BANKER
His Governance by Stages
Stages 4 and 5
Luis Valls’ Governance at Banco Popular – Fourth Stage
In the fourth stage, the bank reaped the benefits of these new management measures, which, though not immediate, brought with them an important turning point: In the early 1990s, Popular was recognized as the most profitable, efficient, and even the best bank in the world. That’s what you call a job well done. An unexpected internal mishap was to overshadow this happiness. The manager of a small branch in Santander caused a six billion pesetas loss (approximately one-sixth of the bank’s profit at the time). Displaying one of his core principles, transparency, which underpinned his governance, Luis Valls brought what had happened into the open, addressed the claims, and absorbed the created shortfall. However, this internal crisis prompted Valls to enter a new stage.
Luis Valls’ Governance at Banco Popular – Fifth Stage
In the fifth stage, the bank’s control procedures were improved, preventive measures intensified, and geographic mobility was given greater importance. All managers who had been in the same post for more than five years were relocated. This measure proved very effective. Simultaneously, in 1992, Spain entered a recession, and the bank leveraged its liquidity and short-term business focus to navigate the crisis. When the difficult period passed, analysts argued that Banco Popular had become too small and would not survive a national or foreign takeover.
It is possible that Luis Valls began planning his succession with the idea of completing it in five years. In 1998, he radically changed the executive team, led by individuals in their 60s, brought in people from within the bank and focussed on profitable growth.
After selling the bank’s stakes in foreign banks, Luis Valls initiated an internal revolution that he personally oversaw (he had created and fictitious the idea of a being a non-executive supervisor, which allowed him to maintain some distance). In 2000, he aimed to implement this idea by gradually retreating to a background role, overseeing the new process of change, and defending the bank from internal and external attacks.
In 2004, he chose to step away from the forefront and handed over control to CEO Ángel Ron while retaining the position of chairman of the shareholders’ board. Essentially, he had relinquished control of the bank. He passed away sixteen months later
