Mexico Financial Reform Seen Improving Credit Data, Collections Amy Guthrie - Dow Jones
go to original April 18, 2013

MEXICO CITY - Mexico is likely to create a universal credit bureau that adds information from government lenders and nonregulated entities to existing data from commercial banks as it seeks to increase access to financial services, Standard & Poor's said in a report Wednesday.

The government of Mexican President Enrique Pena Nieto, who took office in December, plans to announce a financial reform in the coming days aimed at raising Mexico's low penetration of consumer credit and banking services. According to World Bank data, 27% of Mexicans over the age of 15 have a bank account, compared with 56% in Brazil and 88% in the U.S., while only 13% of Mexicans over 15 have a credit card.

Private sector credit as a percentage of gross domestic product in Mexico stands at 27.5%, one of the lowest rates in Latin America, S&P said. The rate in Brazil is 53.5% and in Chile it's 77.9%. Excluding credit from government run mortgage companies and other nonbank lenders, private lending falls to just 18% of Mexico's GDP.

S&P pegs much of the blame for limited credit on Mexico's large informal labor force, as around 60% of employment is on a cash basis. A weak track record of paying back loans, limited consequences for nonpayment and a challenging legal environment for collections are also issues in Mexico.

Read the rest at NASDAQ

We invite you to add your charity or supporting organizations' news stories and coming events to PVAngels so we can share them with the world. Do it now!