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Mexico Credit: Banorte beats Brazil´s Itau as acquisition boosts lending

Bonds sold by Grupo Financiero Banorte SAB, Mexico’s fourth-largest bank by outstanding loans, are outperforming debt from financial peers in Latin America after an acquisition helped the company boost lending by 29 percent.

The 6.1 percent rally in Banorte’s dollar bonds due in 2021 this year compares with an advance of 5.7 percent for bank debt in the region, according to data compiled by Bloomberg and Credit Suisse Group AG. Similar-maturity bonds sold by Banco Itau Unibanco SA, Latin America’s biggest bank by market value, gained 6 percent during the same period. Debt due in 2020 issued by Bancolombia SA, Colombia’s biggest bank, rose 5.5 percent.

Banorte, based in Monterrey, Mexico, is tapping into a growing demand for credit in Latin America’s second-biggest economy. Total loans for Banorte expanded 18 percent in the past year, the most since 2008, according to Mexico’s National Banking and Securities Commission. Banorte said on July 25 that its acquisition of Ixe Grupo Financiero SAB helped increase its loan portfolio to 312 billion pesos ($26.4 billion) in the second quarter from 242 billion a year earlier.

“They grew at a healthy pace in the quarter and I’m expecting it to continue,” Natalia Corfield, an ING analyst who recommends investors buy Banorte’s bonds, said in a telephone interview from New York. “The banking sector has a very good growth potential.”

The yield on Banorte’s bonds sank 47 basis points, or 0.47 percentage point, this year to 4.72 percent, according to data compiled by Bloomberg. Mexican government dollar notes that mature in 2020 yield 3.45 percent.

Credit Expansion

Pedro Rodriguez, a spokesman for Banorte, didn’t return a phone message seeking comment.

Yields on Sao Paulo-based Itau’s bonds due in 2020 fell 41 basis points during the same period to 5.39 percent. Itau declined to comment through an e-mailed statement.

Mexican banks including Banorte are benefiting from the expansion of credit to a larger share of the population, said Alonso Madero, who helps manage about $5.5 billion in debt at Corp. Actinver SAB. The country’s private credit measured as a percentage of the gross domestic product was 21.8 percent in 2009, compared with 45 percent in Brazil, according to ING.

“Banks could lend a lot more,” Madero said in a telephone interview from Mexico City, “It’s very clear that this is how they could grow. There’s a big potential growth to capitalize on because of the low banking penetration.”

Growth Outlook

Banks in Mexico are increasing lending as the economy may grow “a little bit more” than 4.3 percent this year, Finance Minister Ernesto Cordero said in an event in Mexico City yesterday. Gross domestic product expanded 5.4 percent in 2010, the most in a decade.

Slowing growth in the U.S., the destination for 80 percent of Mexico’s exports, may curb demand for credit in the Latin American country, said Araceli Espinosa, debt analyst at Scotia Capital.

A report yesterday showed that service industries in the U.S. expanded in July at the slowest pace in 17 months as orders and employment cooled, indicating the biggest part of the economy had little spark to begin the second half of the year. Economic figures in the U.S. in last two weeks have shown declining home sales, weaker factory orders, waning consumer confidence and the first decrease in household spending in two years.

“If the economy is not growing, the loan portfolio for the banks is not going to grow,” Espinosa said in a telephone interview from Mexico City.

Yield Spread

Yields on futures contracts for the 28-day TIIE interbank rate due in May were unchanged at 4.99 percent, indicating traders expect the central bank will wait until that month to raise benchmark borrowing costs from a record low 4.5 percent.

The extra yield investors demand to hold Mexican government dollar bonds instead of U.S. Treasuries was unchanged at 128, according to JPMorgan Chase & Co.

The cost to protect Mexican debt against non-payment for five years rose 1 basis point to 112, according to CMA. Credit- default swaps pay the buyer face value in exchange for the underlying securities or cash equivalent if the issuer fails to comply with debt agreements.

