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BBVA doubles its market share in Catalonia
The BBVA Group will substantially increase its presence in Catalonia by incorporating Unnim Banc after being chosen for this purpose in an auction by Spain’s Fund for Orderly Bank Restructuring, known as FROB. BBVA thus expands in one of the most attractive markets in Spain through an operation with no material impact on its liquidity or capital, and with the risks contained. The transaction will make a positive contribution to BBVA earnings starting in 2014, with a return of more than 20%.
Unnim Banc has ¤29 billion in assets and one million customers with a high degree of loyalty (63% of them only bank with Unnim Banc). Its activities are centered in Catalonia, which is one of the most attractive and dynamic markets in Spain. The combination of Unnim Banc and BBVA’s existing operations in Catalonia will create the second biggest bank in the region by loans and the third by deposits. Furthermore, Unnim Banc’s traditional stronghold (the Vallés) is home to the biggest business concentration in Catalonia, with a focus on exports and technology.
About 92% of Unnim Banc’s branches are located in Catalonia, its natural market. According to BBVA Research this region accounts for 19% of the Spanish economy, 16% of the population, 23% of the tourism industry and 25% of Spain’s exports.
“This operation is good for BBVA and good for Unnim,” BBVA Chairman Francisco González said. “Once again BBVA is demonstrating its confidence in Catalonia’s future and the integration will certainly help to strengthen the Spanish financial system,” he added.
Unnim Banc has ¤17.5 billion in loans and 561 branches. Its incorporation in BBVA, one of Spain's soundest banking groups, puts an end to the uncertainty surrounding its future. BBVA’s proven efficiency and productivity will be of benefit to Unnim Banc.
Juan Asúa, head of BBVA Spain, explained: “This is a positive operation for Unnim because it will become part of a large, solvent group with a global reach and considerable experience in this type of transactions. And it’s also positive for BBVA because it increases our presence and business activity in Catalonia, which is an important market of great strategic value."
The transaction includes an asset protection scheme financed by the Deposit Guarantee Fund. It covers up to 80% of possible losses from Unnim Banc’s real estate exposure (¤5.5 billion net of provisions). BBVA is acquiring Unnim Banc at no cost and without the need for mechanisms to facilitate liquidity.
BBVA expects to close the operation in the second half of this year and complete the integration in the first half of 2013. The transaction will have a positive impact on BBVA earnings starting in 2014 with an estimated profit for Unnim Banc of more than ¤100 million for that year. The net present value of the estimated synergies amounts to ¤800 million. The transaction implies a return on invested capital for BBVA of more than 20% in 2014.
BBVA is a customer-centric global financial services group founded in 1857. The Group has a solid position in Spain, it is the largest financial institution in Mexico and it has leading franchises in South America and the Sunbelt Region of the United States. Its diversified business is biased to high-growth markets and it relies on technology as a key sustainable competitive advantage. BBVA ranks among the leading Euro zone banks in terms of ROE and efficiency. Corporate responsibility is at the core of its business model. BBVA fosters financial education and inclusion, and supports scientific research and culture. It operates with the highest integrity, a long-term vision and applies the best practices. The Group is present in the main sustainability indexes.