Banco Mercantil , Mercantil Servicios Financieros’ main subsidiary wa incorporated in 1925 as Banco Neerlando Venezolano with a capital of Bs. 3.2 million and 16 employees.
The Bank was founded at the initiative of 98 Venezuelan businessmen, in the form of a corporation whose principal objective was to conduct "business in the broadest possible sense, including loans, discounts, deposits, and drafts, as well as the study, promotion, and incorporation of industrial and commercial companies…." Still another objective was "to develop banking and commercial relations with foreign countries, and especially with Holland and the nations of Northern Europe."
A year later, Banco Neerlando changed its name to Banco Mercantil y Agricola and increased its capital to 8 million Blivars. It then spent the next 56 years strengthening its status as a vanguard bank under that name, positioning itself as the financial institution most strongly committed to the country’s agricultural well-being and development.
Key Elements Of Success
Key elements of Banco Mercantil’s success are comprised in Mercantil Servicios (parent company) strategy.
Mercantil Servicios Financieros will focus its immediate efforts in protecting the development of financial business in Venezuela. In addition, Mercantil will pursue the growth of Latin America foreign trade financing.
Mercantil will reinforce the shelter of its main segments: corporate and mid size companies. In addition Mercantil is aimed in the profitable expansion of the segments with important growth potentials: individuals and small companies. This expansion will take place through specific value creating proposals for the latter as well as for specific actions taken to enhance the rest of the clients’ segments.
In addition to the strategic efforts, Mercantil is making adjustments designed to increased operating efficiency and to enhance profitability in the individual and corporate segments.
Mercantil Servicios Financieros, as an organization, is aware that, in this time of change just as throughout its history, the principle agent of progress is its personnel.
The institution’s employees comprise the best image for its services and products. They are the organization, visualized as a system of efforts and capabilities; of achievements and successes; of values and principles; of knowledge and continuous evaluation of the investment needs of Venezuela, with the necessary goal of contributing to enhance the country’s economic effectiveness. In a word, the possibility of achieving all the goals rests on them.
Corporate Strategy
The corporate transformation which Mercantil Servicios Financieros has been going through in recent years aims in just that direction. It is designed that Mercantil becomes the best Venezuelan provider of high quality financial services according to international standards, and with the greatest possible corporate clarity for the shareholders, customers, employees, investors, and regulatory agencies.
This corporate transformation has been carried out simultaneously from a number of directions, including identification of customers’ specific needs and the circumstances in which they relate to member companies, and the construction of a new structure able to generate capabilities in the creation of an efficient and flexible organization. I the course of that process, and applying the results of the studies performed to support the transformation, the Mercantil group defined an overall strategic vision which focused mainly on service and development of products for the customers in different market segments, and makes possible to maximize the organization’s competitive position and develop leadership and a global position in the financial market.
Business Strategy
Mercantil Srvicios Financieros will continue focusing on the development of the financial business in Venezuela as well as on Latin America Trade Finance.
According to this strategy, Mercantil must strengthen its shelter on its main business segments : Corporate and Middle-Market. In addition, Mercantil will enhance the growth of Personal Banking and Small Companies segments.
Besides the above mentioned, Mercantil is aimed to improve its operating efficiency on a cost basis to achieve profitability in the Retail Market segment and the Corporate segment with high transactional volume. However, Mercantil Servicos Financieros as an organization is aware that during this time of change and throughout its history-the principal driving force is its personnel. The institution’s employees project the best image of its services and products. Mercantil’s employees are he organization, viewed as a system of efforts and capabilities, of the investments and successes, of values and principles, of knowledge and constant evaluation of the investment needs of the different economic agents related to the country, with the objective required to make a contribution to enhancing the nation’s economic efficacy. In a word, it is on them that the chance of achieving all the organization’s goals rests.
Products and Services
Services for Individual clients and companies
Financial Products and Services related to Banking, Investment Funds, Capital Market, and Private Banking.
