Mexican banks face cascading consequences following US sanctions
It comes after the U.S. Treasury Department announced that it was blocking transactions between American banks and Mexican branches of CIBanco and Intercam Banco, as well as the brokering firm Vector Casa de Bolsa.
In presenting the sanctions on June 25, officials provided no evidence to back their claims, fueling criticism from Mexican President Claudia Sheinbaum.
Shortly after, Mexico's banking authority announced that it was temporarily taking over management of CIBanco and Intercam Banco to protect creditors.
Sheinbaum said on Tuesday that the Mexican government is doing everything within it's power to ensure that creditors aren't affected, but said they were well 'within their right' to pull their money from the banks. The U.S. Treasury Department said that the sanctions would go into effect 21 days after the announcement.
All three companies have fiercely rejected those claims.
Despite that, the financial institutions have been dealt economic blows following the announcement, which are set to have stretching impacts on the companies.
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Days after the announcement Fitch Rating downgraded the three institutions and other affiliates, citing 'anti-money laundering concerns' and saying the drop 'reflects the imminent negative impact' that the sanctions could have.
'The new ratings reflect the significantly more vulnerable credit profile of these entities in response to the aforementioned warnings, given the potential impact on their ability to meet their financial obligations,' the credit rating agency wrote in a statement.
On Monday, CI Banco announced that Visa Inc. had announced to them with little warning that it had 'unilaterally decided to disconnect its platform for all international transactions' through CIBanco. The bank accused Visa of not complying with the 21-day grace period laid out by the U.S. Treasury Department sanctions.
'We would like to reiterate that your funds are safe and can be reimbursed through our branch network,' the bank wrote. 'We reiterate to our customers that this was a decision beyond CIBanco's control.'
S&P Ratings also withdrew CI Banco from its ratings index, saying that it was because it had terminated its contracts with the bank following the U.S. Treasury announcement.
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