In 1988 the Basel Committee on Banking Supervision announced the Basel agreement, which established essential principles for a regulatory framework for banks. The original Basel guidelines have since been amended several times. Basel III, the most recent of these amendments, seeks to change the rules for common equity and the method for calculating statutory capital reserves that all banks must have, and also creates the concept of a 'capital conservation buffer'. These changes were introduced as a result of the 2008-2009 global financial crisis for the efficient management of capital and to improve the monitoring of liquidity risks. One of the main purposes of Basel III is thus to improve the regulatory framework of banks and strengthen the global financial system.

The Basel Committee on Banking Supervision has set January 1 2013 as the date on which Basel III will become effective. However, Mexico intends to implement its guidelines during the second semester of 2012 for the following reasons:

  • Generally speaking, banks have the required solvency to implement Basel III; and
  • Early implementation does not imply a significant regulatory cost, due to the favourable conditions prevailing in the Mexican banking system.

There are two possible approaches to implement Basel III:

  • a differentiated approach, in which it is applied only to banks that have a minimum level of assets. This approach assumes that not all banks have the same resources to implement the new guidelines and may affect the credit level and position of smaller banks; or
  • an equalised approach, which assumes that all Mexican banks can carry out the same activities and that the guidelines therefore should not be applied differently based on the level of each bank's assets.

The proposed changes to implement Basel III are in consultation with Mexican banks in order to work out technical details. Changes will then be sent to the Federal Regulatory Improvement Commission(1) for approval and publication in the Federal Official Gazette.

The Mexican financial system, including the banking system, has shown strength in the face of the recent global financial crisis, due in part to its macroeconomic stability and also thanks to its compliance with international standards such as Basel III. In light of the recent presidential elections, the next administration will be forced to continue implementing rules and taking action to strengthen Mexico's financial system and economy.

For further information on this topic please contact Miguel Angel Peralta or Christian Dorantes Picazo at Basham Ringe y Correa SC by telephone (+52 55 5261 0474), fax (+52 55 5261 0557) or email ([email protected] or [email protected]).


(1) The Federal Regulatory Improvement Commission is a decentralised agency of the Department of the Economy that aims to guarantee transparency in the enactment process of federal regulations.