Banco Bilbao Vizcaya Argentaria (BBVA), the Spain-based bank, has raised its stake in China Citic Bank (CNCB) to 15%, having exercised its call option on a 4.93% shareholding in it. The transaction, deemed a strategic investment by BBVA, entails an outlay of approximately EUR1 billion, as the option strike price was HKD6.45 per share. The transaction enables BBVA to be in a position to pursue the opportunities offered by the Chinese market.
Under the umbrella of the strategic agreement in force between BBVA and CITIC, last January both entities signed a series of agreements, setting the foundations for their collaboration in the retail banking arena. As a first step in this direction, in May the parties agreed to jointly develop the car financing and private banking businesses.
In addition to these agreements, BBVA’s Hong Kong branch has permanent relations and businesses with China Citic Bank and Citic Ka Wah Bank that involve the following areas, treasury and global businesses and, corporate banking, trade finance and cash management. In addition, BBVA provides CITIC with advisory services in areas such as risk management, pension fund management and economic research, in addition to developing a training program in Spain for executives from the Chinese entity
The collaboration with CITIC also comes at a time when retail banking is registering healthy rates of growth in China. Furthermore, BBVA’s presence in Latin America represents a key competitive advantage for channeling trade flows between the region and Asia. BBVA is positioned relative to its international peers in terms of leveraging business opportunities deriving from the Asia-Latin America connection.
