Ipab hires three consultancies to audit bank loans

Mexico's deposit insurance agency Ipab has hired three consultancy firms for about 14.3mn pesos (US$1.25mn) to audit controversial loans that four banks swapped for government aid following the 1995 financial crisis, the agency said in a statement Friday. In July, Ipab and the banks reached a settlement which could more than halve what the government owes the banks to about 107bn pesos. The firms selected by Ipab and the bank each company will audit are: Hernández, Marrón y Cía (HSBC, Bancomer); Gossler (Banamex); and De la Paz, Costemalle-DFK (Banorte). The auditors have 125 working days to submit their findings to Ipab. "They are going to audit the total [amount owed to the four banks]. The audit could lead to further discounts and more loans could be returned [to the banks]," an Ipab official told BNamericas. Under the July agreement, Banamex, BBVA Bancomer, HSBC and Banorte agreed to suspend their lawsuits against a new audit and accept a final review of the loans they transferred to Ipab's predecessor Fobaproa in exchange for notes as part of the bailout of the banking sector between 1995 and 1996. The banks also wrote off 9.48bn pesos of related party loans made to shareholders and board members during the crisis and transferred 7.01bn pesos in suspect loans to a trust where the courts will decide whether Ipab or the banks foot the bill. The 223bn pesos in outstanding Fobaproa notes held by the four banks could be cut to around 107bn pesos when related party and trust loans are deducted and recoveries are taken into account. "We would not expect that any significant issues will come out of this audit. We don't expect anything different from what has been found. This portfolio has already been audited about seven times by different organizations," Fitch Ratings financial institution group senior director Gustavo López said. The administration of President Ernesto Zedillo (1995-2000), through Fobaproa, bought non-performing loans from ailing banks with the understanding that owners would recapitalize their banks. But even with government assistance, 14 of Mexico's largest banks went under, leaving only four survivors and costing Mexican taxpayers around 800bn pesos.