Uriarte's Latin springboard

September 01, 1998

Pedro Luis Uriarte's timing on emerging markets seemed brilliant. The CEO of Banco Bilbao Vizcaya, Spain's second largest bank by assets, scaled back in Asia and Russia ahead of the crises. But will his luck hold in Latin America? In the last three years BBV has invested $3 billion buying stakes in banks and financial institutions in 12 Latin countries with major deals in Brazil and Chile sown up recently. Uriarte, whose mantra is shareholder value, aims to compensate for lower margins in Europe by reaping higher returns in Latin America. If he succeeds, BBV may rank among the world's top 10 banks by market capitalization. But the risks are high. Since the emerging markets storm blew up, BBV's share price has fallen 25% and rating agencies have put it under review for a downgrade. In an interview with Brian Caplen, Uriarte is adamant that the bank's Latin earnings will be unaffected. He speaks about the bank's acquisition strategy in Europe, his management style, his relationship with his chairman, Emilio Ybarra, and his wish to retire before the mandatory age of 62 Uriarte is 55 and became CEO in 1994. He has worked at the bank since 1974 taking a four-year break in the early 1980s to be minister of economy and finance for the Basque regional government.

Why did you decide to pull back from Japan?

We closed the operation in Japan immediately after the IMF meeting in Hong Kong last year, for two reasons: we had no competitive advantage in Japan; second, we were very worried about the news we heard at the IMF about Malaysia [the public row between Malaysian prime minister Mahathir Mohamad and international investor George Soros] and that gave us a sense of uncertainty. We decided to go home very rapidly [after that].

We also closed during 1997 some lines to Korean banks. Then we met with different executives of other international banks and asked them about the situation in Korea, and everyone said it was very good. The chairman [Emilio Ybarra] and I had the uncomfortable impression that we had made a mistake. We met at the IMF with the people who had taken the decision asking them why they took took such a tough decision because the Korean situation was very good, according to such and such international bank. We reviewed the process but decided to maintain our opinion and cut some Korean bank lines. Due to this we are one of the few, and perhaps the only, big international bank with no operations in Japan, in south-east Asia or in Russia.

Uriarte's Latin springboard

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