Citi sees ‘little risk’ of Mexico eliminating ATM fees, CFO says
A recent legislative proposal from the leftist political party in Mexico to eliminate ATM and other banking fees stands little chance of becoming law, a top Citigroup executive said Wednesday.
Asked about the proposal at an investor conference in New York, Chief Financial Officer John Gerspach said Citi, which operates a large retail bank in Mexico, is not worried about policymakers moving forward with the proposed ban.
The proposal, unveiled last month by Senate leader Ricardo Monreal, would prohibit banks from charging fees for ATM withdrawals, bank transfers and printouts of bank balances, among other services. Both Monreal and President Andres Manuel Lopez Obrador — or AMLO, as the president is known — are members of the leftist Morena party.
“I see little risk of those propositions being enacted,” Gerspach said.
Gerspach pointed to comments made by President Lopez Obrador, who last month, before his inauguration, dialed back his support for the ban after it sparked a sell-off in bank stocks and ignited fears of further anti-business measures from the administration. The president was sworn in on Saturday.
"My basis for that is just a quick reaction of both on the part of the finance minister, and then importantly AMLO himself, in scaling all of that back and saying, 'Wait a minute, no, no, no,' " Gerspach said.
Among U.S. banks, Citi stands apart for its commitment to Mexico, where it operates about 1,500 branches under the brand Citibanamex. The New York company two years ago said it would invest $1 billion in its Mexican franchise to add ATMs and improve branch technology.
During the conference, which was sponsored by Goldman Sachs, Gerspach said Citi generates just over $1 billion in fees per year in its Mexican retail division. That money would be at risk if the president changes his stance.
“If it all went away, it would be a billion dollars of revenue,” Gerspach said. Still, he added, it's unlikely that the proposed ban would put all sources of fee-based revenue in Mexico at risk.
“So I’m not exactly worried,” he said.