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 Announces Repayment Deferment Under Payment Holiday Scheme

    HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.

    August 05, 2020 WebPage Regulatory News
    News

    ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal

    The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.

    August 05, 2020 WebPage Regulatory News
    News

    MAS Announces Key Initiatives to Support Adoption of SORA

    MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.

    August 05, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    News

    PRA to Extend Temporary High Balance Coverage Amid COVID Crisis

    PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.

    August 04, 2020 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC

    EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.

    August 03, 2020 WebPage Regulatory News
    News

    EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10

    EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.

    August 03, 2020 WebPage Regulatory News
    News

    EC Sets Out Updated Technical Information for Solvency II Calculations

    EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.

    August 03, 2020 WebPage Regulatory News
    News

    US Agencies Issue Statement on Additional COVID-19 Loan Accommodations

    FFIEC, on behalf of its members that include US Agencies such as CFPB, FDIC, FED, NCUA, and OCC, issued a joint statement that sets out prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers.

    August 03, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5

    PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).

    July 31, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5622