The New Spanish Empire
Lazaroff, Leon, Global Finance
When Spain's second-largest bank, Banco Bilbao Vizcaya, landed its deal late in April to buy Brazil's fifth-largest, Banco Excel Economico, it was a major triumph. In the race among Spanish banks to become dominant players in Latin America, BBV has always seemed to lag behind its larger archrival, Banco Santander. In the past 22 months BBV has landed the biggest banks in Venezuela (Banco Provincial) and in Colombia (Banco Ganadero), and it merged two midsize Argentine banks to form Banco Frances, now the country's third-largest.
But BBV has so far been shut out of Chile, the Latin country furthest along with economic reforms, and it had consistently been frustrated in its attempts to invade Brazil, the largest and most important Latin economy by far. Just last September it failed to win the bidding for Banco do Credito Nacional, a midsize retail bank, which wound up in the hands of Bradesco, Brazil's biggest private commercial bank (see "The Bank to Beat in Brazil").
BBV finally has a Brazilian presence-but it's not going to stand pat. Santander, led by its investment banking arm, Santander Investment, has pieced together its $3.7 billion Latin empire (in all of the seven largest countries) by going after smaller operations with investment banking clout, then moving gradually into commercial banking. By contrast, "BBV wants to do mass retail banking," explains Carlos Gomez-Lopez, banking analyst with Credit Suisse First Boston. "That's what they know how to do."
Banco Excel, which is based in Sao Paulo and has only $10.5 billion in assets. is just a platform from which BBV is likely to launch other bids. Of the $6 billion it had allocated for Latin acquisitions through 20()0, it has so far invested about $3.5 billion-and is shelling out some $450 million for Excel, much of which will go into a recapitalization. Among BBV's most likely targets are Banespa, a Sao Paulo state bank with a big business in government bonds but little in the way of commercial operations, and Banco Real, a midsize commercial bank in Sao Paulo
Problem: pickings in Brazil are starting to look slim. And BBV must contend not only with Santander and the biggest Brazilian banks but also a number of other Spanish invaders, such as Banco Central Hispano,Argentaria, and Caja de Madrid. Argentaria in April paid Citibank $280 million for a 50% stake in Argentina's Grupo Siembra. Banco Central Hispano purchased a minority interest in Mexico's Grupo Financiero Bital (whose flagship is Bancointernacional), took a stake in the Luksic family's Banco Santiago in Chile, just raised Ptas160 billion ($1 billion) with a rights issue to buy Bolivia's largest bank, Banco Santa Cruz, and is now hunting in Argentina.
Also in the fray is Portugal's fourthlargest bank, Banco Espirito Santo e Comercial, which the wealthy Espirito Santo family regained control of in 1995 and which family patriarch Ricardo Espirito Santo Salgado is now turning into a powerhouse.Through a joint venture with French bank Credit Agricole and Monteiro Aranha, a Brazilian paperto-chemicals conglomerate, Espi[ito Santo last September acquired control of Brazilian retail bank Banco Boavista and merged it with the group's Banco InterAtlantico to form Brazil's 20thlargest bank If banks from Europe's Iberian peninsula have been particularly active in the past year and a half, they are only doing what bankers have done for centuries-following their biggest customers. (Indeed, Banco Santander was created 141 years ago specifically to finance trade between northern Spain, the country's traditional industrial belt, and Latin America.) For major Spanish companies-and, to a lesser degree, their Portuguese counterparts-the lands across the Atlantic have become what they originally represented 500 years ago: a vast frontier of great potential wealth.
Instead of gold, however, the new Iberian empire builders are seeking supplies of oil as well as new markets for telephone and airline service, electricity; cement, and any number of consumer products. …