JP Morgan, the largest bank by assets in the United States and one of the most powerful in the world, will close its Mexican wealth banking business and transfer its clients to BBVA, Bloomberg reported Wednesday.
The reason why I would leave this company is because the richest customers, the ones served in this segment, are moving their capital out of the country to international financial centers.
This move by the US bank is said to be the result of its decision to also leave equity banking in Brazil, as it did in April last year and referring its customers to the Bradesco bank, according to the US media.
JP Morgan would, however, keep the investment banking, trading and treasury services.
What is Private Banking?
Private banking or patrimonial banking targets clients with a high socio-economic level, offers more personal attention and manages large assets with investments and advanced financial instruments.
As of September 2019, BBVA managed assets of 547,036 million pesos (mp), with a 22% market share in Mexico.
As of September 2020, JP Morgan had assets of 21,463 million pesos.
Capital outflows from Mexico
Sources told Bloomberg that The policies of the government of Andrés Manuel López Obrador have prompted wealthy families to move more wealth abroad. The decision to reverse the energy reform that opened up the sector to private investment, either legally or in practice, also has implications for both physical investment and financial assets.
Only in 2020, $ 9,716 million in portfolio investments left Mexico, compared to 6 billion in 2019, according to data from the Bank of Mexico (Banxico).
In November 2019, US bank Morgan Stanley advised investors to take profits on Mexican assets and close long positions. In other words, he advised investors to sell everything and get out of Mexico.
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