biggest savings banks, runs one of the country’s most successful
social responsibility programmes. Pablo Armendariz, the bank’s head
of innovation, spoke at RBI’s recent Innovations event in
Singapore about why Caja Navarra has gone further than its
Caja Navarra (CAN), the
Pamplona-based savings bank, began to upgrade its social investment
programme back in 2005. It now operates one of Spain’s most
advanced, tech-savvy social responsibility initiatives, a scheme
that will probably invest around €60 million ($76 million) in both
Spanish and, increasingly, international projects in 2008.
Like all Spanish savings banks, CAN is required by law to funnel
a degree of its profits, after taxes and reserve requirements, to
investments in social works – projects that, in simplistic terms,
will improve the quality of life in Spanish society.
Usually, the decision on which projects will be granted the
money is taken by the management of the company or foundations
maintained by them, which are later required to give a full account
of the use of the funds.
From 2005 onwards, however, CAN directly involved its customers
in the process, allowing them to vote online and in branches on the
projects they consider most deserving of help. This is where the
Tú Eliges, Tú Decides (You Choose, You Decide) programme
was born, part of the bank’s wider Civic Banking strategy.
Banking with a conscience
The message is very clear,
and very powerful: do people want to bank with a bank focused on
profits, or one with a more social twist? To stress its social
character as a competitive advantage against commercial banks (such
as Santander and BBVA), CAN’s website also has a tool via which
clients can calculate how much of their money is turned into either
profits for commercial banks or towards projects that aim to
generate some kind of social benefit.
Before 2005, CAN simply offered its clients the option to choose
the kind of projects that would benefit from the bank’s help,
classifying them in eight different categories. In 2006, clients
were also given a limited choice of named projects to get
Last year, customers began to directly choose specific projects.
Around 2,000 initiatives were preselected by CAN, managed by over
1,600 nonprofit organisations, which for the first time included
projects from outside Spain (eg, Mexico, El Salvador, Colombia and
Each customer is entitled to choose three projects. They can
change their minds until the deadline, and if they do not want to
pick actual individual projects, they can simply vote on three of
the eight categories instead.
And the internet is not the only channel where people can vote:
the bank sends all its clients a book with details of every project
that has been preselected, along with a voting form. They can vote
via SMS, by visiting one of its 351 branches and even at ATM
machines, and no charges are incurred by voting.
An edge in a competitive market
The bank hopes the initiative
will keep its customers banking with it at a time when Spain’s
retail banking market is becoming ever more competitive.
In 2006 CAN directed €42 million to such ends; in 2007, this
grew to €50.25 million. According to Pablo Armendariz, the bank’s
head of innovation, 2008 will see significantly more money invested
in the scheme, with around 75 percent of the bank’s 650,000
customers getting involved.
The Tú Eliges, Tú Decides scheme is only half of CAN’s
Civic Banking programme. The other half has involved turning the
bank’s branches into ‘community venues’ or canchas, places
where local people and businesses can meet, hold events as well as
The branches have also been refurbished with children-friendly
areas, coffee-and-newspaper zones and free internet terminals,
while events held regularly in canchas include theatre
productions, magic shows, book groups, concerts, art fairs, debates
Half of CAN’s 351 branches are currently run as
canchas, though the plan going forward involves opening 40
to 50 new ones a year. The one downside is cost: operating costs
for each canchas is 12.5 percent higher than for standard
Still they are very popular with the bank’s customers: in 2007,
65,000 people made use of the specialised branches; they surfed the
internet for 18,000 hours; enjoyed 12,000 hours of lectures;
developed more than 1,581 activities; heard 300 concerts; and
benefitted from more than 47,000 hours of children’s games. As of
June 2008, only half-way through the year, over 71,000 people had
used the branches, up 9.2 percent on the whole of 2007.
Armendariz, talking at RBI’s Innovations conference in
Singapore in early October (see RBI 600), stated that from
CAN’s point of view, the programme is a useful marketing tool to
carve a larger share in a market that is being disputed by a
growing number of domestic and foreign players.
CAN boasts a market share in retail banking of “above 50 percent
in its geographic area”, he said. Profits in 2007 were €175
million, up 24 percent on 2006, with a 17 percent return on
Much more significant, however, will be the future: Spain is
entering a harsh economic slowdown that will hit the banking
industry hard and will almost definitely result in market
consolidation among both the savings and commercial banks. CAN’s
importance to its local community and economy, coupled with its
loyal customer base, could help it survive such volatility.
Cajas are required to allocate at least half of their
profits to reserves, and they channel the remainder back into the
community toward projects that fall under their social mandate
(obra social). Cajas seek to maximise their
profits – and thus, their allocation to the obra social –
through their day-to-day business operations and compete fiercely
with banks and other credit institutions for the provision of
financial intermediation services.
The share of profits allocated to the obra social –
averaging close to 30 percent per year – has decreased somewhat
over the past decade, albeit as in the absolute level of profits
has increased. The decline is accounted for by increased taxation –
cajas were (almost) tax-exempt before 1985 – and higher
capitalisation requirements imposed on credit institutions.
A study by the International Monetary Fund (IMF) published in
June in 2006 concluded that the social works funded by
cajas’ money benefit 96 percent of the Spanish population
(see RBI 564).
Separate statistics gathered by Cajas de Ahorros
Confederada (Ceca), their umbrella organisation, showed that
social investments by all cajas amounted in 2005 to €1.34
billion, equivalent to 21.5 percent of the sector’s net profits,
generating almost 30,000 jobs.
The IMF stated: “The cajas have been a major force in
extending services and in creating a highly competitive environment
in the Spanish financial system.”
La Caixa is Spain’s largest savings bank, and its social
programme is huge – according to its own figures, it’s the world’s
fifth-largest charitable body after the Bill & Melinda Gates
Foundation (US), the Wellcome Trust (UK), the Merck Company
Foundation (US) and The Ford Foundation (US). In 2007, la Caixa
injected some €400 million into its welfare projects, with 64
percent of the money invested in ‘social’ programmes, 15 percent on
environmental and scientific ones, 15 percent on cultural projects
and 6 percent on education.
For 2008, la Caixa says it will end up spending €500 million, 25
percent up on 2007, with the percentage of money going to ‘social’
initiatives down to 60 percent and a greater focus on environmental
and scientific endeavours. Two of the biggest projects are helping
terminally ill patients live more comfortable lives; the other is
an infant vaccination programme.