BBVA To Buy The Rest Of Bancomer In Mexico

Banco Bilbao Vizcaya Argentaria (BBVA), the Spanish bank, has launched a Euros 3.3 billion (US$4.1 billion ) offer to buy the 41 per cent of BBVA Bancomer, Mexico's biggest bank, that it does not already own. Bancomer was until 2001

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Banco Bilbao Vizcaya Argentaria (BBVA), the Spanish bank, has launched a Euros 3.3 billion (US$4.1 billion ) offer to buy the 41 per cent of BBVA Bancomer, Mexico’s biggest bank, that it does not already own. Bancomer was until 2001 a top-rated sub-custodian bank in Mexico, but its performance in the annual Global Custodian survey has deteriorated in 2002 and 2003.

The purchase will make BBVA the leading bank in Mexico, ahead of Citigroup, which owns Banco Nacional de Mexico, and Bancomer is easily BBVA’s most important foreign asset. The announcement is the latest in a series of foreign investments in Mexico’s banking sector, which has recovered from the loan crisis of the mid-1990s. In 2001, Citigroup bought Mexico’s second-largest bank in a $12.5 billion cash and stock deal, the first big acquisition in Mexico by a US bank.

BBVA chairman Francisco Gonzalez said there were “enormous possibilities” in Mexico, BBVA’s second-largest market behind Spain. He will pay 12 Mexican pesos ($1.09 US) per share for BBVA Bancomer, a premium of 13.7 per cent over Bancomer’s Friday closing share price. It closed up 11.5 per cent to 11.76 pesos per share on Monday.

When BBVA took control of Bancomer in 2000, it said it had no intention of acquiring 100 per cent of the bank. But Bancomer has become one of BBVA’s main areas of growth. There are no plans change the bank’s name. Half the acquisition will be financed through a capital increase, the terms of which will be determined later, the bank said. BBVA will use proceeds from recent sales of its stakes in other Spanish companies to help finance the deal, taking advantage of recent rises in stocks. BBVA said Monday its 2003 net profit rose 30 per cent to 2.23 billion euros ($2.77 billion), with operations in Latin America representing more than a quarter of the profits.

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