Introduction
The United States has recently issued designations against three Mexican financial institutions—Intercam, CI Banco, and Vector—accusing them of supporting money laundering linked to fentanyl trafficking. These designations are beginning to affect the banking trust business, valued at 11 trillion pesos in Mexico.
Impact on the Trust Market
In recent days, various organizations—mainly FIBRAS and investment funds—have announced actions related to these designations. Some have removed CI Banco as the trustee of the fideicomisos it administers, while others are analyzing the situation to avoid disrupting these instruments’ operations.
CI Banco holds 26% of the multiple-bank trust market in Mexico, managing over 3 trillion pesos in these instruments. Intercam, on the other hand, administers 67.941 billion pesos with just 1% participation.
Relevance of CI Banco’s Position
HR Ratings recently downgraded CI Banco’s trust business rating to Negative Outlook, stating that a lower rating would result if CI Banco or its subsidiaries default on their obligations.
Moody’s predicts that some originators will start procedures to replace CI Banco as trustee or remove it where it acts as a fiduciary receiving payments from originators’ portfolios.
Actions by FIBRAS and Investment Funds
FIBRA Inn and Terrafina, real estate investment trusts, intend to remove CI Banco as the issuing trustee in the fideicomisos it administers. Other institutions, such as Fibra Storage, FIBRA Macquarie, or FibraHotel, are considering similar actions.
BlackRock, an investment fund, is reviewing the potential consequences of the US orders on its CI Banco-held trust.
CI Banco’s Trust Business Background
CI Banco’s trust business began in 2009 and has grown, both organically and through acquisitions. As of September 2024, it administered 2,849 trust contracts, with most being corporate (70%), followed by restricted zones (18%), non-bank financial institutions (7%), and government (3%).
According to regulations, the trust amounts of a banking institution do not belong to its assets. In case of license revocation, the resources are returned to the beneficiaries.
Key Questions and Answers
- What are the US designations against Mexican financial institutions? The United States has issued designations against Intercam, CI Banco, and Vector for allegedly supporting money laundering linked to fentanyl trafficking.
- How does CI Banco’s position impact the trust market? CI Banco manages over 3 trillion pesos in trusts, representing 26% of the multiple-bank trust market in Mexico. Its designation has led to removals and analyses by various organizations.
- What actions are FIBRAS and investment funds taking? FIBRAS and investment funds like BlackRock are reviewing their CI Banco-held trusts, with some removing CI Banco as trustee in fideicomisos.
- What is CI Banco’s trust business background? CI Banco’s trust business started in 2009, growing to administer 2,849 trust contracts by September 2024. Most are corporate, with restricted zones, non-bank financial institutions, and government trusts making up the remainder.
- What happens to trust amounts if a bank’s license is revoked? According to regulations, the trust amounts of a banking institution do not belong to its assets. In case of license revocation, the resources are returned to the beneficiaries.
