Spain's two largest banks have always been fiercely competitive -- both within the country's borders and beyond. The battleground today is the United States. But, Santander and BBVA are following radically different strategies to crack this giant market.
It's too soon to tell who will come out on top, and neither lender has covered itself in glory so far. But, if Santander's talks with Buffalo-based M&T Bank lead to a deal, it will be much closer than BBVA to clinching its American dream.
BBVA's U.S. adventure began in 2004 with the takeover of Laredo National for $850 million, or nearly three-times book value. The idea was to exploit trade flows between BBVA's strong Mexican franchise and Hispanics across the border.
Since then, BBVA has added four more banks. That includes spending $9.6bn, or 3.5-times book, for Alabama's Compass Bancshares in 2007, only to see the market tank. BBVA wrote-off 704 million euros in goodwill on its U.S. franchise at the end of 2009.
By contrast, Santander has targeted the more affluent northeast coast. Its U.S. foray began badly in 2006, after it controversially bought a pricey 20 percent stake in Sovereign Bancorp. A $1.08 billion (737 million euros) charge followed when recession hit. True, Santander bagged the rest of the bank for a knock-down price, but only after it had injected another $347 million in 2008 in Sovereign's last-ditch capital hike.