Fears of concentration in the Afores market dissipate: expert

With the withdrawal of the financial group Inbursa, owned by Carlos Slim, from the bid for the purchase of Banamex -with everything and its retirement fund manager (afore)-, the Retirement Savings System (SAR) would have a ” new” participant with Grupo Financiero Mifel, of Daniel Becker, or with the businessman Germán Larrea who are still in the dispute.

Afore Citibanamex occupies the second position in the largest number of registered accounts with more than 8.8 million, only behind Afore Coppel.

In addition, it manages 771,696 million pesos, which ranks third in the category, according to data at the end of October.

Carlos Ramírez, former president of the National Commission of the Retirement Savings System (Consar), told El Economista that it is good news that the SAR has a new participant because the doubts of some risk of market concentration are eliminated.

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It is very good news in the sense that there will be new players in the SAR. For the financial system in general and for the pension system, it is good news that it is a different group. Managing an Afore is not easy, the new group will have to take care that there is no brain drain and that it retain the general structure that has characterized it as a reasonably good administrator”, said the now economic and political consultant for Integralia.

Prior to the withdrawal of Inbursa, financial groups such as Banco Azteca or Banorte were interested in the sale of Banamex, by the US conglomerate Citi, which would have put on the table a market concentration in the Retirement Savings System, since both groups have the large Afores in the market.

Afore XXI Banorte manages more than 1 trillion pesos; Afore Azteca, 211,881 million pesos and Afore Inbursa, 149,496 million pesos. Regarding the number of registered accounts, Azteca has 8.1 million, Banorte 7.6 million and Inbursa more than 1 million.

HSBC, Santander and Ve por Más were also interested financial institutions that do not have an Afore service, but in the end they withdrew from the bid.

Bidders will find a chiaroscuro SAR

For the former public official, any of the two bidders that are still in the bid for Banamex will find a strengthened SAR with a fairly good medium and long-term perspective thanks to the reform of the Social Security Law of 2020 that will gradually increase employer contributions from 2023 to 2030.

“If one of these two groups, before the end of the year, wins the bid, they would receive a giant afore and with an expectation that the contributions will begin to increase from January 1 and until the rest of the decade,” Ramírez said. .

However, for the Integralia consultant, a not so positive aspect for a new SAR member is the 0.57% cap on the commissions charged by the Afores on the worker’s balance.

“The return on profits has decreased due to such a drastic reduction in commissions. It is no longer such a profitable business, although they will have more assets to manage, the business is still not as profitable as it was before (…) They arrive at a business that is undergoing structural change, ”he said.

The National Commission of the Retirement Savings System reported that the 10 administrators had a profit of 3,992 million pesos, at the end of October, which meant an annual drop of 70% in real terms.

Sale would take place at the end of 2022

Despite there being no precise date, President Andrés Manuel López Obrador commented a few weeks ago that the sale of Banamex could be resolved before the end of the year.

The President has also made public his desire that the next owners of Banamex be Mexican, that the buyers be up to date with their taxes and that the corresponding taxes for the transaction be paid.

He has also emphasized that Banamex’s cultural heritage remains in Mexico and that workers are not fired.

As time passes and they are less interested, Citigroup can opt for another alternative for the divestment of its business in Mexico and that is through a Public Offering of Shares. (With information from Édgar Juárez).

Allocates 4.44% to national equities

Shares, attractive to invest in the long term: Afore Citibanamex

The director of Risks at Afore Citibanamex, León de Paul, considered that Mexican equities or shares of local companies “look good as long-term investments.”

He said that Mexico is a market that has very large companies listed on the Stock Market, which allows them to withstand moments of crisis like the ones we are experiencing today,” he pointed out.

He added that the country has experience in terms of high interest rates and inflationary periods, which helps companies maintain strategies and plans to withstand “crises.”

Afore Citibanamex invests 4.44% or around 34,263 million pesos in national variable income or shares of Mexican companies of all the resources it manages (771,696.8 million pesos), according to data from the National Commission of the Retirement Savings System ( consar).

León de Paul stressed that the Mexican stock market has performed better than other world indices in this period of high volatility in global stock markets.

The main index of the Mexican Stock Exchange (S&P/BMV IPC) accumulates a fall of 2.43% so far this year, a lower percentage when compared to other benchmarks such as the US Nasdaq, which loses 27.8%; S&P 500, which registers a drop of 15.5% and the Dow Jones, which falls 5.9%, in the same period

He stressed that Mexico is one of the few countries that has positive real rates, which makes it more attractive. (With information from Judith Santiago)

santiago.renteria@eleconomista.mx