Loss making Spanish bank BBVA is pulling out of Portugal in the wake of Barclays’ awkward announcement a week ago that it is to quit.
The decision was slipped out in Spanish daily newspaper El Pais which guaranteed maximum upset for the staff and customers in Portugal as the news filtered through earlier today with unions muttering about a “lack of respect.”
BBVA’s announcement in Madrid mirrored Barclays announcement in London leaving Portuguese network managers at a loss as to what to say to anxious staff and depositors.
Banco Bilbao e Vizcaya Argentaria SA, or BBVA as it is more conveniently known, has racked up three straight years of losses in Portugal, €133 million to September 2013 and trading was getting no easier.
BBVA is a global bank founded in 1857 with Spain remaining as its heartland despite large operations in South and North America. The bank’s Portuguese network of 83 branches are now for sale in preference to straight closure.
According to El Pais the Portuguese operation "does not offer the required profitability" and the bank is fleeing 23 years in Portugal, the vast majority of them profitable ones.
A possible sale of BBVA branches in Portugal had already been mentioned in the Portuguese business press, as has the rumoured departure of Deutsche Bank which is hotly denied by the German bank’s management.
BBVA will be no great loss as it has just 1% of the Portuguese market. In better times the bank had 150 branches in Portugal and made money on the back of Portugal’s property boom.
In 2011 the bank managed to lose €17 million, in 2012 this worsened to €58 million and last year BBVA recorded further losses of €57.5 million despite much of Portugal's banking sector sorting itself out, shoring up balance sheets under new rules and tentatively lending again.
Barclays decided to quit a week ago and is trying to jettison its 147 branches and 1,600 employees – a small part of London’s strategy of 14,000 staff cuts worldwide and a withdrawal from much of non-UK Europe.
Nuno Teles from the Centre for Social Studies at the University of Coimbra commented to new service Renaissance, "It’s no wonder that major international banks, whose activity is not centreed in our country unlike our national banks, are leaving the less profitable Portuguese market as they seek new and more profitable areas," .
“Their type of banking in Portugal before the crisis was rooted in real estate expansion and mortgages.”
Teles adds that there is no chance of debtors escaping their responsibilities and depositors’ money will go to another bank or the Bank of Portugal in the absence of a buyer.
"The people that have to worry are the workers, because branches will be restructured," concludes Teles.
The Bank Employees Union leader described the way the Barclays announcement was made as ‘indecent’ but did not comment on the BBVA news as he had not heard officially that the bank was shutting up shop. A suitably terse press announcement in expected.
