Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Mexico
Country Indicators
Information Last Updated
January 2008
Information Compiled by
Nathalie Lozano Blanco, Consultant
Population (Millions)
103 [2005]
Population Density (per sq km)
54 [2005]
GNI per capita (US$)
7310 [2005]
GNI per capita (PPP US$)
10030 [2005]
Total Unemployment (% of labor force)
3 [2004]
Employment in Agriculture (% of total employment)
16 [2003]
Gross domestic saving (% of GDP)
20 [2005]
% Population under $2/day (PPP)
7 [2002]
Depth of Financial Sector (M2/GDP)
27 [2005]
Exchange rate
1 USD : 10.94027 Mexican pesos, as of January 15, 2008
Percentage of population with access to banking services
1) Universal bank institutions: 383,448 million pesos (USD 35,371 million);
2) Local stock market capitalization (% of GDP): 41.5% (December 2006) ). (Mexico Banking Sector Overview) (Mexico Data Profile).
Ownership structure of banks (and financial institutions if available)
1) The three largest commercial banks own close to 60% of the banking sector's assets (as of December, 2005).
2) Foreign banks controlled about 82 percent of total bank assets (as of December, 2006).
3) State participation is concentrated in the development banks, which represent 12.6% of the banking sector. (Experiments in Financial Liberalization: The Mexican Banking Sector) (IMF Country Report No. 06/350, Mexico)
Formal and Semi-Formal Sources of Microfinance
Savings and Loan Cooperatives, Popular Financial Partnerships (specialized financial institutions), Bansefi (Bank for National Savings & Financial Services), a government institution which provides savings services, infrastructure development, and financial and technical support to microbanking institutions.
NGOs under the government sponsored program, PRONAFIM (National Program for Financing the Microentrepreneur).
Wholesale Lender(s)
1) Universal banks;
2) Development banks;
3) Financial Companies with limited corporate purpose (SOFOLES) [Sociedades Financieras de Objeto Limitado];
4) Regulated Financial Companies with multiple corporate purpose (Regulated SOFOMEs) [Sociedades Financieras Reguladas de Objeto Múltiple Reguladas];
5) Non-Regulated Financial Companies with multiple corporate purpose (Non-Regulated SOFOMEs) [Sociedades Financieras de Objeto Múltiple No Reguladas];
6) Savings and Loan Cooperatives (SOCAPs) [Sociedades Cooperativas de Ahorro y Préstamo];
7) Popular Financial Partnerships (SOFIPOs) [Sociedades Financieras Populares]. The remaining former microfinance institutions (Cajas de Ahorro, Uniones de Crédito, etc.) whose assets exceed 6.5 million UDIs (approx. USD 2.3 million) must be transformed into regulated SOCAPs or SOFIPOs. The term for such transformation has been extended several times. The most recent extension, which was approved on August 31, 2007, mandates that such entities must file their request to become regulated entities before December 31, 2008. If they don't file the request, they can continue rendering financial services up to December 31, 2010, provided that they have a special authorization from BANSEFI (a government-owned development bank). See Reforma a la Ley de Ahorro y Credito Popular (LACP) or Report of Condusef concerning formalization of microfinance institutions.
Note: UDIs are defined as "the factor (value) that is applied to the acquisition of mortgages." UDI rates change every day with the value of the peso; updated rates are published in the Official Diary of the Federation by the Bank of Mexico. As of September 2007, one UDI was equivalent to 3.8592977 Mexican Pesos (Value of UDIs).
Definitions of microfinance or microcredit
According to the Office of the Secretary for the Economy, microfinance provides small loans (microcredits) to the poorest families, in order to support them economically in productive activities (business, self-employment). (Office of the Secretary for the Economy).
NGO microfinance provider formalization or transformation issues
Non-regulated microfinance providers face significant challenges to become regulated as they must comply with prudential regulation, minimum capital, operational restrictions and disclosure obligations.
The obligation to transform into regulated institutions applies to:
(i) Non-regulated financial associations or companies having assets exceeding 6.5 million UDIs (approx. USD 2.3 million); and
(ii) NGOs, if they want to receive deposits from the public. See Reforma a la Ley de Ahorro y Credito Popular (LACP) or Report of Condusef concerning formalization of microfinance institutions
Ongoing microfinance policy development status
1) In 2001, the microfinance sector was reorganized and now there are specific laws and regulations for these activities. The 2001 law allows former NGOs, financial organizations, small savings cooperatives, and private assistance institutions to transform into specialized and regulated finance companies providing savings and loan services. These will be supervised by independent Federations acting as an apex body. It is important to note that this sector is still transforming, and the timelines established in the 2001 regulations have been extended due to the difficulties that institutions have faced in transforming into a regulated MFI.
2) Effective provision of services at the micro level faces constraints such as: high operational costs due to regulatory measures; and the distorsions caused by the government’s intervention through subsidies. For this reason, the SOFOLEs regulation has been modified, allowing non-regulated entities (the non-regulated SOFOMES) to provide credit without the high administrative burden and the regulatory constraints SOFOLEs have. The new SOFOMEs are expected to operate with lower operating costs and interest rates, and with a broader scope in terms of clients and regions served.
3) Fragmented public policy: "The fragmentation of government approaches means that no single leading body can develop, articulate, and align all government agencies around an overarching policy." (Klaehn, 2006). See also "Report on the development of Sofomes". Secretary of Finance and Public Credit. February,2007
Safety net availability: insurance, pension, etc.
Private pensions are available, along with the traditional public pension system. Apart from the pension fund system, there is a public health system, a social security system, and a private insurance system. Social security benefits include: pension, early pension, disability pension, sickness and maternity cash and medical benefits, family allowances, unemployment benefit (between 75% and 95% of the old-age pension for unemployed persons aged 60-64). For more detailed information, see (Mexican Social Security Institute) and (Social Security Programs Throughout the World: The Americas, 2005).
