Even as Spanish banks look to sell off assets in the wake new regulatory demands requiring them to recognize more losses on real estate stacked up on their balance sheets during the earlier economic boom, leading Mexican financial group Grupo Financiero Banorte SAB de CV (Banorte) has reportedly finalized a deal to buy the Bancomer pension fund owned by Spain's Banco Bilbao Vizcaya Argentaria S.A. (BBVA).
The deal value is currently estimated at $1.6 billion, and will likely go up by another $130 million when the price is re-adjusted as per the amount managed by the fund when the deal closes. The transaction is estimated to close in the first quarter of 2013 after the parties to the deal obtain the necessary approvals from Mexico's pension and antitrust regulators.
The cost of acquisition of the fund will be borne equally by Banorte and the Mexican Social Security Institute (IMSS), a state-run health organization. The two entities co-own the Afore XXI Banorte pension fund in Mexico.
The acquisition will seemingly allow Afore XXI Banorte to cut costs and provide lower commission fees to clients. Reports indicate the merged fund will manage $39.6 billion in assets and have 11.8 million accounts. BBVA's pension-fund unit is currently the second-largest pension fund in Mexico, trailing the fund run by Citigroup Inc.'s Banamex unit.
Banorte has been scouting similar deals elsewhere. The group's Chairman Guillermo Ortiz had said earlier this year that the group was also looking at BBVA's pension funds in Colombia and Peru. Pertinent to add that Banorte bought boutique bank Ixe last year and thereby gained access to Ixe's portfolio of wealthy clients.
BBVA had also said earlier that it would consider selling its pension funds in Chile, Colombia, Peru and Mexico. Now, the financial firm aims to utilize the capital coming out of the deal to drive its consumer-banking operations.
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