According to the IMF the Mexican banking system is strong, in which private banks are profitable and well-capitalized. The financial and banking sector is increasingly dominated by foreign companies or mergers of foreign and Mexican companies with the notable exception of Banorte. The acquisition of Banamex, one of the oldest surviving financial institutions in Mexico, by Citigroup was the largest US-Mexico corporate merger, at US $12.5 billion. In spite of that, the largest financial institution in Mexico is Bancomer associated to the Spanish BBVA.
The process of institution building in the financial sector in Mexico has evolved hand in hand with the efforts of financial liberalization and of inserting the economy more fully into world markets. Over the recent years, there has been a wave of acquisitions by foreign institutions such as US-based Citigroup, Spain’s BBVA and the UK’s HSBC. Their presence, along with a better regulatory framework, has allowed Mexico’s banking system to recover from the 1994–95 peso devaluation. Lending to the public and private sector is increasing and so is activity in the areas of insurance, leasing and mortgages. However, bank credit accounts for only 22% of GDP, which is significantly low compared to 70% in Chile.[58] Credit to the Agricultural sector has fallen 45.5% in six years (2001 to 2007), and now represents about 1% of total bank loans. Other important institutions include savings and loans, credit unions, government development banks, “non-bank banks”, bonded warehouses, bonding companies and foreign-exchange firms.
A wave of acquisitions has left Mexico’s financial sector in foreign hands. Their foreign-run affiliates compete with independent financial firms operating as commercial banks, brokerage and securities houses, insurance companies, retirement-fund administrators, mutual funds, and leasing companies. Other important institutions include savings and loans, credit unions, government development banks, “non-bank banks”, bonded warehouses, bonding companies and foreign-exchange firms.
