Institutions of the Mexican financial system
SECRETARIAT OF FINANCE AND PUBLIC CREDIT
CREATION
On November 8, 1821, the Professional Regulation for the Interior and Exterior Government of the Secretaries of State and the Universal Office was issued, through which the Secretary of State and the Office of the Treasury was created.
The Decree of February 23, 1867, changed its name to Secretary of State and the Universal Office of Finance and Public Credit, thus called, as Secretary of Finance and Public Credit, indicating, modifying or eliminating its powers.
LEGAL FRAMEWORK AND POWERS
The SHyCp for many years has been the Governing Unit of the financial system and is in charge of multiple and important powers with respect to it, which are established in various legal texts, among the main ones we have: Political Constitution of the United Mexican States; Organic Law of the Federal Public Administration; Internal Regulations of the Ministry of Finance and Public Credit, General Organization Manual of said agency (DOF 6-I-99) and Laws of the Mexican Financial System.
Faculties
1.) Plan, coordinate, evaluate and monitor the country's financial system.
The SHyCP guides the policy of the country's banking system and non-bank financial institutions.
2.) Authorization
The SHyCP has various authorization powers, among them we have
• Constitution
• Operation
• Fusion
• Exceptional situation
3.) Issuance of Prudential Provisions
The Ministry of Finance and Public Credit mainly issues general regulations on the aspects:
• Institutions of financial entities;
• Prudential to ensure the solvency, liquidity and adequate disposition of financial entities.
4.) Administrative Interpretation
Most of the laws applicable to financial entities assign the SHyCP the power to interpret, for administrative purposes, the precepts of said legal texts.
Interpreting is clarifying, explaining, or unraveling the meaning of provisions of law, which are obscure or ambiguous. Depending on who performs it, it can be legislative, judicial, administrative or doctrinal.
5.) Intervention in Financial Crimes
The SHyCP, through the Federal Prosecutor's Office, has the power to petition for the prosecution of certain special crimes provided for in financial laws, hearing the opinion of the corresponding supervisory body.
6.) Apply sanctions
Impose sanctions established in financial laws, in some cases it is the competence of the Secretary of Finance and Public Credit.
7.) Approval
The SHyCP approves the articles of incorporation of the financial entities, as well as their modifications.
8.) Intervene in the National Banking and Securities, Insurance and Surety Commissions and the Retirement Savings System
The SHyCP appoints its presidents and members before its Governing Boards; annually authorizes its income and expenditure budgets; etc.
9.) Solve queries
Regarding the rules issued for financial entities.
ORGANIC STRUCTURE
Its organic structure that conditions it for the normal development of its functions is specified in its Internal Regulations of September 11, 1996, amended by Decrees published in the Official Gazettes of the Federation dated December 24, 1996, June 30, 1997, June 10, 1998 and October 16, 2000 and in its Organization Manual of January 6, 1999, which specifies the form and terms in which its functions in financial matters will be exercised.
NATIONAL COMMISSION FOR THE PROTECTION AND DEFENSE OF USERS OF FINANCIAL SERVICES
CREATION
The National Commission for the Protection and Defense of Users of Financial Services CONDUSEF was created by the Law for the Protection and Defense of Users of Financial Services, published in the DOF on January 18, 1999.
LEGAL NATURE
The CONDUSEF is a Decentralized Public body with its own legal personality and assets and with a domicile in Mexico City.
The art. 90 of the Political Constitution of the Mexican US establishes that the Federal Public Administration, for its exercise, will be divided into centralized and parastatal.
OBJECT, PRIORITY OBJECTIVE AND PURPOSE
CONDUCEF aims to
The protection and defense of the rights and interests of the public user of financial services, provided by duly authorized public, private and social sector institutions, as well as regulating the organization, procedures and operation of the public entity in charge of such functions.
OBJECTIVE priority.
To seek equity in the relationships between users and financial institutions, giving the former elements to strengthen legal security in the operations they carry out and in the relationships they establish with the latter.
Purpose
• Promote, advise, protect the rights and interests of users against financial institutions
• Arbitrate your differences impartially and
• Promote equity in relationships between them.
LEGAL FRAMEWORK
It is made up of
• Primary framework. Law for the Protection and Defense of the User of Financial Services, Organic Statute and Internal Regulations of CONDUSEF
• Supplementary framework. The Tax Code of the Federation will be applied additionally, for the purposes of notifications.
• Legal framework in its capacity as a parastatal public administration body.
USERS
The user of the CONDUEF will be the person who hires or uses or for any other reason has any right against the financial institution as a result of the operation or service provided.
CONDUCEF has powers of
1. Attention to inquiries and claims
2. Conciliation and arbitration
3. Legal guidance and legal defense of users
4. Guide financial institutions
5. Help with other authorities in financial matters
6. Issue recommendations
7. Celebrate agreements
8. Prepare studies and dissemination programs
9. Authorize the information directed to users about the financial services and products offered by financial institutions.
