In Mexico there are six banks that are of great systemic importance, and in the event that any of them fail, it could cause serious problems.
The turmoil in the US banking sector could worry people about their money. In recent weeks you have heard about the problems since the bankruptcy of Silicon Valley Bank and Signature Bank, and you have wondered: what would happen if something similar happened in Mexico and you have your money in Banorte, BBVA or any other bank?
Although, according to economists and the financial authorities themselves, this scenario is unlikely, it is important that you know what would happen if a bank went bankrupt in Mexico, what would happen to your money and which institution protects your savings.
Until last year, Banorte had more than 12 million clients in the banking sector, 27,000 employees serving 1,191 branches, 7,425 ATMs and 6,989 contact points through banking correspondents throughout the country. For its part, BBVA Mexico reaches a total of 28 million customers.
Why can a bank fail?
The CONDUSEF warns that the bankruptcy of a Bank can cause serious problems for the economy and financial system of a country. There are several causes and among others are: mismanagement of the institution and legal obligations, granting of larger loans to large companies, poor supervision by the banking and financial authorities, even if their capitalization ratio is less than 10.5%, the authorities can withdraw your banking license.
In Mexico there are six Banks that have great systemic importance, that is, in the event that any of them go bankrupt, it could cause problems in the national economy and the financial system, these Banks are:
They are considered to be the largest banks in the country due to the number of active clients, so they must adhere to the established regulations and have a minimum capitalization of 10.5%, thus guaranteeing that they will comply with their obligations, according to with the National Banking and Securities Commission (CNBV).
What happens if your bank goes bankrupt?
Taking into consideration that 41.1 million people in Mexico, between the ages of 18 and 70, have at least one bank account in some financial institution, according to the 2021 National Survey of Financial Inclusion (ENIF), it is important to know that the money you have deposited is protected by a deposit insurance, which is a free benefit granted when opening an account, it is administered by the Institute for the Protection of Bank Savings (IPAB).
It is estimated that deposit insurance currently protects 99% of the existing accounts in the Banks, in such a way that, when a credit institution has entered a state of liquidation, the savings of the account holders are protected for up to 400 thousand Investment Units (Udis), something like 3 million pesos approximately, so those people who have the same or less amount than the one covered by the insurance, the IPAB will return all their money.
The IPAB pays per person and per Bank, that is, when an account holder requests payment of the deposit insurance, the Institute will make a sum of all the money accumulated in the Bank’s accounts, in order to be able to pay a defined amount. Therefore, it is recommended that for those people whose savings exceed 400,000 Udis, diversify their savings, in other words, that they open other accounts in other banks with amounts that do not exceed 400,000 Udis.
Likewise, in accordance with the operating rules of deposit insurance, it can only cover five bank products, which are: savings accounts, payroll accounts, debit cards, checking accounts and promissory notes with returns payable at maturity. It cannot cover investments or deposits made in Insurance Companies, Savings Banks, Popular Financial Societies, Savings and Loan Cooperative Societies, Investment Societies, Development Banks and Brokerage Houses.
Who pays for bank deposit insurance? The Banks themselves, depending on their client portfolio and the financial balance that they report to the CNBV, is for this reason this benefit is free for account holders.
Source: La Silla Rota