¿How would the National Financial Institutions face the Economic Crisis?

-An Interview by Arturo Saavedra

Due to the global concern for the economic recession The Gringo Gazette had an interview with the engineer
Fernando Javier Jimenez, Regional Director of Banamex Citigroup, the most important financial institution of the
country. In this interview he presents the position of the bank he represents about the crisis and the measures needed
to survive it.

How would you define the status of Mexican banks in the current economic crisis?

One way or another, this crisis has affected all industries not only in Mexico but throughout the world, the financial
sector was no exception, because of this, each financial company should take steps to move forward. The problem is
that not all banks were ready and had the same capitalization index (the capital needed to withstand a drop in the
payment of claims and support the growth of nonperforming loans).

In problems like these, the most common measures include:

• To reduce credit granting or to avoid granting at all

• To reduce spending

• To promote deposits

The severity of these measures depends on the capitalization rate, a high rate shows a prepared institution. In June
this year the analysis showed an ICAP (Capitalization Index) of 17.62% for Banamex, 15.89% for Scotiabank,
15.61% for Banorte; on the other hand, BBVA Bancomer reported a capitalization of 14.95%, HSBC an Icap of
13.42% and Santander had 13.38%

What is your forecast for the national economy in the coming years?

The most severe stage of the recession appears to have ended. However, in terms of the fall of production, this
recession was probably the deepest global crisis in decades. Furthermore, I believe that it will leave scars in terms of
the considerable loss of production potential and a long period in which growth will not reach even the weak
potential.

At the local level, economic activity weakened further in the second quarter. Deriving from this, the GDP growth
forecast for 2009 and 2010 to -7.4% and 3.6%, respectively, from -6.2% and 3.0% previously. However, Banamex
keeps waiting for the start of economic recovery during the third quarter of 2009 based on the revival of external
demand and the gradual recovery of domestic demand.

Domestic demand continues to show signs of weakness. Retail trade sales in May revealed that the outbreak of
influenza AH1N1 intensified the effects of the recession.

Foreign trade showed faint signs of recovery. In June, the dynamics of external trade flows turned out better than
expected. In particular, it is surprising the monthly surge of manufacturing shipments, which is in line with the signs
of a minor deterioration in the U.S. market. The trade balance showed a slight deficit of 206 million dollars. The low
level of deficit continues to support less pressure on parity.

Will the banks continue to offer credits?

Definitely yes, but more caution in granting credit is necessary. Banamex is aware that the credit to companies is a
trigger for the economy, and can be the difference to close or continue the operation of any enterprise.

What do you think about government measures to avert the economy collapse?

One of the measures that the Government must control so that there is a slump in the economy is inflation, it
continues its march downward. Although in the first half of July the figures showed an improvement higher than that
expected, this trend persisted. The general reading of recent inflation data showed that by year end at an annual rate
of 4.1%. While the annual growth rate of CPI in the first half of the year, 5.5% is still out of Banxico’s average
forecast for the 3rd quarter (4.75% - 5.25%), the numbers support a scenario that will continue its gradual fall.

When do you estimate the end of the crisis?

It is difficult to define a specific time, however, there are already signs of recovery. Moreover, the involvement of the
crisis in various sectors of the economy promoters is different for each, with the influenza outbreak of last summer
the tourism sector reached its hardest point, that’s why we are promoting several campaigns and touristic publications
such as "Vive Mexico" and "Be a tourist in your state". We are optimistic, Mexico will emerge