The Mexican government will inject $1.38 billion into Grupo Financiero Serfin SA, Mexico's third-largest bank, taking it over and completely wiping out existing shareholders.
Shareholders-including HSBC Holdings PLC, with a 19.9% stake-will be offered the chance to inject the cash themselves but are expected to decline because of the amounts involved. The government intervened Thursday because Serfin no longer has the capital to cover its obligations.
The state-owned Bank Savings Protection Institute will own the bank after a shareholders meeting July 8.
The bank, which the government estimates needs $2.7 billion to set it back on its feet, will be prepared for sale to the highest bidder.
The sudden rise in interest rates late last year cut down the bank, just as it was picking itself up from problems earlier in the decade.
Several banks, both local and foreign, have expressed an interest in buying the bank once it has recovered. Serfin needs the injection to cover its liabilities for loans sold to the government in the 1995 bailout of banks.
HSBC may still be interested, and it stands to collect $153 million in three years as a result of the government intervention, a condition that it placed when it injected capital into the bank two years ago. Other banks interested include BBV-Probursa SA, Grupo Financiero Bancomer SA, and Grupo Financiero Santander Mexicano SA.
- John Moody and Eduardo Garcia, Bloomberg News