Euro-Zone Woes Seen Having Limited Impact On Mexican Banks
December 16 2011 - 11:46AM
Dow Jones News
Mexican financial authorities said in a statement late Thursday
that while the euro zone's debt and banking troubles are
"worrisome," the possibility that the problems will spread to the
Mexican banking system is limited.
The Financial Stability Board, which includes regulators as well
as the finance minister and central bank governor, singled out some
of the banking system's strengths -- such as high capitalization
levels, acceptable bad debt rates and ample deposits -- as backing
their conviction that the system can withstand external shocks.
October data from Mexican banking regulator CNBV shows total
banking assets of 5.96 trillion pesos ($432 billion), deposits of
MXN2.87 trillion and a nonperforming loan rate of 3%.
The Financial Stability Board identified relationships between
Mexican banks and their parent companies abroad as the main
potential source of contagion for Mexico's banking system.
Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA) runs Mexico's
largest bank by assets and deposits while the Mexican unit of
Spanish financial group Banco Santander SA (STD, SAN.MC) is the
system's third-largest.
The Financial Stability Board said that as some European
governments face difficulties refinancing their debts and European
banks seek to shore up their capital levels, world economic growth
could be stunted.
The reduction in European banking assets could also result in a
trimming of assets among subsidiaries of European banks around the
world, the board said.
Earlier in December, Santander sold a 7.8% stake in its Chilean
business for $950 million while also announcing plans to sell all
of its business in Colombia, where Santander has a minimal market
share.
However, Santander reinforced its Mexican operations last year
via a purchase of the 25% of the unit it didn't already own from
Bank of America (BAC) in a deal that valued the business at $10
billion. It also bought a $2 billion portfolio of mortgages from
General Electric Co. (GE), making Santander Mexico's second-largest
private provider of mortgages.
The Financial Stability Board added that Mexican financial
markets continue to function in an "orderly fashion" and that they
have not shown signs of stress. The board also noted that both
public and private issuers of debt in Mexico have been able to
place debt with more favorable terms than some of their
developed-market counterparts.
-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177;
amy.guthrie@dowjones.com
BBVA Bilbao Vizcaya Arge... (NYSE:BBVA)
Historical Stock Chart
From Sep 2024 to Oct 2024
BBVA Bilbao Vizcaya Arge... (NYSE:BBVA)
Historical Stock Chart
From Oct 2023 to Oct 2024