General Participation in the Financial Services Market
No. of institutions
No. of clients
Total Assets
Deposits
Target Market
Constraints to provision of microfinance services
Banks
Development Banks
6 (as of September, 2007):
1) Nacional Financiera
2) Banco Nacional de Comercio Exterior
3) Banco Nacional de Obras Públicas
4) Sociedad Hipotecaria Federal
5) Banco Nacional del Ejército, Fuerza Aérea y Armada, and
6) Banco del Ahorro Nacional y Servicios Financieros (BANSEFI). See Documentation
TOTAL ASSETS: 399,5 billion MXN (approx. USD 36.4 billion) (as of September, 2007). TOTAL LOAN PORTFOLIO: 252.7 billion MXN (approx. USD 23.08 billion), broken down as follows: Commercial Loans 97.62% (55.76% to governmental institutions, 29.63% to financial companies, 12.22% to enterprises). See Comision Nacional Bancara y de Valores Septiembre 2007
Development banks are mainly owned by the Government. They are not driven by commercial purposes. They are created to promote the development of specific sectors (financial, industry, transportation). They act as second-tier banking institutions. See Comision Nacional Bancaria y de Valores, page 11.
Traditional target: wealthier clients, loans granted upon the existence of sufficient collateral.
1)Costs of services are higher and requirements for opening and maintaining accounts are less flexible in the commercial banking sector than in the popular finance institutions and the government development banks. Some of the regulatory requirements that make the costs of providing small transaction services higher for the banks, especially in the rural areas, are: (i) physical security requirements for banks (livefeed video cameras and exclusive entry ways, etc.); (ii) Banks must follow the same approval procedures for all loans, regardless of size; (iii) Reporting requirements are the same for all operations, constituting a barrier due to the high standards set forth by law concerning reporting obligations; (iv) Anti-money laundering rules must be applied to small operations; (v) Commercial banks must offer deposit accounts to any potential client, and accounts having deposits that do not exceed 165 daily minimum wages cannot be charged with fees or commissions for operations such as account opening or withdrawals. As noted by Klaehn (2006) : "These types of regulatory impediments, although not insurmountable, provide further disincentives for banks to launch serious programs to offer savings and loan services to low-income clients. Bankers recognize that the CNBV [National Banking and Securities Commission] has provided exceptions to specific regulations that are demonstrated to thwart efforts at inclusion. Nevertheless, the request and granting of exceptions tends to require significant legal resources." Klaehn 2006.
Non-bank Financial Institutions
Financial Companies with Limited Corporate Purpose (SOFOLEs)
42, of which 3 are microcredit SOFOLEs (Créditos Pronegocio, Financiera Finsol and Consultores de Servicios Varios) (as of September 2007). See Comision Nacional Bancara y de Valores, and AMFE, Report on Sofoles and Sofomes. September, 2007
TOTAL ASSETS: 208.3 billion MXN (approx. USD 19.1 billion). TOTAL LOAN PORTFOLIO: 186 billion MXN (approx. USD 17 billion), of which housing loan portfolio 48.99% and automotive loan portfolio 29.19% (as of September 2007). See Comision Nacional Bancara y de Valores Septiembre 2007
Funds from loans and placement of securities: 172.5 billion MXN (approx. USD 15.8 billion) (as of September 2007).See Comision Nacional Bancaria y de Valores
Specific sectors: 12 in the real estate, 3 in the automotive industry, 11 devoted to providing services to enterprises, 6 having as main purpose the provision of consumer loans, 9 in the agroindustrial sector, and 1 in public sector projects). Data as of september,2007. See Comision Nacional Bancaria y de Valores
SOFOLEs cannot receive funds from the public through deposits, as this activity is still restricted to authorized banks. However, they can receive funding from other sources, such as loans, capitalization, or placement of securities.
Regulated Financial Companies with Multiple Corporate Purpose (Regulated SOFOMEs)
4, as of February,2007. See "Desarrollo y Perspectivas de las SOFOMES". Secretaría de Hacienda y Crédito Público.February, 2007
SOFOMEs cannot receive funds from the public through deposits, as this activity is still restricted to authorized banks. However, they can receive funding from other sources, such as loans, capitalization, or placement of securities.
SOFOMEs cannot receive funds from the public through deposits, as this activity is still restricted to authorized banks. However, they can receive funding from other sources, such as loans, capitalization, or placement of securities.
Development banks are banks established by the Government for specific purposes, such as promoting: small and medium enterprises; foreign trade; housing; and popular savings and credit services. See Credit Inst. Law, Art.30.
Traditional universal banks (providing a variety of services, including savings, loans, and investment services). See Credit Inst. Law, Arts. 2 and 46.
SOFOLEs are financially regulated institutions that can obtain funds through securities market operations, in order to extend credit to specific sectors. The services can only be rendered to the authorized sector (automotive, agricultural, housing, etc.) Services offered include: (i) direct loans, (ii) financial leasing, and (iii) factoring. Although they cannot receive funds from the public through deposits, they can receive funding from other sources, such as loans, offering of equity stake, or debt instruments. They are expected to transform into SOFOMEs in the 7 years following the date of creation of SOFOMEs (2006). See Specific Regulation on SOFOLEs, issued by the Secretary of Finance and Public Credit in 2005, Art.1, and Report on Sofoles, Condusef, 2007. For a very clear explanation concerning the SOFOLEs and SOFOMEs, see Deregulation Of Credit, Financial Leasing And Factoring Activities in Mexico, 2006.
Regulated Financial Companies with Multiple Corporate Purpose (Regulated SOFOMEs)
1) General Law on Organizations and Ancillary Credit Activities (General Law on Ancillary Credit Activities), Art. 87 B,E,F,J,K,L,M,N and Ñ, as amended up to 2006.
2) Credit Inst. Law, Arts. 2, 49, 50, 52, 73, 73 Bis, 73 Bis 1, 93, 99, 101, 102, 103 and 115.
3) CNBV Law, Arts. 4° (I) to (VI) and 6.
4) General Law on Negotiable Instruments and Credit Operations (GLNICO), Art. 395, Title II, Ch. VI, and Arts. 408 to 418, and Ch. VII, arts. 419 to 431.
Regulated SOFOMES are financial institutions created in 2006 that can obtain funds from loans, offering of equity stake, and debt instruments, in order to extend credit to multiple sectors (not a specific sector, as in the case of SOFOLES). Services offered by SOFOMEs include: (i) direct loans; (ii) financial leasing; and (iii) factoring. The difference between Regulated and Non-Regulated SOFOMEs is that Regulated SOFOMEs are partially or wholly-owned by another Credit Institution and/or Financial Group, and therefore are subject to banking rules concerning supervision and prudential regulation, among others. (General Law on Ancillary Credit Activities, Art. 87B). For a very clear explanation concerning SOFOLEs and SOFOMEs, see Deregulation of Credit, Financial Leasing And Factoring Activities in Mexico, 2006. Also see "Report on the development of Sofomes", Secretary of Finance and Public Credit. February, 2007.
