PROSPECT HIEGHTS, Ill. -- Household International Inc., has agreed to form a joint-venture credit card business in Mexico with Grupo Financiero Invermexico.
Grupo Financiero Invermexico owns Banco Mexicano, that country's fourth-largest bank as measured by assets and the sixth-largest among credit card issuers.
Household said the venture would be the first in the Mexican financial services industry in which a U.S. financial firm had a direct ownership interest.
The venture, not yet named, will initially issue and manage credit cards for the middle- and upper-income consumer markets, Household said. The venture will house Banco Mexicano's card portfolio. which includes general purpose MasterCard and Visa cards and various affinity programs.
Currently, the bank's combined card portfolios represent 100,000 accounts and $220 million in receivables, Household said.
Banco Mexicano will provide local marketing expertise, customer relationships, and the infrastructure, Household said.
Meanwhile, the U.S. finance company, through its Household Credit Services unit, will "provide state-of-the-art technology, processing, and underwriting capabilities, its knowledge of card portfolio-management systems, and its experience in cobranding."
The current managed card portfolio of Household Credit Services is $9.5 billion, and it is the fifth-largest U.S. bank card issuer, Household said.
An official with the credit services unit said, "The potential for credit card growth in Mexico is virtually unlimited." Even though it already is the largest card market in Latin America, its usage rate is well below that in the U.S.