10. Information to the public
11. Request for information to substantiate procedures
12. Impose sanctions and enforcement measures
13. Request data from various authorities
14. Send the information required by the Congress of the Union
15. Keep the registry of Financial Services Providers
16. Approve its organic statute
ORGANIC STRUCTURE
For the fulfillment of its functions, CONDUCEF will have the following organic structure
• Governing board
• President
• Vice Presidents
• CEOs
• Delegations. Regional or, where appropriate, state or local / deconcentrated units and hierarchically subordinate to the central administration /. In each federal entity and the DF, CONDUCEF has delegations to meet the needs of users
• Other officials determined by the Organic Statute.
INSTITUTE FOR A PROTECTION OF BANKING SAVINGS
CREATION
The Institute for the Protection of Bank Savings was created by the Law for the Protection of Bank Savings published in the DOF of January 19, 1999. It had to start operations no later than fifteen days after that in which the Governing Board had remained installed, which occurred on May 6, 1999
LOCATION AND LEGAL NATURE
LOCATION
The IPAB is located within the Parastatal Public Administration
LEGAL NATURE
The institute, in accordance with the Law for the Protection of Bank Savings, is a Decentralized body of the Federal Public Administration, with legal personality and its own assets and domiciled in Mexico City. The institute has full capacity for the development of its purposes subject to the regulations for parastatal entities.
OBJECT
The institute aims
Protect savings. Provide the institutions for the benefit of the interests of the people referred to in article 1 of this law, a system for the protection of bank savings that guarantees payment, through the Assumption by the Institute, in a subsidiary and limited of the obligations established in the present law, in charge of said institutions.
LEGAL FRAMEWORK
It is made up of
• Primary framework. Law for the protection of bank savings and the organic status of the Institute
• Supplementary framework. Credit institutions law, federal law of parastatal entities, commercial code and the federal law of administrative procedures.
• Legal framework as a parastatal public Administration body. Political Constitution of the United Mexican States, organic law of the federal Public Administration, federal law of responsibility of public servants, federal law of rights, law of the institute of security and social services for workers of the State.
ATTRIBUTIONS
• Assume and pay, where applicable, guaranteed obligations
• Receive and apply authorized resources for payment of obligations
• Subscribe and acquire securities and titles
• Activities for the benefit of institutions
• Celebrate contracts
• Acquire goods
• Grant financing to multiple banks
• Precautionary administration
• Liquidator or trustee
• Obtain financing
• Participate in capital stock or equity of companies
• Participate in administration in company or company administration
• Carry out auctions, contests and tenders
• Hire personal services
• Coordinate and participate
• Defend rights
• Notify the federal tax attorney's office of irregularities
• Report or file a complaint
• Conduct evaluations
• Others
ORGANIC STRUCTURE
For the fulfillment of its functions, the Institute for the protection of bank savings has the following structure
• Governing Board
• Executive Secretary
• Public servants who leave the Organic Statute of the Institute
DEVELOPMENT BANK
Development banking is a financial intermediary specialized in channeling financial and technical resources to sectors of the economy that the government considers transcendent or a priority for the balanced economic development of the country, which is distinguished from commercial banks by the availability and opportunity of credit and the adaptation of the terms and amounts to the characteristics of the projects, by the objective criteria used in the evaluation of projects, by the expanded financial services offered and by the promotional activities in which it participates.
DEVELOPMENT BANKS
The group of development banks is made up of 7 institutions with 406 branches
NATIONAL FINANCIAL
NATIONAL BANK OF RURAL CREDIT
REGIONAL RURAL CREDIT BANKS
NATIONAL BANK FOR FOREIGN TRADE
NATIONAL BANK OF PUBLIC WORKS AND SERVICES
FINANCIERA NACIONAL AZUCARERA
NATIONAL BANK OF THE ARMY, AREA AND ARMED FORCE.
FINANCIAL ASPECTS OF DEVELOPMENT BANKING
FUND SOURCE
The bonds have a maturity term that fluctuates between 5 and 10 years and they are issued in order to finance long-term investment projects, their yield offers a better surcharge.
BANK ACCEPTANCE
Development banks use this instrument to raise money market resources instead of taking deposits from the public.
LOANS FROM FOREIGN BANKS
A large number of foreign private organizations make loans to development banks.
These organizations impose conditions on how the borrowed funds are used.
Foreign commercial banks. Source that imposes fewer conditions, they have greater liquidity so they have expanded.
Another source of funds for development banks is the Inter-American Development Bank, IDB. It has focused its policy in such a way that funds granted reach the poorest sectors and that it arrives as quickly as possible.
The World Bank provides resources and technical advice to development banks.
FEDERAL GOVERNMENT CONTRIBUTIONS
Government contributions represent a very significant source until 1980. As of this date, they were replaced with credits from abroad.
