Background on the Financial Institutions Involved
CIBanco, Intercam Banco, and Vector Casa de Bolsa are Mexican financial institutions that have recently faced credit rating downgrades by Fitch Ratings. These banks are significant players in Mexico’s banking sector, offering a range of financial services to individuals and businesses.
Fitch Ratings’ Decision
On Friday, Fitch Ratings announced that it had lowered the long-term and short-term counterparty risk ratings for Intercam Banco, S.A., Institución de Banca Múltiple, Intercam Grupo Financiero; CIBanco, S.A., Institución de Banca Múltiple; and Vector Casa de Bolsa, S.A. de C.V. (Vector).
- Intercam Banco’s long-term rating was downgraded from ‘AA-(mex)’ to ‘B(mex)’, and its short-term rating from ‘F1+(mex)’ to ‘B(mex).
- CIBanco’s long-term rating was downgraded from ‘A(mex)’ to ‘B(mex)’, and its short-term rating from ‘F1+(mex)’ to ‘B(mex).
- Vector’s long-term rating was downgraded from ‘AA-(mex)’ to ‘B(mex)’, and its short-term rating from ‘F1+(mex)’ to ‘B(mex).
All ratings were placed under Negative Outlook (ON), according to Fitch Ratings.
HR Ratings’ Parallel Action
Earlier in the day, HR Ratings also placed Intercam Banco and another unnamed bank under a “negative outlook” following the decree by Mexico’s National Banking and Securities Commission (CNBV) to temporarily intervene. The purpose of this intervention was to replace the banks’ administrative organs and legal representatives, ensuring the protection of depositors’ and clients’ rights.
Fitch Ratings’ Rationale for Downgrade
According to Fitch Ratings, the “negative outlook” on credit ratings reflects uncertainty regarding the extent of a potential negative impact on the financial institutions’ credit profiles. Additionally, there is concern about the risks arising from new events that could affect the sustainability of their businesses.
Government Response and Financial Health
On Friday, Edgar Amador Zamora, the Secretary of Mexico’s Ministry of Finance (SHCP), addressed concerns about the financial health of these institutions. He stated that after the close of the financial day on Wednesday, it was observed that these institutions experienced financing issues.
During President Claudia Sheinbaum’s morning press conference, Amador Zamora clarified that there were no imbalances in Mexico’s banking system and emphasized the government’s commitment to providing “certainty to savers and investors regarding the reliability of our financial system.”
Key Questions and Answers
- Who are CIBanco, Intercam Banco, and Vector Casa de Bolsa? These are Mexican financial institutions offering various banking services to individuals and businesses.
- Why were their credit ratings downgraded? Fitch Ratings downgraded the ratings due to concerns about a more significant negative impact on the financial institutions’ credit profiles and risks from potential new events affecting their business sustainability.
- What actions has the Mexican government taken in response? The Secretary of Finance has assured the public that there are no imbalances in Mexico’s banking system and emphasized their commitment to maintaining confidence in the financial sector.
- What is the significance of HR Ratings’ parallel action? HR Ratings placed Intercam Banco under a “negative outlook” following the CNBV’s decision to temporarily intervene in the bank, aiming to protect depositors’ and clients’ rights.
