Signum Perspectives
Program to strengthen the financial sector
The federal government has announced a plan aimed at strengthening the Mexican financial sector. The program is based on a number of proposals which, among other things, aim to boost financial inclusion. The plan was presented jointly by the Ministry of Finance, Banco de México and the Mexican Banking Association (ABM). The main axes of the program are described below:
1. Boost financial inclusion through digital banking. Banco de México Governor, Alejandro Díaz de León, said that a platform called CoDi (Digital Collection), which will act as an extension of SPEI, will also be launched and will permit the generation of safe, expedite and cost-free payments for both remote and on-site purchases.
2. Strengthen and improve the conditions in which workers can access payroll loans. The Banxico governor said they are seeking to implement an open architecture so that workers can pay any type of loan using their payroll accounts.
3. Enable young people of between 15 and 17 years of age to open a bank account on their own. The Secretary of Finance said that this will benefit 1.4 million people who earn a wage but cannot open a bank account.
4. Drive the bonds market by updating the securities lending system. Measures that will be implemented include the possibility of enabling a larger number of financial entities
to undertake repurchase (repo) agreement transactions, enabling less liquid stocks to be the object of a loan, and widening the range of securities that can be used in repo
and loan agreements to those with a BBB- rating. Local and foreign bondholders would also be given equal tax treatment.
5. Strengthen the private pension (Afores) and voluntary savings regime. Carlos Urzúa said they would seek to lower the commissions Afores charge and extend the voluntary savings period to make it more attractive to young people. The investment regime would also become more flexible.
6. Tax incentives for Initial Public Offerings. Finance Ministry representatives said that they would encourage IPOs by lowering income tax in order to get more companies to list on the Mexican Stock Exchange.
We view these proposals as beneficial for both the Mexican population and financial institutions. Mexico is one of the countries with the lowest banking penetration in Latin America, so any initiatives to close that gap should go down well with markets.