Citi Mexico, a New Key Player in the Financial System

The National Banking and Securities Commission (CNBV) has designated Citi Mexico as the eighth bank of significant systemic relevance in the country. According to a CNBV statement, "institutions deemed systemically important are those whose potential failure could jeopardize the stability of the financial system or the national economy."

What happens if a bank declares insolvency in Mexico?

Who are the key banks in the Mexican financial system? The CNBV noted that the banks, ranked by their systemic importance, are BBVA Mexico, Santander, Banorte, Banamex, Scotiabank, Citi Mexico, HSBC, and Inbursa. These entities are required to maintain a capital conservation buffer, which is in addition to the 10.5% minimum capitalization ratio required for all multiple banking institutions. As of February, the CNBV kept a record of 52 banks in the country, although new players like Nu or Revolut are expected to join soon. If a bank, regardless of its category, has a capitalization ratio below 10.5%, regulators will initiate an investigation, and if any irregularities are found, the bank may lose its operating license.

It's essential for banks to maintain a solid capitalization ratio, as this not only ensures their operational continuity but also the public’s trust in the financial system. The designation of Citi Mexico as a systemic bank reinforces its responsibility in the event of any circumstances that could affect the country's economic stability. Proper capital management is vital for mitigating risks and ensuring a robust financial system.