The resolution of a full service bank will be carried out by means of the following methods:

I. Liquidation of the full service bank in cases in which the SHCP has revoked its authorization to organize and operate as such. The liquidation will be carried out by means of the operations described below, or

I. Liquidation

The IPAB Governing Board determines the liquidation operations to be implemented for the full service bank, considering that the estimated cost of implementing such operations is less than the total estimated cost of payment of guaranteed obligations (LIC Article 122 Bis 26). The IPAB Governing Board may also consider the results of a technical study prepared for the purpose by IPAB itself, with its own personnel or through specialized third parties with recognized experience contracted by IPAB for the purpose. The liquidation operations that IPAB can implement are as follows (LIC Article 122 Bis 25):

	Payment of Guaranteed Obligations assumed by the full service bank in liquidation (LIC Articles 122 Bis 17 through 19).
	IPAB will pay obligations that are considered guaranteed under the terms of the LPAB, assumed by the full service bank in liquidation, considering the amount of principal and accessories, for up to an amount equivalent to 400,000 investment units per natural or legal person, observing the terms established in the LPAB (LPAB Article 11).
	Before proceeding to pay guaranteed obligations, IPAB will publish the relevant payment procedure, within five business days after taking possession of the position of liquidator. IPAB will pay the bank’s guaranteed obligations within ninety days after taking possession of the position of liquidator.
	By virtue of its payment of the bank’s guaranteed obligations, IPAB will be subrogated in creditor’s rights in the bank’s liquidation, with the privileges corresponding to the persons to which such payment is made, for up to the amount covered. The document evidencing the payment in question will be sufficient title for such subrogation.
	The surplus amount of guaranteed obligations assumed by the full service bank in liquidation that is not covered by IPAB may be claimed by the persons to whom the guaranteed obligations are paid, directly from the bank in liquidation, in accordance with applicable legal, regulatory, and administrative provisions.
	Transfer of the assets and liabilities of the full service bank in liquidation to another full service bank also known as purchase of assets and assumption of liabilities or P&A (LIC Article 122 Bis 27).
	Transfer of assets and liabilities is defined as the transfer of various rights (assets) and obligations (liabilities) in favor of or charged to a full service bank in liquidation to another full service bank that satisfies the requisites for capitalization established by law, and is therefore a financially stable institution.
	By means of the transfer of assets and liabilities, the liquidator transfers to another institution the payment obligations assumed by the bank in liquidation that are considered guaranteed under the terms of the LPAB. Also, the liquidator must transfer to the acquiring full service bank a quantity of assets sufficient for the latter to meet the guaranteed obligations received. The more assets can be transferred to the acquiring bank, the less the quantity to be liquidated will be, thereby helping to obtain a higher level of recovery.
	Bridge bank, which is a full service bank founded, organized, and operated by IPAB temporarily, to allow the liquidator to transfer to it the assets and liabilities of the full service bank in liquidation, ensuring the continuity of bank services until the bridge bank’s assets are transferred to another full service bank, with the merger of the two banks, or the assets and liabilities the bridge bank has received (LIC Article 122 Bis 29).
	There are cases in which the method for transfer of assets and liabilities may prove more convenient, in terms of cost, than payment of guaranteed obligations. When the least cost rule indicates that the resolution method to be implemented is transfer of assets and liabilities, IPAB will have to initiate the corresponding marketing process. For the purposes of the preceding point, IPAB is authorized to form a bridge bank, which may provide banking and credit services, without requiring express authorization from the SHCP.
	As mentioned above, the bridge bank is not a permanent establishment, but is given a limited duration in the corresponding authorization of up to six months, with the option for a single extension for another, equal period, given that the bridge bank constitutes a mechanism used to maintain control of operations that corresponded to the bank in liquidation, when it is not possible to implement a less costly resolution mechanism in the short term or when the bank’s deterioration is sudden and unexpected.
	Thus, the figure of the bridge bank gains relevance because it gives IPAB a time in which to effect the transfer of assets and liabilities or to transfer the shares representing the capital stock to other operating banks.

