The Mexican financial system stands on solid ground and has re-instilled the confidence among the financial fraternity that the country can withstand any headwind. The country proved its credentials by not letting the financial crisis of 2008-2009 and the euro-zone upheaval cause any major problems. IMF agrees that the Mexican banking system is strong, in which private banks are profitable and well-capitalized. The country is firmly based on its past achievements and strives to live up to it.

 Mexico's Banks Pass ‘Stress Tests’
 
A recent report published on Reuters.com suggests that Mexico's commercial banks are well-capitalized and can withstand tougher trading conditions. The Financial Stability Council informed that ‘Stress tests’ result show that the banks would maintain capital buffers of 11% or more, even under adverse scenarios. However it wasn’t revealed as to what exactly these tests were. The council mentioned that the regulators urged banks to keep diversifying their portfolios and sources of financing to "decrease even more the risks that could materialize in situations of stress."

New regulations for overseas have been implemented by the council. This includes the United States' 2010 Dodd-Frank financial oversight law which is a potential source of headwinds. Other foreign regulators have already asked U.S. banking agencies to exempt foreign government debt from a ban on banks trading for their own profit, arguing that otherwise it could hurt trading in their bonds. U.S. Treasuries are already exempt under the rule.

Foreign banks dominate Mexico's banking sector. This includes likes of Citigroup unit Banamex, subsidiaries of Spain's Santander and BBVA, as well as the UK's HSBC and Royal Bank of Scotland.

For any country on the path to industrialization needs a strong banking industry as a lifeline. It is even more important for sectors such as Mexico real estate and tourism which calls for large capital infusion for funding.  

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