Introduction to Systemically Important Local Institutions (SILIs)
The Board of Governors of the National Banking and Securities Commission (CNBV) has ratified seven Mexican banks as Systemically Important Local Institutions (SILIs). These institutions are crucial to the stability of Mexico’s financial system or economy, as their potential failure could have significant repercussions.
List of Ratified SILIs
The following banks have been confirmed as SILIs by the CNBV:
- BBVA
- Santander
- Banorte
- Banamex
- Scotiabank
- HSBC
- Inbursa
Additionally, Citi has been included in this category, despite being already split but still owning Banamex.
Regulatory Obligations for SILIs
According to the regulatory body, SILIs must establish an additional capital conservation buffer beyond the minimum 10.5% required for the Capital Adequacy Ratio (CAR) and the supplementary capital of Total Loss-Absorbing Capacity (TLAC).
Importance Sistema Grading
The CNBV evaluates the systemic importance of each multiple-bank institution annually, categorizing them based on their potential impact on the financial system or economy. Here’s how the banks ranked:
- BBVA Mexico – Grade IV (Highest Systemic Importance)
- Banco Santander Mexico – Grade III
- Banorte and Banamex – Grade II
- Scotiabank, Citi Mexico, HSBC Mexico, and Inbursa – Grade I (Lowest Systemic Importance)
Each grade corresponds to an additional capital buffer requirement:
- Grade IV: 1.50 percentage points above the minimum 10.5%
- Grade III: 1.20 percentage points above the minimum
- Grade II: 0.90 percentage points above the minimum
- Grade I: 0.60 percentage points above the minimum
Capital Adequacy as of February 2024
As per the CNBV’s data from February 2024, all eight SILIs exceeded the minimum requirements:
- BBVA: 20.45%
- Santander: 18.26%
- Banorte: 22.7%
- Banamex: 20.77%
- Scotiabank: 18.88%
- Citi: 16.97%
- HSBC: 17.54%
- Inbursa: 22.61%
These banks not only meet but surpass the minimum 10.5% CAR requirement, along with their respective additional capital buffers.
Key Questions and Answers
- What are Systemically Important Local Institutions (SILIs)? SILIs are financial institutions whose failure could significantly impact Mexico’s financial system or economy.
- Which banks have been designated as SILIs by the CNBV? BBVA, Santander, Banorte, Banamex, Scotiabank, HSBC, Inbursa, and Citi.
- What are the regulatory obligations for SILIs? SILIs must maintain an additional capital conservation buffer beyond the minimum 10.5% CAR and TLAC requirements.
- How are SILIs ranked based on systemic importance? The CNBV categorizes SILIs into grades I through IV, with Grade IV being the highest systemic importance and Grade I the lowest. Each grade corresponds to an additional capital buffer requirement.
- Do SILIs meet or exceed the minimum capital requirements? Yes, all designated SILIs surpass both the minimum CAR requirement and their respective additional capital buffer requirements.
