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BBVA Securities facing lawsuit


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According to Market Intelligence, April 2023

BBVA Securities facing lawsuit

BBVA SecuritiesInc. was sued in January over certain securitiesofferings in which it was an underwriter.

The suit was filed in the U.S. District Court for the SouthernDistrict of Texas, BBVA Compass BancsharesInc. disclosed in a quarterly filing. The plaintiffs challenge statementsmade in registration statements and prospectuses related to eight offerings of stockand notes issued by Plains GP Holdings and Plains All American Pipeline; they seekunspecified monetary relief. BBVA Compass believes there are "substantial defenses"to these claims and said it will defend them "vigorously."

The filing also noted that the Federal Reserve is consideringan enforcement action against BBVA Compass and its broker/dealer unit. Under law,BBVA Securities cannot derive more than 25% of its gross revenues from underwritingor dealing in bank-ineligible securities. The firm's ineligible revenues exceededthis threshold at certain points prior to April 2013. This could result in civilmoney penalties or other actions, the company said, noting that it is cooperatingwith the Fed.

Houston-based BBVA Compass also provided detail on the from declining oil prices.

The company's total energy exposure declined to $9.3 billionat March 31 from $9.4 billion at year-end 2015. Over the same period, energy sectorloan balances climbed to about $4.2 billion or 6.7% of total loans, from $3.8 billionand 6.3%. The figures include loans directly related to energy, such as explorationand production, pipeline transportation of natural gas, crude oil and other refinedpetroleum products, oil field services, and refining and support.

Oil prices hurt many of BBVA Compass' borrowers, leading to internalratings downgrades. The bank reported that 22.9% of energy loans were rated specialmention or lower at March 31, marking an increase from the 16.3% with this ratingat year-end 2015. At the end of the first quarter the bank observed negative trendsin the internal risk ratings in its energy lending portfolio and an increase innonaccrual loans from 2015. The company said it has continued to observe "negativetrending" in the second quarter.