UPDATE 1-Principal Financial buys HSBC Mexico pension fund

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MEXICO CITY, April 11 (Reuters) – The Mexican pension fund
managed by Principal Financial Group Inc (PFG.N: Quote, Profile, Research) acquired one
of its mid-sized rivals with the purchase of the retirement
fund managed by HSBC (HSBA.L: Quote, Profile, Research), the companies said on Monday.

Principal Financial’s fund, known locally as Principal
Afore, paid roughly 2.36 billion pesos, or $198 million, for
total control over the HSBC fund, which will boost its accounts
under management to 1.6 million, Principal said in a
statement.

The combined assets of the two companies will total roughly
94.4 billion pesos, or $8 billion, according to regulator
figures from February. After the buyout, Principal will control
about 11 percent of Mexico’s private retirement accounts and
become the sixth largest pension fund among the 14 funds left,
in terms of assets under management.

Tighter regulation and more competition among Mexico’s
private pensions has driven some out of the industry and led to
buyouts.

The Mexico pension fund regulator has said in the past he
expects to see more consolidation in the industry. Principal
expects to finish the transaction in the third quarter,
although it still needs regulator approval.

Principal said the acquisition represents its determination
to continue to expand into Latin America and become a dominant
financial services company in the region.

“The HSBC business is a natural fit with our international
strategy, provides critical scale and allows us to expand our
base for growth in key emerging markets like Mexico,” Norman
Sorensen, Chairman of Principal International, said in a
statement.
(Reporting by Patrick Rucker and Tomas Sarmiento; editing by
Andre Grenon)

UPDATE 1-Principal Financial buys HSBC Mexico pension fund