The peso advanced 0.2 percent to 11.8193 per dollar, extending its advance this year to 4.4 percent.

Banorte is likely to exercise a call option on its bonds in 2016, ING’s Corfield said. The yield to the 2016 call date on the company’s notes may drop 50 basis points from 6 percent yesterday, she said. A call is a contract that gives the holder the right to buy a security at a set price within a set period. The holder of the call is not obligated to buy the security.

‘Well Positioned’

Banorte has used takeovers, including the 2001 acquisition of Bancrecer SA, to grow into a national financial group from a north-Mexican regional lender since the country’s banking industry collapse in 1995.

Banorte reported a 24 percent increase in second-quarter net income to 2.05 billion pesos. Ixe added 119 million pesos to the profit.

“It’s a benign environment for Mexico now and Banorte is well positioned to benefit from it,” Corfield said.

Source: Bloomberg, 04.08.2011 by  Veronica Navarro Espinosa vespinosa@bloomberg.net; Andres R. Martinz amartinez28@bloomberg.net

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Filed under: Brazil, Latin America, Mexico, News, , , , , , , , , , ,

Mexico:Banorte cagy on rumors of IXE acquisition

In a release to the Mexican stock exchange (BMV), Grupo Financiero Banorte was noncommittal on a rumor published by a prominent business columnist that the bank was in talks to acquire IXE Grupo Financiero.

The release said Banorte is “analyzing different strategic alternatives to continue consolidating its leadership position as one of the most important institutions in the Mexican financial system.”

IXE released a similarly vague statement through the BMV, saying it was “exploring options to increase its competitive capacity in the Mexican financial market.”

RUMOR RILES MARKETS

The acquisition rumor that sparked a more than 2% jump in IXE’s stock price on Friday (Oct 1) started with Alberto Aguilar, a financial columnist with daily newspaper El Universal, who published an article that afternoon saying that Banorte “is in very advanced talks to acquire IXE.”

Aguilar’s un-sourced columns have frequently been accurate this year as the rumors have swirled over a possible acquisition of non-bank mortgage lender Hipotecaria Su Casita.

Curiously, this is the second time in recent days that Banorte and IXE have appeared in the same headlines in Mexican papers. Earlier, both banks said they would like to be involved as investors in the restructuring of troubled Mexican airline Mexicana: Banorte by possibly converting a loan to the company into an equity stake and IXE by rounding up a group of investors to purchase the company.

Banorte general manager Alejandro Valenzuela had told the Mexican media that he was “very happy” that IXE was interested in getting involved in the Mexicana restructuring.

IXE PROFITS LAGGING

IXE Grupo Financiero has not been very profitable as of late and has had some trouble picking up the pace following the financial crisis of 2009.

The financial group – which includes an insurer and a securities broker, as well as the 11th largest bank in the Mexican market – earned 28mn pesos (US$2.2mn) in the first half, down 83% from its 1H09 earnings.

As a consequence, the group had a 12-month ROE of 0.89%, the lowest of the 25 financial groups tracked by Mexican banking and securities commission CNBV and far below the industry average of 14.9%.

The group also had to close an ill-timed middle-class consumer banking venture called Banco Deuno that it launched in 2008, rolling it up into its flagship bank in August.

Should Banorte complete a full acquisition of Grupo Financiero IXE, the financial group would overtake Santander Mexico to become the third largest financial group in the Mexican market by assets, behind Banamex and BBVA Bancomer.

Grupo Financiero Banorte is the only top-five financial group in Mexico that is controlled by Mexican capital.

