Why have the banking sector employers’ associations hired you as an adviser?
AEB and CECA collaborate on many issues—more than people think—and they felt it could now be useful to have someone with experience in European and Spanish public administration to better understand the role of banking in the European funds. In addition, I have known José María Roldán and José María Méndez (President of AEB and Director General of CECA, respectively) for some time; they contacted me, and here I am.
And do you already have a clear idea of what role banking can play in the Next Generation plan?
The sector’s role is fundamental and indispensable for the funds to have a multiplier effect and enable investments of more than €500 billion. Without banks, the funds cannot reach SMEs, families and the self-employed, as the sector has the broadest reach, serving all types of customers everywhere. In addition, the sector’s core business is to assess risk and provide credit, which will make it possible to anticipate and co-finance the aid that the Government awards.
Some people may think that the only interest driving banks in this is making money from the European funds
The reality is that the direct benefits to banks’ profit and loss accounts will be negligible, as was already the case with the ICO credit lines to tackle the pandemic, which were a great success. Institutions have a genuine interest in the funds being a success for two other reasons. First, it allows them to provide a new service to their customers by helping them receive and use the grants, which will strengthen their solvency. Second, if the objectives are met, the funds can boost Spanish GDP by 1.5 or 2 percentage points. A stronger economy is positive for banks, because their customer is Spain.
However, it seems that the process of allocating grants is slow, and the positive impact on GDP is starting to be revised downwards, at least this year
As Michel Barnier (former European Commissioner in charge of negotiating Brexit) would say, the clock is ticking and there is no time to lose. There is concern because time is running out and the publication of rules and the award processes must be accelerated, since the funds must be committed by 2023 and used by 2026.
And how can that process be accelerated?
2021 is proving to be a transition year, but 2022 will be a critical year to truly launch the rollout of the funds. To achieve this, there is no secret: the publication of the relevant decrees must be accelerated and the awarding of aid must be made highly transparent to stimulate demand. In fact, unlike what happened with the ICO lines after the pandemic, here demand for the funds must be generated, since in many cases companies or individuals do not have an urgent need to apply for them.
Do you see the Government in a hurry to meet those deadlines?
I see in the Administration a desire to meet the deadlines, and they are aware of the need to speed up the process.
It seems that large companies have an advantage and are the best prepared to apply for those funds
There is room for everyone in the funds. There are programmes that require a large anchor company, such as when investing in building an electric car factory, and that can filter through the entire economy via suppliers. But there are other plans, such as those promoting home renovation, electric vehicle purchase schemes and support for SME digitalisation, where incentives must be launched so that people claim them.
Can banks help these smaller customers access the funds?
Another advantage of banking is that it is highly digitalised, and all institutions already have IT programmes in place to identify the calls for aid that are most suitable or best match their customers. No other sector is in that position. One of the plan’s objectives is to improve Spain’s business demographics by facilitating the growth of SMEs, since the current share of companies with fewer than 50 employees is higher than in the rest of Europe. It is a strategic objective, and banks can help achieve it.
Does the latest decree on home renovation send the right signals?
We will have to see how it is implemented, but in principle it is positive. In addition to direct aid, it includes an ICO guarantee line and creates the role of the renovation agent, who can help homeowners’ associations mobilise, complete the procedures and access the grants. In fact, it could make sense to create agreements or consortia between financial institutions and construction companies to create these agents. It should be borne in mind that Spain currently renovates 30,000 homes a year, and the plan’s medium-term objective would be to reach 300,000.
Interview with Carlos Bastarreche, external adviser on European affairs for AEB and CECA, conducted by Roberto Casado
