BBVA seeks int'l arbitration in pension unit fight with Bolivia

Bolivia said it would obtain legal support after Spain's BBVA announced it was seeking arbitration over the nationalization of its local private pension fund unit, BBVA Previsión.

Issues at stake include the valuation of the business.

"The Bolivian state will hire specialized legal services necessary to defend ourselves in the best way possible while this process is carried out," attorney general Pablo Menacho said, state news agency ABI reported.

Under legislation signed into law in 2010, assets managed by Bolivia's two private pension fund managers, or AFPs as they are known, transfer to a state-controlled administrator.

BBVA said it was seeking arbitration through the complementary mechanism of the International Center for Settlement of Investment Disputes (ICSID) within the framework of an investment agreement between Spain and Bolivia.

BBVA said that since 2010 it has "expressed its willingness to negotiate with the Bolivian government to produce a smooth and orderly transfer with the regulator and the authorities. Despite the presentation of a series of proposals it has not been possible to bring views any closer, in particular with respect to the valuation of the AFP business and, as a result, BBVA has decided to initiate the process of arbitration with the ICSID."

Bolivia's finance minister, Mario Guillén, during a press conference, said the price BBVA had requested during negotiations was "excessive" and that the offer had been rejected.

The other AFP operating in the Andean nation is Swiss insurer Zurich's Futuro de Bolivia.

A state-controlled administrator has been established to run the fully funded, defined contribution schemes, but last year the government said it was postponing its launch until March 2019.

Bolivia also provides non-contributory social pensions (renta dignidad) and operates a semi-contributory old age solidarity pension scheme.