Q: What is the current situation of the interest-rate market at global level?
Currently, there is excessive complacency regarding interest rates, particularly in core currencies such as the euro and the US dollar. In a low-inflation environment and with growth still incipient, the feeling is that interest rates will be low for a substantial period of time and any form of hedging is unnecessary. Some emerging countries such as Turkey and Brazil have had to raise interest rates, but the bulk of emerging and mid-range economies (Taiwan, Korea, Mexico, Chile) still have very low interest rates and the feeling there is practically the same as in the core economies. Inflation rates that are under control in general support this feeling.
Q: What do you believe will be the future challenges in the sector?
The biggest challenge in the sector is to maintain a good income statement in an environment where there is little need for hedging and growing regulation, limiting the type of transactions and carrying out highly selective investment. However, a new world is opening up in terms of CVA (credit value adjustment), collateral capital, other forms of finance such as long-term repos and of course we have the difficult challenge of growth in electronic platforms as a means of operating.
Q: How is BBVA tackling these challenges?
BBVA is moving out of interest rate products and making a strong commitment to credit and FX. Having a good mix between flow and structured products and being a major player in all these assets, and not only interest rates, is now a much closer goal. In addition, the bank is making a major effort with respect to regulation. It has reached the level of its leading competitors in the market in record time in the areas of CVA, capital collateral and funding.
Q: What is BBVA's positioning in the market?
BBVA is one of the leading interest-rate product banks in the euro zone and in most of the Latin American currencies. Our presence in the US dollar is growing fast, above all in derivatives, thanks to our presence in the United States, Asia and Latin America.
Our business is balanced, ranging from the simplest products such as Treasury bonds to the most complex solutions. We have very powerful development and structuring teams operating in these areas.
In terms of clients, we aim to assist our corporate clients in collaboration with other areas in the bank, while accompanying various segments of institutional clients (banks, insurance companies, investment funds, private bonds, etc.) in their investment, funding and balance-sheet requirements in general.