MEXICO Law and Practice Contributed by: Pablo Perezalonso Eguía, Isabel Ortiz-Monasterio Borbolla and Alejandro Mosqueda Pérez, Ritch, Mueller y Nicolau, S.C.
pledged as collateral. If obligations are not met, the IPAB becomes the owner of the pledged shares and assumes control of the bank’s man - agement. Funding of the Scheme Mexican banks finance the deposit guarantee scheme through ordinary and extraordinary con - tributions. • Ordinary contributions – at least 0.004% of the bank’s annual funding operations. • Extraordinary contributions – capped at 0.003% of the bank’s annual funding opera - tions. • Combined contributions cannot exceed 0.008% of a bank’s funding operations in a single year. Conclusion The IPAB plays a vital role in safeguarding depositor funds and maintaining stability in Mex - ico’s banking system. By guaranteeing deposits and managing distressed banks, it ensures con - fidence and continuity within the financial sector. 7. Prudential Regime 7.1 Capital, Liquidity and Related Risk Control Requirements Mexico’s banking regulatory framework is aligned with international standards, including Basel III, as implemented by the CNBV through the CUB, and the Banking Law. Below is a sum - mary of key requirements and regulatory frame - work. Basel III Standards and Implementation Mexico fully adopted Basel III standards through amendments to the Banking Law and the CUB,
implemented by the CNBV in co-ordination with Banco de México. These reforms: • updated the definition of net capital, compris - ing capital contributors, retained earnings, and reserves; and • mandated minimum capital adequacy ratios for banks, requiring: (a) Total Capital Ratio: 10.5%, including a Capital Conservation Buffer; (b) Tier 1 Capital Ratio: 8.5%, inclusive of the buffer; and (c) Fundamental Capital Ratio: 7%, inclusive of the buffer. The CNBV may impose additional capital requirements or buffers, such as countercyclical buffers, to mitigate risks during economic down - turns. While Mexico’s adoption aligns closely with Basel III, the rules allow flexibility, granting the CNBV discretionary power to adapt require - ments to local market conditions. Risk Management Rules Mexican banks must implement comprehensive risk management frameworks encompassing credit, liquidity, market, operational, and tech - nological risks. Key requirements include the following. • Establishing Risk Committees and Risk Man - agement Units. • Defining and monitoring exposure limits. • Conducting regular stress tests and submit - ting risk assessments to the CNBV. • Adopting sound methodologies for measuring and mitigating risks. Failure to comply with these standards can lead to CNBV intervention, including imposing cor - rective measures or limitations on specific activi - ties.
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