Mexico Details Plan for Selling Nation's Banks : Economics: Committee will scrutinize would-be buyers of the government's 66% stake in 18 financial institutions.


Within a year, the Mexican government will begin selling its 66% stake in each of the country's 18 commercial banks.

Treasury Secretary Pedro Aspe on Monday told those attending the National Banking Convention that a committee of finance officials will be formed to sell the government's interest in the banks--partly on the Mexican Stock Exchange and partly by a complex auction process.

That is a departure from the practice of the past eight years, when hundreds of state-owned companies have been auctioned off by a divestiture unit in Mexico's Treasury Ministry.

A Treasury official had predicted changes in privatization procedures with the pending sales, including the banks, because "before, we were just selling companies; now, we are selling an entire economic sector."

For that reason, he said, the sales must proceed more carefully and with assurances that the new owners have the ability to administer each company. Otherwise, the sales could upset the entire national economy, said the official, who spoke on condition that his name not be published.

Mexico's 60 banks were nationalized in 1982, when the government accused them of engaging in policies that contributed to capital flight from the country. Since then, the number of banks has been reduced to 18.

In 1987, the government began selling non-voting shares--called CAPs, a Spanish acronym--in the banks on the Mexican Stock Exchange. They now account for 34% of the ownership of the banks.

As part of privatization, CAPs will become shares with restricted voting rights. The government will convert another 15% of each bank's equity into such shares, which eventually will be sold on the stock market. This phase of privatization is scheduled to be completed by next July.

Meanwhile, a bank divestiture committee will begin selecting the new controlling groups for each bank.

For appraisals, the committee will set uniform standards for internal audits of each bank. The National Banking Commission, a regulatory agency, will hire external auditors to review the results.

Potential bidders will be asked to present proof of good character and of their knowledge of bank administration. Once investor groups qualify, 51% controlling interests in the banks will be sold to the highest bidders.

Controlling interest in banks may be purchased by financial holding companies with up to 30% foreign ownership. Foreigners may have only a 10% interest in investor groups formed specifically to buy banks--and even that will require special approval.

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