Q&A: Spanish banking giant big in Texas, too Q&A: Spanish banking giant is big in Texas too

Manolo Sanchez, president-CEO of BBVA Compass, says, "The fact that you have your top executives in the market, it brings a lot of collateral benefit to the community." Manolo Sanchez, president-CEO of BBVA Compass, says, "The fact that you have your top executives in the market, it brings a lot of collateral benefit to the community." Photo: Johnny Hanson:, Chronicle Photo: Johnny Hanson:, Chronicle Image 1 of / 1 Caption Close Q&A: Spanish banking giant big in Texas, too 1 / 1 Back to Gallery

Spanishbanking giant BBVA stepped into the U.S. market in 2005 with its acquisition of Laredo National Bank. It went on to buy two more Texas banks, purchased Birmingham, Ala.-based Compass Bancshares in 2007 and now has about 6 percent of the Texas market share in terms of deposits. Today, BBVA Compass runs 81 branches in Houston and employs 1,400 people.

Manolo Sanchez, U.S. manager of BBVA and president-CEO of BBVA Compass, recently spoke with the Houston Chronicle's Jenalia Moreno about the bank's presence in Texas, its parent company and the economy. Edited excerpts:

Q: How important is the Houston market to your business?

A: I live in Houston. Our holding company is headquartered in Houston. The heads of our lines of business reside and operate out of Houston. The fact that you have your top executives in the market, it brings a lot of collateral benefit to the community.

Q: Comerica recently said it would buy Houston-based Sterling Bancshares. What does that mean for other banks in Texas?

A: It will create some disruption as mergers tend to cause some disruption. They'll have some closings of branches. That creates opportunities for competitors.

Q: You operate in The Woodlands, where a lot of wealthy Mexicans are moving to avoid crime in Mexico. What are you seeing in that market?

A: Wealthy Mexicans have been investing in U.S. properties for a while. It's a way of them diversifying their investments as well as having second residences because of insecurity at home. We have estimates of Mexican nationals having $150 billion roughly in financial assets in the US. There's a tradition of the Mexican investor base to really diversify part of their savings into dollars. As a complement of that, they have invested in real estate assets in the past.

Q: What do you think will happen with the real estate market this year?

A: We expect home prices to increase somewhat, around 3 percent. As long as rates stay low, I think the demand for new loans as well for refis (refinancing mortgages) is going to stay strong in 2011.

Q: How is your mortgage business?

A: Mortgage lending has really become one of our key drivers of activity. We don't have any bailout money here. We were really open for business throughout the crisis. In 2009, in lending we did almost $9 billion. In 2010 we did almost $12 billion in new loans. A good third of that was in residential mortgages. A lot of them were first-time homebuyers. The first half of the year, there were some tax benefits for first-time homebuyers. We rolled out a product that took advantage of that. That really positioned us in this market as a strong player. Mortgages have been such a peripheral business to the actual banking industry. It used to be, five years ago, that 80 percent of mortgages were done in non-banking institutions, with brokers and everything else. It became such a hot commodity for reasons that we all now know. It became a non-bank business. Now, in this day and age, it's back to the banking center of gravity.

Q: How goes your small-business lending now?

A: We are very active in the small-business segment. We're seeing some demand. The volumes testify to what the current economy is. Business owners are worried about the outlook of the economy, so it's not a booming demand.

Q: There's a lot of concern about the Spanish economy, with its high unemployment rate and a lack of growth. What does this mean for BBVA Compass?

A: It doesn't mean much. At the end of the day, we're a U.S.-based bank. Our depositors have guarantees by the FDIC. When the U.S. banks were having problems, there were some that were not. Our parent company is a very diversified conglomerate. It has roughly 40 percent of its revenues produced in Spain, so 60 percent are elsewhere. Even though Spain is having problems, it doesn't really affect it. Spain is going through a very deep restructuring process. There are a few structural problems they have to deal with like the savings bank sector, having no growth, the big bubble that burst in real estate.

Q: Are you seeing Americans buying more vacation homes in Mexico, and did that business slow down in the last few years?

A: We are the only U.S. bank doing this actively. There was a lot of competition when we started this program back in 2005, and we are still an active lender. Anybody who would like to buy a second residence in Mexico, we have the loan program available. I think the demand has come down very significantly, and the volumes are down, but it's still an active market.

jenalia.moreno@chron.com