Lowest Lending Rate in Latin America Slows Mexico's Economic Comeback Nacha Cattan - Bloomberg News
go to original April 20, 2013

Gonzalo Garcia, 45, thought 10 years as a branch manager for Citigroup Inc.’s Banamex unit in Mexico would help qualify him for a loan to start up an herbal medicine business. He was wrong. Banamex, along with two other leading lenders, turned him down.

“I felt utter frustration,” said Garcia, who obtained credit through the government. “From inside we were constantly denying loans. From outside I wasn’t able to get one.”

Mexico’s commercial credit market, the smallest of any country in Latin America, has weighed on the nation’s economy, which expanded less than its regional peers over the past decade. Improving lending rates would boost gross domestic product expansion by about 1 percentage point a year in Latin America’s second-biggest economy, says Jose Perez, associate financial services regional director of Standard & Poors’.

Commercial bank lending as a percentage of GDP is 19 percent in Mexico, half the rate of Brazil’s and the lowest of any Latin American nation, according to the most recent comparable data compiled by the International Monetary Fund.

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