The right of veto of La Caixa in Inbursa
Question. Grupo Financiero Inbursa has come to an agreement by which La Caixa, becomes its partner by means of Criteria in order to grow in the banking business throughout Latin America. Which markets do you have in mind?
Answer. Well I am not the director or the president, but the objective is to achieve the institution’s growth. The company is much capitalized and has a great growth potential. With La Caixa we can do many things: complement knowledge, resources, synergies…
Q. They have taken just 20 percent. Is it planned to increase that share in the future with other capital enlargements?
A. They get to keep 20 percent as we keep the majority. We love they have 20 percent, and if they want to have more, it doesn’t matter, but we plan to keep the majority.
Q. As they have just taken 20 percent…
A. Just 20 percent? That is plenty…
Q. But, as they have a minority status, is there some stockholders agreement to protect them?
A. The company is valued; it is on the market and subject to regulations, to all the information and to the decision-making procedure. There is a numerous council where La Caixa will take part and council decisions are normally taken by consensus, for conviction, not discussions.
Q. And, haven’t they agreed some protection clauses?
A. Yes, of course, there is protection for some cases, their presence in the council is agreed, I mean, there are some conditions in the agreement.
Q. Does Criteria have capability of veto?
A. Which veto?
Q. Over the strategic decisions.
A. I have not read the agreement, I have not seen the conditions, but there are certain things that can’t be done and affect for example dilution, capital enlargements... More than a veto, it is a mutual agreement. We have had partners for 27 years in some cases, and this is like marriage; it is not about being in dispute, but to be in agreement, not by imposing conditions or strategies. The case is to do things together.
Q. Is there any possibility that you take a share in Criteria?
A. There are no restrictions of any kind, but in the future they will see things that are convenient for both. It has nothing to do with this operation.
Q. But, are you posing the possibility?
A. No. We have not started this; we are not going to think about the next step yet.
Q. The bankization is a pending subject in Latin America.
A. I don’t like to talk about bankization, I would way cardization, that even though the customer does not have anything in the bank, he has the card.
Q. In banking, you have a vast Spanish competition in Mexico.
A. Competition is good. We have a lean structure among the group that allows us to compete. Spanish banks are very strong, very large and very efficient: Santander, BBVA… But there are not only Spanish banks in Mexico, there is HSBC, Citibank and others.
The superlative fortune
Carlos Slim’s enterprise conglomerate generates 6 percent of the Mexican GIP
A. MARS June 8, 2008
If you have been in Mexico, you have most probably been Carlos Slim’s client. If you made a phone call, smoked a Marlboro cigarette, shopped in Sears or carried out a financial operation, you have contributed to the earnings of several of the more than 200 companies that are part of the second richest man in the world’s empire. The engineer, the magnate, the Latin Midas King, a dexterous rider in times of crisis, extends his tentacles to all the ambits of Mexicans’ daily life: from telecommunications, through Telmex and America Movil, to infrastructures and oil platforms, passing through commerce, tourism, finances and a long etcetera loaded with dollars.
No one can compete with Slim in the Mexican telecommunications market. And almost no Mexican –and few Latin Americans- can pass a single day without giving him a Peso. This common claptrap in México, that has lead Professor George W. Grayson to come up with the term “Slimland”, is made real in a conglomerate of enterprises which supposes nothing less than 6.3 percent of the Mexican gross internal product (GIP).
It generates 220,000 direct and 500,000 indirect jobs and leads the magnate –one hundred percent passionate for art and baseball- to amass a fortune of 60 billion dollars (38,500 million Euros), according to an estimate by Forbes, making him hobnob with Americans, in the second position, Warren Buffet and Bill Gates.
The whole Carso shed (by Carlos and Soumaya, his late wife) is constructed by various holdings, like Carso Global Telecom, which groups the control shares of the telecommunications giant Telmex; America Movil, which joins the wireless services and with 159 million cellular customers leads mobile telephony in Latin America, clearly ahead Telefonica; the industrial, commercial and services group Carso; and Grupo Financiero Inbursa, which just agreed its entrance in its capital of Criteria, the society that groups La Caixa investments, with a 20 percent.
Slim first experienced the business world through the eyes of his father, a Lebanese businessman that emigrated to Mexico escaping the at that time mandatory incorporation to the Ottoman Army. Julian Slim gave each one of his children a savings book along with their weekly allowance so they could administrate their expenses and earnings, and checked the balance with them periodically.
Therefore, it is not surprising that the first step of the magnate towards his present business was taken at the age of 12, when he bought his first stock, 30 bonds of the Banco Nacional de México. And not too much later, in 1965, when he was 25, he laid the big foundations of his business, with the construction company Carso, a copper mine, a refreshment bottling company and the Inbursa group.
