These days,growth opportunities in the financial sector are becoming rare and seemingly impossible to find,so when the largest banks in Spain showed up in Mexico,they were not going to let this one get away. The largest Spanish lender,Banco Santander has been very bullish on Mexico this year,buying back its 25% stake that it sold to Bank of America (Mexico) at a 56% premium,representing a sizable $1.6 billion investment. Mexico’s largest Spanish banking group,BBVA,said this week that it plans to invest $2 billion to further expand their banking reach.
These massive banks' home markets are experiencing a deep recession resulting in depressed growth and major losses in their respective local markets. Investing in Mexico’s surging economy is expected to be a key strategy for their future growth. In fact,while Spain’s banks are losing money at home,the Wall St. Journal reports that they are experiencing a 10% rise in net profit for their Mexican counterparts.
Although Spain was once Mexico’s colonial master,their financial ties still run deep,especially in the economic investment sectors. Over 3,000 Spanish owned companies have already invested $34 billion in Mexico over the last 2 years alone,bumping Spain to the position of the # 2 global investor in Mexico,just behind the U.S.
A good portion of Spain’s investment has been aimed at an 80-mile,white-sand swath of pristine coastline on Mexico’s Caribbean,known as the Riviera Maya. Huge Spanish companies like OHL,among the largest construction and service groups in the world,Bancaja and Banco de Valencia have dumped more than $4 billion dollars into this explosive,emerging real estate market,recently dubbed “The New Spain” by the London Financial Times.
These giant Spanish banks,developers and financial firms are clearly finding their future growth strategies in Mexico. To that point,Banco Santander’s savvy Chairman,Emelio Botin,said “Mexico is a country that has a very positive outlook for growth” and all the leading indicators are proving him right.