The most important transactions carried out by the different CIB departments and the highlights of the second quarter of 2012 are summarized below:
In Corporate Finance, BBVA continues to be a benchmark as a provider of cross-border transaction advisory services. Two deals were closed in Europe: the sale of the Spanish company OHL Inima to the Korean company GS Engineering & Construction and the acquisition by the Portuguese company Sogrape of the Spanish Bodegas Lan, where BBVA acted as advisor. Worth mentioning in the American continent is the financial advice provided to the Mexican group ICA for the acquisition of the Peruvian construction company San Martín, as well as the advice provided to the US company Colfax for the acquisition of the Peruvian Soldex.
In Equity Capital Markets in Spain, BBVA has acted as agent bank in the scrip dividends of Repsol, Gas Natural and Telefónica. In Europe, the Group has participated in the share capital increase with subscription rights of Banco Espirito Santo. Finally, in Mexico it has acted as a lead broker in the senior trust bond public offering of MRP CKDs and as co-leader in the initial public offering (IPO) of Alpek. Also worth mentioning is the Bank’s role as bookrunner in the share capital increase of the Chilean company Cencosud.
Project Finance is the market leader in Spain and Mexico and holds second place in Europe and Latin America. In Spain, it is very actively involved in the renewable energy, railroad and highway sectors. In the rest of Europe, of particular note is the financing of the Nimes-Montpellier French high-speed railroad line. In Latin America, the Oaxaca II (wind power) deal was closed in Mexico, as was the Bicentennial Pipeline (Oil & Gas) project in Colombia. In the United States it has supported QIC in its winning bid for the Ohio State parking public tender, and closed the financing for the Presidio Parkway in California.
The Structured Trade Finance team continues to support the export activity of BBVA customers globally. Various transactions have been carried out with Angola and Panama for the financing of hospital equipment, and with Venezuela for the financing of the equipment for line 1 of the Caracas Metro. In Asia, a guarantee line was arranged for the Medina-Mecca high-speed train.
Corporate Lending maintains a position of leadership in Spain and Latin America. In the United States, the BBVA Compass franchise has been boosted and its position has been consolidated with major acquisition financing transactions. In South America, it has facilitated syndicated and bilateral local-currency loans. Finally, performance in financial guarantees was also positive.
Of particular note in Global Transactional Banking are the synergies between the United States and Mexico teams, who have arranged cross-border and cross-sell transactions, thus boosting BBVA’s international transactionality. The most significant transactions include the following: in Peru, the issue of letters of guarantee for the financing of the South Andean Gas Pipeline project, the most important in the country’s recent history; in Chile, winning the tender for transactional payment services for the leading telephone company; and in Spain, conclusion of two new non-recourse commercial paper discount lines and the issue of guarantees for over €100m. In addition, the Bank was awarded the management of a virtual online billing POS terminal by a leading transportation company (also in Spain). Finally, Institutional Custody was recognized as the World’s Best Sub-Custodian Bank 2012 in Spain by Global Finance magazine, positioning BBVA as a benchmark Bank in the provision of custody services.
In Global Markets, customer revenue remained stable in the first half of the year, despite the complex economic and financial situation. Including both revenue from franchise and leveraging, gross income stood at €574m, down 8.7% year-on-year. In Spain, BBVA obtained top recognition in the Spanish derivative market from Risk España magazine, and was chosen as second-best equity house in Spain and Portugal by Extel magazine. In addition, revenue from SMEs and retail customers grew more than 50.0% compared to the figure recorded in the first half of 2011. Interest-rate products (15.0% year-on-year increase) and exchange-rate products (which have doubled the amount obtained in the same period last year) were particularly outstanding. Once again, BBVA continues to be the unquestionable leader in equity brokerage, with a market share of 16.0% as of June 2012, 8.7 percentage points above its nearest competitor.
In Eurasia, BBVA holds ninth place in the Pan-European ranking of equity derivatives (according to Extel). In addition, the Milan dealing room has posted a 4-fold increase on the earnings reported for the first half of last year. This profit was obtained in an environment characterized by high volatility, market tension and the aforementioned downgrades of Spain’s sovereign rating between April and June.
In Mexico, Global Markets has taken advantage of the strength of the local economy, and in the first half of 2012 increased its revenue 97.1% compared to the same period in 2011. This excellent performance has resulted in BBVA being chosen Best Distributor Sales by Structured Retail Products magazine. All the different products have posted increases of over 50% compared to the first half of the previous year. The highest volumes have continued to come from interest-rate and exchange-rate products.
In South America, Global Markets revenue increased 13.8% on the first half of 2011. BBVA was selected Best Overall Provider in Latin America by Structured Retail Products. Interest-rate products, loans and exchange-rate products have all grown more than 20%. By country, Argentina, Colombia, Peru and Venezuela have increased their earnings. In addition, customer revenue in Peru, Argentina and Venezuela has posted double-digit growth.
Finally, in the United States, the most notable aspect has been the increase in interest-rate revenue, which grew 90.2% over the last twelve months. As a result, gross income in the country’s markets unit has grown 13.1% over the same period. BBVA continues to implement its business strategy and is leveraging on the Compass distribution network.