Source: Business News America, 02.10.2010

Filed under: Banking, BMV - Mexico, Latin America, Mexico, Risk Management, , , , , , , , , , , ,

BANORTE buys IXE’s Afore (Pension Fund) business and lists ADR’s as part of it’s Global Expansion startegy

BANORTE (the only remaining 100% Mexican owned bank) is continuing with it’s global expansion strategy. After listing it’s shares on the Spanish / Latin American stock exchange LATIBEX on June 9th and ADR listing in the US Pinksheet OTC market, it acquired the pension fund (Afores) portfolio of IXE bank extending it’s Afore portfolio to 3.5 million accounts. In February 2009 it signed an cooperation agreement with China Development Bank,giving both banks access to bank payment and transfer service in México, China and the USA. (Note by FiNETIK, 11.06.2009)

MEXICO CITY, June 10 (Reuters) – Banorte, one of Mexico’s top banks, said on Wednesday it has agreed to buy a pension fund business from a smaller rival and that it listed its stock on the U.S. over-the-counter market.

Banorte’s (GFNORTEO.MX: Quote, Profile, Research) Generali unit will absorb Ixe’s (IXEGFO.MX: Quote, Profile, Research) 312,489 pension clients, whose combined accounts are worth 5.45 billion pesos ($399 million).The transaction is subject to approval from Mexico’s competition agency. In Mexico, workers in the private sector save for their retirements in pension funds known as Afores.

With this acquisition Banorte will be ranked 4th in Mexico’s Afores account holding, managing a total 3.2 million pension account. (El Universal, 11.06.2009)

In a separate announcement, Banorte said it had listed its stock through pink sheets (GBOOY.PK: Quote, Profile, Research) in the U.S. over-the-counter market. Companies sometimes tap this less-regulated market before leaping into a larger exchange.

Banorte sees the over-the-counter market as a possible prelude to listing its ADRS on the New York Stock Exchange, a bank source told Reuters.

Only a handful of Mexican companies, like tycoon Carlos Slim’s telecom giants America Movil (AMX.N: Quote, Profile, Research) or Telefonos de Mexico (TMX.N: Quote, Profile, Research), trade their American Depositary Receipts on big U.S. markets with healthy liquidity.

Some Mexican corporations have withdrawn their shares from U.S. markets in recent years to avoid tighter scrutiny from U.S. securities regulators.

Source: Reuters, 10.06.2009, Banking News (ADR Depository), 11.06.2009

Filed under: Banking, Latin America, Mexico, News, Services, , , , , , , , , , , , , , ,

GF Banorte to list shares on Latibex exchange in June 9th, 2009

The shares of Mexican company Grupo Financiero Banorte will start trading on LATIBEX tomorrow, the company having received the authorisations necessary to list on the market.

Grupo Financiero Banorte is the fifth largest financial group by total assets in Mexico. Its main subsidiary, Banco Mercantil de Norte, better known as Banorte, is one of the most profitable large Mexican banks and the most important one in terms of total volume of loans.

With this incorporation LATIBEX adds a new company from the Mexican financial sector and comprises now 39 stocks from 6 Latin American countries (Argentina, Brazil, Chile, Mexico, Peru and Puerto Rico) consolidating its position as the second largest market in Latin American securities by market capitalisation.

Grupo Financiero Banorte will be included in the FTSE LATIBEX All Share, the calculation and dissemination of which is carried out in collaboration with the index company FTSE. The stock’s eligibility for its inclusion in the LATIBEX Top will also be assessed.

Alejandro Valenzuela will tomorrow present the company to the media at 10h. Afterwards, at 11:30 the company’s common stock will start trading on LATIBEX.

BBVA will act as specialist for the stock, which will be listed in trading units of 10 shares under the code XNOR.

Source: MondoVisione, 09.06.2009

Mexico’s Grupo Financiero Banorte will list its shares on Madrid’s Latin American Stock Exchange LATIBEX. LATIBEX currently has 39 listed companies from six Latin American countries with a combined market capitalization of €316 billion.

Source:FMX Exchange, 28.05.2009

Filed under: Exchanges, Mexico, News, , , , , , ,

Mexico: Foreign banks highest charges, lowest services

According to a survey by “La Expansion/CNN” the service quality of the 8 biggest banks in Mexico (Banamex, BBVA-Bancomer, HSBC, Santander, Scotiabank, Banorte, Ixe and Inbursa) scored an average of 6 out of 10 in service quality.