But the leap from richness to superlative richness came on the early 80’s, when Slim gave example of one of his commandments: -“all times are good for those who know how to work and have the tools to do it”- and rode like nobody the debt crisis in Mexico. He turned it into gold. In a certain moment, he has confessed to have bought some companies at 1.5 percent of their accounting value. For example, he paid 5 million dollars for 100 percent of British American Tobacco and sold it in 40.
At that time, Mexican finances were practically paralyzed; those were the times of the banking nationalization and the resulting capital escape. The engineer was the only one who invested, with a voracious hunger, at sometimes inexplicable prices. Between 1981 and 1986 he acquired the cigarette maker Cigatam, partner of Philips Morris; Bimex; Reynolds Aluminum and 23 percent of Hulera el Centenario. And added Seguros de México, Frisco mining and Nacobre enterprises, as well as Sanborns coffee shops, along with its affiliate Dennys and the tire company Euskadi, among a long list of companies.
With an already accountable enterprise package, the master strike, the one that granted him the title of telecommunications magnate, Telmex victory came in 1990. Grupo Carso was formed with the privatization of the giant state operator it now manages, along with South Western Bell, France Tèlècom and several Mexican investors.
Slim’s control over Mexican telecommunications market is overwhelming and polemic, his competitors criticize supposed monopoly practices that the group has always denied; they affirm it holds 92 percent of the local telephony market, but Slim’s group emphasizes that only 48 percent of the really profitable zones.
But being the second richest man in the world in a country with 50 million of its inhabitants living in poverty can turn into a pinch in the conscience. His philanthropic vocation was crystallized more than 20 years ago with his first foundation, Carso. Now, like Gates, the founder of Microsoft, Carlos Slim has withdrawn from the administration councils of his companies –directed by his three sons- to devote to his social activity functions, which he carries out, mainly through Impulsora del Desarrollo y el Empleo en America Latina (IDEAL, Development and Jobs Impeller in Latin America), the Telmex Foundation, and the Carso Foundation, among others. He has committed to destine up to 10,000 million dollars for philanthropic projects in the next four years. The fact is that everything in relation with Carlos Slim, whose last name is a synonym of thin, moves in big figures.
The empire
- Carso Global Telecom holds the majority of the control shares of Telmex, which operates telecommunications services in Mexico, as well as in Argentina, Brazil, Colombia, Chile, Ecuador, the United States, Peru and Uruguay.
- America Movil holds the majority of the control shares of America Movil, wireless services leader in Latin America, with operations in Argentina, Brazil, Colombia, Chile, Ecuador, El Salvador, the United States, Guatemala, Honduras, Nicaragua, Paraguay, Peru, Uruguay and Mexico.
- Grupo Carso has operations in the industrial, services, commercial and production areas of consumption goods, through CICSA, Condumex, Nacobre, Frisco, Sears, Sanborns, Calinda Hotels, Cigatam and Promotora Musical.
- Grupo Financiero Inbursa, includes Banco Inbursa, Seguros Inbursa, Casa de Bolsa Inversora Bursatil, Afore Inbursa and Operadora Inbursa, among others.
- US Commercial Corp., with actions of CompUSA.
- Impulsora del Desarrollo y Empleo de América Latina. (IDEAL) is an enterprise oriented to the identification, feasibility research, financial organization, implementation and operation of long term infrastructure projects, that does not take the construction risk and is organized to service the physical and human capital, through the development of highways, ports, energy generation and distribution; and water treatment, collection and distribution.
A decalogue to success
- To have simple structures, organizations with minimum hierarchical levels, human development, and internal formation of executive functions. Flexibility and celerity in decisions. To operate with small enterprise advantages, which make big enterprises big.
- Maintaining austerity in prosperous circumstances, strengthens, capitalizes and accelerates enterprise development, and also avoids bitter drastic adjustments in times of crisis.
- To be always active in modernization, growth, training, quality, simplification and improvement of the productive processes. Increase productivity, competitiveness; reduce expenses and costs always guided by the highest international references.
- The company must never limit to its owner or administrator’s standard. Do not feel big in our little corral. Minimal investment in non profitable assets.
- There is no challenge we cannot reach by working together with clarity of the objectives and knowledge of the tools.
- The money that goes out of the company evaporates. For that reason, we reinvest the profits.
- Enterprise creativity is not only applicable to business, but also to solve many of the problems in our countries; which is what we do through the Group’s Foundations.
- Firm and patient optimism is always fruitful.
- All times are good for those who know how to work and have the tools to do it.
- Our premise is and has always been to keep in mind that we don’t take anything when we go; we can only do things while we are alive and that a businessman is a richness creator who temporarily administrates it.
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