What makes an institution considered to be of ‘local systemic importance’? We explain to you.
Institutions of local systemic importance are those whose potential failure may affect the stability of the financial system.
The National Banking and Securities Commission (CNBV) ratified BBVA México, Santander, Citibanamex, Banorte, HSBC and Scotiabank as institutions of greater local systemic importance.
According to the commission, institutions of local systemic importance are those whose potential bankruptcy may affect the stability of the financial system or the economy of Mexico.
“The provisions establish for these institutions the obligation to establish a capital conservation supplement, in addition to the 10.5 percent corresponding to the minimum capitalization index required for all multiple banking institutions,” the agency added.
The Governing Board of the CNBV “approved the annual evaluation of multiple banking institutions, determining the following institutions as of local systemic importance in accordance with current provisions.”
According to the commission, BBVA is the bank with the greatest local systemic importance, in grade four with 1.50 percentage points.
Santander and Citibanamex were ranked in grade three of systemic importance, so their capital supplement should be 1.20 percentage points, while Banorte was ranked in grade two of systemic importance, with 0.90 percentage points.
HSBC and Scotiabank were ranked in grade one for local systemic importance, with 0.60 percentage points.
Treasury remarks: banking in Mexico is strong
Secretary Rogelio Ramírez de la O ruled out that Mexico faces a systemic financial risk, due to the bankruptcies of banks in the US.
Within the framework of the 83rd edition of the Banking Convention last March, he argued that neither the Bank of Mexico lent itself to the game of lowering its rates excessively, nor did the central government take cheap debt taking advantage of the low rates, beyond what Congress approved.
“Yes, the big countries have a problem to solve, the credibility of the central banks has to be restored,” he stated in an interview with Enrique Quintana, president and director of El Financiero.
Source: El Financiero