Mexico's Banorte, Mexico City Government Sign Remittances Agreement

MEXICO CITY --Mexico's Grupo Financiero Banorte SAB and the Mexico City government signed an agreement Wednesday under which the bank will offer preferential rates for migrant workers in the U.S. to send money back to relatives in the capital.

Under the program, Banorte will issue cards to workers in the U.S. at its remittances company Uniteller, and in Mexico it will issue debit cards for recipients who can collect money at Banorte branches and offices of the Mexican telegraph service Telecomm.

Banorte bought Uniteller in January as part of its plans to boost its business in the U.S. Hispanic market. Banorte said in a press release it expects to handle more than 4.2 million remittances this year for $1.65 billion. The bank said it's also offering free transfers for customers of the Inter National Bank in Texas, of which Banorte owns 70%.

Remittances are a major source of foreign currency into Mexico, reaching a record $23.7 billion in 2006. The sharp growth of recent years has slowed in 2007, however, partly as a result of the housing crisis in the U.S. reducing the number of construction jobs, and partly because growth in previous years was boosted by rapidly increasing use of electronic transfers.

In the first nine months of 2007, remittances were up 1.4% from the like 2006 period to $18.2 billion, according to the Bank of Mexico. The average amount per remittance was $351.

The Federal District accounted for 5.7% of total remittances in that period, while adjacent Mexico state, which is home to about half of the capital city's population, received 8.4% of the total.