Mexican banks tighten lending to states as graft concerns surface

August 1, 2016

Mexican banks, determined to avoid a return to past woes, are reining in lending to the country's indebted state governments, some of whose leaders have recently become the focus of corruption allegations.

The drop in bank lending to the states this year has been the sharpest since the 2007-2009 financial crisis, and coincides with a jump in liabilities in several states in the past five years.

In the first half of 2016, commercial banks agreed 11 loans to local and state governments worth 8.471 billion pesos ($451 million), less than half the sum from the same period . . .

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