UPDATE: BBVA Cuts Global Markets Staff In Asia

HONG KONG (Dow Jones)--Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA) has laid off around a third of its global-markets staff in Asia in its first cutback in the region since expanding via through a 2007 purchase of a stake in China Citic Bank Corp. (0998.HK).

The layoffs are part of global cutbacks by the bank that have reduced wholesale banking staff by 150, a company spokesman said Tuesday. The cuts amount to 4 percent of BBVA's wholesale banking workforce globally and are a response declining demand, he said.

The Madrid-listed lender has ramped up its presence in Asia in recent years by gradually increasing its investment in China's seventh largest bank by assets and opening branches in the region.

The bank laid off around 29 employees at its Singapore, Hong Kong and Japan offices in December, a person familiar with the situation said Tuesday.

Before the layoffs, the bank had about 85 staff in Asia working for its global markets team, including traders and structuring and related sales staff spanning the equities, fixed income and credit asset classes, the person said.

BBVA now owns 15% of China Citic Bank after stepping up its stake in two stages--through agreement in 2008 and by exercising an option in 2009.

Both lenders also plan to set up an auto-financing joint venture in China to tap potentially huge demand in the world's largest car market. This is waiting for regulatory approval.

BBVA said earlier it will make an initial investment of EUR54 million for a 35% stake in the planned joint venture which will have an initial presence in Beijing and Guangzhou.

The latest manpower cuts reverse BBVA's earlier plan to expand investment banking in Latin America, Asia and the U.S. In 2010, its director of wholesale banking and asset management, Jose Barreiro, said BBVA would hire about 1,000 people in investment-banking, sales trading and asset management over a three-year period, bolstering its businesses like fixed income, commodities and merger advice, particularly in deals between Latin America and Asia.

-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com

--Christopher Bjork at Madrid contributed to this report

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