Madrid bank has bought a 25% stake in Bank of America Corp.’s Mexican sub-unit Banco Santander SA in a deal worth $2.5 billion. BofA undertook the sale in an attempt to shun its dissociated assets under an international authoritarian scheme.
The scheme has been framed to keep an eye on the marginal stakes of the banks across the nation. Bank of America had purchased a 24.9% stake in Santander's wing I Mexico in 2003 for an amount worth $1.6 billion. The analysts have been speculating that the bank’s decision has come as per the imposition of a “Basel regulatory accord,” which may ask the banks to enlarge its capital in order to continue holding a minimal stake in other organizations.
However, the banks have joined hands to oppose the proposed scheme with a viewpoint that it will add to the expenses of the banks.
"Minority investments are a sound means of diversifying earnings and gaining local market expertise that contribute to overall risk management. A risk-based capital regime should not penalize such investments”, BofA wrote.
Miller, a banking analyst with FBR Capital Markets & Co, opined that the move will force the banks to shun their stakes in other institutions.