Banorte, Afore XXI Discussing Merger of Pension Funds

Grupo Financiero Banorte SAB, Mexico’s fourth-largest bank by outstanding loans, has started talks to merge its pension fund with Afore XXI, the fund half- owned by the Mexican Social Security Institute.

A merger of the pension funds “would allow for the creation of important cost synergies and income that would benefit the institutions and their clients,” Banorte said in a statement to Mexico’s stock exchange yesterday after the close of trading.

The combined total assets of Banorte’s and Afore XXI’s pension funds were worth 270 billion pesos ($21.6 billion) at the end of July, according to data on the website of Consar, the government pension regulator. This would represent the fifth largest afore, as the pension funds are known, according to Consar.

The combined afore would be Mexico’s largest by number of accounts, Banorte said. The merger would be subject to approval from Prudential Financial Inc. (PRU), which owns the other 50 percent of Afore XXI and Assicurazioni Generali SpA (G), which holds a 49 percent stake in Banorte’s pension fund, Banorte said.

Mexico’s 15 afores managed 1.46 trillion pesos ($181 billion) of total assets as of June 30, according to Consar.

Afore XXI is the third best performer of Mexico’s 15 pension funds with an average three-year return of 10.5 percent, Consar data shows. Banorte’s afore is ranked twelfth, with an average three year return of 7.9 percent.

A representative for Banorte could not be reached for comment after normal business hours.

To contact the reporter on this story: Jonathan Roeder in Mexico City at jroeder@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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