Strengthening Banking Risk-Based Supervision in Mexico

Project Development Objective (PDO)

The objective of this technical assistance is to strengthen the risk-based supervision of Mexico’s National Banking and Securities Commission, specifically by putting in place an appropriate governance structure. A mix of on-site and off-site supervision methodologies, tools, processes, and monitoring indicators will enable supervisors to effectively monitor the banking system and to promote the stability of Mexico’s financial sector.


Taking into account the findings and recommendations presented in Mexico’s latest Financial Sector Assessment Program (FSAP) from 2012, Mexico’s National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or CNBV) launched the Integral Supervisory Process Project to review, improve, standardize, and adequately document the supervision of Mexico’s financial institutions. The Mexican financial sector is expected to continue to grow faster in the upcoming years than will the rest of the Mexican economy, and this growth implies additional challenges for CNBV. Because of these challenges, CNBV requested support from the FIRST (Financial Sector Reform and Strengthening) Initiative and the World Bank—specifically technical assistance to provide insights into the supervisory processes, methodologies, and monitoring system. 


The project team is developing (a) guidelines to enhance CNBV’s risk governance framework and (b) an action plan to improve and standardize CNBV´s supervisory processes in accordance with international best practices. In addition, the team is providing guidelines to define the scope and intensity of supervision (on-site) and surveillance (off-site) activities as well as guidelines to strengthen the definition, quantification, and mitigation of individual and systemic risk factors. Those factors include internal controls, auditing, and risk management, among others. 
The team is also providing recommendations for the functions, activities, methodologies, and processes of several specialized units whose activities support supervisory processes. Furthermore, the team is recommending tools and indicators to (a) monitor the supervision of banking institutions and (b) assess those institutions’ relevance to and alignment with institutional objectives.

Expected Outcomes

The expected outcomes of the project are as follows:
1.  Improving efficiency, consistency, and rigor in banking supervision, resulting from comprehensive
     efforts such as those listed below
2.  Establishing a new governance framework for the CNBV 
3.  Updating supervisory procedures, tools (for example, risk assessment matrices), manuals,
     policies, processes, scope, and intensity to align with international best practices
4.  Improving coordination
5.  Establishing processes for monitoring banking supervision