Banco Bilbao Vizcaya Argentaria
|Traded as||BMAD: BBVA
|Founded||Bilbao, Spain 1999|
|Services||Banking, insurance, asset management|
|Revenue||€20.91 billion (2010)|
|Operating income||€11.94 billion (2010)|
|Net income||€4.606 billion (2010)|
|Total assets||€552.7 billion (end 2010)|
|Total equity||€37.48 billion (end 2010)|
|Employees||106,980 (end 2010)|
BBVA is the second largest bank in Spain, after Santander. Since 2006 the bank has focused on overseas expansion, and now operates in 40 countries. Like many other Spanish companies, it enjoys a top tier position in Spanish-speaking Latin American countries. Their debt market operation in Mexico, Chile, Colombia and Uruguay is dominant. It has a strong retail presence in southern European countries, especially Spain, Portugal and Italy, and has expanded into the United States and Asia.
It was formed in 1999 from the merger of Banco Bilbao Vizcaya and Argentaria, both of which had previously amalgamated three major banks in Spain, namely Banco de Bilbao, Banco de Vizcaya, Banco Exterior de España and the government-owned Caja Postal de Ahorros, with other minor entities.
MLS team, Houston Dynamo, operates from the BBVA Compass Stadium in Texas. BBVA sponsors the BBVA Compass Bowl, a college football game between teams from the Big East Conference and Southeastern Conference. In 2010 BBVA became an official sponsor of the NBA.
- 1 History
- 2 Credit ratings
- 3 Criminal charges: money laundering, account falsification, bribery, drug and weapons trafficking
- 4 Connection to drug syndicates and terrorist groups
- 5 U.S. market presence
- 6 Move into Asia
- 7 Move Out Of Asia
- 8 Layoffs
- 9 Distressed asset disposals
- 10 ECB Bailout
- 11 BBVA profit hit by property reserves
- 12 See also
- 13 References
- 14 External links
BBVA’s story began in 1857 when the Spanish Board of Trade sponsored the creation of Banco de Bilbao as a currency-issuing and discount bank. Until the 1890s it was practically the only bank in the Basque Country. In the second half of the 19th century Banco de Bilbao played a leading role in operations involving infrastructure projects and development of the steel industry. In 1878, it lost the right to issue currency and was reorganised as a lending and discount bank.
Banco de Vizcaya was set up in 1901. It carried out its first operations in Bilbao and gradually extended throughout Spain. Apart from its activities as a commercial and general purpose bank, it intervened in the creation and development of a large part of Spanish industry. In 1902, Banco de Bilbao merged with Banco del Comercio although both continued to operate as separate entities. In 1909, Caja Postal de Ahorros was set up as a public entity and started operations in 1916, based on savings books.
A consortium of bankers and manufacturers founded Banco de Crédito Industrial (BCI) in 1920 with the express aim of boosting the installation and consolidation of industry through long-term lending. Both Banco de Bilbao and Banco de Vizcaya formed part of this consortium. In 1923, the Servicio Nacional de Crédito Agrícola was created under the ministry of agriculture to provide loans to agricultural associations against the joint and several liability of their members.
A combination of public and private interests set up Banco de Crédito Local (BCL) in 1925 in the form of a joint-stock company. Its purpose was to finance local authorities and other public institutions. Banco Exterior de España (BEX) was created in 1929 to encourage foreign trade, to seek new markets for Spanish products and to help local companies with imports and exports.
Banco de Bilbao grew further, absorbing other banks. At the same time Banco de Vizcaya also expanded and began to emerge as an important financial group. Greater flexibility by the authorities regarding new branches allowed it to extend its network. Caja Postal added current accounts, securities and specific credit lines to its existing services. The Banking Sector Reform Act 1962 nationalised BCI, BHE and BCL and converted the Servicio Nacional de Crédito Agrícola into Banco de Crédito Agrícola (BCA). All four thus became public entities. However in 1971 they were recast as joint stock companies and became official loan entities (under the Official Credit System Act).
During the 1980s, Banco de Bilbao’s strategy was to attain sufficient size in order to participate in financial operations generated by advances in technology, deregulation, securitisation and the interrelationship between domestic and international markets. Banco de Vizcaya contributed to the refloating of banks affected by the economic crisis and pursued a policy of strong growth through acquisitions. This turned it into a large banking group. The most important operation was the acquisition of Banca Catalana in 1984.
