By Amy Guthrie
MEXICO CITY--The chief executive of Grupo Financiero Santander
Mexico SAB (SANMEX.MX), which listed on the New York Stock Exchange
Wednesday, told CNBC that his bank's parent company, Spain's Banco
Santander SA (SAN, SAN.MC), has good reason to hold on to the 75%
it didn't float in the deal.
"Mexico is a very good investment for the group, and it's one of
the main sources of profit," Santander Mexico Chief Executive
Marcos Martinez said. "It's good for the group to still have
75%."
Santander raised at least 2.77 billion euros ($3.57 billion) via
the dual offer of about 25% of the Mexican unit on the Big Board
and the Mexican Stock Exchange. Should all the green-shoe options
be exercised, that amount could rise to EUR3.18 billion.
Santander plans to use the capital to reinforce its balance
sheet in Spain. Although the Mexican unit accounts for more than
10% of the Spanish group's profit, market watchers have expressed
concern that the Spanish bank might later decide to sell more of
its stake in the unit, thus diluting shareholder equity.
Nonetheless, demand for the offer was strong, with underwriters
receiving nearly five times more offers than shares available,
according to a person close to the deal.
That demand is a reflection of an optimistic global view of the
Mexican economy, which is seen growing nearly 4% this year, and
expectations of sustained double-digit credit growth for Mexican
banks, which are tightly regulated and well-capitalized.
Spain's current economic troubles aside, Mr. Martinez told CNBC
that it was certainly the "right time" for his bank to list on the
New York Stock Exchange, given how "well-perceived" Mexico is by
investors.
With President-elect Enrique Pena Nieto heading into office on
Dec. 1, Mr. Martinez said the probability that Mexico will secure
long-delayed structural reforms is "much better than in the past."
Mexican politicians have been butting heads for more than a decade
over how to overhaul the country's tax, labor and energy laws so as
to boost competitiveness.
Santander is Mexico's fourth-biggest lender by deposits. The
country's two biggest banks, BBVA Bancomer and Banamex, are units
of Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC) of Spain and
Citibank Inc. (C) of the U.S., respectively. Neither of those units
is publicly traded. Together BBVA Bancomer and Banamex control 39%
of Mexico's bank deposits.
Santander placed 19% of the offering in Mexico and the rest via
American depositary shares in New York. Each ADR represents five
local shares. Shares on both exchanges were up more than 4% from
their offer price in recent trade.
--Christopher Bjork in Madrid contributed to this article.
Write to Amy Guthrie at amy.guthrie@dowjones.com