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Mexico payroll banks eye lower costs under AMLO; Colpatria-Citibank deal closes

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Mexico payroll banks eye lower costs under AMLO; Colpatria-Citibank deal closes

S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.

AMLO sweeps to Mexico's presidency

* Left-leaning Andrés Manuel López Obrador, more commonly known as AMLO, will succeed Enrique Peña Nieto as Mexico's next president after securing at least 53% of the votes in the country's presidential election. AMLO pledged to crack down on corruption as part of his campaign and maintained that he would rather have no free trade deal under renegotiations of the North American Free Trade Agreement than have a bad one for Mexico.

* With 64 out of 96 Senate seats accounted for, AMLO's MORENA party had won 29 together with its allies, making it unlikely it would gain control of the upper house and potentially restricting the president-elect's ability to pass big-spending policies.

* Mexican lenders involved in the payroll loan market will urge AMLO's incoming government to pass new regulations aimed at reducing credit costs in the sector. Mexico's Amden association of payroll companies will submit a proposal to authorities that would look to lower the cost of payroll loans by providing lenders with more guarantees.

Reorganizing

* Banco Macro SA was allowed to purchase shares of Banco del Tucumán SA from the Argentine province of Tucumán. The sale was authorized through a law passed by the province's legislature, which also permitted the possibility to merge both entities. The province of Tucumán holds a 10.00% stake in Banco del Tucumán while Banco Macro owns 89.93%.

* Colombia's Scotiabank Colpatria SA, a unit of Bank of Nova Scotia, closed its acquisition of the consumer business and small and medium-sized enterprise operations of Citibank - Colombia SA.

* The Peruvian government sent to the country's Congress a bill that proposes the absorption of troubled Banco Agropecuario by a new financial entity to be called Mi Agro. The new entity will be managed as a second-tier bank. The government's move follows a similar action from Peruvian agriculture group CONVEAGRO, in which it asked Congress to authorize the liquidation of Agrobanco but, instead of creating a new entity, proposes for the creation of a special fund to replace the bank.

Bolstering Chile's cyber health

* The Chilean government is studying amendments to draft legislation aimed at forcing banks to allocate part of their compulsory capital for cybersecurity measures. The Senate's finance committee is considering incorporating the rules with the country's new banking law, in line with the capital requirements of the second pillar of the Basel standards.

* Banco de Chile started legal action against a Hong Kong-registered company, Ketuo Trade Ltd., demanding that the firm return about $5.5 million that was allegedly siphoned into one of its bank accounts during a cyberattack that hit the Chilean bank in May.

* An ATM computer systems expert warned during a Senate hearing in Chile that the country's ATM system is obsolete and represents the weakest link in the cybersecurity of the banking sector.

Featured this week on S&P Global Market Intelligence

* Argentina, Brazil lead LatAm CDS price spike in Q2: After a relatively stable first quarter, sovereign credit default swap prices in Latin America ticked higher in the following three-month period amid a general downturn in investor sentiment for most emerging markets and growing global trade and geopolitical tensions.

* Despite political risks, LatAm sovereign ratings outlooks mostly stable in Q2: Political and fiscal volatility threatened economic stability in several Latin American countries during the second quarter of 2018, but stable sovereign outlooks from major rating agencies continued to outnumber negative ones amid an ongoing election cycle in the region.

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

* Ratings Roundup: A summary of various ratings actions on Latin American financial institutions and economies.