What should Mexico do in the face of the Trump tax reform?

According to specialists, national spending should be reduced, and income should be revised, in the face
of the loss of competition of Mexico because of the fiscal reform of the US.

With the fiscal reform of the administration of US president Donald Trump, the Mexican government
should review its revenues for 2018 and reduce unnecessary expenditures, in agreement with Luis
Aguirre Lang, president of the National Advisement of the Manufacturing ndustrya and Export
Manufacturers (Index).

Previously, in the face of possible loss of competition and change of decisions of long term growth or
production on part of companies located in national territory, as well as by the outflow of capital
through the new tax plan, according to estimations from economic analysts.

“This external pressure appears to be a good opportunity to make a revision to the revenue,
expenditure budgets for and year and to reduce non-productive spending, and to incentivize productive
investments for the country,” commented the specialist, who will be sworn in for the 2018-2019 period
the next January 19th.

Likewise, facing the possible impacts of the United States tax plan, it is necessary to bet on the
development of talent in the industrial sector. “Also, we should modernize the logistic platform
involving infrastructure, such as customs…”, he added.

This December 22nd, Trump signed the tax reform with which tax cuts for American companies are
foreseen, which includes the reduction of corporate tax rom 35% to 21%, as well as a tax exemption of
20% for business owners on their utilities and renews the way in which taxes are levied to multinational
companies, on extending dividends to foreign subsidiaries, by means of the Exemption System of
Participation on World Income.

It is expected that the modifications generated by the tax reform will affect the Mexican economy,
above all on part of the change in capital repatriation tax rates, with which it is found that American
companies with operations in Mexico send their utilities to this country in place of reinventing them in
their own country, according to Gabriela Siller, director of the Financial Economic Analysis of BASE Bank.

“This would also pressure capital outflow from Mexico, since considering that the short term is only cash
capital is repatriated, there is estimated more than 10 billion dollars. With this, it is very likely that the
type of exchange will see a new rise”, marked Siller.

After the American president signed the tax reform, the national currency became pressured, since the
took 20 pesos over the counter.

“We expect there to be a bubble on the topic of the tax reform, success in maintaining a type of change
of approximately 18 pesos generates competitiveness as a country,” commented Luis Aguirre Lanf.
In the session of the last December 22nd, a greater demand of dollars was reported by foreign investors,
prior to a week of possible liquidity decrease for the end of the year period.
El Pais

Inigo de Baron

Madrid JAN 3, 2018 – 11:22 PM EST

Labor unions fear that Bankia will close almost 20% of offices in the medium term

The bank has announced the closure of 145 branch offices by union and will be able close 300 more for
2019.

Unions and Bankia management will resume business on January 11th originated by the merger with
BMN. The bank wants to lay off 2,510 employees and close 145 offices, whose list has already
communicated (see offices). Union sources trust in reducing the number of layoffs, but they believe that
Bankia will continue closing subsidiaries after closing the merger. In addition to these initial 145, these
sources believe that Bankia will close 300 more for 2019, which will mean almost 20% of subsidiaries.
The effect of digitalization and the decrease in types are behind this movement.

The workers’ representatives claim that the first contacts with Bankia management have started off on
the wrong foot. They are not willing to accept the 2,510 layoffs (14.3% of the total) and hope to reduce
them to 2,000 or 2,200 at most.

However, regarding the office network, the situation is very different. Far from hoping that the closure
will remain in 145 branches announced until February, they are convinced that there will be more up to
double this amount and to close 2019 with 450 less branches than now: 18% of the network, composed
in the moment of the merger with BMN by 2,515 offices.

The effect of digitalization of negative types

No statistics are offered from the business, but remember that, in previous years, without there having
been a merger, 140 have closed each year. En Bankia assures that “no town or city will be abandoned,”
that they will not be without offices in any locality. Also remember that some 600,000 clients already
work with remote agents without going to the offices, save for exceptional issues, utilizing digital
manners. Bankia had to abandon many cities after receiving 22,424 million from the State. Now, five
years later, Brussels has removed this restriction, but the bank does not hope to cover these holes with
the opening of many offices, since betting on a physical testimonial presence.

On the other hand, the strong fall of the types of interest, the Euribor is going on 23 months at 0% or
below—also pushing cost savings. The computing integration with BMN will be closed in March 2019.