Carlos Hank González on Mexico | Banco Interacciones

Transcript

Mexico President Enrique Peña Nieto’s ‘Pacto por Mexico’ means the country should see faster and easier reforms in the next few years that it has for decades. Carlos Hank González, President of Banco Interacciones, outlines the three key reforms that have been made, the impact they have had on the economy, and the business case for the $300bn programme of infrastructure spending that has been promised over the next six years.

World Finance: Tell us about the reforms, and how they’ve affected Mexico’s economic performance.

Carlos Hank González: The recent reforms… well, first of all, let me tell you that the reforms are now creating a lot of excitement in Mexico, because they can really make a big break through for the country.

The recent reforms that have been made already, two of them are the most important.

First, the education reform, which can be a big change for Mexico in the long run. We needed that for a long time, and I think it was a very good choice by President Peña, so I think it will be a big game changer in the long run.

And the second reform which will have results very fast is the banking reform. And it’s mainly focused into having better credits, better loans for the people, for the businesses, and at cheaper prices. And as you know, if banks are lending, it means growth for the country. So we’re expecting big things, and we should also have other reforms passed during the year, which should really set a bigger growth rate for Mexico.

“The Mexican banking industry is still growing at a very aggressive rate. We’re ready for Basel III”

World Finance: And if we look at the banking reform in some more detail, what is this hoping to achieve?

Carlos Hank González: What it’s hoping to achieve is what I was telling you, it’s to achieve more loans at a cheaper price. And what the government is doing is, through the government, what they’re trying or proposing to is to give guarantees to the banks in order for the banks to make safer loans.

And we have to make those credits cheaper. So, the result, what we’re looking for, is for the businesses, for the people, to be able to get better choices of loans, better choices of credits, and at better prices.

World Finance: So what other challenges are Mexico’s banks facing today?

Carlos Hank González: We’re facing many challenges – as you know, the Mexican banking industry is still growing at a very aggressive rate. We have very safe banks; for example we’re ready to go into Basel III, we have very good balance sheets at most of the banks, and I think the biggest challenges are that we need to give more access to the people and to our services.

Not more than 10 percent of our population has access to banking services, so we don’t only face a lot of challenges, but we face a lot of opportunities in order for the banks to keep growing in Mexico.

“Infrastructure is the key for a country to stay competitive. $300bn in investments will do a lot.”

World Finance: The president has also announced a $300bn programme of infrastructure investment over the next six years, so why is this needed?

Carlos Hank González: Very important. I think infrastructure is the key for a country to stay competitive. If we don’t have the infrastructure: airports, ports, highways, dams, whatever; if we don’t have the infrastructure in order to compete with the world’s countries, we’re going to stay behind. And that’s something that’s been happening to Mexico.

If we look at Mexico: the position that it holds in the world economically, we’re way far behind in the position that we hold in infrastructure investments. So, I think the announcement that the president made is something that has us very excited in Mexico. $300bn in investments will do a lot. He talked about airports, about new ports, about getting better highways, and that should make Mexico more competitive for sure.

World Finance: Finally, Interacciones has a history of working with the government on these projects, so you are expecting the phone call pretty soon, I guess?

Carlos Hank González: We have a lot of experience in infrastructure, that’s for sure. This year Banco Interacciones is 20 years old, and one of our main niches that we have specialised in since the first year was infrastructure. We have developed a very specific strategy in financing and investing in infrastructure projects as I mentioned, all types of projects, and mainly the private projects that are partnered with the government.

We did for example, last year, we financed the first PPP project, which is private and government projects, which financed a museum for example. Which is the first time that has been done in Latin America. So, we’re very excited about what the president has announced. We are ready for the challenge, and we’re ready to work with Mexico on that.

World Finance: Carlos, thank you.

Carlos Hank González: Thank you very much Nick, it’s been a pleasure.