Opportunity knocks for BBVA’s overseas units

José Barréiro Hernandez, head of global wholesale banking and asset �management at BBVA, Spain’s �second-biggest bank, does not want this year to end. Spain’s growing crop of entrepreneurs, Mexico’s expanding base of high net-worth individuals and the development of wealth �management services in Chile are all reasons for the softly spoken banker – he also oversees BBVA’s �private banking business following recent restructuring – to be content as 2007 comes to a close. Despite a rise of 7 per cent year-on-year in assets under management to ?81.4bn, BBVA’s money management and private banking businesses still only account for 17 per cent of the banking group’s ?450bn asset base. “We are not pretending to be a global heavyweight in institutional �markets – we’re too late and the market is too crowded – but we do see opportunities in offering an �integrated mutual fund, pension fund and wealth management business at a global level,” he says. The operating profit of the unit rose 19.3 per cent to ?118m in the first half 2007. Cange is good It was all-change in December 2006, when under the leadership of chief executive Francisco González, Mr Barréiro was given the remit to create a single global unit encompassing investment banking, asset �management and private banking. “The starting point was to form a unit with a single strategy cutting across all businesses, so we would have the same management and �business �philosophy here in Madrid as we do in our Mexico and Colombia offices,” says Mr Barréiro. Reporting to Mr Barréiro is BBVA’s head of private banking, Daniel de Fernando, who has driven a number of exciting developments in its structured products range. The most recent �offering, which came after a trip made by Mr de Fernando to Mexico – where BBVA owns the country’s largest bank, Bancomer – is referred to as a �structured entrepreneurial product. This fund offers diversification across assets such as property and includes �currency hedging. Around 60 investors seeking exposure to Latin America’s strong real estate story, and especially Mexico City’s, have bought into the fund at a minimum investment of ?2.5m each. Reign in Spain BBVA, with ?12bn in Spanish wealth assets under management, trails Santander and its private banking �subsidiary Banif (?30bn in total assets under management) by some margin, yet this has not stopped Mr Barréiro from declaring confidence in his �business gaining domestic market share. “Spain is a very attractive market for us, especially given its size and high growth potential.” Recent research found that Spain leads Europe in the growth of ‘new �fortunes’ – up 9 per cent in the space of a year – and the private banking market is worth an estimated ?220bn, �according to Madrid-based consultancy Tatum. The �economy’s decade-long bull-run, with the housing sector driving this, has been a contributing factor. Wealth management in Latin America, with the focus on Chile, Brazil and Colombia, holds significant �potential for BBVA’s private banking aspirations. Economic growth and a boom in commodities (coffee, copper and sugar) have helped to expand the number of clients in BBVA’s wealth servicing range. “Those with assets between $5m-$10m are [our] ideal �customers,” he says. Though recent credit conditions have injected nervousness and caution into money management (and severe �dislocation in the investment banking world) they nevertheless represent a source of opportunity for BBVA, says a confident Mr Barréiro. “We’re not �saying we anticipated the crisis, but we believe we know the credit quality of our customers very well. “From now on, the market needs to be less leveraged and with fewer �complex structured products,” he adds. “We have no exposure to toxic �structured products and our business model has been successfully �back-tested by market turbulence.” BBVA Europe has added 200 staff to its global markets, asset management and private banking business in 2007. “What has happened hasn’t changed our minds about the value Europe offers, or on expansion in 2008,” he says.