Mexico banking watch: Geo-location rule, Sabadell unit, NBFI update

Customers looking to access their bank’s digital services in Mexico will have to agree to give permission to share their location or be denied access, due to a new industry standard going into effect on March 23.

According to Mexican banking association ABM, the nation’s banks will be required to obtain and record the real-time physical location of clients at any time they attempt to carry out a transaction remotely, as part of the country’s broader efforts to combat money laundering and financing of terrorism.

On their devices, customers must give the consent to share their location and, where appropriate, proceed with any necessary updates/permissions so that banks are able to grant the corresponding services, said ABM in its statement. 

Sabadell remaining steady in Mexico

Banco Sabadell has confirmed its Mexican operations will not be undergoing any organizational changes at this time amid the broad reorganization announced for its Spanish parent with the appointment of César González-Bueno as CEO, replacing Jaime Guardiola.  

The shake-up came as pressure built up from concerned investors after talks collapsed in November with fellow Spanish lender BBVA to form the country’s second largest domestic bank in terms of assets.

With the bank seeing its division in Spain split into three units (retail, business and corporate), the subsidiary in Mexico will continue to focus on boosting profitability and increasing its contribution to the parent company, Mexican daily El Economista reported Sabadell as saying.

In 1998, Sabadell’s Mexico unit acquired a stake in second-tier bank Banco del Bajío, increasing their participation in 2005 before later selling off the stake entirely. 

In 2014 it started operations as a non-banking financial institution (sofom), before gaining approval to begin operating as a fully licensed commercial bank in 2016.  

Sabadell ranked 14th in terms of assets as of January with 112bn pesos (US$5.5bn), according to Mexican banking regulator CNBV. 

Sofipos hit by pandemic

Mexico’s 38 sofipos non-banking financial institutions recorded a combined 507mn-peso loss in 2020 due to the COVID-19 pandemic.

While operating as non-profit entities, the sofipos recorded negative profitability last year with their average ROA at -1.64% and ROE at -8.35%, according to CNBV data. 

The federally regulated social lenders, who are generally focused on providing loans to businesses in underserved and at-risk communities, saw their total assets drop 0.8% to 31.2bn pesos at the end of 2020. The sector-wide loan book contracted 8.5% to 20.4bn pesos.