Mexico: Cash Access after Hurricane Otis

On Wednesday, October 25, Hurricane Otis landed near Acapulco, a port city on the Mexican Pacific coast of more than 852,000 people. Otis’ sustained winds of 265 km (165 mi) per hour and storm surges caused flooding, mudslides, and widespread devastation in Acapulco and nearby areas. As of November 21, at least 49 people were killed, and another 31 were still unaccounted for.

Graph 1. Mexico: Hurricane Otis’s Wind Speeds, October 18-25, 2023

Source: New York Times (2023).

Hurricane Otis transformed from a tropical storm to a Category 5 hurricane in a day, defying all forecasts. The storm’s wind speed increased by 185 km (115 mi) per hour in less than a day, giving little time for authorities to issue warnings to the public (see Graph 1). Otis was the strongest hurricane in the Eastern Pacific to land in the satellite era.

Devastation in Acapulco

Otis caused telephone and internet service outages that persisted days after the hurricane landed.

• Otis brought down more than 10,000 power poles, leaving 504,340 users without electricity, said Mexico’s Federal Commission for Electricity. “The power infrastructure is heavily damaged. It is a total collapse. It is like building a whole new infrastructure,” said Erik Rojas, 38, an electrician sent to Acapulco after the storm.
• The hurricane disrupted internet connectivity in the state of Guerrero. Telmex restored its primary network four days after the hurricane’s landfall.

People in Acapulco went through ransacked stores for water and food.

• “The government is not helping. [People] loot because they want to eat. Not a single store is open to buy food, not a single tortillería,” said Roberto Alvarado, 45.
• “We have no gas, no water, no food. Everything has been looted. There’s nothing to take anymore.” said Miguel Ángel Dorantes, a taxi driver.
• “The municipality was overwhelmed with looting, we prioritized safety and evacuations,” said Ignacio Orbe López, head of communications of Acapulco.

Acapulco’s tourism infrastructure has taken an enormous toll.

• Hotel occupancy rates in Acapulco were 80.2% on Sunday, October 22. The hurricane damaged nearly 80% of hotels in Acapulco, said Evelyn Salgado Pineda, governor of Guerrero state.
• Tourists were stranded as several airlines suspended flights to Acapulco through October 28.
• More than 80% of restaurants and bars in the city had suffered “total losses” due to the hurricane, said Rosa Gómez Martínez, a tourist officer.

Damage to CashMoney in physical form such as banknotes and coins. More and Banking Infrastructure

“There was time to rip out an ATM and take it away, so we had vandalization of ATMs. They broke into branches because all security devices are not foolproof. […] If we don’t see a more secure situation, we cannot bring new ATMs […] Then there’s the physical infrastructure side.” – Eduardo Osuna, vice president and general director of BBVA Mexico.

Hurricane Otis damaged at least 30 out of 86 bank branches in Guerrero state, said Julio Carranza Bolívar, president of the Mexican Banks’ Association (ABM).

• ABM banks requested the National Banking and Securities Commission (CNBV) for a plan to defer debt repayments. The CNBV set up special accounting regulations allowing for six months of postponement.
• The Business Coordinating Council (CCE) and the ABM opened centers to receive food, water, medications, and other supplies.
• Banks also set up special accounts to receive donations for humanitarian and reconstruction efforts.

The cash infrastructure has recovered slowly. As of October 31, bank branches and ATMs had suffered looting for MXN7.3 million, according to the security firm Seguridad y Protección Bancaria (Seproban).

• BBVA had three working ATMs in Acapulco by October 31. Otis damaged BBVA’s 16 branches and 79 ATMs in Acapulco. The bank expected to reopen its branches and ATMs in two weeks but was sensible to insecurity and looting.
• HSBC restarted two ATMs and a cash deposit machine on November 2.
• Santander had nine active ATMs and tree branches in Acapulco as of November 2.
• Citibanamex reopened two branches on November 3 and set up a mobile unit “with cutting-edge technology, able to process up to 25 thousand monthly operations.”

Plan Billetes (Banknotes Plan) Comes to the Rescue

“[Plan Billetes] has been very effective [before] in ensuring, especially at this time, that people get cash, that people feel confident they can access it.” – Julio Carranza Bolívar, ABM president.

Restoring access to cash was critical after Hurricane Otis hit Acapulco, as cash is the dominant payment instrumentDevice, tool, procedure or system used to make a transaction or settle a debt. More in Mexico. On October 30, Banco de México (Banxico), the finance ministry (SHCP), Banjército, and the ABM activated the emergency cash distribution plan known as “Plan Billetes” (Banknotes Plan) to provide cash withdrawals while the banking infrastructure recovers. Banxico launched “Plan Billetes” for the first time in September 2017 after an earthquake disrupted banking services in Oaxaca.

“Plan Billetes” sets up cash access points through POSAbbreviation for “point of sale”. See Point-of-Sale terminal. More terminals with satellite connections, allowing users to withdraw funds from their bank and welfare benefits accounts.

• The military transported and distributed Banxico-provided cash to Banjército’s access points.
• The ABM provided POS terminals to Banjército with SHCP’s authorization. Banks did not charge fees for these withdrawals.
• Customers could withdraw cash with their debit or credit cards and an ID and sign a receipt for the transaction.

Survivors in Acapulco made long queues to withdraw cash at Banjército branches.

• “On the first day there were people who left here crying with joy, and they were very grateful to us for this modality,” said Édgar Martínez, commercial banking head at Banjército.
• “I am glad because where I live, there is nothing left, there is no water, there is no food, and this cash will mitigate our shortages. You can do practically nothing without cash,” said Gloria Luz Mendoza, 44, who withdrew MXN10,000 at a Banjército cash access point.
• “We are here because this is the only bank, Banjército, at the naval base in the city and port of Acapulco that has been in service for about three days. This is very gratifying for us because there are no services, there is no electricity, so I do not know how they are doing it, but they are doing their job for society,” said a man standing in line to Proceso (00:56-1:26).

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