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A medium and well-known bank: the pools about the next owner of Banamex focus on a handful of actors

2022-01-13T04:04:18.386Z


Experts aim for a profile that does not conflict with the rules of competition and see the entry of a new player unlikely


A Citibanamex cashier in Mexico City, the day after the sale was announced.PEDRO PARDO (AFP)

Wanted buyer of a bank with 1.4 trillion pesos in assets. Citi's decision to sell most of Banamex has skyrocketed the pools: Mexican or foreign? big or small? The interest that awakens the unknown is proportional to the size of the operation, the largest in the financial sector since Citi bought the entity in 2001. Despite the succulent business, there are not so many players with the capacity to swallow the size of an elephant. The experts consulted are committed to a profile of a medium-sized bank that is already present in Mexico and that can overcome the competence requirements. They see less likely, on the other hand, the entry of a new actor.

Citi's announcement puts up for sale the Afore -the retirement fund manager-, the family and business loan portfolio, the insurance, the 1,276 branches… And, of course, the brand: Banamex. A name that has been ringing in the ears of Mexicans since 1884, which was nationalized in the eighties, reprivatized in the nineties, and finally sold to the American giant at the turn of the century for 12,500 million dollars.

Although its market share has fallen, Banamex remains the third largest bank in the country, with assets worth 1.4 trillion pesos, 12% of the total, according to data from the National Banking and Securities Commission as of November last year. The statement made public by Citi on Monday does not mention the price at which it seeks to sell, but financial institutions such as Bank of America or the Mexican Actinver place it in a range that goes from 12,500 to 16,000 million dollars.

Before the incognito of the possible interested, only it is possible to defoliate the daisy. Among the actors not yet established in Mexico, Itaú is the one that sounds the loudest. The main Brazilian bank expressed interest in buying Banamex in 2015 but discarded it because the price, some 30,000 million dollars at that time, seemed expensive to them, according to what its president Roberto Setúbal told

El Economista

. Since then, it has strengthened its presence in South America with acquisitions in Chile and Colombia but has not commented on Banamex again.

At the same time, Mexico's economic and political climate make the new owner unlikely to be a newcomer, experts say. The economist Carlos Ramírez points out that the banking business is undergoing “a gigantic transformation, due to technological changes. Add in the political momentum and possible regulatory changes in the coming years, ”he says. In October the authorities established a cap on the commission that the Afores charge workers for managing their savings, and the initiative to eliminate bank fees, although it was stopped at the beginning of the six-year term, continues to float on the public agenda.

The focus is therefore on players who already have one foot in Mexico and there are not so many with sufficient capacity and adequate synergies. Banorte is one of the analysts' favorites. The entity demonstrated a voracious appetite during the 90s and the first decade of the 2000s. A series of aggressive acquisitions raised it from a regional bank to fourth place by assets, with 1.3 trillion pesos, 11% of the total, according to the CNBV . In addition to his experience in purchasing, Enrique Mendoza, an analyst at Actinver, sees advantages for Banorte. "They have always been struck by this business that has many deposits, a large retail portfolio and that can give more profitability to the loans they already have placed," he says.

A compatibility that Mendoza also finds in the case of Banco Azteca, with its focus on more rural areas and working classes. "It would help you in markets where it does not have a presence, for example in credit cards where Banamex is very strong," he says. Ricardo Salinas Pliego, owner of Azteca and the third richest man in the country, has been the first businessman to break the silence and openly show his interest. "I have asked my team to analyze the convenience of acquiring Citibanamex and to redouble my bet in Mexico, Mexicans and their future," he tweeted after the news of the sale.

Both Banorte and Azteca also share a feature appreciated by the Government. Unlike the rest of the heavyweights, in foreign hands since the privatization of the 90s, these two are mainly Mexican capital. Although the Executive has not openly shown a preference for the origin of the buyer, the speech of President Andrés Manuel López Obrador is openly nationalist and often critical of foreign multinationals. Analysts believe that the government can tip the balance if it so wishes. “He has all the power, the point is if he wants to exercise it. The CNBV could rule against it if it doesn't like the potential buyer, ”says Ramírez.

On the other hand, Azteca and Banorte would have to make a significant effort to fund the operation. By assets, Banamex is five times greater than the first and a little greater than the second. There ScotiaBank and Santander play with an advantage, for whom Mexico is only one piece of a vast international business. In addition, the president of Santander, Ana Botín, has exhibited affinity with López Obrador and has met with him four times in three years. Last April, the president highlighted his "very good relationship" and Botín said he wants to continue investing in the country.

No list is complete without tycoon Carlos Slim, another businessman close to López Obrador.

His Inbursa Group is focused on clients with high purchasing power and the purchase of Banamex's consumer and retail banking opens a window to a new business area.

However, analysts see it unlikely that the businessman is willing to shell out a large amount.

"In my experience of seeing him operate in the Afore, the perception is that he is happy with his size," says Carlos Ramírez.

Pass the economic competition test

Beyond the capacity and synergies of potential buyers, any bid will have to pass under the scrutiny of the CNBV and the Federal Economic Competition Commission (Cofece), the autonomous body in charge of ensuring the proper functioning of the market. The operation will deserve close scrutiny given the high concentration that already exists in the sector.

In this sense, the one that does seem to be ruled out in the pools is the king of the sector, BBVA. With assets of 2.6 trillion pesos, it concentrates 22% of the market and has a profile similar to that of Banamex. “It has a very high participation. It coincides with Banamex in most markets. The problems are more serious, "says lawyer Miguel Flores, former Cofece commissioner between 2006 and 2013." It is not so clear with respect to the other players. HSBC, Banorte and Santander have high stakes in some sectors and not in others. You have to see market by market ”.

The purchase of the Banamex Afore, included in the sales package, is another delicate point.

The law of the sector establishes that no savings fund may have more than 20% participation.

The Afore for sale, the third most important in the country, represents 16% of the total managed resources.

With Banorte's savings fund they would reach 37%, well above the ceiling, and with Grupo Azteca's they would touch it.

In this case, Cofece may authorize “a higher limit”, as provided by law, or oblige the buyer to sell part of the business or exclude the conflict area from the purchase.

In any case, Miguel Flores points out that the Commission "is not a radical authority that blocks just to block."

Of the more than 100 cases that landed on his desk a year, the former commissioner estimates that only one or two were rejected.

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Source: elparis

All news articles on 2022-01-13

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