BBVA Becomes 15th Biggest US Bank In Deposits After Guaranty Purchase
August 22 2009 - 6:38AM
Dow Jones News
BBVA's (BBV) U.S. Compass unit, after purchasing $12 billion in
assets from Guaranty Bank in Texas, will become the No. 4 bank in
terms of deposits in that state, and the No. 15 bank in terms of
deposits in the U.S., the Spanish bank said in a release
Saturday.
BBVA said it is assuming $11.5 billion in deposits from
Guaranty, while the U.S. Federal Deposit Insurance Corporation
agreed to absorb potential losses on $11 billion in that portfolio
after it had decided to shut down the ailing bank.
After the purchase of the Guaranty assets, BBVA Compass will
incorporate 164 new branches with 300,000 clients. That will boost
the number of its U.S. branches to 750 across seven states in the
southern U.S. from Florida to California, a state in which BBVA
Compass will have 58 branches.
In Texas, BBVA Compass will increase its market share in
deposits to 6.4% from 4.9% before the purchase, BBVA said. BBVA
after the acquisition will have about $49 billion in deposits in
the U.S.
Thanks to its risk-averse culture, BBVA has weathered the global
financial crisis reasonably well, putting it in position to pick up
pieces of banks that won't survive. Largely avoiding trade in
complex derivatives and toxic instruments, BBVA stuck to the more
solid business of taking deposits and making loans.
Also, Spain forced banks to build up capital cushions during the
years of plenty. That has helped them ride out the crisis so far
with little government aid.
"The successful completion of the acquisition of Guaranty is a
convincing proof of the solidity and stability of BBVA Compass,"
Jose Maria Garcia Meyer, country manager of BBVA USA and chairman
of BBVA Compass, is quoted as saying in the release.
BBVA has signed a loss sharing agreement with the FDIC under
which FDIC will assume the first 80% of the first $2.3 billion of
possible losses, and 95% of possible losses above that limit.
Compass Chief Executive Manolo Sanchez said the bank hopes to
complete the integration of Guaranty Bank into its operational
systems and platforms by early 2010.
-By Bernd Radowitz, Dow Jones Newswires, +34-618 526 915,
djmadrid@dowjones.com.