Billionaire Salinas Seeks Deposits, Longer Loans in U.S.

Billionaire Ricardo Salinas said he wants to offer no-fee banking deposits and longer-term loans to low-income U.S. consumers, aiming to export his Latin American business model to the world’s biggest economy.

“What we would like to do is have the same model we have in all our other eight countries, a bank especially for people at the bottom of the pyramid,” Salinas said today in an interview in Washington. “It’s a question of regulation, a question of convincing the right authorities that this is something that’s needed. We’re working on it.”

Salinas, 56, is looking for greater access to U.S. consumers after his Grupo Elektra SA paid $655 million in April to acquire Spartanburg, South Carolina-based payday lender Advance America Cash Advance Centers Inc. to enter the market.

Salinas is the world’s 81st-richest person, according to the Bloomberg Billionaires Index, with a fortune of $11.2 billion. He built his wealth by converting the company founded by his grandfather into a retail and lending empire across Latin America, providing cash or goods such as refrigerators and televisions to low-income consumers for interest that eventually can cost as much as the loan itself.

Elektra Shares

While the loans require a high interest rate because of their size and risk, they provide financial resources to a group of people who wouldn’t otherwise have access to banking services, Salinas has said.

“The bottom of the pyramid exists, even in the U.S.,” he said today after a speech at the U.S. Chamber of Commerce. “It’s amazing the number of families that have been excluded from the traditional financial system in the States. And with this economic crisis even more families are in that situation.”

Elektra, based in Mexico City, is in the midst of a lawsuit against Bolsa Mexicana de Valores SAB over the stock-exchange operator’s decision to change the way it calculates the weight of companies on its benchmark index. The changes, announced in April, led to a decline in Elektra shares on concern the company would drop out of the index. Elektra has a temporary restraining order preventing the exchange from applying its new formula to the company’s shares.

Televisa Partnership

“I want to protect my minority shareholders,” said Salinas, whose family holds 70.5 percent of Elektra’s shares. “I’m not selling my stock. I don’t care if it goes up or down, but a lot of people were damaged by the wrong decision and we believe we have the right and obligation to look out for them.”

He declined to comment further on the lawsuit.

“The stock exchange’s duty in designing the index is precisely to protect every shareholder,” Bolsa Chief Executive Officer Luis Tellez said in an interview today at the exchange. The company’s weighting formula is meant to ensure companies have “enough shares so that those shares can be acquired in the market, and that’s basically what was done,” he said.

Elektra rose 1.3 percent to 535.03 pesos at the close in Mexico City. The shares have dropped 61 percent this year.

The company reported sales of 32.2 billion pesos ($2.5 billion) through the first six months of this year, up 40 percent from a year earlier, as more Mexicans signed up for loans at Elektra stores and Banco Azteca branches. Operating profit surged 55 percent in the same span.

“I don’t see how we can saturate the market. It’s just so huge,” Salinas said. “Our quality of our loan portfolio is extremely good, so really it’s just a question of continuing along those lines, and we’ll do really well.”

A partnership in Mexico’s wireless market with Grupo Televisa SAB is “bearing fruit,” Salinas said. The billionaire sold a 50 percent stake in mobile-phone company Grupo Iusacell SA to Televisa earlier this year for $1.6 billion. He declined to provide subscriber figures or goals for the Mexico City-based company.

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