| | |  Business News | January 2009 
Mexico's Banks Remain Well Capitalized in November
 Noel Randewich - Reuters
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 |  | In recent months, banks have become more cautious about handing out new credit cards and consumer loans, sectors increasingly affected by nonperforming loans. |  | | |
Mexico City - Mexico's banks remained well capitalized in November as toxic loans devastated financial groups in the United States and Europe, the country's bank regulator said on Monday.
No. 2 Mexican bank Banamex, whose parent Citigroup (C.N) was rescued in November by the U.S. government as it faced billions of dollars in losses, held its capital adequacy ratio at 16.39 percent at the end of the month.
HSBC Holding Plc's (HSBA.L) Mexican bank marginally increased its capital adequacy ratio to 10.77 percent, the lowest among the country's main financial groups but still within the commission's ideal range.
Capital adequacy ratios illustrate banks' capital relative to their risk-weighted assets and show how prepared they are to weather losses.
Mexico forces banks with capital adequacy ratios under 10 percent to come up with plans to bump up their capitalization.
Banks that let their capital adequacy ratios fall below 8 percent may be ordered to stop paying dividends until they improve.
Spanish bank BBVA's (BBVA.MC) Mexican unit had a capital adequacy ratio of 12.75 percent at the end of November.
Lending to consumers and businesses in Mexico expanded at explosive rates of around 50 percent a year in 2005 and 2006 as banks tended to a market starved of financial services after a crisis in the mid-1990s brought the industry to its knees.
But in recent months, banks have become more cautious about handing out new credit cards and consumer loans, sectors increasingly affected by nonperforming loans.
Mexico's banks have not focused on subprime lending and have avoided many problems plaguing financial groups in the United States and Europe.
But defaults are expected to rise further over the coming months as the financial crisis cripples economic growth.
(Editing by Richard Chang) |
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