“Stick to what you know,” has proven to be a motto that works – and it is a maxim close to the heart of those in charge at Banco Interacciones. The lender insists it does not aspire to be a jack-of-all-trades, but rather to master one – with the objective of applying it to its clients’ advantage.
After a decade of quality control, commitment and hard work, the lender can safely say it has found the key to success. It maintains a constant interest and enthusiasm in banking developments to perfect its work on behalf of its customers. Attentive communication helps the bank avoid surprises and provides timely information to stakeholders when any changes occur. It does that by listening, understanding their positions and paying attention to detail. Teamwork plays a key role in that service too, as it allows for drawing on the experience and qualities of all involved to achieve a common goal. Responsibility, consistency and honesty are dominant facets that drive the group. Above all however, Banco Interacciones has succeeded because it is an organisation that adapts quickly to changing demands and raises the stakes in the market.
Committed leadership at the helm
When in September 1993 Mexico-based holding company Grupo Financiero Interacciones sought and obtained authorisation from the Ministry of Finance to establish a new, multiple banking institution, nobody could guess that Banco Interacciones would rapidly grow to become one of the top banks in the country. The company’s vision to be a leader in its field has become reality through continuous efforts to provide security, prestige, trust, specialised counselling, and the best alternatives to its clientele.
The bank’s CEO, Carlos Hank González, is one of the key people who contributed to itsw vast success and made certain the institution never lost sight of its mission. “We wanted to offer financial products and services that add value and protection to the heritage of each of our customers and adjust to suit their required needs,” Hank says. “At the same time we strived to achieve the return that was expected by shareholders and accomplished this every time. However, none of this would have been possible if it was not for the excellent teamwork within the various departments. Banco Interacciones encourages the personal and professional development of its staff – and they repay us by putting their heart and soul into ensuring client satisfaction.”
Hank’s charisma and affable personality are only surpassed by his ambition, drive and commitment to attain great triumphs on behalf of the bank and its clients. Family history precedes Hank: his grandfather is a renowned professor and his uncle is a former mayor of Tijuana. Despite being the third-generation member of a family often associated with politics, Carlos Hank is much more business-minded than his paternal relatives. Some say he is more like his maternal grandfather, Roberto González Barrera, who is the majority shareholder of Grupo Financiero Banorte.
Hank is very much a man with his own merits, who works hard for his clients and strives towards continuous growth for the bank. He is also a respected member of the board of directors of Grupo Financiero Interacciones and has previously served as co-CEO and as coordinator of strategic planning in the area of promotion and money markets within Interacciones Casa de Bolsa.
He acquired a degree in business administration with specialism in finance from Universidad Iberoamericana and later experienced a rapid rise within Banco Interacciones. He was only 23 years old when he joined the team in 1995, as the country was suffering a heavy financial calamity. The Mexican Peso crisis, also known as the December mistake, caused the abrupt devaluation of the country’s peso in December 1994. It brought hard times for a new bank trying to establish itself in the market. The CEO recalls: “We had to start from scratch… it was a very tough beginning bang in the middle of the crisis.”
Gradually, Hank assumed the leadership of the various businesses until finally in October 2000 he was named CEO of the whole business while his father carried on as chairman of Grupo Financiero Interacciones. According to Hank, Mexico started to work its way out of the crisis around the same time, which meant an action plan was in order to consider all viable options for Banco Interacciones.
“We looked at areas where we could be competitive, and especially looked at what rivals such as CitiBank, HSBC and others were offering. There are numerous professional competitors but we looked to focus at niches in particular, with an emphasis on the financing of states, municipalities and governments and infrastructure projects.” The group is moreover active in representing smaller companies that provide products and services: such as medicines for health programmes run by governments, companies that are involved with transportation of oil, and other similar type of business.
Distinct expertise
Hank believes that regardless of how recognised and established the other lenders proved to be, Banco Interacciones distinguished itself and became noticeable by adopting a different approaching to the business. The bank does not provide a standard product: its ability to proffer custom-made services sets the bank apart from the rest.
“What we presented the market – compared to those large rivals of ours – was different, and it gave us a competitive edge within two facets in particular,” Hanks says. “One was that we are a local business and Mexico is our home, country, and pride. We know our nation’s needs the same way we know our individual needs, especially as we experienced the economic crisis and lived through it. This experience helped us appreciate the wants of the state and the requirements of municipalities. Moreover, we benefit from recognising the diverse structures of the state and can therefore create tailor-made solutions, unique, personalised products to fit each individual client. This has only been possible because we have operated in the close vicinity of our clientele, and learned to adapt to their constraints.”
