Mexico's Resilient Banking Industry - Local Baja Bank Offering Great CD Rates
Recently, The Economist discussed the strength of the Mexican banking system. This article discusses a unique niche in the San Diego/Tijuana cross-border metro area that allows a local bank to offer depositors CD rates from 12-18% annually. The article goes on to describe the loans the bank makes to be able to offer such attractive rates for certificates of deposit.
Tijuana, Baja California (PRWEB) November 25, 2008 -- A recent article in The Economist discusses the strength of the Mexican banking system and why it is relatively unaffected by the U.S. financial crisis. Additionally, there is no mortgage crisis in Mexico which further protects their banking system from the adverse impact. The article titled, "Mexican Banks - Riding High " discusses how Mexico's open banking system is a good bet for investors and provides links to a briefing on the Mexican economy and other information of value to investors.
One Baja banking institution benefiting from the strength of the Mexican banking system and the robust San Diego - Tijuana cross-border economy is Capitalbank of Mexico. Capitalbank received its federal licensing and accreditation as a Mexican Savings and Loan Association in 2005 and is successfully attracting depositors with high CD rates (Certificates of Deposits) earning 12% and 18% interest.
What makes Capitalbank unique is their high-yield CD's which are backed by short-term, fully collateralized, hard asset loans and financing of the currency exchanges in the thriving dollar/peso market. The short-term, collateralized lending industry in Tijuana alone exceeds $500 million U.S. annually and the currency exchange industry exceeds $2 billion U.S.
These industries are driven by three factors. The first factor is that the San Diego - Tijuana metropolitan area boasts a population greater than 5 million, comprising one of the largest border economies in the world with 350 million legal border crossings per year between the two cities. Second is the huge export business generated by NAFTA (North American Free Trade Agreement) and third is the constant and long established need for short-term loans by the local working population who do not otherwise have access credit. The burgeoning markets for short-term, fully collateralized loans and funds for currency exchange allow Capitalbank to offer depositors rates of return that exceed most U.S. and Mexican banks.
Miguel Marquez, the CEO of Capitalbank explains the bank's business model. "Our Savings and Loan Association pays its depositors among the highest returns on dollar-denominated Certificates of Deposit by making high interest, short-term loans to fully collateralized borrowers providing much-needed access to credit. If we have funds that are not being used for loans they do not sit idle. We invest those funds in the $2 billion dollar a year cross-border currency exchange industry between San Diego and Tijuana, both of which provide substantial returns that get passed on to depositors. As a federally-regulated and audited part of the Mexican banking system, we are authorized to receive deposits and lend these funds for the benefit of our depositors. Since interest rates are traditionally much higher in Mexico, we can offer superior rates of return to our CD's depositors," continued Mr. Marquez.
As investors from all countries deal with substantial losses and uncertain financial markets, many seek to bolster their portfolios with a blend of investments that provide higher rates of return while managing risk. Capitalbank offers a white paper entitled, "Investing in High Yield Mexican Certificates of Deposit." This free publication is available by registering on the Capitalbank website.
Capitalbank Mexico is part of Capital Institute, S.C. DE R.L. a Mexican Federal Savings and Loan Association, chartered by the Mexican Federal Banking and Securities Commission based in Tijuana, Baja California.
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