Venturing Abroad: The Internationalisation of Mexican Banks Prior to the 1982 Crisis

*. I would like to acknowledge useful suggestions and comments by Gustavo del Angel, Juan H. Flores, Jean-Marie Grether, Carlos Marichal, Aldo Musacchio, Mary O'Sullivan, Hugues Pirottes and Gail Triner as well as the three anonymous reviewers. I thank participants of seminars and workshops at the Université Libre de Bruxelles, Universidad de Buenos Aires, 11th EHES Conference, Universidad del Pacífico - Pontificia Universidad Católica del Perú and Université de Neuchâtel. I wish also to express my special thanks to the archivists of Banco de México and Banamex for their valuable support and assistance.

Pero el apretón es grande. El control del gasto es brutal y el crédito está seco aquí adentro también.¹

José López Portillo, 30 July 1982

The decade that preceded the debt crisis of 1982 witnessed a sharp expansion of international banking and an increase in overseas lending and borrowing activities of commercial banks. After the oil shock of 1973, as large amounts of petrodollars streamed into the international banking system, private financial institutions increasingly engaged in the Euromarkets and the recycling of wholesale market liquidity via syndicated or direct loans to developing countries.²Mexican banks were no exception:³cross-border claims and obligations went from representing about 0.7 per cent of total assets and liabilities of the banking sector in 1975 to 20 per cent in 1982.⁴Involvement with foreign funding and international lending created a series of new vulnerabilities for the domestic banking system, in particular related to foreign exchange and world financial fluctuations.

Until now, scholars have paid little attention to the internationalisation of Mexican and Latin American banks during the lead-up to the 1982 debt crisis.⁵This is unfortunate because, as the debt and banking crises in Europe have recently illustrated, the condition of domestic banks is typically affected by the activities they undertake in the international capital markets.⁶It is all the more surprising given that banking crises broke out in Argentina in 1980, Chile and Uruguay in 1981, Colombia and Ecuador in 1982, Peru in 1983 and, some time later, Bolivia in 1986.⁷Other countries, such as Brazil and Venezuela, although not affected by systemic banking meltdowns, still experienced banking failures in the 1980s. Mexico, unlike most of its neighbours,...