Banking on a Strategy of Long-Term Understanding

Q: How is Mexico positioned in Barclays’ global strategy?

A: Historically, investment banks tend to place Mexico within their Latin America strategy, but for Barclays it made more sense to include Mexico on the North American map due to the complements of the economies. We believe that, with or without NAFTA, Mexico’s business world will intertwine with North America, given the synergies between the three economies. We are the most active bank in the issuance of CKDs and we issued the first CerPI. We are also strong participants in government and private debt issuance. It is important that we send the message that Barclays is a strong bank, committed to Mexico. Bank strategies tend to be defined for the short-term, but Barclays’ strategy is based on understanding a country in the medium and long term. We understand that Mexico will experience episodes of volatility and that there will be bumps along the way, but in terms of reforms and new initiatives the country is doing what needs to be done, and there is a solid platform to build and strengthen our markets and investment banking strategy. Moreover, Barclays is one of the leading international investment banks with capital committed to our Mexican subsidiary, which is a growing trend that is expected to continue.

Q: Beyond NAFTA, what is Mexico’s value proposition to the world?

A: Mexico has achieved a lot thanks to NAFTA, but also thanks to the bilateral and trilateral relationships of the North American bloc. For example, Canadian pension funds are investing in infrastructure and energy in Mexico, although it is not circumscribed in NAFTA. The most important CKD, which is estimated to total between US$2.5 and US$3 billion, is made up of Afores and the Canadian Pension Fund, which is unrelated to NAFTA; it is related to the bilateral relationship between Mexico and Canada. NAFTA has been a cornerstone of the trilateral relationship but the economies are so close and complementary that the relationship will continue regardless of what happens with NAFTA. One positive achievement for Mexico is that it has signed bilateral agreements with different countries beyond NAFTA, which solidifies Mexico’s position. We will continue to be one of the US and Canada’s most important economic partners, but at the same time we will continue to be very important trading partners for other countries.

Q: What opportunities and challenges might arise for financial institutions following the NAFTA renegotiation?

A: NAFTA will bring stability to the region and if the result is positive the economic ties in the region will be reinforced. For the financial sector, having clarity is important for generating more investment. There are many aspects that go beyond a mere business perspective but which will play a central role in the renegotiation. Factors such as financial security, money laundering or areas where cooperation is needed will end up benefiting both countries. Between the financial entities of the three countries, we can work together to ensure the safety of our nationals and the integrity and stability of the financial sector of the three countries.

Q: What challenges does Barclays perceive that could hinder investment in the country?

A: Instability could play an important role. Regardless of the results of the Mexican elections of 2018, it is essential to maintain the basic principles of responsible macroeconomic management and to foster an environment of clarity, certainty and transparency. Investment in Mexico has not only increased but also strengthened. In moments of strong volatility, foreign ownership of government bonds did not fall. These examples that reflect the mid-term focus of investment, which has grown despite the fact that there are many tasks that need to be tackled in terms of security, corruption and the rule of law.