Thursday, January 12, 2006

Scotiabank Eyes Deals in Mexico

Reuters, Noel Randewich, 12 January 2006

Mexico City - Canada's Scotiabank wants to increase its stake in Mexico's banking industry and could acquire a pension fund operator, a credit portfolio or a mortgage finance firm, the financial group said on Thursday.

Scotiabank plans to increase its 8 percent stake in Mexico's banking industry either by opening more branches and selling new products, or by making opportune purchases, said Anatol von Hahn, chief executive of the bank's Mexican arm.

"We would be interested in fill-ins where we have less than 10 percent," Von Hahn told Reuters in an interview, pointing to Mexico as well as Central America and the Caribbean.

After an economic crisis devastated Mexico's banking system in 1995, Scotiabank was the first of several foreign players to buy into the damaged and capital-hungry industry.

Now Citigroup , Spain's BBVA , Santander and HSBC dominate Mexico's banking industry. Scotiabank holds sixth place.

Scotiabank agreed to buy a controlling stake in Peru's Banco Wiese Sudameris for about $265 million last month.

Von Hahn played down occasional speculation by analysts that Scotiabank might be interested in buying Banorte, the only major bank still in the hands of Mexican investors.

Banorte's owners have said the bank, now carrying out its own expansion plan, is not for sale.

Von Hahn said the purchase of a specialized mortgage lender would be a viable way of expanding Scotiabank's network of around 450 branches.

He also said Scotiabank will eventually get into Mexico's growing pension savings industry, which it could accomplish through an acquisition, a partnership or by launching its own pension fund operator.

Asset managers in Mexico's private pension fund industry control about $40 billion in clients' savings, an amount that is expected to balloon over the next few years.

Scotiabank Inverlat expects to grow lending by 20 percent this year but could speed up that expansion by buying loans from companies in the home lending or consumer credit industry that are looking to free up liquidity, he said.