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CEO slams AMLO's plan to merge Bancomext and Nafin

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CEO slams AMLO's plan to merge Bancomext and Nafin

Francisco González, CEO of Banco Nacional de Comercio Exterior S.N.C. Institución de Banca de Desarrollo, said President-elect Andrés Manuel López Obrador's proposal to merge it with fellow state-run development bank Nacional Financiera S.N.C. Institución de Banca de Desarrollo would have numerous negative consequences, including lower credit ratings for both companies, El Financiero reported.

González claimed that a Bancomext-Nafin merger, which had been attempted in 2005 but later shelved, would likely drag the ratings of both banks down and lead to weaker credit demand. Clients would lose the specialization of each if combined, the CEO argued.

Bancomext is focused on financing for export companies in Mexico, while Nafin promotes lending to small- and medium-sized enterprises and the development of financial markets.

"The same person can't take care of you for three or four things," the CEO reportedly said at an event.

The president-elect, popularly known as AMLO, pledged on Sept. 4 to merge the banks as a part of a strategy to fortify Mexico's development-banking sector in a bid to lower credit costs for small- and medium-sized companies in the country.

Moody's praised the plan, saying it would boost the granting of credit and raise domestic demand. While the details of the plan are still unclear, the rating agency also said the proposed merger would help the next government strengthen the local economy.