Commercial Banks in Mexico Poised to Reap the Rewards of New Reforms Jane Monahan - The Banker
go to original January 6, 2014

The swathe of new reforms being proposed by Mexican president Enrique Peña Nieto have the potential to open up new avenues of business for the country's banks, both large and small.

In an emphatic bid to lift Mexico’s economic growth and put the country on a par with other large emerging economies, president Enrique Peña Nieto, in the year since he has been in office, has introduced more structural and legislative reforms, and more changes – in telecommunications, labour, education, financial regulation, taxation, political reform and energy – than the country has seen in a decade.

Troy Wright, CEO of Scotiabank Inverlat, Mexico’s seventh largest commercial bank by assets and Tier 1 capital, believes that the Mexican banking system as a whole – 45 banks in total – will benefit. “The old saying is ‘rising tides lift all boats’ – I would say the entire economy, and therefore all of the banks, regardless of size, will benefit from the general reforms,” he says in a telephone interview from Toronto, where the bank’s parent, Scotiabank, is based.

When it comes to the key energy reform, generally considered the biggest game-changer in terms of economic policy in Mr Peña Nieto’s reform agenda, Mr Wright believes that it is Mexico’s seven largest banks (five of which are foreign owned – BBVA Bancomer, Citigroup’s Banamex, and subsidiaries of Santander, HSBC and Scotiabank – and two of which are local – Banorte and Inbursa) that stand to gain the most. And it is Scotiabank and Banamex, he says, that are the best positioned of them all.

“At Scotia, it’s a tremendous opportunity. I think all of the big banks in Mexico will play some role. But I think the difference is that we will bring to the table our deep knowledge of the oil and gas business and the ability to provide advisory services,” he says.

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