Another factor that benefited Banco Interacciones, according to its CEO, was its size. Compared to its vast, commercial and chiefly international rivals, Banco Interacciones is smaller and more focused. While its competitors were more concerned with commercial loans, Hank began to instruct and train staff, and plan for increased growth alongside his team which helped him identify operational niches and effective marketing methods.
Capital was injected into the bank and Hank’s strategy of specifically penetrating the markets in government banking, infrastructure projects, government-owned firms, agribusiness, and fiduciary services, started to pay off. These market sectors specifically have payment sources with extremely low credit risk, which allows the bank to preserve a healthy balance sheet and a reliable source of payment for its loan portfolios. The lender now enjoys a leading spot in the financing of municipalities and states and was responsible for issuing the first state bond in the country’s history.
Noteworthy achievements
Measured by profitability, the bank ranks among the top three financial institutions in Mexico and has experienced expansion rapidly. “In Mexico the need for growth is tremendous. The country has matured a lot already and we have grown with it,” says Hank. “Yet, we are still far from our full potential, because over the next 10 years expansion will triple in size – particularly within infrastructure. We are fortunate because our country is evolving in the niches we participate and specialise in.”
At the end of August the credit ratings agency Fitch affirmed the bank’s ‘A’ credit rating, reflecting Interacciones’ consistent profitability and its low, well contained impairments and credit losses. “Achieving a high rating is an indicator to our clients that we are a safe and sound financial institution,” Hank says. “Our team has been working closely with the rating agencies, trying to understand what is required. However, more importantly, we now need to maintain the rating and try hard to improve further. As a company we have to project and give our clients the security they deserve. Banco Interacciones hopes to increase our rating even more within the next three to five years.”
The bank has shown a strong positioning in the public sector financing business, and a comfortable loss absorption capacity in the form of capital and reserves. According to Hank this is due to its traditionalist, old-school style. “We are very conservative in our approach because we started at a time when Mexico was amid a major financial crisis. As we want to shield our clients from unnecessary risk the same applies to every type of loan we pay out. Banco Interacciones has never broken that line or taken a larger risk than needed. Our mission is clear, we are not eager to show good results in the short term, we care about long-term achievements,” he says.
Dealing with challenges of global banking
The changing perspective of banking globally and its effect on financial institutions are felt internationally, and Mexico is no exception. The bank is monitoring the economic turmoil closely and is addressing the arising challenges face-on. Its CEO says, by identifying customer requirements and sticking to what it knows best the bank will not suffer a similar fate as that by other lenders: “We will have to be faster and better, and highly flexible without lowering our risk tolerance. There are a lot of respected institutions out there but so far we have been able to maintain our competitive edge.”
Looking to the future, the bank is directly involved with governments, developing workable programmes and solutions through resources in its regional offices. Hank says: “One of the biggest tasks for me is to listen, understand, and as a team develop what fits best. We do not see ourselves as a bank that will grow to compete in every niche. That is not our forte.
“Banco Interacciones is more of a specialised, niche banking institution – a boutique, if you like – which will stay close to its customers to understand their needs and develop the right products for them.”
According to Hank, government banking can be a very safe environment and is a good business if the provider of the service appreciates what exactly is required. “It may be a very sound niche but there is a lot of follow-up, and it requires a significant amount of detail. It is important to know how governments spend the money we lend to them. Although we are ahead of our competitors and know the market, a 100 percent focus is still essential in order to value how governments conduct their finances. I think the only issue that could affect lenders in the field of government banking is if they do not pay attention and fail to monitor the situation. However, we will not allow what happened to other countries to happen to Mexico.”
Carving out a niche
Banco Interacciones offers a broad array of services and products to individuals and businesses, including chequing accounts, debit cards, commercial loans, investment assessments, currency exchange, and much more. The bank concurs that in addition to government banking, its strongest division remains in infrastructure. Yet, regardless of that, the bank keeps a cautious eye on its rivals and their strategies.
“We are not the typical commercial bank and realise that although we have grown quickly, we have still a wide spectrum for progress. At the same time our bank maintains a careful approach because it has a large number of competitors which should not be underestimated,” Hank says.
He is not letting success get to his head. The CEO’s unruffled manner shows he takes nothing for granted in the advancement of the bank – especially when it concerns the services for clients. He admits there are always areas that the company wants to improve further. “We can still improve in the type of services we offer, the method we use to help clients structure debt, and even to aim higher within our financing for municipal governments by managing their income better through new creative products. Our team is consistently thinking of ways to make infrastructure projects more valuable for the state. It does that by anticipating potential issues that could arise from implemented laws within each state. It is our mission to address each predicament individually and discover the most efficient system to tackle those to get the best deal for our clients,” Hank says.
