Emerging Markets

Edited by Brian Caplen

Latin America: New moves by old conquistadors

Spain's leading banks are taking markedly different approaches to their Latin American expansion. Banco Bilbao Vizcaya (BBV) and Banco Santander, each of which lays claim to being Spain's biggest bank, are busy chasing returns on equity in Latin America well above domestic rates. And they both expect Latin American profits to contribute substantially to overall results. But their strategies for realizing these gains diverge sharply, with BBV going for joint ventures and Banco Santander looking for majority control or outright ownership.

BBV's director general Gonzalo Terreros says: "Acquiring minority stakes in banks or taking the joint venture route means we do not have to go it alone in these markets which, although they share a common language with Spain, may require quite different strategies that are better understood by local partners.

"This approach also helps to limit our exposure to any one market. It would have cost us double the $1.2 billion we've invested so far had we gone for majority control of each bank." Terreros estimates total investment of $1.8 billion to $2 billion will be required to cover BBV's initial Latin American ambitions.