The Mexican Stock Exchange (BMV) plummeted after the National Renewal Movement (Morena), now the biggest political force in Mexico’s legislative houses, presented a bill to eliminate a number of bank fees, but the party’s leader, and president-elect, Andres Manuel Lopez Obrador stepped in to do damage control declaring that banking structures won’t be touched in the first three years of his government.
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“A bill was presented, as many others, and then there’s nervousness and distrust — that’s part of what democracy and liberty mean,” said Lopez Obrador during a press conference Friday. “We won’t modify anything related to finances or the legal framework during the first three years, because we will prove we can improve the country with two things: combating corruption and with an prudent government.”
The future Minister of Finance and Public Credit Carlos Urzua asked his Morena partners to submit their initiatives for review before presenting them, and even told them to consult the Center of Financial Studies about their viability.
“Even though we recognize their intention is to improve the living conditions of Mexicans,” said Urzua in press conference, “this objective is not necessarily reached if we don’t take into account the impacts on public finances, such as the stability of the financial sector.”
The bill states that “alarming” and “excessive” fees brought banks 108 billion pesos (about US$5.4 billion) in profits in 2017, 8 percent more than in 2016. Among the fees the bill targeted charged for interbank transfers, requesting a new replacement card in case of robbery, print requests, credit cards’ annual fees, late payments, failing to reach a minimum amount at points of sale, and others.
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According to Morena’s coordinator in the Senate Ricardo Monreal, such fees amount to more than 30 percent of bank income in Mexico.
“Mexico is one of the countries in which financial institutions earn more. We will listen to the financial institutions and the economic groups and we will listen to them all before passing the bill,” said Monreal in press conference after the controversy.
The National Commission for the Protection and Defense of Financial Services Users (Condusef) welcomed the initiative, but suggested further review. According to Condusef’s own numbers, foreign banks in Mexico charge way more in fees than in their countries of origin. Citibanamex charges 18 percent in fees in the U.S., while in Mexico its fees are 33 percent. Bancomer and Santander charge 19 and 20 percent respectively in Spain, but in Mexico those numbers go up to 36 and 39. The English HSBC’s fees are 25 percent in Britain, but 33 in Mexico.
After it was presented, the price index of the BMV and bank shares suffered their biggest losses in seven years.
Lopez Obrador will take office on Dec. 1, but his party already took control over both legislative houses on Sep. 1 and have already enacted many of the president-elect’s campaign promises.