Three foreign banks have registered to bid for Mexico’s third biggest bank, Grupo Financiero Serfin, at an auction scheduled for May. Spain’s Banco Santander Central Hispano, London-based HSBC, and Citigroup have all said they plan to bid for Serfin, as does Banamex, Mexico’s largest bank. The government took over Serfin following the 1994-1995 peso crisis, which wrecked a large part of Mexico’s banking system. The government plans to sell the bank for at least $685 million.

Banco Bilbao Vizcaya Argentaria’s March takeover of Grupo Financiero Bancomer SA seems to have lit a fire under foreign banks. Few foreign banks have a presence in Mexico, which is entering its fifth year of expansion in spite of a very weak banking system. By buying the 500-branch Serfin, Citigroup or BSCH could immediately become major players in Mexico, while Banamex could fend off a challenge from BBVA-Bancomer for control of a dominant market share of the Mexican banking market. Britain’s HSBC already owns 19% of Serfin, a stake that the government valued at $137 million last year.