1) Popular Savings and Credit Law of 2001, as amended up to August 31, 2007 (PSCL);
2) General Circular Letter for Popular Savings and Credit Law, as amended up to December 16, 2006 (Circular Letter PSCL);
3) General Law for Mercantile Associations;
4) Federal Civil Code.
Stock corporations with a social mission purpose, which: provide savings and loans; facilitate access to credit for their members; support the financing of micro, small, and medium enterprises; and in general, promote the social and economic well-being of their members and the communities in which they operate. The permitted size and scope of operations for SOFIPOs varies depending upon the institution’s assets and liabilities, the number of members or clients, the geographical location, and the technical and operational capacity of the institution. (See PSCL, Arts. 4, 32 and 41).
1) CNBV is the supervisory body that regulates SOFIPOs;
2) CNBV also regulates the auxiliary system of supervision granted to Federations (groupings of SOFIPOs);
3) Federations enforce laws and provide supervision and oversight duties through a Supervision Committee. (See PSCL, Arts. 2 and 124)
Rendering of financial services to members and non-members (PSCL, Arts.4 and 41)
Non-Regulated Financial Companies with multiple corporate purpose (Non-Regulated SOFOMEs)
1) General Law on Organizations and Ancillary Credit Activities, Art. 87 B,E,F,J,K,L,M,N and Ñ.
2) Credit Inst. Law, Arts. 2 and 103.
3) GLNICO, art.395, Title II, Ch. VI, arts. 408 to 418, and Ch. VII, arts. 419 to 431.
Unregulated entities created in 2006. They can obtain funds from loans, offering of equity stake, and debt instruments, in order to extend credit to multiple sectors (not a specific sector, as is the case with SOFOLES). Services offered by SOFOMEs include: (i) direct loans; (ii) financial leasing; and (iii) factoring. The difference between Regulated and Non-Regulated SOFOMEs is that Non-Regulated SOFOMEs do not have any link with other financial institutions. They are not regulated nor subject to the supervision of the National Banking and Securities Commission and do not require any licensing from the Ministry of Treasury and Public Credit. (General Law on Ancillary Credit Activities, Art. 87 B). For a very clear explanation concerning SOFOLEs and SOFOMEs, see Deregulation Of Credit, Financial Leasing And Factoring Activities in Mexico, 2006. Also see "Report on the development of Sofomes", Secretary of Finance and Public Credit. February, 2007.
National Commission for the Protection of Users of Financial Services (CONDUSEF) concerning consumer protection rules, and anti-money laundering regulation. (See General Law on Ancillary Credit Activities, Art. 87 K).
Credit activities
Cooperatives/Credit Unions
Savings and Loan Cooperatives
1) Popular Savings and Credit Law of 2001, as amended up to August 31, 2007 (PSCL);
2) General Circular Letter for Popular Savings and Credit Law, as amended up to December 16, 2006 (Circular Letter PSCL);
3) General Law of Cooperative Associations, 1994 (GLCA);
4) General Law for Mercantile Associations, 1934;
5) Federal Civil Code.
Cooperative financial institutions created to: provide savings and loans; facilitate access to credit for members; support the financing of micro, small and medium enterprises; and in general, promote the social and economic well-being of members and their communities. The permitted size and scope of operations for cooperatives varies depending upon the institution’s assets and liabilities, the number of members or clients, the geographical location, and the technical and operational capacity of the institution. (See PSCL, Arts. 4, 32 and 41).
1) CNBV is the supervisory body that regulates SOCAPs;
2) CNBV also regulates the auxiliary system of supervision granted to Federations (groupings of SOCAPs);
3) Federations enforce laws and provide supervision and oversight duties through a Supervision Committee. (See PSCL, Arts. 2 and 124)
Only deposit-taking and granting of credit.
Non-profit institutions
NGOs
1) General Law for Mercantile Associations, 1934;
2) Federal Civil Code;
3) State-specific Civil Codes (e.g. Mexico D.F.);
4) Private Assistance or Social Welfare laws of each State;
5) Federal Law for the Promotion of Activities Undertaken by Civil Society Organizations.
NGOs include: (i) Civil Associations: "a civil association is formed when various individuals agree to join together, in a manner that is not entirely transitory, to realize a common purpose that is not prohibited by law and that is not predominantly economic in character. There is no minimum number of persons needed to form an association, though it is clear that there must be more than one. (Federal Civil Code, § 2670); and (ii) Civil Societies: "a civil society is formed by a contract in which the members mutually obligate themselves to combine their resources or efforts in order to realize a common purpose of a predominantly economic character. The goal of the society must not, however, constitute commercial speculation (Federal Civil Code, §2688).
None, although CNBV can supervise to ensure that they are not rendering illegal financial services. See CNBV Law, Art.2
Only deposit-taking and granting of credit among its members only.
Companies. Capital is divided into credit instrument certificates (Certificados de aportación patrimonial). See Credit Inst. Law, Art. 32.
1) Only Federal Government and specialized investment companies are authorized to acquire more than 5% of the shares of a development bank.
2) Series A certificates can only be owned by the Government and must always be equivalent to, at minimum, 66% of the capital. Series B certificates can be owned by other public and/or private investors.
3) Foreign investment is prohibited, whether directly or indirectly through a Mexican company. See Credit Inst. Law, Arts. 32-33, and Foreign Investment Law, art.6
RESTRICTIONS APPLICABLE TO BOTH DOMESTIC AND FOREIGN INVESTORS:
1) Acquisition of 2% or more of the capital of a bank requires the Secretary of Finance and Public Credit to be informed of the acquisition within the next three days.
2) Acquisition of 5% or more of the capital of a bank requires prior approval from the Secretary of Finance and Public Credit and a prior favorable opinion from the CNBV. If said acquisition implies that the new owner will have control over the banking institution, the new owner must also submit: (i) a detailed explanation of the source of the funds and of its payment conditions; (ii) a list of the managers and counsels that would be appointed by the new owner; (iii) operating manuals; and (iv) strategy as to the implementation of a corporate governance policy. An owner is deemed to have "control" if (i) the company owns 30% or more of the capital; and/or (ii) it controls the Board of Directors; and/or (iii) it has the power to appoint the majority of the members of the Management Board.
