|Mexico's Banorte Bank to Buy IXE for $1.3 Billion|
Cyntia Barrera Diaz - Reuters
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November 19, 2010
Mexico City - Banorte, the top Mexican-owned bank, is buying smaller financial group IXE in a stock swap valued at about $1.3 billion, strengthening its position as the No. 3 bank in Latin America's second-largest economy.
But Banorte shares slipped as some said the bank may have paid too much for its Mexico City-based competitor, which has been saddled by high operating costs and weak profits.
IXE's portfolio of business loans will help bolster Banorte as the deal underscores the bank's determination to remain in local hands and avoid a takeover by powerful foreign banks that have moved into Mexico over the past decade.
Executives from Banorte and IXE said the deal was a landmark for the Mexican banking system, which collapsed in the mid-1990s, spurring a buying spree by foreign banks.
"We are vindicating Mexican bankers. We are showing that Mexican banks can do it right," Alejandro Valenzuela, Banorte's CEO, said at a news conference.
IXE owns a boutique bank that has cultivated business clients and credit card accounts among Mexico City's elite, as well as a brokerage arm and mutual funds.
IXE accounts for 1.4 percent of the country's loans compared with Banorte's 11.5 percent and the deal would help Monterrey-based Banorte edge closer to the size of U.S. giant Citigroup Inc's Banamex.
The new bank, which will be called Grupo Financiero Banorte-IXE, will be about half the size of Spain's BBVA Bancomer, the biggest bank in Mexico.