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A Gamble, Then Hard Work

Nov 7, 2003

Seven years ago, Canada's Scotiabank took a 10% stake in Inverlat, a Mexican bank laid waste by the 1995 peso crisis. It paid the government, which had taken over Inverlat, $31.2 million for control of the bank. As part of the deal, the Canadians took on $125 million in subordinated debt convertible into 39% of Inverlat's voting stock in 2000.

The Inverlat deal was a gamble and it has paid off handsomely. Inverlat in June turned in pre-tax profits of $65.7 million, up one-third over the previous year. In the whole of 2002, it posted pre-tax earnings of $150.4 million, up 20% over 2001.

Anatol von Hahn, Inverlat's director general and chief executive officer, says that the bank's success is due to the cumulative effects of a lengthy reorganization. "It's not a one-year thing," he says. "In part what are seeing are the great results of the...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management


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