SUBSIDIARIES
The results of Mercantil’s subsidiaries are presented below, highlighting principal activities and business areas developed during the year:
Banco Mercantil, C.A ( Universal Banking)
Banco Mercantil recorded annual Net Earnings of Bs. 15.819 billion in constant Bolivars with December 31, 1999 purchasing power, a full 70.39% less than in 1998. The Bank’s total assets amounted to Bs. 2 trillion 293.297 billion in December 1999, 5.98% less than at the end of 1998. These figures reflect the impact of the negative economic climate prevailing in 1999. In nominal values, the Bank’s annual earnings came to Bs. 50 billion 906 million, its total assets to Bs. 2 trillion 141.778 billion, and its equity to Bs. 267 billion 498 million; the latter figure was Bs. 35.968 billion higher than at the end of 1998.
Moreover, the Bank continued to strengthen its leadership regarding the Internet’s development in Venezuela through the introduction of its "Mercantil On Line for Companies" service. With its "Mercantil Digital Certificate," this service allows companies to conduct any kind of financial transaction with the Bank on line, with top quality, speed, and security. A total of 18 new offices were opened and 43 new automatic teller machines installed during the year, and the Bank continued to develop its new Office concept, initially dubbed "Office of the Future," which has benefited customers by providing them with more space in the Bank’s offices and a single point of contact for the immediate delivery of checkbooks and debit under this concept, and in addition, the ABRA-MATIC waiting line management system was installed at 174 offices, to permit faster and more personalized service to customers. Banco Mercantil operated 285 offices and 605 automatic teller machines throughout the country at the end of the year.
During the period the Bank continued with the introduction, promotion, and development of new products designed to meet its customers’ financial needs, Bs/US$/Bs Transfers, the Mercantil Retirement Trust Plan, the Payroll Account, Mercantil On Line for Companies, the m.i.a. account, the Mercantil Relationship, the Executive Account, Employee Seniority/Severance benefit Trusts, and Automotive Portfolio Share Certificates.
On March the 23rd the Bank will celebrate its 75 Anniversary. During its existence, the Bank has faithfully maintained the founders’ ethical principles that moved out the company; as regards of those goals, they have always focused on meeting the demands from its clientele and public in general, taking its place as a strong and solvent institution, and at the same time as an innovating company. There have been products and financial services in which Mercantil has been pioneer in Venezuela, taking care of its mission: "satisfy the individual and community demands, trough the efficient use of resources in order to obtain an adequate profitability and value for its shareholders".
The sustained and successful growth of the Banco Mercantil, is mainly due to the honesty, dedication and tenacity of its personnel, as well as the confidence given by the clients and shareholders through this 75 years of existence.
We are glad to inform that Duff and Phelps de Venezuela S.A. (DCR) gave Banco Mercantil, C.A a vAA+ local risk rating, being the first majority Venezuelan-owned bank to received such a high rating. DCR’s decision was grounded in "the institution’s equity strength, its strong market position, and the maintenance of adequate liquidity, all these factors reinforced by better-than-average risk management, itself a reflection of a sound credit culture".
Seguros Mercantil
Contact and General Manager:
Rafael Cubillán
Tlf.: (58) (2) 709.07.21
Adresses:
Calle Panamá con Avenida Libertador.
Edificio Seguros Mercantil Los Caobos.
Tel:(58) (2) 709.09.99 (master)
Av. Francisco Solano López cruce con Av. Las Acacias,
Seguros Mercantil is the insurance subsidiary of Mercantil Servicios Financieros, held in strategic alliance with Aetna International Inc. who purchased a 49.9% in February 1998. Aetna International Inc. is a well extended insurance corporation in USA with important shares in the insurance markets of other countries. Seguros Mercantil’s financial statements are issued in accordance with the Venezuelan Superintendency of Insurance Companies.
An important part of results is the 39.8% growth over the year before in Premiums collected in 19 totaling Bs.45,8 billion.
