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Interview with
Marcos Martinez Gavica,
CEO of Banco Santander Mexicano
February 2000
Website : www.bsantander.com.mx
| Can you give us a brief historical overview of Banco Santander Mexicano and its developments?
Banco Santander came to Mexico almost 50 years ago establishing a first representative office. In the 90’s it started local operations with Santander Investment and then focused in the corporate market doing corporate finance and investment banking. Santander then realized that Mexican companies and people felt comfortable with Santander and decided to carry out some major operations in the country, at a point that in 1995, in the middle of the biggest Mexican crisis of all times Santander bet on long term operations and committed itself to the country. In April of 1997 Santander bought the Banco Mexicano configuring then a very strong financial group that had both, the investment banking, corporate finances and private banking experience of Santander and the local commercial operations of Banco Mexicano. The idea was to be the number one financial group in the country in terms of efficiency and profitability, and to be able to offer a complete portfolio of financial services to all clients in Mexico.
How many branches do you have at the moment as far as commercial retail is concerned?
We have 370 branches. There has not been a great expansion of the bank, because we have preferred to work out all the inside aspects in order to prepare ourselves to have an efficient growth.
Can you tell us about what has happened within the Mexican financial sector during this economical rollercoaster that Mexico has been going through since 1994?
In 1995 the whole system was technically in bankrupcy because the huge non-performing portfolios and market losses produced by the immense volatility where interest rates were moving between 9% and 100%. At the end of 95 the government and the financial sector implemented programs that supported the enterprises in order to keep them alive and gave people subsidies to help them pay. Although the cost was very high it avoided the total collapse of the financial system and its consequences for the country. These issues along with the crisis in Asia and Russia during 1997 and 1998 had definite impacts in the financial system which resulted in that a high percentage of the banks changed owners through the arrival of foreign banks with fresh money and is still in the process of cleaning up.
What is it that makes Santander stay in the Mexican market?
Mexico is a country with a promissory future. Its population goes to 100 million people with expectations to improve their quality of life within a panorama that gives a huge economic growth in the next years to come. This will offer a very attractive business potential for the financial sector.
What is your market position within each one of the departments that you have mentioned?
In local M&A we are one of the main players, in the money market we are number one even if we are rated 6th as a bank, in equities we are not a very aggressive player as we are in service appliance. In corporate banking we are very strong and in commercial banking we were rated 9th, today we are number 5, and we are working very hard to improve it.
Who would you say are nationally your major competitors both in corporate and commercial banking?
Actually our main competitors are the largest banks in the country, Banamex and Bancomer. The Banco Bilbao Vizcaya and other international banking institutions are weight competitors but in specific markets, and that because of their and our size. For example we have no competitor in the commercial aspect other than both Banamex and Bancomer, and even if these institutions will still be present in the future, we will make sure that Santander continues capturing the market.
Why should one invest in your bank here instead of going to Brazil or Argentina? What is it about Mexico that one should be looking out?
Unsteadiness and uncertainty are disappearing from the Mexican economical horizon, and from the international point of view Mexico is right now a good and strong option for long term investment. NAFTA put Mexico in the right direction and made us bet on macro-economic discipline, now the free-trade agreement with Europe will give continuity to this consolidation process. The combination of these agreements with the fact that Mexico will be receiving soon the Investment Grade will allow the country to grow at an annual rate of 5 or 7 per cent. In 1999 Mexico was not affected by the Brazilian surprise and this kind of facts made everyone change its mind about us, and today investors are looking this way rather than looking south, and the ones that are not should.
How many banks would you say are major carriers in the Mexican market?
In a very near future Banamex and Bancomer will see a substantial diminution in their market share, BBV will grow stronger, Citibank, the first US bank that came to Mexico, will start participating in commercial activities and seen that some Canadian institutions are deciding right now if they will come or not, I think that there will be no more than 6 or 7 institutions importantly participating within the Mexican market.
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What are your objectives for a near future?
We would like to double our market share in Mexico because we think that each of our strong competitors will be holding around the 15% of the market share. We know that the Mexican market offers a lot of opportunities to do business, we are convinced that in the next 3 or 4 years the country will be growing very fast and that the purchasing power capabilities will be recovered, all the international community will come to invest more everyday and we want to be active participants of this process and help companies to grow.
Now that for many reasons investors are looking at this country, what are your strategies to attract them?
Our strategy is to have a very good position in terms of knowing the Mexican market and the Mexican companies. Last year we focused investment banking in merchant business and it was a very successful year mainly because of all the Spanish companies that came here to make business with Mexican industries and companies. This represented 70% of all our Mexican operations. The other 30% were operations where we acted as mediators between some Latin American and some Mexican companies that wanted to form commercial alliances or start join ventures.
What percentage of your clients are national?
In M&A 90% of our clients are international. Last year we worked with mostly clients coming from Brazil, Venezuela, Argentina and Spain.
What kind of image does Santander Mexicano has?
We have an image of professionalism, solidity and reliability that has aloud us to captivate clientele that has looked for a secure option and with good conditions for their savings in times of uncertainty like the ones I have mentioned. In fact, we were the bank that grew the most in its market share deposits within the country in 1999.
What can you tell us about your work philosophy and the "Pasión Santander" concept?
In September of 1999, when we made our strategic plan for the year 2000, we were waiting and hopping for a much better economical environment but surprisingly the market anticipated considerably. Those were bad news for the entire system and we realized that decisions had to be taken at the speed that the economical pace imposed. Then very strong measures were taken in January, as cutting shorter our staff, in order to increase productivity which we did by far. All measures taken had as an objective the whole re-configuration of the group with the exception of our distribution and promotion channels. In addition we knew that cutting expenses was not enough, that we had to change our people’s way of thinking if we wanted to keep on developing business, diversifying our income and growing bigger without changing credit risk. All those who wanted to make the commitment stayed and now we have consolidated Santander Mexicano in terms of efficiency and bearing in mind the present financial situation of the country we are in the position of doing many good businesses.
How do you communicate all of your ideas in terms of banking services and possibilities to the global financial market?
Nothing that we have made is new, we have just taken the decisions that were ought to be taken in order to be a successful institution. We know that not everyone is doing so entirely believing and working for it, and that is what makes us different. In the past, banks were institutions that waited for customers to come, now we work as any other industry finding our market and our clients and looking out to serve them each day better, we are now a global and diversified bank that offers a very complete service portfolio. From 95 to 97 Mexico was not strong enough to do business with, but now everybody is looking this way and soon everyone will be here so we are preparing ourselves taking advantage of the temporary interval that separates the market merging and the business completion. We have taken to the practical field something that may sound very theoretical, which is team-work. Not only our people have committed to change their attitude but have learned depend on each other and to work more as a team, which is very hard to achieve in groups conformed by many different companies, but we have done it successfully.
Can you tell us a little bit about your background?
I worked 18 years for Banamex before coming to Santander Mexicano where I have been for the last 3 years.
What is your final message for our readers?
Mexico is the big opportunity you have all been looking for.
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© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Mexico published in Forbes Global.
July 3rd 2000 Issue.
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MEXICO
