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Adapt or fight: the Afores options with a lower commission

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Each year, the Afores must send the Consar a proposal on the commission they will charge the workers for managing their resources. The Afores had agreed that each year the commissions would be gradually lower and in 2021, the average commission was 0.80%.

But now, with an abrupt reduction to 0.57%, the effects will not only be for the Afores, which will have lower income.

“The provision indicates that as of January 1 they cannot charge more than 0.57%. The only thing that can stop that is an amparo, a provision of a judge, but for that to happen, the Afores have to defend themselves. I think there is Afores who may not agree but prefer not to fight with the government and there are others who think that this is not worth it because of the drastic and that they defend themselves judicially, “Carlos Ramírez, former president of Consar, considered an interview.

The former official said he does not see an early consolidation of the Afores because before going out of business, they must find a buyer.

For Grupo Financiero Banorte, the reduction in commissions could also cause the Afores market to consolidate and the sale of some businesses. The sale of portfolios among the Afores is what has been seen in other “more mature” markets, so it is not something that should be of concern.

“There is a change in how the system worked previously, without a doubt. It is foreseeable that the effects will be greater for those who with the reduction of commissions and given its scale, the amount of assets it manages, and given its administration expenses, particularly marketing For some it will be particularly difficult to remain in these circumstances and it is foreseeable that there will be a consolidation ”, said Fernando Solís Soberón, general director of Savings and Prevision Banking at Banorte.

The financial institution stressed that they do not see the “bankruptcy” of Afores but a sale of the portfolios managed by the smallest companies. He also stressed that in the extreme case that an Afore goes bankrupt, the assets of the workers will not be at risk.

Carlos Ramírez, for his part, considered that the Afores will only adjust their operating expenses: “One would think that they are going to reduce commercial spending, which is like the ‘bad cholesterol’ of the system, but there is no guarantee that this will happen. Afores could reduce their spending on what is important such as technology, services, human capital, having better people for the investment process, “he said.

With figures as of September, the smallest Afores by managed resources are: Inbursa with 204,636.1 million pesos (mp), Invercap with 298,770.4 million pesos and Afore Azteca with 335,786.5 million pesos.

What do the Afores say?

Financial group Banorte, which has the largest Afore for managed resources, said it will seek to adapt to the conditions established by the regulator. The Afore business represents 6% of the group’s total.

“We are looking at how to adapt; if we could, negotiate and if not, adapt. At school they taught us that when there is no more income, via costs, we will have to see what costs, how we make ourselves smaller and how we are going to do it. do to move forward, “said Marcos Ramírez, CEO of Banorte recently in the presentation of its quarterly results.

The Financial Group said that its Afore is one of the best positioned in the system and that they are prepared for the challenges. When questioning them about their interest in acquiring a smaller Afore, Marcos Ramírez said that it is premature to know if they will buy or not but assured that they will remain attentive to what happens in the sector and in due course they will analyze the opportunities.

Afore Azteca He said that the reduction of commissions to 0.57% will have a serious impact on the competitive environment of the Afores that will also translate into the quality of services and workers’ pensions.

“Establishing such a low ceiling on the commissions that Afores can charge will force them to rapidly and strongly reduce their costs, with the consequent reduction in the quality of their services, together with an expected concentration in the Afores market by merger. or bankruptcy, “the Afore detailed in a comment sent to the National Commission for Regulatory Improvement (Conamer).

Afore Principal He recently told Expansión, before the formula was published, that he was confident that secondary regulation would establish how commissions would be charged.

“We are going to respect the legislation and regulation; we are not going to seek protection. The regulation is clear and we are going to comply with it,” said Jaime Santibañez, country head of Afore Principal.

Azteca added that the cap on commissions will cause a strong disincentive to serve low-wage workers, young workers, low-income workers and who work close to informality (as they do in Azteca and Coppel).

Afore Coppel, Citibanamex and Inbursa they refused to comment to Expansion about the topic.

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