Bank / Credit Union
Mexico's Banco Famsa collapses
August 28, 2020
Mexico's National Banking and Securities Commission has received criticism for being too slow in responding to applications from new financial institutions as it deals with the collapse of domestic lender, Banco Famsa.
The CNBV revoked Famsa's license in June, after finding it held insufficient capital reserves and had submitted inaccurate information about its credit portfolio since 2016, according to a report in Global Banking Regulation Review.
Banco Famsa's parent company, Mexican retailer Grupo Famsa, submitted a request to file for Chapter 15 bankruptcy in the United States and bankruptcy in Mexico.
Federico de Noriega, a partner at Hogan Lovells in Mexico City, says the CNBV is doing the best possible in the circumstances, but its workforce is "overwhelmed" and "has a lot on its plate".
"Understaffing naturally means they are slower to respond to requests, and there are fewer senior technocrats to answer the more complex questions," De Noriega said in the report. "There is of course the need to make sure banks are well capitalized and not hiding losses. A weak regulator gives room for banks to start avoiding compliance or altering ratings of their loan portfolio."
