By David Román in Madrid and Enda Curran in Hong Kong
Banco Bilbao Vizcaya Argentaria SA has agreed to sell a stake in
a Hong Kong-based financial-services firm for EUR845 million ($1.03
billion), a move that will help bolster the balance sheet of
Spain's second-largest bank.
BBVA said in a regulatory filing on Tuesday that it is selling a
29.7% stake in Citic International Financial Holdings Ltd. to the
firm's parent, China Citic Bank Corp., already the owner of the
remaining 70.3% stake.
BBVA has long been a partner of China Citic, but the Spanish
bank has lowered its exposure to China in recent years. In October
2013, BBVA cut its stake in China Citic to just below 10%, as it
sought to shore up its finances which were hit hard by the collapse
of Spain's property market during the eurozone's financial
crisis.
Like other foreign banks, BBVA has found it difficult to expand
in China beyond the ownership of minority stakes in local lenders,
and is facing tougher global capital rules that make it expensive
to hold those stakes. That has made investments there disposable to
pay for expansion plans elsewhere.
In the case of BBVA, Turkey has emerged as a key target after
the Spanish lender said last month it will pay EUR1.99 billion to
acquire additional shares in Turkiye Garanti Bankasi AS, Turkey's
largest lender by market value--a move that represents a
doubling-down of a bet on Turkish economic growth first made when
BBVA bought an initial Garanti stake in 2010.
BBVA is anticipating that Turkey may help as another market for
growth beyond its stronghold in Latin America and Spain, its home
country but an overleveraged developed economy where lending
opportunities are scarce.
In October, BBVA said net loans in Spain were down 7% from the
first nine months of this year compared with a year earlier, as the
rate at which borrowers pay down existing loans continues to
outpace the rate at which they take out new loans.
For China Citic, the deal represents an opportunity to gain full
control of Citic International amid an intense portfolio reshuffle.
In recent months, the bank has mapped out plans to raise up to 11.9
billion yuan ($1.9 billion) from placing up to 2.46 billion shares
to state-owned China National Tobacco Corp., the country's largest
tobacco maker.
China Citic, which is 67% owned by Citic Ltd., said it sold the
stake to boost its capital base. At the end of September, China
Citic had a tier-one capital ratio of 9.35%. Beijing is pushing
banks to boost tier-one capital adequacy ratios to at least 9.5% at
big banks and 8.5% at smaller ones.
Write to David Román at david.roman@wsj.com and Enda Curran at
enda.curran@wsj.com
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