Already a Bloomberg.com user?
Sign in with the same account.
Bank of Nova Scotia plans to take advantage of improved credit quality and a growing middle class to expand lending in Mexico, Latin America’s second-biggest economy.
“We see a lot of opportunity right now to really start to drive a lot more of the business, and take advantage of people’s credit health,” said Troy Wright, president and chief executive officer of Grupo Financiero Scotiabank Mexico.
Canada’s third-largest bank will extend credit to families looking to buy first homes, cars and furnishings, Wright said. Mexico’s economy will grow 3.8 percent this year, versus 2.1 percent in the U.S. and a contraction of 0.5 percent in the euro area, estimates compiled by Bloomberg show.
Mexico is “starting to get into a good period of time where we don’t have challenges” on loan losses, Wright said in an Oct. 12 telephone interview.
Scotiabank is Mexico’s seventh-largest bank by assets, with 710 branches. Wright, 47, was named to the position this month, replacing Nicole Reich De Polignac. Before this post, Wright was an executive vice president of retail distribution in Canada and had spent nine years in Mexico with the bank’s capital markets business.
“The story we were saying five, seven years ago has continued to materialize in Mexico,” he said. “There’s a lot of optimism in the growth of the economy in Mexico itself.”
Mexico has the largest branch network among Scotiabank’s international banking businesses, which include operations in more than 50 countries. The international business had C$1.49 billion ($1.52 billion) in profit last year, representing about 28 percent of the lender’s 2011 earnings.
Scotiabank agreed in August to buy Mexico City-based Credito Familiar SA, buying a stake owned by Citigroup Inc. (C)’s Banamex unit. The price wasn’t disclosed. The purchase, expected to close by December, will allow Scotiabank to make $500 to $1,500 loans to families that may not have a credit history, Wright said.
The bank plans to run the 250 Credito Familiar branches separate from Scotiabank because of the different types of lending they provide. Customers have average salaries of $5,000 to $10,000 a year, and there are government programs distributed through Mexican banks that allow clients to apply for first mortgages, Wright said.
Scotiabank will “likely” keep the Credito Familiar name, said Wright, who holds a Bachelor of Arts degree with a major in economics from the University of Western Ontario, and completed an Advanced Management Program at Harvard Business School.
“It’s opening up a whole new segment,” said Wright. “As those customers build and grow and succeed over time, then of course they can potentially graduate up into our Scotiabank operations.”
Scotiabank will look at acquisition opportunities in Mexico, although its main focus will be organic growth, Wright said.
To contact the reporter on this story: Sean B. Pasternak in Toronto at firstname.lastname@example.org
To contact the editors responsible for this story: David Scanlan at email@example.com; David Scheer at firstname.lastname@example.org