Grupo Financiero Banorte and Ixe Grupo Financiero are merging in what both companies hope will result in a more competitive,larger bank. Banorte,which is the third-largest lender in Mexico behind Citigroup,will purchase Ixe Grupo for 16.2 billion pesos.
According to Wall Street Journal,Banorte will issue just over 308 million shares in order to obtain all Ixe shares. Together the Grupo Financiero Banorte-Ixe will have assets of $54.3 billion,a loan portfolio of $21.6 billion and deposits of $23.8 billion. These figures represent about a 15% market share in each category.
The Banorte-Ixe merger will make it the third largest bank in the country. The first two largest banks are the Spanish-owned BBVA Bancomer and Citigroup Inc. They each have about $88 billion in assets.
Banorte concentrates mostly in northern Mexico with businesses while Ixe is a relative newcomer to the Mexican market. They cater to metropolitan customers in Mexico City who want personal services like financial planning.
Although the banks conceivably serve very different markets,the idea behind the merger was to help the banking group attain better widespread positioning in the market. “[We want to] complement and not substitute efforts,” said Ixe chairman Enrique Castillo.
“Ixe is a premium bank,it’s a bank that’s well consolidated in certain sectors of the market Banorte still isn’t present,” said Alejandro Valenzuela,chief executive offices of Banorte,“The synergies are clearly very important.”
This latest purchase is the second in Banorte’s quest to become a more major player in the Mexican banking area. It’s earlier purchase of Bancrecer SA helped it grow from a regional bank to a major contender.
As a result of the merger announcement,Ixe shares rose 1% higher on Wednesday,November 17. The merger will likely close in the first quarter of 2011 and the banks will be called Grupo Financiero Banorte-Ixe.