MEXICO Law and Practice Contributed by: Pablo Perezalonso Eguía, Isabel Ortiz-Monasterio Borbolla and Alejandro Mosqueda Pérez, Ritch, Mueller y Nicolau, S.C.
banks, including transferring critical functions and restructuring liabilities. • Resolution planning – banks designated as systemically important are subject to recovery and resolution planning to minimise systemic risks. • Continuity of critical functions – the LPAB mandates that resolution efforts prioritise continuity of essential services, such as deposit-taking and payment processing. • Bail-in mechanisms – while not fully devel - oped, certain tools allow for creditor and shareholder loss absorption to reduce reli - ance on public funds. Insolvency Preference Rules Applicable to Deposits Under Mexican law, depositors enjoy priority in insolvency proceedings. • Deposit preference – insured deposits covered by the IPAB (up to 400,000 UDIs – approximately USD135,000) are paid first from the liquidation proceeds. The IPAB Law guarantees deposits in the above-mentioned amounts per person per institution. • General deposits – uninsured deposits have a higher priority over other unsecured creditors but rank below secured creditors. Upon liqui - dation, payment preferences are established as follows. (a) Secured or pledged credits. (b) Liquid and enforceable labour liabilities. (c) Tax liabilities. (d) IPAB-related claims, including guaranteed obligations. (e) Bank deposits, loans, and other liabilities. (f) Preferred subordinated debentures. (g) Non-preferred subordinated debentures. (h) Shareholders.
Unsecured obligations cease to accrue interest upon liquidation, and derivatives or repurchase transactions are terminated and netted. • IPAB reimbursement – as shown above, the IPAB, after compensating insured depositors, has a claim against the failed bank’s estate, ranking after insured depositors and before other unsecured creditors. Conclusion Mexico’s legal and regulatory framework aligns closely with international standards, including the FSB Key Attributes. The framework empha - sises depositor protection, systemic stability, and orderly resolution, with clear priorities in insolvency proceedings and tools to manage failing banks effectively. 9. ESG 9.1 ESG Requirements Banking Regulatory Requirements Related to ESG in Mexico Mexico’s financial sector is undergoing sig - nificant regulatory changes to align with global environmental, social and governance (ESG) standards. These adjustments aim to integrate sustainability into financial practices and reflect Mexico’s commitments to reducing greenhouse gas emissions and combating climate change. Below are the key ESG-related banking regula - tory requirements currently shaping the sector. Mexican sustainable taxonomy Launched in March 2023 by the Ministry of Finance and Public Credit, the sustainable tax - onomy is a cornerstone of Mexico’s ESG frame - work. It serves as a science-based classification tool to identify sustainable economic activities across six sectors.
385 CHAMBERS.COM
Powered by FlippingBook