MEXICO: An Introduction to Banking & Finance

Mexico’s financial system has shown remarkable stability throughout 2025. Despite considerable challenges – especially political and legal – credit has kept flowing and confidence in Mexico’s banking and capital markets remains firm.

Background: 2025

On the economic front, banks entered 2025 in a strong position and for the most part have managed to sustain it. This is particularly remarkable considering the unexpected developments that would be seen throughout the year.

In the political arena, things were much livelier. Mexico had barely begun to adjust to the new Sheinbaum administration (which came into office in October 2024) when elections in the United States delivered President Trump back to the White House in January 2025. New administrations coming in at the same time in both countries usually make for bumpier transitions – and a more noticeable lull in business activity – while investors and other participants gauge and adapt to the size and colour of adjustments in each country as well as in the interaction between both governments. This time around, however, the political landscape on both sides of the border made it particularly difficult to predict how the ground would shift.

Indeed, this transition was marked by a number of changes that have significantly impacted the legal environment and, consequently, the economic activity and outlook.

First, a number of major changes were implemented in Mexico, beginning with amendments to the legal framework of heretofore autonomous governmental agencies, such as:

• the former Instituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales (National Institute for Transparency, Access to Information and Data Privacy – INAI);
• the Instituto Federal de Telecomunicaciones (Federal Telecommunications Institute – IFT); and
• the Comisión Federal de Competencia Económica (Federal Economic Competition Commission – COFECE).

All of these are now defunct, with their respective functions having been folded into different agencies directly under the executive branch.

Sending even greater ripples across the country (and beyond) was the landmark reform of the Mexican judiciary, whereby – among other changes – most judges will now be elected by popular vote.

These reforms imply major changes to institutions, rules, processes and practices that had been in place for decades in Mexico, and on their own will take a considerable amount of time to be digested. Some other developments, however, have been stealing a good amount of the spotlight.

When President Trump came into office on 20 January 2025, he signed several executive orders, notably one initiating the process of designating a number of known drug cartels based in Mexico, as well as other transnational organisations, as Foreign Terrorist Organizations and Specially Designated Global Terrorists.

The potential ramifications of this for the Mexican financial community were immediately apparent, and spurred significant activity within compliance and legal departments, as well as multiple conversations in industry forums and with Mexican and US regulators.

The risks from this renewed focus by the US government on combating drug cartels came into stark relief on 25 June 2025, when the US Financial Crimes Enforcement Network (FinCEN) issued orders designating three Mexican financial institutions – CIBanco, Intercam and Vector – as “of primary money laundering concern”.

As is now known, these designations wreaked a degree of havoc within the Mexican financial system, not least because of the unforeseen (at least by US authorities) implications for the trust business handled by CIBanco, which had a disproportionate size vis-à-vis its market share as a bank. Other banks, broker-dealers, financial entities, pension funds, government agencies, very large institutional investors and myriad other market participants were forced to scramble to migrate their trusts elsewhere in a very tight timeframe, while navigating uncharted waters and a significant amount of uncertainty as to the extent and reach of the orders.

At the same time, Mexican regulators were forced to open urgent channels of communication with their US counterparts, though this will hopefully have positive implications in the long run.

Ultimately, the FinCEN orders resulted in M&A transactions for each of the affected entities being conducted in record time, with mixed results for their various stakeholders; however, the financial community at large will be extracting lessons from all of this and continuing to adjust for quite some time.

While this was happening, the USA, Canada and Mexico began gearing up for the formal joint review of the United States–Mexico–Canada Agreement (USMCA), scheduled for 2026, in the midst of some very explicit tariff discourse and activism by the Trump administration.

Challenges and Opportunities Ahead: Outlook for 2026

As 2025 comes to a close, it is encouraging to see that, in spite of the skepticism – if not outright concern – with which many view the recent reforms in Mexico, leading global financial players remain bullish on Mexico, continuing to move ahead with major plans to expand their presence and activity. This is no doubt a testament to their long-term focus and the opportunities that the country continues to offer, driven by macro factors such as still favourable demographics, the large portion of the population that has yet to be banked, and the very evident need for infrastructure across the country, which of course requires financing.

One thing to keep a close eye on as we move into 2026 is the evolution of the Mexican judiciary. The impact of the reform is profound, and it will be years before courts settle into their new dynamics and new trends become visible and predictable. It seems certain that a number of deals will look to migrate to arbitration, but it is also clear that this will by no means be the solution for everything – especially for lenders. One size does not fit all here, and it is to be expected that a substantial number of disputes will still be sorted out in court. However, a number of investors can also be expected to look to cross-border solutions – whether agreeing on the jurisdiction of foreign courts, arbitration administered by foreign organisations or even financing structures that bypass the need for Mexican courts altogether – which might not have been considered before.

Finally, it will be very interesting to see how negotiations for the review of the USMCA progress. US investors, organisations and even some government entities have been ramping up pressure on Mexico to reverse course on issues such as the recent reforms to the energy sector, aviation and even the judiciary’s reform itself. That this may also result in changes to the Agreement’s dispute resolution mechanisms cannot be ruled out. If all this were to mean that Mexico could finally start making good on the nearshoring promise, the net result might just be worth it.

It seems then that the consensus view for 2026 is (again) one of cautious optimism, especially as inflation continues to decline and lower rates are expected ahead, reducing borrowing costs and reviving demand for credit. Most signs point to a slow but steady return to growth in lending and issuance, supported by healthy liquidity and a deep pool of investors. Companies that refinanced early will have room to invest again, while those waiting for better conditions are preparing to re-enter the market. Cross-border activity should also increase as investors continue to see Mexico as a relatively low-risk, high-depth market within the region.

In essence, Mexico’s banking and finance sector ends 2025 wiser and better prepared than it began – tested by largely unprecedented legal and regulatory challenges and political upheaval, yet strengthened by discipline and positioned to benefit once the cycle turns, provided it is able to capture and apply the lessons learned this year.