Baja Bernie
`Normal` Nomad Correspondent
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Registered: 8-31-2003
Location: Sunset Beach
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This affects the folks in Baja Too!
Why do they follow our most negative of leads?
June 8, 2007
Commerce News
Credit Card Debts with Foreign and Mexican Banks Grow
The central Bank of Mexico (Banxico) has issued a report
that gives a "yellow light" to the growing trend of unpaid
consumer debt. In a report this week, Pascual O'Dogherty,
chief analyst for the bank, revealed that the percentage of
overdue credit card accounts rose from 3.1 percent in 2005
to 4.6 percent in the first trimester of 2007. Banxico and
private bank sector officials gave mixed assessments of the
news. O'Dogherty urged credit-card granting institutions to
be cautious in their business practices, but discounted an
immediate threat to the financial system.
Enrique Castillo Sanchez Mejorada, president of the
Association of Banks of Mexico, recognized that more credit
card holders have fallen into arrears, but maintained that
the problem was "under control." In Mexico, credit card
accounts are considered overdue when holders are more than
90 days late in their payments.
In the last few years, mostly foreign-owned banks have
dramatically expanded their Mexican credit-card debt
portfolio. According to Banxico's O'Dogherty, banks
approved 8.7 million new credit cards last year, awarding
40 percent of the new accounts to customers with no
previous credit history. Credit card consumer spending
reached about $37 billion in 2006, but now shows some signs
of slackening.
With their aggressive, street-hustling style of signing up
new credit card holders, banks are taking on many risky
clients. On the other hand, banks are clearly cashing in on
the business. The Banxico reports that the percentage of
banks' income derived from commissions rose 14.9 percent in
2006, with a good chunk of the cash stream attributed to
income from credit cards.
Much of the new business is targeting lower and middle
income sectors of the population, and enticing non-
financial sector companies like Wal-Mart into starting up
their own banks. In 2006, the last year of the Fox
administration, 15 new banks were authorized to operate in
the country. A recent story in the Mexican press reported
that Mexico's budget and taxation ministry is holding
negotiations with Volkswagen and the Bank of New York to
add the companies to the list of the country's banks.
Pushed by banks, the credit card boom is redefining the
meaning of foreign debt in Mexico. Previous to the
country's economic liberalization, the government typically
contracted large debts with foreign lenders. Now,
individuals from all walks of life are acquiring debts with
foreign financial institutions and corporations.
As consumer credit woes mount, so are complaints against
banks. The Ciudad Juarez division of the Office Federal
Attorney for Consumer Protection (Profeco) lists the
Mexican-owned Grupo Elektra, a large transnational with a
presence across Latin America, as third in the total number
of local complaints on record with the agency.
Ciudad Juarez Profeco official Vicente Diaz Montano said
that most of the complaints against Elektra were actually
filed against the affiliated Banco Azteca, which maintains
outlets in Elektra's popular department stores. Diaz said
that high interest rates allegedly charged by Banco Azteca
were the common cause of the consumer complaints. Banco
Azteca offers new credit card customers a 10 percent
discount on a first purchase if it is made with Elektra on-
line or in person.
Sources: El Universal, June 7, 2007. Articles by Jose
Manuel Arteaga and Romina Roman. Norte, June 7, 2007.
Article by Francisco Cabrera. La Jornada/Notimex,
June 6, 2007. Sec.edgar-online.com. Elektra.com.mx
Frontera NorteSur (FNS): on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico
My smidgen of a claim to fame is that I have had so many really good friends. By Bernie Swaim December 2007
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Gnome-ad
Nomad
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Too bad. 
Have seen many good people here (USA) get in credit card trouble, including my daughter. Emergency stuff, you know? She and her husband have dug their
way out, but it was a struggle. Seems like folks in Mexico might not understand how interest can eat up tomorrow's breakfast.
The only normal people are the ones you don't know very well. - Ancis
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DENNIS
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Who cares?
Push the young, educated Mexicans into credit card debt and they'll be the new illegal immigrant to the states. With education, they will survive,
in style.
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Baja Bernie
`Normal` Nomad Correspondent
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Dennis
Why, Sir! I do because the only way we are going to get a handle on immigration, no matter the form, from Mexico is for them to create a viable
middle class and offer their own folks some hope in their lives.
This just hit me right on the head..............Why did our forefathers brave the western plains and deserts---perhaps because things were not so rosy
for them on the eastern seaboard. Just a thought.
My smidgen of a claim to fame is that I have had so many really good friends. By Bernie Swaim December 2007
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Baja Bernie
`Normal` Nomad Correspondent
Posts: 2962
Registered: 8-31-2003
Location: Sunset Beach
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Mood: Just dancing through life
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grover
What they forget is that folks are not idiots and they prefer to invest over saving.......... which does not even keep up with inflation.
My smidgen of a claim to fame is that I have had so many really good friends. By Bernie Swaim December 2007
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woody with a view
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funny thing happened
whilst reading this thread. i noticed the banner ads above are all about wiping out credit card debt! i guess the ad placement companies are getting
better at targeting your web surfing and showing you the ads you (probably) don't care about anyway!!!!
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