SPECIAL RESTRICTION FOR FOREIGN INVESTORS:
1) Foreign companies having an administrative position in a bank (e.g. external auditors) cannot have any participation in the bank's capital. See Credit Inst. Law, Arts. 13, 14, and 17.
1) TIME FOR LICENSING: All institutions have a three months term to resolve any petition. Pursuant to it, the granting of authorization from the Secretary of Finance and Public Credit may take up to three months.
2) TIME FOR INCORPORATION: Time required for incorporation in the Public Commercial Registry may vary depending on the State of incorporation (Mexico DF being considered as a difficult place for such proceedings.
3) AFFILIATION FEE: Banks must pay an affiliation sum equal to 10% of the minimum capital. (See Credit Inst. Law, Arts. 8, 9, and 10). (See Doing Business -- Mexico)
Non-bank Financial Institutions
Financial Companies with Limited Corporate Purpose (SOFOLEs)
Unknown. In 2006, the restrictions on foreign investment were eliminated.
1) TIME FOR LICENSING: All institutions have a three months term to resolve any petition. Pursuant to it, the granting of authorization from the Secretary of Finance and Public Credit may take up to three months.
2) TIME FOR INCORPORATION: Time required for incorporation in the Public Commercial Registry may vary depending on the State of incorporation (Mexico DF being considered as a difficult place for such proceedings. (See Doing Business -- Mexico)
Regulated Financial Companies with Multiple Corporate Purpose (Regulated SOFOMEs)
1) Public Commercial Registry (incorporation);
2) CONDUSEF: the SOFOME is also required to give notice of its operations to the CONDUSEF within 10 days from the registration of the notarial instrument with the Public Registry of Commerce. See General Law for Mercantile Associations, and General Law on Ancillary Credit Activities, Art. 87 K.
Stock corporation. See General Law on Ancillary Credit Activities, Article 87B
None
1) TIME FOR INCORPORATION: Time required for incorporation in the Public Commercial Registry may vary depending on the State of incorporation (Mexico DF being considered as a difficult place for such proceedings. (See Doing Business -- Mexico)
1) Individuals and corporations cannot hold -- directly or indirectly -- more than 10% of the institution’s equity without a previous favorable opinion from the Federation and previous authorization from the CNBV. Non-profit associations can hold up to 30%. See PSCL, Arts. 44 and 45.
Must first file an application before the Federation or Confederation, as applicable. The federation has 90 days to approve or reject, and the CNBV has 120 days to make its final decision. See PSCL, Art. 9.
Non-Regulated Financial Companies with multiple corporate purpose (Non-Regulated SOFOMEs)
1) Public Commercial Registry (incorporation);
2) CONDUSEF: the SOFOME is also required to give notice of its operations to the CONDUSEF within 10 days from the registration of the notarial instrument with the Public Registry of Commerce. See General Law for Mercantile Associations, and General Law on Ancillary Credit Activities, Art. 87 K.
Stock corporation. See General Law on Ancillary Credit Activities, Article 87B
None
1) TIME FOR INCORPORATION: Time required for incorporation in the Public Commercial Registry may vary depending on the State of incorporation (Mexico DF being considered as a difficult place for such proceedings. (See Doing Business -- Mexico)
1) Public Commercial Registry (incorporation);
2) CNBV, with a previous favorable opinion from a Federation. See Credit Inst. Law, 1990, Art. 9; and GLCA, Art. 13.
Cooperative (with a minimum of 100 members for "level 1" operations and 200 members for "levels 2, 3 and 4" operations), with variable capital; can be constituted as a limited liability company. See GLCA, Arts. 11, 13, 14, 49 and 50.
1) Individuals and corporations cannot hold -- directly or indirectly -- more than 10% of the SOCAP's equity without a previous favorable opinion of the Federation and previous authorization from the CNBV. Non-profit associations can hold up to 30%.
2) Any non-profit organization acting as a co-founder of the cooperative cannot have a participation exceeding 15% in the Board of Directors or 30% in the Supervision Council. See GLCA, Art. 34; and PSCL, Art. 40.
Must first file an application before the Federation or Confederation, as applicable. The federation has 90 days to approve or reject, and the CNBV has 120 days to make its final decision. See PSCL, Art. 9; and GLCA, Third transitory article.
Non-profit institutions
NGOs
1) General Law for Mercantile Associations, 1934;
2) Federal Civil Code;
3) Federal Civil Code;
4) Civil Code of the State (i.e. Mexico D.F.);
5) Private Assistance or Social Welfare Laws of each State;
6) Federal Law for the Promotion of Activities Undertaken by Civil Society Organizations.
1) NGOs: must register their memorandum and articles of association before the Public Registry of Property. See US International Grantmaking, Mexico, 2007, page 5.
1) NGOs: Can be: (i) Civil Associations (Federal Civil Code, § 2670); (ii) Civil Societies; or (iii) Private Assistance Institutions. See US International Grantmaking, Mexico, 2007
Unknown
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Audit of Proposed Founders, Owners, Officers
Operating Manuals
Prohibited sources of funds
Banks
Development Banks
1) General Manager (appointed by the Federal Executive Government through the Secretary of Finance and Public Credit) and high-ranking officers must have a solid reputation; Mexican residency is required; at least five years of financial and administrative experience in high positions; cannot hold a regulatory position.
2) THE FOLLOWING CANNOT BE GENERAL MANAGER OR HIGH-RANKING OFFICERS: persons having overdue loans with any financial institution; persons having any legal claim against the bank; those having a previous criminal conviction for economic crimes; persons having legally declared bankruptcy.
3) If the Secretary of Finance and Public Credit considers that some of the high-ranking officers do not have significant decision-making authority, it can decide not to enforce some of these requirements. See Credit Inst. Law, Arts. 23, 24, 24 (bis), 41, and 43.
Must have a business plan detailing, at minimum: financial projections (with a prohibition on distribution of dividends in the first three years); commercial projections and policies; and organizational structure (see Credit Inst. Law, Art. 10).
1) Applicants or duly registered institutions must certify that the General Manager and high-ranking officers comply with all legal requirements to be appointed.
2) Any shareholder having a controlling position must submit information as to the source of funds for its capital contribution. See Credit Inst. Law, Arts. 17(I) and 24(bis).