Seguros Mercantil’s results are mainly due to a change in its strategic orientation from property and casualty to health insurance products and vehicles.
Merinvest is the subsidiary of Mercantil Servicios Financieros which specializes in Investment Banking products and services. Through its subsidiaries, Merinvest Sociedad de Corretaje, Merinvest N.V., and Merinvest Administradora de Fondos Mutuales, it participates actively in the Venezuelan, Latin American, and United States capital markets, meeting the financing and investments needs of Mercantil Servicios Financieros’ clientele.
Merinvest earned Bs.5.8 billion of profits during the fiscal year ended November 30, 1999. that figure represented a 44.3% return on equity.
As of December 31, 1999 Merivest Sociedad Administradora de Entidades de Inversion Colectiva reached US$ 40.9 million through its family of mutual funds with a market share of 26.1%
Holding Mercantil Internacional
Holding Mercantil Internacional is a bank holding company which owns four overseas financial institutions: Banco Mercantil Venezolano, in Curazao; Banco del Cento, in Panama; BMC Bank & Trust Limited, in the Cayman Islands; and BMS Finanz AG, in Zurich, Switzerland. In respect to the latter, the Swiss Banking Commission authorized its conversion to commercial bank implying larger business and operating benefits. The name will change to Banco Mercantil Suiza, S.A.
Summary of 1999 Results
Million of US$ BMS FINANZ BMV
Loan portfolio 3.9 26.0
Deposits 8.7 69.4
Total Assets 22.7 79.5
Equity 10.7 9.6
Net income 0.11 (0.45)
All the subsidiaries have a long record of participation in the market, the oldest being Banco Mercantil Venezolano, which was founded in 1975. Their personal banking activities are performed mostly in Venezuela and their foreign trade activities predominantly in Latin America and the Caribbean.
All these institutions are supervised by the bank regulatory authorities in their respective countries, where they are subject to strict rules comparable to those in force in the most advance countries.
Inversora Maracima
Adress:
Avenida Andres Bello N°1, Edificio Mercantil, 27th Floor. Caracas, Venezuela
Inversora Maracima’s principal purpose is to undertake and maintain Mercantil Servicios Financieros’ capital investments in non banking activities. Among its investments in subsidiaries set up to provide support services to Mercantil Servicios Financieros are : Servicios de Bienes Raices SERVIBIEN, C.A., a real estate brokerage ; Almacenadora Mercantil, C.A., a warehousing company ; and Mensajeros y Transportes, S.A. MENTRASA, a garage and car rental firm.
A leading place in its investment portfolio is held by CANTV AD’s, equivalent to 0.38% of the company’s capital stock. It also holds 43% of the stock of Servicios Empresariales-SEREMCA, C.A., a leader in the consumption ticket market through its range of products.
Maracima fiscal year ends on November 30, 1999. At the end of the 1999 fiscal year, Inversora Maracima held Bs. 20.7 billion of assets and Bs. 16.3 billion of equity. Maracima recorded Bs. 2 billion 147 million loss due to a non recurring event in the sell of the participation in the real estate project in the east of Venezuela.
Based on the quality service and principles that has been moving Mercantil during the years, in 1999 the bank obtained a number of awards from various financial publications, as well as from other subsidiaries. In his sense, the Bank was awarded by : The Banker, from the Financial Times Group, as the " First Bank in Venezuela ", in its July 1999 edition ; Euromoney, recognized Mercantil with the " Excellence Award " as the " Best Bank in Venezuela " in its October 1999 edition. ; and the Executive Association from Carabobo’s State, gave the " Executive Merit Order " for Enterprises in 1999. Latin France in its 1999, edition awarded Merinvest in the " Research Olympics 1999 " as one of the best providers of the capital market and economic information in Venezuela, and the Greater Miami Chamber of Commerce distinguished Commercebank between the " Top 100 Hispanic Business in Florida ".
NETWORK ABROAD
Agencies
Miami
Agency 220 Alhambra Circle Coral Gable, FL 33134, U.S.A.
