Banco Bilbao Vizcaya Argentaria Essay ⋆ Business Essay Examples ⋆ EssayEmpire

An international financial institution, headquartered in Spain and with operations in over 30 countries in Europe, Asia, North and Latin America, Banco Bilbao Vizcaya Argentaria (BBVA) offers personal banking, loans and mortgages, insurance, investment banking, asset management, and wholesale banking.

The bank was born from the merger of Banco Bilbao and Banco Vizcaya in 1988, which formed BBV, and the later merger of BBV with Argentaria in 1999. Banco Bilbao had started its international operations in the early 1900s, opening offices in Paris and London. During the 1960s and 1970s, the bank started its expansion in Latin America with the acquisition of banks in Panama and Puerto Rico. However, it was only after the merger with Banco Vizcaya that the institution began a large-scale expansion in Latin America through gradual acquisitions and partnerships with local banks. Through the 1990s, BBV established banking subsidiaries and pension funds in Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela.

BBV strategy coincided with the growth of other Spanish companies in Latin America, such as Banco Santander, Endesa, and Telefónica, a phenomenon dubbed by some journalists as La Reconquista. This expansion is a result of market deregulation both in Europe and Latin America, cultural factors stemming from the two continents’ former colonial relationships, and acquisition opportunities created by differences between the performances of banks in the two regions.

In 1999, when BBV merged with Argentaria, the companies unified the Spanish retail banks BBV, Argentaria, Banca Catalana, Banco del Comercio, and Banco de Alicante under the BBVA brand. However, some of the former BBV branches outside Spain have maintained their original names. Because of its strong international presence, BBVA has structured its operations around business areas that mainly reflect the bank’s geographic reach: business in Spain and Portugal, Mexico, South America, and the United States. Other business areas—global business, finance, risk, and innovation and development—support all markets and global customers’ activities. In addition to the business areas, BBVA comprises two other divisions: support and the chairman’s office.

To hedge against the volatility of the Latin American market, BBVA’s strategy has turned to the United States, Europe, and Asia. In the United States, the bank focuses on immigrant—particularly Latino— customers, and it is currently structured around five businesses: BBVA Bancomer USA specializes in first-generation immigrants in California; Bancomer Transfer Services (BTS) offers money transfers to Mexico and other Latin American countries, China, India, and the Philippines; and BBVA Finanzia USA provides consumer financial services and credit cards. BBVA’s other businesses in the United States include banking business in Texas—a state with a large Hispanic population—and Puerto Rico. In Asia, BBVA has partnered with Hong Kong–based CITIC to take a 5 percent stake in CITIC-China. BBVA also has branches in Japan and Singapore, and representatives in India, South Korea, and Taiwan.

The expansion of Spanish banks like BBVA has been the result of their strong investment in information technology (IT), and the early deregulation of the banking industry in Spain. BBVA’s expenditure in IT has allowed the bank to create detailed profiles of its customers and thus more accurately target clients for new products. BBVA expects to use this platform to become a “distribution-service company,” offering products in insurance, education, healthcare, and retirement. Moreover, this IT investment and the depth of its management experience after many years of strong competition in the Spanish market allows BBVA to improve the performance of the institutions it acquires at home and abroad. Information technology allows BBVA to coordinate the activities of subsidiaries in many countries in real time.

Lately, BBVA has benefited from national regulations that limited the exposure of Spanish banks to mortgage-backed securities. The Bank of Spain, which regulates all Spanish banks, created a series of requirements concerning leverage and capital reserves that are more stringent than the provisions of the Basel I Accord. Despite its good position in the global financial crisis, BBVA still faces challenging times in Spain as a result of the cooling of the local housing market. However, its international diversification should continue to provide a hedge against falls in any particular market.

Bibliography:

“Conquistadors on the Beach,” The Economist (2007);
Sánchez-Peinado, “The Internationalisation Process of Spanish Banks: Strategic Orientation after the Mergers,” European Business Review (2003);
Sebastián and C. Hernansanz, “The Spanish Banks’ Strategy in Latin America,” Société Universitaire Européenne de Recherches Financières (2000).

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