In the meantime, the official credit entities expanded their business through market operations. In 1982, BEX lost the exclusive right to provide export finance. It refocused its goals on becoming a universal bank and on building a financial group. During this process it acquired Banco de Alicante in 1983. In 1988, Banco de Bilbao and Banco de Vizcaya merged to form Banco Bilbao Vizcaya (BBV).
Corporación Bancaria de España (CBE) was set up in 1991 as a government corporation and credit entity with bank status. Argentaria started out with a federated banking model. However, in 1998, Corporación Bancaria de España (already privatised via IPOs), BEX (which had merged with BCI), BHE and Caja Postal were merged into a single bank, Argentaria.
BBV and Argentaria announced their planned merger on October 19, 1999. The new group had the advantages of significant size, a strong capital base, a considerable financial structure and appropriate geographic diversification of its business and risks. As a result there was a greater profit potential.
Customers now had access to a larger network and a wider range of products. They also enjoyed easier access to new channels and a considerable international presence. Employees also had more opportunity for career advancement.
The integration process was given an important boost in January 2000 by the roll-out of the single BBVA brand. This helped the group generate an image that was strongly positioned in terms of identity and distinguishing characteristics.
The integration of the group's retail businesses in Spain (BBV, Argentaria, Banca Catalana, Banco del Comercio and Banco de Alicante) led to the creation of a significant branch network under the BBVA banner. The efficiency of the BBVA integration was recognised by top financial publications. In 2000 it was chosen World’s Best Bank (Forbes) and Best Bank in Spain (The Banker). In 2001, it was Best Bank in Latin America (Forbes) and Best European Bank (Lafferty).
Currently(03/2013) BBVA has the following debt ratings with the four major rating agencies:
|Rating Agency||Long Term Rating||Short Term Rating|
|S&P||BBB- (Outlook: Negative)||A-3|
|Moody’s||Baa3 (Outlook: Negative)||P-3|
|Fitch||BBB+ (Outlook: Negative)||F-2|
|DBRS||A (Outlook: Negative)||R-1 (low)|
Criminal charges: money laundering, account falsification, bribery, drug and weapons trafficking
|This section does not cite any references or sources. (February 2014)|
In 2002, by then Spain’s second largest bank, Banco Bilbao Vizcaya Argentaria (BBVA) was the target of a criminal investigation into secret offshore accounts. The accounts were allegedly used by the bank to trade in its own shares, bribe politicians in Latin America, top up the pensions of some of its board members and secretly pay high-ranking officials to gain control of banks in Peru, Colombia, Mexico and the United States. The Bank of Spain initially opened the investigation in March 2002 because it was dissatisfied with explanations concerning previously hidden accounts. The so-called secret accounts of sixteen senior executives employed by BBVA were investigated by the Spanish courts, most notably Judge Baltasar Garzón. Garzon asked the Bank of Spain in April to suspend its civil inquiry into the secret accounts because of "possible penal responsibilities" facing current and former BBVA employees. The senior executives that faced investigation include BBVA’s chief executive, José Ignacio Goirigolzarri Tellaeche, a deputy finance minister and several members of Spain’s business elite who served on BBVA’s board of directors. The executives were charged with alleged money laundering, account falsification, and illegal political contributions. A court order that followed the release of a report from the Bank of Spain claimed BBVA used "accounts held in fiscal paradises, in offshore companies to maintain significant sums of money outside the annual accounts." The accounts were valued at $200 million and were allegedly used for diverse purposes, including the acquisition of minority stakes in Argentaria by Banco Bilbao prior to their eventual merger, and to hide losses from regulators. Garzon alleged the bank had used offshore funds "to make illicit payments of millions to Venezuela to the election campaign of a certain political leader -- the Venezuelan president Hugo Chavez -- through other accounts, secret accounts, accounts held by intermediaries, also in fiscal paradises, without declaring these payments." Chavez was forced out of office for two days in April by the Venezuelan military before being reinstated. The army’s action was spurred by Chavez’s dismissal of a number of workers from a state oil company and a subsequent strike that severely cut the volume of the country’s oil production. Syrian General Duba, Syrian dictator Hafez al-Assad, and heroin kingpin Rifaat al-Assad, all maintained multimillion dollar accounts at the Banco de Bilbao, which were used to launder drug and weapons trafficking proceeds.
Connection to drug syndicates and terrorist groups
|This section does not cite any references or sources. (February 2014)|
BBVA is known to engage in the business of and launder proceeds from the illicit drug trade originating from both the Middle Eastern and South American regions. Known associates include General Duba, Syrian dictator Hafez al-Assad, and heroin kingpin Rifaat al-Assad. In addition, BBVA maintains large commercial operations in Medellin and Bogota Columbia.
