Brazil shutters struggling local unit of Mexico's Banco Azteca
SAO PAULO/BRASILIA Jan 8 (Reuters) - Brazil's central bank ordered the liquidation of the local unit of Mexican billionaire Ricardo Salinas Pliego's Banco Azteca SA, after eroding finances and the breach of industry rules led to successive losses.
In a statement on Friday, the central bank said the deteriorating situation of Banco Azteca do Brasil SA left depositors and creditors subject to "abnormal" risks. Azteca do Brasil only had one functioning branch and owned 0.0005 percent of Brazil's banking assets and 0.0009 percent of total deposits.
The central bank is "taking the appropriate measures to assess responsibilities," the statement added.
Salinas Pliego, whose fortune is estimated at $4.5 billion by Forbes Magazine, opened the local unit of Azteca in the city of Recife in 2008 as part of a broader effort to expand his Grupo Elektra SAB retail chain in Brazil's Northeast. Yet in recent years, consumer spending in the once-booming region began to lose momentum, hammering both Elektra and Banco Azteca.
The decision comes as the central bank tightens oversight of banking and brokerage firms during the industry's worst crisis in almost two decades. Banks in Brazil are grappling with the nation's deepest recession in at least a quarter-century, rising borrowing costs and fallout from a corruption scandal at state companies that triggered a wave of loan renegotiations and defaults.
Banco Azteca operates in five Latin American countries. Calls to the bank's headquarters in Recife were not immediately answered.
According to the statement, 68 percent of Banco Azteca do Brasil's deposits are backed by guarantee fund FGC, a privately held institution funded by banks operating in Brazil. (Reporting by Guillermo Parra-Bernal and Marcela Ayres; Editing by Lisa Von Ahn)
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