BBVA Peru Capital Optimization
Project Description
On March 31, 2025, MIGA issued a guarantee of up to USD300 million to Banco Bilbao Vizcaya Argentaria, S.A. (BBVA or the Group) for a period of up to 3 years covering the risk of expropriation of the mandatory reserves held by its subsidiary in Peru, Banco BBVA Perú S.A. (BBVA Peru or the Subsidiary) at the Central Bank of Peru.
BBVA is a global financial services group founded in 1857. The bank is present in more than 25 countries, has a strong leadership position in the Spanish market, is the largest financial institution in Mexico and it has leading franchises in South America and Turkey. BBVA contributes with its activity to the progress and welfare of all its stakeholders: shareholders, clients, employees, providers and society in general. In this regard, BBVA supports families, entrepreneurs and companies in their plans, and helps them to take advantage of the opportunities provided by innovation and technology. Likewise, BBVA offers its customers a unique value proposition, leveraged on technology and data, helping them improve their financial health with personalized information on financial decision-making. As of December 2024, the group employed 125,916 people across 5,749 branches and served more than 77.2 million customers. Further information on the BBVA Group can be found on https://shareholdersandinvestors.bbva.com/.
BBVA Peru was acquired by the Group in 1995. The Group holds 47.1% of shares. The Subsidiary provides a broad range of financial and non-financial products, serving more than 8.8 million clients through its 7,545 employees.
Environmental Categorization
BBVA Peru provides financial products and services to retail, MSMEs and corporate clients in Peru. The MIGA guarantee will support BBVA Peru’s lending operations in climate activities (limited to green retail mortgages) and MSME projects, including support to women-owned MSMEs. The supported sectors and types of transactions supported by BBVA Peru are considered to be mostly medium risk, with potentially limited adverse E&S risks and impacts that are site-specific, reversible and can be addressed through mitigation measures. The project is thus categorized as FI-2 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013).
The main E&S risks of this project are associated with BBVA Peru’s ability to identify, assess and manage the E&S risks of its financing activities and the Subsidiary’s labor practices. The applicable E&S requirements for this project portfolio will be: (i) MIGA’s Exclusion List and (ii) applicable national environmental and social laws and regulations in Peru.
MIGA analyzed BBVA Peru’s portfolio by types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. As of December 2024, BBVA Peru’s portfolio included the following business segments – corporate finance (medium to long term loans to clients in mostly medium-risk sectors), and project finance, retail banking and consumer loans, SMEs, and loans to financial institutions. The main sectors supported include consumer loans; retail; agriculture and fishing; construction and real estate; consumer goods; retail; transportation; transport service; leisure and common services; machinery and other industrial production; and oil, gas and mining. BBVA Peru currently has no exposure to activities on the MIGA Exclusion List. The Subsidiary has exposure to oil and gas activities. MIGA's guarantees will support climate finance (limited to green retail mortgages) and MSME loans, excluding upstream oil and gas and coal-related activities. BBVA Group has policies covering the Group’s commitment decarbonization of its loan portfolio by 2030 and Net Zero by 2050.
MIGA assessed BBVA Peru’s E&S policies and procedures in line with the requirements of MIGA Performance Standard 1: Assessment and Management of E&S Risks and Impacts (PS1) and also assessed the bank’s labor practices in line with MIGA Performance Standard 2: Labor and Working Conditions (PS2).
In relation to E&S risk management, BBVA Group has been an Equators Principles financial intermediary since 2004. The Group has E&S policies – Sustainability General Policy and the Environmental and Social Framework; these are mainly focused on management of E&S risks associated with high-risk sectors and are applicable to all subsidiaries. BBVA Peru has a Sustainability Policy (approved in 2022) and an Environmental and Social Management System (ESMS) for identifying and evaluating potential E&S risks and impacts associated with its lending activities. The ESMS covers transaction screening, risk categorization, compliance with E&S national laws and identification of E&S actions to address identified gaps, as well as monitoring and reporting requirements and stakeholder engagement. The ESMS also covers the application of the IFC Performance Standards to Equator Principles transactions. In addition, BBVA Peru has an E&S team responsible for the implementation of the E&S procedures. BBVA Peru’s exclusion list includes activities on MIGA’s Exclusion List. BBVA Peru has an external communication mechanism for receiving and addressing E&S concerns raised by third parties regarding projects financed by BBVA Peru. There are no gaps identified with BBVA Peru’s ESMS; the ESMS is suitable for the asset classes to be supported by MIGA.
MIGA reviewed the Subsidiary’s emergency response procedures and found them to be in line with the requirements of MIGA PS1. In relation to PS2, MIGA’s assessment revealed that BBVA Peru’s labor policies and procedures are in line with the requirements of PS2 and national labor laws in Peru. The Subsidiary’s policies and procedures cover amongst other aspects, terms of employment, performance management, benefits and remuneration, employees’ rights and responsibilities, occupational health and safety, harassment, non-discrimination and grievance mechanism.
For the proposed guarantee, BBVA Peru will report annually to MIGA regarding the implementation of the E&S procedures for the project portfolio, as well as its labor practices.
Development Impact
The aim of MIGA’s guarantee is to help BBVA optimize the Group’s risk-weighted assets (RWA) on a consolidated basis. Through the MIGA guarantee, the parent bank will pass the benefits of the RWA relief at the Group level to its operating subsidiary. The RWA capacity that is freed up by MIGA’s guarantee will be utilized to support BBVA Peru’s lending operations in climate finance activities, namely green mortgages, and MSMEs, mainly in support to women-owned MSMEs.
The project is aligned with the World Bank Group (WBG) Country Partnership Framework (CPF) FY23-27 under the High-Level Outcomes (HLOs) of “Increased access to quality economic opportunities for workers and entrepreneurs” and “Increased resilience to shocks” as it will support increased access to finance in Peru, including in support of financing climate activities. The guarantee is aligned with MIGA’s FY24-26 Strategy and Business Outlook under its strategic direction of addressing the global challenge of climate change by supporting climate finance lending for BBVA’s Subsidiary in Peru. Furthermore, the project is aligned with the WBG Gender Strategy 2024-2030, given that part of the RWA relief will be used towards new lending to women-owned MSMEs