Banrural is the development bank that receives the most contributions and support from the federal government
PERSPECTIVE
CREDITS
Main use of funds. A significant amount is channeled as a qualification and avio loan, refactional, medium and long term.
INVESTMENT OF SECURITIES
Development banks buy the securities of industrial firms. In other words, they grant funds to firms in the form of foreign capital.
The acquisition of securities in the establishment of a new company gives the development bank more power to manage these companies. This benefits entrepreneurs and the bank.
The purchase of securities by the development bank can increase positive expectations for the future of the company.
COMMERCIAL BANK
Commercial banking has undergone a constant evolution always oriented towards universal banking.
In the early 1970s to date, Mexican commercial banking has gone from a specialized banking structure, to one of financial groups of a banking nature and then to a multiple banking structure, now it is projected towards one of modern financial groups as a preamble to universal banking.
SPECIALIZED BANKING
At the beginning of the 1970s, Mexican commercial banks had a horizontal specialization structure / different types of institutions had been assigned more or less well-defined areas of operation, taking into account the terms and methods followed in obtaining funds. and the terms of granting the loans. The purpose of these limitations was to maintain an adequate balance between the maturity terms of the received resources and the terms of the invested resources, seeking to preserve the liquidity of the system. Commercial banking included deposit banks, savings banks, finance companies, mortgage banks, deposit banks, and trust institutions.
The system featured three types of banking organizations
• Independent unit banks
• Branch banking
• Group banking
BANKING GROUPS
The next step was the formation of banking groups that generally had a deposit bank as their nucleus. These groups included a depository bank with its savings and fiduciary departments, a finance company, a mortgage bank, and less frequently an insurance company or other type of financial institution.
MULTIPLE BANKING
The strengthening of the banking groups gave way to the multiple banking system, which constitutes an offer of integrated services that make it easier for the client to obtain these in one place.
FINANCIAL GROUPS
When commercial banks were nationalized in 1982, the organization of commercial banks became general and a process of mergers was accentuated.
After the nationalization of commercial banks, new financial institutions appeared and existing ones were strengthened. Brokerage houses, foreign subsidiaries, factoring companies, investment companies and exchange houses emerged, and financial lessors and insurance companies were strengthened.
THE NUMBER OF COMMERCIAL BANKS
In the last five years commercial banking has evolved. Financial groups emerged. The government allowed the entry of foreign banks into the national territory in the form of subsidiaries, which increased the total number of banks, leading to the creation of federal bodies to strengthen the solvency of banks and the merger of the National Banking Commission with the Securities Commission.
AUTHORIZATION AND SUPERVISION
The first contact that a commercial bank has with the financial authorities is when it obtains authorization from the SHyCP to organize and operate as a multiple banking institution. To obtain authorization, the group planning the bank's organization must submit an application that shows how it expects to operate the bank.
Once the bank is authorized to operate, it is required to provide periodic reports describing assets and liabilities, its profit and loss statement, its capital structure, its foreign exchange operations and other aspects. The bank is also subject to periodic inspections by the National Banking and Securities Commission to verify its adherence to the provisions of the Law on Credit Institutions, mainly, as well as to specify its financial situation.
FINANCIAL ASPECTS OF DEVELOPMENT BANKING
Source of Funds
The development bank obtains almost all its resources through government contributions and loans from national, foreign or international entities
Deposits
Some development banks offer checking account deposit services at a very low rate compared to commercial banking.
Bank bonds
The bonds have a maturity term that fluctuates between 5 and 10 years and they are issued in order to finance long-term investment projects, their yield offers a better surcharge.
Bank acceptances
Development banks use this instrument to raise money market resources instead of taking deposits from the public.
Loans from foreign banks
A large number of foreign private organizations make loans to development banks.
These organizations impose conditions on how the borrowed funds are used.
Foreign commercial banks. Source that imposes fewer conditions, they have greater liquidity so they have expanded.
Another source of funds for development banks is the Inter-American Development Bank, IDB. It has focused its policy in such a way that funds granted reach the poorest sectors and that it arrives as quickly as possible.
The World Bank provides resources and technical advice to development banks.
Contributions from the federal government
Government contributions represent a very significant source until 1980. As of this date, they were replaced with credits from abroad.
Banrural is the development bank that receives the most contributions and support from the federal government
Perspectives
It is thought that the certificates will be one of the instruments that can institutionalize development banks.
There is also interest on Certificates of Deposit as they pay higher interest in lower. If they can be offered in the financial and capital markets, it could raise the image of the development bank and improve the outlook for the market for other instruments with a low interest rate.
Uses of funds
Credits
Main use of funds. A significant amount is channeled as a qualification and avio loan, refactional, medium and long term.
Investment of securities
Development banks buy the securities of industrial firms. In other words, they grant funds to firms in the form of foreign capital.
