fernando restoy : the financial sector and the banking union speech by mr fernando restoy, deputy governor of the bank of spain, at the circulo financiero, organised by la caixa, barcelona, 18 may 2015. * 1. * * introduction good evening. it is a pleasure to visit barcelona again and an honour to stand on this rostrum at the circulo financiero, which has borne witness to the key debates affecting catalonian, spanish and european society over the past forty years. allow me to thank the organisers and, in particular, isidro faine, for the opportunity to participate in this forum. following isidro ’ s suggestion, i have decided to share with this eminent audience tonight some thoughts on the transformation the spanish banking system has undergone. i think the current juncture is a most timely one for addressing the subject : in july three years will have elapsed since the signing of the memorandum of understanding ( mou ), which marked the start of the financial assistance programme, approved by the european authorities, under which a most substantial portion of the reforms to the spanish banking system were undertaken. six months have likewise gone by since the single supervisory mechanism commenced operating in the euro area, and the single resolution mechanism has now been set up. these landmarks make for an appropriate setting both for reviewing the scope of what has been achieved and, naturally, for discussing the challenges ahead for spanish banks in the new economic and institutional environment of which the banking union is a key part. i shall structure my address around four simple questions. what were the problems of the spanish banking system? what was done to try to resolve them? what results were achieved? and, finally, what is left to be done and what challenges lie ahead? 2. the problems looking back, the crisis can be seen to have had an enormous impact – one not yet fully absorbed – on levels of employment and well - being. likewise apparent are the significance of the banking sector in the development of the crisis and the efforts taxpayers have had to make to restore financial stability. and in this light, it is difficult to avoid having a very negative perception of the functioning of the banking system in the run - up to the crisis. that said, the spanish banking industry has, traditionally, been a rather profitable one, capable of successfully pursuing a very effective commercial banking model, of developing valuable franchises built on a highly stable customer base and, in the case of the biggest

given his links to the ruling conservative popular party. however he has carved out a reputation as a hard worker who has kept his head down, remained polite and attentive, and has helped his credibility as head of the central bank. “ he likes teamwork, and is very close to those he works with, ” one former colleague says. caruana worked for the trade ministry from 1979 to 1987, including a three - year stint in new york, and then spent 10 years first as chief executive and then as chairman of private brokerage renta 4. he was named treasury secretary at the finance ministry in 1996, when the socialists were voted out, and was in that post for four years under the popular party before heading the bank of spain's supervision department. in july 2000 he took over from highly - respected bank of spain governor luis angel rojo, under whom he had worked as supervisor.