* Mexican investors to subscribe Popular capital hike
* Spanish bank Popular to raise up to 450 mln euros
* To buy 24.99 pct stake in Mexico's BX+ with proceeds
* Will also boost capital ratios ahead of European tests
By Sarah White and Elinor Comlay
MADRID/MEXICO CITY, Dec 11 Spanish lender
Popular said on Wednesday it would raise up to 450
million euros ($620 million) by selling shares in the bank to
new Mexican investors, allowing it to boost its solvency ratio
and secure a stake in a small Mexican bank.
Spanish banks and companies, hurt by a deep recession, have
started to turn to Latin America for investment and growth.
While Mexico's economy is forecast by the United Nations to
expand 3.5 percent next year, Spain's is expected to grow no
more than 1 percent.
Banks across Europe are also preparing for a region-wide
health check of their assets next year, putting them under
pressure to improve their financial strength.
Popular's deal involves Mexico City-based bank BX+ - also
known as Grupo Financiero Ve Por Mas - and its controlling
shareholders, billionaire businessman Antonio del Valle and his
These investors, and other unnamed Mexican business people,
will subscribe to a capital increase of up to 450 million euros
in December this year, handing them about 6.4 percent of the
Spanish bank, Popular said.
About 114 million new shares will be offered at 3.95 euros a
share, a discount of 5 percent to the closing price of Popular's
stock on Tuesday.
Popular said it would in turn inject 97 million euros of
capital into BX+ in the first quarter of 2014, in exchange for a
24.9 percent stake in the Mexican bank.
"For Popular it's quite a positive operation given that it's
capturing foreign investors who are likely to be long-term
shareholders, and that the discount on the capital increase is
of only 5 percent," said Nuria Alvarez, a Madrid-based analyst
at brokerage Renta 4.
Popular shares closed down 1.4 percent at 4.1 euros per
Popular was among Spanish banks that managed to escape a
state bail-out last year, when Spain had to turn to Europe for
41 billion euros in aid for the lenders unable to cope with the
after-shocks of the 2008 real estate crash.
But it did have to turn to shareholders in 2012 for a 2.5
billion euro capital hike, and has still been trying to bulk up
its solvency ratios since. In October it issued a bond that can
convert into capital, though it paid a high price for the deal.
Popular said the Mexican transaction would improve its
capital to risk-weighted asset ratio by 54 basis points to 12.3
percent under so-called Basel 2.5 criteria, a softer version of
international rules that are set to be beefed up as of 2013
under a regime known as Basel III.
It had said in October its 'fully-loaded' Basel III ratio,
which takes into account changes that need to be made by 2019,
would reach 8.6 percent at the end of 2013, just above minimum
Spanish banking peer Sabadell turned to Latin
American investors in September as part of a 1.4 billion euro
capital hike, bringing in Colombian financier Jaime Gilinski as
its biggest shareholder.
Other Spanish companies have also attracted investment from
the region, with Mexicans among the most active. Mexican frozen
food company Sigma Alimentos recently launching a takeover bid
for Spanish meat processor Campofrio.
For Popular, the BX+ deal also marks a shift away from its
home market, where margins have been squeezed in the economic
downturn. Popular was the only one among Spain top six banks to
report falling nine-month profits in the year to September.
The bank said it was diversifying geographically and had
chosen Mexico for its strong growth prospects. Domestic rivals
such as BBVA already have big businesses in Mexico,
which helped them weather woes in Spain.
BX+, founded in 1995, is a small player, however, with
19.909 billion pesos ($1.55 billion) in assets at the end of
October, less than 1 percent of Mexico's total bank assets,
according to data from the country's banking regulator.
Most of its loans are commercial and to other financial
institutions, and Popular said it would be investing to help it
better develop its business targeted at small and medium-sized
"Both groups are looking to develop the market targeted at
SMEs and individuals in Mexico and Latin America," Popular said.