This has convinced The Banker to vote Agromercantil Guatemala’s best bank twice.
The bank originally catered to the agricultural sector but has grown into a full-service bank with 40 branches in the capital and 40 elsewhere in the country.
Part of its expansion and profit margins can be linked to standard sources of growth in Guatemala: higher fees and commission, especially owing to a mushrooming remittances business. But a fair chunk of the positive numbers is due to keen management.
Rafael Viejo, head of Agromercantil, stressed this factor in an interview with The Banker. He points out that the bank has one manager per branch (many competitors have two), it meets Basel II requirements, invests in IT systems and has a team dedicated to risk.
With a handful of offices open in the US, plus strong revenue, Agromercantil is positioning itself for further business development in the north. But, privately, Guatemalan bankers who share Mr Viejo’s enthusiasm for the US market say that now is not the time to ask Washington for a licence because, in the post-9/11 environment, concerns over drug trafficking keep US officials wary of granting the country a financial presence – even though there is no suggestion that Agromercantil’s anti-money laundering controls are inadequate.
Mr Viejo is disturbed by Guatemala’s increasing crime rate. Part of the violence is driven by powerful, well-financed drug rings, which could reverse the gains that the financial sector has made in fighting money laundering. Tighter laws implemented in recent years have helped to remove Guatemala from lists such as the Financial Action Task Force’s non-co-operative countries and territories list but any slip in supervision could change that and considerably damage investor confidence in the financial sector.
“We have to be extremely vigilant,” says Mr Viejo. “We are part of the chain. We do not produce drugs but we are considered a transshipment spot.”
Another source of worry for him is the burgeoning remittances market. The growing amount of small-time money transfers into Guatemala toughens oversight. “For example, if a lot of people abroad send money to just one person here, that’s a red flag,” he says.
Next year’s presidential election will escalate tension. “There is room for a populist politician to gain popularity here on many levels,” says Mr Viejo. That could lead to a wild-card scenario. “So we expect an open space for opposition. And right now there is no real idea of how that could go,” he adds.
