Santander Chairman Ana Botín, 59, was first made aware of the coronavirus at a dinner in Davos in January. Shortly afterwards, the topic was addressed at a meeting of the Business Council, which brings together the heads of the world’s largest companies, mainly from the United States. She believes this was responsible for her rapid response and preparation weeks before lockdown was implemented, though she could not have imagined the impact Covid-19 would have on the world.
After an “Ask Ana” session – a chance for employees of the group to quiz her, an initiative that was introduced several weeks ago, and that is conducted from company headquarters in Boadilla del Monte, in the west of Madrid – she turns her attention to EL PAÍS.
Question. Have you lost anyone close due to the coronavirus?
Answer. As soon as the confinement began, I got a call from Portugal to tell me that António Vieira Monteiro, our chairman there, had died. He is the only person in the group to have died of the coronavirus to date. It was a blow. We were very close and it affected me badly. We have all lost people, friends, family and acquaintances.
Q. How have you found the confinement?
A. We’ve all been affected. No one expected it to be so long. Obviously, I and others like me are very lucky because we can work from home and our conditions are very different from those of other people. But it has helped us all to appreciate the things that really matter. I think it’s a lesson we shouldn’t forget. We now know the value of physical safety and being reasonably sure that our lives are not in danger.
Q. What are the things you appreciate more now?
A. Primarily health – knowing that you can go out and be with your family and friends. My generation has never experienced this lack of freedom to do the simplest things like going out to dinner, to a concert or to see your mother. It is something that has made us reflect.
Q. Is this crisis different?
A. I have the advantage of having lived through quite a few crises both in this country and in others. Each crisis has been more difficult and different than the one before it. This one is more serious because it is global and puts everyone’s health at risk. The most important aspect of other crises was job losses or the fear of them; but fear of the disease, or that something will happen to someone close to you, creates another level of anxiety.
Q. How will it change society and capitalism?
A. More than changing the world, the pandemic is likely to accelerate the trends that have already been around for some time. Which trends will it accelerate? The digital versus the physical, although I still think that the personal relationships will continue to carry a lot of weight because they generate more confidence. The crisis will also accentuate the gap between winners and losers, both between economic blocs – China, the United States and Europe – and between countries and types of employment. We have to make a new social contract, which involves everyone and which allows us to grow in an inclusive and sustainable way. The departure point is to support the entrepreneur and companies across the board, from large ones to the self-employed. Without companies that generate quality jobs, investment and profits, nothing else will work. Then there is a third trend that has become apparent now; the need in certain strategic areas and sectors, such as health, to be self-sufficient at a national and a European level. It is not a question of rejecting globalization, but of preserving and using the multilateral framework so we can guarantee the public that we will not be exposed to the risk of product shortages, or vulnerability to abuses from monopolies, as has been the case with medical supplies, threatening health and general well-being.
Q. Has the way you see your work changed?
A. When people talk about banks, I always say that we are people. Santander is 200,000 people, 38,000 of them and their families living in Spain, who are helping our clients and also addressing the needs of our communities. This is something we always do, but it’s been done in a particular way during this crisis. Our mission is to help people and companies to move forward. Apart from solidarity initiatives, the bank has been lending more than €1 billion a day to customers who need it during this crisis. We are processing moratoriums for six million of the group’s customers. We have done a lot of things and I like to sum them up by saying that we are part of the solution. We have to be there for employees and customers alike and support society. When a problem arises we have to be there. And in this way, we will offer an attractive return to our shareholders. This is being a responsible bank or company.
Q. What has your priority been at the bank?
A. In these crises, you have to know the difference between what is urgent and what is important but can wait. For me, the first thing has been to protect all of our employees, with the view that banking is an essential service and that we need to make branches and services accessible. The second thing has been to ensure business continuity, which in our case is to ensure balance sheet solvency, liquidity and the best service to our customers. Liquidity, whether regarding individuals or companies, is essential to the economy in an acute crisis such as the one we are experiencing. It has been my focus and that of the whole team at Santander in Spain and around the world.
Q. What is the current situation of Santander as it goes into this crisis?
A. The bank is in a very strong position. Net profit excluding extraordinary items has doubled from 2014 to 2019; we have 50% more capital and the cash dividend paid to shareholders is more than double what it was five years ago.
