In the biggest single development in Mexico’s banking system since foreign banks entered the market a decade ago, Banorte, the country’s third largest financial institution, and medium-sized bank Ixe Grupo Financiero have agreed to merge. The $1.3bn deal, announced in November last year, was approved by authorities in February.
Both banks are locally owned and the merger will lend some muscle to Mexican competition in the foreign-dominated banking sector. “It is possible to develop market niches in banking up to a certain point,” says Alejandro Valenzuela, chief executive officer of Banorte. “But at that point, becoming bigger requires huge investments. At the end of the day, banking is an industry that requires scale.”
