CHINA Citic Bank Corp., a unit of the nation’s largest State-owned investment firm, agreed to buy Banco Bilbao Vizcaya Argentaria SA (BBVA)’s holding in a financial-holding unit for HK$8.16 billion (US$1.05 billion).

    The purchase of BBVA’s 29.7 percent stake will make Citic International Financial Holdings Ltd. (CIFH) wholly owned, Citic Bank said in a statement yesterday. CIFH holds commercial banking interests and non-bank financial services stakes outside the Chinese mainland.

    The deal will give Citic Bank “sole discretion in formulating the corporate control and governance over CIFH in terms of strategic planning, risk control and the development of cross-border businesses,” according to the statement.

    BBVA, Spain’s second-biggest bank, said last year that it sold 5.1 percent of Citic Bank to parent Citic Group Corp. It followed banks including Goldman Sachs Group Inc. and Bank of America Corp. in selling stakes in Chinese financial institutions as new international rules make it expensive to hold minority stakes in lenders.

    While BBVA will book a loss of 25 million euros, the sale will add more than 700 million euros (US$852 million) in capital to BBVA, the Bilbao, Spain-based lender said yesterday in a statement. It will improve its fully loaded common equity Tier 1, a measure of financial strength, by about 20 basis points.

    BBVA, which plans to remain in China and owns shares in Citic Bank, is seeking to replenish capital after buying a stake in Turkey’s lender Turkiye Garanti Bankasi AS. The bank sold 2 billion euros in stock to pay for the Garanti stake last month.

    “It is a positive deal that allows BBVA to strengthen its capital,” said Nuria Alvarez, an analyst at Spanish bank Renta 4 Banco SA in Madrid. “The transaction is due more to regulatory matters than strategic ones.”

    The sale is expected to close by the second quarter of 2015, BBVA said. The lender, which entered China in 2006, still owns 9.9 percent of Citic Bank after the 2013 disposal. The transaction announced yesterday doesn’t affect that holding, BBVA said.

    BBVA chief operating officer Angel Cano said the bank decided to reduce its stake in Citic Bank because the capital demand was high and it had no possibility of controlling the lender in the short term. (SD-Agencies)