Financial Companies with Limited Corporate Purpose (SOFOLEs)
General Manager and high-ranking officers must have a solid personal and professional reputation; Mexican residency is required; at least five years of financial and administrative experience in high positions; cannot hold a regulatory position. THE FOLLOWING CANNOT BE GENERAL MANAGER OR HIGH-RANKING OFFICERS: persons having overdue loans with any financial institution; persons having any legal claim against the bank; those having a previous criminal conviction for economic crimes; persons having legally declared bankruptcy. See Credit Inst. Law, Arts. 23, 24, and 24(bis).
Must file a business plan containing: (i) strategic plan to capture funds; (ii) loan granting and risk management policies; (iii) geographical area to be served; and (iv) organizational structure and internal control policies. (See Specific Regulation on Sofoles, Art. 5).
Unknown
Risk management; internal organization; loan granting policies. (Specific regulation on SOFOLEs, issued by the Secretary of Finance and Public Credit in 1994, Art. 5).
They cannot receive deposits from the public. See General Law on Ancillary Credit Activities, Art. 87 B.
Popular Financial Partnerships (SOFIPOs)
1) Administration council members must have experience in financial and administrative matters.
2) No criminal conviction for economic crimes such as money laundering or illicit enrichment, or being responsible for mismanagement in other institutions.
3) The General Manager must have at least three years of financial and management experience unless the institution falls under Level I of Operations, in which case the Federation must decide if it is satisfied with his/her credentials. (See PSCL, Arts. 20 and 23).
Must submit a study as to the financial and organizational viability of the association. See PSCL, Art. 10
1) They must submit at least two reports issued by Credit Information Bureaus concerning the financial activities of administration council members during the preceding five years.
2) Must submit information evidencing moral and economic solvency of the officers. See Circular Letter PSCL, Title II, Ch. I, Section I, Art.2.
General operations manual must include:
a) list of regions and areas in which it will operate;
b) financial and organizational viability analysis;
c) basis for payment of dividends and distribution;
d) internal control and organizational structure;
e) the proposed contract to be signed with the Federation in charge of the auxiliary supervision. (See PSCL, Art. 10).
Unknown
Non-Regulated Financial Companies with multiple corporate purpose (Non-Regulated SOFOMEs)
They cannot receive deposits from the public. See General Law on Ancillary Credit Activities, Art. 87 B.
Cooperatives/Credit Unions
Savings and Loan Cooperatives
1) Administration council members must have experience in financial and administrative matters.
2) No criminal conviction for economic crimes such as money laundering or illicit enrichment, or being responsible for mismanagement in other institutions.
3) The General Manager must have at least three years of financial and management experience unless the institution falls under Level I of Operations, in which case the Federation must decide if it is satisfied with his/her credentials. See PSCL, Arts. 20 and 23.
Must submit a study as to the financial and organizational viability of the association. See PSCL, Art. 10
1) They must submit at least two reports issued by Credit Information Bureaus concerning the financial activities of administration council members during the preceding five years.
2) Must submit information evidencing moral and economic solvency of the officers. See Circular Letter PSCL, Title II, Ch. I, Section I, Art.2.
General operations manual must include:
a) list of regions and areas in which it will operate;
b) financial and organizational viability analysis;
c) basis for payment of dividends and distribution;
d) internal control and organizational structure;
e) the proposed contract to be signed with the Federation in charge of the auxiliary supervision. (See PSCL, Art. 10).
In November 2007, Mexico adopted new rules on capitalization requirements, following the Basel II guidelines (the rules are applicable as of January 1st, 2008):
1) CAPITAL ADEQUACY RATIO (CAR) BASED ON CREDIT RISK: when applying the standard risk-weighting of assets, as defined by the Rules on Capitalization, 8%. When applying other measurement methods, the CAR will be defined on a case by case basis.
2) CAR BASED ON MARKET RISK: 12% for general market risk operations; 4% or 8% on specific market risk operations; 4% on liquidity risk operations.
3) CAR BASED ON OPERATIONAL RISK (TECHNOLOGICAL AND LEGAL RISK): 15%, calculated on the average of the net income for the last three years. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008; Credit Inst. Law, Arts. 50 and 102; and Summary on new capitalization rules, Cofemer [Comisión Federal de Mejora Regulatoria], 2007.
TIER I CAPITAL [Capital Básico], which must represent at least 50% of the net capital, includes equity capital; and irredeemable stock. TIER II CAPITAL [Capital Complementario] includes subordinated term debt; general provisions (which cannot exceed 1.25% of the total risk-weighted assets); and special reserves. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008).
New risk-weighting rules were issued on November 2007. Risk-weighting of assets is defined for credit risk assets, market risk assets, and operational risk assets, with risk weights ranging from 0% to 150%. The regulation includes specific provisions for operations between related parties. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008).
1) Entities must provision 100% for loans granted without previous advice from a Bureau of Credit Reporting.
2) General provision: 0.5%.
3) When provisioning for overdue loans, there are several categories. For consumer, commercial, and housing loans: Depending upon the installment period (weekly, semi-monthly, or monthly), a different number of overdue installments leads to classification at a particular provisioning level. Provisions range from 1.5% to 100%. (To see the detailed chart, see Circular Letter Credit Inst. Law, Chapter V, Section I, Art. 90. In addition, see Credit Inst. Law, Art. 76; and Circular Letter Credit Inst. Law, Art. 39).
1) Must set aside annually at least 10% of net profits, until such fund equals the paid-up capital.
2) Must create a trust fund to provide financial support to financial institutions. (See Credit Inst. Law, Art. 55 bis and 99A).
In November 2007, Mexico adopted new rules on capitalization requirements, following the Basel II guidelines (the rules are applicable as of January 1st, 2008):
1) CAPITAL ADEQUACY RATIO (CAR) BASED ON CREDIT RISK: when applying the standard risk-weighting of assets, as defined by the Rules on Capitalization, 8%. When applying other measurement methods, the CAR will be defined on a case by case basis.
2) CAR BASED ON MARKET RISK: 12% for general market risk operations; 4% or 8% on specific market risk operations; 4% on liquidity risk operations.
3) CAR BASED ON OPERATIONAL RISK (TECHNOLOGICAL AND LEGAL RISK): 15%, calculated on the average of the net income for the last three years. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008; Credit Inst. Law, Arts. 50 and 102; and Summary on new capitalization rules, Cofemer [Comisión Federal de Mejora Regulatoria], 2007.
