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 a milestone: 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 would 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 shed light on what had happened, 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 directors who had been in the same position 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 to complete it in five years. In 1998, he radically changed the executive team, led by individuals in their 60s, bringing in people from within the bank and focusing on profitable growth. After selling its stakes in foreign banks 20 years earlier, Luis Valls reopened to growth and initiated an internal revolution that he personally oversaw (he had created and nurtured the idea of being a non-executive supervisor, allowing him to maintain some distance). In 2000, he aimed to implement this theory by gradually retreating to a background role, overseeing the new change process, and defending the bank from internal and external attacks. In 2004, he chose to step away from the forefront, handing over control to CEO Ángel Ron while retaining the position of chairman of the shareholders’ meeting. Essentially, he had ceded control of the bank. He passed away sixteen months later
