HSBC Holdings, the world's third largest bank by market value, has agreed to buy Panama-based Grupo Banistmo for US$1.77 billion to further expand its banking and insurance business in Latin America.
HSBC will pay US$52.63 per share in cash for the acquisition and shareholders who own 65 per cent of Banistmo have agreed to accept the offer.
The deal is expected to be completed in the final quarter of this year.
The acquisition, the biggest for HSBC since it bought a 19.9 per cent stake in Bank of Communications for more than US$1.7 billion in 2004, will add another 220 branches to HSBC's operations in Latin America.
HSBC now has 19 branches in Panama providing services to personal and corporate customers.
'[The deal] will allow us to expand into new markets, in a region of 83 million people in which large sections of the population do not currently have bank accounts,' said HSBC group chairman Stephen Green.