Monday, September 04, 2006

Former Inverlat Shareholders Sue Scotiabank

Business News Americas, 4 September 2006

Shareholders of former Mexican bank Inverlat have filed a joint lawsuit in New York against Canada's Scotiabank.

According to Mexican press reports, the US$500mn lawsuit is for alleged breach of contract and some 150 former Inverlat shareholders have joined the suit.

Scotiabank believes the lawsuit is without merit and is seeking to have it dismissed, the bank's public affairs director Frank Switzer told BNamericas in an emailed statement.

"All parties connected to the transaction were treated fairly and no actions taken by BNS affected the rights of any shareholders," he said in the mail.

In 1996, Scotiabank acquired a 10% stake in Mexican financial group Grupo Financiero Inverlat and increased its stake to 55% in 2000. Then in January 2001, the group changed its name to Grupo Financiero Scotiabank Inverlat.

In 2003, the Canadian bank paid US$322mn for an additional 36% in the financial group, raising its ownership to 91%. The 36% stake was sold by the government's Bank Savings Protection Institute (IPAB).

Then in 2004, Scotiabank paid around US$53mn for another 6.3% to raise its stake to 97.3%.

Grupo Financiero Scotiabank Inverlat is Mexico's sixth largest financial group, with 126bn pesos (then US$11.6bn) in assets as of June 30. It controls commercial bank Scotiabank Inverlat, a stockbrokerage and a mutual fund company.

The bank, the sixth player in the banking league, accounted for 99% of group assets at end-June.