TIER I CAPITAL [Capital Básico], which must represent at least 50% of the net capital, includes equity capital; and irredeemable stock. TIER II CAPITAL [Capital Complementario] includes subordinated term debt; general provisions (which cannot exceed 1.25% of the total risk-weighted assets); and special reserves. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008).
New risk-weighting rules were issued on November 2007. Risk-weighting of assets is defined for credit risk assets, market risk assets, and operational risk assets, with risk weights ranging from 0% to 150%. The regulation includes specific provisions for operations between related parties. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008).
1) Entities must provision 100% for loans granted without previous advice from a Bureau of Credit Reporting.
2) General provision: 0.5%.
3) When provisioning for overdue loans, there are several categories. For consumer, commercial, and housing loans: Depending upon the installment period (weekly, semi-monthly, or monthly), a different number of overdue installments leads to classification at a particular provisioning level. Provisions range from 1.5% to 100%. (To see the detailed chart, see Circular Letter Credit Inst. Law, Chapter V, Section I, Art. 90. In addition, see Credit Inst. Law, Art. 76; and Circular Letter Credit Inst. Law, Art. 39).
1) Banks must refrain from distributing profits during the first three years of operation.
2) Must set aside annually at least 10% of net profits, until such fund equals the paid-up capital.
3) Condusef can (See Credit Inst. Law, Arts. 10 and 99A).
Non-bank Financial Institutions
Financial Companies with Limited Corporate Purpose (SOFOLEs)
In November 2007, Mexico adopted new rules on capitalization requirements, following the Basel II guidelines (the rules are applicable as of January 1st, 2008):
1) CAPITAL ADEQUACY RATIO (CAR) BASED ON CREDIT RISK: when applying the standard risk-weighting of assets, as defined by the Rules on Capitalization, 8%. When applying other measurement methods, the CAR will be defined on a case by case basis.
2) CAR BASED ON MARKET RISK: 12% for general market risk operations; 4% or 8% on specific market risk operations; 4% on liquidity risk operations.
3) CAR BASED ON OPERATIONAL RISK (TECHNOLOGICAL AND LEGAL RISK): 15%, calculated on the average of the net income for the last three years. (See Rules on capitalization requirements for Universal and Development Banks, as of November 27,2008; Credit Inst. Law, Arts. 50 and 102; and Summary on new capitalization rules, Cofemer [Comisión Federal de Mejora Regulatoria], 2007.
Minimum capital varies depending on the total amount of assets, and must be in all cases fully paid: (i) INSTITUTIONS HAVING ASSETS UP TO 7 MILLION UDIs (APPROX. USD 2.6 MILLION): Minimum capital of 100,000 UDIs (Approx. USD 35,678). (ii) INSTITUTIONS HAVING ASSETS BETWEEN 7-50 MILLION UDIs (APPROX. USD 2.6-17.8 MILLION): Minimum capital of 500,000 UDIs (Approx. USD 178,390); (iii) INSTITUTIONS HAVING ASSETS BETWEEN 50-280 MILLION UDIs (APPROX. USD 17.8-108 MILLION): Minimum capital of 4 million UDIs (Approx. USD 1.4 million); (iv) INSTITUTIONS HAVING ASSETS OF MORE THAN 280 MILLION UDIs (APPROX. USD 108 MILLION): Minimum capital of 22.5 Million UDIs (Approx. USD 8 million). (See Circular Letter PSCL, Title IV, Chapters I - IV).
8-11% solvency ratio; the more capital, the lower the ratio. (See Circular Letter PSCL, Title IV, Ch. III; and Circular Letter PSCL, Art. 69).
Paid-up capital. For detailed information on accounting rules, see Circular Letter PSCL, Art. 69; and Annexes A and B.
0% for maximum-security assets, such as on-site deposits; and investment in government securities. 20% for high-security assets, such as securities guaranteed by governmental trusts created to promote development programs; term deposits in other credit institutions; and credit operations related to the sale of interbanking funds. 100% for the remaining risk assets. (See Circular Letter PSCL, Art. 67).
1) General provision: 1%.
2) Provisions for overdue loans: from 1 to 181 days default, provisioning requirements vary from 1.5% to 100%, with minor changes depending on the total amount of assets. (For a detailed chart, see Circular Letter PSCL, Arts. 137, 139, 140, and 141.)
Obligation to constitute the following reserves: (i) 10% of net profits must go to a reserve fund until it is equivalent to 10% of total capital; the fund must be invested in highly liquid government securities; (ii) a percentage of the profits (exact percentage to be defined by the Board of Directors) shall go to a "social purpose reserve fund". This fund is managed by the Board of Directors, which will decide the social projects to be invested in. (See PSCL, Arts. 12, 13, 14, and 15).
Non-Regulated Financial Companies with multiple corporate purpose (Non-Regulated SOFOMEs)
Minimum capital varies depending on the total amount of assets, and must be in all cases fully paid: (i) INSTITUTIONS HAVING ASSETS UP TO 7 MILLION UDIs (APPROX. USD 2.6 MILLION): Minimum capital of 100,000 UDIs (Approx. USD 35,678). (ii) INSTITUTIONS HAVING ASSETS BETWEEN 7-50 MILLION UDIs (APPROX. USD 2.6-17.8 MILLION): Minimum capital of 500,000 UDIs (Approx. USD 178,390); (iii) INSTITUTIONS HAVING ASSETS BETWEEN 50-280 MILLION UDIs (APPROX. USD 17.8-108 MILLION): Minimum capital of 4 million UDIs (Approx. USD 1.4 million); (iv) INSTITUTIONS HAVING ASSETS OF MORE THAN 280 MILLION UDIs (APPROX. USD 108 MILLION): Minimum capital of 22.5 Million UDIs (Approx. USD 8 million). (See Circular Letter PSCL, Title IV, Chapters I - IV).
8-11% solvency ratio; the more capital, the lower the ratio. (See Circular Letter PSCL, Title IV, Ch. III; and Circular Letter PSCL, Art. 69).
Paid-up capital. For detailed information on accounting rules, see Circular Letter PSCL, Art. 69; and Annexes A and B.
0% for maximum-security assets, such as on-site deposits; and investment in government securities. 20% for high-security assets, such as securities guaranteed by governmental trusts created to promote development programs; term deposits in other credit institutions; and credit operations related to the sale of interbanking funds. 100% for the remaining risk assets. (See Circular Letter PSCL, Art. 67).