The acquisition of securities in the establishment of a new company gives the development bank more power to manage these companies. This benefits entrepreneurs and the bank.
The purchase of securities by the development bank can increase positive expectations for the future of the company.
However, the purchase of securities by the Development Bank is hampered by the small number of buyers and sellers. One way to solve the problem is the formation of Sincas risk capital investment companies by national financial company, through which they sell shares of the companies to investors and then buy securities of companies that they wish to promote with the funds received from the public..
BANK OF MEXICO
BACKGROUND
The first definitive step in the fundamental legislation of Banxico had its origin in the Constituent Congress of Querétaro in 1917, with the initiative presented by the Federal Executive of Constitutional Article 28 that ordered the creation of a single issuance bank controlled by the Federal Government.
In the years 1936 and 1941, new Banxico Organic laws were issued and through reforms to ordinance 41 the decentralized public body called Banxico was created, ratifying said legal nature and the Organic Law of December 31, 1984.
CREATION OF AN AUTONOMOUS CENTRAL BANK
The state will have a central bank that will be autonomous in the exercise of its functions and in its administration. Its main objective will be to ensure the stability of the purchasing power of the national currency, thereby strengthening the leadership of national development that corresponds to the State. No authority may order the bank to grant financing.
LEGAL NATURE
Banxico has had a different legal nature throughout its existence. It was born as a public limited company in majority state participation and later it became a decentralized public body.
THE BANXICO IS NOT PART OF THE FEDERAL PUBLIC ADMINISTRATION
Article 90 of the Constitution establishes that the public administration was centralized and parastatal.
Banxico, a decentralized agency of the Federal Government, becomes the new person of public law referred to in this law and retains the ownership of all assets, rights and obligations that make up the first estate. In other words, the central bank is not part of the federal public administration.
THE BANXICO AS AN AUTONOMOUS ORGANISM OF THE STATE
The government is the means by which the State exercises the Public Power, through the Executive, Legislative and Judicial powers. The faculties of each of these are established to achieve a certain balance between them.
PURPOSES
The purposes that Banxico has to fulfill for the economic functioning of the country are.
• Provide the economy with national currency
Banxico has the power to manufacture its banknotes or to entrust their manufacture to third parties, as well as to put both monetary signs into circulation through the operations that its law authorizes.
• Promote the healthy development of the financial system
One of the missions developed by central banks throughout their history has been to ensure the proper functioning and stability of the financial system. In the case of Banxico, its law has reserved various functions to achieve this purpose.
1. Regulate intermediation and financial services
The LBM and the Financial legislation confer on said central //// Institute the power to issue general provisions to structure and conduct activities in financial institutions.
2. Operate as creditor of last resort for credit institutions
The classical doctrine considers that the need for a lender of last resort arises when a bank run threatens the stock of working capital and the level of economic activity
3. Operate with credit institutions
Operate with financial entities
According to the LBM, it can carry out various operations with financial institutions. They are between them
Granting financing to credit institutions, constituting deposits in credit institutions and securities of the country or abroad, receiving money deposits, receiving deposits of titles or securities in custody or in administration of financial institutions in the country, etc.
4. Punish intermediaries
In congruence with the attributions of authority, it may impose sanctions on financial entities that aim to preserve the effectiveness of the public order rules established in the WB and in this way provide for the purposes of monetary or exchange regulation, the healthy development the financial system, the proper functioning of the payment system and the protection of public interests.
5. Promote the proper functioning of payment systems.
Credit institutions have a function of great importance such as establishing the payment system, which empowers the various economic agents to carry out transactions and exchange goods and services.
Banxico, in order to promote the proper functioning of payment systems, assumes a double function in the way of operating said system, on the one hand as a direct participant and on the other as a regulator.
6. Inspection visits
In the 1998 LBM Reform project, it is proposed to give said Bank the power to carry out inspection visits to financial entities, through the administrative units established by its internal regulations, in order to review and verify, with the opportunity that is required, the records, systems, documentation and any other means in which the information of the financial intermediaries costs, that is necessary to evaluate the due compliance with the provisions issued by the bank itself.
7. Other functions.
• Grant credit
• Federal Government financial agent
• Manage international reserves.
NATIONAL BAKING AND STOCK COMMISSION
Background
The immediate antecedents of the current CNBV are the National Banking Commission and the National Securities Commission.
1) National Banking Commission (1924)
2) National Securities Commission (1926)
Creation
This body was created by the law of the CNBV (LCNBV), published in the Official Gazette of the Federation on April 28, 1995. The reasons for their consolidation into a single decentralized body, the functions that corresponded to the previous Commissions, They were mainly the need to strengthen the regulatory and supervisory capacity of the federal government to face it successfully.
New Law of the CNBV (1995)
The three main objectives pursued with this new law are:
• Provide the supervisory entity with a regime that seeks adherence to technical criteria regarding the authorization, regulation and supervision of entities that are part of the financial sector.
