U.S. bankers are stepping up their lobbying efforts for the authority to offer full banking services in Mexico and Canada.
The American Bankers Association recently submitted a list of demands to the U.S. Trade Office, which is representing the government in negotiations for a proposed North American free-trade agreement. Among the powers sought: branching and investment banking rights and entry to payment systems.
"In simple terms, U.S. bankers want to be free to do business in Mexico on an equal footing with your banks," C.G. Kelly Holthus, a former president of the ABA, said in a speech at the annual convention of the Mexican Bankers Association in Acapulco last week.
A number of U.S. banks have designs on Mexico, for different reasons.
Bankers say large U.S. institutions such as J.P. Morgan & Co. and Chase Manhattan Corp. are mainly interested in handling trade and corporate finance, underwriting and distributing securities, arranging mergers and acquisitions, and supplying private banking and complex derivatives such as currency swaps and options.
Some, such as Citicorp and BankAmerica Corp., are also interested in building retail banking networks in Mexico, bankers say.
Several Southwest institutions -- including NCNB Texas National Bank and Chemical Banking Corp.'s Texas Commerce Bancshares Inc. -- would like to expand retail operations, foreign exchange, and lending, as well as do trade finance and process cross-border payments.
One-Way Restrictions
The bank's lobbying efforts underscore the growing resentment over restrictions on activities in Mexico and Canada.
Canada obliges foreign banks to set up locally incorporated subsidiaries, while Mexico bars foreign banks from retail activities or having more than representative offices.
The single exception in Mexico is Citicorp, with four branches grandfathered under Mexican law in the 1930s.
Meanwhile, there are no similar limitations on Canadian or Mexican banks doing business in the United States.
"What we'd like to see is some reciprocity," said Alfonso Martinez-Fonts, president of Texas Commerce Bank-San Antonio. "right now the situation is such that the U.S. door is totally open and the Mexican door is totally shut."
U.S. banks are keen to spell out early on what they want from the North America agreement, because many feel the 1989 free-trade accord with Canada failed to produce any substantial gains. Now U.S. banks are looking to the new round of trade talks as a lever to persuade the Canadian government.
"The lesson we've learned from experience with Canada is that the details are important," said Henry Ruempler, the ABA's director of tax, accounting, and international banking in Washington.
"If you include financial services but don't spell out what it means, you won't accomplish much for U.S. banks."
Assets of U.S. banks in Canada have grown only by 20%, far less than was originally hoped, since the agreement went into effect at the beginning of 1989.
Bankers say that Canada's requirement for separately capitalized subsidiaries of foreign banks limits their ability to lend in Canada.
List of Objectives
The negotiations on a North American free-trade agreement, which began in June, offer an opportunity to revise the Canada accord as well as work out an agreement with Mexico. A pact would probably lead to a massive increase in cross-border investments and trade.
According to Mr. Holthus, who is currently president and chief executive of Nebraska's First National Bank of york, the ABA is seeking authorizations for U.S. banks to:
* Branch into Mexico and Canada.
* Gain full access to the banking markets involved, including payment systems, capital markets, and automated teller machine networks.
* Issue credit cards and join existing credit card networks.
* Engage in investment banking in Mexico and Canada.
The ABA is also asking for fair taxation and regulation of U.S. banks whose operations are conducted cross-border from U.S. offices.
Treasury officials, who are participating in the U.S. negotiating team, are due to resume discussions early this week on a financial services chapter for the free-trade agreement with their Mexican and Canadian counterparts.
Treasury officials say that administration is giving its full backing to bankers' demands.
"U.S. banks would very much like to enter [Mexico] and we're obviously here to represent their needs," said a senior Treasury official who asked not to be named.