On the other hand, regulations in force allow for conventional liquidation of full service banks (LIC Article 28, Item II) in cases where the shareholders’ meeting approves the bank’s financial statements proving that it no longer reports guaranteed obligations under the terms of the LPAB and provided the financial statements are submitted to the CNBV and accompanied by an external auditor’s opinion confirming this point. In such cases, the general shareholders’ meeting of the full service bank in liquidation may designate a liquidator.

II. Financial Strengthening or Partial Payment

In accordance with best international practices relating to bank resolution schemes, it is important that there be an express agreement among the different financial authorities to determine when a bank is too big to fail, and to establish a financial aid mechanism in which deposit insurance must provide the funds necessary to keep it operating, considering that, given the bank’s volume of operations, its liquidation would cause an impact in the financial system as a whole, resulting from the high interdependency through the system de payments, interbank funding, and risk management. Consequently, it is necessary that the financial authorities have the authority to address such situations opportunely, in the interests of keeping the system operable, and above all protecting the interests of the saving and the general public.

Therefore, the law stipulates that when a full service bank’s default on its obligations can have a negative impact on other banks (known as the "domino effect") or put the functioning of the system of payments at risk, such banks will be considered systemic (LIC Article 29 Bis 6), in which case, to protect the interests of the saving public and the general public, IPAB must pay all or part of the bank’s non-guaranteed obligations, to ensure that its default does not cause an interruption in the financial system.

The decision regarding whether a bank is systemic will be made by a collegiate body known as the Committee on Financial Stability, which is made up by top ranking officers in the following financial authorities: SHCP, BANXICO, CNBV, and IPAB (LIC Article 29 Bis 8). The advisability of the decision’s being made by a collegiate body lies in that, no financial authority alone has all the information necessary to make the decision. When the Committee rules on the matter discussed in the preceding paragraph, the IPAB Governing Board will determine the resolution method most advisable as follows (LIC Article 122 Bis):

a) Financial strengthening, provided the Committee on Financial Stability has decided to pay 100 percent of the non-guaranteed obligations (LIC Chapter II, Section One, Points B and C).

The primary advantage of financial strengthening is that it causes fewer disruptions in the full service bank’s relations with its clients, in other words although the bank’s situation is considered financially critical or unviable, it is highly likely that a qualitative analysis will find that effective financial strengthening can preserve and take advantage of its franchise value. Given that in operations of this kind there is no discrimination regarding the liabilities to be supported, their implementation is rapid, which helps to lower the associated or indirect costs of a bank resolution. Another advantage is that most of the full service bank’s assets remain in the private sector, which may be particularly important to prevent risk of contagion.

b) Transfer of assets and liabilities, as well as partial payment, in cases where the Committee on Financial Stability has determined a percentage below 100 percent of the non-guaranteed obligations (LIC Article 122 Bis 20).

The primary advantage of this mechanism is that it minimizes fiscal cost and creates greater market discipline, by reducing the moral hazard for full service banks.

Financial Group Responsibility

Today, full service banks have the legal means of forming part of financial groups. A considerable number of full service banks in Mexico belong to financial groups, and consequently control of the majority of the shares representing their capital stock is in the hands of their respective holding companies.

When IPAB has identified the operations to be executed in the resolution method applicable to a full service bank belonging to a financial group, there is a procedure for payment of the losses that bank reports. In this sense, a bank is understood to present losses when its assets are insufficient to meet its payment obligations. This process is discussed briefly below (Article 28 Bis of the Law to Regulate Financial Groups):

It is relevant to mention that, without prejudice to the process described above, the holding company must respond for losses the full service bank reports after the definitive assessment of its losses, provided they are derived from operations executed before the IPAB Governing Board has defined the resolution method applicable to the full service bank that have not been disclosed as of the date of IPAB’s assessment.

LIC Article 122 Bis 26

The operations contemplated in the preceding article must conform to the rule of least cost, understood as that under which the estimated cost of executing such operations would be less than the total estimated cost of payment of guaranteed obligations mentioned in Article 6 of the Law of Banking Savings Protection.

