Magazine article American Banker

For BankAmerica, Yellow Light Signals 'Caution.' (Mexico's Banking Market)

Magazine article American Banker

For BankAmerica, Yellow Light Signals 'Caution.' (Mexico's Banking Market)

Article excerpt

Badly burned in the early 1980s - along with many other banks that lent heavily to Mexico - Bank of America all but shunned that country until last year.

Then came a deal too good to refuse - syndication of a $2.5 billion short-term facility to Petroleos Mexicanos, the state-owned oil company better known as Pemex.

Still, the San Francisco-based unit of BankAmerica Corp. has not been quick to forget the hard lessons it learned a few years back.

Reluctant Rivalry

In a telling sign of continuing wariness about rebuilding financial links with Mexico, Bank of America kept only about $70 million worth of the Pemex debt on its books.

Even though its home state of California borders on Mexico, Bank of America is not hurrying to keep up with money-center rivals that are already stalking Mexican borrowers.

In the backgrounds is the expectation of agreement in the foreseeable future on a free-trade agreement with the United States and Canada.

"There is no reason to substantially increase our presence in Mexico until we have authority to do more," said Peter McPherson, executive vice president in charge of Bank of America's operations in Latin America and Canada.

"Even then, we're going to be cautious."

That cautious stance means building up businesses in areas where the risk to Bank of America is minimal and where its knowledge is greatest.

Few banks handle more dollar payments from Mexican banks and brokerage firms, for example.

Bank of America is also a leading provider of syndicated trade credits backed by guarantees to Mexican banks from Export-Import Bank. …

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