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October 18, 2007 3:58 pm

BBVA denies that the return of Rodrigo Rato to Spain portends management change at bank

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The imminent return of Rodrigo Rato to Spain has prompted a flood of rumours that the former finance minister could take the helm of a major company.

BBVA, which had initially declined to comment on market speculation, has subsequently come out and denied that any such changes are afoot.

However, an executive at one Spanish bank had earlier said that he was convinced that moves are underway for Rato to take over from his friend Francisco González as chairman of banking giant BBVA.

According to the executive, this move would make perfect political sense. He said that the Socialist government, which is believed to have plotted to get rid of González in the past, would be pleased to tie the politician to a corporate role.

Meanwhile, the leaders of the opposition Popular Party (PP) would be likely to approve the move as it would remove a potential rival and keep the bank within its own orbit of influence, the executive said.

One government insider said that the idea has certainly been discussed in Socialist circles. The insider said that it would certainly be logical, but would not comment further.

Meanwhile, one source with links to the PP said that González might well decide to leave BBVA if he felt he had lost the support of the opposition party.

However, it is thought that at the moment González has no intention of giving up the helm of the bank. He has already weathered at least one attempt to depose him.

The 58-year-old Rato recently announced that he would stand down as managing director of the International Monetary Fund (IMF) to return to Spain. He said that he does not intend to return to politics.

As finance minister of Spain between 1996 and 2004, Rato took a very hands-on approach to the corporate sector. He appointed the chairmen of many of the country’s largest companies, including González at Argentaria, before privatizing the companies.

Rato was also strongly rumoured to be behind many mergers and acquisitions (M&A), using his influence to encourage deals to create national champions, and encouraging regulators to block deals that he disliked.

After the PP lost the 2004 election, Rato’s successor as finance minister, Pedro Solbes, has taken a much less central role in the corporate sector. However, a high-ranking government adviser, Miguel Sebastián, has been strongly linked to a previous attempt to depose González at BBVA. He is no longer actively involved in politics.

One rumour suggests that Rato might be offered a deputy chairmanship at BBVA under González. However, one long-term observer of the Spanish market said that this could be interpreted as a step down for Rato.

The observer said that González would have to be offered some concession to leave BBVA with his head held high before Rato could take over.

Rato has also been linked to a number of other companies in Spain.

For example, the source with links to the PP said that there are rumours that Rato could be offered the chairmanship of Banco Santander. In this scenario, Santander’s 73-year-old chairman Emilio Botin would be able to hand over to a transitional candidate to prepare the way for his daughter, Ana Patricia Botin.

However, one person with familiar Santander’s thinking said that this rumour certainly did not originate in the bank, adding that it would be very difficult for an outsider to run the bank.

Santander has been run by the Botin family for generations. A bank spokesperson declined to comment on market speculation.

Rato’s name has also been linked in the past to two other large companies, Endesa and Criteria Caixa.

A person familiar with Endesa’s thinking said that speculation about a link with Rato – while still in theory possible – has died down since Acciona chairman Jose Manuel Entrecanales took over. Acciona recently bought the electricity company alongside Italian partner Enel.

Meanwhile, Criteria Caixa executives have in the past poured cold water on the idea that Rato could head the investment arm of the unlisted savings bank La Caixa. The PP has little chance of ever governing La Caixa’s core region of Catalunya and the region’s Socialist government is strongly rumoured to have opposed the appointment.

Spokespeople for both companies declined to comment on market speculation. A spokesperson for the PP also declined to discuss the situation.

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