Mexico’s Grupo Financiero Banorte has agreed to acquire Grupo Financiero Interacciones in a cash-and-stock deal valued at $1.4bn.

The deal will make Banorte the second-largest bank in Mexico by assets, loans and deposits, behind Spanish-owned BBVA Bancomer.

In a filing with the Mexican stock exchange, Banorte said it will pay MXN13.7bn ($719.39m) in cash and 109.7 million of its shares.

Banorte chief executive Marcos Ramírez Miguel said: “With this acquisition, Banorte positions itself as the leader in financing the enormous infrastructure needs of our country, which represents a unique opportunity to drive competitiveness, attract investmen and improve the quality of life of Mexican families.”

The deal, which needs to be approved by shareholders of both banks and regulators, is expected to close in the second quarter of 2018.