Mexico Ruling Party Says Deal Struck With Banks on Fee Bill

(Bloomberg) -- Mexico’s Senate majority leader Ricardo Monreal reached an agreement with banks that allows him to move forward with his bill to regulate lenders’ fees, his aide said. Bank stocks and the peso jumped on the news.

The new version of the bill removes across-the-board prohibitions from the original legislation, but requires banks to offer zero-fee accounts to low income clients, Monreal’s aide Juan Garay said. The proposal may be approved by the Senate as soon as March 21, Garay said in an interview.

The bill also prohibits banks from charging customers for any ATM transaction, including withdrawals done at banks where they don’t have accounts, Garay said. That prohibition is lifted for customers who use ATMs more than three times a month, he said.

Mexico Ruling Party Says Deal Struck With Banks on Fee Bill

Since Monreal’s original bill in November to curb or cut over a dozen fees caused bank stocks to swoon, lawmakers and lenders have been working to find a compromise that would address the problem of commissions in Mexico. International banks in Mexico typically earn about one-third of local revenue from fees and commissions, compared with one-fifth in their home markets, according to financial consumer-protection agency Condusef.

Mexican policy makers are pushing for lower charges as part of a wider package of financial measures, aimed at getting more credit flowing through the economy. International banks operating in Mexico typically rely on fees and commissions for a bigger chunk of profit than in their home markets, where they do more lending and earn more interest income.

"The point is how do you increase financial inclusion and close the inequality gap," said Aliza Klip Moshinsky, who runs the Senate institute that coordinated bank fee discussions among lawmakers, banks, the government and the central bank. "Instead of going against 13 fees we’re moving toward a series of products and actions that will permeate to that entire income bracket."

Representatives of the Association of Banks in Mexico met with the senator and government officials on Thursday, where the representatives said that apart from the timing of the implementation of the legislation they had few remaining objections, Garay said. Banks and lawmakers are yet to reach an agreement on what the balance threshold would be to define a low-income client eligible for a zero-fee account.

The Association of Banks in Mexico didn’t immediately respond to a request for comment.

Grupo Financiero Banorte and Banco Santander Mexico both jumped more than 1 percent on the news. The peso closed stronger at 19.2714 per dollar.

Monreal is seeking to have his bill up for a vote on the Senate floor before the annual banking convention later this month, Garay said. President Andres Manuel Lopez Obrador’s Morena coalition holds a majority in both houses of Congress.

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