Goldman Sachs Mexico Brokerage to Challenge Citigroup

By Brendan Case and Christine Harper on November 16, 2012

 

Goldman Sachs Group Inc. (GS) won authorization for a Mexican brokerage unit, setting the stage for heightened financial-services competition in Latin America’s second-largest economy.

Goldman Sachs Mexico Casa de Bolsa SA plans to “transfer some activities that it does in other countries and increase its operations to become an important participant in the Mexican market,” the nation’s National Banking and Securities Commission said today in an e-mailed statement.

“Over the years we’ve developed a strong relationship with local Mexican clients but believe it’s now vitally important to operate in closer proximity,” said Michael DuVally, a Goldman Sachs spokesman in New York. “This license is consistent with our general expansion in Latin America.”

The approval means Goldman Sachs can trade onshore in Mexico, said a person familiar with the firm’s activities in Latin America. The focus will be on fixed-income products, the person said. Except for Brazil, all of Goldman Sachs’s trading in the region has been offshore until now, said the person, who asked not to be identified because the details aren’t public.

Goldman Sachs is the fifth-largest U.S. bank by assets. Foreign companies with Mexican brokerages includeMorgan Stanley (MS) and Credit Suisse Group AG (CSGN), according to the Mexican Association of Brokerages. Citigroup Inc. (C)’s Banamex unit also owns a major brokerage.

The most senior person in the Goldman Sachs Mexico office is Martin Werner, the co-head of investment banking for Latin America. He joined the firm in 1999 after more than a decade at Mexico’s Finance Ministry, where he was credited with helping restore investor confidence after the 1994 peso devaluation and who in 1996 became the youngest deputy minister ever at age 33.

Mexico is one of the four biggest markets in the Goldman Sachs N-11 Equity Fund along with Indonesia, South Korea and Turkey, the so-called MIST nations, Jim O’Neill, chairman of Goldman Sachs Asset Management, said in August.