Bloomberg Businessweek and NASDAQ have reported that Mexico will soon be home to a new Goldman Sachs brokerage unit that is expected to rival Citigroup and lead to heightened financial services competition in this emerging Latin American superpower. By creating Goldman Sachs Mexico Casa de Bolsa SA,the firm will be able to transfer some of its activities that are currently taking place in other countries,thereby boosting operations outside of the U.S. and becoming an important participant in Mexico’s market.
“The decision builds on Goldman’s decades-long investment banking presence in Mexico City,and is consistent with the firm’s general expansion in Latin America,” Goldman Sachs spokesperson Michael DuVally told NASDAQ. “From a sales and trading perspective,we have developed strong relationships with local Mexican clients,but believe it’s now vitally important to operate in closer proximity to these clients.”
DuVally went on to say that the firm will develop the new broker dealer in Mexico real estate throughout the first half of 2013,with a primary focus on fixed income products. Other top brokerage firms in Mexico are Grupo Financiero Inbursa SAB,which is operated by the world’s richest man Carlos Slim,Citigroup Inc.,Morgan Stanley,Banamex,Credit Suisse Group AG (CSGN) and the Spanish Banco Bilbao Vizcaya Argentaria SA (BBVA). Combined,all of Mexico’s brokerages reported an impressive financing margin of more than $370 million and $290 million in net profit throughout the first half of 2012.
Bloomberg Businessweek also pointed out that the Goldman Sachs expansion will allow the firm to begin trading onshore in Mexico,adding that the nation is one of the four largest markets in the Goldman Sachs N-11 Equity Fund,as part of the MIST nations that were singled out for their immense opportunities by Goldman’s own chairman of asset management Jim O’Neill for the first time in August of 2012. Goldman Sachs is the fifth-largest U.S. bank by assets.