billion) to double its stakes in two banking subsidiaries of
Chinese conglomerate Citic Group, extending its exposure to China’s
fast-developing retail banking market to drive future earnings and
hedge against possible downturns in its established Spanish and
North American markets.
Spain’s second-largest banking group will now own 10 percent of
China Citic Bank (CNCB), a retail and corporate lender with 485
branches, and 15 percent of Hong Kong-based Citic International
Holdings (CIFH), a commercial financial services business which
operates primarily outside mainland China. It has a further
two-year call option for an additional 5 percent of CNCB, a deal
which would bring it near to the maximum 20 percent level foreign
banks are allowed to own in Chinese banks.
Go deeper with GlobalData
A BBVA spokesman said: “The transaction places BBVA in an
unbeatable position, creating value for its shareholders in a deal
which is accretive from the outset. With this agreement, BBVA is
making progress on its Asian growth strategy, particularly in
China… It is emerging as one of the few international banking
groups with a significant presence in these markets in the form of
a strategic collaboration agreement with an important Chinese
business group.”
In its 2007 annual results, CNCB reported net attributable
profit up 116 percent year-on-year to the equivalent of €756
million. According to BBVA’s figures, CNCB’s assets increased 43
percent, pushing it from third to second place in the ranking of
China’s privately owned banks, behind the four large government
banks. It is also the top private bank in China in terms of
efficiency, BBVA added. Net profit at Hong Kong-based CIFH jumped
64 percent to €151 million.
Along with Spanish rival Santander, BBVA has evolved rapidly
into one of the more successful global banks, with profitable
businesses across the Americas, Mexico, Europe and now Asia
churning out relatively strong earnings despite the sour global
banking environment. First quarter net attributable profit was
€1.44 billion, an increase of 14.9 percent year-on-year, with
profit up 18 percent in Spain & Portugal, 25.9 percent in
Mexico, 12.6 percent in the US and 19.4 percent in South
America.
In March, BBVA received approval from the US authorities to
merge its four US separate banking units into one, a move which
will create what the group says will be the biggest bank in the
southern US region – Compass Bank – with $58.6 billion in assets
and 593 branches. BBVA bought Alabama-based Compass for $9.6
billion last year, its biggest acquisition to date. Over the past
two years it has also snapped up Laredo National Bank, State
National Bank and Texas State Bank; the integration of the four is
expected to be complete by the end of 2008.
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By GlobalDataThe world’s 13th-largest branch network
BBVA, now ranked as the 13th largest global banking group in
terms of the number of branches (8,028 – see RBI 592),
picked up RBI’s 2007 Best Marketing Strategy Award in
April for its numerous innovative campaigns and retail banking
products (see RBI 589). One recent mortgage campaign in
Spain, for instance, called Ven a Casa, which incorporated a high
degree of personalisation and customer segmentation, added €574
million in loans in the first quarter of 2008 alone.
The bank has just signed a major IT deal with India’s Infosys
Technologies for a complete core banking upgrade across its global
empire, part of its €5.6 billion Innovation and Transformation plan
(see Infosys bags huge BBVA deal). Initial implementation
will take place in Paraguay, a strong growth market; in 2007,
operating profit in Paraguay rose to €21 million, up 40 percent
year-on-year.
