Posted on 01/29/2006 9:58:23 PM PST by Liberty Valance
McALLEN Texas — Mexico’s fourth-largest bank will make its entry into the U.S. market with branches in the Rio Grande Valley, after it buys 70 percent of McAllen-based Inter National Bank for $259 million later this year, the companies announced Thursday.
Mexico City-based Grupo Financiero Banorte will also have the option to acquire the remaining 30 percent of INB, which is Hidalgo County’s fourth-largest bank. That purchase would be worth $370 million.
"I see this bank as a jewel," said Banorte CEO Luis Peña Kegel, through a translator, during a news conference Webcast from the Monterrey headquarters of the financial holding company’s subsidiary, Banco Mercantil del Norte.
"It’s a well-oiled machine."
The earliest the full transaction could be complete is in 2009, but Inter National president and chief executive Carlos Garza expects the initial part of the sale to be complete in the late third quarter or early fourth quarter of this year, which would be as early as September.
Terms of the cash transaction call for a change in ownership of Inter National’s holding company, INB Financial Corp., which the Federal Deposit Insurance Corp. will continue to insure and which will also continue to fall under U.S. bank regulations.
Garza said there will be no job cuts because Banorte doesn’t have any U.S. employees other than a handful in New York.
"There is no one from INB that will leave," Peña said.
The boards of both financial institutions have unanimously approved the transaction; Mexican and U.S. banking regulators must also now approve it.
Banorte’s stock gained 3.34 percent Thursday, closing at 24.71 pesos a share on the Mexican stock exchange. Inter National is a privately held company.
The Mexico City financial group is paying roughly four and a half times Inter National’s book value, said Scott Alaniz, a financial analyst in the Atlanta office of New York-based Sandler O’Neill & Partners, an investment banking and brokerage firm. Most banks that are sold in Texas go for two or three times the book value.
"They got a heck of a price," Alaniz said. "This is just an example of larger banks desiring to get into really attractive markets, and you have to pay a premium for that."
Inter National was not up for sale, but Banorte approached the bank’s leadership with the prospect, said Garza. Acquisition by a Mexican bank allows the two companies to take advantage of an international customer base.
Peña said one of the reasons his financial group picked Inter National is the increasing integration of the U.S. and Mexican economies. He said the group wanted to start small with its entrance into the U.S. market. The acquisition will require about 20 percent of Banorte’s equity, he said.
Banorte also wants to cash in on the growing Hispanic market in the United States, and the purchase of Inter National — which employs 278 people at 16 branches in McAllen, Edinburg, Mission, Weslaco and El Paso — gives the Mexican bank a foothold on the fast-growing South Texas border.
Hidalgo County contains Texas’ fastest growing population and the nation’s fourth fastest growing.
Founded in 1983 in McAllen, Inter National holds $940 million in deposits, and Banorte, with a market capitalization of $4.2 billion, has $11.7 billion in deposits.
Banco Mercantil del Norte was founded in 1899 and the financial group formed in 1993.
Banorte has more than 1,000 branches in Mexico and employs about 14,000 people. It has previously acquired Mexican financial institutions such as Afin Casa de Bolsa, Bancentro, Banpais and Bancrecer.
Inter National — ranked behind McAllen’s Texas State Bank, Edinburg’s First National Bank and Pharr’s Lone Star National Bank in assets and deposits — bought privately-held City National Bank of Weslaco for $13.5 million in cash last August.
Another recent bank transaction in the Valley came in November when San Antonio-based Cullen/Frost Bankers Inc. agreed to buy Alamo Corp. of Texas and its subsidiary, Alamo Bank of Texas, for $87 million cash. The agreement is expected to be complete in the first quarter of this year
BTTT
And we'll be guranteeing these funds with the fed.
"Mexican economy"? How rarely those two words are used together.
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