* BBVA sees no impact of case on business
* Bank has not set aside provisions related to case
* CEO says he is aware of damage to bank’s public image
* Genc says recognises stakeholders may be concerned (Adds quote, updates share price)
By Jesús Aguado
MADRID, July 31 (Reuters) - The chief executive of Spain’s BBVA said on Wednesday the bank was reinforcing internal compliance controls and was treating an alleged spying case “very seriously” although he said the issue had not had an impact on the bank’s business.
Spain’s High Court placed the country’s second-largest bank BBVA under formal investigation on Monday as part of a probe into the case that dates back to 2004, the court said in a statement.
The court decision followed a request by the anti-corruption public prosecutor last week. BBVA will be investigated on charges of bribery, disclosure of secrets and corruption in relation to the bank’s alleged dealings with former police chief Jose Manuel Villarejo.
“We have not identified any relevant direct impact caused by that situation related to our business or our stock performance,” CEO Onur Genc told a news conference, although he said the bank was aware of the damage to its public image.
He said BBVA took the case “very seriously”, adding that the probe was at an early stage. He said he did not see a need for now to set aside any provisions related to the issue.
The chief executive also said the case could have an “impact on the long-term thinking of different stakeholders of the bank ... and obviously it has an implication on the thinking of our colleagues and of our customers and so on.”
BBVA shares reversed early gains and dropped 1.3% in afternoon trading after the comments.
Genc said the bank’s internal investigation could now follow new lines. “We are going to do what we need to do,” Genc said.
The inquiry is related to contracts with the jailed ex-police chief Villarejo, whom news websites El Confidencial and Moncloa.com said the bank had hired to spy on top executives of a potential buyer, construction company Sacyr, in 2004 when Gonzalez was BBVA’s executive chairman.
The bank acknowledged it hired Grupo Cenyt, a security firm owned by Villarejo, but said it had found no evidence of spying.
Genc said the bank had strengthened its internal processes to improve governance. “We’ll continue to do so,” he added.
The bank said on Tuesday it had appointed Ana Fernandez Manrique to replace Eduardo Arbizu as global head of regulation and internal control. It declined to say if this was related to the case.
Genc, who spent much of the results news conference answering questions about the case, reiterated the bank’s “firm commitment to clarifying the facts and complying with the law”.
He declined to name any executives being investigated.
The investigating judge, Manuel Garcia-Castellon, expanded his investigation in early July to eight former BBVA employees. None belong to the bank’s current board. (Reporting By Jesús Aguado; Editing by Andrei Khalip and Edmund Blair)