Spain's BBVA bank takes step into Indian banking
Spain's second largest bank BBVA took a step into the Indian market Wednesday with the creation of a credit card joint venture with India's state-owned Bank of Baroda.
As part of the deal BBVA will take a 51 percent stake in Bank of Baroda's credit card unit Bobcards for 34 million euros (45 million dollars), the Spanish bank said in a statement.
The new joint venture aims to issue over five million credit cards in India over the next eight years.
"This partnership marks BBVA's first entry in the Indian retail banking market and responds to its strategy to enter new markets by establishing relationships with a local partner," the statement said.
The credit card spending in India is forecast to grow at an annual rate of 20 percent over the next few years, according to the KPMG consultancy.
BBVA opened a representative office in India's financial hub Mumbai in 2006.
The bank generated nearly half of its net attributable profit, 44.8 percent, during the first half in South America, Mexico and the United States, where it is mostly present in southern states with a large Latino population.
BBVA predicts Spain could account for less than 10 percent of its total net profits within five years, down from roughly 30 percent currently.
Founded in 1908, Bank of Baroda has 3,100 branches across India and over 36 million clients.
© 2010 AFP