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Mexico not affected by sudden collapse of U.S. banks

Mexico City, Mexico — Mexico has not been affected by the sudden collapse of the U.S. Silicone Valley Bank last week. At the recent 86th Banking Convention organized by the Association of Banks of Mexico, President Andrés Manuel López Obrador listed the economic strengths of the country.

Some of his points included historical average monthly wages (16,000 peso per month), an increase in IMSS registration (more than 21 million), low unemployment rate (2.9 percent), old age pensions of 71 percent of Mexican families, an increase in tax remittances and in infrastructure projects.

During the meeting held in the International Congress Center in Mérida, the President stressed that Mexico is one of the most attractive countries for foreign investment due to current economic conditions.

“Last year it grew at a rate of 3.1 percent. It’s not to brag, but we had higher growth than the United States and China. We also continue without contracting additional public debt. The public debt has grown less than in the last three six-year terms,” he said.

When inaugurating the work of the 86th Banking Convention, President López Obrador endorsed the commitment to maintain the operating standards of the banks in Mexico.

“Continue to do legal business in Mexico, continue to obtain legitimate and reasonable profits, let’s all continue promoting progress with justice in our country. (…) May the results, the work of this convention be for the benefit of individuals, families, companies and the people of Mexico,” he said.

He also pointed out that his government has not increased taxes, fuel, gas and electricity prices, which has been in order to protect the popular economy.

As a result of these measures, he said, there is political stability. In addition, security work continues to reduce the crime rate, particularly homicides, kidnappings and robbery, thanks to attention to the causes of violence with special emphasis on young people.

The Association of Banks of Mexico (ABM) affirmed that the country has a stable financial system and has not registered any outflow of savers, despite the banking crisis in the United States due to the bankruptcy of Silicon Valley Bank and Signature Bank.

“There is no risk of contagion due to the closure of the banks in the US. We will see this crisis pass from afar, as in 2008 and 2009,” said Daniel Becker, President of the organization.

Within the framework of the 86th Banking Convention, the headline affirmed that “Mexico is fine”, and therefore, the increase in housing credit will continue, which in 2022 reached 147,000 new approved applications.

“The nominal growth of credit was 11%, reaching 1.2 billion pesos. This benefited 4.5 million people with a delinquency rate of 2.6 percent,” he detailed.

In addition, he highlighted the importance of financial inclusion and that the credit will increase the availability of resources for families in Mexico by 35%.

“We have more than 20 years without any problem or financial risk, which contributes to the stability of the country.”

Regarding the effect on the Fintech sector, Becker pointed out that all will be well received among banks, as long as they correctly manage risk.

Unanimously, the ABM Board assured that they are ready to serve companies that are arriving in Mexico due to nearshoring. “The relocation of supply chains to our country would represent up to an additional 50 billion dollars of investment,” added the president.

Likewise, he estimated that up to 100 billion pesos can be received for this phenomenon in supply chains.

Eduardo Osuna, director of BBVA Mexico, clarified that it is still not clear how many companies are setting up in the country. However, the addition of Tesla to the national territory is of the utmost importance.