Spanish Bank BBVA (Banco Bilbao Vizcaya Argentaria) has backed out of the deal to buy 51 per cent stake in Bank of Baroda's credit cards subsidiary BoB Cards.
The foreign bank had signed a Memorandum of Understanding with the public sector bank in December 2010 to pick up the stake in the credit card venture for €34 million (about Rs 208 crore at the then prevailing exchange rates).
Pressures to bolster capital are apparently prompting banks in Europe and the US to either sell their businesses or investment in companies outside their home markets or back out of proposed ventures to conserve capital.
In a notice to the Bombay Stock Exchange, Bank of Baroda said due to change of strategy within BBVA, the foreign bank may not be able to proceed further in the matter relating to the signing of a MoU for a credit card joint venture.
“After a detailed and through review, BBVA has come to the conclusion that the scope of the proposed venture is too limited to implement the business model of BBVA,” said Mr Joiel Akilan, Chief Representative of BBVA in India.