BBVA says sells stake in China's Citic Bank for 944 mn euros

Spain's second-biggest bank BBVA said Thursday it had agreed to sell a 5.1-percent stake in China Citic Bank to its parent company for 944 million euros ($1.35 billion). The deal will reduce its stake in the Hong Kong-listed bank to 9.9 percent, just below 10 percent to adjust to the internationally agreed Basel III capital rules that punish banks for holdings in other lenders above that threshold. "This transaction allows BBVA to move forward on the adoption of the new Basel III capital requirements and, at the same time, maintain its commitment to the Chinese market," BBVA said in a regulatory filing. BBVA said it will take a 2.3-billion-euro charge on the deal which will boost its "core capital" by 2.4 billion euros. The Spanish government forced banks last year to strengthen their capital and liquidity to cushion them from risks as the sector recovers from the bursting of a real estate bubble in 2008 which threw the country into recession. BBVA also said it planned to open a "fully operational branch" in China. "China remains an attractive country to for BBVA due to its commercial links with Latin America," it said. BBVA began building its stake in Citic companies in 2006 as it targeted China to diversify its business. China Citic Bank is China's 10th-biggest lender by market value.