In addition to offices throughout Latin America, the organization now has a footprint in North America, Asia and Europe. The bank now boasts 1, branches and more than 20 million customers. Its revenue stream includes retail banking operations, stock brokerage services, insurance and mutual fund management. Like some several other Latin American banks, Santander Brasil is actually part of a larger European bank — in this case, Spanish-based Santander.
In addition to retail banking, credit cards and home loans, the organization offers asset management and commercial banking services. The bank plays a key role in executing income transfer programs and putting national housing policies into effect. In addition to banking products, it offers insurance services and retirement plans. It also provides traditional corporate banking services as well as investment banking operations and merger and acquisition support.
They have forty-five business days to make a decision. Criteria for approval includes employment and training considerations, technological contributions, and contributions to productivity and competitiveness.
The Commission may reject applications to acquire Mexican companies for national security reasons. The significant economic reforms passed in have the potential to increase investment particularly in the newly liberalized energy and telecommunications sectors. Mexico has experienced significant increases in investment in automobile production and currently ranks as the seventh largest producer of automobiles in the world.
Other sectors, including aerospace and medical device production, have also seen significant growth in recent years. Mexico maintains open conversion and transfer policies. In general, capital and investment transactions, remittance of profits, dividends, royalties, technical service fees, and travel expenses are handled at market-determined exchange rates. The establishment of an automated clearinghouse for cross-border financial transactions between the U. Federal Reserve and the Bank of Mexico has facilitated payments between financial institutions in both countries.
In , in an effort to prevent money-laundering transactions, Mexico imposed limits on the amount that could be deposited in USD. This provision was effective; it reduced the amount of dollars repatriated to the United States by over 50 percent. In January , the head of the Financial Intelligence Unit disseminated a resolution outlining its authority to freeze the assets of designated persons and entities, namely those involved in money laundering, terrorism, or terrorist financing.
In , the mechanism contemplated in the Federal Law for the Prevention and Identification of Transactions with Illicit Proceeds was established. According to the U. Expropriations are governed by international law, and require rapid fair market value compensation, including accrued interest. Investors have the right to international arbitration for violations of this or any other rights included in the investment chapter of NAFTA.
Mexico's legal system is based on civil law that is derived from Roman law and the Napoleonic Code. The Constitution is the fundamental law.
Mexico utilizes a form of jurisprudence constant, which means that the decisions of the Supreme Court are binding on lower courts only upon five consecutive and uninterrupted decisions approved by at least eight justices when in plenary sessions or by at least four justices when in chambers. By , Mexico is scheduled to be moving to a system of oral trials, but they are making slow progress. Mexico's commercial code, which dates back to , was most recently updated in Mexico has four specialized courts regarding fiscal, two for labor, and agrarian law.
The Federal Court of Fiscal and Administrative Justice is an autonomous body that decides disputes governing fiscal entities, the interpretation and completion of contracts, the responsibilities of public servants, and administrative authority disputes. The Federal Conciliation and Arbitration Boards CABS are tripartite groups made up of workers, employers and government representatives which rule on issues between workers and employers.
The Federal Court of Conciliation and Arbitration has jurisdiction over labor issues between the federal government or the Federal District and their contracted laborers. The Superior Agrarian Court and the Unitary Agrarian Courts are autonomous and have jurisdiction over land and water rights, agricultural legislation, and agricultural business.
The judicial branch is nominally independent from the executive, although the CABs are run through local party systems, and there have been allegations that they are corrupt. Pending judicial reform will make the Attorney General's Office independent of the executive. Mexico's Bankruptcy law was established in Declaring bankruptcy is legal in Mexico and it may be granted to a private citizen, a business, or an individual business partner. Bankruptcy lending reforms of and created Mexico's first effective legal framework for granting collateral. The average bankruptcy filing takes 1.
There have been numerous cases in which foreign investors, particularly in real estate transactions, have spent years dealing with Mexican courts trying to resolve their disputes. Often real estate disputes occur in popular tourist areas such as the Yucatan Peninsula. Due to the legal complexities involved in this type of transaction, U.
S investor may also wish to contact the local U. Embassy to keep them appraised of the status of the case. ICSID has resolved four of these cases, while ten are still pending. The Foreign Investment Law eliminated export requirements except for maquiladora industries , capital controls, and domestic content percentages to be more in line with their treaty obligations under NAFTA.
