In an effort to replicate its success in Italy and increase its pace of client acquisition, BBVA, the second-largest bank in Spain, has revealed its intentions to open a new digital bank in Germany.

With the great success of its digital strategy in Italy, where it joined the market in 2021, BBVA Italia intends to grow to 600,000 customers by the end of 2024.

Expanding in markets to compete with Santander

After submitting a US$13.2 billion hostile takeover proposal for Sabadell, BBVA decided to expand into growing areas like Mexico and aggressively invest in digital banking services. This coincides with the company's planned expansion into Germany.

Santander, BBVA's competitor, has also expanded into Latin America as both banks seek to increase their clientele abroad.

When BBVA has had difficulties in more developed countries, emerging nations like Mexico have helped it increase income.

"Logically we are replicating the successful model we have had in Italy in the German market, where we hope to have a digital bank by 2025," states Peio Belausteguigoitia, Country Manager for BBVA in Spain.

With changes to its local market strategy, it is expanding internationally through digital means.

In addition to buying Sadabell to expand its commercial banking activities, BBVA plans to close 300 branches in its own country of Spain. In Spain, Sabadell holds a prominent market share in small- and mid-sized financing; BBVA's current goal is to recruit 80,000 SME clients by the end of 2024.

But the Spanish government is presently opposing the proposal, and Sabadell's board rejected it. As a result, BBVA decided to arrange a direct purchase effort through Sadabell's shareholders.

Rumors have been growing that BBVA would try to sell TSB, a UK high street bank, in order to raise money for a better offer to purchase Sadabell. If BBVA's proposal, which it made directly to Sadabell holders, is successful, it's not clear if it would still want to sell TSB.

The massive Spanish bank has established a minimum threshold of 50.01% for approval of Sadabell shares, but it may take up to eight months for the regulatory acquisition approval procedure to be completed before a proposal can be publicly presented to shareholders.

Peio Belausteguigoitia expressed his confidence that a takeover might be finalized at a financial event. If not, BBVA will concentrate on developing its home country of Spain through organic expansion.

BBVA: A shift in focus to digital

A much-discussed broader tendency to fulfill the requirements of modern banking clients with their digital changes is represented by BBVA's ambitions to concentrate on the expansion of digital banking.

Revolut, N26, and Monzo—three of the top European neobanks—have been so successful that big financial institutions throughout the continent are now moving away from their physical presence and toward the digital space.

We stated earlier this year that we anticipated incumbents to step up their digital efforts in order to compete with digital companies. Phillip O'Neil, Director of Financial Services at Kin + Carta Europe, stated that "a reckoning between competition, partnership, and acquisition" will take place.

That's exactly what we're seeing with BBVA, and for the rest of 2024, we can expect to see a lot more action globally.