FIBRAs Replace CIBanco as Trustee After US Allegations

Mexican Real Estate Investment Trusts (FIBRAs) are moving or seeking to replace CIBanco as their trustee following the temporary intervention of the financial institution by the National Banking and Securities Commission (CNBV). The regulatory action came after US authorities flagged three banks for alleged involvement in money laundering operations, including CIBanco.

El Economista notes that while CIBanco is a smaller bank in terms of assets, it is a major player in the trust market, managing approximately 26% of all trusts in the country. This includes acting as the trustee for at least seven FIBRAs listed on the Mexican Stock Exchange (BMV). The trustee is legally responsible for managing their assets and acting as their legal representative.

In the days following the announcement, FIBRA Terrafina and FIBRA Inn (FIIN) informed investors they had decided to replace CIBanco. "To date, we have had the full support and cooperation of CIBanco to maintain normal day-to-day operations, as well as to carry out the previously announced replacement process," reads FIIN's press release.

Retail and life center-focused trust, FIBRA Shop (FSHOP), also announced that Banco Actinver will replace CIBanco as its trustee, noting that this does not affect the ordinary operation of the properties or the fulfillment of its contractual obligations. “Until CIBanco is fully replaced, it will continue acting as trustee. FibraShop will keep the market informed of any progress regarding the trustee transition process,” reads FSHOP’s press release. 

FIBRA Macquarie and FIBRA Storage, also initiated the process to remove the bank as their fiduciary. Both FIBRAs announced they are assessing options to address any potential risks to their real estate trust certificate (CBFI) holders. 

Despite reputational risk concerns, other entities have stated they will continue operating with CIBanco as their trustee, including CFE's FIBRA E, Toyota Financial, Banorte, and Volkswagen Leasing. CFECapital noted its vehicle’s resources and distributions remain protected under Art. 386 of Mexico's General Law of Negotiable Instruments and Credit Operations, which mandates that fiduciary institutions must keep trust assets separate from their assets, as reported by MBN. 

Market analytics firm SiiLA notes that while the day-to-day operations of the FIBRAs, such as rent collection and property occupancy, are not expected to be affected, remaining under the administration of an institution under investigation could impact investor confidence and affect future debt or equity issuances. "It is likely that, beyond the specific ruling, internal fiduciary eligibility criteria will change. Entities under investigation would fall off the radar of funds and institutional investors, making way for trustees with greater international backing and stricter controls. This would be accompanied by regulatory pressure: greater transparency, more demanding compliance requirements, and reinforced accountability,” the firm notes.