Advertisement
Singapore markets closed
  • Straits Times Index

    3,224.01
    -27.70 (-0.85%)
     
  • Nikkei

    40,400.65
    +232.58 (+0.58%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Bitcoin USD

    70,247.66
    +564.99 (+0.81%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • FTSE Bursa Malaysia

    1,541.25
    +10.65 (+0.70%)
     
  • Jakarta Composite Index

    7,288.81
    -21.28 (-0.29%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

Banco Bilbao to Divest Stake in BBVA Chile to Scotiabank

Recently, Banco Bilbao Vizcaya Argentaria BBVA agreed to divest its 68.19% stake in BBVA Chile and the life insurance business to The Bank of Nova Scotia BNS. Banco Bilbao expects the transaction to result in net capital gain of about €640 million and raise its common equity tier 1 capital ratio by 50 basis points.

The main reason for Banco Bilbao’s decision to exit the Chile market is intense competition in the region and consequent impact on profits. The bank exists on the policy of being among the “top three players” in the regions where it has operations. However, in Chile, it is ranked as seventh largest bank by assets, hence it is divesting BBVA Chile.

Scotiabank had made a binding offer of $2.2 million to Banco Bilbao late last month, with a view to become the third largest private sector bank in the country. It will be making a tender offer to buy the remaining shares of BBVA Chile soon. The bank plans to merge the operations of BBVA Chile with that of Scotiabank Chile.

Brian Porter, CEO of Scotiabank, said, "BBVA Chile has a proven track record of providing leading financial products and services to customers across the country and this transaction demonstrates excellent synergy between both banks with customer-centric cultures."

ADVERTISEMENT

Remaining Stake in BBVA Chile

The Said family currently owns 31.62% stake in BBVA Chile. It had a Right of First Refusal for its shares in the company and an option to exercise tag-along rights. This right allowed the family to sell its shares in BBVA Chile to Scotiabank on the same terms offered to BBVA.

Following Scotiabank’s offer in November, the Said family waived its Right of First Refusal. In fact, the family is interested in remaining part of the Chilean business and would like to invest nearly $500 million to own up to 25% of the merged business.

Our Take

Banco Bilbao also agreed to sell 80% of its Spanish real estate business earlier to a subsidiary of Cerberus Capital Management for €4 billion through a joint venture. The bank’s efforts to streamline businesses will support revenue growth and drive operational efficiency.

Shares of Banco Bilbao have gained 25.4% year to date, outperforming the 19.2% growth of the industry it belongs to.

Currently, the stock carries a Zacks Rank #3 (Hold).

Key Picks 

A couple of foreign banks worth considering are Bank of N.T. Butterfield & Son Limited NTB and Credicorp Ltd BAP. Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of N.T. Butterfield & Son’s Zacks Consensus Estimate for current-year earnings has been revised 2.2% upward in the last 60 days. The company’s share price has risen almost 22% year to date.

Credicorp’s current-year earnings estimates have been revised nearly 1% upward over the last 60 days. Also, its shares have gained 32.5% so far this year.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Bank of Nova Scotia (The) (BNS) : Free Stock Analysis Report
 
Banco Bilbao Viscaya Argentaria S.A. (BBVA) : Free Stock Analysis Report
 
Credicorp Ltd. (BAP) : Free Stock Analysis Report
 
Bank of N.T. Butterfield & Son Limited (The) (NTB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research