November 20, 2007
Mexico City
In our Oct. 5 alert we wrote that Wal-Mart got approval to open banking operations in Mexico, and that the first branches were scheduled to open in November. For those of you who wrote in clamoring for further details, here they are:
Wal-Mart de Mexico (known as Walmex) has launched Banco Wal-Mart right on schedule. The company launched four bank branches just over a week ago—one at corporate headquarters in Mexico City and three at stores in nearby Toluca. Walmex aims to have 16 branches open by year-end—an aggressive schedule, considering it’s mid-November.
And, according to news sources, there are no plans to slow down the roll-out schedule next year. In fact, Banco Wal-Mart Chief Executive Julio Bosco has upped the ante. Wal-Mart’s original goal was to open 60 branches by the end of 2008. Bosco now wants to aim for 70 to 80.
Banco Wal-Mart is actively targeting low-income clients who don’t usually qualify for traditional bank loans. At present, it offers savings accounts with debit cards and consumer loans up to 50,000 pesos (just under $4,600) for purchases in its stores. The bank plans to expand its product suite in the future to include small business loans, credit cards, and time deposits.
Analysts are waiting to see what impact Walmex’s foray into financial services will have on the traditional banking sector. For years, Mexican banks have charged high fees on accounts and services, and high interest rates on credit products—as those with Mexican bank accounts can tell you. But Wal-Mart’s strength has been its low prices, and Banco Wal-Mart is likely to offer banks stiff competition.
Wal-Mart is not the first retailer to create a bank in Mexico. Grupo Elektra paved the way with creation of its Banco Azteca in 2002, which has proved highly profitable. At the end of September, according to news reports, Banco Azteca had $1.76 billion in loans and over double that amount in deposits. Three other retail groups have also created banking arms this year.
Banco Wal-Mart is benefiting from Wal-Mart’s already strong position in Mexico. Some 2.5 million people enter Walmex stores each day, which are open 8 a.m. to 10 p.m. seven days a week. That’s a schedule that’s virtually impossible to match, particularly for traditional banks.
At the end of October, Walmex had 983 locations, including 130 Supercenters, 296 supermarkets branded under the Bodega Aurrera name, and 338 restaurants.
Best regards,
Suzan Haskins
Latin America Editorial Director
