Further re Merger, etc
Banco Bilbao Vizcaya Argentaria SA
13 June 2000
The Board of Directors of Grupo Financiero BBV- Probursa
recommends the approval of the
Merger and Capitalisation Plan of BBV- Probursa and GFB
(Mexico D.F., June 12, 2000) Grupo Financiero BBV- Probursa (GFBBVPRO) informed
today that its Board of Directors decided unanimously to recommend to its
shareholders the approval of the Merger and Capitalisation Plan (the 'Plan') of
GFBBVPRO. In order to approve this Plan, the Board of GFBBVPRO will call to an
Extraordinary Meeting of Shareholders to be held on Thursday, the 29th of June
of 2000.
The Plan contemplates the merger of GFBBVPRO and GFB, an increase of capital of
USD 1,400 millions in cash, and the issue of USD 450 millions of Notes of
Banking Capitalisation which will increase the basic capital of the banking
subsidiaries of the new financial group. Taking into account the market value
of the shares of GFBBVPRO at the end of the session of the previous Friday, the
operation involves an amount of USD 2,500 million funds, approximately.
The merger of GFBBVPRO, a Mexican subsidiary of BBVA, and GFB will be carried
out with an exchange rate of 0.205 shares of GFB for each share of GFBBVPRO.
The name of the new company after the merger will be Grupo Financiero BBVA
Bancomer. This merger is submitted to the approval of the meetings of
shareholders of both firms, of the Secretaria de Hacienda y Credito Publico
(SHCP) (Mexican Tax Authority) and the correspondent authorities, and has
already the favourable opinions of the Comision Federal de Competencia and the
Direccion General de Inversion Extranjera de la Secretaria de Comercio y Fomento
Industrial, (other Mexican authorities).
The increase of capital proposed, USD 1,400 millions, will be achieved at a
subscription price of Ps 7.40 per share. This increase, which contemplates the
incorporation of Banca Promex in GFB, substitutes the original plan (USD 630
millions of increase of capital, USD 600 millions of bonds of compulsory
conversion and USD 52 millions of warrants).
Consequently, in exchange of the 100% of GFBBVPRO and the USD 1,400 millions,
the shareholders of GFBBVPRO will receive 2,924.5 millions of shares, equivalent
to the 32.2%* of ownership in the social capital of the new group. The
ownership of BBVA will be the 30%*, approximately. The Plan foresees the
purpose of BBVA to reach the ownership of the 40% of the new group in the near
future.
* Percentages based on shares with dilution as on March 31, without taking
into account the possible effect of the acquisition of Promex.
After the merger, with the previous authorisation of the SHCP Furthermore,
Bancomer will carry out the issue of non-accumulative Notes of Banking
Capitalisation for USD 450 millions in market conditions. BBVA is committed to
sell to the investors or to subscribe by itself, at market value, at least the
50% of the issue, in a term of 12 months.
The funds generated by the subscription of the additional capital and the issue
of notes of banking capitalisation will be assigned to strength the financial
situation of the banking business: additional reserves will be created to cover
100% of the matured loans portfolio of the new group and the contingencies of
loss sharing and schedule of incentives associated to the promissory notes of
the IPAB and the ones derived from the expected rents and losses of the trusts
of the assets received in payment of debts.
The banking business of the new group will be strongly capitalised according to
the strictest rules of capitalisation approved recently. The capacity of
generation of utilities of the new group will allow the amortization of the
deferred taxes. It is estimated that the combined index of the total
capitalisation will be significantly over the legal minimum, that is, an index
higher than the 15% from the first year of the merger. If the application of
the rules of capitalisation of 2003 were anticipated, the new group would be
able to pay dividends from the profits of the year 2001.
GFB and Banco Bilbao Vizcaya Argentaria (BBVA) have convene to establish an
Strategic Alliance, and through it Grupo Financiero BBVA Bancomer will become
the most relevant partner of BBVA for every initiative of business in the
natural markets of BBVA Bancomer. This alliance has the final target of
creating value for all the shareholders of Grupo Financiero BBVA Bancomer.
These markets will be Mexico, Central America and the communities of Mexican and
Central American origin in North America. In the rest of Latinamerica, the
possibilities of cooperation will be analysed. The contemplated areas by the
Alliance include Banking and Securities, Bancassurance, Pensions, Money
Remittance, E-Banking, E-Commerce, Assurance and Industrial Projects.
For the administration of the new financial group, according to the original
merger and capitalisation plan of BBVA, it will be proposed to the Meeting of
Shareholders that Ricardo Guajardo Touche continues as President of the Board of
Directors. Furthermore, the managing of the Grupo Financiero BBVA Bancomer will
be at the charge of BBVA and the first executive will be Vitalino M. Nafria
Aznar.
Grupo Financiero BBVA Bancomer will be the biggest Mexican financial institution
and the leader private financial institution in Latinamerica in number of
clients. Its banking operations will become the biggest of the country, with
assets higher than Ps 387 billions and customer funds that represent the 30% of
the system.
Billions of Pesos(1)
Bancomer BBV Mexico Total Marketshare Ranking
Assets 302,767 84,881 387,163 28% 1
Loan portfolio 223,410 57,082 280,492 31% 1
Funds 224,645 63,856 288,502 30% 1
Branches 1,727 680 2,407 35% 1
Cash Expenders 3,416 686 4,102 24% 1
Employees 28,691 6,673 35,364 31% 1
Clients 8,000,000 1,000,000 9,000,000 1
(1) Consolidated banks at March of 2000, Marketshare: CNBV Dec 1999
(2) Includes Promex
Destination of the funds
Funds' resource
Millions of USD
Issue of capital 1,400
Notes of capitalisation 450
Total resources 1,850
Destination of the funds
Millions of USD
Bancomer(1) BBV Mexico Total
Fobaproa/IPAB(2) 1,265 146 1,411
Matured loan reserves 20 0 20
Rent programme 50 0 50
Trusts 120 23 143
Tax -509 -59 -568
Total 946 110 1,056
Other reserves 200
Re-structure 150
Tax -122
Total 228
Total applications 1,284
Capital excess 566
Total funds 1,850
(1)Includes Promex
(2)Includes loss sharing and incentive schedule, with no additional
recuperation in the future
Quotation of the Shares
As both companies will be joint, the register and the quotation in the markets
in which GFB does nowadays will be kept. The purpose of Grupo Financiero BBVA
Bancomer is to be listed in the Mexican Securities Stock Exchange, in Latibex
and in the New York Stock Exchange.
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