Legislative reforms open Mexico's financial sector to foreign institutions | White & Case LLP International Law Firm, Global Law Practice
Legislative reforms open Mexico's financial sector to foreign institutions

Legislative reforms open Mexico's financial sector to foreign institutions

Subsidiaries of foreign investment funds, including foreign sovereign investment funds, may now own a bank in Mexico

In 2014, the Mexican government announced comprehensive reforms of the regulations governing financial institutions. Mexico amended, supplemented and repealed various legal provisions, including amending 34 legal statutes to foster greater competition in the financial and banking system by creating incentives to increase lending, as well as a new mandate for development banks. These reforms sought to strengthen both the stability of financial institutions and the powers of financial authorities in regulatory, monitoring and enforcement matters.

The reforms included amendments clarifying how foreign state-owned entities can legally participate in Mexican financial institutions. They set out the rules that require prior approval from Mexico’s national banking and securities commission—the Comisión Nacional Bancaria y de Valores (CNBV)—before foreign governments may invest in Mexican commercial banks, as a temporary prudential measure, in cases where foreign entities receive financial support or are rescued. The reforms made it clear that this type of intervention should be only through official entities that do not exercise direct authority or control over the Mexican bank. Thus, foreign government participation in a Mexican financial institution must be indirect, without direct control. The reforms also regulated in more detail the procedures for exchanging information with foreign authorities and verification visits.

As a result of the reforms, it became possible for a foreign institution to participate in a Mexican bank as long as the investing entity  does not exercise authority over the bank. Subsidiaries of foreign investment funds, including foreign sovereign investment funds, may now own a bank in Mexico.

 

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