What about the Monte de Piedad?
Nacional Monte de Piedad has around 1.4 million clients, of which a little less than a million have current credit, however the effort has lost competitiveness because banks have found ways to offer loans in this financing niche, mainly Banco Azteca and BanCoppel.
Multipurpose financial companies (Sofomes), popular financial companies (Sofipos) and fintechs have also found ways to understand risk. We have seen pawn business come on a consistent decline for several years.
In addition to this, the pandemic also represented a drop in commitment, which continues to drop at a worrying level.
How has the effort performed?
In May 2019 we had close to 6.3 million garments that have a current pledge loan. While in May 2023 there were 4,541,000, that is, a 28% drop.
In May 2019 there were just under 1.3 million customers with a pledge on deposit, and in May of this year the figure was 901,000, one. 30% drop.
The commitment had a 51% drop between 2015 and 2021, according to the latest financial inclusion survey.
Also, in Mexico most of the pawn is against jewelry/jewelry, and there is far less jewelry in the public today. According to our estimates it was reduced by half. So having half as many customers and each with less jewelry, and a lot of the value of the jewelry is the gold content, and the current jewelry has less gold.
What is the risk for Monte de Piedad?
In February, the Ministry of Labor and Social Welfare (STPS) suggested that three expert reports be carried out, one from the authority, one from the company and another from the union. The result was that the future of the company is in a critical situation and there is a very high probability of bankruptcy. The union’s expert opinion turned out that it would be bankrupt in 2029 and ours showed that in 2027.
Today, the financial situation of the institution is not bankrupt. In 2021 and 2022 we made profits, but these are modest numbers. In 2021, we had 26,000 million pesos of stockholders’ equity (equity) and the profit (remaining) 1,979 million pesos, between 6.5% and 7% with respect to stockholders’ equity, is inflation.
What does Monte de Piedad have to do?
We need to adapt to the circumstances in which we live. If we don’t change, we are going to die. One of the things that is urgent to reform is our very old collective labor contract (CCT), which has three characteristics that make the institution unfeasible:
1. It is extremely rigid: Branches close at lunchtime and on Saturdays at 1:00 p.m. These aspects that slow down the service of the institution.
2. It is expensive: Our workers have Social Security, we also pay them private medical service because the CCT indicates so. That attention is maintained by unionized workers once they retire.
According to information in the possession of the Tax Administration Service (SAT), the cost of the collective agreement is 3,400 million pesos.
3. It contains defined benefit lifetime benefits, that is, the institution is obliged to pay pensions and medical services for life to all workers once they can retire.