Banks/Banking in Mexico
Mexico has developed banking systems comprising of a central bank and other banking institutions such as public credit institutions, public development banks, private investment banks, private commercial banks, loan and savings associations and mortgage banks.
Other financial system components include development trust funds, credit unions; securities market institutions, bonded warehouses, insurance companies, mutual funds and factoring companies.
The Bank of Mexico, the central bank regulates foreign exchange markets and money supply, besides setting reserves for Mexican banks it also enforces credit controls. It controls banking in Mexico through National Banking Commission and offers funds for government programs. It ensures control of inflation and serves the federal government and private deposit banks.
This bank, central bank became autonomous in 1994 to ensure control of inflation.
Banks in Mexico include other official banks for foreign trade, housing, agriculture, public works, cooperatives and sugar industry. Nafinsa is an important institution under the state ownership offering financial support to the industrialization programs in Mexico.
It offers medium-term financing, promotes investment companies, controls oversees stock market and serves the government securities. National Bank of Public Works and Services is a major state development bank and one of the top banks in Mexico.
The private sector of banking in Mexico consists of over 200 banks having over 2500 branches. The two private banks in Mexico are the major banks namely, Bank of commerce and the National Bank of Mexico. The Bank of commerce comprises of 35 affiliated banks with 500 branches.
Development banks in Mexico are organized by commercial banks that offer the private sector financing for development. In fact, in 1992, 18 commercial banks yielding over US$12 billion were sold to private owners and there was a dramatic increase in the investors from 8000 to 80000 in 1993 on the eve of nationalization of banks.
The government has introduced programs to reschedule bank loans and to provide aid to bank debtors by offering 8 million as relief in 1995. Eventually, in 1996 the various efforts of the government to avoid banking system collapsed and it was estimated to 91 billion pesos. However, the government took control of the bank assets to 25% and made efforts in restoring the stability of the financial sector owing to the drop in early 1996 in the interest rates.