Banorte Sees Mexico as Best Bet for Growth Elinor Comlay and Tomas Sarmiento - Reuters
go to original June 1, 2012

MEXICO CITY - Banorte, Mexico's No. 4 bank by assets, sees its best chance for growth in Mexico, although it may consider alliances with foreign banks, Chief Executive Alejandro Valenzuela said on Thursday.

The biggest Mexican-owned bank is focused on increasing lending within Mexico's economy, which is pegged to grow by 3.5 percent this year, and it will take a cautious look at any opportunities to expand abroad, he said.

"There are some tough years ahead for banking," Valenzuela said, noting that he expects many multinationals to refocus on a smaller number of countries after a rapid expansion at home and abroad that saw some rack up bad loans and run low on capital.

Still, Mexico's bank sector broadly is well capitalized after a crisis in the late 1990s and Banorte, with assets of 627.5 billion Mexican pesos ($43.80 billion), has a capital level of about 14 percent that will allow it to expand by increasing lending.

"Mexico right now presents so many opportunities that we have to take advantage of it, since it's the market we know best," Valenzuela said.

While Banorte will keep an eye out for opportunities from other banks that may need to sell assets to boost their capital, Valenzuela said he prefers to establish alliances with other lenders rather than go on a buying spree.

"It's no longer the time for global expansion, it's better to be the best-offer locally and associate yourself with banks that are also the best-offer in their own country," he said.

Working with other banks would allow Banorte to offer its customers services abroad without the bank taking on more risks and costs.

There is a lot of appetite from foreign banks for these kind of alliances, Valenzuela said, although he did not give details about what banks Banorte might consider working with.

Banorte, which has a loan portfolio of about 350 billion pesos or 14 percent of Mexico's total bank lending, will seek to make more loans to small and medium-sized businesses as well as to up its consumer lending.

Bank lending in Mexico is at low levels compared to other countries in the region. Domestic credit of all kinds provided by the banking sector reached 45 percent of Mexico's GDP in 2010, compared to a rate of 97.8 percent in Latin America's biggest economy, Brazil.

"If I were a Colombian, Brazilian, Chilean or Argentine bank I'd be looking to Mexico rather than to other places," he said.

($1 = 14.3263 Mexican pesos)

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