• Long-term planning and continuity in the application of supervision guidelines and strategies that seek to maintain and promote the healthy and balanced development of financial systems in protection of the public's interests.
• That the countries have highly trained personnel with experience in accumulated supervision tasks.
Object
The CNBV will have the objective of supervising and regulating, within the scope of its competence, financial institutions, in order to:
• Ensure its stability and correct operation, and
• Maintain and promote the healthy and balanced development of the financial system as a whole, in protection of the interests of the public.
Its purpose will also be to supervise and regulate individuals and companies when they carry out activities provided for in the laws relating to the aforementioned financial system (Article 2 LCNBV).
Legal nature
Deconcentrated body of the SHCP.- The CNBV according to its 1995 law is a decentralized body of the SHCP with technical autonomy and executive powers.
Body with technical autonomy and executive powers
The CNBV law has two fundamental elements in mind for this body to efficiently meet its objectives:
1) Technical Autonomy
When speaking of technical autonomy, it is necessary to refer to the freedom of action that the law unquestionably confers on the Commission to:
• Supervise without question or interference;
• Appoint and remove officials at the level of vice presidents by the Governing Board;
• Have legal mechanisms of automatic execution for the application of sanctions to violators of financial laws;
• Have its own governing and administrative bodies;
• Have administrative and technical organic separation from the SHCP;
• Hire the staff of their offices and appoint their General Directors and the rest of the staff;
• Have their own offices and furniture assigned;
• Contract with suppliers on their own account to acquire supplies and work material; and
• Enter into agreements with national and international organizations with supervisory and regulatory functions similar to their own.
2) Executive Powers
The powers of this body are executive by virtue of the fact that they are not subject to the approval of the SHCP, which allows it a capacity for dynamic and timely response to situations that may have negative consequences on the development and stability of the financial system.
3) National Institute for the Supervision of the Financial System.
Autonomous Body
The powers constitute the basis that must sustain the response capacity that every supervisory and control body must have, in a dynamic environment subject to permanent and often unpredictable changes.
The autonomy of the supervisory bodies guarantees the correct application of the law that regulates intermediation activities, allows channeling the internal resources of a country, internal savings, towards productive investment since internal investment is a necessary and mandatory condition to sustain genuine processes of development and economic growth.
Supervision at the Central Bank
Advantage:
• Achieves joint action of monetary and supervisory policy.
• It allows more direct and immediate access to the information required by the banking sector, which facilitates the correct design and execution of an adequate monetary policy.
• They have strong incentives, more than any other State Agency, to maintain a solid financial system due to their role as a lender of last resort.
• When it is independent from other public powers, it contributes significantly to effective banking supervision.
Disadvantages:
• Conflicts of interest may arise between monetary stability and financial stability, by giving priority to monetary policy objectives, being able to make decisions that are not necessarily correct under the terms of the Banking System or vice versa.
• Internal supervisory activities harm their independence or their performance, due to the incompatibility of objectives.
• When exercising the role of resource providers, the segregation of functions between this and financial supervision may result from a duplication of functions.
Legal framework
The legal framework of the CNBV in accordance with its law comprises two aspects.
• The laws, regulations and circulars that provide it with powers in its capacity as supervisory body of the Mexican financial system, and
• The regulations that are applicable to it due to its legal nature as a decentralized body of the SHCP or in the case of Banxico or decentralized.
Faculty of supervision
Supervision Justification
The supervision of financial entities by the CNBV is justified by virtue of the fact that they perform functions of great importance to promote growth and economic development.
Credit Auxiliary Organizations and Activities.
Classification of Auxiliary Credit Organizations and Activities.
Auxiliary credit organizations are without non-bank intermediaries, constituted as joint-stock companies, which the SHCP and CNAVB authorities in the case of credit unions, discretionally authorize to contribute to the development of credit activity, representing a complement of this activity in a specialized way.
The law emphasizes that auxiliary organizations belong to credit and not to credit institutions. In this order she classifies them:
Auxiliary Credit Organizations
• General deposit warehouses
• Credit unions
• Financial leasing companies
• Financial factoring companies
• Loan savings companies, and
• Others that other laws consider as such.
Auxiliary credit activities
• Regular and professional purchase and sale of foreign currency (Exchange House).
GENERAL DEPOSIT WAREHOUSES
General deposit warehouses are defined as corporations authorized at the discretion of the SHCP, to carry out the storage, storage, conservation or transformation of goods or merchandise; financing its depositors and issuing certificates of deposit and press bonds.
The different activities carried out by general warehouses constitute a strong stimulus for the increase in agricultural and industrial production and for the increase in commercial activity.
