Mexicos development banks are jumping back into the
economic driving seat as the bruised private sector dithers on
the sidelines, their directors have said.
The institutions are confident that they will be able to
ramp up credit for infrastructure, real estate, business and
Rafael Gamboa, the director for development banks in
Mexicos Finance Ministry, told Emerging Markets
that the nations quintet of principal development banks
expects jointly to boost their loan portfolios by 14%, from $57
billion now to $65 billion at the end of the year.
Officials hope the banks can be a driving force in
Mexicos nascent recovery, extending loans to
credit-hungry sectors of economy to fill in for a private
banking system that is still risk averse.
Javier Gavito, director of Sociedad Hipotecaria Federal
(SHF) Mexicos mortgage development bank, told Emerging
Markets: Private banks stepped back, and the development
banks stepped in and will continue to do so over the
When the crisis started, Mexico, encouraged by a new
vitality in local credit markets, was in the process of scaling
back its development banks role.
Infrastructure development bank Banobras was scaling back
its participation in a thriving market. SHF was meant to stop
lending altogether in 2009, instead focusing on providing
credit guarantees. Mexicos Senate removed that block in
2008, allowing it jump in to provide liquidity as the crisis
The government is pushing in any direction in which it feels
the private sector is not ready to respond. It is happy to take
up the slack from creditors beyond its borders as well as those
at home, and says loans are available for foreigners too.
Mexico sends 80% of its exports to the US, and its economic
fortunes depend heavily on a US recovery boosting manufacturing
at home, especially in the auto sector. But US automakers have
been hard pressed to find financing for expansion.
When Fiat-Chrysler mentioned it was considering opening a
major plant in the central city of Toluca to produce a low fuel
consumption car, Mexicos export development bank stepped
in itself as a lender, disbursing $400 million on a 15-year
Fiat took the bait and the project is expected to bring in
$550 million in investment and create 2,000 permanent jobs.
The loan sealed the deal, the banks director
Hector Rangel told Emerging Markets.