Telf. (1)(305)460.8500
Fax:(1)(305)460.8595/96 y 448.7105.
Telex: 6812178 BMER UW
General Manager: Alberto González.
Correspondent Banks:
Commercebank, N.A
Commercebank is a commercial bank located in Florida, USA, a subsidiary of Commercebank Holding Corporation. Commercebank, N.A. is regulated, supervised and examined by the Office of the Comptroller of the Currency, and deposits at Commercebank, N.A. are insured up to US$100,000 by the Federal Deposit Insurance Corporation (FDIC). Commercebank was founded in 1979. It wasn’t until February 1987 that the Bank became part of the Mercantil Group. A summary of financial statements are presented as follows:
Million of US$ 1999 1998 Loan portfolio 584.9 542.1
Deposits 960.5 847.5
Total Assets 1.189.7 1.031.4
Equity 91.0 86.1
Net income 11.1 7.9
During 1999 Commercebank had net income of $ 11.1 million for the year, 40.33% higher than the $ 7.9 million in 1998. The improvement is mainly attributed to loan growth in real estate as well as trade finance.
In 1999 the bank achieved excellent growth while further strengthening its balance sheet. Assets totaled $ 1.190 million at December 31, 1999, an increase of 15.3% from the same period in 1998.
Florida
Personal Customer Services
Miami 305-629-1200.
From Venezuela 800-800-24
Operation Center
3105 N.W. 107 Avenue Miami, FL 33172-2136.
Commercebank Center
Coral Gables
220 Alhambra Circle Coral Gables, FL 33134
Tel.305-460-8701
Airport West
3105 Northwest 107 Avenue Miami, FL 33172.
Tel.305-629-1244.
Correspondent bank
Santafé de Bogotá (Centro Andino)
Carrera 12 No. 84-15/17
Tel: (571) 635.0035 - (571) 635.0001
Fax: (571)623.7932
Lima
Paseo de la República Nº. 3211, 5 Piso, San Isidro o Casilla 59-55, Lima 27, Perú
Tel: (51) (1) 442-3880 / 3870 y 441-1541
Fax: (51) (1) 442-3870
Telex: 20197 INVEST
Representative: Alberto Martínez P.
BRAZIL
Sao Paulo
Avenida Paulista, No. 1728, Piso 3, Sao Paulo, Brasil
Tel: (55) (11) 287-8566, 285-4647 y 284-0206
Telefax: (55) (11) 289-5854
Representative: Néstor Girón
Manaus
Adress: Avenida Constantino Nery, No. 2789, piso 12, Sala 1205, Bairro Chapada, Manaos, Estado Amazonas, Brasil.
Representative: Julio Gonzáles M.
SUBSIDARY
Banco Mercantil de Colombia
Address : Av.82, Nº12-18, 6th and 7th floors, P.O. Box 75168, Santafe de Bogota, Colombia
Tlf.(57-1) 635.0001 fax(57-1) 623.7572
e-mail : bmcolombia@bancomercantil.com.co
President : Jose Alberto Martinez
54.7% Banco Mercantil in Venezuela 12.7% Agencies and Branch 3.0% Banco Mercantil de Colombia 3.0% Holding Mercantil Internacional 2.8% Other 23.7% Commercebank
Banco Mercantil, C.A. is the principal subsidiary of Mercantil Servicios Financieros, accounting for 70.4% of the group’s total assets.
Mercantil Servicios Financieros (" Mercantil ") was incorporated in April 1997, as a holding company for Banco Mercantil and Consorcio Inversionista Mercantil CIMA. On August 7, 1997 Mercantil acquired the shares of Banco Mercantil and CIMA from their shareholders, who subscribed for Class A and B common shares of Mercantil Servicios Financieros in exchange for the shares in the subsidiaries. A merger in which Mercantil Servicios Financieros absorbed CIMA was approved at a Shareholders Meeting held in June 1998, with which the current corporate structure came into being.