Foreign investors already in Mexico at the time the law went into effect could apply for a modification to their prior export commitments. Foreign investors who failed to do this, continued to remain subject to them.
The Mexican federal government passed a new fiscal reform package in which eliminated the Flat Rate Corporate Tax IETU and the cash deposit tax IDE ; raised the value-added tax VAT in the border region from a rate of 11 percent to 16 percent to make it the same as the rest of the country; and increased the income tax ISR to as high as 35 percent for individuals earning more than 3 million pesos annually.
The government also imposed a 10 percent tax on capital gains from stock sales and eliminated consolidation for holding companies. Firms will now be authorized to deduct only 50 percent of expenses related to employee benefits. Other changes include the imposition of a 16 percent VAT on temporary imports except for certified maquiladoras.
Following these changes the process for the Government of to refund VAT reimbursements for companies that had previously received them has significantly slowed, with companies reporting several months delay. For more information on obtaining certification, consult the Diario Oficial dated January 1, Most taxes in Mexico are federal; therefore, states have limited opportunity to offer tax incentives.
However, Mexican states have begun competing aggressively with each other for investments, and most have development programs for attracting industry. This includes discounted or even free access to land, employee training programs, and reductions of the 2 percent state payroll tax, as well as real estate, land transfer, and deed registration taxes, and even new infrastructure, such as roads. Four northern states --Nuevo Leon, Coahuila, Chihuahua and Tamaulipas -- have signed an agreement with the state of Texas to facilitate regional economic development and integration.
Investors should consult the Finance, Economy, and Environment Secretariats, as well as state development agencies, for more information on fiscal incentives. Tax attorneys and industrial real estate firms can also be good sources of information. Consulates have reported that the states in their consular districts have had to modify their incentive packages due to government decentralization. Many states have also developed unique industrial development policies. Companies interested in investing in industrial activity in Mexico need to follow the IMMEX guidelines closely, preferably in close consultation with locally based legal advisors.
Other recent changes include the elimination of the partial income tax exemption for maquiladoras which are now required to pay the standard corporate rate of 30 percent, rather than the reduced rate of Under these programs, most favored nation import duties on listed inputs and components used to produce specific products are eliminated or reduced to a competitive level.
These programs comply with NAFTA provisions because import duty reduction is available to all producers, whether the final product is sold domestically or is exported to a NAFTA country. The gradual elimination and reduction of import duties concluded in , and the tariff structure now has six basic rates: There has been a recent trend of companies investing in research and development in Mexico and moving from making not only exclusively maquiladora type investments.
Recently the auto industry has led the way, but other industries such as aerospace and medical devices have also begun to see Mexico as a destination for top engineering and research talent and not just comparatively low-wage labor. Mexican labor law requires that at least 90 percent of a company's employees be Mexican nationals. In cases of specialized positions employers can hire foreign workers as long as the percent of foreigners in specialized positions does not exceed 10 percent of the workers in that particular category.
The GoM encourages foreign companies to train local staff in specialized areas. Mexico does not have any policy of forced localization for data storage, nor must foreign IT providers turn over source code or provide backdoors into hardware or software. Foreign and domestic private entities are permitted to establish and own business enterprises and engage in all forms of remunerative activity in Mexico, except those mentioned above.
Private enterprises are able to freely establish, acquire and dispose of interests in business enterprises. The two most common types of business entities are corporations and limited liability partnerships. Under these legal entities a foreign company may operate an independent company, a branch, affiliate, or subsidiary company in Mexico. The rules and regulations for starting an enterprise differ for each structure. A Can be percent foreign-owned; B Must have a minimum of 50, Mexican pesos in capital stock to start; C Must have minimum of two shareholders, with no maximum.
Board of Directors can run the administration of the company; D The enterprise has an indefinite life span; E Free transferability of stock ownership is permitted; F Operational losses incurred by the Mexican entity or subsidiary may not be used by the U. A Can be percent foreign-owned; B Must have a minimum of 3, Mexican pesos in capital stock to start; C Must have a minimum of two partners to incorporate a corporation with limited liability. The partners must manage the company but 50 is the maximum number of shareholders; D Exists only when the business purpose and partners remain the same; E Restricted transferability of partnership shares.
