BBVA announced this Monday an investment of 300 million dollars (263 million euros) in the Brazilian digital bank Neon, where it already had an 8% stake through the venture capital fund Propel.
The new purchase raises the position of the Spanish entity to 29.7% of Neon, and reinforces the strategy of trying to grow in other markets through financial digital platforms: in 2015 it entered the British Atom Bank —of which it owns a 40%—, and in 2018 in the German Solarisbank —16%—.
Neon, founded in 2016, facilitates access to financial services for individuals, freelancers and small Brazilian companies and has 15 million registered accounts.
BBVA sees two great advantages in acquiring more shares of the bank.
"In addition to a clear commitment to innovation, the investment allows BBVA to have exposure to the retail banking business in Brazil, one of the markets with the greatest potential in the world," he explains in a press release sent on Monday.
The South America area is BBVA's fourth largest area of influence.
In 2021, it obtained a profit of 491 million there, 10.1% more than the previous year, but behind the profits in Mexico, Spain and Turkey.
The bank has carried out in recent months a geographical redistribution of its assets.
In November, it sold its business in the United States to PNC Financial Services Group for 9.7 billion euros, which gave it financial muscle.
That same month he launched a takeover bid for the half that he did not control of the Turkish bank Garanti in exchange for 2,249 million.
And now it is growing in the Brazilian digital banking segment.
Neon's financial services offer includes free checking accounts, debit and credit cards, loans and specialized products for micro-enterprises.
Its performance caught the attention of BlackRock, the world's largest investment fund manager, which is part of its shareholding.
Same as PayPal payment platform.
Before BBVA's investment, the company had raised 423 million in various rounds of financing.
And among its partners are also the General Atlantic fund, Vulcan and Banco Votorantim, based in Brazil.
Fintech: competitors and allies
Pedro Conrade, founder of Neon, believes that BBVA's investment will help them reach more customers.
“We want to reach more Brazilians and further our purpose of reducing inequalities and making a difference in the lives of people in Brazil,” he said.
The subscription of the shares and the payment will take place in February.
And according to the Spanish bank, the operation will consume approximately 10 basis points in BBVA's fully-loaded
CET1 capital ratio
, the highest quality, which at the end of 2021 was 12.75%.
The disbursement comes in an environment of growing competition between traditional banking and an ecosystem of
fintech
, neobanks and financial applications to which the entities that now dominate the market fear that technological giants such as Google, Amazon, Facebook or Apple will join.
To try to counteract it, banks are acting in two areas: internally, with an accelerated digitization of their operations that is generating certain tensions due to leaving behind older customers accustomed to face-to-face treatment and in certain cases disconnected from the digital universe.
And the external one, with the acquisition of shares in digital financial platforms.
In the field of corporate operations, BBVA is also closely watching the sale of Banamex, which will begin in the spring, after the US bank Citigroup, its owner, announced that it intends to sell its consumer banking and small business companies in Mexico.
BBVA is currently the leader in the Mexican market, but some of its competitors, such as Banco Santander, threaten that place of privilege if they grow in Mexico with the acquisition of Citi's business.
