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BBVA Compass pushes Sun Belt presence, CEO says

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One of America’s 20 largest banks has expanded its Sun Belt presence by formally opening its first San Diego location, a wealth management and commercial banking office in La Jolla.

Spanish-banking giant BBVA Compass has established itself in what it perceives as the country’s primary growth markets, according to President and CEO Manolo Sánchez.

The La Jolla office’s grand opening this week followed last year’s merger with BBVA Bancomer in Southern California. Employees have been in the UTC-area, wealth management and commercial banking-focused location since fall.

BBVA, one of the nation's 20 largest based on deposit market share, has pushed its presence in the Sun Belt because demographics and population flows make it home to the nation’s most attractive markets, according to Sánchez.

“The economies are well diversified, particularly California and Texas, as top exporting states in the nation, with technology, health care, biotech, and great university systems,” he said.

The San Diego market specifically, he said, will allow the bank to maintain its presence in the cross-border banking sector.

Along with the Sun Belt, BBVA is strongest in Spain, Mexico and Latin America. Its merger with BBVA Bancomer last year strengthened its relationship and product offerings for Hispanic customers looking to buy a home or invest in the United States, or for U.S. residents to purchase a home or vacation home in Mexico.

“There’s a lot of synergies with the Mexican economy that we’re able to exploit because we provide services across the border,” Sánchez said.

San Diego’s economy is coming back slowly, he said.

The bank’s economic research arm projects 2 percent growth in total nonfarm employment for the year, compared to 1.4 percent growth in California and 1 percent growth in the country as a whole.

It also expects a 51.2 percent annual increase in building permits, compared to declines of 11 percent and 15.3 percent in the state and nation, respectively.

It also cited the region’s comparatively low concentration of bank branches per capita in the area, coinciding with elevated net worth and deposits per capita, as one of the market’s strengths.

A high share of over-leveraged homeowners, creating a fragile-if-stabilizing housing market, is the market’s primary weakness, according to the BBVA economic team.

Sánchez said purchases of U.S. homes by Mexican nationals are on the rise, a trend that’s accelerated by security questions there and that is more pronounced during Mexican election years. Citing the bank’s first-time homebuyer program, he said BBVA intends to be active in San Diego’s housing market.

“There’s a lot of refinance opportunity right now,” he said. “It’s a great time to lend.”

He rejected the oft-heard notion that borrowing standards are unrealistically high right now.

“In the boom years, underwriting standards loosened, now they’ve tightened,” he said. “I think we’re all ready to make loans, and our interest is to be a responsible lender, to provide structure and confidence to make the loan successful over time, so it isn’t a noose around someone’s neck.”

BBVA is also one of few U.S. banks not to have accepted any bailout funds from the Troubled Asset Relief Program.

Sánchez said that has allowed the bank to remain active while many of its competitors were effectively closed for operation.

In 2010, BBVA loaned $13 billion in fresh funding, a year after loaning roughly $10 billion. He said that’s still roughly 30 percent below the bank’s peak level of 2007, but nonetheless meant it was able to out-lend many of its competitors.

“We’ve been a very active lender, particularly in 2009 when a lot of banks were shut down for business and there was no lending, we were able to strike relationships that needed an active bank,” he said.

BBVA was also earned “Lender of the Year” honors in both 2009 and 2010 from the Small Business Administration.

“It’s not a bad time to be in lending,” he said.

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