"We knew Xabi wanted to stay and he knew we wanted to keep him," said the Spaniard.
"Some other top clubs were interested in doing something or at least wanting to know what the situation was but we were always clear that we wanted to build a strong team for the future and Xabi is part of that future.
"He has had some fantastic years with us and he will be just as good in the future. When you know you are settled and that the team is ready for another challenge then you can work with total focus.
"From my point of view I know I have a lot of options all over the pitch now, and especially in the centre. Xabi is a key player but he will need to fight to compete for his position and that can only be good for the team."