In a bid to deal with both the negatives and the positives, BBVA has been on the acquisition trail in the US in order to exploit its Mexican franchise, where its BBVA Bancomer bank is responsible for about 40% of Mexican remittances. Around six million Mexican families receive funds from relatives living abroad.
Buying Laredo National Bancshares in 2005, as well as Texas Regional Bancshares and State National Bancshares last month, represents the part-fulfilment of this strategy. The Spanish bank’s interest in buying up more local banks has not ceased, although the rise in the prices of local targets is making them less attractive.
Texas represents a great opportunity due to the cross-border nature of so much of its business. BBVA is using its 40% market share in the maquiladoras (export-only assembly plants) on the Mexican side of the border to target small and medium-sized firms. It is also targeting the cross-selling of products to Texas-based Mexicans who send money home. In addition, the bank is going up the value chain for second and third-generation Mexicans based in the US.
Although in theory Citigroup and Bank of America are competing in this sector, BBVA executives say that so far the US banks have not proved tough competitors because the Hispanic sector does not represent a big market for them, while for BBVA it is a fundamental part of the bank’s strategy.
