The eurozone's largest bank, Spains Banco Santander, said today that it will pay $2.5 billion in cash to acquire Bank of America's 24.9-per cent stake in Santander's Mexican unit in order to consolidate its operations in Mexico's growing economy.
Banco Santander, which has large operations in Latin America, will acquire the remianing 24.9-per cent stake that it does not already own in Banco Santander Mexico, taking its stake to 99.9 per cent.
Mexico is one of the bank's key markets, with high growth potential due to the low level of use of banking services in the country and the sound, efficient and competitive business model of the Mexican subsidiary.
By taking full control of the bank, Mexico's contribution to Banco Santander Group profit will increase by two percentage points, to 7 per cent.
''This acquisition reinforces Santander's commitment to Mexico, a country with a very positive outlook for growth, and furthers the geographic diversification of our Group,'' said Banco Santander chairman Emilio Botín.
Banco Santander had sold the 24.9-per cent stake to Bank of America in 2003 for $1.6 billion, valuing the bank at $6.4 billion. Seven years later, the current transaction values the Mexican unit at $10 billion, an increase of 56 per cent.
Banco Santander is the third-largest financial group in Mexico by business volume, with a market share of 13 per cent in loans ($16.160 billion) and 14.8 per cent in deposits ($18.550 billion).
The bank has 1,095 branches, 12,400 employees and 8.8 million customers.