Modification to certain provisional measures published by Banco de Mexico, as a result of the COVID-19 coronavirus pandemic

White & Case LLPOn June 30, 2020, the Mexican Central Bank (Banxico or Central Bank) issued a press release announcing the amendments to be made to Rules 20/20201 and 25/20202, which shortly will be published in the Federal Official Gazette.

The aforementioned rules refer to:

Rule 20/2020, addressed to multiple banking and development banking institutions, concerning the Rules applicable to the provision of resources to banking institutions to channel credit to micro, small and medium-sized companies, as well as to individuals.

Rule 25/2020, addressed to multiple banking and development banking institutions, regarding the Rules applicable to the Central Bank financing secured by qualified banking assets, to channel to micro, small and medium companies.

These two provisions regulate the content of the support measures approved by the Governing Board of the Central Bank (Support Measures), listed in items 7 (Rule 20/2020) and 8 (Rule 25/2020), which were announced on April 21 of this year as measures to provide liquidity to banking institutions in order to strengthen the channels of credit granting, improve the functioning of domestic markets and promote the orderly behavior of debt and exchange markets in our country, before the COVID-19 coronavirus pandemic.

In this context, Banxico indicates that the main changes to the mentioned Rules are:

Destination of the resources of the Support Measures.

(A) Specify that banking institutions may enter into, in addition to credit, leasing and factoring transactions with the Micro, Small and Medium size Companies (MiPyME, as per its acronym in Spanish), with the proceeds derived from the Support Measures.

(B) Allow banking institutions, with the resources derived from the Support Measures identified in item 7, to grant mortgage and automobile loans to individuals with the limits and conditions established for this purpose.

Guarantees required from banks to obtain resources from the Support Measures.

Accept trust schemes in which the rights corresponding to mortgage credit portfolios are affected, as guarantees for the financing granted by Banxico in terms of the Support Measures referred to in item 8.

Operating aspects.

(A) To extend to three months the term for the banks to dispose the resources for the granting of the respective credits.

(A) To allow the institutions to dispose the total amount assigned through partial ministrations in the weeks they request, so they can place the resources of said ministrations in the respective credits during the following 20 business days to each ministration.

(B) To specify that the credits and leasing and factoring that banking institutions have entered into with the MiPyME and individuals, may be included as the purpose of resources granted under the Support Measures as of the entry into force of Rule 20/2020 and 25/2020, as applicable.

(C) To include among the terms of the financing of the Support Measures the options 12, 24 and 36 months, at the choice of the bank.

Click here to download 'Modification to certain provisional measures published by Banco de Mexico, as a result of the COVID-19 coronavirus pandemic' PDF in Spanish.

1 Published on the Federal Official Gazette on June 2, 2020.
2 Published on the Federal Official Gazette on June 19, 2020.
 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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