Scotiabank Takes Aim at Mexico's Middle Class Ron Buchanan - The Financial Times
go to original October 16, 2012

Bank of Nova Scotia’s new chief in Mexico, Troy Wright, is enthusiastic about the growing purchasing power of Mexico’s middle class. “We see a lot of opportunity right now to really start to drive a lot more of the business, and take advantage of people’s credit health,” he told Bloomberg this week.

Wright, whose predecessor resigned abruptly, has certainly gone to the right place in his quest for the middle class. There can be fewer countries than Mexico in the world whose population more vehemently treasures middle-class values.

But those middle-class values do not always relate to what might be regarded elsewhere in the world as middle-class incomes.

Of 2.1m jobs that have been created in Mexico in the year to June of this year, 1.7m earn less than $300 a month, and more than 230,000 receive no wages at all – presumably, many of them are petrol-pump attendants and bar girls.

Even so, large, low-income families have been able to raise consumer credit, and several lenders have been doing very well despite their customers lack of a previous credit record. Those Mexican middle-class values include basic honesty.

Scotiabank, Canada’s third largest bank is Mexico’s seventh-largest bank by assets, with 710 branches. Following a deal earlier this summer to buy Credit Familiar from Citigroup Banamex unit for an undisclosed price, Wright plans to extend credits to families looking to buy their first homes, cars and furnishings.

As Bloomberg explained:

    The purchase, expected to close by December, will allow Scotiabank to make $500 to $1,500 loans to families that may not have a credit history, Wright said.

    The bank plans to run the 250 Credito Familiar branches separate from Scotiabank because of the different types of lending they provide. Customers have average salaries of $5,000 to $10,000 a year, and there are government programs distributed through Mexican banks that allow clients to apply for first mortgages, Wright said.

But the rush to lend has not been a one way street.

Ricardo Salinas, the billionaire whose business interests include Grupo Elektra, the electrical-goods retailer and low-income bank, is now aiming to export his business model to the United States.

Salinas said recently in a Bloomberg interview that he wants to create in the US what he has done in Mexico and elsewhere – “a bank especially for people at the bottom of the pyramid.” A very Mexican pyramid.

We invite you to add your charity or supporting organizations' news stories and coming events to PVAngels so we can share them with the world. Do it now!