IXE Bank led with 8.6 score as the best and most customer friendly service provider, while CitiBanamex and HSBC where below average.  The 8 banks cover 80% of the Mexican market.

According to the survey the bank clients rated woerse the commisions the banks are charging for the value added (or the abscence of it) by the financial service providers.

See the rating chart below: 10 = excellent, 9 = very good, 8 = good, 7= average, 6 = sufficent, below 6 = failed.

Source: La Expansion, FiNETIK,  19.03.2009

Filed under: Banking, Mexico, News, Risk Management, , , , , , , , , , , ,

Mexican Bank Outlook update 2009

Mexican Senate to limit Excessive Credit Card charges by foreign banks, observed by U.S. Senate – 28.03.2009 Update

Mexico: Big foreign banks highest charges, lowest services – 20.03.2009 Update

Banamex  Citibank Earnings (Excerpt from Bloomberg article  17.03.2009)

Profits at Mexico City-based Banamex doubled from 2002, the first full year it was part of the U.S. bank, through 2007, Citigroup Latin America Chief Executive Officer Manuel Medina- Mora said last year. Banamex revenue climbed 6.3 percent in 2008 to 85 billion pesos ($5.86 billion), Chief Executive Officer Enrique Zorrilla said last month. Citigroup’s 2008 sales fell 33 percent to $52.8 billion, according to Bloomberg data.

Now, after New York-based Citigroup received $45 billion in government rescue funds and its shares tumbled 73 percent this year, the outlook for Mexican banking subsidiaries also is dimming as the country heads for its first recession in eight years. The deepening slump in the U.S., the destination for 80 percent of Mexican overseas sales, is curbing export revenue and trimming remittances that help keep up local consumer demand.

Mexican banks will have a “complicated year because of pressures from defaulted loans, a byproduct of the economic backdrop,” said Juan Partida, a banking analyst with UBS AG in Mexico City. UBS estimates Mexico’s economy will contract as much as 4 percent this year.

Paulo Carreno, a spokesman for Banamex in Mexico City, didn’t return calls seeking a comment. Ovidio Cordero, a press representative for Madrid-based Santander, declined to comment. Ruth Lavelle, a press officer at London-based HSBC, didn’t reply to an e-mail request seeking a comment.

Shrinking Economy

Mexico’s economy will shrink 1.9 percent in 2009, according to the average forecast of 30 economists surveyed by the central bank and published this month. Morgan Stanley said yesterday that the economy will contract 5 percent this year. Mexico’s gross domestic product expanded 1.5 percent in 2008, central bank Governor Guillermo Ortiz said in January, after growing 3.2 percent in 2007.

Migrant worker remittances will decline this year after falling in 2008 for the first time since the central bank began tracking transfers in 1995, Mexican Deputy Finance Minister Alejandro Werner said last month. Mexico’s unemployment rate surged to 5 percent in January, the highest since the statistics agency began measuring the data in 2000.

Consumer Lending

While Shaw wrote in a report last month that bad loans will keep rising, Deutsche Bank AG recommended last week that investors take an “overweight” position in Mexican financial stocks. New York-based strategist Guilherme Paiva said Mexican banks will benefit from an increase in lending to consumers who have low debt levels relative to disposable income.

The recommendation helped send shares of billionaire Carlos Slim’s Grupo Financiero Inbursa SA to their biggest gain since 2002, and pushed up Grupo Financiero Banorte SAB, Mexico’s largest publicly-traded bank.

“Banks are going to suffer, but the year is not going to be a catastrophe,” said Angelica Bala, a banking analyst with Standard & Poor’s in Mexico City. “The capitalization of the Mexican banks is the system’s strength.”

Legislators from the nation’s three biggest political parties and bankers will get together on March 19 and 20 in Acapulco, Mexico. President Felipe Calderon, Ortiz, Finance Minister Agustin Carstens and former U.S. Federal Reserve Chairman Alan Greenspan are scheduled to speak at the conference.

