BANKING MEXICO

Mexico 2018 | FINANCE | B2B

Developing broader banking products not only for local companies, but also for multinationals coming to Mexico, is part of growth plans for banks.

Mario Maciel
MARIO MACIEL
CEO
CI BANCO
Hyunghoe Koo
HYUNGHOE KOO
General Director
Banco Shinhan de México

What are the main achievements and goals of the bank?

Mario Maciel During the last year, we have consolidated our banking activities. We started as an FX house 35 years ago, and April 2018 marked 10 years of CI BANCO operating under a banking license. We take pride in being ranked second in Mexico's entire FX and derivatives market and are the second-largest beneficiary and the sixth-largest bank in auto loan portfolios. We have developed a nationwide presence and have increased our banking activities, not only through increasing FX and derivatives revenues, but also by developing the majority of banking products. We are competing against strong multinational and domestic banks that have been operating for almost 150 years, and we have certain strong points that give us an advantage in the market.

Hyunghoe Koo The general goal of the bank is to expand our business, have more customers, increase our earnings, and grow together with society. Our first target is to promote our business with Korean companies incorporated in Mexico because there will be less risk as we know their headquarters in Korea; we want to be slightly more conservative in the first stage. In one or two years' time, we will focus on the local market and will hire more relationship managers. Our ultimate target, and third stage, is to provide a tailored banking service to Mexicans in about five years' time. By progressing through these stages, we will reach our global business target.

What is your strategy to remain ahead of your competitors in the FX market?

MM The FX market is a market to trade commodities, and the most liquid commodity is currencies. We are intermediating the most liquid commodities; hence, the price must be right according to the market. Our main tool for being among the market leaders is our service; certain companies prefer to deal with us because we have an FX-focused business. Our philosophy is not to take high-risk positions in the FX market for either long or short term. We buy and sell simultaneously, and there is a wider space to boost earnings when market volatility is high; however, a flat market means no space for making money. Betting against the trend leads to a high possibility of incurring losses.

Why did you make the move from being a representative office to a registered bank in the country?

HK Mexico is a neighbor of the US, the largest consuming country in the world. It also has competitive labor costs and many Korean companies continue to come to Mexico. We set up a representative office in Mexico in 2008. Our main business was to promote business opportunities with our overseas network, like our New York or Hong Kong branches. Our business did not grow as much as expected and our board of directors in Korea decided to establish a bank in Mexico to provide faster and better service for our customers, including local companies. We injected capital into Mexico and in 2015 obtained an incorporation license. In December 2017, we received our business license from the National Banking and Securities Commissions.

How do you plan to collaborate with fintech companies?

MM We need to enter fintech after an in-depth analysis of the situation of fintech in the Mexican market. Authorities must regulate cryptocurrencies before alliances are made with certain fintech companies. Cryptocurrencies and fintech are trending; the banking sector must make well-calculated alliances to create a technological innovation department. To be successful in this modern era, a company must possess state-of-the-art technology.

Which sector holds the greatest growth potential for trade relations between Mexico and Korea?

HK There is a huge increase in business volume between Korea and Mexico. Our government is turning toward the Pacific Alliance, and if we become a member, more Korean companies will try to enter Mexico, and we will boost our business with those companies. Those will include not only Korean companies but also global companies. Mexico can be an excellent business base point, not only for companies but banks as well.