Fitch: Mexico’s banking system could withstand EZ funding crisis

Genevieve Signoret

Fitch today reported seeing “little risk that a potential Eurozone funding crisis would spill over into Latin America’s banking system.”

The ratings agency noted that Mexico has a 45% European subsidiary bank market share. This doesn’t worry Fitch, however:

Subsidiary banks in Latin America are largely funded through local deposits, with little or no direct exposure to short-term parent funding. On the asset side, exposure to parent banks and Eurozone sovereigns is negligible. Moreover, with respect to parent banks most directly exposed to European sovereign debt risks, French and Italian banks are generally small players in Latin American banking.

Fitch does note that “smaller and weaker banks are more directly exposed to risks than their larger market-leading competitors.”