MEXICO CITY (AP) -- Just weeks after it was created, Mexico's bank insurance agency will likely have to bail out the country's third-largest banking group and cover $1.4 billion in losses, financial regulators and bank officials said.
The rescue of Grupo Financiero Serfin SA is the first test of the Bank Savings Protection Institute, created in the aftermath of one of the biggest political issues last year: the government's $65 billion bank rescue.Mexican financial regulators and Serfin executives said at a news conference Thursday that the bank will hold an extraordinary shareholders meeting July 8 to determine if current shareholders are willing to provide the capital needed.
But the officials said that such a move is highly unlikely and suggested that the insurance agency, known by its Spanish initials as IPAB, will have to assume control of Mexico's oldest bank. They did not say what the taxpayer share of the bailout would likely be.
They also said that IPAB will then likely put Serfin up for sale.
Serfin's current management team, headed by chief executive Adolfo Lagos, will continue to run the institution. Lagos said the bidding process for Serfin is expected to be completed in four to six months.
IPAB president Vicente Corta said several banks have expressed their interest in participating in the bidding process. Financial authorities are also holding talks with HSBC, he said.