Q. What should be done with the economy?
A. Just as we have a health crisis that’s never been seen in our lifetime, as a consequence, we are also facing a very serious economic crisis. And we have to act, in the short term, with a vigorous plan to boost job-generating sectors, one that considers the capabilities of our current workforce. This should run alongside a more strategic plan for the medium term, focusing on investment in areas of growth, such as digital, health sciences, technology, the green economy... It is difficult to radically transform the economy in the midst of an economic and social emergency, but we must approach the recovery with the necessary changes we’ll be facing next in mind. What’s more, I believe that we must strive to create decent employment and maintain adequate levels of social protection and prioritize public spending. Growth is only sustainable if it is inclusive. And only by supporting the entrepreneur and businesses is everything else possible. Without private initiative, there is no growth. We must create the conditions for investors, both within the country and outside, so they have confidence in our future and invest.
Q. Can you give examples of the measures needed?
A. One of the initiatives we are working on with experts and people in the real estate and construction sectors is a public-private partnership scheme, specifically with the ICO [Official Credit Institute], to help young people buy their first home. In this program, the buyer would pay only 5% of the value of the house and the bank would offer a mortgage for 95% of its value, with a 20% guarantee from the ICO. For the sake of giving an example, if, thanks to this public-private partnership scheme, we could build 150,000 houses, we would be creating some 500,000 jobs and helping thousands of young people to become independent. It would save many small- and medium-sized companies [SMEs] and self-employed, and cut down on the size of the unemployment bill. In the short term, we also have to think about tourism and the hospitality industry. We have to rescue the summer because, if we can, we will be helping many companies to survive and have a quicker way out of the crisis as a result. To achieve this, we need the pandemic to continue to ease off internally, and to achieve that we need to carry out more tests, make better use of data and monitor those who are sick as well as those they have been in contact with while reaching international agreements so that gradually, and with all guarantees, we can open up our borders.
Q. Should the emphasis be on supporting businesses or workers?
A. If you support companies, you support the workers. We are in an acute crisis. We have to support businesses as much as we can, because if they get enough liquidity, they are far less likely to close down and will create wealth and jobs when the health crisis is over. In Spain, there were 19 million people paying social security, and, according to the Stability Plan sent to Brussels today, there are six million people receiving financial support to cope with the situation. This is what has to be done. But we must all be aware that the welfare state cannot pay out indefinitely by borrowing. The money paid out must come from restoring the levels of employment that make it sustainable and fair, and this requires structural changes that must be carried out with broad consensus so that they are irreversible. Basically, what we must understand is that private employment is a priority because that’s what makes public employment, health and education sustainable...
Q. Do you favor a minimum income?
A. We get embroiled in discussions about the means to an end and what matters is that we agree on the principles. What we agree on is that we must support the people who need it. You have to be able to take some money home for as long as it takes to get through the crisis, that has to be done and that is the principle that we all have to agree on. The other principle is that the right thing to do is to promote lasting employability. We each have an individual responsibility as well as a collective one. How should this be done? This is something that we can debate.
Q. Would you like to see an agreement between Spain’s political parties?
A. We need a shared vision for the Spain of the future, based on very clear and transparent principles and with the support of a large majority of society. First, it must guarantee legal security and institutional stability. Secondly, it must be both compatible with and competitive within Europe. A tax scheme that does not allow Spain to keep or attract top entrepreneurs creating the companies of the future is of no use. In Spain, we need investment, and national investment is not enough. Without investment there is no job creation, nor can the public finances be sustained. The third thing we need is loyal cooperation with all the interest groups – the public sector, the private sector, education and civil society – because we each have something to contribute. The fundamental thing is to generate investment and employment. At the same time, I have no doubt that we are not going to have sustainable growth without inclusive growth. And to achieve that, we need jobs, jobs and jobs.
Q. Is the easing of the lockdown being done well, in your opinion?
A. The job of the governments is very complicated. It is easy to say it could have been done better when you’re looking in from the outside, but you don’t always have all the facts. Our responsibility is to offer support in any way we can. Global experience, backed by authoritative voices such as those of [US economist] Larry Summers or Bill Gates, shows us that, in order to return to work, it is important we have a good digital system in place, one that respects privacy – one that is technologically viable with apps to collect and manage data. We have to monitor those who are infected and those they have been in contact with and test them all and, when necessary, quarantine those who test positive. We all have to wear masks whenever we are in public, respect the protocols and act responsibly, just so we can resume activity as soon as possible.
Q. Is the ICO’s line of guaranteed loans working?
A. The public guarantee model is tried and tested and working well in general, but it also comes with some specific problems. Santander has a total credit quota of 18%, but in companies it is 27% and they have given us 18%. If you are an SME with three employees, you have a bank that knows you. You are not going to go to a new bank in the middle of the crisis. We have had huge demand and we have not yet been able to respond to all the requests. That’s why it’s so important that they make the €100 billion available as soon as possible. The banks and the government are working together in a very positive way, although perhaps it would have been more effective if the requests had been dealt with on a first-come, first-served basis, as has been done on other occasions with the ICO guarantee line and in countries such as Germany, rather than by a quota allocation system.
