Banco Bilbao Vizcaya (BBV) and Argentaria announced on October 19 that they are to merge creating Spain’s largest pensions asset management group with almost e7bn in assets.
The new group called Banco Bilbao Vizcaya Argentaria (BBVA) hurdles its nearest rival BSCH – the merger in March this year of Banco Santander and Banco Central Hispano, and according to figures from Inverco, the Spanish funds regulator, the BBVA group’s pensions assets under management will now total approximately e6,909m compared to BSCH’s figure of e4,176m.
In company pension scheme assets, BBVA also becomes the largest market player with combined assets of e3,316, leapfrogging the giant Fonditel pension scheme.
BBVA now controls 20% of Spain’s investment funds and almost 25% of pension fund money in the Spanish market.
Combined pension fund business in Latin America, for over 10m customers, represent assets worth Pts3.1trn.
Dubbed a merger between equals, the merger involves the absorption of Argentaria into the BBV structure with what the group claims is the aim of forging the banking leader in Spain and Latin America alongside the desire of becoming one of the most important banking groups in Europe.
The merger will involve a new culture integration between the groups and cross selling of products. However, Luis Buey Villahoz, director general at BBV Consultores, says it is a little early and too complicated to know what is happening.
“The management here is currently meeting with the management of Argentaria to decide what will happen. I think it will completely change the investment approach as well the overall game and the players in the Spanish market.
It’s incredible in the same week that the Spanish investment rules appear this merger happens. Spain is always like this. We go for three years with nothing and then everything goes off.”
Juan Carlos Martinez, at consultant William Mercer in Madrid, says: “Our conclusion is that this merger is going to lead to an even higher concentration of the Spanish market between the two big banks – BSCH and the new BBV Argentaria merger – BBVA.
In my personal view the next step will probably be war in the pursuit of each other’s business.”
Martinez points out that BSCH holds a 14% portion of the Spanish pensions market and that the new BBVA operation will have 24.4%.
“This is a high market concentration to have for two banks. I believe the next step will eventually be a merger with a big German bank or something along these lines in order to consolidate and become a future European bank.
Rumours about this merger had certainly been flying about for about eight months in the Spanish market.”
Martinez also feels the merger could have a noticeable effect on the way asset management is carried out in Spain.
“The fight to be number one in Spain will mean an increase in professionalism in my opinion.
Argentaria has a strong asset management approach on the pensions side and I think that is going to be good for BBV. Now the big players on the pensions side will need to get a clear advantage over the other, so they will need to do their best.” Hugh Wheelan