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Wed, Nov 29, 2006 - Page 10 News List

Mexican Wal-Mart announces plan to offer bank service


Wal-Mart, already Mexico's largest retailer, is hoping to tap into the country's booming consumer-loan market when it opens its own bank in the second half of next year, executives said on Monday.

While its efforts to enter the banking business in the US met opposition, Wal-Mart Stores Inc has benefited from Mexico's efforts to open the financial services industry to low-income clients, a segment of the population largely ignored by Mexico's large retail banks.

Last week the finance secretary approved five new banks, including one by Wal-Mart de Mexico, or Walmex, bringing to 13 the number of new banking licenses granted this year by financial authorities.

"A large percentage of our clients do not have access to banking services," Eduardo Solorzano, Walmex's president, said in a conference call with reporters on Monday.

Walmex said its bank, Banco Wal-Mart de Mexico Adelante SA, will start operations in the second half of next year, offering savings accounts, debit cards, and credit lines to its individual and small-business customers.

Solorzano said the bank will operate in the company's stores, but not its restaurants. Walmex has about 558 retail stores -- including Wal-Mart Supercenters and Sam's Clubs -- and 311 restaurants.

"This is a business meant to support the current retail operation and to complement the services we offer at our stores," said Solorzano, adding the bank should boost traffic and sales at Walmex's retail stores.

However, he said the company doesn't expect its new banking unit to start showing profits before 2011.

Mexican banks are enjoying a boom in consumer lending thanks to low interest rates, a growing economy and pent-up demand for credit.

Banks had 338.4 billion pesos (US$30.65 billion) in performing loans on their books at the end of September, a 44.4 percent increase in real terms from a year-ago.

Analysts at Deutsche Bank said in a report last week: "Mexico offers an attractive potential for growth as loans only represent 13 percent of gross domestic product, in contrast to 70 percent in Chile and 32 percent in Brazil."

Julio Bosco Gomez, the former general director of Bank One in Mexico, has been put in charge of WalMex's new bank, which the company will finance with its own capital.

In recent years, Mexican retailers have moved into retail banking to sell financial products to their mainly low-income clients.

Mexico's large retail banks have typically shunned this market, in favor of lending to middle and upper income individuals and corporations.

Mexican retailer Grupo Famsa plans to open Banco Ahorro Famsa, while retailer Controladora Comercial Mexicana SA said it will partner with a unit of French banking group BNP Paribas SA to offer consumer and credit card loans in Mexico.

Grupo Elektra was the first Mexican retailer to enter banking when it opened its Banco Azteca unit in 2002, which had 17.32 billion pesos in loans at the end of June. Elektra also operates insurance and pension-fund companies.

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