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Six years ago the Mexican banking system began its meltdown. Now international institutions, mainly from Spain, have taken strong industry positions, providing the needed stability during an election cycle.
WHEN VITALINO NAFRIA, general director of Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) announced its merger June 12 with Mexico's Grupo Financiero Bancomer, many felt relieved. Six years earlier, when the last administration handed over power, the weakness of the banking system (along with a string of political upheavals) led the country into a severe economic crisis. To pull the banking system out of its downward spiral, the government had to seize control of 20 banks and assume US$70 billion in debt, a sum that is still unpaid today.
Despite government efforts, the financial system's credibility was compromised. Investors saw the Mexican banking system as the problem and, with no reform measures in sight, they fled. The Spanish, on the other hand, saw opportunity When new policies opened the market to foreign investment, they jumped in. …