Escotet Joins Rich Latin Americans Investing in Spanish Banks

Venezuelan billionaire Juan Carlos Escotet is building a bank in the country his father left in 1947, as rich Latin Americans invest in Spanish lenders.

The Banesco Group, a Venezuelan bank controlled by Escotet, 54, made a winning 1 billion-euro ($1.37 billion) bid this week for NCG Banco SA, a lender nationalized under a 41 billion-euro banking bailout sought by Spain last year. Banco Sabadell SA raised 1.38 billion euros in September from investors including the Colombian billionaire Jaime Gilinski, and Mexican investors with Spanish roots this month agreed to buy a 450 million-euro stake in Banco Popular Espanol SA.

After Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s biggest banks, led about 34 billion euros of acquisitions in Latin America between 1990 and 2008, tycoons from the region have been stepping up financial investments in the land of many of their forebears. A Spanish real estate crash that forced lenders to absorb 87 billion euros of impairment charges in 2012 opened investment opportunities for companies and wealthy families from Latin America to push into Europe, said Mauro Guillen, a professor of management and international relations at the Wharton School of the University of Pennsylvania.

“It’s a way for Latin American investors to diversify their business and get a foothold in Europe,” said Guillen, whose book “The Rise of Spanish Multinationals” was published in 2005. “It’s good news.”

Banking Empire

Escotet is the son of Spanish immigrants from the regions of Leon and Asturias and his father left Spain to seek better economic opportunities in Venezuela, a spokesman for Banesco’s Spanish unit, Banco Etcheverria, said in a phone interview. Escotet got his start as an errand boy at a Venezuelan bank in 1976, according to a 2011 interview in the magazine Mercado de Republica Dominicana.

As well as owning Venezuelan lender Banesco Banco Universal, Escotet’s empire stretches across the Caribbean to Miami and Panama -- and now to Spain. He set up a holding company based in Madrid in 2007 and five years later bought Banco Etcheverria, a bank founded in the Spanish region of Galicia in 1717.

Buying NCG Banco will enable him to add 672 branches to the 117 Banesco has through the Banco Etcheverria network. With 57 billion euros of assets, NCG is bigger than his Venezuelan bank, which holds about $33 billion of assets, according to Caracas-based Softline Consultores.

Beyond Frontiers

“We have an industry that has gone beyond its own frontiers and we therefore can perfectly see that other international competitors come in,” said Pedro Pablo Villasante, general secretary of the Spanish Banking Association, in a news conference yesterday.

Banco Popular said this month that the family of Antonio del Valle, who owns Mexico’s Grupo Financiero Ve Por Mas, and other investors from the country would buy 6 percent of the bank as it sought to boost capital before stress tests next year. Del Valle, whose family hails from the northern Spanish region of Asturias, has a net worth valued at $5.2 billion, according to data compiled by Bloomberg.

Santander and BBVA joined other Spanish firms since the 1990s, including Telefonica SA and power company Iberdrola, which made expanding in Latin America a cornerstone of their strategy of diversifying beyond Spain.

Some economists labelled the process a “reconquista,” using the Spanish word for reconquest, to describe the Spanish corporate drive into former colonies in Latin America. BBVA relies on its Mexican and South American banks to provide about half of its revenue, while Brazil, Chile and Mexico provide 41 percent of Santander’s profits.

Plan B

To talk about a reverse Latin American “conquista” in Spain would be to overstate the scale of their investment so far, said Guillen.

Even so, Spain, where asset prices have slumped, offers Latin American investors the chance to diversify their businesses and provide protection against potential political or economic risks in their home countries, said Guillen. “It’s all about having a plan B.”

“It’s a natural step for the Latin Americans to take because Spain is a way for them to invest in Europe,” said Luis Garicano, a professor of economics and strategy at the London School of Economics. “We’ll see more of this.”