A recent proposal by Mexico's president-elect Andrés Manuel López Obrador to merge state-run development banks Banco Nacional de Comercio Exterior S.N.C. Institución de Banca de Desarrollo and Nacional Financiera S.N.C. Institución de Banca de Desarrollo could spur a growth in loan disbursements in the country, Moody's said.
The move would boost the granting of credit and raise domestic demand, analysts from the rating agency told El Financiero. While the details of the plan are still unclear, the proposed merger would help the next government, which will take power in December, to strengthen the local economy, Moody's reportedly said.
The president-elect, popularly known as AMLO, on Sept. 4 pledged to merge the banks, known as Bancomext and Nafin.
The proposal is a part of a strategy to fortify Mexico's development banking sector in a bid to lower credit costs for small and medium-sized companies in the country. "[The] two institutions can merge to offer better services," AMLO reportedly said at a meeting with business leaders.
Meanwhile, Moody's analyst Felipe Carvallo highlighted the need for banks in Mexico to invest in cybersecurity following the string of cyberattacks that hit the financial sector earlier in the year, particularly after the massive SPEI-heist in April and May where about $15 million was stolen from banks and which has raised serious questions of the country's defenses against hackers.
In early August, Moody's said it expected Mexico's development banks to increase lending during AMLO's administration but warned their capitalization needs to be bolstered in order to counter a rapid rise in the granting of loans.
In a report, Moody's noted that government sources will be needed to support the banks' capital ratios if credit growth becomes too fast and remains high over extended periods of time. The impact on each public bank will vary depending on its asset quality and profitability, the rating agency said.