BBVA's Ybarra Sees Technology, Mexico As Key Investments

By Robert Duncan

17 April 2000

Dow Jones International News

Banco Bilbao Vizcaya Argentaria SA (BBV) Monday said recent investments in Mexico and in the technology sector are two of the group's most important operations.

BBVA chairman Emilio Ybarra told the bank's annual general shareholders meeting that the bank was pursuing projects in these two areas to exploit growth opportunities in both the "old" and "new" economies.

"The first (project), the merger with our bank in Mexico with Bancomer, will allow us to become the number one banking entity in that country," Ybarra said. "The second project refers to all that has to do with the communication revolution and the development of information technology.

"With this capital we are going to grow simultaneously in the traditional and the so-called new economy," he said.

BBVA unit Grupo Financiero BBV-Probursa SA (E.GFP) is merging with Mexico's number-two lender, Grupo Financiero Bancomer SA (GFNSY). The merged Grupo Financiero BBVA-Bancomer will have $36.6 billion in assets, a $27 billion deposit base and around 2,000 branches in the country. The deal also meets BBVA's long-standing aim of raising its market share above 10% in key Latin American countries.

The operation includes a $1.2 billion capital injection, half to come from BBVA itself and half from its Mexican unit, BBV-Probursa. BBVA's stake in the new group will be of about 30%, and it will assume managerial control of the company.

"We are going to grow in a banking system, such as the Mexican one, where the performance of that market and the application of our banking model, will assure rates of growth much higher than what we could obtain in Spain," Ybarra said.

Earlier this year, BBVA also announced a strategic alliance with Telefonica SA (TEF) and said they would create 14 joint ventures, mostly centered around the Internet and other new technologies.

Most recently, BBVA said it will invest EUR3.6 billion in 50 e-commerce programs as part of its three-year, "Proyecto E-VOLUCION," and it created with Spanish Internet company Terra Networks SA (TRRA) and the U.K. Internet company First-e the first global Internet banking group, Uno First Group.

BBVA said its Latin American units will put up the funds for the infrastructure costs related to starting up Uno First in their respective countries.

"And we are also going to grow in everything related to the virtual world, which - rather than being seen as a threat - we see as an excellent opportunity; an opportunity to strengthen our position as a leading competitor in our markets of origin, and also to penetrate into new segments and businesses," Ybarra said.

He also hinted at future consolidation when he told shareholders that once the Mexican operation is completed, "from now on, there won't be a need for such high levels of investment."

BBVA shareholders approved Monday a 7.5% capital increase, or around 220 million shares, to raise EUR3 billion-EUR3.6 billion for financing the above mentioned investments.

Shareholders also approved two stock option plans for employees and 237 executives.

BBVA executives qualify for a total of 15,476,500 share-options; 10 million shares will be reserved for the rest of the employees at a price of EUR12.02 per share.

BBVA shares closed 2.9% lower, or down EUR0.44, Monday at EUR15.