BBVA, Spain’s second largest bank, has signed an agreement with China Citic Bank to develop private banking business in China. The bank, headquartered in Madrid, has a 20 per cent stake in the project. The deal concurs with the framework agreement on strengthening strategic cooperation in core areas that the banks signed in January.

BBVA, which already owns 10.07 per cent of China Citic, will participate in the management of the latter’s existent private banking business. This cooperation will lay the groundwork for the new private bank. The new business aims to take 5 per cent market share in its first five years, a target based on China Citic’s position in the Chinese market, its client base and its distribution network.

In a statement yesterday, BBVA expressed its pride at increasing its investment in China in a climate where other international banks are disposing of their interests in the region. It estimates that there are currently more than 320,000 families with wealth exceeding €1 million ($1.36 million) in the region.

BBVA employs 112,000 people in over 30 countries around the world. Its fund management unit had €130 million in assets under management at the end of 2008. The bank froze bonuses for top management at the beginning of February.

China Citic Bank is listed on the Hong Kong Stock Exchange. The bank bought a 70.32 per cent stake in affiliate Citic International Financial Holdings from its parent, the Citic Group, for $1.75 billion on Sunday. It said the move was part of its plans for foreign expansion.