Banking
From The Report: Mexico 2014
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Mexico’s banking system has been experiencing a period of stability unseen in its recent history. With sound and well-capitalised banks, the task now seems to be improving Mexico’s low banking and credit penetration. Domestic credit as a proportion of GDP stood at 47% in 2013, according to the World Bank, well below the average of 75% for Latin America and lower than Brazil (111%), Chile (108%) and Colombia (73%). Commercial banks hold 51.7% of assets in the financial system, with total assets reaching $505.05bn in December 2013, 8.8% above the $466.89bn in December 2012. Credit was the most important contributor to assets, accounting for 46% of the total, or $235.4bn. Following a financial reform in early 2014, significant changes to the system are expected over the next few years. This chapter includes an interview with Alejandro Valenzuela del Río, CEO, Grupo Financiero Banorte.

Articles from this Chapter

Overview

On a roll: With reforms under way the sector looks set to continue positive trends over the next few years
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Despite slow growth in the Mexican economy in 2013, the prospects for the next few years remain positive, given recent structural reforms, a stable macroeconomic environment and an improved credit rating. The banking system has been experiencing a period of stability not seen in its recent history. Not only was it not affected by domestic financial crises, but it also demonstrated resilience in the face of global problems stemming from the 2008-09 financial crisis. Following the financial reforms that went into effect in 2014 and are considered among the most important structural reforms, new and significant changes to the system are expected…

Interview

OBG talks to Alejandro Valenzuela del Río, CEO, Grupo Financiero Banorte
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Interview:Alejandro Valenzuela del Río To what extent can financial reform help to increase credit penetration? ALEJANDRO VALENZUELA DEL RIO: The level of loans issued by commercial banks to the non-financial private sector is equivalent to 15% of GDP. This is not only significantly below developed economies’ standards, but also below the credit ratios of emerging markets. In Peru the figure is almost 25%, Colombia is slightly above 40%, Brazil is close to 50% and Chile is above 70%. While…

Analysis

Changing the rules: Structural reform should go a long way towards tackling low credit penetration
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One of the most important structural reforms for Mexico’s banking sector is wide-ranging financial reform. Presented to Congress in May 2013, approved in November 2013 and promulgated in January 2014, the reform includes various bodies in the financial sector, such as banks, stock exchange intermediaries, investors, insurance companies, saving and loan unions, and politicians. The reforms addressed 34 pieces of legislation and different entities of the federal government and the central bank, Banco de México, will be responsible for implementing them. The National Banking and Securities Commission will be in charge of enforcing most of the…

Analysis

Top of the heap: A breakdown of the leading players in the Mexican market
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Banking regulators in Mexico treat the seven largest of the 21 financial groups operating in the country as a distinctive group. The top seven include Spain’s BBVA Bancomer and Santander, Mexico’s Banorte and Inbursa, America Banamex (which has been controlled by Citigroup since 2001) HSBC and Canada’s Scotiabank. The list is made up of two Mexican and five foreign firms. Total Assets In December 2013 all seven banks held MXN5.13trn ($398.3bn) in combined assets, 78.4% of the national banking system’s total of MXN6.5trn ($505.05bn). BBVA Bancomer is the largest with MXN1.37trn ($106.45bn), or 26%, followed by Banamex with 22.8% (MXN1.17trn,…

Analysis

Market shift: Financial societies adjust to the new regulatory environment
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An important component of the Mexican banking system is its multiple-purpose financial firms (Sociedades Financieras de Objeto Múltiple, SOFOM). Until July 2013, there were two types of financial societies, the other being for limited purpose (Sociedades Financieras de Objeto Limitado, SOFOLs). SOFOLs were created in 1993 and were specialised in granting loans to specific activities or sectors, such as small and medium-sized enterprises, housing and cars. Since July 2013, however, the SOFOLs are no longer legal and they were sold, liquidated or converted into SOFOMs. Most of them were transformed into SOFOMs or merged with other institutions.…