Introduction
As an economist with a focus on Mexico, I have not specialized in bank supervision. However, from the Banco Central’s perspective as the ultimate lender, I’ve had to familiarize myself with liquidity and solvency matters in banks. Over the long term, I’ve observed the Mexican state’s inability to prevent bank failures. Historical examples include the 1934 rescue of the Banco de Londres and the 1963 Somex financial crisis. The National Banking Commission (now CNBV) had already existed for a decade when the Banco de Londres crisis erupted.
Sofipo CAME: A Significant Player in Distress
Similar to the historical cases mentioned, Sofipo CAME was not a minor intermediary. In terms of leverage, it absorbed 43% of total obligations in its sector. With over 1.3 million savers entrusting their capital to it, CAME was not an insignificant player. Contrary to claims, not all of its savers are covered by the Prosofipo risk protection insurance in this case. Approximately 1% of depositors have rights exceeding the minimum insured amount of 212,000 pesos.
A History of Irregular Practices
Beyond CAME’s relative importance in its sector, the primary concern is the duration of its irregular practices. It began with offering savers rates above market value, followed by accounting manipulations and deceiving authorities. A witness, speaking anonymously, stated, “The CNBV supervised CAME but did nothing.” The crisis didn’t erupt due to negligent authorities, but because of an obligation that matured in favor of the FIRA fideicomiso for 800 million pesos.
State Entities and Unreliable Intermediaries
The article highlights the surprising naivety and trust of many state entities in dealing with unreliable intermediaries like CAME. The main issue, however, is the CNBV’s proven historical inefficiency in preventive intervention. As Marco A. Mares stated, “There are doubts about the efficiency of detecting irregularities and deteriorating capital levels in a timely manner.”
Key Questions and Answers
- Who is Sofipo CAME, and why is it relevant? Sofipo CAME was a significant financial intermediary in Mexico, handling 43% of total obligations in its sector and serving over 1.3 million savers.
- What led to its insolvency? CAME’s insolvency resulted from a combination of offering savers rates above market value, accounting manipulations, and deceiving authorities. The final straw was an obligation maturing in favor of the FIRA fideicomiso for 800 million pesos.
- Why are state entities’ actions surprising? State entities displayed naivety and trust in dealing with unreliable intermediaries like CAME, which eventually led to the crisis.
- What is the CNBV’s historical inefficiency? The CNBV has historically struggled with preventive intervention, failing to detect irregularities and capital level deterioration in a timely manner.