1) General provision: 1%.
2) Provisions for overdue loans: from 1 to 181 days default, provisioning requirements vary from 1.5% to 100%, with minor changes depending on the total amount of assets. (For a detailed chart, see Circular Letter PSCL, Arts. 137, 139, 140, and 141.)
Obligation to constitute the following reserves: (i) 10% to 20% of net annual profits must go to a reserve fund until it is equivalent to 10% of total capital; the fund must be invested in highly liquid government securities; (ii) a percentage of the profits (exact percentage to be defined by the Board of Directors) shall go to a "social purpose reserve fund". The fund is managed by the Board of Directors, which will decide the social projects to be invested in. In the case of the cooperatives, the social purpose fund may be used to cover costs of work injuries, or the cultural and sport activities of its members. (iii) Cooperatives must set aside at least 1% of their net profits for an educational fund. See PSCL, Arts. 12, 13, 14, and 15; and GLCA, Arts. 23, 53, 58, and 59.
Non-profit institutions
NGOs
No requirements as to the minimum capital.
N/A
N/A
N/A
N/A
N/A
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Development Banks
PERMITTED: Receive deposits (sight and term deposits); grant loans; issue subordinated debt; issue credit cards; process money transfers; discount and negotiate promissory notes, letters of exchange, and any other debt instrument; invest in special purpose institutions and in treasury bills; etc. PROHIBITED: Using bank’s property or securities as a guarantee. (See Credit Inst. Law, Arts. 46, 106)
1) Banks shall give 30 days' prior written notice to the Secretary of Finance and Credit -- and shall publish a notice in a regional newspaper -- before opening or closing branches.
2) Risk management regulation: strict and very detailed rules concerning minimum requirements to grant loans, administrative structure of the institutions, internal procedures, standards for the banks' employees, etc.
3) Must comply with regulation concerning anti money-laundering measures: information requirements for unusual, relevant exceeding over 100,000 MXN (approx. USD 10,000), or suspicious operations; code of conduct for managers and employees; specific internal auditing procedures. See Credit Inst. Law, Arts. 48, 87 and 115; Circular Letter Credit Inst. Law; Resolution issued by the Secretary of Finance and Public Credit on December 14,2004; Resolution 28/11/2006; Resolution 28/11/2006 - 18612, and Inteligencia Financiera
1) In order to maintain monetary and macroeconomic stability, the Bank of Mexico has the discretionary power to issue regulations as to interest rates, commission fees, and conditions for deposits and granting of loans.
2) But to date, there are no interest rate caps, and intermediaries adopt market-based interest rate policies.
3) The Bank of Mexico uses the "corto" (lit. "shortage"), a mechanism that allows the Central Bank to influence market interest rates by leaving the banking system short of its daily demand for money by a predetermined amount. If the central bank wants to push interest rates higher, it increases the corto. If it wishes to lower interest rates, it decreases the corto. (See Preguntas frecuentes (Política monetaria)), (Transparency Law, Art.4), and Economy of Mexico
1) CREDIT TO AN INDIVIDUAL OR INSTITUTION/COMPANY: Depends upon capital adequacy ratio: (i) If between 8.01% and 9%: 12% of the bank's Tier I capital; (ii) If between 9.01% and 10%: 15% of the bank's Tier I capital; (iii) If between 10.1% and 12%: 25% of the bank's Tier I capital; (iv) If between 12.01% and 15%, 30% of the bank's Tier I capital; (v) If more than 15%, 40% of the bank's Tier I capital.
2) Aggregate loans granted to the three largest debtors cannot exceed 100% of the bank's Tier I capital.
3) The aforementioned limitations are not applicable when the loans are granted to the Federal District and/or municipalities and/or development banks whose debt is fully guaranteed by the Federal Government.
4) Banks can invest in securities of other companies up to 5% of the capital of such company.
5) Total investments in other companies can not exceed 5% of the deposits received from the public. (See Credit Inst. Law, Art. 75; and Circular Letter Credit Inst. Law, Arts. 51, 54, 55, 56).
1) 75% of the Administration Council must authorize transactions with related parties. Related parties are: those who own directly or indirectly 2% or more of the bank's capital; members of the Administration Council; spouses of the above-mentioned parties; those that have the authority to bind the bank; companies in which the aforementioned parties own 10% or more of the capital.
2) Transactions with related parties that do not exceed 2,000,000 UDIs (approx. USD 714,000) or 1% of the Tier I net capital of the institution are exempted from the requirement to obtain the Administration Council’s approval.
3) Aggregate related transactions may not exceed 75% of Tier I net capital.
4) Employees other than the General Manager and high-ranking officers are not considered related parties.
5) Banks cannot invest in securities issued by any of its shareholders (See Credit Inst. Law, Arts. 51, 73, 73 bis and 75 (11)).
Universal Bank Institutions
PERMITTED: Receive deposits (sight and term deposits); grant loans; issue subordinated debt; issue credit cards; process money transfers; discount and negotiate promissory notes, letters of exchange, and any other debt instrument; invest in special purpose institutions and in treasury bills; etc. PROHIBITED: Using bank’s property or securities as a guarantee. (See Credit Inst. Law, Arts. 46, 106)
1) Banks shall give 30 days' prior written notice to the Secretary of Finance and Credit -- and shall publish a notice in a regional newspaper -- before opening or closing branches.
2) Risk management regulation: strict and very detailed rules concerning minimum requirements to grant loans, administrative structure of the institutions, internal procedures, standards for the banks' employees, etc.
3) Must comply with regulation concerning anti money-laundering measures: information requirements for unusual, relevant exceeding over 100,000 MXN (approx. USD 10,000), or suspicious operations; code of conduct for managers and employees; specific internal auditing procedures. See Credit Inst. Law, Arts. 48, 87 and 115; Circular Letter Credit Inst. Law; Resolution issued by the Secretary of Finance and Public Credit on December 14,2004; Resolution 28/11/2006; Resolution 28/11/2006 - 18612, and Inteligencia Financiera
1) In order to maintain monetary and macroeconomic stability, the Bank of Mexico has the discretionary power to issue regulations as to interest rates, commission fees, and conditions for deposits and granting of loans.
2) But to date, there are no interest rate caps, and intermediaries adopt market-based interest rate policies.
