Bankia SA's Chairman and CEO Jose Ignacio Goirigolzarri Friday said the bank has set goals to improve its efficiency and significantly reduce unproductive assets.
At the General Meeting of Shareholders, Goirigolzarri assured to bring back the profitability levels of the bailed-out Spanish bank to that of other top banks of Spain. Bankia is the banking arm of BFA Group, resulting from the merger of seven Spanish savings banks.
Goirigolzarri also said that he was aware of the huge losses sustained by Bankia's shareholders and expressed regrets. However, he urged investors to "look to the future."
Goirigolzarri said that the Bankia now faces four challenging tasks in order to achieve the profitability levels: client care, improving efficiency, reducing unproductive assets and restoring the quality of Bankia's investment.
The task may have been made a little more feasible for Bankia with the deal at the European leaders summit meeting in Brussels. Under the plan, the European Union will take urgent action to help stabilize the Spanish and Italian bond markets and the ailing eurozone banking sector.
"To meet these four challenges, we are implementing very detailed action plans. It will take time, but I can assure you that we are working fast, and with great commitment on the part of our teams", said Goirigolzarri.
"First of all, we need to be clear that our focus has to be on the customer. Only then can we be competitive and, ultimately, create value. We must cut out bureaucracy and flatten our hierarchies, so that all of us - including me - are closer to our customers" stressed Goirigolzarri.
Bankia aims to reduce its unproductive assets by 50 percent to 30 billion euros from 60 billion euros, over a three-year period.
Bankia's chairman also referred to "the need to dispose of assets that are not part of our core banking business - because we are convinced that the best way to create value is by becoming more focused".
Goirigolzarri said the bank will work to reduce its efficiency ratios to below 40 percent in three years from now.
"That is to say, a situation where, of every 100 euros of revenue, less than 40 euros are eaten up by expenses. Today, to generate 100 euros of revenue, we spend almost 60. This is a big challenge," Goirigolzarri said.
Goirigolzarri also said in order to restore investment quality, the bank should not pay the kind of risk premium which it is paying right now. "Our credit risk premium needs to come down sharply, to around 50 basis points," he said.
by RTT Staff Writer
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