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China remains a key part of Spanish bank BBVA's growth strategy, a company spokesman said on Thursday, despite intensifying investor concerns about rising bad debts among Chinese banks.
Spain's second-biggest bank owns a 15% stake in second-tier Chinese lender Citic Bank and exercised an option to boost its stake by 5% in 2009.
"Nothing has changed (on our strategy for China)," the spokesman said.
Credit rating agency Moody's warned on Tuesday China's local government debt may be $540 billion larger than auditors estimated, potentially putting banks on the hook for bigger losses that could threaten their credit ratings.
Singapore state investor Temasek Holdings sold stakes in two of China's biggest banks a day after the Moody's warning, depressing shares of Bank of China and China Construction Bank.
Temasek later said it remained heavily invested in China and was still looking for investment opportunities.
BBVA has sought to diversify away from Spain's sickly economy, investing in Latin America, the United States and Turkey. The lender agreed its initial Citic stake purchase in 2006, making it the first Spanish bank to buy into China.
Spain accounts for over a third of BBVA's business, making it more exposed than larger rival Santander to the euro zone's fourth-largest economy.
Net interest income margins are shrinking for Spanish banks as they provision for rising bad debts, while their costs of funding on wholesale markets rises amid increased fears Spain could undergo an Irish or Greek-style debt crisis.