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Buying Mexican banks is becoming a popular strategy for large international financial institutions. But before the Mexican banking industry was in vogue, Canada's Scotiabank was here, quietly testing the waters.
Following the collapse of Grupo Financiero Inverlat after the 1994 peso crisis, Scotiabank bought a 10% stake in the bank from bank rescue agency Fobaproa for US$31.2 million.
The Canadian bankers apparently considered their investment to be a success. In 2000, Scotiabank increased its ownership in Inverlat to 55%, and now, Fobaproa's descendent, the Bank Deposits Protection Institute (IPAB), is planning on selling its remaining 36% stake in Inverlat. Scotiabank is an obvious potential buyer.
BUSINESS MEXICO spoke with Scotiabank-Inverlat President Peter Cardinal about his bank's experience in Mexico.
As the first foreign bank to invest in the Mexican financial industry following the 1994 peso crisis, did Scotiabank get a bargain-basement deal for its stake in Inverlat?
There's a perception that Scotiabank got an exceptionally good deal, but you have to take into account that we came in at the depth of the crisis. At that time, the loan portfolio was in bad shape, and the bank was not profitable. Scotiabank had already written off a 10% investment in the equity of Inverlat, plus we invested...