October 10, 2008 / 6:50 PM / 9 years ago

UPDATE 2-Banorte shares dive but group says in good shape

(Recasts, adds analysts comments)

MEXICO CITY, Oct 10 (Reuters) - Shares of Banorte bank plunged more than 35 percent amid a global meltdown on Friday but the firm said it was in sound shape to face past-due loans.

Banorte GFNORTEO.MX fell 8.75 pesos to 16.10 pesos in afternoon trading.

Reassuring investors, Banorte said in a statement it had “ample liquidity, robust capitalization levels and sufficient reserves to face past-due loans.”

Banorte attributed the steep fall in its stock price to speculation and market nervousness caused by recent news of Mexican firms hit by steep losses in their derivatives positions, a result of a massive slump in the peso MXN= MEX01.

Earlier on Friday, Banorte said it was not part of derivative operations with paper maker Corporacion Durango CODUSA.MX, retailer Comercial Mexicana (Comerci) COMEUBC.MX or Grupo Industrial Saltillo GISSA.MX, all of which have disclosed deep financial troubles this week.

Comerci and Corporacion Durango have filed for protection from creditors, while Industrial Saltillo said it would record a write-down in its third-quarter results due to derivative trading.

Banorte did say it was exposed to a $100 million Comerci loan due in 2009, but it hoped to recover part or all of its money once the retailer restructures its liabilities.

“It would seem an overreaction because the market is extremely fearful about where the (likely) losses are and which others are yet to be revealed,” said analyst Francisco Suarez with Actinver.

Banorte is Mexico’s fifth-largest bank and the last big financial institution controlled by Mexican investors after a wave of acquisitions by major foreign players.

“We have spoken with the company and they tell us that, at least through September, there are no surprises,” said a New York-based analyst who asked not to be named.

“Our view is that Banorte is one of the banks with the best management team and with the lowest risk profile of the industry in Mexico,” the analyst said. (Reporting by Cyntia Barrera Diaz, Armando Tovar, Noel Randewich, editing by Richard Chang)

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