Q. Are you relaxing the criteria for granting loans?
A. We have a responsibility toward society and our shareholders that requires us to grant loans using rigorous and professional criteria; you only have to look at the last crisis to see the price of not being prudent. The ICO guarantee allows us to achieve the high volumes of financing we are providing.
Q. Some bank practices regarding refinancing risk or requiring certain conditions for loans with ICO guarantees are being criticized.
A. Our team has very clear instructions to do things responsibly and I am sure this is the case. I aspire to avoid one single mistake. The sector is processing more than 300,000 operations and there may be some exceptions, but, honestly, you can’t take the exception and treat it as the rule.
Q. Perhaps the criticism has something to do with banks’ reputation in recent years.
A. We have to be responsible companies in order to gain the trust of customers. I have been insisting on this for five years. We have changed a lot in this time and, with this crisis, trust is going to be even more important. We have taken numerous measures to help both with the health crisis and with those customers affected by the economic crisis, which they recognize and appreciate. But we cannot be complacent. We always have to do better, even if we cannot achieve every goal. By doing things responsibly, we will also be rewarding our shareholders. I hope that in October the global health and economic situation will allow us to reassess the value of the dividend once more.
Q. Could this crisis end up infecting the entire financial system and causing solvency problems?
A. Governments and central banks have acted very swiftly and significantly and are supporting the economy as they should. We believe that it is very important that a common fiscal and regulatory recovery program is launched in Europe as soon as possible, not only to accelerate the recovery, but also to preserve the single market and competition because both can be affected by the very different fiscal situations of the member states. For example, while the ICO guarantee program is equivalent to 10% of GDP, it is the equivalent to 30% of GDP in Germany. If this uneven response is not offset by regulations regarding competition and a European fiscal program, Spanish companies risk being put at a disadvantage – not only due to the volume of the program, but also because of the disparate guarantee percentages in the programs. In Spain, according to the ICO lines, the banks assume between 20% and 30% of the risk, as well as providing liquidity.
Q. Is Europe responding as it should?
A. The European Central Bank has acted decisively to defend the euro in general and Spain and Italy in particular. There is a lot of solidarity and both Christine Lagarde [president of the ECB] and Luis de Guindos [vice president of the ECB] have said that, within their mandate, they will do “everything necessary.” Beyond the ECB, Europe has to understand that solidarity is not charity; that it benefits us all, while we, the member states, have to understand that we have to be responsible and do everything needed to ensure that viable companies survive. For Europe to support us, the policies for exiting the crisis must encourage and attract investment, and the measures must be compatible with inclusive growth, competitiveness and future financial stability. Europe’s system is not perfect, but, make no mistake, it is the best that the continent has ever had and, although we need to improve it, it is far more supportive than the American one. We need to raise Europe’s digital economy to the level of that in the US and China. This is a key moment for Europe because our relevance in the world and our model of society are at stake.
Q. How do you do that?
A. We have to be aware that it is not going to be easy. But we all have to come to an agreement, whatever political party we’re from, and we have to rely on the private sector, universities and invest more in education. We also need responsible governments, in Europe as a whole and in each country, that understand that if companies are not supported, if profits are not generated, we cannot have a social economy. This is a turbulent time with big winners and big losers, and almost all the big winners are outside Europe, in the US and in China. There is a lot that needs to be done to ensure that large European companies are among them. But if we do it well, I am not giving up hope of seeing companies such as Santander and Telefónica among the winners.
Q. Are new forms of communication with staff, such as “Ask Ana,” working?
A. It is important to be very close to the employees right now. We started this shortly after the confinement began. All the topics discussed relate to the return to work, home working and people’s physical safety when they do return. There is a lot of anxiety and it is essential that we rebuild people’s confidence so that we can come back as soon as possible – with masks and distance and responsibility, but getting out.
Q. Is the home working trend here to stay?
A. There is going to be a structural change in the way we organize ourselves, the way we market products and the way we work. And everything has a common denominator, which is an intensive use of digital capabilities. The crisis has accelerated the digital revolution. Without digitalization, the consequences would have been much worse, but we must ensure that it is within everyone’s reach. In surveys we have conducted, we have found there are people who find it more difficult to reconcile their personal and professional lives when they are at home. Teleworking is good up to a point. Most of the professionals at the bank are asking to be able to combine [working in the office with] two or three days of work from home.
English version by Heather Galloway.