On Monday,
JPMorgan Chase & Co.
(
JPM
) announced that it has infused $250 million capital in its Mexican
subsidiaries with the aim of benefiting from one of the fastest
growing economies. The additional capital infusion brings the total
registered capital in JPMorgan's Mexican division to about $653
million.
In 1994, Ministry of Finance and Public Credit (SHCP) authorized
JPMorgan to set up a financial group (J.P. Morgan Grupo Financiero,
S.A. de C.V.) in Mexico, which included a bank (Banco JPMorgan,
S.A.) and a brokerage firm (JPMorgan Casa de Bolsa, S.A. de C.V.)
as well. The established group offers wholesale banking services,
investment banking, corporate banking and other financial
services.
JPMorgan funded the financial group in Mexico with the objective
of increasing lending capital for its clients. The additional
capital infusion to the bank in Mexico awaits final regulatory
approval. Once approved, JPMorgan's lending limits in the country
will be enhanced and clients will have additional credit
opportunities.
Moreover, JPMorgan is expected to infuse additional capital in
the brokerage firm in order to boost its equity market activities
in Mexico.
The company believes that the additional capital funds and
recruitment of more employees will provide the bank with ample
opportunities over the long term. The bank has expanded its
business in Mexico significantly over the years. It has hired 200
people based in Mexico for furnishing numerous financial services
to a broad range of clients.
Recently, JPMorgan has also infused nearly 2.5 billion Yuan
($394.08 million) in its Chinese subsidiary - JPMorgan Chase Bank
(China) Company. JPMorgan has also received permission from the
China Banking Regulatory Commission (CBRC) to open a new branch in
Suzhou.
The infusion of the additional money brings the total registered
capital in JPMorgan's Chinese division to about 6.8 billion Yuan
($1.1 billion). The additional capital will be utilized for
expanding its footprints, launching new products and boosting
corporate lending. Moreover, the permission to open a new branch in
Suzhou will enable JPMorgan to meet the financial and banking needs
of the institutional and corporate clients in that region.
Similar to JPMorgan's planned investment in a Chinese trust
firm, other international banks like
Barclays PLC
(
BCS
), Macquarie Capital,
Royal Bank of Scotland
(
RBS
) and
Bank of Montreal
(
BMO
) also have invested in a number of foreign trust companies.
Presently, Mexico has been attracting a large number of foreign
companies that are willing to gain market share in one of the
fastest growing economies.
Currently, JPMorgan retains a Zacks #4 Rank, which translates
into a short-term Sell rating. However, considering the
fundamentals, we maintain a long-term 'Neutral' recommendation on
the stock.
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