Spanish fund specially launched for widened foreign investor deal

PUBLISHED : Wednesday, 27 June, 2007, 12:00am
UPDATED : Wednesday, 27 June, 2007, 12:00am

Spanish bank Banco Bilbao Vizcaya Argentaria said it would launch a Madrid-based fund to invest European assets in the Shanghai stock market in a sign that global banks are gearing up to take advantage of an expanded qualified foreign institutional investor scheme.

The European fund would be managed by investment firm Citic Capital in which the Spanish lender holds an indirect stake, BBVA executives said in Beijing yesterday.

'We are looking at channelling BBVA's assets from our asset management business into China and Asia. We are talking to Citic about launching a China fund in Spain to be managed by Citic Capital in China,' said Manuel Galatas, general manager of BBVA Asia. The assets would be invested in the Shanghai stock market once the company received its investment licence, he said.

However he did not reveal how large the fund would be.

BBVA would also help its mainland partner China Citic Bank Corporation get a qualified domestic institutional investor (QDII) permit to invest Chinese capital overseas, Mr Galatas said.

Foreign banks have long complained about Beijing's strict controls on foreign capital inflows and Beijing last month raised the QFII quota from US$10 billion to US$30 billion.

'Currently there is no way for Spanish investors to invest in Chinese assets,' said Ramon Gascon, head of BBVA China.

BBVA also confirmed it would double its stake in Citic Bank to 10 per cent once the lock-up period following the mainland bank's recent initial public offering - which raised US$5.4 billion in a dual Hong Kong and Shanghai listing - ends in April.

Besides its Citic Bank stake, the Spanish lender holds 15 per cent of Hong Kong-based Citic International Financial Holdings, a co-owner of the mainland-focused investor Citic Capital.

BBVA, which has a strong presence in Spanish-speaking markets worldwide, hoped to take advantage of the trade and investment boom between the mainland and resource-rich countries in South America, said chief executive Francisco Gonzalez.

'We want to position ourselves as a bridge between Latin America and China,' he said.