Mexico bank regulator fine tunes loan restructuring program

Mexico’s banking regulator (CNBV) issued changes to the recently announced bank loan-restructuring program, including moving next year’s deadline for registering with the program to January 31 from September 24. 

The head of the country’s banking association (ABM), Luis Niño de Rivera, said the earlier deadline is reasonable given that many clients who took advantage of the pandemic-emergency deferment program that began in March were already concluding their participation in August, with only a small number continuing through the last extensions running to early December. 

“Those that know their situation have already approached the bank or are doing so now,” said Niño de Rivera in an interview with local daily El Economista. He added that banks have largely identified which customers are going to need additional assistance, making it unlikely any applicant would emerge past January.

“I think it is very clear that we will be able to get a handle on the restructuring requirements by then,” said the ABM chief. 

CNBV issued regulatory memorandum P417 / 2020 to ABM with a raft of other changes as well to the original memo sent in late September. 

In addition to the date change, the new rules establish that a loan can only be renewed or restructured under the COVID-19 special accounting facility for a single occasion.

It also indicates that lenders using the program may pay dividends for 2019 and 2020. The original rules had ordered banks using the facility to halt dividends until 2024.

With respect to the original debt servicing reduction of 25%, the new guidelines set the reduction at 25% only for loans restructured by up to 48 months. For loans requiring longer extensions, the debt cost reduction is now 20%. 

The original wording stated that terms on restructured loans would depend on how well the client was keeping payments up to date. The new arrangement establishes the restructuring would only be valid in the event the client maintains payments up to date. 

In the case of mortgage loans, CNBV's update specifies that the minimum 25% reduction in debt servicing only applies on loans of 15 years or less, with longer-term mortgages receiving the minimum of a 15% reduction.

In the case of microcredits, the 25% reduction only applies for maturities of six months or less, with 20% applying to longer-term loans. 

With credit cards, debt must be reorganized under a scheme of fixed periodic payments on the remaining balance. Likewise, the 25% discount only applies if clients have used less than 20% of their credit line. Otherwise, the reduction is 20%.

CNBV also made it discretionary for financial institutions to grant write-offs, forgiveness, bonuses or discounts, but clarified that in any case they must incentivize the payment of loans that are renewed or restructured.