Pedro Luis Uriarte, chief executive at Spain's Banco Bilbao Vizcaya Argentaria, has spearheaded a $6.5 billion investment drive into Latin America over the past six years. The invasion has been dubbed the "reconquest" by the Latin press. Now Uriarte's got his hands on Aztec gold. On Mar. 9, BBVA snapped up a 30% stake along with operating control of Grupo Financiero Bancomer, Mexico's No. 2 financial group, for $1.75 billion. The deal makes BBVA the No. 1 bank in Latin America with a 9.1% share of total deposits, ahead of Spanish arch rival Banco Santander Central Hispano.
Yet Uriarte has more than Latin America in his sights. As he shuttled between Madrid in Mexico City to put the finishing touches on the Bancomer purchase, his team in Europe landed a controlling stake in Dublin-based Internet bank first-e Group PLC for $675 million. The twin deals give the Madrid bank the critical mass it has sought in Latin America and a platform to pioneer e-banking worldwide. "We will define a new model of virtual banking along with a new model of branch networks," says Uriarte.
BBVA's clicks-and-bricks strategy could pay big dividends. While other European institutions, notably Germany's Deutsche Bank and its new partner Dresdner Bank, are beating a retreat from retail banking, BBVA sees an increasingly efficient retail network as its ticket to global growth. In Spain where BBVA is the No. 2 with a 20% share of bank deposits, Uriarte has transformed 730 traditional bank branches into highly profitable "mini-branches." These outlets sell a slew of financial products with an average of only 5.5 employees per branch. Uriarte's next goal is to squeeze costs a further 5% by completely automating back-office operations and boosting sales through the mini-branches by 25%. By 2002, he aims to nearly double BBVA's net profit, to $3.4 billion.
Uriarte also wants to accelerate the overhaul of BBVA's network in Latin America. That process is already underway at BBV-Probursa, the Spanish bank's existing Mexican property, where the number of employees per bank branch is down to 11, well below the 17 that is the average for most Mexican banks. At Bancomer, which eventually will be merged with Probursa, Uriarte wants to trim costs by as much as 12% within 18 months. "They're getting a really good bank," says Laurence Madsen, Latin American bank analyst at Warburg Dillon Read in New York. Yet some analysts have voiced concerns that BBVA's increased exposure to Latin America--a region plagued by financial volatility--could prove a liability.
DIVERSIFIED. But Uriarte is not putting all his eggs in one basket. He is courting online customers around the world through unofirst. That's the company formed by the merger of Uno-e, the online financial services unit co-founded by BBVA and Terra Networks (the Net arm of Spanish telecom giant Telefonica), with first-e. Unofirst already has an e-bank in the U.K. and plans to roll out operations to Spain, Germany, Brazil, Chile, Mexico, and Argentina. Asia and the U.S. will be next.
It all comes down to first mover advantage. "If we don't do it, someone else will," says Manuel Galatas, executive chairman of unofirst. He's right. Banco Santander is negotiating a similar e-commerce alliance with British telecom powerhouse Vodafone AirTouch PLC and recently grabbed a majority stake in Patagon.com, a Latin American online brokerage. In Brazil, local banks are leaders in online banking. Galatas' goal is to export to Latin America and elsewhere the concept of a "financial supermarket through the Web." Net penetration in Latin America is just 5% so far, but it is growing fast. For those without their own Net connection, unofirst plans to set up public "e-boutiques," terminals where users can log on to access their bank accounts.
It's a bold move. But if Uriarte's execution in Internet banking matches his track record in Latin America, his Spanish bank will soon be scoring victories in virtual markets too.