Mexico’s banking industry has experienced numerous changes since being nationalized in 1982, then re-privatized in 1991. It is believed that the country’s 10 year period of state ownership weakened the national banking system, as the government failed to assure a strong supervisory and regulatory structure. During this period, government-owned banks discouraged lending practices and put policies into place that left banks significantly undercapitalized by the time re-privatization occurred. Poor supervision and regulatory enforcement during the early 1990s also led to many reckless (and often fraudulent) lending practices, with banks undermining their own stability by lending beyond the scope of their deposits. By 1994, the financial crisis (characterized by prohibitively high interest rates) led to a government bailout, which primarily took the form of the temporary capitalization of the system and assistance in the payment of foreign debts. The bailout was costly, however, estimated at 20% of the country’s GDP. As a result of these many crises and failings, the Mexican financial system has since been overhauled, with all banking, accounting, and lending practices now conforming closely to US standards.

Today’s banking system in Mexico can be characterized as one that continues to strive for a strong regulatory framework and an increase in sound lending activities to both the public and private sector. The system also works to promote activity in the areas of insurance, leasing, and mortgaging. As a result, the International Monetary Fund (IMF) now lists Mexico as a nation with a “strong” banking system, with private banks being particularly well-capitalized and profitable. Recent years have seen the banking industry increasingly dominated by foreign companies, however, or by domestic and foreign company mergers (the exception to this rule being Banorte, the primary subsidiary of Grupo Financiero Banorte, one of Mexico's largest and oldest financial institutions). US-based Citigroup’s acquisition of Mexico’s Banamex in 2001 was the largest US-Mexico corporate merger in history, at approximately US$12.5 billion. Still ranking as the largest financial institution in Mexico, however, is Bancomer, which is associated with the Spanish financial services group, BBVA.

Despite many of these recent, high-profile acquisitions and mergers, bank credit only accounts for 22% of Mexico’s GDP (compared, for example, to Chile’s bank credit GDP representation of 70%). Efforts at financial liberalization continue, however, as do efforts to insert Mexico’s economy more significantly into the world market. The high number of mergers and acquisitions that took place in the 1990s has left much of Mexico’s financial sector in foreign hands, with these non-Mexican affiliates competing with still-independent financial firms in the areas of commercial banking, mutual funds, retirement-fund administration, brokerage and securities houses, and leasing companies. Listed among Mexico’s most vital financial institutions are savings and loans, credit unions, bonding companies, bond warehouses, government development banks, and foreign-exchange firms.

Currently, the country’s central bank is Banco de México, an internally autonomous public institution whose primary objective is to maintain stability in the purchasing parity of the peso, and to act as a lender of last resort. Traditionally, the governor of Banco de México is appointed by the president and subsequently approved by the legislature (to which the bank is ultimately accountable). Banco de México is also responsible for monitoring changes in key economic indicators, such as exchange rates and the parity between projected and observed rates of inflation. In 1996, the bank established mechanisms to acquire foreign reserves when the peso is strong, resulting in high levels of reserves (primarily from oil revenue). Such activities have worked to improve the terms and conditions of the debt Mexico has established with foreign markets. However, some analysts have become concerned in recent years with the country’s heavy reliance on oil income. In 2003, Banco de México created a program to sell US dollars through monthly auctions, with the goal of maintaining moderate but stable levels of reserves. According to the central bank, international reserves stood at US$75.8 billion in 2007.