Banorte launches Total Return Swaps in Mexico

By Divya Shah

Banorte to implement Total Return Swaps (TRS) in Mexico, expanding its derivatives capabilities and strengthening its balance sheet optimisation, risk management and capital efficiency framework. 

The introduction of TRS adds a new instrument to the bank’s capital markets offering, enabling the transfer of the economic performance of an underlying asset without transferring ownership.  

The structure provides greater flexibility for managing market exposures, enhancing hedging strategies and optimising balance sheet usage. 

The implementation forms part of a multi-year innovation programme under which Banorte has steadily expanded its product and market infrastructure capabilities across credit, rates, foreign exchange and equity derivatives. 

Since 2019, the bank has launched or implemented 19 product streams and market infrastructure initiatives spanning treasury, capital markets, brokerage and transactional banking. These developments have been supported by robust risk, operational, regulatory and compliance controls. 

Abraham M Izquierdo, Managing Director, Traded and Treasury Risks at Banorte, said the TRS rollout marks another milestone in the bank’s long-term innovation strategy and efforts to enhance risk management capabilities. 

The development is builds on a broader transformation programme that has included the adoption of Credit Default Swaps (CDS), Constant Maturity Swaps (CMS), Credit Indices (CDX), equity derivatives, self-service foreign exchange platforms, and benchmark rate transitions from LIBOR to SOFR and from TIIE to TIIEF. 

The TRS implementation was delivered in collaboration with Murex. Imane Cheradi, Head of Murex Americas, said the project reflects Banorte’s commitment to transforming its treasury, trading and risk management operations while strengthening scalability and resilience to support future growth. 

The rollout further reinforces Banorte’s position in Mexico’s financial markets as institutions increasingly seek sophisticated risk management and capital optimisation tools amid a changing regulatory and market landscape.