Leading the Pack

Nov 1, 2004

Mexico's anemic banking industry is back in shape and ready to grow, possibly at surprising rates. One bank in particular is especially well positioned: BBVA Bancomer.

Bankers, as BBVA Bancomer Chairman Hector Rangel wryly remarks, are not popular anywhere. In Mexico, they have had to tolerate years of abuse from politicians, the media and ordinary Mexicans. Banks would not lend, service was poor, interest rates were high and fees were outrageous. The bailout of 1995, when the government indemnified banks for their losses despite evidence that part of those losses were due to wrong decisions and related-party lending, added insult to injury. The bill for the bailout will reach about $100 billion.

Those years are far behind now. The Tequila Crisis happened a decade ago, and the bankers involved have (nearly) all left the scene. Foreigners took control of Mexico's big banks, recapitalized them and overhauled their management. In 2001, Spain's second-largest bank, BBVA, took over Bancomer, Mexico's biggest bank, and turned it into a fearsomely efficient machine - spewing profits and conquering market share.

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