BBVA Could Close 2,800 Branches in CEO's Long-Term Digital Shift

  • Branch count may shrink 74% to 1,000; CEO doesn't give timing
  • Torres says fintech startups erode `sticky' customer relations

Banco Bilbao Vizcaya Argentaria SA’s new chief executive officer, digital-banking specialist Carlos Torres, said the Spanish lender could ultimately close more than 2,800 branches in its home market as customers do more banking online and are lured away by technology startups.

“We have 3,800 branches in Spain -- does that make sense?” Torres, 50, said in an interview at the Money20/20 Europe financial technology conference in Copenhagen on Monday. “No. Can we reduce that? Yes.” He said the bank, the nation’s second-largest, will shrink its branch network continuously over the next few years, and may eventually manage just 1,000 outlets in Spain, “over an unspecified long-term time frame, many years ahead.”

Torres’s comments are another sign that digital automation and the smartphone are reducing the need to visit the bank branch. Last week, Banco Santander SA confirmed that it was planning the closure of 450 branches in Spain, while Citigroup Inc. said three out of 10 bank employees may lose their jobs in the next decade as digital innovation makes lending faster and more efficient.

Torres added that there is no current plan to close that many branches and that his remarks are rhetorical. BBVA’s branch network had been shrinking in the earlier part of this decade before the lender completed the purchase of nationalized Catalunya Banc SA last year, adding 760 branches.

Torres, who was named CEO in February after heading digital banking and being operating chief, also said financial technology threatens to cream off some of BBVA’s consumer business. The firm has acquired a slew of fintech startups in the last three years to head off this threat, paying 45 million pounds ($64 million) in November for a 29.5 percent stake in Atom Bank Plc, a U.K. online startup with no branches at all.

“Fintech startups are taking away the relationship that we own, which was a sticky relationship associated with the branch,” said Torres. “They are just eating it away, a product at a time, by offering superior value at a lower cost. We need to redefine the relationship with our customers.”

Bilbao-based BBVA, which has 750 billion euros ($854 billion) in assets, spends almost 1 billion euros annually on information technology. That’s close to what the bank earned in the fourth quarter last year.

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