MEXICO CITY — 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.