MEXICO CITY - American bankers where there's trouble there's also opportunity. While Mexican banks try to address burgeoning problem loans and economic malaise, many bankers here say an opening has been created for the U.S.- affiliated banks that have sprung up since the Mexican government loosened foreign-ownership laws. Global banks have been able to operate representative offices here for decades, but it wasn't until last October that the Mexican government allowed foreign owners to set up or acquire full-fledged banks that could compete directly in the Mexican market. More than 40 foreign-based banking companies have either petitioned for - or have already opened - Mexican banks here in hopes of tapping into what is still seen by many as the hemisphere's most promising emerging market. "The fact that the Mexican banks are so distracted gives us an opportunity to bring on some Mexican companies as clients," said Stephen Thomas, vice president in charge of Bank of Boston's representative office in Mexico City. "Our plans aren't predicated on that, but don't lose sight of the fact that Mexico is Latin America's second- largest economy despite its troubles." U.S.-based banking concerns such as Citicorp, BankAmerica, Chase Manhattan Corp., Bank of Boston Corp., and Chemical Banking Corp. have all recently opened banks in and around Mexico City. And executives at some of these new enterprises are saying that opportunity exist here like never before to make inroads into the Mexican market. "We've gained even stronger relationships with our Mexican clients because of the crises," said Manuel Pena-Morros, director general of Chase Manhattan Bank Mexico. "We've been largely unaffected by the problems facing many Mexican banks, and our clients know that." Chase opened the doors of its Mexican bank in February and since then has been concentrating on commercial lending and advisory services to such top-tier Mexican companies as giant glassmaker Cifra SA, Mr. Morros said. "There is a lot of interest here on the mergers and acquisition side, and project finance, especially in power and environmental projects," said the Dominican-born Mr. Morros. The strategy of concentrating on only the biggest Mexican companies isn't unusual for American affiliates here. Typically, said Bank of Boston's Mr. Thomas, the giant companies are involved in international trade or have cross-border interests that make it easier to work with a U.S. bank. The current economic crisis has affected corporate relationships as well. Shortly after the devaluation of Mexico's currency, interest rates skyrocketed, catching many consumers in a credit crunch. The result has been that retail lending in the country has been nearly paralyzed for most of this year. Most banks here completely halted consumer loans and credit- card operations - and they're only now beginning to be revived. "There is no real credit culture here at a retail level; there isn't even an established credit bureau," said one American banker here, who requested anonymity. "There's a need to build up record keeping in this country - and that's going to take anywhere from five to six years to do." Still, the appeal of opening a Mexican bank lies in the ability to take demand deposits, and make local currency loans - areas where foreign-owned banks had been locked out before the government loosened requirements. "There is a need for equipment leasing, infrastructure projects - you name it," said Federico Gonzalez, director of BankAmerica Corp.'s Mexican leasing subsidiary. "They are trying to remodernize the Mexican economy, and there is a place here for any bank willing to take the risk." James F. McCabe, president of newly formed Bank of America Mexico, said Mexican banking officials had "bent over backwards to help us assimilate" into the market. Indeed, the Mexican banking system has been a sort of sacred cow in this country, receiving considerable insulation from foreign competition. But one U.S. government official, who asked not to be identified, said the Mexican banking commission has been open to foreign banks' coming in to the market because it would turn up the heat on domestic banks. "The injection of new competitors that are well financed and fiscally responsible should stimulate the banking system here," the official said. Bank of America's Mr. McCabe said he doesn't see many more American banks coming into the Mexican market, though there has been talk for some time that some U.S. banks may be interested in acquiring Mexican banks now that the devalued peso makes takeovers much cheaper. "The current weakness of the Mexican banking system creates, at least on paper, the prospect to acquire," Mr. McCabe said. "I know that there are talks going on that would raise some minority shareholders to majority stakes, but Bank of America is not looking to acquire." He added that "most banks have been concentrating on growing their U.S. operations, but as the Mexican economy calms down I think you will see them considering doing more here." But one executive at a U.S. bank affiliate said that a U.S. takeover of any Mexican bank was unlikely in the short term. "It's a price issue, in the sense that the (Mexican) banks are weak," he said. "Do you really want to pump the resources into it to build it back up?" "Besides, is this a time you want to be making home loans?" he asked. "I would like to see Mexico back on its feet before I enter this market on a retail level." Yet American-owned banks here are going forward with plans to expand despite the economic difficulties of the country - though the focus on corporate and institutional business will likely remain, bankers said.

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