Nov. 3 (Bloomberg) -- Wal-Mart de Mexico SAB, Latin America’s largest retailer, will be a competitor to Mexico’s banks “relatively quickly,” said Guillermo Babatz, president of the National Banking and Securities Commission.

Walmex, as the retailer is known, received approval to offer banking services in its stores last month under a so- called correspondent license that enables third parties to take deposits and cash paychecks. Ten companies, including some of Mexico’s largest lenders, have also applied for the license, Babatz said in an interview at his Mexico City office.

“It’s evident that there is substantial interest among the country’s most important banks to establish a network of correspondents,” Babatz said. “Banco Wal-Mart has an important base from which to expand relatively quickly as a retail bank.”

The license for third-party services was conceived to stimulate competition in a “concentrated” financial industry, Babatz said. Eight companies control about 90 percent of the country’s deposits and 89 percent of credit, according to the banking commission. Total bank lending represents 7.9 percent of gross domestic product.

Cashier Banking

Walmex’s correspondent license allows the company’s 19,000 cashiers to provide banking services, spokesman Antonio Ocaranza wrote in an email. The retailer expects that business to expand to 1,356 stores by the end of the year, he said.

Mexico City-based Walmex first received a banking license in 2006 for in-store booths that offer savings accounts, debit cards and credit lines to consumers and small businesses. The banking unit had a net loss of 395 million pesos ($30 million) this year through Sept. 30 and has yet to post a profit.

Mexico’s banking industry can “sustainably” increase assets by 12 percent to 15 percent a year, according to Babatz.

“It can’t grow any faster without excesses being committed,” he said.

The country’s lenders are forming partnerships with telephone companies that allow bank customers to make deposits and transfer money through their mobile phones, Babatz said. The commission will require banks to collect and analyze customers’ transactions, he said.

“We’re insisting that banks start to develop the mechanics to link the debit transactional profile with their credit potential,” he said.

Babatz said in August that regulators are stepping up oversight of bond sales on concern banks may be selling securities that they underwrite to clients without their consent. The commission will publish a list of banks under investigation by the end of the month, he said today.

To contact the reporter on this story: Emily Schmall in New York at eschmall@bloomberg.net

Last Updated: November 3, 2009 18:01 EST