On April 13, 2023, Banco de México published Circular 3/2023 and Circular 4/2023 in the Official Gazette of the Federation, amending Circular 14/2007 (regarding interest rates in terms of the LTOSF (1)) and 3/2012 (regarding transactions of banks and other financial entities), respectively. The modifications eliminate the existing methodology for calculating the Equilibrium Interbank Interest Rate (TIIE) for terms longer than one Banking Business Day, and gradually will limit the possibility for Financial Institutions (2) that enter into Loans (3) to use the referred TIIE for terms longer than one Banking Business Day as a reference rate. 

The most relevant amendments are: 

  • A new definition of “TIIE de Fondeo” (Overnight TIIE) is included. TIIE de Fondeo (Overnight TIIE) is the TIIE for one Banking Business Day calculated according to the methodology included in Circular 3/2012. 
  • Financial Institutions that enter into TIIE Loans denominated in local currency, may only use the TIIE de Fondeo (Overnight TIIE) for such Loans and not TIIE with other terms, in addition to other authorized rates (4).
  • The definition of “TIIE for Terms Longer than One Banking Business Day” is added in order to merge the current 28, 91 and 182 day TIIE rates within the same methodology. The current methodology to calculate the 28, 91 and 182 day TIIE rates is eliminated and Annex 11 of Circular 3/2012 will implement a synthetic calculation of such TIIE rates that are for terms longer than one banking business day.
  • The synthetic methodology to calculate the TIIE for Terms Longer than One Banking Business Day will continue to apply for reference rates of the Loans entered into before the entry into force of Circular 4/2023, and the calculations of such rates will be published until Banco de México deems it convenient. In the event that Banco de México stops publishing the TIIE for Terms Longer than One Banking Business Day, it will inform such event on a timely manner and will specify the rate that will replace it.
  • These changes will become effective on January 1, 2025, subject to the following dates and exemptions: 

    

To read the full version of this newsflash, please visit our site's News & Press section at www.ritch.com.mx/en/news