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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