Spain’s BBVA Makes Bid for Rest of Bancomer

Spanish bank BBVA launched a $4.1-billion cash bid Monday for the rest of Bancomer, Mexico’s biggest bank.

The announcement was the latest in a string of high-profile foreign investments in Mexico’s banking sector, which has shown signs of a strong recovery from the loan crisis of the mid-1990s.

In bidding for the 41% of Bancomer it does not already own, BBVA aims to boost its weight in Mexico, one of Latin America’s top economies, which is showing signs it may be catching up with a U.S. economic recovery after several years of weak growth.

Spain’s second-largest bank noted that analysts on average expected Mexico’s economy to grow 3.0% in 2004 after expanding 1.1% in 2003 and after several years of weakness.

For years after the loan crisis, many Mexicans didn’t even have bank accounts, and mortgages were nearly nonexistent. But Mexico’s interest rates have fallen to record lows, and Mexicans are seeking lines of credit for cars, apartments and other purchases.

The resurgence in the banking industry -- along with a strong euro -- fueled BBVA’s decision to expand its share of the Mexican market.

BBVA will pay $1.09 a share for Bancomer, a premium of 13.7% over Bancomer’s Friday closing share price. It closed up 12% on the Mexican stock exchange at $1.07 a share Monday.

When BBVA took control of Bancomer in 2000, it said it had no intention of acquiring 100% of the bank. But Bancomer has become one of BBVA’s main areas of growth.

“We want to strengthen the ties that we already have,” BBVA President Francisco Gonzalez said.

The bank has more than 25% of Mexico’s expanding credit market, nearly 29% of client resources and 40% of all the industry’s transactions.

Gonzalez said he believed Bancomer’s stockholders would approve the deal, which bank officials hope to close by March.

The move is the latest of a series of bank mergers in Mexico. 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 U.S.-based bank. Grupo Financiero Banamex-Accival, or Banacci, had been the last major Mexican bank without a foreign partner.

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Associated Press and Reuters were used in compiling this report.