José María Roldán, chairman of the Spanish Banking Association (AEB), says that in little more than a decade, the world has witnessed two crises of the sort that used to emerge once in a century. “The current emergency poses an extraordinary test for the economy and the financial system,” he says. “Fortunately, banks are much better prepared today in terms of capital and liquidity to confront this challenge.”
Mr Roldán says until now, profitability was the greatest hurdle facing the global banking system. “This has now become difficult to achieve,” he says. “The banks have no alternative but to continue focusing on efficiency and seeking ways to develop their digital business. In the short term, they will have to focus on absorbing an increase in non-performing loans (NPLs), which in turn will require higher provisioning levels and a reduction in capital. By rebuilding the balance sheet and achieving an acceptable level of creditworthiness, the banks can avoid another systemic crisis.”
