Wal-Mart moving in on lucrative Mexican banking sector

Mexicans revile few institutions with as much vigor as the nation's banks, which according to industry insiders, are highly profitable. Not surprisingly then, Wal-Mart plans on entering the fray with bank branches inside its more than 700 Mexican outlets that would cater to lower-income clients.

Wal-Mart brings a track record of upsetting the genteel status quo in Mexican business. It burst on to the nation's retail scene by opening a single Sam's Club in 1991. Fifteen years later, it became the Mexico's largest employer and now dwarfs its competitors.

Like the retailers Wal-Mart put the boots to - Soriana, Comercial Mexicana and Gigante - Mexico's six big banks, five of which are foreign owned, are in need of a shake up. An article in yesterday's Miami Herald Mexico, noted that earnings at Spanish-owned BBVA's Bancomer operations, "Constituted the biggest contributor to (BBVA's) profits," and that paradoxically, "(BBVA) would use those profits to expand their services in Spain." (Bancomer is Mexico's second-largest bank.)

Walmex, Wal-Mart's Mexican subsidiary, conquered Mexico's retail market for a reason. It's poised to do the same in banking, although it will most likely succeed by expanding the market - approximately 80 percent of Mexican's don't use banks - than pummelling the competition.