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 Business News | October 2007 
Banco Azteca to Add 85 Branches Outside Mexico
 Adriana Arai & Karla Palomo - Bloomberg
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Banco Azteca, the five-year-old Mexican bank with more accounts than any lender in the nation, plans to add 85 branches in the rest of Latin America by end of next year.
Banco Azteca, a unit of Mexico City-based retailer Grupo Elektra SA, will start operations in Brazil, Argentina, Peru and El Salvador, and expand in Panama, Guatemala and Honduras, Vice- Chairman Luis Nino de Rivera said in an interview.
The international expansion plan will boost the number of branches and points of sale outside Mexico by 40 percent to 300, he said. The investment plan for Mexico, where Banco Azteca has 1,450 branches and points of sale, hasn't yet been defined, Nino de Rivera said.
"There's a huge market out there," he said in a Sept. 25 interview.
Banco Azteca, which focuses on consumer lending, amassed almost $4 billion in deposits by serving low-income individuals in Mexico who are overlooked by the nation's biggest banks, including units of Banco Bilbao Vizcaya Argentaria SA and Citigroup Inc. Azteca, with 11.8 million accounts as of June 30, overtook BBVA's 11.7 million accounts this year, according to data from the Mexican banking regulator.
Elektra shares rose 0.9 percent today to 222.04 pesos, boosting this year's gain to 70 percent. The Mexican benchmark stock index added 15 percent in the same span.
Model for Expansion
The Banco Azteca model can be exported to other countries in the region because their economies are similar, Nino de Rivera said.
In Brazil alone, Elektra and Azteca will invest $25 million to open 25 units, half of which combine retail and banking, he said. The investment will be mostly in the poorer northern half of Brazil, where competition from the biggest retailers and banks is less, he said. The Azteca and Elektra units will be in Fortaleza, Recife and Belem.
"Competition is intense in Brazil, but we still see room to come in and grow," Nino de Rivera said.
The growth of Banco Azteca is luring competitors in Mexico, including Wal-Mart Stores Inc., which obtained a Mexican banking license last year. The retailer plans to introduce branches in stores nationwide next month. Smaller retailers including Grupo Famsa SA and Coppel SA opened banks and Citigroup's Banamex unit has a plan for branches at Organizacion Soriana SAB, Mexico's second-largest supermarket chain.
Banco Azteca initially targeted consumers who bought home appliances at Elektra outlets and all branches were inside the stores. Now the bank's revenue accounts for about 55 percent of Elektra's, Nino de Rivera said, and the company has stand-alone units and points of sale inside other retail chains.
To contact the reporter on this story: Adriana Arai in Mexico City at at aarai1@bloomberg.net |
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