About Mexican Banks

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Mexican banks have recently begun to open their systems up to foreign banks. In fact, the two largest banks in Mexico are owned by American companies. Consider investing in Mexican banks, but be aware of the potential volatility with information from a financial consultant in this free video on banks.

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Video Transcript

Are you a dedicated investor in Mexico? Hi, this is Roger Groh at Groh Asset Management. One of the industry groups in Mexico that holds allure for investors are banks. Now Mexican banks are going through much of the same upheaval as US banks and the rest of the world's banks are going through. So you need to be very careful about what you buy. However, several times over the last 20 years, the Mexican economy has gone into a tailspin because of the lack of discipline in the financial management system in Mexico. That changed dramatically starting about 10 years ago when they really got their act together and as a result, one of the things that the Mexican government did was they opened up their banking system to foreign banks and many foreign banks came in and took the lead positions in the Mexican banking industry. For instance, the largest bank in Mexico, Banamax, is owned by CitiBank, that's something for you to consider. For instance the largest bank in Mexico is owned by CitiBank and that's something for you to consider. Might a company like CitiBank end up selling off their holdings in Mexico in order to generate cash and survive? I don't know, that's a decision that you would have to make. Other companies that are heavily involved in Mexico would include Spain's Santander and HSBC. There is also a big newcomer in Mexico. The largest retailer and largest employer in Mexico is Wal-Mart, called Wal-Mex in Mexico. It's a publicly traded company and you can look it up, just Google Wal-Mex. Wal-Mex has gotten the right to open banks in Mexico and the idea is that yeah, Banamex serves the high end of the Mexican population, but who really serves as the average person or poor person in Mexico? The thought was that they probably shop at Wal-Mex and as a result, would be more apt to deal with a bank based in the stores. So Wal-Mex is a wonderful way to play banks in Mexico because they're new, they may not have many of the legacy loans and problems as the older banks that exist today in Mexico. It's not for the fainthearted, Wal-Mex is a wonderful business but the bank part is new. Hope that helps, you should contact your investment professional when it comes to buying banks anywhere much less in the emerging markets. Be very careful. I'm Roger Groh with Groh Asset Management and I hope it helps.


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