Another Wake Up Call

Apr 29, 2004

Politicians again are demanding that Mexico's banks lend more. As the pressure mounts, consumer finance companies are steam-rolling into the market.

One issue dominated the annual gathering of Mexican bankers in Acapulco in March, just as it does every year. Strange as it may seem to those poorly acquainted with Mexico's banking system, politicians are having to twist bankers' arms to make them lend money. Lending is a bank's main function in most countries, but not in Mexico. Bankers have resisted these demands for years, but the pressure is becoming unbearable.

Politicians and business leaders are fuming that banks are chalking up fat profits from charging their customers fees, rather than from interest on loans. Insufficient credit makes it hard for companies to sell their products and difficult for consumers to buy them. President Vicente Fox himself laid into the bankers in Acapulco. "Mexico needs banks to take up their role as promoters of sustainable economic growth," Fox said. "Without credit there's no growth, without growth, no development." On...

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