Acquisition of the Guaranty bank operations
BBVA has become stronger in the United States after the acquisition on August 22, 2009 of certain assets and liabilities of the Guaranty Financial Group (Guaranty) from the Federal Deposit Insurance Corporation (FDIC). This investment offers an attractive financial return, an opportunity to strengthen BBVA’s United States banking franchise in the retail market (164 branches and 300,000 customers in Texas and California). At the same time, the agreement with the FDIC limits the credit risk to a minimum (the FDIC assumes 80% of the losses up to the threshold of $2,285 million and 95% of the losses above this threshold). In addition, the purchase of Guaranty provides the Group with $7,500 million in loan portfolio and $11,400 million in customer funds.
As well as complementing and pushing forward with the Group’s organic growth plans in the Sunbelt, the deal makes the Bank the fourth biggest in Texas, with an increase in its market share of deposits of 150 basis points to 6.4%, according to the latest available data. In the United States overall, BBVA lies in 15th place. It is present in seven states with 785 branches and manages $46,874 in deposits and $49,136 million in its loan book, as of December 31, 2009. The United States is expected to represent approximately 15% of the Group’s net attributable profit within 3 years.
BBVA strengthens its expansion in China
BBVA’s financial soundness has enabled it to strengthen its investments in the CITIC Group, one of the main industrial conglomerates in China. Specifically, on December 3, 2009, it exercised a call option (to be executed starting March 1, 2010) on an additional 4.93% of the share capital of China Citic Bank (CNCB), raising its holding to 15%. This is yet another step by BBVA in its consolidation in the economy with the biggest growth potential in the world: a market that represents 55% of the world’s population, 26% of global GDP and 60% of global growth in 2012-2020. And what is more, this is Asia, a region with clear competitive advantages with Latin America.
Asia is expected to represent approximately 8% of the Group’s net attributable profit within 3 years. BBVA is working towards this goal on various fronts. Among them is the recent signing of two joint ventures, one in auto finance and the other in private banking.