Banco Santander SA is planning to delist its Mexican subsidiary, once its tender offer for the 8.3% of outstanding shares it does not already own in Banco Santander México SA Institución de Banca Múltiple Grupo Financiero Santa is approved by the CNBV banking regulator, Héctor Grisi Checa said in a call to discuss first-quarter results.
"The CNBV has yet to approve the tender offer, but we expect the transaction to be closed by the end of the second or during third quarter," the executive said, also noting that the bank's parent company intends to delist the subsidiary from both the BMV Mexican Stock Exchange and the New York Stock Exchange.
The move would leave Grupo Financiero Banorte SAB de CV as Mexico's only lender listed on the U.S. stock exchange.
Regarding what will be Santander Mexico's final dividend payouts as a separately listed unit, the CEO pointed to lingering uncertainty around the CNBV's recent recommendation to banks, particularly around the timing and the amount of profit distribution that will be allowed.
The regulator has stated that payouts should be capped at 25% of the combined net income of 2019 and 2020, minus any distribution attributable to those periods made in 2020 before restrictions were implemented at the outbreak of the pandemic.
"It's not clear if the roughly 5.5 billion-peso dividend payment that we made in December 2019, according to our practice of paying dividends twice a year, which were associated to the earnings of the first half of that year, must be subtracted," Grisi Checa noted.
While the bank has asked the CNBV for clarification on the issue, for the time being, the CEO is assuming the restriction will apply "regardless of when the payment was made."
If the regulator reaffirms that assumption, Santander Mexico would distribute approximately 5 billion pesos, but if it decides to the contrary, the bank would pay out double that amount.
Grisi Checa also pointed to doubts about the timing of payouts, as systemically relevant banks have been asked to refrain from doing so if dividend payments would compromise their ability to comply with new regulation on total loss-absorbing capacity, or TLAC, by the first quarter of 2022.
"It's interesting that Santander Mexico did its IPO at around 32 pesos per share, and now they [Banco Santander SA] would be buying them at approximately 24 pesos per share," Eduardo López Ponce, an equity analyst at Banco Ve por Más, commented, adding that "in terms of valuation, they [Banco Santander SA] are offering at a price-to-book ratio of 1.0, compared to about 1.4 in 2012."
The lender's delisting could take place two weeks to one month after the tender offer is executed, the analyst said, pointing to the only two analysts covering the earnings call as a sign of diminishing investor interest.
As of Apr. 28, US$1 was equivalent to 19.97 Mexican pesos.