U.S. market presence
Top BBVA executives have commented that they dove into the U.S. retail-banking business at the worst possible time. It bought Compass Bancshares in early 2007 for $9.5 billion, just before the crisis hit. The business's diminished value prompted BBVA to take a roughly $1.3 billion write-down. In addition, BBVA Compass failed two FDIC audits into its operations and compliance with US banking laws. As a result, the Company was banned from making further acquisitions of financial institutions in the United States.
In 2005, BBVA Group acquired Laredo National Bank, based in Laredo, Texas. In 2006, it acquired Texas Regional Bancshares of McAllen, Texas, and State National Bancshares to become the fourth biggest bank in Texas after Wells Fargo, Bank of America and JPMorgan Chase.
On February 16, 2007, BBVA announced a definitive agreement to acquire Compass Bancshares, Inc., based in Birmingham, Alabama. BBVA plans to create the biggest bank in the Sun Belt by consolidating all those banks to create BBVA Compass. The deal was completed on Friday, September 7, 2007, when Compass Bancshares became a wholly owned subsidiary of BBVA. The transaction gave BBVA a substantial stakehold in the US banking sector by creating the second- largest financial institution in the Sun Belt region. BBVA plans to integrate banks previously acquired in the US with the current Compass technology and management platforms.
BBVA Compass is a Southeastern and Southwestern financial holding company with US$65 billion in assets and primarily located in Alabama, Arizona, California, Colorado, Florida, New Mexico, and Texas. With headquarters in the Daniel Building in downtown Birmingham, Alabama, BBVA Compass is one of the nation’s 25 largest banks, and was previously a member of the S&P 500 Index and the Dow Jones Select Dividend Index. Birmingham is also the location of all BBVA Compass's administrative and operational functions.
On August 21, 2009, in a transaction supervised by the Federal Deposit Insurance Corporation, BBVA Compass acquired the deposits and other core assets of the failed Guaranty Bank of Austin, Texas. The deal gives BBVA Compass a first-time presence in California and expands an existing presence in Texas.
In July 2012 BBVA Compass Bancshares agreed to pay $11.5 million to exit multidistrict litigation in Florida, becoming the latest bank to settle the suit accusing a slew of financial giants of tampering with customers’ debit card transactions to collect higher overdraft fees.
Move into Asia
In the year 2006, BBVA outbid Banco Santander Central Hispano and Bank of America, and formed an alliance with China CITIC Bank, one of the biggest banks in China by acquiring a stake in the bank and in CITIC International Financial Holdings Limited (CIFH), China Citic Group’s main international arm.
- The BBVA Group invested about €3 billion into China CITIC Bank and CITIC International Financial Holdings Limited, the biggest outlay by a Spanish company in mainland China and Hong Kong so far
- BBVA holds a 15% stake in China CITIC Bank (CNCB)
- It owns a 30% stake in CITIC International Financial Holdings (CIFH)
- The alliance between BBVA and CITIC covers the development of retail and corporate banking in mainland China and Hong Kong, one of the fastest growing markets in the world, via CNCB and/or CIFH
- BBVA and CIFH (CITIC Group’s international arm) conduct corporate banking, investment banking and treasury business across the Asia region
- BBVA has directors on CNCB’s and CIFG's boards
- CNCB, whose head office is in Beijing, has assets of €62.2 billion, 13,485 employees (as of June 2006) and 416 branches, distributed throughout mainland China
- CIFH, whose headquarters are in Hong Kong, has assets of €9.3 billion, 1,711 staff and 38 branches
Move Out Of Asia
Banco Bilbao Vizcaya Argentaria SA (BBVA) sold a third of its stake in China Citic Bank Corp for $1.3 billion to fund Basel III capital requirements. “Given the difficult environment in its home market, it appears prudent for BBVA to raise capital at this juncture.” said Sandy Mehta, chief executive officer of Value Investment Principals Ltd. in Hong Kong.
- BBVA laid off around a third of its global-markets staff in Asia in its first cutback in the region since expanding through its 2007 purchase of a stake in China Citic Bank Corp. The layoffs were part of global cutbacks by the bank that have reduced wholesale banking staff by 150.
- The cuts amount to 4 percent of BBVA's wholesale banking workforce globally and are a response to weakened demand.
