MICROCAPITAL STORY: Microfinance through Wal-mart? Banco Wal-mart de México Adelante Opens in Mexico

Wal-mart de México (Walmex), a subsidiary of the world’s largest retailer, has started its own bank, Banco Wal-mart de México Adelante. According to Reuters, Banco Wal-mart opened nine branches this month, with a total of 16 planned for November. Currently, the branches are offering free savings accounts and personal credit for in-store purchases up to 50,000 Mexican pesos (USD 4,450 equivalent). The bank is planning on opening as many as 80 branches in 2008 and will launch checking accounts, credit cards, payroll accounts and loans for small companies.

Wal-Mart opened its first Mexico-based store, a “Sam’s Club,” in 1991 through a joint-venture with Cifra, a Mexico-based retailer. In 1997, Wal-Mart acquired a majority position in Cifra, and in February 2000 Cifra became Wal-mart de México. In November 2006, Wal-mart de México received a license from Mexico’s Finance Ministry to organize and operate a bank in the country and Banco Wal-mart was born.

The new bank’s customer reach is potentially immense as the parent retail business operates over 950 business units, including 127 “Supercenters” and 80 “Sam’s Clubs.” Wal-mart de México currently employs over 147,000 people and has sales over USD 18.3 billion. Banco Wal-mart will be competing with traditional banks like HSBC, BBVA, and Citigroup, which traditionally charge high transaction fees and high interest rates and often ignore rural or low-income customers. Banco Wal-mart will likely put pressure on other Mexican financiers such as Banco Azteca, a bank formed by another Mexico-based retailer in 2001, Compartamos, a microfinance institution (MFI) that had a successful initial public offering (IPO) in April 2007, and Financiera Independencia, a microfinance institution that also launched its own IPO this month.

According to a quote on Bloomberg from Walmex’s Chief Executive, Eduardo Solorzano, Banco Wal-mart is targeting millions of Mexicans without bank accounts as well as product suppliers and small companies that need credit. About 10,000 of the company’s 12,000 suppliers are small businesses. Furthermore, Walmex’s survey results from 2002 indicate up to 80% of Walmex’s customers don’t have a banking relationship.

Additional Resources:

Reuters: http://www.reuters.com/article/companyNewsAndPR/idUSN1358416520071113

Bloomberg: http://www.bloomberg.com/apps/news?pid=20601086&sid=aIcFRebBZe0I&refer=latin_america

Wal-mart: http://www.walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=379

MicroCapital.org article, April 25, 2007: “Mexican Microfinance Institution Compartamos Makes Strong Market Debut”

MicroCapital.org article, November 5, 2007: “MICROCAPITAL STORY: Mexican Microfinance Lender Financiera Independencia SAB Plans Initial Public Offering”

Banco Azteca: http://www.bancoazteca.com.mx/

Financiera Independencia: http://www.independencia.com.mx/

Compartamos: http://www.compartamos.com.mx/

Bloomberg.com: Currency Calculator

Similar Posts: