Mexico Plans To Submit Bank Failure Bill To Congress - Minister
June 10 2010 - 3:14PM
Dow Jones News
Mexican Finance Minister Ernesto Cordero said Thursday that the
government plans to submit legislation to Congress later this year
that would make it easier for regulators to close insolvent
banks.
"Its objective is to create an efficient process that minimizes
the fiscal cost and improves the possibility of recovering assets
with greater legal certainty," according to a copy of prepared
remarks that Cordero made during a banking seminar hosted by the
ministry.
"The bill is in a very advanced stage and could be sent to
Congress in the next [ordinary] legislative session" that starts in
September, he added.
Governments in the U.S. and Europe also are grappling with the
prickly question of how to wind down failing or insolvent banks
without putting taxpayer money at risk or disrupting financial
markets following several high-profile failures during the 2008-09
global financial crisis.
Mexico experienced its own home-grown banking crisis in 1995,
when a sharp devaluation of the peso and a surge in interest rates
caused most of the country's banks to go into government
receivership or receive billions in bailout funds.
Bankers and analysts have put the total cost to the public of
the bailout program and liquidation of insolvent banks at around
$70 billion.
Fast-forward 15 years and Mexico's banks are profitable and
among the best capitalized in the World. Foreign investors like
Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA) and Citigroup
Inc. (C), which snapped up most of Mexico's leading banks in the
wake of the 1995 crisis, brought capital and professional
management to the local banking industry.
The sector's combined net profit grew 11% to 62.06 billion pesos
last year, and the top seven banks sported an average
capitalization ratio of 16.9% at the end of March, more than double
the regulatory minimum of 8%, according to the National Banking and
Securities Commission.
Asked by reporters on the sidelines of the event about upcoming
anti-money laundering measures that would restrict cash deposits of
U.S. dollars, Cordero said the government will make public the
measures "very soon".
"[The measures] aren't going to interfere with formal,
legitimate economic activity. They aren't going to affect the
dollar operations of citizens who need to buy and sell dollars," he
said in a transcript of the question-and-answer session with
reporters.
-By Ken Parks, Dow Jones Newswires; 52-55-5980-5177;
ken.parks@dowjones.com
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