For the purposes of the preceding paragraph, the total cost of payment of the aforementioned guaranteed obligations of a full service bank will be calculated based on the bank’s financial information available on the day the IPAB Governing Board determines the resolution method. The cost of payment of a full service bank’s guaranteed obligations will be equal to the result obtained by subtracting from the value of its guaranteed obligations, up to the amount mentioned in Article 11 of the Law of Banking Savings Protection, the present value of the estimated net amount that the Institute for the Protection of Banking Savings expects to recover from disposing of the full service bank’s assets, for which it would have the necessary authority in accordance with the pertinent provisions of Article 17 of the Law of Banking Savings Protection.

If the bank in question had formerly agreed to implement a Conditional Operation regime and is nonetheless in a state of dissolution and liquidation, the IPAB Governing Board must also consider the results of a technical study prepared for the purpose by IPAB, with its own personnel or by third party specialists with recognized experience contracted by IPAB for the purpose.

The IPAB Governing Board must establish, by means of general guidelines, the elements that the technical study mentioned in this article must contain, which will include, as minimum, an itemized description of the financial position of the full service bank in question, an estimate of the resulting total cost of payment of its guaranteed obligations under the terms of this Law and of the Law of Banking Savings Protection, and the estimated cost of the operations mentioned in Article 122 Bis 25, Items I and II, of this Law.

The results of the technical study, and the information obtained for its preparation, will be considered confidential information for all legal effects, and therefore the third party specialists contracted by the Institute for the Protection of Banking Savings to prepare it must maintain complete secrecy at all times in relation to the information to which they gain access to prepare the study.

When the full service bank pertains to a financial group, the technical study prepared pursuant to this article will be considered preliminary and will be considered definitive only when the requisites established in Article 28 Bis of the Law to Regulate Financial Groups have been satisfied.

LIC Article 122 Bis 25

In the liquidation of a full service bank, the IPAB Governing Board may order any of the following operations:

I. Transfer assets and liabilities of the bank in liquidation to another full service bank, including the guaranteed obligations mentioned in Article 6 of the Law of Banking Savings Protection, in accordance with the provisions of Article 122 Bis 27 of this Law, under the terms of the agreement between them. In such cases, the transfer of assets may be effected directly or through a trust;

II. The founding, organization, and operation of a full service bank by IPAB under the terms of the present Law and the regulations derived from it, with the purpose of transferring assets and liabilities of the full service bank in liquidation to it; or

III. Any other which, observing the limits and conditions established in this Law, the IPAB Governing Board considers the best alternative to protect the interests of the saving public, depending on the specific circumstances of the case.

The Institute for the Protection of Banking Savings will proceed to pay guaranteed obligations that are not subject to any of the transfers to which the preceding items refer, in accordance with the pertinent provisions of the present Law and the Law of Banking Savings Protection.

The operations to which this article refers may be executed independently, successively, or simultaneously.

Payment of Guaranteed obligations

Article 122 Bis 17.- When liquidation of a full service bank is ordered or its bankruptcy is declared, the Institute for the Protection of Banking Savings will proceed to pay the full service bank’s guaranteed obligations to which the Law of Banking Savings Protection refers, subject to the limits and conditions stipulated in this Law and in the Law of Banking Savings Protection, except those that have been the object of the transfer of assets and liabilities mentioned in Article 122 Bis 25, Items I and II, of the present legal ordinance.

Article 122 Bis 18.- Only persons who executed any of the operations mentioned in Article 6 of the Law of Banking Savings Protection and who filed a request for payment, to which they must attach copies of the contracts, account statements or other documentation supporting the operations mentioned in Article 6, within sixty calendar days from the date when the Institute for the Protection of Banking Savings publishes the procedure for payment of guaranteed obligations corresponding to the full service bank in question in the Official Gazette of the Federation in two daily newspapers of nationwide circulation and through the other means of communication that IPAB deems appropriate, may exercise the right to receive payment of guaranteed obligations, without prejudice to the rights of those persons who did not file the request to which this paragraph refers within the aforementioned term and who may pursue their rights through the appropriate judicial channels.