In accordance with the General Law of Organizations and Auxiliary Credit Activities, general deposit warehouses may be of three kinds:
• Those that are intended to receive goods or merchandise of any kind in deposit and carry out the other activities referred to in this law, with the exception of the fiscal deposit and granting of financing;
• Those that are also to receive merchandise destined to the fiscal deposit regime; and
• Those who grant financing in accordance with the provisions of this law; It must be subject to the minimum capitalization requirements established by the SHCP, through general provisions.
The basic operations of the warehouses are referred to:
• Storage, storage or preservation of goods or merchandise; in other words, the storage institution will dedicate itself to storing, keeping and keeping the goods deposited by the depositors in good condition. Mod
• The issuance of certificates of deposit and pledge bonds. In other words, it has the exclusive power to issue documents with the category of securities called certificates of deposits and pledge bonds. The former are intended to serve as an instrument of disposal, transferring to the acquirer the
• Grant financing with a guarantee of goods or merchandise, stored in warehouses of their property or in leased warehouses, that they manage directly and that are protected with pledge bonds, as well as on merchandise in transit protected with certificates of deposit. Said financing can be used ac
• Provide fiscal warehouse services, as well as any other expressly authorized to the general warehouses of deposit in the terms of the customs law. This refers to receiving merchandise from abroad, they are the previous payment of the corresponding customs duties
• The transformation of merchandise, without essentially changing its nature.
• Additional services: Marketing and transportation of goods or merchandise. It will certify the quality, as well as value the goods or merchandise. Pack and pack the goods or merchandise received in deposit, as well as place marb
• Related operations:
Requirements for the storage of goods.
a) Deposit agreement.
b) Issue a certificate of deposit.
c) Issue good of pledge
d) Enabling warehouses.
FINANCIAL LESSOR.
The financial leasing companies are public limited companies, authorized at the discretion of the SHCP to carry out financial leasing activities.
Article 25 of the LGOAA tells us that, by virtue of the financial lease contract:
»The financial lessor undertakes to acquire certain assets and to grant their use or temporary enjoyment, for a forced term, to a natural or legal person, forcing the latter to pay as consideration, which will be settled in partial payments, as agreed, an amount in determined or determinable money, which must value the acquisition of goods, financial charges and other accessories, and will adopt, at the expiration of the contract, any of the terminal options referred to in article 27 of this law "
Therefore, the characteristics of the financial lease will be:
a) Agreement and precision of the contract object
b) Prior acquisition by the lessor of the goods subject to the lease, from a third party or from the future lessee.
c) Subsequent concession of its use and temporary obstacle, for a forced term to the lessee.
d) The amount that the lessee must be obliged to cover is established.
e) At the end of the lease, the lessee must adopt some option of: sale, extension of the term of the lease or participation in the profit that it produces with the sale of third-party assets.
Legal Framework: It is mainly made up of articles 24 and 28 of the LGOAAC and the Basic Rules for the operation of Financial Leasing Companies, issued by the SHCP and published in the DOF of August 29, 1990.
Advantage
Leasing operations produce economic effects very similar to those of bank credit. However, they have some additional qualities, highlighting:
• Full financing of the value of the leased asset
• Financing of the costs involved in the sale of the asset.
• Credit to LP
• Greater responsiveness than bank credit
• Ease of adapting the payment profile to the liquidity needs of the tenants
• Low risk credit by having the guarantee of the leased asset
• Credit related to capital formation in productive sectors.
Operations
Financial lessors can only carry out operations that are expressly authorized by the LGOAAC, among them we have
a) Acquire assets to lease them
b) Grant credits for the development of small and medium-sized companies, in order to finance, mainly fixed assets.
c) Leasing is a specialty of the financial service, with which companies have the option of obtaining a loan to finance assets instead of acquiring them and thereby promoting working capital flows to them, since it does not imply an investment essential by the user
Funding source
Within the structure of survey sources of the leasing companies, the
• Credits and loans from national insurance banks or foreign financial entities as well as from suppliers, manufacturers of the goods subject to leases.
• Issue subordinated obligations and serial credit titles, for placement among the general investing public.
• Other credits
Legal nature of the contract
Financial leasing is a complex operation that participates in the characteristics of a credit, leasing and sale operation as it requires an outlay from the lessor who maintains the payment of periodic benefits, grants the temporary use of the goods that he acquires and can also be agreed the sale of those assets by the end of the lease.
