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Fallout: The Financial Crisis

The Spanish (and others) are coming!

Jeff Tyler Aug 20, 2009
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Fallout: The Financial Crisis

The Spanish (and others) are coming!

Jeff Tyler Aug 20, 2009
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TEXT OF STORY

Tess Vigeland: The Spanish are coming! The Spanish are coming! Spain’s second largest bank — BBVA — has reportedly won an auction for a Texas bank that was on the verge of collapse. The purchase is expected to be formalized by the end of the week. If it goes through, it would be the first failed bank to be taken over by a foreign company since this financial crisis began.

And as Marketplace’s Jeff Tyler reports, this isn’t likely to be the last deal of its kind.


JEFF TYLER: Here in the U.S., the banking industry may look like a mess. But others see our distressed banks as bargains.

CHARLES Geisst: It presents a wonderful buying opportunity for foreigners.

That’s Charles Geisst, a finance professor at Manhattan College.

Geisst: Now, with the crisis, a lot of the regional banks and the local banks have become very attractive. Their prices are under duress. And some of them have quite good asset basis. It’s also a very good way for these foreign banks to finally enter the American market.

The Spanish bank — BBVA — already has a presence in the U.S. In recent years, it bought banks with branches in Alabama, California and Texas. It’s also one of the dominant bankers in Mexico. Geisst says Hispanics in both countries make attractive clients.

Geisst: It becomes a natural to have institutions where people eventually will be able to bank on either side of the border.

But BBVA is not just focused on Spanish-speaking clients.

Richard Melville is with the trade publication American Banker.

RICHARD Melville: You would absolutely be under-estimating them if you thought this was simply about Hispanic marketing.

He says the Spanish bank has grand ambitions.

Melville: They want to be one of the bigger retail banks in North America.

Executives with BBVA told Melville that U.S. banks are destined for consolidation, and BBVA wants a piece of the paella.

I’m Jeff Tyler for Marketplace.

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