Law and regulation of Covid-19 loan moratoriums in Mexico

No.

As at 7 April 2020, no legislation has been implemented or proposed for a moratorium on loans. Other sources of legislation and private sector initiatives provide alternative options for borrowers.

Force Majeure 

Mexican legislation Article 2111 of the Federal Civil Code, which applies in all states in Mexico, contemplates the occurrence of unforeseen circumstances (also referred to in common law jurisdictions as Acts of God) and force majeure in general. 

In addition, the Federal Civil Code is supplemented by the Commercial Code, which regulates commercial relationships where contracts do not have a specific provision regarding such events. 

CNBV Press Release Recommendation

On 27 March 2020, the Mexican Securities and Exchange Commission (CNBV) issued a press release detailing special accounting criteria for banks regarding past-due and current portfolio reporting, to allow them to implement moratoriums on loans in force and effect as of 28 February 2020. The press release is not legally binding.
As a result, Mexican banks are introducing measures to allow loan holders to defer payments up to 6 months under a relief plan put forward by the country’s banking association (ABM) amid the COVID-19 crisis.

The measures will apply to credit cards, automotive credit, payroll loans, mortgages, small- and medium-sized companies (SMEs) and personnel, and will benefit those clients who request it, if they have been directly or indirectly affected by COVID-19.
Additionally, the states of Jalisco, Guanajuato, Guerrero, Aguascalientes and Oaxaca have already implemented measures to ease the impact of the crisis on the financial sector, including loans, and funds for self-employed workers, among other initiatives. 

Some banks have, on their own accord, implemented the following moratoriums on loans: 

Banorte: the bank will grant its clients a 4-month moratorium on credit card loans, car loans, payroll loans, mortgages, personal loans and corporate loans to SMEs. 

BanBajío: the bank will grant its clients up to a 6-month moratorium for credit card loans, car loans, payroll loans, mortgages and corporate loans and loans to SMEs. 

Banregio: the bank will assess each client individually and will offer moratoriums personalised to individually-assessed needs. Moratoriums may be granted for credit card loans, personal loans, car loans, payroll loans, corporate loans and loans to SMEs .

BBVA: the bank will grant its clients a 4-month moratorium for car loans, personal loans, credit card loans, simple loans for SMEs and associated corporate cards. Also, the bank will put into practice a business plan to lower the monthly payment on credit cards to clients who request it.

Citibanamex: the bank will grant its clients a 6-month moratorium for credit card loans, car loans, payroll loans, mortgages and loans to SMEs.

HSBC: the bank will grant its clients a 6-month moratorium for  credit card loans, car loans, payroll loans, mortgages and loans to SMEs.

Inbursa: the bank will assess each client individually and will offer moratoriums personalised to individually-assessed needs. Moratoriums may be granted for credit card loans, personal loans, car loans, payroll loans, corporate loans and loans to SMEs.

Santander: the bank will grant its clients a 4-month moratorium for credit card loans, car loans, payroll loans, mortgages and corporate loans to SMEs.

According to the CNBV press release, all moratoriums granted must be put in place within a period of 120 days following 28 February 2020 through the restructuring or amendment to the respective loans with moratoriums up to 6 months.  

The moratorium is not mandatory, and clients must request the benefit (opt in) with their respective banks if they wish to be included within the moratorium offered by each of them.

N/A

See point 1.1 above.

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See point 1.1 above.

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See point 1.1 above.

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See point 1.1 above. 

As stated, no official legislative or executive act has been issued by the Federal Government, nonetheless the moratorium implemented by the banks as stated above does cover corporate loans to SMEs and consumer loans.

The affected lenders in the scheme set out by the Mexican banks are the banks themselves. 

Yes, the moratorium implemented by the banks applies only to the Mexican branches of participating banks. 

As there is no official legislative or executive moratorium on loan agreements, each bank has set different options regarding cut-off dates to their respective moratoriums. None of the moratoriums apply to loans defaulted prior to COVID-19 and, in general, borrowers have to be up to date with their payments to apply for a moratorium on their loans.

The moratoriums established by the banks in general apply both to principal and interest. 

No, it must be requested by clients individually (both consumers and corporate clients (SMEs)) or according to the moratorium scheme granted by each bank.

Yes, they may be covered by the moratorium; however, borrowers have to be up to date with their payments to apply for a moratorium on their loans and request such benefit of their banks.

Yes, nothing in the CNBV’s press release or other official communication imply the possibility to restrict the lender’s ability to terminate loan agreements for events of default other than non-payment; most banks will have event of default clauses in their contracts that will determine if the lender may terminate a loan under such events.

Furthermore, a case could be made that both parties may terminate any contract or agreement based on unforeseen circumstances or force majeure without any responsibility or penalty for either of them but having to pay any outstanding amounts owed to each other, if they are able to prove force majeure in accordance with the Federal Civil Code (mentioned above).