BBVA - Press Room

• BBVA, pioneer of this business in the region, holds a 23% market share
• The Group manages the pension funds of 12.4 million Latin Americans in seven countries
• In order strengthen the region's pension systems, the main challenge is to raise coverage
  

BBVA has reinforced its status as the Latin American leader in pension management, a business in which it is pioneer and currently present in seven countries. At the end of June 2008, the Group had a total of $63.49 billion of pension funds assets under its management (Aum), 9% more than the year earlier.  This volume strengthens BBVA's position as regional leader in this business, as it now manages 23% of all Latin American pension assets.

The BBVA Group manages 12.4 million people's pensions in seven Latin American countries through pension fund management companies, AFP (Administradoras de Fondos de Pensiones), making it the regional market leader by customers with an 18% share. BBVA ranks among the top three pension fund managers by market share in the countries in which it operates.

BBVA has pension fund management companies in seven Latin Americans countries: Bancomer in Mexico (16.5% market share of AuM); Consolidar in Argentina (18.2%); Horizonte in Colombia (16.0%); Horizonte in Peru (22.2%); Provida in Chile (30.9%); Previsión in Bolivia, (53.0%). It is also present in Ecuador, where, as in Chile and Bolivia, it tops the rankings.

In all, at the end of June 2008 the Group had $63.49 billion (€40.27 billion) of pension assets under management; a year-on-year increase of 9%.  This volume gives BBVA an overall regional market share of 23%, and firms up its position as the leading pension fund manager in Latin America.

"BBVA, pioneer of this business in the region, considers its position in the Latin American pension industry as part of a long-term strategy, both for its value creation ability and the opportunity to reach new customers," according to Eduardo Fuentes, head of BBVA's Americas Pensions and Insurance Unit. BBVA also considers it a key part of the development and consolidation of the private pension systems in the region, which it believes are an important contributing factor to the wellbeing of Latin American countries.

The challenge: to increase coverage

BBVA is driving pension system development in the region and actively participates in the design of the reforms currently being implemented in the various countries, offering advice and suggestions for improvements, and at the same time providing solutions for the sustainable development of pension systems.

BBVA sees the major challenges in the consolidation of Latin America's pension systems as improving the coverage and level of pensions, as well as administration costs, supplementing public and private sector pension schemes and adequately assessing risks.

"Although a number of important advances have been made in terms of coverage, this remains the central challenge. And this requires a joint strategy by the state and private sector to focus efforts on low-income groups and provide the incentives that will gradually allow new contributors to join the pension system," points out Eduardo Fuentes.

Long-term model

With the aim of evaluating the long-term performance of pension systems and contributing to the development of reforms, the BBVA Group has implemented a methodology for future analysis (up to 2050) based around a macro-actuarial model that considers three key factors.

First, demographics, to establish the age profile; second, the macroeconomic position of each country (e.g. levels of GDP, investment and productivity and formal employment demand) and, third, the parameters of the pension system, which determine the affiliation, contributions and benefits profile, taking into account the rates of contributions, fees and returns, the mortality tables and the calculation of benefits between different systems.

The pensions and insurance business in Latin America has proved to be a key part of the BBVA Group's activities, contributing 15.4% of customers and with a workforce of over 10,000 employees, 9% of the total.