Mexico approves Wal-Mart banking

MEXICO CITY — 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 United States 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 presi- dent, said in a conference call with reporters on Mon- day.

Walmex said its bank, Banco Wal-Mart de Mexico Adelante SA, will start operations in the second half of 2007, offering savings accounts, debit cards and credit lines to its individual and small-business custo- mers.

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 ($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."

Wal-Mart has faced stiff opposition in its bid to charter a bank in Utah that would handle the 140 million credit, debit card and electronic check payments it processes each year. Opponents say the so-called industrial bank would be the first step in the retailer's move toward expanding into full-scale banking with retail branches that would destroy local U.S. banks.