3) The Bank of Mexico uses the "corto" (lit. "shortage"), a mechanism that allows the Central Bank to influence market interest rates by leaving the banking system short of its daily demand for money by a predetermined amount. If the central bank wants to push interest rates higher, it increases the corto. If it wishes to lower interest rates, it decreases the corto. (See Preguntas frecuentes (Política monetaria)), (Transparency Law, Art.4), and Economy of Mexico
1) CREDIT TO AN INDIVIDUAL OR INSTITUTION/COMPANY: Depends upon capital adequacy ratio: (i) If between 8.01% and 9%: 12% of the bank's Tier I capital; (ii) If between 9.01% and 10%: 15% of the bank's Tier I capital; (iii) If between 10.1% and 12%: 25% of the bank's Tier I capital; (iv) If between 12.01% and 15%, 30% of the bank's Tier I capital; (v) If more than 15%, 40% of the bank's Tier I capital.
2) Aggregate loans granted to the three largest debtors cannot exceed 100% of the bank's Tier I capital.
3) The aforementioned limitations are not applicable when the loans are granted to the Federal District and/or municipalities and/or development banks whose debt is fully guaranteed by the Federal Government.
4) Banks can invest in securities of other companies up to 5% of the capital of such company.
5) Total investments in other companies can not exceed 5% of the deposits received from the public. (See Credit Inst. Law, Art. 75; and Circular Letter Credit Inst. Law, Arts. 51, 54, 55, 56).
1) 75% of the Administration Council must authorize transactions with related parties. Related parties are: those who own directly or indirectly 2% or more of the bank's capital; members of the Administration Council; spouses of the above-mentioned parties; those that have the authority to bind the bank; companies in which the aforementioned parties own 10% or more of the capital.
2) Transactions with related parties that do not exceed 2,000,000 UDIs (approx. USD 714,000) or 1% of the Tier I net capital of the institution are exempted from the requirement to obtain the Administration Council’s approval.
3) Aggregate related transactions may not exceed 75% of Tier I net capital.
4) Employees other than the General Manager and high-ranking officers are not considered related parties.
5) Banks cannot invest in securities issued by any of its shareholders (See Credit Inst. Law, Arts. 51, 73, 73 bis and 75 (11)).
Non-bank Financial Institutions
Financial Companies with Limited Corporate Purpose (SOFOLEs)
1) Cannot engage in agreements ruled by terms and conditions that differ from general industry practice.
2) Cannot engage in commercial transactions for goods or services.
3) Must give 30 days' prior notice to the Secretary of Finance and Public Credit and to the Commission before opening or closing branches.
4) There are restrictions on the percentages of capital that may be spent in administrative costs: (i) up to 60% of paid capital may be spent on furniture, equipment, and other goods to be installed in the SOFOLEs' offices, as well as outsourced administrative services; and (ii) up to 10% of paid capital may be spent on organization expenses.
5) Must comply with regulation concerning anti money-laundering measures: information requirements for unusual, relevant exceeding over 100,000 MXN (approx. USD 10,000), or suspicious operations; code of conduct for managers and employees; specific internal auditing procedures. (See Specific Regulation on Sofoles, Arts. 7, 8, 9, and 11; Credit Inst. Law, Art. 115; Resolution issued by the Secretary of Finance and Public Credit on December 14,2004; Resolution 28/11/2006; Resolution 28/11/2006 - 18612; and Inteligencia Financiera).
1) In order to maintain monetary and macroeconomic stability, the Bank of Mexico has the discretionary power to issue regulations as to interest rates, commission fees, and conditions for deposits and granting of loans.
2) But to date, there are no interest rate caps, and intermediaries adopt market-based interest rate policies.
3) The Bank of Mexico uses the "corto" (lit. "shortage"), a mechanism that allows the Central Bank to influence market interest rates by leaving the banking system short of its daily demand for money by a predetermined amount. If the central bank wants to push interest rates higher, it increases the corto. If it wishes to lower interest rates, it decreases the corto. (See Preguntas frecuentes (Política monetaria)), (Transparency Law, Art.4), and Economy of Mexico
N/A
N/A
Regulated Financial Companies with Multiple Corporate Purpose (Regulated SOFOMEs)
PERMITTED: (i) direct loans; (ii) financial leasing; and (iii) factoring. PROHIBITED: receive funds from the public. See General Law on Ancillary Credit Activities, Art. 87 B.
Must comply with regulation concerning anti money-laundering measures: information requirements for unusual, relevant exceeding over 100,000 MXN (approx. USD 10,000), or suspicious operations; code of conduct for managers and employees; specific internal auditing procedures. See Resolution issued by the Secretary of Finance and Public Credit on December 14,2004; Resolution 28/11/2006; Resolution 28/11/2006 - 18612; General Law on Ancillary Credit Activities, Arts. 87 B, K and L, and Inteligencia Financiera
N/A
Pursuant to General Law on Ancillary Credit Activities, Art. 87 D, same regulation as banks:
1) CREDIT TO AN INDIVIDUAL OR INSTITUTION/COMPANY: Depends upon capital adequacy ratio: (i) If between 8.01% and 9%: 12% of the bank's Tier I capital; (ii) If between 9.01% and 10%: 15% of the bank's Tier I capital; (iii) If between 10.1% and 12%: 25% of the bank's Tier I capital; (iv) If between 12.01% and 15%, 30% of the bank's Tier I capital; (v) If more than 15%, 40% of the bank's Tier I capital.
2) Aggregate loans granted to the three largest debtors cannot exceed 100% of the bank's Tier I capital.
3) The aforementioned limitations are not applicable when the loans are granted to the Federal District and/or municipalities and/or development banks whose debt is fully guaranteed by the Federal Government.
4) Banks can invest in securities of other companies up to 5% of the capital of such company.
5) Total investments in other companies cannot exceed 5% of the deposits received from the public. (See Credit Inst. Law, Art. 75, and Circular Letter Credit Inst. Law, Arts. 51,54, 55, 56).
Pursuant to General Law on Ancillary Credit Activities, Art. 87 D, same regulation as banks:
1) 75% of the Administration Council must authorize transactions with related parties. Related parties are: those who own directly or indirectly 2% or more of the bank's capital; members of the Administration Council; spouses of the above-mentioned parties; those that have the authority to bind the bank; companies in which the aforementioned parties own 10% or more of the capital.
2) Transactions