Mercantil Servicios Financieros is regulated by the National Securities Commission, which lays down standards for the preparation of its financial statements ; the latter consolidate the activities of Banco Mercantil and the other main subsidiaries, and are updated to reflect the effects of inflation. Since Banco Mercantil draws up its financial statements in accordance with Venezuelan Superintendency of Banks rules, its financial statements have been adjusted in order to prepare those of Mercantil Servicios Financieros, mainly in regard to the application of the inflation adjustment.
Mercantil’s financial statements include the accounts of its subsidiary Banco Mercantil, C.A. and y those of its branch and agencies, Banco Mercantil de Colombia, S.A., Banco Mercantil Venezolano, N.V., Commercebank Holding (USA), Merinvest, C.A., and Inversora Maracima, C.A., among others.
Mercantil recorded net earnings of Bs. 16,124 million in 1999, less than in 1998 (Bs.23,531 million). Total assets amounted to Bs. 3,252,544 million, and equity to Bs. 546,302 million, at the end of 1999.
Gross loan portfolio was Bs.130,542 million (7.1%) smaller at the end of 1999 than a year earlier, in spite of a 3.6% recovery in the last quarter. Demand for credit in Venezuela in general rose by 4.9% in real terms towards the end of the year, according to Venezuelan Superintendency of Banks figures. In spite of the contraction of the loan portfolio, Mercantil maintains its institutional commitment to provide adequate service and has oriented it leading toward the country’s fundamental productive sectors.
Mercantil Servicios Financieros continues-through each of its member companies-to provide excellent financial products and services embodying the highest quality and on a par with international standards. In so doing, it strives to satisfy the expectations of individuals, companies, and the community, and to ensure the greatest possible corporate clarity while achieving adequate earnings for the benefit of its clients and shareholders. In addition, Mercantil seeks to diversify its earnings among its product lines and geographic coverage.
Our independent auditors, " Espiñeira, Sheldon y Asociados, " performed a general examination of the Company’s accounting pursuant to the legal standards and Mercantil’s own administrative control procedures, and found, as stated in their opinion on (attached hereto) that the consolidated financial statements fairly present the financial position of Mercantil Servicios Financieros, C.A. in all material respects and in conformity with generally accepted accounting principles.
The conclusions of a study on Mercantil’s strategic guidelines done with the support of the McKinsey and company consulting firm were put into practice in July. The aim is to strengthen the company’s strategic position and overall operating efficiency, ensuring that Mercantil will continue to be the leading Venezuelan supplier of financial services. As a result of that study, the Company ‘s organizational structure was modified in such a way that there are now five Business Units (International Operations, Corporate and Institutional Banking, Businesses) and three Support Units (Operations and Technology, Human Resources, and the General Counsel’s Office). Appointments and reappointments were made in those units.
To achieve a substantial reduction of expenses, the Company continued to advance a substantial reduction of expenses, the Company continued to advance in the application of the methodology, known as Activity Value Analysis (AVA) , calls for a valuation and review of all the activities. Its application elicited ideas which led to the identification of more efficient ways to conduct many tasks and reduce work which adds no value to the business. With the implementation of the project’s final phase an estimated 1,600 approved ideas will have been put into practice. Once they are all in place, the overall level of efficiency of all the companies is expected to improve, their organization to be more modern, and their expenses to be better rationalized. All of that will make a positive contribution to earnings.
Given the volume of the financial and service activities performed by Mercantil’s leading subsidiaries, they have applied a Money Laundering Prevention Plan drawn up in accordance with legal requirements, which maintains appropriate controls in an effort to comply with the legal requirements and pressing forward in the automation of processes and dissemination of the different aspects of this issue by providing training and informational programs and tools for the personal, whose members are properly supervised by specialized units which maintain adequate control in this area.
