A proposal to regulate fees charged by banks operating in Mexico won’t put a big dent in Bank of Nova Scotia’s (BNS) bottom line, but it could be a sign of worse things to come, as banking rules around the world begin to tighten in the wake of the financial crisis.
Brad Smith, Blackmont Capital analyst said:
As of the year-end 2008, Scotia’s Mexican operations were responsible for 9% of total earnings and while this legislation could impact on Scotia’s total operations to be marginal at this time.
The greater concern, in our view, is that this is merely an initial step in increased international regulation of the financial industry, thereby putting increased strain on future profits.
The new banking bill passed by the Mexican Senate, but still required to pass through the lower house, proposes ceilings on credit card and loan interest rates and also seeks to regulate deposit rates and eliminate certain banking fees.
Mr. Smith continues to rate Scotiabank shares a “hold” and left his C$36 price target unchanged.
Source: SeekingAlpha, 23.04.2009
Filed under: Banking, Latin America, Mexico, News, Risk Management, Services, Banking System, Black Swan, Consumer Credit, Credit Cards, Credit Crisis, Latin America, Latinoamérica, Mexico, Regulation, Retail Banking, Scotia Inverlat, Senate
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