Banks Hit With Fines; Banorte’s Profits Fall

A thorough investigation into the actions of several major banks in Mexico ended with multi-million peso fines for those involved. Meanwhile, the release of Banorte’s 4Q20 report demonstrated the challenges that the last year brought to the financial sector. Also, Piotr Godzinski, Co-Founder of Finnu, asked us to rethink social inclusion.

All this in the Week in Finance.

COFECE Hits Banks With Collusion Fines

Antitrust watchdog, Federal Economic Competition Commission (COFECE), charged Barclays, Deutsche Bank, Santander, Citibanamex, Bank of America, BBVA and JP Morgan a combined total of MX$35 million (US$1.74 million) for price-rigging activities unearthed during a four-year investigation.

While Deutsche Bank received the largest fine, JP Morgan got away with paying the least after COFECE found conversations between traders in which they made agreements to rig prices, causing an estimated damage to the market of MX$29.39 million (US$1.46 million).

“The Commission proved […] that the banks and traders mentioned established 142 agreements in violation of the Federal Economic Competition Law (LFCE) to manipulate prices and establish the obligation of not trading and/or not acquiring certain government securities in specific transactions (not general agreements), which had a direct impact on the price of the related instruments in such transactions in the secondary market,” said COFECE’s report.

Finnu Pushes Financial Inclusion

Piotr Godzinski, Co-Founder of personal credit fintech Finnu, used his recent Expert Contributor piece to speak about financial inclusion, the growth of which is one of the government’s overarching financial aims.

Godzinski notes that financial inclusion has become a buzzword, while its complexity has been stripped away. Here, Godzinski explains how the preference for cash can be better understood to drive financial inclusion through new fintech operations. “The challenge with financial inclusion might be about understanding existing transactions and translating them into data that formal financial institutions or any financial stakeholder can digest,” he says.

Banorte’s Profits Suffer in 4Q20

Banorte’s 4Q20 profits dropped 34 percent, hitting MX$5.9 billion (US$299 million) compared to the MX$8.9 billion (US$445 million) in 3Q20. The impact of the lingering COVID-19 crisis stood out, with the bank’s overdue loan portfolio ballooning by 34 percent in 4Q20 against the previous quarter.

The bank said that the ending of the credit support system that was agreed between government institutions and banks to help businesses and individuals cope following the pandemic’s initial shock, had impacted its 4Q20 figures. With a second wave of cases currently sweeping through Mexico, more reserves will be put aside, the bank said.