| | |  Business News | October 2008 
Mexico to Probe Firms Involved in Derivatives Losses
 Cyntia Barrera Diaz & Noel Randewich - Reuters
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| | Finance Minister Agustin Carstens | | |
Mexico City - Mexico will probe whether companies that suffered steep losses last week when peso derivatives bets went bad broke rules by not keeping investors informed, Finance Minister Agustin Carstens said on Tuesday.
Supermarket operator Comercial Mexicana (COMEUBC.MX), cement maker Cemex (CX.N)(CMXCPO.MX) and other companies said last week they had steep losses on their derivatives positions as the peso took its worst hit in a decade.
"The biggest positions in the derivatives markets, often positions that have nothing to do with a company's traditional business, that's relevant information and should have been communicated to investors," Carstens said in a radio interview.
The National Banking and Securities Commission, or CNBV, will fine any banks and companies found to have broken the rules, he added.
"We have two formal investigations open at the moment. I don't know how many more we are going to pursue," Guillermo Babatz, the head of the CNBV told local radio, without naming specific companies.
Central Bank Governor Guillermo Ortiz said in an earlier radio interview that Comercial Mexicana, which has been forced to seek court protection from creditors, and other companies had no business making big currency derivatives bets.
He said bankers had been irresponsible in selling companies derivatives unsuitable to their profiles.
"There was a lack of professionalism, to put it lightly," Ortiz said.
As the international financial crisis tipped global markets into a tailspin last week, the Mexican peso MEX01 slumped 15 percent over five days.
News that some Mexican companies were stuck on the bad side of derivatives currency bets added to panic in local markets.
Mexico's central bank used nearly 11 percent of its foreign reserves to support the peso and politicians are now looking for someone to blame for the currency's steepest drop since a mid-1990s financial shock that became known as the Tequila Crisis. |
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