Nafinsa moving toward more emphasis on guarantees rather than direct funding

Tuesday, March 15, 2011

Mexican government development bank Nafinsa is in the middle of a strong shift in its development strategy toward guaranteeing commercial bank lending, rather than providing funding for that lending, Nafinsa general manager for promotion Luz Stella Lozano told BNamericas.

"As a development bank, we're not attractive when it comes to funding because in the end, the same regulations apply to us as to private banks and we get our funding from the market," she said.

Instead, the development bank is shifting toward increasing guarantees for loans by commercial banks under a raft of new Nafinsa programs.

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Some 43% of the bank's total portfolio is made up of loan guarantees, up from 12% six years ago. Lozano said the bank expects to increase that figure further this year, to about 50% of its total portfolio.

Many of those guarantees fall under the category of Nafinsa's broad support for commercial bank lending to micro, small and mid-sized enterprises (MSMEs). Lozano said 63% of all commercial bank lending to MSMEs is guaranteed by Nafinsa.

The full interview with Lozano will be published in this Friday's Banking Perspectives, for subscribers only.