Mexican banking regulators have begun extraordinary daily checks on the health of banks and brokerages since Donald Trump clinched the US presidential election, four people familiar with the matter said. The checks are focused on the capital and liquidity levels at the financial institutions, three sources said, adding that regulators were particularly interested in banks' holdings of Mexican government peso-bonds.
Yields on Mexico's ten-year benchmark fixed rate bonds have risen over 100 basis points since the election, their highest since 2011, on concern that Trump could rework or scrap the North American Free Trade Agreement (NAFTA) and worries that his stimulus policies could mean higher US interest rates. Two of the sources said that information on derivatives positions was being sought in some cases.
Three sources said their institutions had received one or two calls per day from Mexico's CNBV banking watchdog since Trump won. All the sources spoke on condition of anonymity because they were not authorized to speak to the media. Mexico's banking regulator spokeswoman Priscila Blasco said "we are monitoring all the banks ... We are not officially asking for anything additional."
Several analysts consulted by Reuters after Trump's victory said Mexico's banking sector is well capitalised and stable. Mexico's peso last week took its biggest two-day tumble in more than 20 years following the surprise win for Trump, who has vowed to rework NAFTA and said he will make Mexico pay for a wall on the US Southern border.
Mexico's financial sector was the second hardest hit in the IPC index last week, slumping more than 8 percent after Trump's win. Before the US election, Mexico's financial authorities ordered the country's banks to conduct stress tests to assess the potential macroeconomic impact and volatility resulting from a Trump victory, in addition to a normal annual stress test. .
Jaime Gonzalez, CNBV President, said in an interview earlier this month that the results revealed four or five banks needed to boost their capital buffers but declined to name them, adding that the gap was not serious. The new oversight is in addition to the pre-election tests. Mexican banks and brokerages usually report monthly capital ratios while banks alone report Liquidity Coverage Ratios, according to the CNBV.