On March 19 Mexico’s Finance and Public Credit Secretariat (SHCP) ruled that due to the current economic crisis, exceptions could be made to a law banning foreign governments from owning Mexican banks. The SHCP indicated that the 20-year- old article 13 of the Law of Credit Institutions should be revised. Although the ruling didn’t mention any banks by name, the question arose because of the US government’s continuing efforts—at a cost of $45 billion since October—to prop up the mammoth US-based Citigroup banking group, which owns Banamex, Mexico’s second largest bank.
In a partial nationalization, the US bought preferred shares in Citigroup last fall. In February US officials said they would convert up to $25 billion of the preferred shares to common stock, which would give the US government a stake of as much as 36% in the banking group and therefore in its subsidiaries.
Banamex itself was nationalized by the Mexican government in 1982, along with the rest of the banking system, in response to a major debt crisis. The government reprivatized the system in the early1990s, but the banks were bailed out again through the Fund for Bank Savings Protection (FOBAPROA) after an economic collapse at the end of 1994, the year the North American Free Trade Agreement (NAFTA) took effect. Most of Mexico’s banks are now foreign-owned. Citigroup bought Banamex in May 2001 for $12.5 billion. (Reuters, March 19; La Jornada, Mexico, March 20)
Economy Secretary Gerardo Ruiz Mateos announced on March 16 that Mexico was raising tariffs on the importation of 90 industrial and agricultural products from the US. The move was in retaliation for the US government’s suspension of a NAFTA-mandated program allowing Mexican truckers to carry out some operations inside the US. The 90 products accounted for $2.40 billion in 2007, representing 1.7% of Mexico’s imports. Almost 70% of the products traded between Mexico and the US are shipped by truck. (LJ, March 17)
From Weekly News Update on the Americas, March 22
See our last posts on the econocataclysm and the politics of NAFTA.
