Brief history of BBVA (XXII): renewal toward the end of the Franco regime

Franco's government pushed relentlessly to normalize the financial system after determining that most of the efforts over the last decade to open up the sector had been effective. Progressive liberalization of the system was therefore considered a path to continue following. Among other issues, the administration focused on a change in private banking in 1972.

The 1974 reform

On August 9, 1974, some of the legal impediments to expansion that banks had endured for years, were left behind. It gave way to new regulations to establish a bank and expand existing branches. Antonio Barrera de Irimo, Finance Minister and technocrat from Carrero Blanco's government, came up with the initiative.

In terms of creating new banks, approval depended on the Ministry of Economy following a report from the Bank of Spain, the Official Credit Advisory Board and the Spanish Banking Supervisory Authority. Two minimum requirements were established:

• A 750 million peseta share capital minimum if the bank was opening in Madrid or Barcelona, and 500 million pesetas for any other location. Furthermore, 100% of the shares had to be subscribed from the start, with at least 50% of its paid-in value, as well as the payment of 100% of the share premium in order to feed a special reserve that could not be mobilized without prior authorization.
• All of the newly created bank's shareholders had to be individuals.

The regulations also stated that banks' freedom to open new branches was only limited by its ability to expand. This expansion capacity was determined by the difference between the bank's own resources, according to the latest monthly balance sheet, and each institution's consumed capacity resulting from the application of the amount of resources needed for each piece, according to the scales applied by the Ministry of Finance.

The liberalization of opening new branches has a tremendous expansionary effect on the Spanish banking industry. The 5,711 offices that existed in 1974 rose to 15,045 in 1981, just seven years after the regulatory change. From 1974 to 1977, the Spanish economy had double digit inflation, reaching 27% at one point, as a result of the global economic situation stemming from the 1973 oil crisis. Nevertheless, the Spanish banking industry's expansive joy seemed to follow a different path than the complicated economic tendency in the rest of the country.

Banco de Bilbao

In the period from 1969 to 1974 the Banco de Bilbao not only absorbed the banks La Coruña, Castellano, de Irún and Asturiano de Industria y Comercio, which was described earlier, but it also set its sights abroad. The signing of the Preferential Agreement between Spain and the EC, which took place in June 1970 and the liberalization of the national economy encouraged Gervasio Collar's men to expand outside of Spain. The Bilbao-based bank opened 12 offices abroad and became a shareholder in the eurodollar and eurocurrency market.

The new times impacted the Banco del Bilbao's priorities during this period that can be summarized by the following aspects:

• A booming internationalization in both foreign business as in the financial relationships that were created between Spain and other countries.
• A search for the ideal size to securely attend to the wide range of operations it wanted to carry out.
• Greater diversification in all markets and financial activities beyond the traditional concept of the business in order to have an active presence in all sectors of financial activity.
• A decentralization of decision making in the approach to customer decision-making power and the interests of the group.

The Banco de Bilbao embarked on a clear path toward providing specific support for domestic economies with good numbers like the Woman's Campaign in 1970 and Instant Credit in 1972. Furthermore, in 1971, it added a credit card, a service in which the Banco de Bilbao led the Spanish market for the next two decades.

In the first month of 1973, health reasons forced Gervasio Collar to resign as Chairman of the bank and he was replaced by José Ángel Sánchez Asiaín. One year later, the Bilbao-based bank named Rafael Acosta as Director General, a position he held for 15 years before being appointed Deputy Chairman.

Banco de Vizcaya

The Banco de Vizcaya also took advantage of the passage from the 1960s to the 1970s to make a notable move toward its internationalization. It opened its first offices in New York and Mexico and later in Amsterdam and London. At the same time, it also started to participate in the eurocurrency market.

Just like its neighbor, the Banco de Bilbao, the Banco de Vizcaya was very quick to join in on the new services and products that were requirements of the times. As described earlier, it acquired a majority share in Eurocard in 1970, betting on the novelty of the credit card disruption. It began installing its first ATMs and offered its customers other services like gasoline-checks, for example.

The liberalizing reform of 1974 made the Banco de Vizcaya bet on joining in on the possibility of opening new branches. This is illustrated by the fact that the bank had 305 branches in 1970, and nearly three times as many - 904 ten years later.

After 32 years as Chairman of the bank, Pedro de Careaga left the job to Ángel Galíndez Celayeta, a Biscayan agricultural engineer who had been a member of the Banco de Vizcaya's Board of Directors since 1967, and equally connected to the electric company Iberduero.