Slow and Steady Wins the RaceWed, 01/21/2015 - 09:57
Q: How did Intercam first start serving oil and gas companies?
A: Intercam began operations in the Mexican financial market in 1996. It started as a foreign exchange broker focused on providing services to companies benefiting from NAFTA. Since then, it has grown through the acquisition and incorporation of new companies. Today, Intercam’s objective is to offer its corporate customers all financial services related to foreign exchange, investments, the money market, equity markets, investment banking, commercial loans, and bank deposits. Within the oil and gas industry, Intercam’s customers import machinery and services to carry out their operations. We offer them loans to finance their projects and we provide international treasury services that enable them to compete in this new regulatory environment.
Q: With the entrance of new players, how is Intercam planning to remain strong within the oil and gas sector?
A: In order to satisfy the financial needs of old and new players in the oil industry, Intercam will start with foreign exchange services, and then move on to loans. During 2014, we opened a new branch in Ciudad del Carmen in order to increase our participation in that region. As part of its modernization, the oil industry will require equipment and services from the US, which is why Intercam is also very active with the ExportImport Bank in providing credits to facilitating the import of machinery or services from the US under attractive financial terms. Intercam has a long-standing relationship with the Export-Import Bank, so it can help its customers through the process of getting their credit line approved.
Q: What are the typical attributes that a company needs to have in order to receive a loan from Intercam?
A: Intercam’s core market lies with medium-sized companies, even though we also cater to several large corporations. In the energy sector, Intercam seeks either to do business with companies that provide services to large suppliers of PEMEX, or directly with those suppliers. Any company with sales above US$10 million a year is a very interesting target for us. In terms of general risk parameters, Intercam looks for well-capitalized companies with positive cash flows and long-term contracts with their customers. We want to work with companies that have plenty of experience in their line of business, as well as a healthy cash flow.
Q: How is Intercam adapting to the impact that low oil prices are having on international markets?
A: Oil prices are significant in this industry, but they remain prices. It was not so long ago, back in 2008, that oil prices were at about the same level as today. Companies involved in the oil industry have to formulate their business plans while taking into account the high volatility in prices. Intercam is very familiar with volatility and knows how to deal with it because we operate foreign exchange and money markets, as well as long-term bonds, which see high fluctuation. The bank has highly defined and strict risk-taking policies for each of the markets it does business in. We closely control very specific gain and loss expectations in each of these markets, because working with high volatility industries, like oil and gas, is part of our nature. Intercam competently swims in turbulent waters, seizing the moment when currents are calm to help companies plan for the long term.
Q: How can changes in PEMEX’s credit rating affect Intercam’s financial solutions for the oil and gas industry?
A: Banks were used to PEMEX being a part of the government, meaning that the risk was almost zero, but now that PEMEX is acting much like a private company, it has cash flow considerations that are affecting its customers in terms of payment simplicity. PEMEX needs to be better capitalized and banks now need to view it more in the long term than in the short term. As a bank, we have to be very close to our customers and to PEMEX to stay informed about how policy changes will affect its customers and its credit portfolio.
Q: Where and how do you expect to see Intercam in the short, medium, and long term?
A: While Intercam is a small bank, it has very important trading operations in the money and foreign exchange markets. In the next five to eight years, we want to move up in the bank size rankings. Intercam is competing to move up and be counted among the country’s 15 most important banks. Intercam is growing its banking business very fast. In 2014, it increased its deposit base by 66% and grew its credit portfolio by 35%.