BBVA Expands Digitally into Germany Amid Strategic Shifts

Spain’s second-largest bank, BBVA, has announced plans to launch a new digital bank in Germany to enhance customer acquisition, reports FinTech Magazine. Following its success in Italy with BBVA Italia, a market it entered in 2021, the bank aims to expand its customer base in Italy to 600,000 by the end of 2024.

BBVA: Expanding to Compete with Santander BBVA's German expansion follows a US$13.2 billion hostile takeover bid for Sabadell and significant investments in digital banking and emerging markets, such as Mexico. BBVA and its rival Santander both seek to grow their international customer bases.

Emerging markets like Mexico have bolstered BBVA's income amidst challenges in more mature markets. According to Peio Belausteguigoitia, BBVA’s Country Manager for Spain, the bank intends to replicate its Italian success in Germany, aiming to establish a digital bank there by 2025.

This digital international expansion coincides with a shift in BBVA’s strategy in its home market. The bank plans to close 300 branches in Spain and aims to strengthen its business banking operations through the acquisition of Sabadell. Sabadell holds a strong position in small and mid-sized lending in Spain, where BBVA hopes to add 80,000 SME clients by the end of 2024.

However, BBVA's acquisition bid for Sabadell faces opposition from the Spanish government and has been rejected by Sabadell’s board, leading BBVA to pursue a direct acquisition through Sabadell’s shareholders. There is speculation that BBVA might sell the UK high street bank TSB to fund an improved bid for Sabadell. The bank has set a minimum acceptance threshold of 50.01% of Sabadell shares and estimates that regulatory approval for the takeover could take six to eight months.

Peio Belausteguigoitia expressed confidence in completing the takeover, but if unsuccessful, BBVA plans to achieve organic growth in Spain. BBVA: Embracing Digital Transformation BBVA's focus on digital banking aligns with a broader trend among financial institutions to meet modern customer demands through digital transformation. The success of European neobanks like Revolut, N26, and Monzo has prompted traditional banks to reduce their physical presence and enhance their digital services.

Earlier this year, it was anticipated that traditional banks would intensify their digital efforts to compete with digital players. Phillip O’Neil, Financial Services Director at Kin + Carta Europe, noted a coming "reckoning between competition, partnership, and acquisition." BBVA's actions reflect this trend, with more developments expected worldwide throughout 2024.