Mexican stocks plunge over move to slash bank fees

MEXICO CITY: Mexico’s main stock index plunged nearly six per cent after President-elect Andres Manuel Lopez Obrador’s party introduced legislation to dramatically slash the fees banks can charge clients.

Dragged down by banking stocks, the BMV index slid 6.18 per cent after Senate majority leader Ricardo Monreal introduced the bill, before recovering slightly to close down 5.81 per cent.

The peso also weakened 1.2 per cent against the dollar. Monreal said the bill would eliminate or curb ‘excessive’ amounts that banks in Mexico charge for things including ATM withdrawals, late payments on credit cards, annual fees, interbank transfers and business’ use of credit card terminals.

“More than 30 per cent of the Mexican banking sector’s revenues come from charging commissions,” said the bill.

“The alarming and excessive abuse of banking fees to the detriment of Mexicans is even more evident when one considers the fact that such revenues increased by eight per cent in 2017, to 108 billion pesos,” or US$5.34 billion, it said.

It was the latest day of turbulence for the Mexican markets. Stocks and the peso also plunged last week when Lopez Obrador announced he would halt construction on a new US$13-billion airport for Mexico City. The largest investor in the project was telecoms billionaire Carlos Slim, the richest person in Mexico and seventh-wealthiest in the world, according to Forbes magazine.

Lopez Obrador, an antiestablishment leftist, has worried the business sector with rhetoric about overhauling Mexico’s economic model when he takes office on Dec 1. — AFP