Banco Bilbao Vizcaya Argentaria (BBVA) and Bank of Baroda (BoB) have today signed a Memorandum of Understanding (MOU) to form a joint venture in credit card business. Upon regulatory approval, BBVA will acquire a 51% stake in the existing credit card unit of Bank of Baroda, BOBCARDS, by investing a total amount of 34 million Euros, announced the firm Thursday. This joint venture marks BBVA’s first entry into the Indian retail banking market and is consistent with the bank’s strategy of entering new markets through relationships with a leading local partner.
Through this joint venture, Bobcards aims to become a leading credit card player in the Indian market and plans to issue more than 5 million credit cards in the next eight years, using top-notch technology, state-of-the-art risk management tools and models. The completion of the joint venture is subject to the approval of regulatory authorities, including the Reserve Bank of India and the Bank of Spain.
Banco Bilbao Vizcaya Argentaria head Mr. Galatas said the Spanish bank was delighted to have this opportunity to work with such a high quality partner as Bank of Baroda. Through this JV, Banco Bilbao Vizcaya Argentaria will be able to share its expertise and experience of managing over 50 million cards in Europe and the developing Latin American markets, with the customer base of one of the largest public sector banks in India, he said.
This investment by BBVA in the credit card business shows a long term commitment of the bank to the Indian market and also provides an opportunity for the firm to bring its sophisticated risk management models, solutions and products to India, added Galatas. BBVA has proven experience with retail banking and consumer finance franchises in developed and emerging markets, he noted. As such, the Spanish banking giant can leverage this experience with Bank of Baroda’s network that exceeds 3,000 branch offices to further serve its customers that do not have a credit card yet, he said.
Commenting over the investment JV, Chairman & Managing Director of Bank of Baroda, M D Mallya noted that Bank of Baroda was the first public sector bank in India to go into credit card business as early as in 1984. Bobcards which has affiliation with both Visa and Master Card, has recently acquired state of the art software and is poised for growth.
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