- The latest manpower cuts reverse BBVA's earlier plan to expand investment banking in Latin America, Asia and the U.S. In 2010, its director of wholesale banking and asset management, Jose Barreiro, said BBVA would hire about 1,000 people in investment-banking, sales trading and asset management over a three-year period, bolstering its businesses like fixed income, commodities and merger advice, particularly in deals between Latin America and Asia.
Distressed asset disposals
November 28, 2012 – Spain’s BBVA has agreed to sell its Mexican pension fund to local buyers for $1.6bn, the latest in a line of local asset sales to improve its solvency ratios. Spanish banks are selling off assets as the government requires them to recognize more losses on real estate piled up on balance sheets during the country’s boom. BBVA had said it would consider selling pension funds in Chile, Colombia and Peru in addition to Mexico because there wasn’t a big enough overlap between those units and consumer banking in those countries.
January 23, 2012 – Spain's second-biggest bank BBVA indicated it had sold its 50 percent stake in auto insurer Direct Seguros to French insurer AXA for 49 million euros ($63 million). Banco Bilbao Vizcaya Argentaria will make capital gains of 27 million euros from the sale, said sources close to the deal.
June 28, 2012 – Spanish banking giant BBVA said it reached an agreement to sell its operations in Puerto Rico to Oriental Financial Group for $500 million in cash.
April 20, 2012 – USI Insurance Services, an insurance brokerage firm headquartered in Briarcliff Manor, N.Y., acquired certain assets of BBVA Compass Insurance Agency, a unit of BBVA Compass, a financial holding company headquartered in Birmingham, Ala. The acquired business assets generated $26.7 million in revenues in 2011. USI said the deal will strengthen its middle-market insurance brokerage business in the Southwest region
December 22, 2011 – Spanish bank BBVA took around 11 billion euros ($14.4 billion) in the European Central Bank's offer of cheap long-term cash, in order to cover 2012 debt maturities. Spain's second-biggest bank will not buy sovereign debt with the proceeds, the source said, due to the European banking regulator forcing banks to mark down their sovereign holdings. "BBVA has used the auction to cover its 2012 debt maturities, and not for carry-trade operations."
February 24, 2012 – Banco Bilbao Vizcaya Argentaria SA (BBVA), CaixaBank SA (CABK.MC) and Banca Civica SA (BCIV.MC) were among a slew of Spanish banks that participated in the European Central Bank's long-term refinancing operations, the lenders said Wednesday. BBVA, Spain's second-largest bank by market value, took a "similar amount" to the EUR11 billion it had borrowed in the first 3-year LTRO tender, a spokesman said. Much smaller Banca Civica took EUR6.1 billion, more than the EUR3.7 billion it had borrowed in the first tender in December, Chief Financial Officer Roberto Rey told a conference call.
BBVA profit hit by property reserves
Banco Bilbao Vizcaya Argentaria SA has indicated that third-quarter 2012 net profit tumbled 82% after the Spanish lender set aside billions of euros to cover losses on property assets in its crisis-struck home market. In Spain, banks are grappling with the fallout from the burst of a huge housing bubble five years ago, a fast-shrinking economy and difficult financing conditions. Bad debts in the sector recently topped 10% of total loans, and lending is shrinking at a record pace, denting profitability.
- BBVA Bancomer
- BBVA Banco Francés
- BBVA Banco Provincial
- BBVA Banco Continental
- BBVA Compass
- European Financial Services Roundtable
- Liga BBVA
- List of investors in Bernard L. Madoff Securities
- "Annual Results 2010" (PDF). BBVA. Retrieved 7 February 2011.
- „S&P Research Update: BBVA 'BBB-/A-3' Ratings Affirmed Despite Rising Economic Risk In Spain; Outlook Negative“, November 23, 2012
- „Moody’s Rating Report“, October 29, 2012
- „Fitch Downgrades Santander & BBVA to 'BBB+'/Negative Outlook on Sovereign Action“, June 12, 2012
- „DBRS Lowers BBVA to “A” After Downgrade of Spain to A (low), Trend Now Negative“, August 10, 2012
- "BBVA fusionará cuatro bancos para crear la mayor entidad del sur de EEUU" El Mundo online Spanish newspaper.
- "BBVA becomes NBA sponsor"
- "The Next Chapter". Simple.
- "BBVA acquires digital banking service pioneer Simple". Retrieved 20 February 2014.
|Wikimedia Commons has media related to BBVA.|
- Official website
- BBVA Foundation (in Spanish)
- Banco Bilbao Vizcaya Argentaria companies grouped at OpenCorporates
- Yahoo! - Banco Bilbao Vizcaya Argentaria, SA Company Profile