Mexico City, Nov 2 (IANS/EFE): Mexico's financial system is on a solid footing and shielded from the crisis in Europe, but there are some "red lights" that could affect the economy, the Bank of Mexico said.

"We do not see any imbalances that could pose risks to the financial system," Bank of Mexico Gov. Agustin Carstens said.

Mexico's banking system is in good condition and has performed well in comparison to the situation abroad, Carstens said.

The "scenario is pretty favourable and we do not have any concerns", the central bank chief said during the presentation of the annual report on the financial system.

"The market recognizes that Mexican financial institutions are sound and that is reflected in the recent sale of shares by Santander Mexico" on international markets, a deal that generated more than $4 billion, Carstens said.

Mexico will not be affected by contagion from the banking crisis abroad because foreign banks are not transferring funds out of local subsidiaries to overseas units, the central bank chief said.