In the area of technological change, the strategic plan designed to meet the year 2000 challenge was fully implemented. As a result, the goal of ensuring operational continuity in all respects and successfully addressing the risk of technological change was achieved and a technological platform totally ready to handle the year 200 was installed and is now operating successfully on a regular basis. Work will continue, as envisioned in the monitoring plans running to the end of the year. The total investment in this area came to US$14 million.
Pursuant to a National Securities Commission Resolution, we can inform you that, according to Form CNV-FG-010, compensation payments to the directors and executives amounted to Bs. 320 million in the fiscal period in question.
Relations with the Company’s officers and employees have been conducted in the traditional spirit of harmony and cooperation, and the Board wishes to express its appreciation for their efficiency and dedication in the performance of their work.
Due to the temporary absences of some Principal Directors during the half, the following Alternate Directors attended Board meetings as guests : Luis Esteban Palacios W., Gustavo J. Vollmer A., Gonzalo Mendoza M., Rafael Teodoro Hernandez A., Luis A. Sanabria U., Gustavo Galdo C., Victor J. Sierra A., Juan Mesa Freydell, Adolfo Nass, Eduardo Mier y Teran, German Sanchez Myles, Luis A. Marturet M., and Alfredo Rodriguez G. In addition, Messrs, Alejandro Gonzalez S., Rene Lepervanche M., and Nerio Rosales acted as Interim Executive Presidents during the temporary absences of President Gustavo A. Marturet.
Sincerely yours,
Gustavo A. Marturet
Gustavo J. Vollmer H.,
Alfredo Travieso P.,
Luis A. Romero M.,
Francisco Aguerrevere P.,
Miguel A. Capriles L.,
Alberto J. Sosa S.,
Timothy Purcell
AWARDS TO MERCANTIL IN 1999
Duff and Phelps de Venezuela S.A (DCR) gave Banco Mercantil, C.A. a vAA+local risk rating, being the first majority Venezuelan-owned bank to receive such a high rating. DCR’s decision was grounded in " the institution’s equity strength, its strong market position, and the maintenance of adequate liquidity, all these factors reinforced by better-than-average risk management, itself a reflection of a sound credit culture ". The Banker, from the Financial Times group, recognized Banco Mercantil as the " First Bank in Venezuela ", in its July 1999 edition. Euromoney, recognized Mercantil with the " Excellence Award " as the " Best Bank in Venezuela " in its August 1999 edition. PC News and Report, distinguished as the " Best Internet Banking " in its August 1999 edition. Latin Finance, qualifies Mercantil as the " Best Bank in Venezuela " in its October 1999 edition. The Executive Association from Carabobo’s State, gave the " Executive Merit Order " for Enterprises in 1999 Latin Finance in its September 1999 edition, awarded Merinvest in the " Research Olympics 1999 " as one of the three Best Providers of capital markets and economic information in Venezuela. The Greater Miami Chamber of Commerce distinguished Commercebank between the " Top 100 Hispanic Businesses in Florida " in September 1999.
MERCANTIL Servicios Financieros
98.65% Banco Mercantil
50.1% Seguros Mercantil
100% Merinvest
100% HM I
100% Commercebank Holdings Corp
100% Inversora Maracima
Full service Bank
Bco. Mercantil de Colombia
Miami Agency
New York Agency
Curacao Branch
In early 1998
49.9% of Seguros Mercantil, was sold to Aetna International Inc.
Investment banking activity
BMV,
Curacao
BMS Finanz AG., Switzerland
BMC,
Cayman
Islands
Banco del Centro, Panama
Commercebank, USA
Almacenadora,
Servibien
Mentrasa
FINANCIAL HIGHLIGHTS
Consolidated Figures
December 31 1999
December 31 1998
December 31 1997
Balance Sheet (In Million of Contant Bs.)
Total Assets
3,252,544
3,323,336
3,605,358
Laon Portfolio
1,616,169
1,762,729
2,177,256
Total Deposits
2,400,524
2,381,624
2,638,474
Shareholders’ Equity
546,302
543,507
517,521
Profit & Loss Statement (In Million of Constant Bs.)
VENEZUELA
