The internationalization of Spanish banking has consolidated Mexico as one of Spain’s main financial partners outside the European Economic Area (EEA). This is one of the main conclusions of the Bank of Spain’s analysis presented in its latest economic bulletin. Based on the most recent data for 2023, the country led by Claudia Sheinbaum is positioned as one of the most relevant destinations for banking assets and liabilities of Spanish origin, exceeding 10% of the total international exposure of Spanish banking entities.
The banking supervisor has identified Mexico as one of the “material third countries”, a classification used to determine non-EEA jurisdictions that have a relevant impact on the Spanish banking system. This analysis is carried out using criteria established by the European Systemic Risk Board (ESRB) to quantify the weight of the international credit exposures of Spanish entities. Countries that exceed the 1% threshold in any of the exposure categories analysed – original, risk-weighted or in default – in two consecutive quarterly periods are considered “material”.
Mexico, an anchor point in international markets
The report shows that Spain’s banking exposure in Mexico, both in terms of assets and liabilities, reaches significant levels, comparable only with those of economies such as the United Kingdom and the United States, the only two that are ahead. In 2023, banking assets in Mexico stood at around 10%, a proportion that is also reflected in banking liabilities, such as deposits. Due to their magnitude, these figures position Mexico ahead of Brazil, whose weight in banking assets and liabilities was close to 8%, and well above Chile, Turkey, Colombia or Peru, which have exposures of less than 3%.
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The analysis by components shows that loans constitute the largest segment of Spanish assets in Mexico, representing nearly 75% of the total. This pattern reinforces the importance of the country as a key destination for credit from Spanish deposit institutions. In the liabilities section, deposits also concentrate the vast majority of banking operations, reflecting a close bilateral flow between both financial markets.
Spanish investment in Mexico, a consolidated link
In addition to its relevance in the banking context, Mexico has proven to be a relevant partner in the field of foreign direct investment (FDI). According to the Bank of Spain, Mexico concentrates around 9% of the total Spanish FDI in material third countries, registering similar quotas to those of Brazil and only behind the United Kingdom and the United States. This data highlights the strategic importance of Mexico as a destination for Spanish capital, especially in transnational sectors that favor the expansion of Iberian companies in Latin America.
The FDI figures are equally notable in reverse terms. Mexico contributes 2.6% of the accumulated stock of foreign direct investment to Spain, ahead of other emerging economies and with an upward trend in recent years, which strengthens the bilateral economic link.
Trade as the basis of the economic relationship
Along with its relevance in banking and investment, Mexico maintains a prominent position as a trading partner of Spain. The report highlights that Spanish exports to Mexico represented between 1% and 2% of total Spanish exports of goods, services and added value in 2023. Although these figures are more modest compared to other material countries such as the United Kingdom or the United States, reflecting a solid presence in bilateral trade.
As for Spanish imports from Mexico, the relative weight is above 1% in the categories of goods, services and exported added value, being the Latin American country with the highest share in this category among material third countries.
On the other hand, the report highlights that, in the case of emerging economies, the financial links between Spain and Mexico are more significant than trade relations. For example, in trade, Spain’s exposure is greater with Turkey and the United Kingdom, while in the banking and investment sphere, Mexico is positioned as the main market among developing economies.
Greater economic stability
The predominance of Mexico in the Spanish banking and financial system has grown steadily in recent years, thanks to greater economic stability and its strategic geographic position in Latin America. This pattern also responds to the internationalization of Spanish banking, which has increased its presence in emerging markets with growth potential and historical ties with Spain, as is the case of Mexico.
The Bank of Spain report adds that the analysis of financial and trade flows to material third countries, such as Mexico, remains essential to assess macroprudential risks and adjust regulatory policies. The identification of Mexico among the main destinations in terms of banking exposure also represents a recognition of the country’s role within the global strategy of Spanish financial institutions.
Looking ahead, the Bank of Spain experts highlight the need to pay attention to the macroeconomic challenges that may arise in these markets, as well as to the geopolitical financial complexities that could affect international flows.
Source: infobae
