EVERY morning before 9 o'clock, long lines form outside banks across this and other Mexican cities with customers waiting to go inside - usually to wait even longer to do their banking.
The lines hint at the inefficiency, complacency, and inadequate service that many Mexicans say typify the country's banking sector. But help is on the way, in the form of foreign banks and other financial institutions, which analysts say will boost competition, lower loan costs, and inevitably improve client services.
Last week, the Mexican government announced a long-awaited list of foreign banks and other financial companies that will be authorized to conduct business in Mexico beginning next year. Among the 52 institutions are 18 banks, 16 brokerage firms, 12 insurance companies, five financial groups, and a Citibank leasing company. Until now, Citibank has been the country's only foreign bank subsidiary. Nineteen of the new banks and brokerage firms are American and 13 are European.
``The competitive pressures within the system have been intensified,'' says Geoffrey E. J. Dennis, director of Latin American research for Bear Stearns & Company in New York.
Officials and observers say the market opening's greatest impact should be threefold: Increased competition will drive down the cost of borrowing; the pool of money for loans will grow; and banks will have to offer new services, at better terms, to attract and keep customers.
``We can expect lower costs [that will] have a favorable impact on our growth expectations, and better service for users,'' Mexican President Carlos Salinas de Gortari told Mexico's National Banking Convention last week. Mr. Salinas pushed through the North American Free Trade Agreement (NAFTA), which counts the liberalization of Mexico's financial services market as a central accomplishment.
Arrival of the foreign financial institutions will mean $1.2 billion in direct foreign investment, according to Finance Minister Pedro Aspe Armella, and perhaps nearly three times that amount in new credit in 1995.
Some observers caution that the market opening may not be as impressive as the Salinas government suggests, however. First, under NAFTA, the foreign institutions were supposed to already have been operating here this year. Some analysts say Salinas wanted to give Mexican banks extra time to gear up for the competition. The foreign banks also were to have been allowed up to 8 percent of Mexican bank capitalization; instead, the approved foreign investments represent only 6.5 percent. That limit is to rise to 15 percent by 2000. Some government officials caution that interest rates will not come down substantially because of the presence of foreign banks.
Several of the United States banks and brokerage firms have indicated they are likely to continue working much as they have been from outside the country, and with largely the same clients. ``We'll be setting up a brokerage office in Mexico City, so that's good news, but I don't think we're going to be doing things wildly different,'' Mr. Dennis says. Bear Stearns is one of the authorized US brokerage houses.
Few of the institutions are expected to venture beyond corporate services into retail banking - bad news for all the bank customers waiting in lines across Mexico. San Francisco-based Bank of America will be one exception and is expected to branch out beyond Mexico City to Monterrey and Tijuana.
Still, most business groups, analysts, and even Mexican banks themselves - the larger of which have already set up joint ventures with foreign counterparts - are optimistic about the long-term effects of the market opening.
In an open letter to foreign bankers, Enrique Quintana, business columnist for Reforma, Mexico City's daily, wrote: ``You must be the incentive for Mexican [financial] institutions to really do what so many times they repeat in their advertising yet so seldom accomplish in real life. Millions of consumers of financial services are hoping that ... just as shelves full of imported goods served to lower inflation and force our manufacturers to improve quality, you will fill our financial shelves with new services at lower prices and with more options to choose.''