It was this drive to continually achieve more on behalf of its customer base that led to its success. The CEO says: “In the first three years we prepared to start our growth plan and focus in our niches, but it wasn’t until we launched the 3×3 plan, a highly ambitious programme that set out to triple the bank’s assets, capital and profits in the space of three years.”
The niche focus of the bank proved to be the company’s best strategy as the bank grew from an impressive $6bn to a staggering $18bn within its three year target. “Fortunately we were very accurate in our market predictions when we chose these specific areas of business. This, coupled with our highly competitive team, has been the basis of the banks’ main success, and allowed us to become one of the most important players in these industries. For the past eight years we kept very close to our customers’ progress and analysed the risks so that we can evaluate efficiently how to manage their portfolio.”
The three year target to reach $18bn is long gone now, and figures have long since surpassed $43bn. “We continue to see an extremely big opportunity within municipalities because the government here compared to other countries has still a low percentage of debt,” he says.
According to the CEO’s outlook the bank’s credit increase over the next few years will come largely from governments. “I believe about 40 percent will be from states and municipalities, 25 from infrastructure, 20 from government-linked companies, and the rest will be agribusiness.”
Despite its status and expertise, Banco Interacciones continually prepares for any challenges or eventualities that could emerge from such advancement. “We have to pay close attention now. There is a need for sufficient resources, because the government has not been structuring loans and loan portfolios the way they should have done. Because of that, the bank would have to examine closely what the state and municipalities are financing and the way they go about it. By doing this, we hope to achieve a breakthrough in understanding how they can reach their full potential, and manage their debt more effectively so we can be future participants to help out the best we can,” Hank believes.
Banco Interacciones puts great emphasis on teamwork and collective labours. The CEO recognises that it would not have been possible to achieve successes of such dimensions if it had not been for the people he works with. Hank waxes lyrical about the team effort, saying: “I am extremely proud of each and every one of them, they are an outstanding group of talented people and luckily we managed to keep them with us.”
Mexico flourishes
Armed with a strong, experienced team and an in-depth knowledge on market developments, the bank’s positioning remains highly advantageous. This looks to carry on particularly as infrastructure development is heavily on the rise. Concessions packages such as the Mexico-Toluca and Mexico-Guadalajara highways, El Cajon hydroelectric project, and other planned public investments in roads and water infrastructure will continue to drive the country’s industry value this year. International and local utilities are discovering prospects to enter the country’s water infrastructure after talks that it is to be expanded and renewed. This has prompted an above-consensus forecast for construction industry value growth. Hank believes investment prospects, which are fundamental to the progress of the country, are opening up everywhere within the Mexican market now.
“Mexico is experiencing a highly promising development momentarily, and has overall shown tremendous opportunity for further growth. We work with almost all 31 states on improvements of infrastructure, and there is still so much that needs to be done. Toll roads, airports, water plants, prisons, and ports are all seeing enhancement and expansion. Taking all that into account, in addition to our strength in the farming sector, I believe we will reach $60bn by next year and around $115bn by 2014-2015,” he says.
The bank has an exceptional reputation for providing credit and financial support to companies active in the farming and agribusiness sectors. This is an area with a vast potential for growth and Banco Interacciones is well placed in the market due to its longstanding expertise in this field. Hank says: “Mexico’s agribusiness still lags behind where it could be, but the Federal government has played an important role in its current development. Yet, there are infinite prospects for growth in this area. We are aware that as a company we can offer a great deal of experience to this sector and help the Federal government reach its full potential within agribusiness. Banco Interacciones wants to be part of this progress.”
Community support
The company knows that with success comes duty to the public and its nation. Social responsibility and community support is paramount to Banco Interacciones which makes it its business to help in areas it sees as crucial to the development of the country. The bank is a keen advocate of Bécalos, an educational scholarship programme founded in 2006 in Mexico by the Association of Banks, Fundación Televisa and other key banks. Hank states: “The team at Banco Interacciones is extremely involved with the community. The future is in the hands of our children and in Mexico the biggest concern is lack of education. This is a long-term task to help students with talent who lack the resources and means. The programme has grown a lot over the past few years and provides secondary and higher scholarships for academic excellence, for scientific and technical careers, and to train teachers.”
Banco Interacciones also aids Mexicanos Primero, a similar organisation, which focuses on the best resources and best teachers for Mexico. The bank has attracted interest on behalf of both and has already made a huge difference. “Schemes such as these are outstanding in what they are trying to achieve for the community, and we are happy to offer our help and be a contributor to our nation’s successful future,” Hank adds.
