BANKS

Mexico 2019 | FINANCE | B2B

Mexico's well-capitalized and regulated banking sector offers banks great opportunities to finance upcoming projects.

Ernesto López Clariond
ERNESTO LÓPEZ CLARIOND
President of the Board
Bancrea
Jorge del Castillo
JORGE DEL CASTILLO
Deputy Country Head & Managing Director
MUFG Bank México

How has your success in Monterrey served as grounds to establish a presence in other major Mexican cities?

ERNESTO LÓPEZ CLARIOND Bancrea was born out of the internal concept of warm banking. This means that we look for our clients to feel unique. This has worked well in Monterrey because we have grown significantly in that state and become part of the community. Our rapid responses, credit instrumentation, and customer service helped us effectively penetrate the Monterrey market. Currently, Bancrea's assets are located in Monterrey, San Luis Potosí, and León. Our growth has occurred because in Mexico there remains considerable growth potential in banking. We plan to open offices in Mexico City, Guadalajara, Querétaro, and Saltillo in 2019, while the strategic plan for 2023 also contemplates Chihuahua. In 2019, we received an A- rating from one of the three rating agencies, which is a great qualification for a five-year-old bank.

Why did MUFG decide to be the first locally incorporated Asian bank in Mexico?

JORGE DEL CASTILLO MUFG established a representative office in Mexico in 1958, one of the first international banks to do so. Known as Bank of Tokyo at that time, we joined with the Export-Import Bank of Japan to aid in the development of Japanese industry entering Mexico. Along with a handful of others, MUFG was among the first Asian banks to create a beachhead in Mexico. After the financial crisis in 2008, Japanese banks, including MUFG, emerged financially sound, with a large amount of liquidity. We were able to make a sizable investment in Morgan Stanley—USD9 billion in exchange for a 23% stake in the company that was then converted into common stock. Following that, MUFG continued to invest in the Americas, first in the US, then in Latin America. In 2011, Mexico received a capital injection of USD200 million from our home office in Tokyo, enabling us to expand our business.

What segments are better positioned to grow your client portfolio?

ELC Our business call is the entrepreneur, and we focus on the services they need. While we do not offer credit cards to our clients, for example, we lease resources for them. Bancrea clients have access to other services such as tax payment and payment of services and social security. Bancrea's focus is on medium-to-large companies. Our clients are neither small SMEs nor huge corporations. Our sector is broad and has many projects. The success of our clients is our success, and our job is to help them achieve. Our assets currently stand at MXN13 billion, and the target for the 2023 horizon is to reach MXN30 billion.

What differentiates you from other banks in Mexico?

JDC Given that few other banks can match MUFG's worldwide reach, what differentiates us from other financial institutions is our global footprint and our client-centric culture. We are one of the three largest Asia-based banks and the biggest in Japan. This positions us perfectly to be the Asian bank of choice for corporate Mexico. Further, as the world's fifth-largest bank with total assets of USD2.7 trillion and a presence in more than 50 countries, MUFG's scale provides our clients with the ability to leverage opportunities from anywhere around the world.

What is your outlook for 2019?

ELC Bancrea will post extraordinary performance in 2019 and 2020, as there are many opportunities in the sector. The country needs investment, and investment cannot be made solely with capital. Additionally, Mexico has a new administration, and I agree with current plans to develop the southeast region and the Isthmus of Tehuantepec. Development can be achieved with the support of the government and entrepreneurs, with banks playing a key role in financing projects nationwide.

JDC With exposure of around USD5 billion, Mexico represents MUFG's largest operation in Latin America, behind Brazil. A key part of our strategy is to be more efficient, productive, and profitable. Management is keen on supporting us, and there is room for us to keep growing here and win new customers. We pride ourselves on being a relationship bank—the customer always comes first. We continue to find ways to build our brand in Mexico as we seek to expand our market share. While some of our larger global banking peers are double our size here, we have the ability to compete effectively against any of them in this vibrant market.