In the 23 years since the United States and Mexican governments created the pioneer institution known as the North American Development Bank, the bank has financed projects that have improved day-to-day life for an estimated 16 million people on both sides of the border.
Last week, the bank changed leaders, transitioning from one nation to the other in accordance with its charter, which calls for trading the seat every four years. The board named Alex Hinojosa of San Antonio its new acting managing director. He replaces Gerónimo Gutiérrez, a Mexican national who resigned from NADBank when he was appointed Ambassador of Mexico to the United States.
Established in San Antonio under the auspices of the North American Free Trade Agreement, the bank is a financial institution created and capitalized in equal parts by the U.S. and Mexico to finance environmental infrastructure projects along the border. Its board is comprised of the U.S. Secretary of Treasury, Secretary of State, the Environmental Protection Agency (EPA) administrator, a border state representative, and a border resident, and the equivalents of those agencies and representatives from Mexico.
The first “green bank” of its kind in the world, NADBank operates in partnership with a sister institution, the NAFTA-established Border Environment Cooperation Commission, located in Ciudad Juarez, Mexico.
In that city, which neighbors El Paso, six NADBank infrastructure projects have created wastewater collection and treatment plants and paved roads to improve urban mobility and air quality for the 2.7 million combined population of this region.
And that’s just one area where NADBank has so far financed 240 such projects in six northern Mexico states and four border states in the U.S. Funding distribution between the two countries is about equal with slightly more being spent in Mexico.
In all, NADBank is responsible for $8 billion worth of projects, funded through $2 billion in loans provided to public and private entities, $1 billion borrowed from other banks, and $450 million paid by the governments of both countries. On average, every dollar of NADBank financing becomes $3 in infrastructure investment, mostly for water and wastewater projects that improve capacity for the treatment and conservation of water.
When NADBank was created in 1994, only 21% of wastewater flow in the northern states was being treated. Now more than 88% is collected and treated, about double that of the rest of Mexico. NADBank has also financed clean energy projects – in building 25 solar parks and wind farms and in putting 343 low-emission buses into circulation in eight communities.
A native of Medina County, Hinojosa previously worked in public accounting as an auditor, as an international accountant for Baker Hughes, and as director of finance at the San Antonio Water System. Hinojosa earned a bachelor’s degree from St. Mary’s University and an MBA from the University of Texas at San Antonio. He joined NADBank as deputy managing director in 2011.
“Working with [Gutierrez] as a team was great because of his vast knowledge of both the Mexican government and his connectedness there, but also the bilateral relationship he had, which is one of the reasons he was appointed ambassador,” Hinojosa said. “We each had our expertise, his in relation to government and the political element, mine in banking and structuring loans properly.”
Now the bank finds itself entering a new era, he added. “For the first time in our 23-year history, we have to have additional capital to maintain our strong financial ratings [due to methodology changes by the rating agencies]. And that coincides with the timing of needing additional capital.”
That effort began two years ago, he added, and it will take about seven years for the bank to become fully capitalized.
“The things that are going to be different [during my tenure] is the way we manage our capital, and the projects we look at,” he said. “We’re still a very highly rated, AA+ bank, but if we are to continue our lending, we are having to slow down to manage the capital so we can maintain our high credit rating and provide service as we get the additional funding … and to grow the services of the bank so we don’t rely on interest income, the mantra a lot of other banks have had.”
When the topic of a President Trump’s border wall comes up, Hinojosa admitted he’s asked that question often. “We build infrastructure that has environmental benefit,” he said. “I think they know the wall doesn’t qualify.”
Potential budget decreases by the current administration at the EPA, however, could have an impact. “We do not rely on government funds to operate, so cuts there do not affect us directly, but they certainly affect the amount of grant money we can hand out to communities, especially low resource communities,” Hinojosa said.
With Hinojosa’s promotion, the board also named the current director of risk management and control at NADBank, Calixto Mateos, the new acting deputy managing director.
NADBank hired Mateos in 2014 to develop its risk management department. Prior to joining NADBank, he worked for 25 years at Banco de México, the Mexican central bank. He holds a degree in economics from the Instituto Tecnológico Autónomo de México and a doctorate in applied economics from Stanford University.