ACROSS LATIN AMERICA, THE MAKINGS OF A major bank crisis blossomed this year-soaring interest rates, flagging economic growth and wobbling exchange rates. When the Brazilian currency finally collapsed, all eyes turned to watch Banco Santander Central Hispano (BSCH) and Banco Bilbao Vizcaya (BBV), Spain's number-one and-two banks, take a major haircut in the region.
After all, Emilio Boton and Emilio Ybarra, chairmen of BSCH and BBV, respectively, have brashly led their banks on the largest Spanish invasion of the New.
World since the Conquest. In five short years, each bank has spent more than US$4 billion to acquire more than $40 billion in financial assets. But if the conquistadores are in trouble, they are showing no signs of retreat. Just listen to Pedro L. Uriarte, vice chairman and CEO of Banco Bilbao Vizcaya: "We are not missionaries, we're bankers and we believe that if things are done right in the region, our investments will be profitable."
So far, so good. In the first quarter of this year, when devaluation pain should have started to show, both banks remained firmly in the black. Santander's Latin American operations posted almost $143 million in profit-more than a third of the group's total profits and well on its way toward its year-end goal of $500 million. Compared with the same quarter last year, Bilbao Vizcaya's regional profits fell 6% to $92 million, which still represents more than a third of the financial institution's total net income worldwide.
Both institutions continue to make major acquisitions. As well as the added oomph from its merger with Central Hispano's operations in Latin America, Santander bought Banco O'Higgins to secure almost a third of the Chilean market-unless local authorities modify the deal. For its part, BBV spent another $250 million to buy Chilean...