STRATEGICALLY SPEAKING

Mexico 2014 | FINANCE | INTERVIEW

TBY talks to Jorge A. Arce, Managing Director & Chief Country Officer of Deutsche Bank Mexico, on growth strategies, financial reforms, and limiting the informal economy.

Jorge A. Arce
BIOGRAPHY
Jorge A. Arce is Managing Director and the Chief Country Officer for Deutsche Bank Mexico, overseeing all Deutsche Bank business activities in the country. Previous roles elsewhere included a stint as Head of Northern Latin America Private Wealth Management (PWM) with assets under management of close to $10 billion. He was also Managing Director in DB’s Corporate Investment Banking (CIB) group; from 1998 to 2004. He holds a Bachelors degree from Pace University.

What is the strategic significance of Mexico for Deutsche Bank?

Mexico represents a unique opportunity for Deutsche Bank. We focus on helping corporates and the federal government meet their financial and strategic needs. We target the top clients in Mexico, with whom we work in capital raising, risk management, treasury services and M&A activities. In 2013, we won the Euro Money Magazine Award for Best Investment Bank in Mexico in 2013. We were leaders in most business lines in which we participate. Mexico is a country of stability and high growth potential with GDP of over $1.6 trillion, a diversified economy, excellent location, a young population and important natural resources.

What has been the main focus of your growth strategy over the past five years?

Our strategy is built on the strengths of Deutsche Bank globally, namely investment banking, market capabilities, and risk management. We are also building up local capabilities, cash management, and are funding loans locally. We are focused on developing the trade finance business, which is crucial for a country that exports and imports over $2 billion per day.

What is your role in promoting VEMEX (foreign securities for Mexican markets)?

That is actually a business we created in partnership with the authorities BMV and INDEVAL. It accounts for about 25% of the daily volume of the Mexican stock market. It provides strong opportunities for Mexican investors to invest in global financial instruments locally. As markets become more sophisticated and people want to have a true global asset allocation, they are going to invest in international securities as part of their portfolio strategies.

What are your views on Mexico's financial reforms?

I believe that financial reforms will be positive for the country. It has many positive aspects for example it establish clear processes for collecting guarantees and specialized courts to handle financial disputes. Reform will increase banking penetration in the country, both from the deposit side, and the use of credit. Importantly, the focus of development banks is changing toward the promotion of growth and development, rather than just protecting their capital.

What of the role of the financial sector in limiting the informal economy?

The informal sector has to see the benefits of being a part of the formal economy in terms of access to the social-safety net, availability of credit, and access to programs that help them gain higher productivity. In addition, education is critical to the development of the formal economy. It will take time, but we are developing the basic infrastructure to transform the informal economy into a formal one. Once you integrate productivity, greater tax collection and transparency result. The best route to achieving this is through incentivization. This has been the stated goal on the government, to push various reforms including welfare, education, and financial reform.

What is your forecast growth rate for Deutsche Bank Mexico?

I think we should expect double-digit revenue growth within the next couple of years. Between direct and indirect employees, we now have about 150 people, and that should have reached about 300 staff by 2016.

What is the significance of your award for best investment bank in Mexico?

We are proud of this achievement; because it is reassuring that other people also think that we are doing well. In 2013, we have participated in many critical deals for our clients. But it is more than an award for us; it is an award for our clients because we have been the leader in providing what they need in order to continue growing, to strengthen their financial positions, to have the resources they need, and to implement their strategies.