Amex Reveals Mexico Venture

American Express Co. and Banamex, Mexico’s largest bank, announced Friday that they have formed a joint venture to offer new financial services in Mexico as the country’s economy continues its embrace of international business.

The first offering of the new company will be an American Express Gold Card that also bears the Banamex name, said James D. Robinson III, chairman and chief executive of American Express, and Roberto Hernandez, chairman of the newly privatized Mexican bank.

Called BANAMSA, the joint venture will offer other financial services if Mexico, Canada and the United States sign a North American free trade agreement, according to the executives. And the partnership could expand to offer charge card and travel services to the rest of Latin America.

“This reflects the growing relationship between Mexico and the United States that we hope will be given further momentum as the free trade agreement moves along and becomes law in both countries,” Robinson told a press conference at Banamex’s executive office.

“One important component of the agreement is financial services, and negotiators on both sides are working hard to come up with creative solutions. I’m confident the financial services component will be a meaningful part of the agreement,” he said.

The three countries concluded a dicey round of negotiations for the trade pact in Dallas last week. Mexican newspapers and the Wall Street Journal reported that Mexico is proposing to keep U.S. and Canadian banks and brokerages from operating Mexican subsidies before 1998.

The tough negotiating stance stems from the fact that Mexico has just begun to sell its state-owned banks to the private sector. Mexican officials believe that they need protection from foreign competition.

Hernandez, who led a group purchase of Banamex last year, has expressed concern about competition from Citicorp in the area of commercial loans. The joint venture, meanwhile, appears to be a way to meet the foreign competition for consumer services.

“This is a chance to learn from the leaders about what kind of service we can give to our cardholders,” Hernandez said. “We also want to move into other areas in which we can grow together.”

He said BANAMSA expects to issue about 500,000 Gold Cards in Mexico over the next three years. American Express now has 450,000 cardholders in Mexico, 110,000 of them holders of Gold Cards. Banamex itself has issued 8.4 million credit and debit cards.

Robinson said that in the joint venture, Banamex will provide access to the Mexican market and infrastructure, while American Express will provide worldwide services.

Tommaso Zanzotto, president of the international unit of American Express Travel Related Services Co., said he expects Mexicans’ purchasing power to rise dramatically over the next 10 years.

Mexico is now one of the top five markets in the world for travel services, he said, and American Express “touches” nearly a quarter of all tourist dollars spent in Mexico with its cards, travelers’ checks and tours.