Banco Santander has announced plans to invest 15 billion pesos ($735 million) in Mexico over the next three years despite market uncertainty as U.S. President-elect Donald Trump’s inauguration draws nearer.
Santander Mexico CEO, Hector Grisi, announced the investment program, which he said was aimed at modernizing Santander’s systems and branch network to transform the bank into Mexico’s best financial institution. Speaking at a year-end press event on Thursday, Grisi said the plan was Santander’s biggest-ever in Mexico, a country that contributes 7 percent of the group’s profits, fourth-most after Brazil (20 percent), the United Kingdom (19 percent) and Spain (14 percent), based on third-quarter figures. The investment program will include a 3-billion-peso outlay for systems in 2017, Grisi explained.
Despite the Mexican central bank’s decision in November to hike its benchmark interest rate by 50 basis points to 5.25 percent, Grisi said Santander would not initially modify its rates based on the market and instead would adjust them as needed depending on the clients’ profile. On Dec. 5, Mexico’s central bank said it was not ruling out “new episodes of volatility” that put additional pressure on national financial markets following Trump’s victory.
The peso fell sharply versus the dollar after the surprise victory by the Republican real-estate mogul, who has threatened to renegotiate the North American Free Trade Agreement that links the United States, Canada and Mexico and build a wall on the U.S.-Mexico border. The Mexican currency has been sliding against the greenback for more than a year due to low oil prices and the U.S. Federal Reserve’s decision late last year to begin raising its benchmark rate from a historically low level.
But Grisi put those concerns into perspective. “Our commitment to Mexico is over the long term,” he said, adding that “these investments need to be made no matter what ... We’re worried about what we can control and we remain focused on what we have to do,” he added.