Best bank – Bancomer
Best local partner – Banorte
Best debt house – JPMorgan
Best equity house – JPMorgan
Best M&A house – JPMorgan
In Mexico, as in Brazil, there was a tight three-way race for best bank this year. We mentioned last year that Banamex would face much tougher competition if its Santander-owned rivals, Banco Santander and Serfín merged, and that’s precisely what happened. The merged bank, Santander Serfín, is still not nearly as big as Banamex and Bancomer but at least now it looks as though the three are competing on the same playing field. Santander Serfín is easily the most profitable bank in Mexico in terms of return on equity. It increased its customers by 320,000, or 13.2%, in 2002.
The two biggest banks, however, continue to dominate the market. Banamex is the biggest in the country. It contributed $1.2 billion to Citigroup’s bottom line in 2002. It’s a formidable opponent, especially with the clout of Citibank behind it, and will be the bank to watch next year.
In 2003, however, the best bank award goes to Bancomer, Banamex’s great rival, because Banamex posted a loss for the year while Bancomer made a profit of $516 million. Bancomer, owned by Spain’s BBVA, had an impressive 12.2% drop in costs in 2002, even as its fees grew by 13%. That brought its fee-to-expense ratio all the way up to 65.5%, from just 50.9% in 2001.
Bancomer is also leveraging its size, seizing a 75% market share of the direct-debit business, and opening more than a million payroll accounts during 2002.
All three banks still have room to grow, and there might even be space for a fourth major competitor if HSBC-owned Bital were to merge with the last big independent Mexican bank, Banorte. Banorte wins the best local partner award since it has the best profitability after Santander Serfín, and is a crucial strategic asset in the fast-growing north of the country in the final stages of Mexican banking consolidation.
Investment banking is a clean sweep by JPMorgan, which picks up the debt, equity and M&A awards. Its leadership in debt capital markets can be seen in the deals it lead managed in 2003 for the sovereign. First there was the standard 10-year benchmark deal that Mexico does every year, then the ground-breaking $1 billion 12-year bond that introduced collective action clauses to the dollar bond markets. Finally, there was the mechanism by which Mexico called all of its outstanding dollar-denominated Brady bonds.
JPMorgan has also, in the past year, lead managed bond and loan deals, some of them highly complex, for such companies as oil giant Pemex and soft drinks bottler Coca-Cola Femsa. In fact, the deal in which Coca-Cola Femsa bought rival Mexican bottler Panamco is one of the primary reasons why JPMorgan must get the M&A award. But again, there are many other deals to point to, such as conglomerate Grupo TMM selling its railway, TFM, to Kansas City Southern; the acquisition of Bital by HSBC; and the $2.8 billion Tenaris global simultaneous equity exchange offer.
That exchange offer, as well as the HSBC-Bital deal, also counts towards the equity award. JPMorgan is also the ADR bank for 11 ADR issuers in Mexico, including Telmex and Kimberly-Clark de México.
