The departure of JP Morgan and other banks from Mexico


In his collaboration with Luis Cárdenas, Mario Maldonado, financial columnist for El Universal, spoke about his column ‘The closing of J.P. Morgan and taxes on the rich. ‘

JP Morgan, the most important investment bank in Mexico, transfers clients to BBVA Mexico, with whom it already had alliances in the past.

We are talking about one thousand 500 million dollars, they are going to pass it on to BBVA Mexico to manage it.

There is concern about what may come from this exit; other major banks may transfer the money to entities outside of Mexico.

Beyond the tensions between the private sector and the government of President Andrés Manuel López Obrador, the departure of international banks from Mexico should be read as a worrying sign of the times. Added to the fact that López Obrador has faced private initiative, limiting investment, several factors are combining that could make Mexico a less profitable destination for global banks. Among them, the economic crisis due to the pandemic, the new geopolitics as defined by access to vaccines, and the lack of accurate information on the long-term health impact of covid-19.

The problem with the Mexican president is not that he is on the left, but that one day he says he loves you very much and the next day he says he does not know you.

Mexico is an important place for the two most international Spanish banks, BBVA and Santander. The entity chaired by Carlos Torres is the first bank in the country by volume of assets, well ahead of CitiBanamex, Banorte and Santander, which occupies the fourth place in the ranking. Naturally, the North American country weighs more in BBVA – it contributes 44% of the group’s profit – than in Santander -13% of the group’s profit, as of June 30, 2020-.

Mexico is a reef for the purely banking business, the one that is barely sustained in Spain and Europe. To begin with, interest rates, which, despite their downward trend -Banxico, the country’s Central Bank, lowered rates again on Thursday-, are at 4.25%. A dream for Spanish bankers. In addition, we are talking about a country of 127 million inhabitants and very little banking: only 37% of the population has a checking account. The potential is immense.

Now, not everything blows in favor of the banking business and, both Carlos Torres and Ana Botín, look askance at the president, Andrés Manuel López Obrador (AMLO). The problem is not that it is left-wing, which it is, but the changes in its economic policy.

For example: after winning the elections, in November 2018, but before taking office, it occurred to him to say that he would limit – even eliminate – certain bank fees that entities charged customers. The reaction on the stock market was immediate and the price of BBVA fell by about 6% in a single day. In the end, AMLO did not carry out his threat, but the damage had already been done.

Another shock, this time indirect: AMLO’s request to the King and the Pope to apologize for the conquest of Mexico. It may seem somewhat minor, but it was not, considering the importance of the two Spanish banks in the country.

The decision to unify all the BBVA brands -except the Turkish Garanti-, did not like the Mexican president (nor many clients, who considered the historic Bancomer brand as their own), who decided not to attend the annual event of directors organized by the bank in Mexico and that historically has had the participation of the nation’s president.

To AMLO’s disagreements, we must add the economic crisis derived from the pandemic. Mexico is one of the countries that is suffering the most from the consequences of the government’s limited room for maneuver to take measures to support the economy. And that, with AMLO as president, is not reassuring.

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Mexico Daily Post