Aug. 2 (Bloomberg) -- Wal-Mart de Mexico SA, Latin America's largest retailer, plans to open a bank in Mexico to offer loans and financial services to consumers and businesses not served by the nation's banks.

Walmex, as the Mexico City-based company is known, said today in an e-mail that it applied for a banking license and will inform investors when the permit is granted.

Walmex plans to operate the banks out of its 826 stores and provide credit charging lower fees than other banks to help boost sales, said a company spokesman in Mexico City. Walmex has agreements with lenders including the local unit of Banco Bilbao Vizcaya Argentaria SA to service Wal-Mart credit cards in Mexico.

``Walmex already has the client base, and they may feel more comfortable going there than to a bank,'' said Vivian Salomon, who covers Mexican retailers for Scotia Casa de Bolsa, a unit of Bank of Nova Scotia. ``We see great growth potential.''

The move follows similar steps by parent Wal-Mart Stores Inc., which is seeking authorization in the U.S. to open a Utah- chartered bank. Unlike its Mexican unit, Wal-Mart said it would use the bank for the strict purpose of processing debit and credit-card transactions, responding to concerns that it would use the application to expand into branch banking.

Shares of Walmex, Mexico's second-largest company by market value, have gained 26 percent from a seven-month low on June 13, outpacing the Bolsa's 21 percent gain in the period. Speculation the company would apply for a banking license helped drive up the stock, Salomon said.

Foreign Competition

Walmex will face competition from international lenders such as Citigroup Inc., BBVA, HSBC Holdings Plc and Santander Central Hispano SA in Latin America's second-largest economy. Foreign institutions control about 80 percent of Mexican banking assets.

The fees and loan rates charged by the foreign banks in Mexico have drawn criticism from central bank Governor Guillermo Ortiz, who says they discourage low-income consumers from using banking services. A 2004 survey by the government's statistics agency found just one-fifth of Mexico's 25.8 million households had access to financial services.

In May, Ortiz introduced a rule requiring lenders to disclose all fees and costs in advertisements for loans and credit cards to foster competition and lower rates.

``Walmex could pressure other financial institutions to become more competitive,'' Salomon said.

To contact the reporters on this story: Patrick Harrington in Mexico City at pharrington8@bloomberg.net; Adriana Arai in Mexico City at aarai1@bloomberg.net

Last Updated: August 2, 2006 19:12 EDT