Texas Banks Are Targets for Mexican Buyers
Greef, Charles E., Hidalgo, Greg, American Banker
With passage of the North American Free Trade Agreement, there is a growing interest among Mexican banks and investors about entering the United States banking market.
The Texas banking market offers attractive opportunities for a Mexican bank investor to acquire a U.S. financial institution. Entry of Mexican banks and investors into the Texas banking market will benefit Texas banks by enlarging the pool of possible buyers for banks that wish to sell.
In addition to its geographic proximity and historical ties to Mexico, several other factors make Texas a logical market for Mexican banks and investors. Texas has a large number of potential target banks, a favorable regulatory environment and comparatively low prices as compared to other banking markets in the United States.
Texas has 1,100 commercial banks. At any given time, a number of these banks are actively for sale and many others can be bought "for the right price." An interested purchaser, as a result, can usually find a target bank of the size and in a location the purchaser desires.
Texas offers Mexican banks and investors alike a favorable regulatory environment. The Texas Banking Code has been construed to permit non-U.S. holding companies to acquire commercial banks in Texas.
In addition, Texas permits statewide branching. As a result, once a Mexican bank or investor group acquires a commercial bank in Texas, the bank can branch into any other town or city in the state following a relatively quick and routine procedure by the bank's primary regulator. Texas also permits non-U.S. citizens to be directors of Texas state banks.
Mexican Investor Acquisitions
Federal and state law have permitted the ownership of a commercial bank in Texas by non-U.S. citizens for many years. Mexican investors have been involved in the ownership of Texas banks for many years.
Mexican investors are subject to the same regulatory approval process as U.S. citizens. Mexican investors must receive regulatory approval from the bank's primary federal regulator under the Change in Bank Control Act prior to obtaining "control" of a U.S. bank, whether it be a state or a national bank.
Mexican investors must also comply with the applicable change-in-control provision of the Texas Banking Code. Change-in-control approval for a foreign investor often takes somewhat longer than for a U.S. citizen due to the time-consuming process of completing the required background checks with foreign regulatory agencies.
The Board of Governors of the Federal Reserve System governs entry of foreign banks into the U. …