July 29, 2021

López Obrador reassures banks amid the confusion created by his party | Economy

López Obrador reassures banks amid the confusion created by his party | Economy

The bewilderment generated by the initiative of the Movement of National Regeneration (Brunette), the ruling party in Mexico, to limit the collection of bank fees, forced the president-elect, Andrés Manuel López Obrador, to rectify the senators of their formation. Shortly before the Mexican stock market closed and the financial turbulence, the future president tried to calm the markets and said he will not promote changes to the legal framework in economic, financial or fiscal matters in the first half of his six-year term.

"We are not going to make any changes to the legal framework that has to do with the economic, financial and fiscal in this first stage of government," said Lopez Obrador, who has insisted: "The Executive is not going to promote any initiative (. ..) In three years there will be no initiative to modify the legal framework in banks and financial institutions. Still clearer? "

The Mexican Stock Exchange rose 0.22% this Friday and recovered from a fall of almost 3% that had during the day, after collapsed on Thursday by 5.8% after the bench in the Senate of Morena, the party of Lopez Obrador, presented an initiative to restrict the charges of bank fees. Thursday's was the biggest fall suffered by the entity since August 2011, when it collapsed 5.9% due to fears that a recession would hit the world's largest economies.

During the day on Thursday, banks left 82,000 million pesos (4,000 million dollars) after the collapse of their shares. Among the most affected were the Banorte Financial Group, which lost 11.90%, the Homex construction company, with 11.5%, Inbursa -the financial company of Carlos Slim-, with 9.8%, and Santander, with 8%. However, these last two were among the few that started the session this Friday on the upside, with 1.5% and 2.3%, respectively.

The proposal was not well received in the foreign exchange market either. The Mexican peso, a thermometer of the stability of the national economy, also lost value against the dollar during the start of the day on Friday, when the US currency was about 15 cents more expensive compared to Thursday's close. The currency managed to recover also throughout the morning when it went from 20.60 (Mexican pesos for dollars) to 20.10.

The initiative of Morena, which raises the restriction of commission charges in twelve cases ranging from the consultation of the balance to inter-bank transfers, hits the banking sector squarely, since these revenues represent an average of 30% of their total profits , according to the National Commission for the Protection and Defense of Users of Financial Services. The amount collected in commissions in Mexico exceeded only 108,000 million Mexican pesos last year (5,300 million dollars), 8% more than in 2016, according to this organization.

Ricardo Monreal, coordinator of Morena in the Senate and promoter of the initiative, was one of those who left the afternoon of Thursday to put cold pads on the subject and said he will meet in the coming weeks with banks. "We have decided to listen to the financial institutions because obviously they are nervous, and they should not be, what we want is for them to self-regulate, self-regulate and, if not, do it by legislative means," he said. However, the senator said Friday that the parliamentary bloc maintains the intention to carry out the initiative.

It is not the first time that the decisions of the president-elect and his party bother the private economic sphere. Just ten days ago, López Obrador shook the business sector with the cancellation of the new airport through a popular consultation. That decision made the stock market lose 4% and the peso 3.6%, although they were traced in the following days to the messages that the future president gave to the affected companies. "Today we take another step in the promise to separate economic power from political power," Senator Caraveo Camarena concluded from the rostrum, a phrase that remains in doubt after the ambiguity of the party.


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