Sheinbaum and bankers: Agreements

The Banking Convention marked a new cycle in the relationship between bankers and Mexican President Claudia Sheinbaum.

At the first convention she attended in her capacity as Chief Executive, it was actions, more than words, that made it clear that the current government will not engage in confrontation with the bankers.

The vision that Sheinbaum proposes is pragmatic.

It wants to collaborate with banks to expand access to credit for the Mexican population.

All signs indicate that there will be dialogue and agreement.

This was reflected in the presidential wish he announced in the first half of last April, when he asked for a reduction in interest rates on loans offered to the country's micro, small, and medium-sized businesses.

To date, according to the official assessment, only 4.4% have bank financing.

This productive segment represents 99.8% of the country's establishments, with 5.4 million economic units, and only 242,000 of them have access to financing.

The bankers and Finance Secretary Édgar Amador got to work, and at the banking convention, just a few days after the presidential request, they reached a general agreement to achieve the goal of reducing interest rates for MSMEs.

The head of public finances also left his mark, with a calm and open personality. He clearly had the political skills to reach agreements with bankers. He was much more media-friendly.

In the spotlight of the event, which was attended by around 2,000 people, there was no tension between the parties.

On the contrary, there were only good faces and good manners.

Despite the fact that just days before the meeting, there was a scandal caused by President Ernesto Zedillo's statements regarding his criticism of the Judicial Reform and what he considers the death of democracy in Mexico, and the presidential response that followed, with criticism of Fobaproa and the alleged benefit to "businessmen and politicians."

At the banking convention, as if a huge parenthesis had been opened, the Mexican president did not mention the topic.

And the bankers, in only brief responses, referred to the rescue of deposits and the benefit of having a strong and solid banking system today.

They focused on how interest rates can be reduced for MSMEs, which represent more than 90 percent of the country's productive units.

President Sheinbaum did emphasize that in Mexico, credit to the private sector represents only 33% of GDP, while in Brazil it reaches 72%.

This means that only a third of the Gross Domestic Product is allocated to business credit.

The overall objective of the agreement is summarized as follows: to increase the number of companies with bank credit by 3.5% annually and achieve financing coverage of at least 30% in that population by the end of the six-year term.

The agreement reached is just the beginning.

For bankers, this is a good start because the government, through development banks, will offer guarantees of 70% and possibly more to back the loans bankers grant.

It was also agreed to establish seven working groups to analyze the various issues and make progress on them.

There are seven main thematic areas: financial education, digitalization and formalization, supply chains, regulatory simplification, specialized commercial courts, public guarantees, and access to financial information.

Two issues are of greatest concern to both sides: informality and the intensive use of cash.

Emilio Romano Mussali, the new president of the ABM, said that in Mexico, 74% of purchases under 500 pesos are made in cash.

He stated that the objective is to limit the issuance of high-denomination bills, establish certificate systems for compliance with tax and social security obligations, and digitize federal and local government transactions.

For the new banker's leader, cash remains an obstacle to the growth of the financial system because it limits banks' innovation, increases costs, encourages informality, facilitates illicit activities, and hinders social mobility.

Romano comes from the public sector. He knows how to pull the strings in government. Julio Carranza, his predecessor, played a great role in the final years of the previous administration.

A new relationship is coming between the government and bankers. It seems they've found a path to understanding. We'll see.