Characteristics of the contract
a) Perfection of consent, the tenant who has already located the supplier who has the good he needs, goes to the lessor to request the purchase of the same in the terms contained in the purchase order, whose term to grant acceptance by the lessor to coincide with the promise of the lessee with the supplier of the good. The lease must be granted in writing in the faith of the notary public
b) Direct-object consists of the creation of rights and obligations between the parties, indirect object is the conduct that both the lessee and the lessor must comply with, direct object consists of the creation of rights and obligations between the parties, material object is the good that is given in lease and the money that the tenant will pay in partial payments.
c) Rights and obligations of the financial lessor, that the lessee make partial payments in amount of money, which will cover the acquisition value of the goods that the lessor covered the supplier of the good that he leased, in case of dispossession that affect the temporary use of the goods, the property, the lessor has the right to exercise the actions or defenses with respect to the good that it leased, it must be indicated in the policies as pr
d) Rights and obligations of the lessee in rights to deliver the goods that are leased. Deliver the necessary documents to the tenant, when the property is not delivered directly and the tenant remains as a legitimate person to receive it. Legitimize the lessee to carry out actions or defenses on her behalf in the event of dispossession, act of third parties or authorities that affect the property. If you acquire an asset due to default by the lessee
CREDIT UNIONS
They are public limited companies with variable capital, authorized by the CNBV to serve the partners as a means of obtaining financial resources, satisfying the productive needs of inputs and making their organizational and administrative processes more efficient.
These organizations have the authority to operate in the economic branches in which the activities of their partners are located, who may be individuals or legal entities, which require the authorization of the company's board of directors for the transfer of their shares.
Said companies can negotiate better credit conditions with banks and obtain loans, contribute to the capitalization of their associates, solve problems related to the lack of guarantees, as well as carry out joint actions regarding the industrialization and commercialization of their products.
characteristics
• The participation of the partners is incorporated in credits and their responsibility is limited up to the amount of their contributions. To operate it must have the authorization of the CNBV, any modification to the articles of incorporation must be submitted to the approval of the CNBV, the duration of the social contract is indefinite.
• To operate you must have the discretionary authorization of the CNBV
• The operations carried out will be exclusively those authorized by law
• Any modification to the articles of incorporation must be previously submitted for approval by the CNBV
• The duration of the social contract is indefinite.
Object
The purpose of credit unions is to be a financial intermediary that, in accordance with the explanatory statement of its first regulatory law, were created in order to bring credit to strata of the population that due to lack of guarantees and resources are not subject to Bank credits.
Legal framework
In the legal framework, its organization and operation are regulated by the LGOAAC, and by the General provisions issued by SHCP, banxico and the CNBV for this purpose. Who is in charge of inspection and surveillance
Advantage
The advantages that it has are
• Bargaining power for your credits
• Productive management of your idle resources
• Greater transparency in the management of your credit and interest management
• Financial management of your resources with professional criteria
• Training of partners in the analysis of investment projects
• More effective technical assistance and supervision
• Taking advantage of economies of scale
• Rigorous selection of partners
Operations
Credit operations can only operate with its partners
Credit union operations
Active
• Facilitate the use of credit to its partners as well as provide a guarantee of the credits that contract this.
• Acquire shares, bonds and keep them in portfolio
Passive
• Receive deposits in a savings account at sight
• Receive loans from partners and credit institutions, and from suppliers
• Issue credit titles in series or mass, except subordinated obligations of any kind.
FINANCIAL FACTORING COMPANIES
They are those corporations, authorized by the SHCP to finance accounts receivable, providing professional collection services, research, credit analysis.
Importance
The importance of these companies is that they play an important non-bank intermediation function in the Mexican system aimed at financing commercial activity, through the acquisition of credit rights which are based on the supply of goods and services.
It is a function that is developed mainly in support of small and medium-sized companies
Operations
Financial factoring companies are authorized to provide various types of services
a) Non-recourse or pure factoring. The operating mechanics of non-recourse factoring is virtually the same as that of recourse factoring, with the only difference that the former consists of the purchase of unexpired receivables, represented by invoices, against / receipts, and credit instruments., etc. a factor entity in exchange for collecting these documents immediately.
The type of pure factoring is almost no longer used in Mexico because the factor entity assumes the risk of bad debts and the decision on the risk will have to be evaluated with respect to the documents
b) Recourse factoring. This type of factoring is the most practiced in Mexico and consists in that an entity sells its portfolio of clients or documents receivable, not due, represented by invoices, counter-receipts, credit titles, etc., to a factor entity in exchange for collecting from these documents immediately to be able to continue producing and not have to wait for your client or buyer to pay you.
c) Factoring suppliers. This modality of factoring is granted to those entities that are suppliers of large public and private entities, such as self-service chains, department stores and those that handle a variety of suppliers that require liquidity at any given time.
Advantages and disadvantages
Advantage
• Eliminates the problem of lack of liquidity
• Cash flow leveling
• Inventory leveling
• Decrease in operating costs
• Information of high credit quality is obtained
• Does not generate liabilities
• Greater freedom in the selection of suppliers
• The immediate availability of financing without increasing the company's liabilities
• Greater liquidity that allows taking advantage of opportunities
• The reduction of collection work and support for analysis work
Disadvantages
Little use due to little knowledge
Accounts receivable financing is very expensive
Limited geographic coverage
The selectivity of the documents by the factor does not reduce collection costs
Mechanics of use
The hiring process may vary according to the policies and way of working of each factor entity.
