PRESIDENT VICENTE FOX'S ADMINISTRATION REACHES AGREEMENT WITH FOUR MAJOR INSTITUTIONS ON BANK DEBT.

SourceMex Economic News & Analysis on Mexico, August, 2004

President Vicente Fox's administration has reached an agreement with the country's four largest banks to settle a longstanding dispute regarding disposal of debt related to the economic crisis that followed the 1994 peso devaluation. The crisis forced the federal government to acquire about US$20 billion in bad debt from the banking system to prevent a major banking crisis (see SourceMex, 1995-03-15).

Under the agreement reached in mid-July with the Secretaria de Hacienda y Credito Publico (SHCP) and the Instituto de Proteccion al Ahorro Bancario (IPAB), the four banks will forgo 9.5 billion pesos (US$830 million) in bailout notes in exchange for a government pledge to limit the audit on loans that were transferred to the Fondo Bancario de Proteccion al...