MEXICO CITY, Jan 31 (Reuters) - HSBC is giving itsMexican unit a $500 million capital injection to increaselending in Latin America's second-biggest economy, the bank saidon Thursday.
The Mexican unit, whose London-based parent was slapped witha $1.9 billion fine in December for money laundering lapses, haslagged behind other foreign banks that dominate lending inMexico, despite a $700 million injection from its parent inDecember 2009.
The capital raise, which will be completed by next Monday atthe latest, is aimed at boosting consumer lending and expandingfinancing of production chains for import/export companies,something the bank has succeeded with over the past year,according to Jaime Pena, the CEO of the Mexican subsidiary.
Mexican manufactured exports rose to an all time high inDecember on strong U.S demand, helping the country to notch itsfirst annual trade surplus in 15 years.
HSBC's expansion in Mexico comes as the company scales backits operations elsewhere. According to Pena, the bank has"divested" from 44 different countries in the last 2 years, butsees a bright future in Mexico.
"Mexico is a great destination for investment," said Pena,pointing to Mexico's exporting strength. It has "public financesthat I think are enviable, (and) macroeconomic policy managedwith great orthodoxy."
He added that HSBC has its second largest network ofbranches, and largest network of ATMs, in Mexico.
HSBC is Mexico's fifth largest bank with assets of 495.6billion Mexican pesos ($38.91 billion). BBVA Bancomer and Citigroup's Banamex unit are Mexico's two biggestbanks.
HSBC has a 7 percent share of bank lending in Mexico, with aloan portfolio of 195.8 billion pesos but has lost market sharein the last year.
Lending has lagged in Mexico behind other Latin Americancountries, with outstanding commercial bank loans as a percentof GDP below 19 percent in 2011, according to the IMF.
On Wednesday, London-based HSBC announced it was hiring aformer U.S. deputy attorney general to avoid a repeat of lapsesin its anti-money-laundering controls that led to the fine.
HSBC Holdings (HSBA)
