Economics: Commercial banks look solid, but some non-bank banks may prove the soft underbelly
Following the recent events involving a number of banks in the United States (the failures in short order of Silicon Valley Bank, Silvergate Bank and Signature Bank and financial problems at First Republic Bank) and in Europe (e.g., Credit Suisse and its sudden acquisition by UBS), speculation has arisen as to the risks of a possible contamination or contagion effect on Mexico’s banking system. Despite the pressures emanating from the latest turn of events, the general operating and solvency indicators of Mexican banks appear solid, capital adequacy ratios are much higher than required, and bank profits are running at their highest levels of recent years.
However, the longer financial conditions remain tight, the more the odds grow that stresses will expand within and beyond the bank sector, causing greater financial and economic damage than currently anticipated. Even under current conditions, we cannot rule out the possibility that non-bank financial intermediaries such as Sofomes, credit unions, leasing companies and the like will encounter financial problems at a time when interest rates continue to climb and such institutions find it more difficult to get financing from commercial banks and other regular funding sources, such as bond markets.
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