Featured Product

    IMF Publishes Report on Review Under FCL Arrangement with Mexico

    November 27, 2018

    IMF published its staff report in the context of the review under the flexible credit line (FCL) arrangement with Mexico. The report highlights that the financial sector remains sound, with the banking sector being well-capitalized and highly profitable. The 2016 Financial Sector Assessment Program (FSAP) and the 2018 Article IV consultation did not highlight significant solvency risks or recapitalization needs.

    The assessment reveals that, as of July 2018, the tier 1 capital ratio of the banking sector stood at 14.0% while the non-performing loan (NPL) ratio remained at a near record low of 2.1%. However, the provisioning of NPLs is high at 150.7%. Commercial bank credit to the non-financial corporate sector strengthened by 9.4% (y-o-y) in real terms in September, despite higher borrowing costs, while consumer credit growth slowed down to 1.5%. Additionally, capital in the insurance sector exceeds the minimum requirements while all insurance companies comfortably satisfy the new capital requirements under the Solvency II regime, which was adopted in April 2015. Real estate investment trusts have grown since 2011, but remain small and are financed mostly by equity, with new statutory limits on their leverage. 

    The 2012 FSAP had concluded that banking supervision in Mexico was effective while the 2016 FSAP had highlighted the improvements in supervision since 2012. Mexico adopted the Basel III capital rules in 2013, and BCBS assessed it as compliant in 2015. The minimum liquidity coverage ratio (LCR) requirements have been in place since January 2015. The regulation of financial groups was enhanced in January 2014, through the implementation of supervision at the group level. The current administration closely monitors the operations of foreign bank subsidiaries—about 70% of banking system assets—to ensure compliance with regulatory norms. The 2016 FSAP had found that significant progress has been achieved in strengthening financial sector prudential oversight since 2012 and recommended several areas for further progress, especially to strengthen the governance of the supervisory agencies. The 2018 Article IV consultation with Mexico did not raise substantial concerns regarding the supervisory framework.


    Related Link: Staff Report

    Keywords: Americas, Mexico, Banking, Insurance, NPL, Solvency II, Basel III, LCR, FSAP, Article IV, IMF

    Featured Experts
    Related Articles
    News

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.

    July 29, 2021 WebPage Regulatory News
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    ECB Study Assesses Impact of Basel III Finalization Package

    The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.

    July 26, 2021 WebPage Regulatory News
    News

    ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading

    The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.

    July 26, 2021 WebPage Regulatory News
    News

    PRA Updates Remuneration Policy Statement Templates and Tables

    The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.

    July 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7311