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Telefonica, BBVA Join in One-Two Punch for E-Banking, B2B

Telefonica S.A. Friday signed a far-reaching accord with Banco Bilbao Vizcaya Argentaria to swap stock, delve into new delivery formats, jointly target the B2B market and integrate one of Spain's conventional banks with its first online bank.

BBVA, which previously held a minority stake in Telefonica (TEF), will see its holding rise to 10 percent. Telefonica, which is also the parent company of leading Spanish Net player Terra (TRRA), will now hold a 3 percent stake in BBVA. BBVA will also acquire a 40 percent stake in e-commerce subsidiary Telefonica B2B.

Telefonica will increase its stake in recently launched online bank Uno-e from 20 percent to 49 percent. BBVA will then integrate all aspects of its Banco de Comercio banking unit -- from trademark to assets, offices and staff -- to Uno-e, effectively sending its potential customer base skyrocketing.

The companies are considering plans to develop joint ventures for other B2B and B2C companies for portals, interactive banking services and transaction products.

After hitting into online banking and B2B, the dynamic Spanish duo aim to develop new online payment methods for Internet and mobile device access through Movilpago. In this aspect of the deal, BBVA will take a 5 percent stake in the Telefonica-led consortium which is currently pursuing UMTS licenses throughout Europe.

The two Spanish multi-industry groups plan to cross customer bases within the same regions to accelerate development and encourage adoption of the new creations.

BBVA will also get a 20 percent share of Telefonica's Atento, which is building a call center business in Europe, Latin America and the U.S. BBVA will transfer its customer support centers to this unit. Other businesses involvements include a $200 million injection from BBVA to Telefonica-led venture capital company Communicapital Partners.

Two other companies -- Hispasat, S.A., which has received investments from both players, and La Caixa -- will also have the opportunity to join in the vast initiative.

Uno-e was formed last month as a joint venture between BBVA and Terra. Uno-e will commence operations in Spain, expanding to Southern Europe and Latin America later this year. The company aims to win over a million online clients--including the U.S. Hispanic market--by 2003. Earlier in January, Terra acquired a 20 percent interest in a BBVA-backed company, and BBVA purchased three percent of Terra.

The recently merged BBVA is the current leader in Spanish online banking, with 4.5 million transactions monthly. Its 160,000 clients make up 20 percent of the market share.