Any changes in the partnership composition may cause the partnership to be liquidated; F If structured properly, it may offer tax advantages by allowing operational losses incurred by the Mexican entity to be used by the U. According to the most recent World Bank Study "Doing Business in ", Mexico dropped one ranking in for ease of registering property, going to on the list.
Article 27 of the Mexican Constitution guarantees the inviolable right to private property. Expropriation can only occur for public use and with due compensation. Mexico has four categories of land tenure: Under President Salinas de Gotari in , Mexico amended article 27 of the Constitution, eliminating the constitutional right to form new ejidos or communal owned land. The reform also allowed ejido members to acquire full land rights or lease the land to non-ejido members; however the process, governed by Mexico's Agrarian Law, requires regulation of the land, division into parcels, and granting of individual titles before it can be offered for sale to non-ejido members.
Mexico's census found that 50 percent of all land was held by ejidos. Despite a proposal in to do away with the restriction, foreigners are still prohibited from acquiring title to residential real estate in so-called "restricted zones" within 50 kilometers approximately 30 miles of the nation's coast and kilometers approximately 60 miles of the borders. In all, the restricted zones total about 40 percent of Mexico's territory. Nevertheless, foreigners may acquire the effective use of residential property in the restricted zones through the establishment of a year extendable trust fideicomiso arranged through a Mexican financial institution that acts as trustee.
Under this trust, the foreign investor obtains all property use rights, including the right to develop, sell, and transfer the property. Real estate investors should, however, be careful in performing due diligence to ensure that there are no other claimants to the property being purchased. In some cases, Fideicomiso arrangements have led to legal challenges. The protection of IPR rights is spread across several government authorities.
Banking and investment in Mexico have changed radically over the past decade, and the economic events that prompted these changes will have a significant. MEXICAN BANKING AND INVESTMENT IN TRANSITION - In this site isn`t the same as a solution manual you buy in a book store or download off the web.
The Mexican Customs Service Aduanas plays a key role in ensuring that illegal goods do not cross Mexico's borders. Legislative reform long identified by USG and others - such as granting customs ex-officio authority and providing the authority to seize suspected counterfeits that are in-transit - have been dormant and there is reluctance on the part of the GOM to seriously address these issues. In addition, the GOM has failed to articulate a coherent strategy to deal with IP crimes in the digital environment.
Despite strengthened enforcement efforts by Mexico's federal authorities over the past several years, weak penalties and other obstacles to effective IPR protection have failed to deter the rampant piracy and counterfeiting found throughout the country. Mexico suffers from widespread commercial infringement that incurs significant losses to Mexican, U.
There are many issues that have made it difficult to improve IPR protection in Mexico including legislative loopholes, lack of coordination between federal, state, and municipal authorities, a cumbersome and lengthy judicial process, and widespread cultural acceptance of piracy and counterfeits. In addition, the involvement of Transnational Criminal Organizations TCOs that control the counterfeit market in parts of Mexico continues to impede federal government efforts to improve IPR in Mexico. Their involvement has further illustrated the link between IPR crimes and illicit trafficking of other goods including arms and drugs.
Customs handled seizure cases from amounting to 13,, seized articles. In , IMPI conducted 4, inspection visits and seized 6,, counterfeit and pirated goods. General areas of concern for IPR include protection of intellectual property in the digital environment, a lack of customs ex-officio authority, lack of transshipment enforcement, a lack of penalties for IPR crimes overall, little to no coordination between the federal government and the states, and no legislative priority for IPR issues. Though Mexico signed the Patent Cooperation Treaty in Geneva, Switzerland in , which allows for simplified patent registration procedure when applying for patents in more than one country at the same time, it is necessary to register any patent or trademark in Mexico in order to receive protection under local law and claim an exclusive right to any given product based on intellectual property.
Patent and Trademark Office and IMPI have a work sharing agreement in place to help applicants expedite the examination of patents in each country. The Patent Prosecution Highway agreement allows a patent holder in one country to fast track the examination of that same patent in the other country in order obtain the corresponding patents faster and more efficiently.
Los Morales Mexico City Tel.: The Mexican government has been making steady progress on this issue in the last few years. On a quarterly basis, these agencies must report to the President on progress achieved toward reducing the regulatory burden. In December , the government replaced the Regulatory Moratorium Agreement to ensure agencies streamline their regulatory promulgation processes, with the Quality Regulatory Agreement.
