Nearshoring is a reality. The so-called relocation of companies, a term that gained traction last year, is Mexico’s great opportunity to boost its economic growth and, at the same time, generate more jobs in a country that, like the rest, was strongly shaken in the 2020 due to the Covid-19 pandemic.
“It is difficult to estimate the benefit of nearshoring in Mexico because it is a process that is beginning and will probably consolidate in waves: anchor companies will arrive first, which are the ones that usually begin to bring supply chains, and then others will arrive. ”, he explained in an interview with The Economist Gabriel Yorio González, Undersecretary of Finance and Public Credit.
From his office in the National Palace, the Treasury official made a general calculation. If Mexico manages to replace 25% of China’s exports to the United States, this would be equivalent to 2 points of the Gross Domestic Product (GDP), which in turn would be equivalent to 1.2 million new jobs. “It would be a new impulse in the labor market and in the growth dynamics.”
The United States is expected to be the most attractive for Foreign Direct Investment this year, so several companies will want to be either in the neighboring country to the north or close to it, so Mexico has an advantage in nearshoring.
In this context, Mexican banks play an important role by facilitating financing for those companies that wish to relocate in the country.
“Banks have enough resources to be able to lend to productive activities, including the relocation of companies. I believe that the role of banks is to facilitate financing, which can be through direct credit, subordinated, factoring, supply chain, among others. Banks are going to play a fundamental role in consolidating the trend of relocation of companies that the country is experiencing”.
Regarding delinquency in the sector in the midst of a scenario of high interest rates and inflation, the Undersecretary of Finance indicated that this is not something that worries the Treasury since the overdue portfolio and delinquency rates have not moved much in recent years. last years.
“Right now it is not a concern. We have a solid, capitalized banking sector, with low delinquency rates, with plenty of room to lend more and, also, with high profitability. We are not worried about the delinquency rate yet, it is quite stable”.
High rates and different speeds
Although in some segments, such as consumer credit, they have shown significant growth, the fight against high levels of inflation through monetary policy has had an impact on credit, but at different speeds, Yorio González said.
“We have seen that credit to micro, small and medium-sized enterprises (MSMEs) is falling. This means that monetary policy is generating an impact on demand and slowing down the demand for credit, especially in that sector. With the level of interest rates (at 11%), what would be expected is that the demand for credit from all lines of credit would fall, but we are seeing different speeds of growth in the different lines; that of consumption is growing more, that of mortgages is growing a little less, while that of MSMEs is decreasing”.
In this vein, he pointed out that despite the fact that the banking and financial market in Mexico is developed, there are still great challenges in financial inclusion, where MSMEs and their access to credit enter.
Therefore, he added that strategies must be worked on so that these companies can access credit more easily, through strategies with development banks, private banks, as well as through the simplification of processes.
Sale of Citibanamex will benefit
The sale of Citibanamex, announced a little over a year ago, is one of the events that is being watched within the banking sector, and which brings with it high expectations about what will happen when this process ends.
The Ministry of Finance, as the head of the sector of banking and financial supervisors, has been extremely attentive to the sale process and, according to the statements of Gabriel Yorio, has maintained communication with all the parties involved.
“The sale, regardless of who buys it or at least with the information we have on the final buyers that they may be, is not going to generate concentration in the market, in fact it is going to generate deconcentration of the sector and I think that is something good,” he assured.
The Citibanamex transaction, which has generated a lot of interest in the banking sector, will separate the institution’s assets and leave them where they make the best sense in the market, the finance official said.
In this sense, he expressed that Banamex will probably dedicate itself to a business line segment where it will be more efficient than if it were with Citi, and the latter will be more efficient in what it is going to do. “And that is where we are going to have a gain in the efficiency of the banking sector.”
“There will also be a gain in the use of the sector’s assets because Citibanamex is one of the banks that has many assets and has a lower level of asset use over the portfolio, so when the assets are separated and used to strengthen the new lines of business, we are probably going to have an efficiency gain in the leverage of the banking sector”, he added.
