Mexican regulator takes over running of banks hit by US fentanyl sanctions

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By Noe Torres and Emily Green

MEXICO CITY (Reuters) -Mexico’s banking regulator said on Thursday it will temporarily step in to manage three financial institutions, CIBanco, Intercam Banco and Vector Casa de Bolsa sanctioned by the U.S. for alleged involvement in money laundering linked to organized crime.

The banking and securities commission said the move was aimed at protecting the banks’ creditors and depositors of CIBanco and Intercam Banco.

It comes a day after the U.S. Treasury prohibited certain transactions with the banks, as well as brokerage firm Vector Casa de Bolsa, under new fentanyl-related sanctions. All three firms deny the money laundering allegations.

The sanctions effectively cut the institutions off from the U.S. financial system and could have a significant impact on Mexican banking, given the interconnectedness between lenders and close trade ties with the U.S., experts said.

Vector and Intercam Banco did not immediately respond to requests for comment.

CIBanco in a statement said it will collaborate with U.S. and Mexican regulators and that clients’ deposits were protected under local law.

Mexico has so far rebuffed the allegations from the U.S., saying the Treasury has not provided Mexico with proof to back up declaring these institutions “as primary money laundering concerns.”

“There is no evidence,” Mexican President Claudia Sheinbaum told reporters earlier on Thursday. “We will collaborate and coordinate (with U.S. authorities), but we will not bend to them,” she added. “We are no one’s piñata.”

Mexican authorities, as well as the nation’s banking association, have said the blow to the firms would not have a contagion effect on the broader financial system, which remained resilient.

Luis Manuel Perez de Acha, a tax lawyer and money laundering expert in Mexico City, said the move by the regulator means it can put its own people in charge or hire others to assume operations at the banks.

He said the impact of the sanctions – and the takeover by the commission – depends on the fate of the banks. “If two medium-sized banks go under, there will be a systemic effect without a doubt,” he said.

Intercam’s assets stand around $4 billion, while CIBanco holds some $7 billion and Vector nearly $11 billion, according to the U.S. Treasury, making them medium-sized operations in the country.

Vector’s CEO, Edgardo Cantu, told Reuters on Thursday that the institution had not been subpoenaed by U.S. authorities and that it was “fully prepared to provide the information needed to clarify these allegations.”

(Reporting by Raul Cortes, Noe Torres, Kylie Madry and Emily Green; Additional reporting Natalia Siniawski, Editing by Stephen Eisenhammer, Alistair Bell and Lincoln Feast.)