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Mexico's regulator monitoring several sofipo companies over low capital levels

Mexico's CNBV banking regulator is closely monitoring five popular finance companies, or sofipos, that were found to have capital levels below the minimum regulatory requirement, El Economista reported.

Microlenders Proyecto Coincidir S.A. De C.V. S.F.P., Caja de la Sierra Gorda, Perseverancia, DeVida Hipotecaria and Operadora Reforma were reportedly below the required capital levels last February, triggering the regulator to put the companies into the "early warning" stages category three and four, which represents capital levels of between 56.99% and 55.99%.

CNBV classifies the 44 sofipos operating in Mexico into four capital level categories, where the first category requires a 130% capitalization. Companies with smaller capital levels slide into lower categories, where they are monitored by the regulator and are required to present a plan to rectify their situation.

In April, Francisco Mier Sainz, the head of sofipo supervision at the CNBV, voiced concerns over capital levels within the sector, as many companies often struggled to show stable capitalization due to frequent fluctuations in their coffers.

"We have to aim to increase the levels of capitalization," the official said, adding that an economic crisis or other problems in any region would have the potential to impact the entire sector. He also said that several sofipos in Mexico City were forced to close for a few days after the September 2017 earthquake as they did not have adequate contingency measures in place.