As the US, Canada and Mexico prepare to renegotiate the deal that has defined intra-regional trade for over two decades, the North American Free Trade Agreement (Nafta), The Banker has looked at a sector negotiators might like to prioritise in their modernisation efforts: financial services.
How does Mexico score in relation to the US, whose current administration has lambasted the trade deficit with its southern neighbour? The country has done well in attracting foreign direct investment (FDI) to its financial centres. Between June 2016 and May 2017, $209.5m flowed into Mexico City compared with the $207m received by New York, according to greenfield investment monitor fDi Intelligence.
Mexico City’s financial services FDI flows were the largest across the three countries in those 12 months, as was the $268.2m it received the previous year. Two of its five FDI projects are from the US, from North Carolina-based Bank of America and investment fund the Vanguard Group, based in Pennsylvania. The other investors are Bermuda-headquartered Lazard, Spain’s Banco Sabadell and Zurich-based Credit Suisse.
However, New York is clear leader in outward FDI, with $1.55bn – a figure substantially up on the previous year’s $1.2bn. Out of 42 recent foreign investment projects, none went to Mexico and only one to Canada, where a joint venture between Bank of New York Mellon and Canada’s CIBC opened a new office in Mississauga, Ontario. Canada’s main financial centre, Toronto, is fifth by outward FDI.
