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
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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