Magazine article American Banker

Citicorp Rules the U.S. Banking Roost in Mexico

Magazine article American Banker

Citicorp Rules the U.S. Banking Roost in Mexico

Article excerpt

Citicorp's gutsy Mexican gamble appears to be paying off handsomely.

Unlike other U.S. banks, Citicorp stayed put in Mexico when the local economy went into a tailspin in the early 1980s and business opportunities vanished.

As the only U.S. bank allowed to do business in Mexico today, Citicorp has the field pretty much to itself.

That could change if Mexico allows foreign banks to set up branches or local subsidiaries under a North American Free Trade Agreement.

But other banks are going to have to move fast - at considerable expense - to catch up with Citicorp, which earned $20 million in Mexico in 1990.

Earnings included $8 million from retail operations, Salomon Brothers noted in a recent survey of the bank's Mexican operations.

"Even with restrictions on balance-sheet growth, we believe that profits in Mexico could grow by 15% to 20% annually in the foreseeable future," Salomon predicted.

On the retail side, Citicorp is targeting Mexico's increasingly affluent population through six branches.

In August 1991 Citicorp opened its first branch outside Mexico City, in Monterrey, a city of 2,858,800 noted for its strong, closely knit group of industrialists and financiers.

Citicorp is already planning to open a seventh branch, in Guadalajara, later this year.

This is just the start, according to bank executives. Citicorp chairman John Reed said last summer that the bank hoped to have up to 41 branches within the next few years.

Derivatives in Development

Among sectors slated for development by Citicorp are derivatives - such as swaps, forwards, and options - and retail banking products.

"The consumer side of the business is strategically very important for us," said Gabriel Jaramillo, Citicorp's corporate officer for Mexico. "We plan to make a major thrust."

Analysts concur. …

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