Mexican Banks Exposed to Credit Crunch

A big lingering question for global financial markets is how the crisis in US subprime mortgages will impact credit availability globally, and Mexico is seen particularly vulnerable. “Mexico’s banking system would be most vulnerable to an eventual decision by large banking powerhouses to tighten credit availability,” says Credit Suisse. “Over 80% of assets in the Mexican banking system are owned by foreign institutions. Chile is next on the vulnerability list, with 46% of banking assets in foreign hands,” it adds. As with Mexico, two of the largest foreign banks doing business in Chile are Spain’s BBVA and Santander. Another concern on the radar is a drop in remittances from the US. “Vulnerability appears to be high for small Central American and Caribbean countries,” says Credit Suisse.