Monterrey, Mexico–based Grupo Financiero Banorte has agreed to pay $1.6 billion to acquire the Mexican pension fund business of Spain’s Banco Bilbao Vizcaya Argentaria (BBVA).

Banorte will finance half the acquisition of the unit, called Afore Bancomer, with the other half to be put up by Mexican Social Security Institute—a state-owned organization that co-owns an existing Banorte pension fund, Afore XXI Banorte, via which the acquisition will be made. Afore Bancomer manages more than $21 billion in assets through nearly 4.5 million accounts. By adding the unit, Banorte, one of Mexico’s largest financial institutions, will become the country’s largest pension fund manager.

The deal, which was announced Tuesday, is subject to regulatory approval.

Meanwhile, Reuters reports that Banorte’s chairman, Guillermo Ortiz, said the bank is considering further expansion and may make a run at BBVA’s pension funds in Colombia and Peru.

Covington & Burling is serving as lead counsel to Banorte in connection with the acquisition with a team led by New York–based corporate partner Rubén Kraiem and corporate of counsel Gabriel Mesa. Tax partner Robert Heller, employment benefits partner Michael Francese, intellectual property partner Lee Tiedrich, antitrust partner James O’Connell, and M&A partner Peter Schwartz are also advising.

Both Haynes and Boone and Jones Day are providing Banorte with advice on Mexican law aspects of the transaction. The Haynes and Boone team is led by Mexico City–based finance partner Jorge Labastida, who told The Am Law Daily in a statement that his team specifically advised Afore XXI Banorte on due diligence review of the target unit, as well as regulatory and corporate aspects of the deal, while Jones Day provided similar advice to the parent company. New York–based Haynes and Boone M&A partner George Wang is also working on the deal.

Jones Day’s team is being led by finance partner Fernando de Ovando and M&A partner Mauricio Castilla in Mexico City. Capital markets partner Silvia Malagón and labor partner José Carlos de Uriarte are also advising.

For its part, Bilbao, Spain–based BBVA is being represented in the sale by a Sullivan & Cromwell team that includes the heads of the firm’s Paris and London offices, as well as the head of the Latin America practice: M&A partners William Torchiana, Richard Morrissey, and Sergio Galvis, respectively. European M&A counsel Joram Lietaert and Lucas Carsley are also advising, along with financing partner Neal McKnight, tax partner Ronald Creamer Jr., compensation and benefits special counsel Rebecca Coccaro, and intellectual property special counsel Blaze Waleski.

S&C also advised BBVA in 2006, when the Spanish bank paid $2.16 billion to acquire Texas Regional Bancshares Inc.