May 17, 2018 / 11:02 PM / 3 days ago

Bank of China plans to go 'local' in Mexico

MEXICO CITY, May 17 (Reuters) - China’s fourth-largest bank by assets is pushing into the Mexican market, aiming to meet the needs of large Chinese companies increasingly eager to expand into Mexico, a senior executive said on Thursday.

Diego Folino, one of the executives leading Bank of China’s expansion strategy into Latin America’s No. 2 economy, said that for the first time the lender would provide several loan products, wire transfers and basic treasury services.

Bank of China Mexico received a license from the Mexican banking and securities regulator two years ago, but Folino said it only recently received approval to offer its services and would now seek out the largest Chinese and Mexican companies.

“There are about 70 strong Chinese companies already investing in Mexico and Chinese financial institutions must follow them,” Folino, the deputy chief executive of Bank of China Mexico, told Reuters in an interview.

“Now we are trying to become local,” he said, in still sparsely-furnished offices in Mexico City.

Companies like the China National Offshore Oil Corporation, which won the right to exploit potentially lucrative deepwater oil blocks in a 2016 Mexican auction, have been increasing their investment.

Meanwhile, Mexican companies like Bimbo, the world’s largest breadmaker, have expanded into China.

Folino said management was already developing more services for potential corporate clients, including foreign exchange transactions, money markets and offshore renminbi management.

“We expect to become the leader in renminbi management eventually,” he said. “The use of the currency is increasing significantly.”

China keeps currency controls in place and when international companies do business with China they use offshore renminbi, which is held outside of China but can flow in and out to pay for goods, services and some investments.

In recent years, Mexico has also seen the arrival of the Industrial and Commercial Bank of China, or ICBC, as well as Mizuho Bank from Japan and Shinhan Bank from Korea. (Reporting by Stefanie Eschenbacher, Editing by Rosalba O’Brien)

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