The request to which the preceding paragraph refers must be filed in the terms, hours, and places indicated in the procedure for payment of guaranteed obligations which the Institute for the Protection of Banking Savings establishes by means of general rues.

No judicial action whatsoever may be exercised against resolutions issued by the Institute for the Protection of Banking Savings in relation to payment of guaranteed obligations if the pertinent request is not filed in accordance with the terms and conditions set forth in the two preceding paragraphs and such action is not initiated within twelve months after the publication of the procedure for payment of guaranteed obligations corresponding to the full service bank in question.

Article 122 Bis 19.- The Institute for the Protection of Banking Savings will publish the procedure for payment of guaranteed obligations mentioned in Article 6 of the Law of Banking Savings Protection within five business days after it has assumed the position of liquidator or receiver, as the case may be, in the full service bank in question, and will make such payment within ninety calendar days after the date of such publication, provided the persons mentioned in Article 1 of the Law of Banking Savings Protection have filed their requests for payment in the time, manner, and terms indicated in the first and second paragraphs of the preceding article.

Article 11 of the Law of Banking Savings Protection

LIC Article 122 Bis 27

The transfer of assets and liabilities to which this section refers will consist of the transfer of rights and obligations in favor of or payable by a full service bank in liquidation to another full service bank. The aforementioned transfer of assets and liabilities will be subject to the general guidelines issued by the IPAB Governing Board, which must establish, as guiding criteria for the selection of the acquiring bank, that at least three full service banks that satisfy the requirements for capitalization mentioned in Article 50 of this Law will be invited, considering, among other aspects, the banks’ geographic coverage, the market segment[s] they serve, and the infrastructure at their disposal to ensure the continuity of the bank services provided by the bank in liquidation without affecting the user public, and in selecting the acquiring bank all efforts must be made to obtain the highest possible recovery value.

The guidelines mentioned in the preceding paragraph must also consider the following:

I. The assets, rights, and other assets of the full service bank in liquidation determined by the liquidator may be transferred, and may include ready funds, securities investments, and loan portfolios, at the value the liquidator agrees to with the full service bank to which they are transferred, which may not be below the reference value determined in accordance with the guidelines contemplated in this article;

II. The guaranteed obligations mentioned in Article 6 of the Law of Banking Savings Protection payable by the full service bank in liquidation may be transferred, taken at their book value, with interest accrued through the date of the operation, without exceeding the limit established in Article 11 of this Law;

III. Guaranteed obligations by the full service bank in liquidation under the terms of Article 6 of the Law of Banking Savings Protection whose book value, with accrued interest through the date of the operation, exceeds the limit established in Article 11 of the Law of Banking Savings Protection may be transferred, as well as obligations, if any, different from such guaranteed obligations, provided the full service bank in liquidation has sufficient assets to meet the payment obligations mentioned in Article 122 Bis 24 of this Law. The operations mentioned in Article 10, Items II, IV, and V, of the Law of Banking Savings Protection and subordinate obligations may be transferred only when the bank in liquidation has covered all its payment obligations, without considering the corporate equity, as applicable;

IV. The operations mentioned in Article 122 Bis 23 of this Law may be transferred;

V. If the value of the assets transferred is equal to the value of the obligations payable by the bank in liquidation that are transferred, the Institute for the Protection of Banking Savings will pay the bank in liquidation an amount equal to the value of the assets transferred.

For the purposes of the preceding paragraph, the Institute for the Protection of Banking Savings must deliver the corresponding funds to the bank in liquidation or subscribe payment instruments payable by IPAB, which will be covered by the guarantee mentioned in Article 45 of the Law of Banking Savings Protection;

VI. If the value of the assets transferred is below that of the obligations transferred, the Institute for the Protection of Banking Savings must pay the difference to the acquiring bank. For its part, the Institute for the Protection of Banking Savings must pay the bank in liquidation the value agreed upon for the assets in accordance with the provisions of the present article. In both cases, IPAB must proceed in accordance with the provisions of the second paragraph of the preceding item;

