Latin Finance - November/December 2010 - 46

programs providing partial guarantees, García says. Bancomer will stay relatively risk averse to low-income Sofole-type mortgages, García says, although after acquiring Sofole giant Hipotecaria Nacional in 2005, Bancomer is still the largest bank lender of such loans. In September, Bancomer ceased discussions to form an alliance with another Sofole, Hipotecaria Su Casita SA. García says that while the bank was open to increasing Sofole exposure, the sale price was likely not right given current economic uncertainties. Consumer loans may also inch upward, but mostly through cross-selling to well-known clients. Other banks are also venturing more aggressively into commercial loan and mortgages, with perhaps the ﬁercest competition remaining contained among the top four banks, analysts say. Bancomer says its new 2010-12 growth plan aims to increase small enterprise credits and services, mortgages, investment banking for mid-size businesses, payroll accounts and loans and correspondent banking agreements. New technology-based products include basic ﬁnancial transactions via mobile phone aimed at growing the client base by targeting people without bank accounts. In addition, Bancomer o ers payroll loans through ATMs.

to protect and defend users of ﬁnancial services. Credit cards still charge through the roof despite reference rates being halved during the recession, with some banks requiring up to 80% interest per year, says Marco Carrera Santa Cruz, a Condusef spokesman. Loans on average cost 40% more than in the US, Carrera adds. “Close to 80% of the system is run by four banks. There is no incentive for new participants,” Carrera says, noting that only half of the population actually uses ﬁnancial institutions. “There is a custom of [high] prices and people just take it or leave it.” LF

Heineken acquisition of Femsa Cerveza, in addition to intra-company deals such as the incorporation of Carso Global Telecom and Telmex international into América Móvil and Walmart’s consolidation of Central American operations into Walmex. Cabral explains the small number of equity deals and lower number of DCM deals – though volume remains the same – this year means fees in both areas are down. In the case of equities, he notes fewer deals and smaller commissions are a global phenomenon. “We don’t have enough issuers in the country,” Cabral says, of local bond deals. The country’s local DCM market is 95%

MEXICO
Best Investment Bank – Citi-Banamex

Limited Funding

S&P predicts no new debt issuance this year from the bank after Bancomer sold $1 billion in 10-year bonds on international markets. It sees modest growth and reliance on deposits. Fitch’s García however, says the bank could increase its capital market presence, mostly locally, over the next 12 months to ﬁnance growth in loans that deposits alone cannot fulﬁll. The bank will likely keep placing senior secured, medium-term bonds as well as hybrid securities such as perpetual bonds, he adds. As for the high price of banking in Mexico, some progress has been made. In April the Bank of Mexico forced all lenders to stop charging double fees for services and cut 11 out of 200 transaction charges. This may have brought down costs to consumers by 30%, according to Condusef, the national commission

he past 12 months have seen capital markets activity and M&A pick up in Mexico following a crisis-inspired lull. Mexican issuers have been issuing dollar bonds, and the country saw its ﬁrst IPO in more than two years, though capital markets ﬂow falls short of pre-crisis levels. The landscape for large banks handling such operations seems little changed from the past few years, with only a small group specializing in all products. This allows Banamex to retain its title as the bank best-equipped to o er a full range of services in Mexico, without much need for the innovation characterizing competition in other markets. “We’ve worked to align all of our di erent services, so that when we visit clients, they have a single o er of integrated services, with all of the possible global and local market alternatives,” says Humberto Cabral, director of local debt capital markets at Banamex. “M&A activity has been heavy, in Mexico, with much competition in the past year,” Cabral says. He adds that it should remain that way, likely remaining the most competitive business area. Recent deals include a $1.7 billion Cemex divestment and the $7.3 billion

More of Lo Mismo? T

New LatAm IB head Eduardo Cruz investment grade, he says. The question is how to expand this market. Structured transactions, slowed during the crisis period, are one area that could be developed and extended down the credit scale. States and municipalities represent another area to be explored further, particularly project ﬁnance structures to help address infrastructure needs. Cabral says there should end up being around 100 bond issuances in 2010, worth some $12-$14 billion equivalent, with a similar volume expected next year. This would be up from $9.3 billion in 2009 and $10.4 billion in 2008, according to Dealogic. Issuance in 2010 has been mostly

46 LATINFINANCE

November/December 2010

Latin Finance - November/December 2010

Table of Contents for the Digital Edition of Latin Finance - November/December 2010