InvestaBank, the Mexican lender that agreed in 2016 to buy Deutsche Bank AG’s Mexico units, is considering steps to renegotiate the $175 million purchase, according to people with direct knowledge of the matter.
The Mexico-based firm may seek to lower the price after regulatory changes wiped out most of the revenue the German lender generated through its monopoly on custodial services in the corner of the Mexican stock market where foreign securities trade, said the people, who asked not to be identified because the information is private. A Deutsche Bank spokeswoman declined to comment.
Until last year, Deutsche Bank earned commissions as custodian for the bulk of securities registered in the Sistema Internacional de Cotizaciones, known as the SIC, which accounts for 35 percent of trading on Mexico’s stock exchange. In June, Mexico put into place rules that sought to lower costs for investors by cutting banks out of the role and transferring the custodianship to the stock exchange’s clearing house.
The agreement between InvestaBank and Deutsche Bank includes a provision that allows for the price to be renegotiated if the value of Deutsche Bank’s businesses changes, one of the people said. InvestaBank is studying how the change in the SIC revenue stream might affect that provision.
Deutsche Bank announced the sale of its Mexico unit as part of Chief Executive Officer John Cryan’s plan to revive the struggling German lender. The deal was expected to close last year. InvestaBank agreed to buy the bank subsidiary — Deutsche Bank Mexico, SA Institucion de Banca Multiple — and a broker dealer, Deutsche Securities, SA de C.V., Casa de Bolsa.