Santander says it pays 2.5 billion dollars for Mexican asset

Spain’s biggest bank, Santander, said on Wednesday it will pay 2.5 billion dollars in cash for the 24.9-percent stake in its Mexican branch, Santander Mexico, owned by Bank of America.

The deal will lift the bank’s stake in the Mexican group to 99.9 percent and it highlights the growing importance of Santander’s international operations as the domestic market Spain faces a lengthy period of sluggish growth.

Mexico is one of the bank’s key markets. With full ownership of Santander Mexico, the country’s contribution to total group profit will increase by two percentage points to seven percent, Santander said in a statement.

“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,” Santander chairman Emilio Botin said.

Santander is the third financial group in Mexico by business volume, with a market share of 13 percent in loans and 14.8 percent in deposits.

It sold the 24.9-percent stake to Bank of America in 2003 for 1.6 billion dollars (1.3 billion euros).

Santander posted a first-quarter net profit of 2.22 billion euros, a 5.7 percent increase over the same time last year.

The banks’ net profit in Latin America during the period rose by 14.6 percent to 1.02 billion euros.