Mexico's banks well-capitalized even under stress-watchdog

MEXICO CITY Thu Nov 8, 2012 7:02pm EST

MEXICO CITY Nov 8 (Reuters) - Mexico's commercial banks are well-capitalized and able to withstand tougher trading conditions, the country's financial stability watchdog said on Thursday.

Stress tests showed that banks would maintain capital buffers of 11 percent or more, even under adverse scenarios, the Financial Stability Council said, without detailing what kind of scenarios they tested against or the results for individual banks.

But regulators urged banks to keep diversifying their portfolios and sources of financing to "decrease even more the risks that could materialize in situations of stress," they said.

In particular, the council flagged new regulations overseas, including the United States' 2010 Dodd-Frank financial oversight law, as a potential source of headwinds.

Other foreign regulators have already asked U.S. banking agencies to exempt foreign government debt from a ban on banks trading for their own profit, arguing that otherwise it could hurt trading in their bonds. U.S. Treasuries are already exempt under the rule.

Mexico's banking sector is dominated by foreign banks, including Citigroup unit Banamex, subsidiaries of Spain's Santander and BBVA, as well as the UK's HSBC and Royal Bank of Scotland.

The Mexican financial system is seen as solid and has weathered both the financial crisis of 2008-2009 and the euro-zone upheaval without major problems.