Grupo Serfin Auction Won
Banco Santander Central Hispano SA
9 May 2000
GRUPO SANTANDER CENTRAL HISPANO WINS SERFIN AUCTION
* With a market share of 16%, Santander Central Hispano becomes the third
largest financial group in Mexico
* It acquires one of the best capitalized banks in the country, with one
of the highest asset qualities
* The Group reinforces its position as the leading financial group in
Latin America
Madrid, May 8, 2000 - Grupo Santander Central Hispano, through its.
subsidiary, Grupo Financiero Santander Mexicano, today won the auction
for Serfin organized by the Institute for the Protection of Bank Savings
(IPAB).
Grupo Santander Central Hispano wishes to congratulate the Mexican
authorities, and in particular the IPAB, for the transparency of the
process and for the important step forward that it represents for the
restructuring of the Mexican banking system.
Santander Central Hispano will invest 14.65 billion pesos, approximately
US$1.56 billion, in the acquisition of 100% of Grupo Financiero Serfin.
The final price will be determined following a due diligence process
which will last 90 days. The conditions of sale established by the IPAB
cover legal, tax and labour contingencies.
The operation will be financed by the provision of the necessary
resources to Grupo Santander Mexicano by Santander Central Hispano.
The co-chairmen Banco Santander Central Hispano, Jose Maria Amusategui
and Emilio Botin, said in a statement that 'the acquisition of Serfin
follows Group practice of majority shareholdings, in a well-capitalized
entity, fully restructured and with a solid involvement in the most
important sectors of the Mexican economy.'
The complementary nature and synergies available between Serfin and
Santander Mexicano will decisively broaden the potential of these banks,
which together will become the third largest financial group in the
country,' they said.
They added that 'this operation demonstrates the confidence of Grupo
Santander Central Hispano in Mexico, in its economy and in its future, as
well as the Group's commitment to its customers in this market.'
Grupo Serfin
Grupo Financiero Serfin is the 4th largest financial institution in Mexico, with
1.5 million customers featuring a socio-economic profile very similar to that of
the customer base of Grupo Santander Mexicano. Its network of 569 offices covers
the 100 main cities in Mexico, with a strong presence in the most active regions
of the Mexican economy - especially Mexico City, Guadalajara and Monterrey.
Grupo Serfin has a diversified franchise in retail banking, corporate banking,
fund management and private banking, brokerage, insurance and annuities. It is
one of the sector leaders in credit and debit cards with 1.9 million cards in
circulation, has a network of 1,184 ATMs, and also operates an Internet banking
channel.
The rigorous loan workout carried out by the IPAB has made Serfin one of the
best capitalized banks in the country with US$979 million in capital, and a
capitalization ratio of 16.7%, behind only Grupo Santander Mexicano. The
restructuring has also given Serfin one of the lowest non-performing loan ratios
and the highest provision cover. The asset cleanup has been extremely demanding,
leaving Serfin also with the lowest ratio of non-productive assets to total
assets.
As a result of the restructuring, Serfin is today one of the most solid banks in
Mexico extremely well placed to maximize the value of its franchise and
contribute to the current growth phase in Mexico, taking advantage of the
synergies and competitive advantages deriving from its incorporation into
Santander Central Hispano.
Commitment to Mexico
The investment in Grupo Financiero Serfin underlines the firm commitment of
Grupo Santander Central Hispano to Mexico, where it has been doing business
since 1955.
The experience built up over these years, during which Grupo Santander Mexicano
has achieved growth and increased profitability, as well as the gradual overhaul
of Mexico's financial system and the notable improvement in the country's
economic prospects, culminating in the granting of investment grade status, have
all made this a highly opportune moment to decisively strengthen Santander
Central Hispano's involvement in the country's financial sector.
With the acquisition of Serfin, Santander Central Hispano achieves a strong
customer base for its broad range of products and services, as well as the
branch network and geographical reach needed to strengthen the contribution from
Mexico to its strategy of generating value in Latin America.
The combination of Grupo Financiero Serfin and Grupo Financiero Santander
Mexicano gives rise to the 3rd largest financial group in the country, with a
market share in assets of 18%, 16,2% in deposits, 13.2% in mutual funds, 8.6%.
in pension funds, and 11.5% in loans. It has 2.2 million customers and 927
offices 1,648 ATMs and 2.7 million credit and debit cards.
Pro-forma assets of the new entity come to US$24.11 billion, with deposits of
US$18.75 billion and a loan portfolio of US$5.34 billion. Total capital comes
to US$1,74 billion while pro-forma net income for the first quarter of 2000 was
US$44.7 million.
In a first stage, the two franchises will operate independently though in a
coordinated manner, prior to a subsequent integration.
The leading financial group in Latin America
As a result of this acquisition, Grupo Santander Central Hispano reinforces its
presence in 12 Latin American countries - Argentina, Brazil, Bolivia, Chile,
Colombia, Mexico, Panama, Paraguay, Peru, Puerto Rico, Uruguay and Venezuela -
making up 98% of the region's GDP. The Group has 17 banks, 11 pension fund
managers, 12 mutual fund managers, 9 insurance companies and 10 leasing and
factoring companies. The regional franchise comprises 16 million customers: 11
million for banking services and five million for asset management (mutual
funds, pension funds and insurance).
Santander Central Hispano policy is to maintain majority holdings in the
financial entities that it acquires. Today, this stands at an average 85% in the
region.
Total Group assets in the region stand at US$85.45 billion, representing a
market share of 9.4%, the highest of any financial group. Balance sheet
customer deposits come to US$37.75 billion, giving a market share of 9.0%, while
mutual funds under management stand at US$11.8 billion for a 6.8% market share.
Pension funds come to US$11.04 billion giving a market share of 15.1%. Santander
Central Hispano thus manages US$60.59 billion in savings for Latin American
citizens, or 9.1% of the regional total. Loans stand at US$38.07 billion, a
market share of 10.2%.
In the first quarter of 2000, the Group recorded net attributable income of
US$220 million .
This broad and diversified presence is reflected in each of the 12 countries
underscoring the Group's leadership profile in the region.
Grupo Santander Central Hispano is Spain's leading banking group with total
managed funds of US$338 billion, a network of 8,364 branches and approximately
90,000 employees. Its market capitalization at the close of trade on May 5 was
US$41.15 billion, making it the largest bank in the Euro zone and the 10th
largest worldwide. The Group recorded net attributable income of 483.3 million
euros in the first quarter of 2000, a rise of 31.2% over the same period last
year.
ANNEXE
Banca Serfin
Banco Serfin has total assets of US$16.47 billion, a market share of 13%
and a loan portfolio of US$2.95 billion. Its market share in deposits
is 9%.
Founded in 1869, it has a network of 569 offices in 263 cities, with a
strong presence in the Monterrey and Guadalajara areas.
Grupo Financiero Santander Mexicano
The Group has total assets of US$7.37 billion, giving a market share of
5%, and a loan portfolio of US$2.33 billion. It has the highest capitalization
ratio in the Mexican financial system - 17% - and a non-performing loan ratio of
1.2% with a provision cover of 196%. It has a market share in deposits of 7%
and by number of affiliates is the second largest pension fund manager in
Mexico.
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