EVERYTHING YOU NEED TO KNOW ABOUT BANKING IN MEXICO L A E. R A U L G A R C I A C H A V E Z C I B A N C O

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1 EVERYTHING YOU NEED TO KNOW ABOUT BANKING IN MEXICO L A E. R A U L G A R C I A C H A V E Z C I B A N C O

2 Banks in Mexico According to the Mexican Bank Association, there are 50 banks working in Mexico.

3 Bank Regulation COMISION NACIONAL BANCARIA Y DE VALORES: Every bank is authorized, regulated, supervised and sanctioned by the Comisión Nacional Bancaria y de Valores. BANCO DE MÉXICO: The Bank of Mexico is the central bank of the Mexican State. It is autonomous in its functions and administration. It s purpose is to provide the economy of the national currency and its primary objective is to ensure the stability of the purchasing power of the currency.

4 Bank Regulation IPAB: Bank deposits are ensured by the federal government through the Instituto para la Protección al Ahorro Bancario. The insurance covers for deposits up to $2,178, MXN ($110, USD). CONDUSEF is a government agency that promotes financial education so banks clients can make better and informed decisions regarding costs, benefits and risks of the products and services offered by the financial institutions, and protect their interests by regulating and supervising financial institutions.

5 Credit Information BURÓ DE CRÉDITO is a private Company that gathers, classifies and saves the credit history of bank, department stores and telecommunication companies s clients. Financial institutions request this information prior to any credit authorization, and it only shows the payment behavior of the client, so banks and other institutions can decide whether to authorize or deny a credit application. Only the clients themselves can request their own record in detail.

6 Major Banks In terms of bank deposits, the biggest banks are BBVA BANCOMER, BANAMEX and BANORTE. These three banks have 54.85% of the total bank deposits nationwide.

7 Products and Services Checking account: It s a deposit for individuals and companies. The money is available always. It bears no interest. It comes with: Debit card (Customized or with no name)some banks don t have debit cards for corporation accounts. Checks (optional) Online Banking

8 Products and Services Checking account in USD: It s a deposit for companies only. The money is available always. It bears no interest. It comes with: Checks (optional) Online Banking

9 Products and Services Depending on the bank, some fees may apply: Penalty and/or Maintenance Fees, Card replacement fee, checks issued on the month, etc. Penalty Fees: Vary from $ to $ Card Replacement: $87.00 Checks: $11.60 Returned Check: $928.00

10 Products and Services Depending on the bank, some fees may apply: Penalty and/or Maintenance Fees, Card replacement fee, checks issued on the month, etc. Penalty Fees: Vary from $ to $ Card Replacement: $87.00 Checks: $11.60 Returned Check: $928.00

11 Products and Services Interest bearing accounts Must be linked to a checking account. There are basically two types: Pagaré: It s a savings certificate with a fixed maturity date, specified fixed interest rate. A Pagaré restricts access to the funds until the maturity date of the investment. When the Pagaré matures, the entire amount of principal as well as interest earned is available for withdrawal. It is not possible to withdraw money from a Pagaré prior to the maturity rate. There s a 0.5% tax on the rate.

12 Interest Rates: Products and Services

13 Products and Services Fondo de Inversión A Fondo de Inversión is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Fondos de Inversión are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

14 Money Exchange MONEY EXCHANGE Banks can exchange foreign currency in several ways. Wire transfers: Is an international payment sent by a bank outside Mexico. Most banks deposit the wire transfer amount as soon as it gets and charge a service fee of $20.00 to USD. At Cibanco we can hold the deposit for a month and deposit into the account, when the rate is higher. Cash: it s important to notice that foreign customers (individuals)can exchange USD for up to $1, per month converted to pesos in cash. In some banks it s necessary to have an account. Clients can change up to $4, USD per month maximum. In some banks, it has to be converted to pesos with a deposit to the client s account. There is no monthly limit for other currencies. Personal Checks: Most banks don t take personal checks.

15 Credit MORTGAGE All major banks offer mortgage products, mainly to buy a new house, not land nor to start a business. The collateral is not how a bank gives credit. Usually a mortgage goes from 5 to 20 years. The rates go from 8% to 15%, depending on the bank and the specific type of mortgage.

16 Credit HOUSE: 1,020, DOWN PAYMENT: $204, (20%) CREDIT AMOUNT: $816, TERM: 15 years

17 HOUSE: 1,020, DOWN PAYMENT: $204, (20%) CREDIT AMOUNT: $816, TERM: 15 years

18 Credit CREDIT CARD You do not need to be a Mexican national to apply for credit a credit card. However, banks will usually require you to be legally resident in Mexico (showing a Resident Visa) and be able to prove your income. You can prove your income with: Payroll receipts Mexican Tax return Mexican Bank Statement (optional) Documents: Passport Resident Visa You also need a credit reference in Mexico. The bank will make a credit inquiry via the National Credit Bureau

19 Interest Rates

20 Interest Rates

21 Credit COMERCIAL LOANS Small and big businesses can apply for a commercial loan. There are basically two types of commercial loans, based on the destiny of the funds: Working Capital Fixed Assets

22 Credit Crédito Revolvente Revolving credit is very similar to a credit card. The lending institution grants you a maximum credit limit, which you can use to make payments to suppliers. Many small business owners and corporations use revolving credit to finance capital expansion.

23 Credit Crédito simple Is an arrangement between a financial institution, and a customer. The bank establishes a maximum amount. The borrower can access funds from the line of credit just one time and make a monthly payment in a bank account.

24 Credit Rates Variable rates go from TIIE+5 and up to TIIE+8 Fixed rates go from 9.5% to 12.00% The bank may or may not have an opening fee for the credit, which can be 2.00% or 2.50%

25 Credit The bank will ask for the following documents Corporation Papers. Passports and Resident Visas of legal representative. Tax identification number Proof of address (Utility Bill) Tax Returns (last 2 or 3 years) Financial Statements (Income Statement and Balance Sheet,last 2 years and the current one).

26 Documents NECESSARY DOCUMENTS Passport: It will be mandatory to open an account, exchanging USD, withdrawing cash from your account and asking for your balance.

27 Documents NECESSARY DOCUMENTS RESIDENT VISA: The Mexican government issues Resident visa cards to those foreign citizens that start a business in Mexico. Three types of visas: Temporary Resident

28 Documents Permanent Resident Forma Migratoria Múltiple

29 Important tips Always bring your passport or the resident card to the bank. Always sign exactly the same way. Do not assume anything, always make sure. Major international banks do not have the same products and services or systems they do in their countries. There are no early withdrawals on Certificates of Deposit. Not even with a penalty fee.

30 Important tips Remember, major banks have many offices, ATM s, products and services, but also many clients. Customer service sometimes is not a priority. Smaller banks do not have many products or offices, but can provide a more customized service. Credit interest rates are higher than in the US or Canada, but you can always pay in advance. Try to learn basic phrases for your banking needs, as sometimes not all bank employees speak english.

31 Important Tips When you deposit a check in a different bank, it takes one business day to clear. If you don t bring your id to cash a check, you can endorse it to someone else. Checks must be written in spanish. Some bank debit cards, can not be used for online purchases. Spei is a domestic transfer, it takes 30 minutes to arrive from your bank to the benefficiary s bank.

32 Cibanco SA Av. 10 esquina Calle 14, Local 7, Plaza Tendenza Playa del Carmen, Quintana Roo LAE RAÚL GARCÍA CHÁVEZ Tel Tel Cell