Source: Bloomberg, 17.03.2009  Jose Enrique Arrioja at jarrioja@bloomberg.net; Valerie Rota vrota1@bloomberg.net.

Filed under: Banking, Latin America, Mexico, News, , , , , , , , , , , , , ,

Hits and Errors of Risk Management in the Crisis – 1st Mexico PRMIA Event for 2009 a Success

The first event for PRMIA Mexico in 2009, “Hits and Errors of Risk Management in the Crisis” was hosted by BMV  the Mexican Stock Exchange, headquartered on the prestigious Paseo de la Reforma located at the financial heart of Mexico City.

Carlos Kretschmer, Director Head of Capital Markets at Scotia Bank Inverlat, the sponsor Institution, welcomed more than 220 delegates and guests who attended last Thursday, March 5th, to learn and discuss with a panel of four well known risk managers speakers with great background in theory and practice on risk management.

Juvencio Ramírez, representing Banco de Mexico, prepared and presented: “Current Status of Financial Risk Management “ and “The Mexican Financial System and the Subprime Crisis: Contagion or Defense? – A Liquidity Risk Perspective”.

On behalf Banamex Citibank, Carlos Vallebueno talked about the “Origin and Evolution of the First Global Crisis. Heleodoro Ruiz, Credit Risk Manager at Banorte, followed and focused on the “Common Elements in the Crisis and Lessons Learned – A Credit Risk Perspective”.

Jorge Galindo, CEO of HiTo and Regional Manager of PRMIA Mexico, completed the conference providing the audience with information and details about PRMIA organization. Right after that, the experts opened the panel for discussion and to respond all delegates’ questions.

At the end of the event, the large group of professionals representing national e international bank institutions in Mexico, mortgage and insurance companies, private corporations, among many others, enjoyed a cocktail outside of the Mexican Stock Exchange Auditorium where they were able to exchange points of view and give a pleasant close to a very interesting evening.

Download the Speaker presentations below:
Juvencio Ramirez, Banixco ( Estado Actual de la Admon de Riesgos Financieros )
Juvencio Ramirez, Banixco ( El Sistema Financiero Mexicano y la Crisis de la Suprime )
Carlos Vallebueno, Banamex ( Aciertos y Errores en la Administracion de Riesgos )
Heleodoro Ruiz,  Banorte  ( Impacto Altamente Improbable )

Jorge Galindo,  HiTo ( PRMIA – Credit Risk Management in Times of Economic Stress )
Jorge Galindo, HiTo ( PRMIA Overview )

Source: PRMIA Mexico, 10.03.2009

Filed under: Banking, BMV - Mexico, Latin America, Library, Mexico, News, Risk Management, , , , , , , , , , , , , , , ,

IXE Grupo Financiero high capitalization ratio earns S&P rating raise

S&P raised its credit rating outlook to stable from negative for IXE Grupo Financiero and its subsidiaries.

 

IXE Grupo Financeiro has shown a strong financial performance and is one of the soundest financial institutions in Mexico.

 

In this time of turmoil and when others are receiving downgrades (see list below), IXE has emerged as a bright star. IXE Banco’s capitalization ratio as of year end 2008 stands at 18.5%, the second highest in the Mexican Financial Sector just behind Inbursa. Furthermore, IXE Banco continues to have outstanding liquidity, as it has significantly more deposits than loan portfolio. 

 

Bank                                       S&P Rating

IXE                                        A, Raised to Stable from Negative

Banamex:                               BBB+, lowered to Negative from Stable

Banorte:                                 BBB, Stable

Santander:                              Lowered to Negative Outlook

Merrill Lynch/BofA:               A, Lowered from A+

MBIA:                                   BBB+, lowered from AA

HSBC Mexico:                      Lowered to Negative Outlook

 

 

Source: IXE Casa de Bolsa, 06.03.2009

Filed under: Banking, Latin America, Mexico, News, Risk Management, , , , , , , , , , ,

Mexico: GF Banorte in cooperation with China Development Bank

Mexico’s Grupo Financiero Banorte has signed a cooperation agreement with China Development Bank, its first with a Chinese lender. The agreement will give both banks access to bank payment and transfer service in México, China and the USA.