The new agreement intends to allow the creation of new regulations only when agencies prove that they are needed because of an emergency, the need to comply with international commitments, or obligations established by law. On April 29, the Mexican Congress passed secondary legislation to implement the constitutional competition policy reform. The law provides the Commission with more power than previous years. For instance, it authorizes the Commission to eliminate barriers both to competition and free market entry anywhere in the economy except in the telecom sector, which is governed by its own competition authority and to identify and regulate access to essential production inputs.
Moreover, new enforcement tools allow the Commission to ban specified individuals from holding positions in a sanctioned company and provide authority to impose fines for anticompetitive behavior. In addition, the federal law on administrative procedures has been a significant investment policy accomplishment. The law requires all regulatory agencies to prepare an impact statement for new regulations, which must include detailed information on the problem being addressed, the proposed solutions, the alternatives considered, and the quantitative and qualitative costs and benefits and any changes in the amount of paperwork businesses would face if a proposed regulation is to be implemented.
The Mexican government, with the OECD, the private sector, and several think tanks, has worked to streamline bureaucracy and procedures, with a particular focus on several Mexican states. Mexico made significant improvements in business registration and registration of new firms, such as the elimination of the requirement to have minimum capital to create a new business and the creation of a collateral registry.
Although Mexico still needs to approve some legal reforms to make this registry stronger, it was a step in the right direction to unify information on collateral under some sort of centralized registry. These improvements have had positive effects on foreign participation. Many local businesses and successful industrialists tend to prefer joint investments with foreign companies that can make modern technology available acting as technical partners.
Also, organized labor sometimes prefers to deal with companies having substantial foreign capital since such companies tend to be more agreeable to the collective-bargaining process. Despite these measures, many difficulties remain. Foreign firms continue to list bureaucracy, slow government decision-making, lack of transparency, and a heavy tax burden among the principal negative factors inhibiting investment in Mexico, but with some state and municipal governments having more pro-business policies. However, the OECD and the government will continue working to improve the regulatory process at the subnational level.
The Secretariat of Public Administration made considerable strides in improving transparency in government, including government contracting and involvement of the private sector in enhancing transparency and fighting corruption. The Mexican government has established several Internet sites to increase transparency of government processes and establish guidelines for the conduct of government officials.
Normateca provides information on government regulations; Compranet allows for on-line federal government procurement; Tramitanet permits electronic processing of transactions within the bureaucracy thereby reducing the chances for bribes; and Declaranet allows for online filing of income taxes for federal employees. Finally, there is need for greater coordination between federal and regional legislation and implementation.
It is important to consolidate the private sector collective action in order to mandate greater compliance with the current legal framework, not only by government authorities but also by companies and businesses involved in the public procurement process. Reforms creating better regulation and supervision of financial intermediaries and fostering greater competition have helped strengthen the financial sector and capital markets.
These reforms, coupled with sound macroeconomic fundamentals, have created a positive environment for the financial sector and capital markets, which have responded accordingly. Foreign institutions hold more than 70 percent of banking assets and banking institutions from the U.
Foreign entities may freely invest in government securities. The Foreign Investment Law establishes, as a general rule, that foreign investors may hold percent of the capital stock of any Mexican corporation or partnership, except in those few areas expressly subject to limitations under that law. Regarding restricted activities, foreign investors may also purchase non-voting shares through mutual funds, trusts, offshore funds, and American Depositary Receipts. They also have the right to buy directly limited or nonvoting shares as well as free subscription shares, or "B" shares, which carry voting rights.
Foreigners may purchase an interest in "A" shares, which are normally reserved for Mexican citizens, through a neutral fund operated by one of Mexico's six development banks. Finally, state and local governments, and other entities such as water district authorities, now issue peso-denominated bonds to finance infrastructure projects. These securities are rated by international credit rating agencies. This market is growing rapidly and represents an emerging opportunity for U. Since the Mexican Peso Crisis that almost left Mexico insolvent, the banking sector has strengthened considerably. The GoM has introduced reforms to buttress the banking system and to consolidate financial stability.
