Mexico cracks down on use of funds by foreign banks

Mexican financial authorities backed a new rule that cracks down on the ability of foreign banks to siphon funds from their Mexican subsidiaries to shore up capital shortfalls back home.

The rule, released by the central bank earlier this month, requires banks to seek permission at least 20 banking days before making any transfers to an affiliate that total 25 percent or more of their own capital.

Mexico's financial stability council, which includes the finance ministry and banking and securities regulators, said the new rules would help protect the Mexican financial system from crises that parent banks face in their home countries.

Source: Reuters