Bancomer’s 3-for-1 ‘NAFTA’ Offer

Some of Mexico’s banking institutions are determined to leave the bad old days behind. Take the first “NAFTA bank,” actually an alliance of banks stretching from Mexico to the U.S. Midwest to Canada.

Exploiting the opportunities opened up by the 1994 North American Free Trade Agreement, Mexico’s second-largest bank, Bancomer, has sold a 16% stake to the Bank of Montreal, creating the first continent-wide banking alliance.

Bank of Montreal is the owner of Harris Bank, a Chicago-based institution that is strong in retail banking in the Midwest. That allows BMO, Harris and Bancomer to boast of having the first true NAFTA banking operation, with more than 2,500 branches in the three countries.

Jeffrey S. Chisholm, BMO vice chairman and a Bancomer board member, said the two banks had several years of commercial dealings with each other, so that when the idea of an alliance emerged, BMO knew there was a good match of corporate cultures and strategic strengths.

“The top management of Bancomer is as able as the top management of any bank in the world,” Chisholm said. “Every single aspect of how we felt this alliance would work has been met or exceeded.”

The three banks have begun to develop products and services that exploit their tri-nation reach.

One new service is headed up by Sonia Pylarinos, on loan from BMO to Bancomer. She worked for Harris in Chicago before joining Bank of Montreal, so can lay claim to being a tri-national banker.

She cited an example of the way the new service works: A U.S. client with a finance operation in Wisconsin sells products by catalog to corporate customers in Mexico. The customers use an 800 number to order and can make payments at any Bancomer branch. The funds are transferred electronically to Harris, which then confirms to the client company that the payment has been made, allowing the product to be shipped immediately.

“We are linking existing products and existing infrastructures in each of the three countries to capitalize on what is already in place,” she said. “We have three of the top cash management services in each North American country. Now we are integrating the three.”

One of the alliance’s most ambitious efforts involves a deal with the U.S. Postal Service to transfer funds from Mexican Americans to relatives in Mexico, using post offices across the U.S. that have links with Bancomer’s branch network in Mexico.