Mexico Puts Its Most Profitable Bank on Block

Banco Nacional de Mexico, Mexico’s largest bank with assets of $24 billion, was put up for sale Thursday as part of the government’s ongoing privatization drive.

The proposed sale brings to seven the number of Mexican banks on the block. None have been completed.

Banamex, as the bank is known, is expected to fetch the highest price of the 18 commercial banks the government plans to eventually sell, not only because of its size, but also its profitability. The government has been selling off state-owned properties to the private sector in an attempt to liberalize the economy.

The market value of the government’s 71% stake in the bank is $2.2 billion. That figure is extrapolated from Thursday’s closing price for the shares that the government does not own and which trade on the Mexican Stock Exchange.

However “Banamex is expected to sell at a premium because it is a quality bank,” said Eileen Evans, who follows banking for D. A. Campbell Co., an international stock broker based in Los Angeles.

Likely buyers for the government’s shares include investor groups headed by Acciones y Valores, a major Mexican stock brokerage, and Desc, a Mexican industrial conglomerate with revenue of $2 billion last year. It was not known whether either group includes foreign investors who can own up to 30% of a financial holding company that buys a bank.

The bank recorded profits of $341 million last year, double its 1989 income. Half that income was from off-balance-sheet assets, such as the $13 billion in mutual funds it has under management.

Banamex is also the largest primary dealer of Mexican treasury bills and has a thriving credit card business linked to MasterCard.