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Spanish Bank Announces Merger With Grupo Bancomer To Form Mexico's Largest Financial Institution

LADB Article ID: 53959
Category/Department: Mexico
Date: 2000-03-15
By: LADB Staff

Spain's Banco Bilbao Vizcaya Argentaria (BBVA) has agreed to merge its Mexican subsidiary with Grupo Financiero Bancomer (GFB). Officials for the two banks said the merger is expected to gain easy approval from the boards of directors and banking regulators in Spain and Mexico before June 2000. Under the merger agreement, BBVA and its Mexican subsidiary Grupo Financiero BBV-Probursa will inject about US$1.2 billion in capital into the company. In return, the Spanish bank will gain control of a 40% share in the merged institution and full control of its management operations. The Bank of Montreal, which had held a 16% share in Bancomer, is expected to remain a minority partner in the merged institution, which will be called BBVA-Bancomer. The Spanish-Mexican venture is expected to control a 26% share of the Mexican banking market and surpass Grupo Financiero Banamex-Accival as the country's largest financial institution. Company officials said BBVA-Bancomer will own assets of 340 billion pesos (US$36.4 billion), a credit portfolio of 240 billion pesos (US$25.6 billion), and deposits of 250 billion pesos (US$26.7 billion). Analysts said the infusion of capital from BBVA will help Bancomer erase its financial difficulties. "This capital infusion will also strengthen the balance sheet of Bancomer, covering 100% of past-due loans and also loan-loss provisions," said Jason Mollin, analyst at Dresdner Bank in New York. "They will be well-positioned to grow going forward.

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