The second-largest Spanish bank, BBVA, revealed its plans of launching a digital bank in Germany. The move comes as part of the bank’s plan to boost its customer numbers.
BBVA has enjoyed considerable success in Italy and wants to mirror that success in Germany to increase its customer acquisition rate.
The Expansion
BBVA had entered the Italian market back in 2021 with its digital model called BBVA Italia. This moved prove to be highly successful.
By the end of 2024, BBVA expects its customer base to growth to 600,000 in Italy. The German expansion comes after it had submitted a hostile takeover bid worth $13.2 billion for Sabadell.
BBVA has invested heavily in digital banking services and expansion in emerging markets, which includes Mexico.
One of the major rivals of the Spanish bank, Santander, has also embarked on a Latam expansion. Both institutions aim to expand their customer bases globally.
BBVA has been able to boost its income in emerging markets like Mexico, while struggling in more mature markets.
BBVA’s Country Manager for Spain, Peio Belausteguigoitia, said that they wanted to follow the same successful model in Germany as they had in the Italian market.
He added that they were planning on establishing a digital bank in Germany by 2025.
The Change
The digital international expansion of the bank comes at a time when there has been a change in its native market plans.
It is planning on offloading a total of 300 branches in Spain. In addition, BBVA’s acquisition of Sabadell is aimed at taking its business banking operations a step forward.
Sabadell enjoys a strong position in the market, as it caters to small and mid-sized businesses (SMBs). BBVA wants to add 80,000 SME customers by the end of this year.
However, Sabadell’s board turned down BBVA’s bid to acquire it and the Spanish government is also opposed to it.
This has prompted BBVA to attempt a direct acquisition through the shareholders of Sabadell.
The Speculation
There has been ongoing speculation that BBVA may decide to improve its bid to Sabadell. It is expected to do so with the sale of TSB, the UK high street bank.
It is unclear if the bank would still offload TSB in the event its Sabadell shareholder bid is successful. According to the Spanish banking giant, it wants a 50.01% minimum shareholder approval threshold.
But, it also revealed that it could take six to eight months for it to obtain regulatory approval before a formal bid can be submitted to shareholders.
Peio Belausteguigoitia spoke at a financial event and said that they were ‘confident’ about completing the takeover.
If it does not happen, the bank would focus on achieving organic growth in the country. BBVA has focused its attention on digital banking growth as part of the broader market trend.