VII. If the value of the assets agreed upon under the terms of Item I of this Article exceeds the value of the obligations payable by the bank in liquidation that have been transferred, the acquiring bank must pay the difference to the bank in liquidation. In addition, the Institute for the Protection of Banking Savings will pay the bank in liquidation the difference between the value of the assets agreed upon pursuant to Item I of the present article and the amount the bank in question has received from the acquiring bank pursuant to this item; and

VIII. As a consequence of the transfer of liabilities, the bank in liquidation must acknowledge a debt on its account payable to the Institute for the Protection of Banking Savings for an amount equal to the value of the obligations assumed by said bank that have been transferred.

The acquiring bank will be subrogated in the rights and obligations of the bank in liquidation in relation to the assets and liabilities transferred, and consequently must respect, through their maturity, the terms and conditions agreed upon between the full service bank in liquidation and the beneficiaries of the operations transferred, and therefore may not charge any fees other than those originally stipulated. If, following the transfer of assets and liabilities, the beneficiary of any of the liability operations transferred agrees with the acquiring full service bank on advance payment of the balance due on the operation in question, the bank may make such advance payment, as an exception to the provisions of Article 106, Item XV, of this Law.

In transfers of assets and liabilities, acquired labor rights in favor of persons that may be affected must be respected at all times. Likewise, the rights of creditors that are not involved in a transfer of assets and liabilities must not be affected in relation to what would have corresponded to them had the transfer not been effected.

The transfer of assets to which this article refers may be made through a trust created in a credit institution different from the banks involved in the operation.

In cases in which the Committee on Financial Stability determines that the bank in question may fall under any of the hypotheses contemplated in Article 29 Bis 6 of this Law, the operations mentioned in Item III of this article may not be transferred.

LIC Article 122 Bis 29

In order to ensure the continuity of bank services in the interests of the saving public of the full service bank in liquidation, the liquidator may execute the transfer of assets and liabilities with a full service bank operated and organized by the Institute for the Protection of Banking Savings.

In such cases, the transfer of assets and liabilities will be subject to the terms and conditions of Articles 122 Bis 27 and 122 Bis 28 of this Law, except as regards the value of the assets transferred, which will be effected considering their book value net of reserves.

For the purposes of the preceding paragraph, within sixty business days after the transfer takes effect, the liquidator must determine, through a third party specialist contracted at the expense of the bank in liquidation, the value of the assets on the day they have been transferred. The final value of the assets will be that resulting from the adjustments, if any, made to the book value net of reserves, based on the results of the aforementioned appraisal. The third party specialist must comply with the criteria for independence and impartiality that the National Banking and Securities Commission determines in accordance with the provisions of Article 101 of this Law.

LIC Article 28, Item II

The Ministry of Finance and Public Credit, after hearing the opinion of the Central Bank and the National Banking and Securities Commission, may order revocation of the authorization granted to organize and operate as a full service bank in the following cases:

LIC Article 29 Bis 6

Under the terms of this Section, a Committee on Financial Stability will convene, whose purpose will be to determine – before a ruling is passed on revocation of the authorization granted to a full service bank to organize and operate as such, for any of the reasons mentioned in Article 28, Items IV, V, or VI, of this Law – if, in the event that the bank in question breaches its obligations, it could:

I. Produce a severe negative impact on one or more other full service banks or other financial entities compromising their stability or solvency, whenever it could in turn affect the stability or solvency of the financial system, or

II. Compromise the functioning of the system of payments.

If the Committee on Financial Stability resolves that the full service bank in question might fall under any of the hypotheses contemplated in the preceding items, the Committee will determine, one time only, a general percentage of the balance of all operations payable by the bank in question that are not considered guaranteed obligations under the terms of the Law of Banking Savings Protection, and those others considered guaranteed obligations that exceed the limit established in Article 11 of this Law, payment whereof could prevent such hypotheses from being actualized.For the purposes of this precept, the operations payable by the bank in question, mentioned in Article 10, Items II, IV, and V, of the Law of Banking Savings Protection, and liabilities it assumes by the issue of subordinate obligations will not be considered.Operations, if any, carried out in accordance with the provisions of this paragraph and Article 122 Bis, Item II, of this Law, must conform to the provisions of Articles 45 and 46 of the Law of Banking Savings Protection.

