Transcript Doing Business in Mexico_ICC BC Meeting Slides

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Doing Business
in Mexico
Banking and Finance
November 2012
Agenda
I.
Business Environment.
II. Investment Environment.
III. Banking and Finance.
IV. Future Agenda.
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I. Business Environment.
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I. Business Environment.
• Mexico is a member of the WTO,
• The government has a favorable
OECD and APEC.
attitude towards foreign investment.
• Currently Mexico has a broad Free- • Strong government efforts to reduce
inflation.
Trade Agreement network that
includes North America, the
• Mexico has a common border with
European Union, Japan and some
the United States, one of the largest
South American countries.
markets in the world.
• Almost all non-strategic
• Government policy encourages
government assets have been
exports.
privatized.
• No exchange control exists,
• Foreign investment is restricted
exchange rates are determined by
only in certain strategic industries
market forces.
• Public/private sector cooperation.
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I. Business Environment.
Financial Services
• Previous government policies have
not encouraged the establishment of
financial service centers.
• This trend has changed since the
banking system was re-privatized.
• Trade Agreements and Foreign
Investment Law reforms have
significantly reduced limitations.
• Mexican banking system is now
operated mainly by international
financial corporations, such as
Citigroup, HSBC, BBVA, Santander
and Scotiabank.
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II. Investment Environment.
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II. Investment Environment.
Pocket of Opportunities
• Mexico, Indonesia, Australia and Poland, have a number of common features
out from the crowd:
 They have all had a swift recovery from the 2008 crisis and have
returned to sustainable growth levels.
 Opportunities continue to appear in these countries which are
undergoing rapid structural change in their economies.
 Mexico’s planned opening of key markets such as media telecoms
and energy, is anticipated to accelerate its transformation from a
manufacturing base to a more service oriented one.
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II. Investment Environment.
Pocket of Opportunities
• The incoming Mexican President Enrique Peña Nieto, has announced a GDP
growth target of 6%, and is planning sweeping reforms to open up labour and
the telecoms, energy and media industries.
•
One third of the Mexican economy is reliant on exports, of which around 75%
go to the United States. Mexican businesses continue to take steps to shift their
focus from the US market to the emerging Latin American economies.
•
Having gone through a financial crisis in 1994, its banking system regulation
has been assessed to be “ahead of new international standards” by the IMF.
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II. Investment Environment.
Role of E7 emerging economies
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III. Banking and Finnace.
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III. Banking and Finance.
Investor´s Considerations
• Local credit has increased and
diversified in recent years.
• MEXDER has been in place for over 10
years.
• Commercial credit provided by banks • A new Securities Market Act is in force
since June 2006.
specially, credit cards and real estate
mortgage loans, have grown
• New banks have been incorporated
substantially.
since 2002.
• Brokerage houses have a significant • New niche banks and financial entities
participation in the financial markets.
have been participating in the local
credit market.
• Banco de México, the Central Bank,
operates as an autonomus entity within
the Federal Government, including
monetary policy issues.
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III. Banking and Finance.
General Note
• The Mexican banking system is
privately owned and managed. Foreign
investment is allowed.
• In order to reduce the risk of a banking
crisis and to protect investors´savings
in financial institutions, the Banking
Savings Protection Act has been in
place.
•
There are Commissions that supervise
and regulate the different segments of
the financial sector:
I.
CNBV
II. CONSAR
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III. CNSF
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III. Banking and Finance.
Regulatory Segmentation
Full Licensed Bank
 Limited operations
Commercal Banks
 Differentiated regulation
“Niche Bank”
 Core banking standards
 Capital requirements
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Category
Capital requirement
(millions of UDIS)
Group 1
90
Group 2
54
Group 3
36
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III. Banking and Finance.
License
Description
Deposits
Lending
Leasing
Rep.
Office
A Rep. Office for a foreign financial institution is allowed to perform
only certain activities and cannot accept deposits or grant lending.
Its main objective is transmiting information. Its activities are
supervised by the CNBV.
NO
NO
NO
A SOFOM (E.N.R.) is a corporation, whose purpose is to grant
credit and financial leasing, without requiring authorization from
the Federal Government.
NO
YES
YES
SOFIPO
SOFIPOS are microfinancing entities aimed at promoting popular
savings and expanding access to financing for persons whose
situation has excluded them from the traditional lendings systems.
Its activities are supervised by the CNBV.
YES
YES
YES/NO
(depends on
assets´size)
Niche Bank
It is also called “limited operation institution” and offers the
opportunity to offer the financial services specialized in a specific
geographical areas or business niches.
YES
YES
YES
A company authorized to perform the following operations: deposit,
savings, financial intermediation and mortgage and trust
operations. Due to the economies of scale it can achive, it is the
most efficient type in the financial sector.
YES
YES
YES
Non
Regulated
SOFOM
Fulllicensed
Bank
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IV. Future Agenda.
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IV. Future Agenda.
Key trends and prospects for E7 banking markets
Country
China
India
Brazil
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Domestic credit
in 2004
($ trillion)
2.8
0.4
0.3
Projected domestic credit in
2050 ($ trillion: at constant
2004 prices)
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Recent trends and key market drivers
•
Sale of major state banks with progress on
reducing non-performing loans
•
Profitability starting to rise
•
Large increase in foreign bank investment
•
Rapid growth in retail banking, with huge
potential in mortgage and consumer credit
markets
•
Major financial sector reforms since 1991
•
Public sector banks still dominant but
private/foreign banks with markets share
•
Entry barriers being eased gradually but still
significant for foreign banks
•
More stable economy in recent years
•
High profitability
•
Foreign banks entering via acquisition
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IV. Future Agenda.
Key trends and prospects for E7 banking markets
Country
Mexico
Domestic credit
in 2004 ($ trillion)
0.2
Projected domestic credit in
2050 ($ trillion: at constant
2004 prices)
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Recent trends and key market drivers
•
Economy has stabilized recently after
banking crises on 1990s
•
Improved bank regulation and accounting
standards
•
Low share of banking sector in GDP gives
scope for strong future growth if economic
and political stability can be mantained
Largest two state banks still dominant; rest of
banking sector quite fragmented
•
Russia
0.2
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•
Regulatory regime with gradual progress on banking
reforms
E7 total
4.2
98
•
High growth, with potential to mitigate high
•
Individual risks through portfolio approach
•
Moderate growth but lower risk
G7 total
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IV. Future Agenda.
Strategic implications of the rise of the E7 banking markets
 Adecuate local targets.
 Preferences of local banking.
 Local legal and regulatory
environment.
 War for talent.
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