Ignacio Pino, head of the Spanish CaixaBank office in Egypt, tells Niveen Wahish about the bank's activities and his outlook on the Egyptian and Spanish economies
CaixaBank is one of Spain's largest banks, with a customer base of 14 million people. It is also a holding company with stakes in companies in sectors such as infrastructure, communications, transportation, energy and water distribution and real estate. The La Caixa Banking Foundation is also the largest charitable foundation in continental Europe and the third-largest worldwide.
In an interview with Al-Ahram Weekly, Ignacio Pino, head of the bank's Egypt office, explained his view of his host country.
What is the role of CaixaBank's representative office in Egypt?
Our main objective is to improve communication channels with local financial institutions and to give support to the activities of CaixaBank clients in Egypt, which might be foreign trade or investments, as well as advising on the implementation of new projects.
We also offer advice and accompany Spanish businesses that want to develop in Egypt.
Why hasn't your bank thought about opening a commercial bank in the Egyptian market?
CaixaBank has 16 representative offices throughout the world and three commercial branches outside Spain, two in Morocco and one in Poland. At the end of this year we will open another one in London. Our strategy with our representative offices consists of exploring markets and watching areas of interest, and if we see a real business opportunity, then we will take the next steps. Regarding Egypt, we have been working in this market for four years, and it is still premature to make further decisions.
What is your view of the outlook for the Egyptian economy?
Egypt has passed through difficult times and its economy has suffered, but it is clear that for the time being there is much more stability with many projects going on, which is encouraging new investors to come to the country to do business. Our outlook is positive, as long as stability remains.
Since you service Spanish companies operating in Egypt, what in your view are some of the challenges they face when operating in the Egyptian economy?
Egypt has two major issues in order to be more attractive for foreign companies. One is to improve the availability of hard currency for companies. The second is to establish a clear and defined legal framework for the better protection of investors. The rules of the game for investors need to be clearly articulated and stable.
Which sectors are Spanish companies most focused on in Egypt and which could hold potential for increased Spanish investment?
Spanish companies are mainly focused on energy, renewable energy, power plants, rail systems, port equipment, communication systems and technology and infrastructure as a whole. Other sectors that could have potential for Spanish investors are petrochemicals and fertilisers.
The growth of the Spanish economy is reported to have picked up since the 2008 crisis. How was that achievable?
Spain went into crisis at the beginning of 2009. In 2013, things started getting better step by step. In June, the International Monetary Fund (IMF) increased its growth forecast for the Spanish economy by 0.6 percentage points for 2015 to 3.1 per cent and by 0.5 points for 2016 to 2.5 per cent. In its concluding report, the IMF recommended continuing with the agenda of reforms that has allowed Spain to achieve the recovery and bolster the country's growth capacity in the medium and long term. Regarding macroeconomic adjustments that have yet to be finalised, the IMF has asked Spain to continue its efforts to improve fiscal consolidation, reinforce solvency in the banking industry, and reduce private debt.
Some other EU countries such as Greece have not been as lucky. Why was that the case?
Greece is going through hard times, and severe economic reforms are still pending. The new government must take drastic measures in order to stabilise the economy and start it growing again in the long term.
How is the Greek crisis affecting the Spanish economy?
There's growing uncertainty regarding Greece's situation, but Europe's macroeconomic expansion is in no danger, and that applies also to Spain. First of all, you have to take into account the fact that even though the Greek crisis is of major proportions, Greece's GDP only represents 1.53 per cent of the EU total, so it will not shake the EU's foundations. Regarding Spain, the country has an exposure of around 20 billion euros to Greek debt, and it now has to see whether or not a schedule for debt restructuring will be set in terms of the release of debt and the extension of maturity dates, etc. This will be discussed in Brussels in the coming months.
Despite the improvement in growth, it is reported that many Spaniards do not feel any improvement?
When there is an economic recovery, it starts showing up in the macroeconomic indicators. It takes longer to be perceived in the "real economy", the economy that really matters to citizens. But there are some indicators that suggest that this recovery is taking place already. Internal consumption is picking up, the unemployment rate is decreasing, and investors are coming back in large numbers. In June, unemployment in Spain stood at 22.5 per cent, down from 26 per cent in December 2012. During the first quarter of 2015, foreign investors invested 8.5 billion euros in Spain, which represents an increase of 73 per cent compared to the same period in 2014.
Spain has now entered a positive period that includes elements such as improved household incomes benefitting from the good performance of the labour market. Inflation is at last starting to reflect an increase in consumption, and after 11 months of negative inflation this year it is positive again at 0.1 per cent. And there is growth in the external surplus, recovery in the real estate sector, and a revival in credit.
Does the La Caixa Banking Foundation plan to fund projects in Egypt?
The foundation supports charitable projects worldwide in a total amount of 500 million euros a year. It is currently in the process of planning a project in Egypt, but the details cannot be disclosed at the moment.
Your bank is headquartered in Barcelona in Catalonia. What is your opinion of calls for Catalan independence from Spain?
No comment. We do not make political comments.
© Al Ahram Weekly 2015