In any event, on determining the hypotheses mentioned in the first paragraph of this article, the Committee on Financial Stability, based on information available, will consider whether the probable cost to the Federal Treasury or the Institute for the Protection of Banking Savings of paying obligations assumed by the bank in question can be expected to be reasonably less than the harm that would be caused to the saving public of other financial entities and society at large.

The Institute for the Protection of Banking Savings must send the Federal Congress a report on the rulings of the Committee on Financial Stability, and the resolution method adopted by its Governing Board in accordance with Article 122 Bis, Item II, of this Law, in a maximum term of 30 business days after the Committee on Financial Stability meets.

The Superior Auditing Office of the Federation, on reviewing the Federal Treasury Accounts for the fiscal year in question will exercise, in relation to the activities to which this Article refers, the powers and faculties conferred upon it by its governing Law.

LIC Article 29 Bis 8

The Committee on Financial Stability mentioned in Article 29 Bis 6 of this Law will be made up by:

I. The Ministry of Finance and Public Credit, represented by its Chief Officer and the Under-Minister of Finance and Public Credit;

II. The Central Bank, represented by its Governor and a Deputy Governor that the Governor designates for the purpose;

III. The National Banking and Securities Commission, represented by its Chairman and the Vice-Chairman competent to supervise the bank in question; and

IV. The Institute for the Protection of Banking Savings, represented by its Executive Secretary and a member of the its Governing Board appointed from among said body’s members in accordance with the provisions of Article 76 of the Law of Banking Savings Protection.

The members of the Committee on Financial Stability will not have alternates.

Sessions of the Committee on Financial Stability will be presided by the Minister of Finance and Public Credit, and in his absence by the Under-Minister of Finance and Public Credit.

The Chairman of the Committee on Financial Stability will appoint a minutes secretary, who must be a public official employed by the Ministry of Finance and Public Credit.The minutes secretary must verify that meetings of the Committee on Financial Stability observes the attendance quorum established in Article 29 Bis 9; will prepare detailed minutes of the Committee’s meetings, which must be signed by all Committee members in attendance; will provide the Committee members with the information mentioned in Article 29 Bis 10; and will make the Committee’s resolutions known to the Institute for the Protection of Banking Savings, no later than the business day after they are passed, to allow the IPAB to proceed to determine the corresponding resolution method.

The Committee on Financial Stability may agree to allow invitees to attend its meetings when deemed advisable for decision making purposes.

Information relating to the matters deliberated on in the Committee on Financial Stability will be considered reserved, to the extent that its disclosure does not compromise the full service bank in question or its user public, without prejudice to the Committee’s option to resolve to issue public informative releases.

LIC Article 122 Bis

Resolution of a full service bank will proceed when the Ministry of Finance and Public Credit has revoked the authorization granted to it to organize and operate in such capacity or when the Committee on Financial Stability determines that it may fall under any of the hypotheses contemplated in Article 29 Bis 6 of this Law.

Resolution of a full service bank will be carried out under the following terms:

I. When the Ministry of Finance and Public Credit has revoked its authorization to organize and operate as a full service bank, the IPAB Governing Board will order that its dissolution and liquidation be carried out by means of the operations provided for in Section Two, Points A and B, of this Chapter, or

II. When the Committee on Financial Stability resolves that the full service bank in question may fall under any of the hypotheses of Article 29 Bis 6 of this Law, the IPAB Governing Board will determine the resolution method to be applied, as follows:

a) Financial strengthening of the full service bank in accordance with the provisions of Points B or C of this Section, as applicable, whenever the Committee on Financial Stability has determined that, to prevent the full service bank from falling under any of the hypotheses contemplated in Article 29 Bis 6 of this Law, it is necessary to make the full payment of all operations assumed by the bank in question that are not considered guaranteed obligations under the terms of the Law of Banking Savings Protection, as well as those considered guaranteed obligations that exceed the limit established in Article 11 of this Law, with the exceptions indicated in Article 29 Bis 6, in which case the Ministry of Finance and Public Credit will refrain from revoking the authorization granted to the full service bank in question to organize and operate as such, or

