Yesterday was “black Thursday” on the Mexican stock market when bank stocks plummeted after senators from president-elect López Obrador’s Morena party unexpectedly presented a proposal to curb bank charges.

The Mexican Stock Exchange’s benchmark IPC index fell 5.81% due to the bank losses, its biggest single-day decline since August 2011.

Senator Bertha Alicia Caraveo, who presented the legislative initiative on behalf of Morena upper house coordinator Ricardo Monreal, said that bank charges generated income of more than 108 billion pesos (US $5.3 billion) for Mexican banks last year, 8% more than in 2016.

The proposal to stop banks from charging certain commissions, she explained, seeks a “fairer” relationship between the banking sector and Mexican families.

Shares in Banorte suffered the biggest drop, down 11.9% at the close of trading, while Gentera and Inbursa saw 10.23% and 10.08% wiped off their market value respectively.

The Mexico subsidiary of Spanish bank Santander slumped 8%.

According to Bloomberg, the combined losses of Banorte, Inbursa, Santander, BanBajío, Gentera and Regional totaled more than 85.4 billion pesos (US $4.2 billion).

The FTSE index of Mexico’s new stock exchange BIVA also took a hit yesterday, closing trade down 5.66%.

The Banks of Mexico Association (ABM) said in a statement that it would analyze the content of the Morena proposal in order to identify its reach and determine the impact it would have on its members.

The bill referenced a study by financial consumer protection agency Condusef that said that, on average, 30% of Mexican banks’ revenue comes from commissions.

That percentage, Morena argued in its proposal, is more than banks in other countries earn from those charges.

If approved, the legislation would prohibit banks from charging customers for checking their account balances, withdrawing cash, requesting past statements and issuing replacement cards among other services.

Gabriela Siller, a director at Banco Base, said that the initiative is a sign that the soon-to-be ruling party will promote policies that could have an adverse effect on the private sector.

Several bankers told the news agency Reuters that the proposal caught them by surprise while the move also served to further stir fears about López Obrador’s economic plans.

The private sector is already concerned about the impact that canceling the Mexico City International Airport project will have on the economy.

Prominent business leaders last week slammed the cancellation decision, which came after a public consultation on the future of the project was held.

“All of this is by the book of what every other leftist government has done in Latin America: governing by referendum, then going after the financial conglomerates,” said Santiago Arias, a portfolio manager at Credicorp Capital Asset Management.

“There was a hope that Lopez Obrador would be a little more conscious about how he would approach the private sector,” he told Reuters.

Following the market reaction to the bank charges proposal, Senator Monreal stressed that lawmakers would take business concerns into account.

“We are not going to pass [the law] in an abrupt, fast, hasty way,” he told reporters. “We are going to listen and we will take enough time to be able to listen to all sectors.”

Future finance secretary Carlos Urzúa also sought to calm markets, calling on lawmakers in both houses of Congress to review the financial impact of their proposals.

“While we recognize the aim [of these initiatives] is to try to improve the living conditions of Mexicans, this objective will not necessarily be achieved unless impacts on public finances and stability in the financial sector are taken into account,” he said.

UPDATE November 9, 6:46pm CT:

Bank stocks recovered today after president-elect López Obrador offered an assurance there would be no fiscal reforms during the first three years of the new government.

“We are not going to make any modifications to the legal framework with regard to economic, financial or fiscal matters,” he told a press conference.

Mario Delgado, the head of the soon-to-be-governing Morena party in the lower house, promised there would be no more “surprises” such as yesterday’s proposal.

Source: El Financiero (sp), Reuters (en), El Economista (sp)