“With this agreement China Development Bank will have reciprocal access to Banortes service platform and solid banking business in Mexico and the USA”.

Additionally the agreements includes reciprocal management training, know how and experience exchange, as well as mutual beneficial finance and investment promotion.

This agreement adds to a series of similar agreements  Mexico’s Banorte has in place with similar institutions in Japan, Brazil and Spain.

Source: FiNETIK, 12.02.2009

Filed under: Banking, China, Mexico, News, , , , , , , , , ,

China’s influence in Latin America

While the United States is preoccupied with other parts of the world, China is paying ever more attention to Latin America, sending leaders to the region, opening banks and promising investment. At this writing, two Chinese leaders are touring the Western Hemisphere.

One of them is Vice President Xi Jinping, who is likely to succeed President Hu Jintao early next decade as China’s maximum leader. Xi left this morning on a tour that will take him to Mexico, Jamaica, Colombia, Venezuela and Brazil, all nations eager to enhance ties with China.

Elsewhere in the region, Vice Premier Hui Liangyu is paying official visits to Argentina, Ecuador, Barbados and Bahamas from Feb. 7 to 19. Might seem like no big deal, you say? Well, recall that President Hu visited Latin America in November, stopping in to Cuba and Peru. And while Hu was rubbing elbows with most of the major Latin presidents at the APEC summit in Lima, China’s highest ranking military officer was elsewhere in South America on tour. That officer, Xu Caihou, is vice chairman of the Central Military Commission, which controls the People’s Liberation Army. Only President Hu outranks Xu in the military hierarchy. On his trip in November, Xu toured military installations in Venezuela, Chile and Brazil and promised increased exchanges between the two regions.

For Washington to match this pace of high-level visits, it would have to send President Barack Obama, Vice President Joe Biden, Chairman of the Joint Chiefs of Staff Adm. Mike Mullen and a fourth senior official, perhaps Secretary of State Hillary Clinton, to Latin America within four months.

I doubt we will be seeing that. The Chinese officials aren’t going empty handed either. Just take a look at the $7.3-million national stadium Chinese workers are erecting in the Bahamas, a quick boat ride from Miami. I’m sure Hui will tour the site later this week and receive multiple huzzahs from the Bahamians for this showpiece project.

Xi will be attending a big powwow of Mexican industrialists on Tuesday. If one were looking for a specific gauge of China’s growing influence on the world stage in relation to the United States, one could do worse that just studying the Beijing-Washington-Latin America triangle.

Consider the trade numbers between China and Latin America and the Caribbean, for example. Trade between the region and China jumped 13-fold since 1995, from $8.4 billion to $110 billion in 2007. China is now the region’s second biggest trading partner after the United States.

A concrete sign of China’s growing trade importance occurred just a couple of weeks ago. On Jan. 12, China formally became a member of the Inter-American Development Bank, the leading hemispheric financing arm for long-term development projects. As Chinese Ambassador Zhou Wenzhong signed the forms for membership, China also threw in $350 million into bank coffers. With the Chinese flag flies along with the other 47 flags of the IDB’s member states.

Another sign of Chinese interest: Beijing has agreed to open branches of the China Development Bank in Mexico, Brazil and two other countries, a sign of intensified trade cooperation. My understanding is that this is a quasi-private bank. The world has indeed grown smaller. If Latin America was once considered part of the U.S. backyard, it’s now also part of China’s backyard.

Source: McClatchy Newspapers By Tim Johnson 08.02.2009

Filed under: Banking, China, Energy & Environment, Latin America, News, Venezuela, , , , , , , , , , , , , , , , ,