b) Transfer of assets and liabilities in accordance with the provisions of Article 122 Bis 27, or 122 Bis 29, of this Law, when the Committee on Financial Stability, under the terms of Article 29 Bis 6, second paragraph, has determined a percentage of less than one hundred percent, and partial payment, based on that percentage, of all operations not considered guaranteed obligations under the terms of the Law of Banking Savings Protection and those guaranteed obligations that exceed the limit indicated in Article 11 of this Law, except those mentioned in Article 10, Items II, IV, and V, of the Law of Banking Savings Protection and liabilities resulting from the issue of subordinate obligations.The partial payment to which this article refers will be made under the terms and subject to the limitations established in Article 122 Bis 20 of this Law.

The Institute for the Protection of Banking Savings must notify the Ministry of Finance and Public Credit of the adoption of the resolution method to which this point refers in order to proceed to revoke the authorization granted to the bank in question to organize and operate in such capacity.

The IPAB Governing Board must determine the appropriate resolution method by majority vote of its members in attendance, and will require the affirmative vote of at least one of the first three members mentioned in Article 75 of the Law of Banking Savings Protection.The relevant decision must be made in a maximum term of ten business days after the day on which any of the acts mentioned in the first paragraph of this Article have been taken.

In cases where the authorization granted to a full service bank to organize and operate in such capacity is revoked in accordance with the provisions of Article 28, Items I, II, or III, of this Law, the Institute for the Protection of Banking Savings will proceed to pay its guaranteed obligations under the terms of Article 122 Bis 19 of this Law.

The resolution methods to which this article refers, and the different acts or operations which, in their respective spheres of competence, are issued or executed for their implementation by the Ministry of Finance and Public Credit, the National Banking and Securities Commission, the Central Bank, and the Institute for the Protection of Banking Savings, will be considered matters of the public order and public interest.

Financial Strengthening

LIC Article 122 Bis 2.The financial aid contemplated in this point will be granted to full service banks that have commited to undertake the Conditional Operation regime and who fall in any of the assumptions stated in Article 29 Bis 4, Item V, as well as in the hypothesis contemplated in Article 122 Bis, Item II, paragraph a), of this Law.

For this purpose, the financial aid to which this point refers must be granted by means of subscription of shares in the full service bank in question.In this case, a provisional administrator will be designated in accordance with Article 139 of this Law.

LIC Article 122 Bis 3.For the purposes of the subscription of shares to which the preceding article refers, the fiduciary institution in the trust mentioned in Article 29 Bis 4 of this Law, on the instructions of the Institute for the Protection of Banking Savings and in use of the corporate and equity rights of the shares representing the capital stock of the full service bank in question, will convene an extraordinary general shareholders’ meeting to approve the procedure for making the necessary capital contributions, under the following terms:

I. The actions deemed necessary or advisable to apply positive items in the full service bank’s stockholders’ equity different from the capital stock to negative items in the stockholders’ equity, including absorbing the institution’s losses, must be taken.

II. After making the application to which the preceding item refers, if negative items remain in the stockholders’ equity, the capital stock must be reduced accordingly.Then, the capital stock must be increased by the amount necessary for the full service bank to satisfy the requirements for capitalization mentioned in Article 50 of this Law.

The stock certificates issued by virtue of the increase in capital to which the preceding paragraph refers must evidence the consent of their holders so that, in the case mentioned in Article 122 Bis 5 of this Law, the Institute for the Protection of Banking Savings on their account and at their expense may alienate their stockholdings under the same terms and conditions as IPAB sells the shares it subscribes.

III. The Institute for the Protection of Banking Savings must make the contributions necessary to cover the increase in capital mentioned in the preceding item and, on the same day as IPAB subscribes and pays the shares issued by virtue of the increase in capital, IPAB will offer the settlors in the trust mentioned in the first paragraph of this article or the shareholders, such shares for acquisition based on the percentages corresponding to them, subject to prior proportional payment of all negative items in the stockholders’ equity.

