Mexico Financial Services Market Opportunities - Mexico's Tequila Crisis of 1994-1995 that decapitalized the banking sector in Mexico and sharply curtailed its lending activity, the “hangover” from the crisis is not over yet. According to bank regulators and bankers in Mexico, along with the slowdown of Mexican economy in 2001-2002 that further delayed a recovery in bank financing, vestiges from the crisis are still a main reason behind the reluctance by banks to extend credit other than to their most sound customers. These facts have made it difficult for the banking system to meet Mexico’s needs.
Around 80% of the banking activity in Mexico is carried out by important foreign groups, especially from Spain. The two biggest banks in Mexico by all measures are BBVA Bancomer and Banamex, respectively the subsidiaries of Spain’s BBVA and the United States’ Citigroup. Together they account for 45% of the entire sector. Santander Serfin, controlled by Spain’s Banco Santander Central Hispano, comprises 16% of total assets whereas HSBC Mexico enjoys 10% and Scotiabank Inverlat, the subsidiary of Canada’s Scotiabank holds about 5%.
Mexican banks, Banorte and Inbursa have relatively significant shares of the market, accounting for about 8% and 4% respectively. Of the remaining banks, only Bank of America, ING Bank, Banco del Bajio, Banco Azteca, and J.P. Morgan enjoy more than 1% (but less than 2%) of the Mexican market. These numbers show how competitive the market is, not only for the smaller and newer players, but also for the global giants, whose percentages of participation in the market are by no means assured along time and across regions.
Financial regulations in Mexico are conducted at the federal level and overseen by the Secretaría de Hacienda y Crédito Público (SHCP), Mexico’s Finance Ministry, which is actually the highest authority within the structure of the Mexican financial system. It sets government policy regarding the financial sector, issues regulations and licenses most financial intermediaries. Banco de Mexico (BANXICO) is independent from the government and is in charge of conducting monetary policy, assuring the operability of the system of payments and regulating the functioning of the financial system. Operation and inspection of the system is carried out by the following agencies which work under the umbrella of SHCP:
- Comision Nacional Bancaria y de Valores (CNBV): It is the bank regulator and its stated function is to supervise and regulate financial entities to assure their stability and correct functioning. It focuses on the Banking, Financial and Securities institutions. In addition to commercial banks, it supervises the government-run development banks, credit unions, and most deposit and credit institutions, as well as brokerage houses, mutual funds, stock markets, and other organizations involved in securities markets.
- Comision Nacional de Seguros y Fianzas (CNSF): Oversees insurance companies, trust companies and certain other institutions. It is relevant to some of the larger commercial banks mentioned in this report which operate insurance services.
- Comision Nacional del Sistema de Ahoro para el Retiro (CONSAR): Oversees retirement savings. It is relevant to some of the commercial banks mentioned in this report which operate asset management companies.
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