BANKER
His Governance by Stages
Stage 3
Luis Valls’ Governance at Banco Popular – Third Stage
These years occurred during a period of political transition. The intelligence with which Luis Valls managed the bank’s activities earned him widespread recognition and a place in the country’s leading institutions. A notable fact: in 20 years, he managed to position the bank among the country’s top seven. For Luis Valls, the Spanish transition was a challenge; suddenly, everything changed, starting with the political regime. The major shift, however, occurred in 1982, with the socialist victory. Before this, Valls had anticipated the change by extending credit to political parties, including the Communist Party. In the early 1980s, the bank surmounted a critical moment, which Luis Valls utilized to introduce modern international banking management criteria. He popularized concepts such as ROA, ROE, efficiency, and the margin on average total assets, which were not previously used in Spanish banking. This was merely a strategic shift to survive in a hostile environment. It was an example of his pragmatism.
That adverse environment grew, and in 1987 and 1988, it became evident that the March Group was subjecting the bank’s subsidiaries to a share acquisition process. Luis Valls eloquently described this episode as a “kidnapping and ransom payment.” The bank did not merge and remained committed to a management focused on excellent results, prioritizing profitability and small clients over size. Meanwhile, Luis Valls continued to weave a safety net around him, with a stronger Syndicate of Shareholders supporting him and finding international partners willing to develop joint ventures, such as Allianz, HypoBank, and RaboBank.
By the end of this stage, Luis Valls was satisfied with having transformed the bank’s board from a stronghold of administrators eager to intervene in management into a body of supervisors. However, the transformation did not stop there. He once again surprised the financial world by achieving a national bank with international shareholders and a board composed of non-remunerated shareholders. This was unprecedented at the time and far from the norm in the sector.
Let’s see what happened in the fourth and fifth stages. Go to: Returning to his leadership by stages – Stage 1 – Stages 4 and 5
