HSBC Holdings has made another push into Latin America, announcing yesterday it is to buy a 19.9 per cent stake in debt-ridden Mexican banking conglomerate Grupo Financiero Serfin (GFS). The deal, yet to be concluded, is likely to be worth about US$300 million on a forward estimate of GFS's net asset value, and will give HSBC significant exposure to GFS's principal subsidiary, Banca Serfin. 'It's the third biggest bank in Mexico, it's got a good franchise, and we have made a satisfactory deal with the existing owners of the bank and the [Mexican] government,' Midland Bank - a wholly-owned British subsidiary of HSBC- general manager for international operations George Cardona said. But news of the acquisition came as GFS revealed it had rung up huge losses of 7.44 billion pesos (about HK$7.23 billion) last year, flowing from continued bad debts and losses stemming from the Mexican crash of 1994. Mr Cardona said the poor result came after significant provisioning by the bank against these bad debts, some of which had been sold to the government following HSBC's investment. GFS said it had set up a $1 billion reserve to cover unpaid loans. 'We are joining in after these provisions . . . and the bank is selling its bad loans to the government,' Mr Cadona said. The government is also thought to be taking a $250 million stake, which will be slightly smaller than HSBC's interest. The government will also take on $1.3 billion of problem mortgage loans. Mr Cardonna said full details of the deal would not be revealed until later in the year, but he said the proposed acquisition represented a good way to participate in intra-regional business flows between Latin America and Asia. 'It has enabled us to go in at net asset value, with an important bank, whose economy is being integrated with the North American economy,' he said. Since Mexico signed the 1993 North America Free Trade Agreement (Nafta), Mr Cardona said its economy had benefited considerably from the increased trade links with the United States and Canada. He said HSBC had discussed a whole range of areas of co-operation between the two groups, which were expected to expand across retail and corporate banking. In securities trading, he foresaw GFS's broking subsidiary, which he estimated has 12 to 13 per cent market share of trading in Mexican stocks, working in alliance with HSBC Securities in New York.