By David Román and Christopher Bjork 

MADRID-- Banco Bilbao Vizcaya Argentaria SA said Friday it is selling a 4.9% stake in China Citic Bank Corp. to local firm Xinhu Zhongbao, for HK$13.14 billion ($1.7 billion), as it looks to bolster its balance sheet.

BBVA said Friday's stake sale will dilute the bank's stake in Citic to 4.7% and bring net capital gains of around EUR400 million ($454.7 million), strengthening its financial cushion.

BBVA has been selling off assets in China in recent months, as it seeks to shore up its finances as European regulators toughen postcrisis capital requirements for banks. In October 2013, BBVA cut its stake in China Citic to just below 10%, and in December 2014, it announced the sale of its remaining stake in Citic International, a Hong Kong-based financial-services firm, for EUR845 million.

BBVA said Friday it would first sell the China Citic stake to UBS AG. UBS's London branch will then transfer the stake to Xinhu Zhongbao. BBVA said it expects the deal to be closed in the first quarter of this year.

While BBVA has been slimming its presence in China, it has been stepping up its investment in Turkey.

In November, BBVA issued EUR2 billion in shares to fund the purchase of an additional stake in a Turkish lender Turkiye Garanti Bankasi AS. BBVA raised its stake to 39.9% from 14.89%.

While Turkey's economic growth has eased recently, analysts still said they had expected BBVA to try to increase its investment in Garanti given the Turkish lender's solid performance in recent quarters.

The move was also a way for BBVA to further diversify its presence beyond Latin America. While the region is the biggest contributor to BBVA's net profit, weaker currencies in South American countries such as Venezuela and Argentina have chipped away at earnings in recent quarters.

BBVA, Spain's second-largest bank by market value, reports annual earnings results on Feb. 4.

Write to David Román at david.roman@wsj.com and Christopher Bjork at christopher.bjork@wsj.com

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