These reforms include creating a more favorable economic and regulatory environment to foster banking sector growth by reforming bankruptcy and lending laws, moving pension fund administration to the private sector, and raising the maximum foreign bank participation allowance. The bankruptcy and lending reforms passed by Congress in and made it somewhat easier for creditors to collect debts in cases of insolvency by creating Mexico's first effective legal framework for the granting of collateral.
Pension reform allows employees to choose their own pension plan. Allowing banks or their holding companies to manage these funds provides additional capital to the banking sector, while the increased competition permits fund managers to focus on investment returns. The banking sector remains highly concentrated, with several large banks controlling a significant market share, and the remainder comprised of regional and smaller banks. The Mexican Tax Authority has approved the opening of several new banks since , including Wal-Mart Bank and Prudential Bank, but the sector's competitive dynamics and credit quality are still being driven by six large banks Banamex, Bancomer, Santander, HSBC, Scotiabank, and Banorte —the first five of which are foreign-owned with a total market share of 74 percent.
As part of the fiscal reform, Mexico became one of the first countries to implement the Basel III accord which establishes standards for bank capital and liquidity. Other aspects of the law establish clearer procedures for the support and liquidation of troubled banks, and also provide more certainty to the process by which banks can recover collateral in cases of default. Despite having high levels of liquidity, banks in Mexico have historically been reluctant to provide credit in part due to limited consequences for nonpayment and lengthy legal processes for collection.
In , Congress approved a financial reform to increase bank lending to priority areas and projects such as to small and medium size enterprises, infrastructure projects, technology innovation and patent development. The reform facilitates commercial banks making more and lower interest loans, thus giving a more active role to the Mexican development banks, which have a more flexible mandate to focus on financial inclusion.
It also boosts competition in the sector.
The Banco de Londres issued paper money for private not public debt. Consequently, there has been an important loss of produce valued at tens of millions of dollars combined with significant losses in tourism and commerce. His first priority was to reduce Mexico's external debt; in mid the government reached agreement with its commercial bank creditors to reduce its medium- and long-term debt. The Mexican Tax Authority has approved the opening of several new banks since , including Wal-Mart Bank and Prudential Bank, but the sector's competitive dynamics and credit quality are still being driven by six large banks Banamex, Bancomer, Santander, HSBC, Scotiabank, and Banorte —the first five of which are foreign-owned with a total market share of 74 percent. The establishment of an automated clearinghouse for cross-border financial transactions between the U.
Commercial banks are now subject to periodic lending reviews. The reforms also make it easier for banks to collect on bad loans, one of the obstacles that was hindering more lending to the private sector. The reform has improved the bankruptcy process, fostered more expeditious resolution of cases through the creation specialized commercial courts, and strengthened protection for financial users with the creation of a Bureau of Financial Institutions.
There are two main state-owned enterprises SOEs in the energy sector. Petroleos Mexicanos PEMEX is in charge of running the hydrocarbons oil and gas sector, which includes upstream, mid-stream, and downstream operations, and is the most important fiscal contributor to the country. The Federal Electricity Commission CFE is the other main state-owned company and is in charge of the electricity sector. In August , a historic energy reform bill was signed, overhauling the entire system. It amends the constitution, allowing the private sector to enter into competitive contracts that include profit sharing, and license contracts with PEMEX for the exploration and extraction of hydrocarbons.
Mexico still retains full ownership of its hydrocarbon reserves, and the bill does not privatize PEMEX or CFE; however, it allows private sector companies to participate in downstream operations, such as refining, transport, commercial supply, and electricity generation. On January 1, retail gasoline market will be open to full competition without restriction on gasoline imports or the necessity to involve PEMEX. Energy reform Forthcoming legislation is also expected to established national content percentages to promote the development and inclusion of Mexican suppliers to the industry.
Subsequent to this allocation, the remaining oil and gas fields as well as new offshore fields and land-based unconventional resources will be opened to private sector bidders for development rights during successive rounds each year through Changes to the Mexican constitution will also open up power generation and commercial supply to the private sector, allowing companies to compete with CFE.
Although private investment in electricity transmission and distribution is allowed by these reforms, CFE will remain the sole provider of transmission and distribution services and will own all transmission and distribution assets. The constitutional reform transitions CFE from a state monopoly to a parastatal. CFE will still exercise control over the transmission and distribution, but will no longer be the sole electricity provider.
Independent power generators were authorized to operate in , but were required to sell their output to CFE or use it to self-supply.