July 1, 2020 / 4:37 AM / 3 days ago

UPDATE 1-Mexico revokes license of savings bank arm of Grupo Famsa

(Adds details, quote from authorities)

MEXICO CITY, June 30 (Reuters) - Mexican financial authorities said on Tuesday they had revoked the license of the savings bank arm of retailer Grupo Famsa, which last week announced it was seeking Chapter 11 bankruptcy protection in the United States.

In a statement, the financial authorities said the license for Banco Ahorro Famsa had been withdrawn due to inappropriate risk management and operations, as well as loans granted to “related parties of the group above regulatory limits.”

The bank had also kept improper records, and repeatedly failed to comply with regulatory provisions, the central bank, the finance ministry and banking regulator said jointly.

Authorities had made their decision in order to protect the bank’s 580,774 savers, they added.

“The liquidation of Banco Ahorro Famsa is the result of recurrent breaches of regulatory provisions since 2016,” the authorities said in their statement.

Those breaches had arisen before the economic and financial effects of coronavirus lockdown were felt, they added.

In a separate statement, the authorities said they did not expect the situation at the bank to pose a significant risk to the stability of the Mexican financial system. (Reporting by Stefanie Eschenbacher Writing by Dave Graham Editing by Anthony Esposito; Editing by Kim Coghill)

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