SPAIN - Spanish financial group BBVA has announced plans to increase managed assets in its South-American pension and insurance unit by 55% to US$70bn by 2008.
It also intends to promote voluntary pension plans in the region, on the grounds that this line of business will establish greater coverage and greater assets for pensions.
In addition, BBVA has recently signed an agreement with the World Bank and the OECD (Organisation for Economic Co-operation and Development) to participate in a research and analysis project on the operation and expansion of pension systems in Latin America, and central and eastern Europe.
A goal of the project is to create an information database detailing the composition of portfolios, investment practices, costs and fees. It will also examine the regulatory framework and financial results.
According to data quoted by the firm, Latin-American pension systems already cover 56% of the working-age population, while less than five years ago the figure was 36%. This implies a 55.6% increase in the period, it said.
BBVA said it believed there was ample room for continued growth and quoted estimates issued by Salomon Smith Barney that predicted cumulative assets in obligatory pension plans in Latin America would triple to $765bn in the next ten years, and their contribution to the region’s GDP would grow from 15% at present to 30%.
Agustín Vidal-Aragón, manager of BBVA’s insurance and pensions unit (Pensiones y Seguros América), said: “There is considerable synergy between insurance and pensions provided each country’s legislation allows.”
Ignacio Sánchez-Asiain, manager of BBVA’s South America Area, which includes the pension and insurance unit, said: “Pensions and insurance are strategic businesses for BBVA in South America and they are examples for other countries that face the problem of guaranteeing their pension systems in the long term.”
By Lisa Haines
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