Grupo Financiero Banorte, Mexico's fifth-biggest bank, is contemplating the purchase of all or part of Bancrecer SA, a troubled institution with 1,600 branches that has put itself up for auction.
Robert W. Chandler Jr., Banorte's acting chairman and chief executive, confirmed Thursday in a phone interview from Monterrey that his bank is interested in a cutting a deal. But he also emphasized that it had yet to review the figures and had not bid.
"We want to grow, and the most effective avenue to growth is acquisitions that help us pick up selective customer bases in selective geographies," Mr. Chandler said.
Analysts said the move would significantly strengthen Banorte's national network in Mexico.
Banorte, which has shot up from No. 14 in asset size three years ago to No. 5, with more than $9 billion of assets, has been aggressively expanding both its geographic and product range in recent years but remains overly dependent on business lending in northern Mexico, analysts said.
"They've realized the name of the game is nationwide, universal banking," said Robert Lacoursiere, a managing director and senior analyst at Bear, Stearns & Co.
"But they're still in in-between land," he said, "because they're not really a regional bank anymore while their national branch network is still too light."
Mr. Lacoursiere, however, suggested that a merger between Banorte and Grupo Financiero Bital, another capital-short Mexican banking group, would help Banorte even more.
Mr. Chandler said there was no sense in discussing a possible merger with Bital or any other Mexican bank since only Bancrecer has come up for sale.
Mexico's banking system has been consolidating steadily ever since a financial crisis in 1995 created a large number of problem loans and capital shortages at Mexican banks.
In recent years, several U.S., Spanish, and Canadian banks have either taken over financially troubled Mexican institutions or bought large equity stakes in them. Banorte's main contender for Bancrecer is expected to be Spain's Banco Bilbao Vizcaya, which already owns Grupo Financiero BBV- Probursa.
Analysts noted that Banorte is one of the few well capitalized banks in Mexico.
Bancomer, Mexico's second-biggest bank, needs from $500 million to $800 million of added capital, and Serfin, the country's third-biggest, needs $1 billion to $1.3 billion more. Bital is estimated to lack about $500 million.
The capital shortages have led to speculation on a merger of Bancomer and No. 1 Banamex, which jointly hold about 50% of Mexico's banking assets of some $120 billion. However, analysts said such a deal remains unlikely.