BBVA is a trusted partner for US corporates and investors on their cross border expansion as well as on their sustainability transition

In a continuously changing world with growing geopolitical uncertainty, banks will play a key role helping clients to secure supply value chain financing  as well as transition to cleaner energies.  BBVA CIB turns the cross border business into a source of value generation: the bank's geographic footprint is put at the service of wholesale clients. Regina Gil, Head of BBVA CIB USA, speaks at depth on the strategy in the region and how BBVA is helping US clients on their cross border expansion as well as on the energy transition.

• What is the BBVA value proposition in USA?

BBVA is an international bank with a global footprint that matches well with our corporate clients. In New York, we serve mostly American global corporations, which typically have subsidiaries in both Latin America and Europe. This makes our coverage model highly effective, as we can assist them on various fronts, both at the headquarters as well as the subsidiary level. This geographical breadth and proximity provide us with a deep understanding of the needs of our corporate clients, as we address strategic issues with the head office in the USA and engage simultaneously in transactional business with subsidiaries in Latam.

Moreover, following the Covid pandemic and amid growing geopolitical uncertainty, many U.S. companies have brought back part of their main supply chain to the United States or even to Mexico. We have been actively involved in this process from different angles. On one hand, we are assisting clients with the financing of their new factories and new working capital lines through supply chain financing programs in the U.S. On the other hand, we are guiding them on how to leverage the Nearshoring trend in Mexico. Not only can we advise them on expanding into this country, but we can also provide financing, either through our own balance sheet or through the local and global capital markets.

• Sustainability is a factor that is increasingly present in the strategies of companies and also of financial institutions, what is your vision of the US market?

Sustainability is one of the pillars of our institution, not only in the U.S. market but globally. On a global scale, we aim to support companies in transitioning their business models toward a more sustainable future, whether through sustainable products or solutions, commitments to Net Zero, or by providing sustainable investment solutions. The corporate and investment banking segment is the primary contributor to BBVA's global sustainable business mobilization, representing 67% of the total funds channeled by the group in 2022.

In the case of the United States, the Inflation Reduction Act (IRA) is one of the most significant steps taken in the country towards an energy transition to renewable and other clean energy sources. Our institution has committed to fully engage in this objective. The majority of our clients, both corporate and institutional, are involved in this plan. For example, many companies in sectors such as utilities or oil and gas participate in wind and solar projects. Other sectors, such as manufacturing or automotive, contribute to the development of batteries for electric vehicles. Many of these projects receive  subsidies and guarantees from the IRA plan, fostering direct investment in them. BBVA USA is actively involved in many of these operations, providing loans, debt capital market services, or working capital lines as an intermediary.

• How is the evolution of sustainability in the US compared to other geographies? How is BBVA accompanying its clients in this region?

The past two years have been very interesting. Historically, the U.S. market lagged behind the European market in terms of sustainability commitment. However, thanks to the Inflation Reduction Act, there is a growing interest in renewable energy projects in both mature sectors (wind and solar) and new technologies (clean tech). 

BBVA USA has been investing in the last three years to enhance capabilities in key areas such as project financing, specialized DCM ESG, and sustainable supply chain financing to serve our clients in their ESG journey. Looking ahead, we will need to continue learning in the field of clean technologies, as we expect to see more transactions in green hydrogen, carbon capture, or electric vehicle batteries in the market in 2024 and 2025, once the technology is more mature and commercially viable.

BBVA USA has been investing in the last three years to enhance capabilities in key areas such as project financing

Both corporate and institutional clients are key players in the transition. Particularly, the institutional side is very interesting. For the energy transition to occur, we need both private banks and public institutions, as well as investors, to be deeply involved. BBVA USA is strengthening its presence in the U.S. institutional sector precisely to capture these flows and connect supply and demand in the sustainability field. Leveraging our fundamental expertise in ESG, BBVA can assist institutional clients in originating and structuring some of these opportunities. As recent examples, we have participated in various financing operations for solar and wind projects with private equity investors. The investment we have made in strengthening our Project Finance and Syndicated Loans teams has helped us cope with an increasingly high level of activity.

• We have also observed a market dynamic that is having a relevant impact in Mexico but it also has an impact on American clients, the nearshoring. Is BBVA well positioned in the US to capture this cross border trend?

Nearshoring is here to stay. For the U.S., two different waves can be considered, both for strategic reasons but with nuances. The first would be the Chip Law, whereby U.S. clients who had microchip or semiconductor factories in Asia are returning to the U.S. for defense and national security reasons. Additionally, after the chaos in supply chains that the world witnessed post-COVID and the Russian war, it became clear that having suppliers closer to home is a necessity. In line with the group's cross-border strategy—which constitutes 30% of BBVA CIB's revenue—Mexico is a relevant commercial and strategic partner for the United States, especially due to its geographical proximity.

BBVA USA is well-positioned in both regions, but especially in the second, with corporate offices in Monterrey and Mexico City. Currently, we are working with some of the largest U.S. corporations in their expansion into Mexico and the rest of Latin America, providing them with advice but also capital to carry out operations locally in Mexico. In many cases, once these companies are established locally, we also assist them with capital market programs so that they have access to local investors.