Spanish lender BBVA to acquire Catalunya Banc
23 July 2014
Spanish lender BBVA said yesterday its acquisition of bailed-out Catalunya Banc, announced on Monday, would add an average €300 million annually to its group profit from 2018, as it made a show of confidence in its recovering home market, Reuters reported.
BBVA, whose revenue comes mostly from overseas from regions such as Latin America, said on Monday, it was buying the Barcelona-based lender from the state for around €1.2 billion.
Its latest domestic purchase following the 2008 property market crash, which hobbled many smaller peers, will consolidate its presence in the country's wealthiest region and make it Spain's biggest lender by assets.
BBVA beat rival Santander to buy Catalunya Banc as also Caixabank, which is also based in the Catalonia region.
With Spain emerging from a six-year recession banks have been trying to increase revenues even though credit demand continued to be weak and troubled debts continue to run high.
This had led to a situation of heightening competition to lend to viable small companies and win over depositors - a pressure that could spark more consolidation in the banking sector, BBVA said.
According to Jaime Saenz de Tejada, the bank's finance director who spoke on a conference call, competition dynamics would probably generate further opportunities and was something to be analysed in the future.
According to The New York Times, Spain had taken an important step toward completing the cleanup of its banking sector with the sale of state-owned Catalunya Banc to BBVA for €1.19 billion, or $1.6 billion.
The sale, announced on Monday night by the state banking restructuring fund, follows a difficult and delayed auction process for Catalunya. Spain had to inject more public money the bank beyond initial expectations to attract bidders.
Catalunya, based in the northeastern region of Catalonia, was formed from the merger of three smaller savings banks, or cajas, that were hit severely by the 2008 bursting of Spain's construction bubble.
Crippled by bad property loans, Catalunya had to be nationalised and ended up receiving €12 billion of rescue money under a broader bailout led by Bankia, the giant lender whose troubles saw Spain end up in a banking crisis two years ago.
After gaining control of Bankia, the government was forced to negotiate a European bank bailout in June 2012 to keep Bankia and others afloat, but Spain ended up using only €41 billion of the available €100 billion of European rescue money.