| | |  Business News | May 2009 
Banks Across Borders
 Kent Paterson - CorpWatch
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(See related - Mexico’s Other Crisis: Foreign Banks)
| | (Khalil Bendib) | |
Bank of America, Banamex, Citigroup, HSBC, BBVA, ING and Santander teamed up late last year to engineer a $2.38 billion buy-out of the U.S. operations of Canada-based George Weston Limited by Bimbo, the giant bread, snacks and other foods company founded by conservative Mexican businessman Lorenzo Servitije. The purchase greatly helped Bimbo consolidate its position as one of the leading baking and food companies in the world.
Recipients of U.S. government bailout money, Citigroup and Bank of America, greased the wheels of the deal after they announced lay-offs of tens of thousands of workers in the United States.
In Mexico, foreign bank bailouts have had their own repercussions. Under Mexican law, foreign governments are not permitted to own banking assets in Mexico. When the U.S. government acquired a 36 percent ownership stake in Citigroup, Banamex’s parent company, Mexican opposition politicians said Banamex was now operating in defiance of the law.
Calderon administration officials issued contradictory responses, first insisting that international free trade agreements signed by Mexico rendered the ownership law obsolete. Treasury Secretary Agustin Carstens later said Banamex had three years to shed itself of foreign government involvement.
“Can you all explain to me?” wrote a reader of the daily La Jornada website. “In what law or part of the Constitution can you violate a law for three days, three months or three years, without punishment?”
Besides Banamex, several other banks in Mexico are in the same legal quandary, including the Dutch ING bank and the Royal Bank of Scotland, both of which have been propped up by their respective governments.
The foreign government ownership controversy could wind up in Mexico’s Supreme Court. By virtue of its new ownership interest in Citigroup, the Obama administration has, for all intents and purposes, put its stamp of approval on the corporation’s Mexican business practices, including the extremely high interest rates charged to credit card holders. Calls to the U.S. Treasury Department for comment were not returned.
Based in the northern industrial city of Monterrey, Banorte is the sole remaining big Mexican-owned bank. Its principal stockholder is Roberto “Tortilla King” Gonzalez Barrera, who also leads Grupo Maseca, the giant corn flour milling and tortilla-making business that dominates the market in North America, Central America, and beyond. Maseca’s rival in the staple tortilla market is none other than Bimbo.
In the past, Gonzalez has been associated with the family of ex-president Carlos Salinas de Gortari. Nowadays, Gonzalez and Banorte have their sights set on U.S. expansion. The Mexican bank recently completed a take-over of the Texas-based Inter National Bank, a lending institution that offers mortgages to U.S. and Canadian citizens for vacation properties in Mexico. |
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