In preparation for the most important financial event of the year in Mexico, Julio Carranza (Mexico City, 1959) has a long thread of pending meetings. The 87th edition of the Banking Convention is Carranza's first as president of the Association of Banks of Mexico (ABM), and, more than nervous, he says he is excited. “You may have realized that I am an optimist about Mexico,” says Carranza, also president of the Board of Directors of Bancoppel, when receiving EL PAÍS in a room in the Exhibition Center of the Palacio Mundo Imperial Hotel, headquarters of the event.
This year, the event is loaded with symbolism and signs to the future. Acapulco (Guerrero) was chosen as the headquarters to boost the economy devastated by a hurricane and, in addition to President Andrés Manuel López Obrador, the three candidates for the presidency will attend. Of them, the ABM asks three specific tasks: invest in the physical infrastructure necessary to take advantage of the nearshoringtechnically train populations that could benefit from manufacturing jobs and uphold the rule of law.
Ask. Six months after the hurricane Otis devastated Acapulco, what is the message that the ABM wants to send by holding the Banking Convention here?
Answer. We already had everything planned to do it in Nuevo Vallarta, Nayarit, when, suddenly, on October 25, this category five hurricane came and it was terrible. Nothing like this had ever been seen in Acapulco. Hurricane Paulina, for example, was very strong and unfortunately killed many people. Otis fortunately it didn't take as many lives, but it killed the economy. Of the 20,000 apartments that were heavily affected, only 20% were insured. Of the 380 hotels there were, the vast majority were badly affected. All 87 bank branches were affected, if not by the hurricane itself, during the looting of the following days. We looked at the relationship between the ABM and Acapulco, that 40 of the 87 annual banking conventions have been held here, and what we decided to do was help. We want to support Acapulco and that is why we decided to bring the convention this year and postpone taking it to the Riviera Nayarit Vallarta.
Q. Last year they had already taken it out of Acapulco and it was made in Mérida.
R. What we want to do is for the Banking Convention to go to all regions of the country. It is the most important financial event of the year and we have seen that it is something very good for the city and the region where we take it. That's why we decided to take it out of Acapulco and start taking it to all the states. This year we returned to Acapulco and we had a pleasant surprise.
Q. How are investors, banks and companies assimilating the electoral process?
R. Mexico had a record $36 billion in foreign direct investment last year. This has to do with the fact that, since the pandemic, we are seeing a regionalized world instead of a globalized one. For Mexico, the integration of supply chains represents a great opportunity. We are part of the USMCA, a trade bloc that today generates 28% of all world trade. This bloc trades 50% more than China does and 55% more than the European Union does. Today, there are nearly 400 projects that are in different stages of development. nearshoring or relocation, or that have to do with foreign investment, or that have to do with Mexican investment. Many people tell me that Mexico is not ready with the infrastructure to take advantage of this opportunity and my answer is, when are we ready? When have we been ready in an emerging country to address these opportunities? Opportunities come and at that moment we all get to work and take advantage of the opportunities.
Q. I understand that it is a moment of nearshoringbut I asked him about the electoral process.
R. What happens is that, on the economic side, Mexico has had a good performance. When President López Obrador attended the convention in 2019, the first one he attended, he promised to respect and not change banking regulation and he complied. This has generated a large investment on the part of the banks, having certainty and confidence that they were not going to change the rules. Between 2018 and 2024, banking capital investment grew 60%. Investment in technology has been almost 25,000 million pesos per year. It's not that I'm leaving out the electoral issue, it's that giving certainty and trust is a very good example. We ask the candidates three things. One is to ensure that the physical investment required for development is made. This includes transportation and energy. Two, it is taking care of the rule of law, which has many aspects. We mean that security must be taken care of, that messages to investors, both foreign and Mexican, are trustworthy. Don't change the rules of the game. In the particular case of banking, we ask for the creation of specialized courts that allow credit cases to be resolved. This will allow us to continue growing credit significantly. And three, we ask for technical training. We have a large number of companies that are going to come and manufacture very specific and sometimes even sophisticated things. What is needed is a technically qualified workforce to meet all the employment demand that is going to be generated.
Q. In recent years, big players have entered the financial sector, although they are not banks. Registered as companies fintech or companies of different types, are already competition for the banks. What will the sector look like in five years?
R. In Mexican banking there is a great concentration on volumes, profits and so on. It is good for the market that there is greater competition, but that there is competition with a level playing field. That means that similar products have the same regulation.
Q. Is the ABM looking for the parties to pass necessary legislation to level the floor?
Q. No legislation is needed, the only thing that is needed are rules that the National Banking and Securities Commission (CNBV) sets and that the Bank of Mexico sets the rules for the payment system part. What has happened is that these great fintechs, They have come to Mexico and have seen the Mexican market with great interest, which we love, and they have now decided to apply for a banking license. Why do they ask for a banking license? Because the opportunity to be a bank puts you in a completely different dimension, but it also gives you uniform rules and with adequate supervision and regulation for the development of the country. We cannot be against. On the contrary, we are very happy that new participants are coming and that they have decided to invest in a banking license and do things well. The sector is in an evolution. In the last 10 years, we went from 2.4 million digital banking contracts to more than 80 million contracts. It is a brutal growth that we have had.
Q. How is banking's hands more tied than the different financial companies?
R. There are many products that these entities offer under much more lax supervision or without regulation. There are 52 banks in the system, seven of them are systemic. The other 45 are competing in various market niches. You have many banks that are small in Mexico and those banks are competing with fintechs and financial companies of different types. But banks are operating in a regulated environment. We ask that they have equal regulation and, now, yes, that the best one wins.
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