Required documentation
It varies according to the factoring entity, since a financial and legal study is made to determine the operation risk
Process
To start with this operation, the entity, in this stage called prospectus, only needs to answer the request for lines to the factor entity of its choice, attaching documentation
Contract bases
Financial factoring companies may enter into promising factoring contracts
By signing said contract, the factor acquires the obligation to respect the credit line for the established period, provided that the prospectus here called the assignor complies with the stipulations indicated therein. The purpose of such a contract is to document the factoring line.
The signing of contracts requires that they have powers for acts of ownership
• Financial factoring contract. It serves to exercise each provision of the factoring line, serving as an annex to the factoring promise contract, which identifies the characteristics of the transferred documents.
The notification
It is a legal element that perfects the transfer of credit rights against third parties.
Sources of funds
The main source of financing for factoring companies is the bank fund. This offers a certain advantage to those companies that are linked to a commercial bank.
International factoring
There are 3 types
• Direct factoring factor
• Network factoring
• Inter./company factoring
SAVINGS AND LOAN SOCIETIES
Savings and loan companies are limited liability companies, with legal personality and their own equity of non-profit variable capital, of indefinite duration in which the responsibility of the partners is limited to the payment of their contributions, authorized by the SHCP for the collection resources, exclusively from its partners through acts causing direct or contingent liabilities, the company being obliged to cover the principal and financial accessories of the resources raised. The placement of these resources will be made only between the partners themselves or in investments for the majority benefit of
Generally its scope of operation is regional and its partners have some common bond
Mission
Promote savings and mutual aid in the society that nobody serves, to operate, with high clarity and at competitive prices, financial services predominantly aimed at the middle and popular class, as well as micro and small businesses.
Features
The [role of savings banks begins to exceed the objectives originally defined by their organizations, to become potential promoters of regional and local development in some areas of the country.
Operations
• Receive deposits only from their partners and minors, financially dependent on them
• Services. An additional service, which in practice these companies have been providing, consists of insurance that covers the beneficiaries of the partner, an amount that varies between two and four times the amount saved, in addition to the balance of any loan contracted by the company. The placement of liabilities in investments must be for the majority benefit of the partners.
Operating remnants
The remnants of operations presented by the companies, once the expenses incurred in carrying out their own operations have been deducted, must be allocated in their entirety to
• Works of social benefit
• Private
• Establish a reserve for the development of the savings and loan company.
• Distribution between partners.
Background sources
The sources of funding for the SAPs are their own capital, the acquisition of resources from their partners and loans from national credit institutions.
Organic structure
The general assembly of partners is the supreme body of the company. The administration and supervision of the companies will be in charge of a board of directors, a director or general manager, a vigilance committee, a credit committee and the other bodies that the meeting itself may designate, which will have the powers that indicated in the bylaws and other applicable provisions.
EXCHANGE HOUSES
Exchange houses are those corporations authorized at the discretion of the SHCP, to carry out in a regular and professional manner, purchase, sale and exchange operations with the public, within the national territory and are subject to the supervision and surveillance of the CNBV.
General rules
The main provisions contained in these rules are
• They may agree that in carrying out their operations the currencies and their counter value be delivered deferred, but in this case the delivery must be made no later than the second banking business day following the one on which the operation is contracted.
• You must send to the how or sell to credit institutions in the country, all documents in charge of third parties denominated in national currency that they receive
• They must settle the operations they carry out with each other through transfers of funds on bank accounts, certified checks, cashier's checks or cash, with the understanding that if there is more than one operation between the same exchange houses, only the differences may be settled, so agree the parties
• When they receive documents denominated in national or foreign currency as a result of foreign exchange transactions, they must register the account that appears in the catalog of accounts established by the CNBV, precisely on the date they were collected.
Operations with currencies exempted from authorization
There are 2 types of operations that can be carried out with currencies and that are not subject to the authorization of the SHCP
• Those that are not considered habitual and professional activities that they are. Operations with currencies related to the provision of services, nor the acquisition of foreign currency from the sale of goods, carried out by establishments located in the border strips and free zones of the country and by other companies that, due to their normal activities, carry out operations
• Those known as retail exchange houses and that do not have the minimum share capital required by the SHCP to be considered as wholesale exchange houses.
• Purchase and sale of banknotes, as well as pieces minted in common metals, with legal tender in the country of issue
• Purchase and sale of travelers checks denominated in foreign currency
• Purchase and sale of metal pieces minted in the form of coins
• Purchase of sight documents denominated and payable in foreign currency, in charge of financial entities up to an equivalent amount of US $ 10 million for each transaction
Foreign exchange operations that require authorization
• Purchase or collection of sight documents denominated and payable in foreign currency, in charge of financial entities without limit per document
• Sale of documents at sight and payable in foreign currency that exchange houses issue at the expense of credit institutions in the country, branches and agencies abroad of the latter or foreign banks.
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