Laredo's International Bancshares Has Rio Grande Designs

By Zack, Jeffrey | American Banker, February 6, 1995 | Go to article overview

Laredo's International Bancshares Has Rio Grande Designs


Zack, Jeffrey, American Banker


Dennis E. Nixon of International Bancshares in Laredo, Tex., was a big booster of the North American Free Trade Agreement, and it's easy to see why.

At a Glance INTERNATIONAL BANCSHARES

  Headquarters     Laredo, Texas
        Assets     $2.7 billion

     Employees     800

     Return on     1.64%(*)

average assets

     Return on     21.68%(*)

average equity

(*)Nine months ended Sept. 30, 1994.

His $2.7 billion-asset, multibank holding company has grown up along the U.S.-Mexico border, helping to facilitate trade between the two countries and beyond.

While the recent collapse of the Mexican peso has dampened spirits and brought new economic worries to the border, Mr. Nixon remains confident in the border region's long-term economic health.

"Normally when we have these peso devaluations we see a very quick reduction in retail sales in the border area," which lasts until the sticker shock wears off, said Mr. Nixon, International Bancshares' chairman and chief executive.

The current crisis is different, he noted, because the floating of the Mexican currency caused a greater degree of unpredictability than in previous devaluations. Further, it's not clear that the Mexican government's plans to stabilize the economy will succeed.

"Hopefully [the Mexican government] will get a program to again attract foreign capital," the banker said.

While he doesn't expect the Mexican situation to have an impact on his bank's earnings, Mr. Nixon conceded the devaluation "has created a big bump in the road."

Still, International Bancshares isn't planning to back off its plan to open a bank in Monterrey, Mexico, about 150 miles south of Laredo. It has received approval from American regulators and is awaiting a decision from Mexico.

Nafta makes this move possible, Mr. Nixon said.

"Trade between Mexico and the United States had been growing rapidly over the last decade," he said. "And if we didn't recognize it and memorialize it in a proper agreement, I don't think it would have been able to continue moving forward at the level we all hoped it would be."

Down the road, International Bancshares--the largest bank headquartered along the Rio Grande and the second-largest banking company based in Texas--is poised to benefit from freer trade. Mr. Nixon said some 750 of the bank's 800 employees speak Spanish as well as English. The company, which is closely held by predominately Hispanic-American investors, is also the largest minority-owned bank in the U.S.

"The rate of growth in Latin America far exceeds the rate of growth in, say, Europe. It's more in line with the rate in Asia," he said. "Why would we want to go to trade in Asia when we've got an opportunity right here on our doorstep?"

"People will be able to access and piggyback, for lack of a better word, off of our resource base, our experience, our skills, and our people network," he said. "If somebody comes in from McAllen or Brownsville or San Antonio and needs help [in the Mexican marketplace], our staff and facilities can make that happen."

If his bank's history is any indication, Mr. Nixon has reason to be optimistic. In 1975, when he was 33 years old, Mr. Nixon was named CEO of International Bank of Commerce, at the time a nine-year-old institution with about $40 million of assets. Since then, he has guided the bank through a rapid expansion marked by de novo openings in the 1980s and a string of acquisitions in the first half of the 1990s.

Today, the company has four bank subsidaries with 34 branches as well as a life insurance company and an export trading unit. About 70% of its business is with commercial customers; the remaining 30% are consumers.

International Bancshares has earned kind words from other bankers. Robert S. …

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