Mexico’s bank regulator stepped in to temporarily run CIBanco SA and Intercam Banco SA, an extraordinary measure aimed at protecting customers following money-laundering accusations by US authorities.
The claims that the lenders were potentially facilitating drug cartels’ money laundering sent shock waves through a country scarred by banking scandals and raised questions about whether more institutions could become targets of Washington. Mexico’s banking lobby rushed to say the interventions wouldn’t impact the country’s financial system.
The National Banking and Securities Commission, or CNBV, said in a statement Thursday that it was replacing management at the CIBanco and Intercam “in order to safeguard the rights of these institutions’ savers and clients, given the potential implications for these banks of the measures announced by the United States Department of the Treasury.”
CIBanco said in a statement that it would cooperate with the intervention and assured clients that their funds were safe under Mexican law.
“We will collaborate at all times with regulatory authorities in both Mexico and the United States, within the legal framework governing financial institutions, to address any potential concerns identified by the CNBV and FinCEN,” CIBanco said.
Intercam didn’t immediately respond to a request for comment, but had denied the accusations on Wednesday.
The US Treasury’s Financial Crimes Enforcement Network, or FinCEN, slapped CIBanco, Intercam and brokerage Vector Casa de Bolsa SA with orders that will prohibit certain fund transmissions with US entities. Vector, which is not a bank, is not subject to such intervention since it does not hold deposits. The orders take effect 21 days following publication in the US Federal Register. The register’s website does not yet include publication of the orders.
The regulator’s move comes amid risks that clients could be spooked by the allegations even as President Claudia Sheinbaum responded defiantly to the US measures, arguing she’s seen no evidence to support the designations.
Mexicans have seen their fair share of banking scandals, from failures tied to related-party loans in the 1990s to HSBC Holdings Plc’s admission to anti-money laundering and sanctions violations that facilitated the laundering of at least $881 million in drug proceeds.
The Asociacion de Bancos de Mexico, or ABM, said the bank interventions wouldn’t impact the stability of the country’s banking system.
“The announced intervention seeks to create an environment of certainty that will allow institutions to operate normally for the time required to ensure that they meet regulatory standards,” ABM said in a statement.
Investors also seemed little concerned the US measures poised a major risk to Mexico, with the peso currency posting its fourth day of gains. With Mexico’s economic fundamentals still intact, long-term investors are not worried by the news, Karobaar Capital’s Chief Investment Officer Haris Khurshid said, even if bank stocks could see some pressure.
“This is a serious reputational hit for Mexico’s banking system, even if the fundamentals remain stable,” he said. “The real risk is contagion, not just client outflows, but broader pressure on cross-border capital flows and compliance costs.”
While the three firms tagged by the US are small, they are all well known for foreign exchange operations and overseas branches that invest the wealth of Mexicans. Vector was founded by a key ally of former President Andres Manuel Lopez Obrador. Intercam is known for its FX exchange traded funds. CIBanco has a nightly segment on Milenio TV explaining market moves.
Manuel Somoza, a CIBanco executive, had to abandon his routine TV slot to defend his bank. He said CIBanco had not been contacted by US authorities prior to the announcement and was open to clearing up any concerns immediately. He said he had been on the phone with clients throughout the afternoon, assuring them their investments were safe.
“Rumors hurt you more than formal accusations,” he said. “That’s why we want them to conduct the investigation as quickly as possible.”
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