Mexico regulators ordered bank stress tests to model Trump victory: sources

Republican presidential nominee Donald Trump takes the stage for a campaign rally in Grand Junction, Colorado, U.S. October 18, 2016. REUTERS/Jonathan Ernst

MEXICO CITY (Reuters) - Mexico’s financial authorities ordered the country’s banks to conduct stress tests to assess the potential impact of Republican candidate Donald Trump winning the upcoming U.S. presidential election, sources said on Wednesday.

Alongside a normal annual stress test, the banks were asked to conduct an additional test to examine the macroeconomic effects and volatility resulting from a potential Trump victory on Nov. 8, six banking sector sources said.

In a statement last month, the Financial System Stability Board (CESF) said that as a result of the ongoing risk surrounding the U.S. election and an expected tightening in Federal Reserve monetary policy, it had examined the results of stress tests of the country’s financial system.

“These exercises showed that the banking sector maintains adequate levels of capital and liquidity to face adverse scenarios,” the CESF, which includes representatives from the Finance Ministry, the Bank of Mexico and the banking regulator CNBV, said in its statement.

The sources said the stress tests were specifically aimed at modeling the possible impact of a Trump victory over Democratic candidate Hillary Clinton, the latest example of the panic the Republican candidates campaign has induced in Mexico.

Trump has vowed to rewrite the North American Free Trade Agreement if he wins, and build a southern border wall that Mexico would pay for. Fears that Trump could take the White House have also weighed on the peso MXN=D2, which is down nearly 8 percent so far this year.

Trump was in Mexico City briefly in August for a highly contentious visit that led to widespread criticism of Mexican President Enrique Pena Nieto and helped precipitate the resignation of then finance minister Luis Videgaray, who was seen as the architect of the meeting.

However, one of the banking sources said Trump’s recent collapse in the polls following a string of groping accusations had helped calm concerns that he might win.

Writing by Gabriel Stargardter; Additional reporting by Roberto Aguilar, Nathalie Schachar and Christine Murray; editing by Frank Jack Daniel