Mexico: Stocks plunge 5.81% over move to slash bank fees

[MEXICO CITY] Mexico's main stock index plunged nearly six percent Thursday after President-elect Andres Manuel Lopez Obrador's introduced legislation to dramatically slash the fees banks can charge clients.

Dragged down by banking stocks, the BMV index plummeted more than six percent after Senate majority leader Ricardo Monreal introduced the bill, before recovering ground slightly to close down 5.81 per cent.

The bill would eliminate or curb what banks can charge for things including ATM withdrawals, late payments on credit cards, inter-bank transfers, minimum amounts for credit card terminals and cashiers' checks.

It is the latest turbulence for the Mexican markets.

Stocks and the peso also plunged last week when Lopez Obrador announced he would halt construction on a new US$13-billion airport for Mexico City.

The anti-establishment leftist has worried the business sector with rhetoric about overhauling Mexico's economic model when he takes office on December 1, though he has sought to soothe fears for the future of Latin America's second-largest economy with a team of market-friendly economic advisers.

Some analysts, however, said the banking bill probably gave a hint of how he will manage the economy.

"This is the type of interventionist idea that will emerge in the coming weeks and months," said Eurasia Group in a note.

"There will likely be a reaction and efforts by the banking community to stop or water down the proposal, but they are unlikely to succeed given that Lopez Obrador generally distrusts banks and traditional financial institutions."

AFP