The Treasury Department removes trust funds from CIBanco and Intercam and temporarily transfers them to NaFin.

A severe blow for CIBanco and Intercam . The Ministry of Finance and Public Credit (SHCP) announced this Friday that it has initiated a spin-off process to temporarily transfer the fiduciary business of both financial institutions to the development bank .

The agency said this move aims to " ensure the operational continuity of the trusts currently managed" by both banks and added that this action "will be carried out under current financial regulations and in close coordination with supervisory authorities."

According to the Treasury Department's statement, this measure consists of "the temporary transfer of the trust business to Mexican development banking entities," allowing the trusts to continue operating uninterruptedly, "for the benefit of their settlors, beneficiaries, and third parties involved."

He also specified that during this stage, the corresponding regulatory and operational controls will be maintained, and there will be ongoing support from the National Banking and Securities Commission (CNBV) and financial authorities to oversee the process and protect the interests of users.

According to industry sources, Nafin will temporarily manage the trusts, with the latter being acquired by private banks in a second step. In fact, the Treasury stated that "in parallel, a scheme will be implemented to facilitate the permanent transfer of the trust business to private financial institutions, under conditions that ensure continuity, legality, and certainty for all participants in the system."

Meanwhile, during this first stage, the agency explained, the corresponding regulatory and operational controls will be maintained, and there will be ongoing support from the National Banking and Securities Commission (CNBV) and financial authorities to oversee the process and protect the interests of users.

It's worth remembering that CIBanco and Intercam Banco, along with Vector Casa de Bolsa, are under temporary management intervention by the CNBV (National Commission for the Promotion of Public Credit) after being charged by the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN).

The allegations implicate the three financial institutions in alleged money laundering practices linked to fentanyl trafficking, as well as organized crime, considered terrorist groups by the United States.

Fears about the concentration of trust funds by CIBanco had already been noted by industry participants, as as of April of this year, it held 27.5 percent of the trust portfolio managed in Mexico.

Prior to the SHCP's announcement, Fitch Ratings argued that Mexico's robust legal framework for trusts effectively mitigates CIBanco's exposure in its role as trustee in Mexican securitizations.

The rating agency assured that it will monitor CIBanco's operational capacity in its role as trustee, in order to inform the market of any emerging operational risks.

"It's important to note that some entities have already begun replacing CIBanco as the issuing trustee, the trustee of the master collection trust, or bank accounts in their securitizations, a trend that will continue to be closely monitored," he indicated.

With information from Jeanette Leyva / Ana Martínez .