MEXICO Law and Practice Contributed by: Pablo Perezalonso Eguía, Isabel Ortiz-Monasterio Borbolla and Alejandro Mosqueda Pérez, Ritch, Mueller y Nicolau, S.C.
Binding Rules of Conduct Bank employees are not subject to a formal Bankers’ Oath; however, internal codes of ethics and conduct, often required as part of corporate governance practices, ensure that employees adhere to the highest professional and ethical standards. 4.2 Registration and Oversight of Senior Management Refer to 4.1 Corporate Governance Require- ments . 4.3 Remuneration Requirements In Mexico, banks are required to implement, maintain, and continuously review a “Remuner - ation System” that encompasses all forms of compensation, whether monetary or otherwise. These requirements, established under the CUB, aim to align remuneration practices with prudent risk management and long-term stability. Individuals Subject to the Remuneration Requirements The Remuneration System applies to all individ - uals whose roles significantly impact the bank’s risk profile, including members of the board of directors, senior management, and employees in administrative, control, and business units. The system must account for the risks inherent to the activities performed by each role. Relevant Remuneration Principles Banks must design their Remuneration Systems
• The board of directors must approve the Remuneration System and oversee its proper functioning, ensuring that the Remuneration Committee exercises independent judgment. 2. Policies and risk alignment: • Establish policies and procedures governing ordinary and extraordinary remuneration in line with reasonable risk-taking. • Consider risks faced by the bank, including liquidity, solvency, stability, and reputational risks, while making compensation decisions. • Tailor remuneration schemes to each job profile, with adjustments for the specific risks associated with their activities. 3. Performance and extraordinary remuneration: • Performance evaluations for extraordinary remuneration must account for results observed over a reasonable period, not solely the financial year, to ensure alignment with long-term risk outcomes. • Methods to mitigate risk include adjusting remuneration through risk-related factors, deferring payments, extending evaluation periods, and reducing short-term incentives. 4. Flexibility in risk scenarios: • The system must allow for reductions or suspensions of extraordinary remuneration in cases of losses or materialised risks exceed - ing expectations. 5. Continuous review and disclosure: • Banks must ensure continuous review of their remuneration policies by the Remunera - tion Committee and the Comprehensive Risk Management unit.
based on the following principles. 1. Responsibilities and governance:
• Define the roles of corporate bodies, such as the Remuneration Committee, responsible for implementing remuneration schemes.
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