BankAmerica May Go Retail in Mexico

BankAmerica Corp., which for 47 years has made only commercial loans in Mexico, may open retail branches in the nation’s export-oriented northern border region, Chairman and Chief Executive David A. Coulter said Wednesday.

Coulter’s comments came as bigger rival Citibank said it would buy Mexican bank Banca Confia in a bid to boost its presence in Mexico’s retail banking market.

Under the agreement, the nation’s second-largest bank would pay $45 million in cash to Abaco Grupo Financerio, Confia’s parent, and provide up to $200 million in fresh capital to the bank.

The acquisition would mark the biggest investment by a U.S. financial institution in a Mexican bank. It would give Citibank, a unit of New York-based Citicorp, branches in 29 of Mexico’s 31 states. Monterrey-based Abaco, which is mostly composed of Confia, has assets of $4.7 billion.

Coulter, in a speech to the American Chamber of Commerce in Mexico City, said San Francisco-based BofA, the nation’s third-largest bank, sees the markets of the U.S. Southwest and the Mexican border states of Baja California, Sonora, Chihuahua and Tamaulipas as increasingly interdependent and “an economy we like a great deal,” he said.

“The border between California and Mexico continues to be blurred” more and more, Coulter said.

BankAmerica, which since 1950 has limited its Mexican lending operations to the nation’s largest companies, now plans to focus more on small and medium-sized companies, officials said.

The efforts by Citibank and BankAmerica to expand their loan businesses is aimed at filling the credit vacuum that developed after the December 1994 peso devaluation. The resulting 18-month recession forced most Mexican banks to limit their loan activities to only their most trusted customers.

In New York Stock Exchange trading, BankAmerica shares were unchanged at $67.56; Citicorp shares fell $1 to close at $131.56.