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Mexico: COFECE reports barriers to entry in the banking sector

By  |  April 23, 2019
A study by Mexico’s National Banking and Securities Commission CNBV), supported by information from the Federal Economic Competition Commission (COFECE), presented an international comparison of the capital required to start a new bank in Mexico, detecting high entry barriers that place Mexico among the places with the highest costs for start this activity, requiring up to US$33 million and exceeding what is required in countries such as Switzerland, Germany, Spain, England or Brazil, as well as many developing countries.

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    The minimum amount required to open a bank is above countries such as Switzerland, with a US$16 million requirement, and well above countries such as Guatemala (US$13 million) or Nicaragua (US$11 million). Other countries, such as Chile, Spain or Portugal, do not have minimum capital requirements.

    “A possible explanation for the limited access of new banks in Mexico may be a consequence of the high amounts that must be initially available,” suggests the report presented by COFECE. “… It should be analyzed, in order to assess whether it is advisable to adjust it to the levels that allow greater market entry,” it suggests.

    The study includes the 48 banks that operate in Mexico, although just three of these concentrate more than 50% of the financial assets: BBVA Bancomer, Santander and Citibanamex. Both BBVA and Santander have expressed their interest in increasing their presence in Mexico, one of their biggest centers of profitability.
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