The settlors and shareholders mentioned in the preceding paragraph will be granted a term of twenty business days to acquire the shares to which they are entitled from the day the Institute for the Protection of Banking Savings publishes the resolution approving the corresponding increase in capital in the Official Gazette of the Federation.

LIC Article 122 Bis 4.When the tem mentioned in Item III of the preceding article has expired, the Institute for the Protection of Banking Savings will proceed to take the actions necessary to sell the shares representing the capital stock of the full service bank in its possession.

The sale must be made in a maximum term of six months from the expiration of the term mentioned in the preceding paragraph and in accordance with the provisions of Title Three of the Law of Banking Savings Protection.The six-month term mentioned in this paragraph may be extended by the IPAB Governing Board, one time only, for an equal term.

LIC Article 122 Bis 5.The fiduciary institution in the trust mentioned in Article 29 Bis 4 of this Law, in executing the instructions contained in the corresponding trust agreement, and the Institute for the Protection of Banking Savings, by virtue of the consent evidenced in the stock certificates mentioned in Article 122 Bis 3 of this Law, as the case may be, will sell the stockholdings of the settlors or shareholders of the full service bank in question, on their account and orders, on the same terms as IPAB makes the sale to which the preceding article refers.

Similarly, the Institute for the Protection of Banking Savings will sell, on the account and orders of the shareholders, the shares that have not been conveyed to the trust mentioned in Article 29 Bis 4 of this Law, under the same terms and conditions as IPAB sells its own stockholdings.The bylaws and the corresponding stock certificates must expressly evidence the shareholders’ irrevocable consent to the sale of shares to which this paragraph refers.

For the purposes of the preceding paragraph, to protect the public interest, the securities deposit bank in question must transfer the shares to an account held by the Institute for the Protection of Banking Savings, for which purpose a written request from IPAB will suffice.

The trustee and IPAB mentioned in this article must deliver the proceeds from the stock sale to their lawful beneficiary in a maximum term of three business days, after receiving the corresponding price.

LIC Article 122 Bis 6.The shares sold by the Institute for the Protection of Banking Savings pursuant to the two preceding articles may not be acquired directly or indirectly by persons that have had control of the full service bank in question in accordance with the pertinent provisions of this Law, on the day the trust mentioned in Article 29 Bis 4 of this Law is created or the day IPAB instructs the trustee in said trust to convene the extraordinary general shareholders’ meeting in accordance with Article 122 Bis 3 of this Law.

LIC Article 122 Bis 7.The loans contemplated in this point will be granted only to those full service banks that have not entered into the Conditional Operation regime mentioned in Article 29 Bis 2 of this Law and that fall under the hypothesis contemplated in Article 122 Bis, Item II, paragraph a), of this Law.

In this case, the provisional administrator of the bank in question, designated pursuant to Article 138 of this Law, must negotiate a loan on the bank's behalf, granted by the Institute for the Protection of Banking Savings, for an amount equal to the funds necessary to satisfy the requirements for capitalization mentioned in Article 50 of this Law, which must be repaid in a term that under no circumstances may exceed fifteen business days from its date of granting.

To grant the loan to which this article refers, the Institute for the Protection of Banking Savings will consider the financial and operative position of the full service bank in question, and consequently will determine the terms and conditions deemed necessary and advisable.

The funds from the loan will be invested in government securities, which will be deposited in custody in a development bank.

LIC Article 122 Bis 8.Payment of the loan to which the preceding article refers will be guaranteed with the totality of the shares representing the capital stock of the full service bank in question, which will be credited to the account that the Institute for the Protection of Banking Savings holds in any of the securities deposit institutions contemplated in the Securities Market Act.The corresponding transfer will be requested and ordered by the provisional administrator.

Payment of the loan may be made only with funds obtained, as applicable, from the increase in capital to which the following article refers.

To protect the interests of the saving public, the system of payments, and the public interest in general, in the event that the provisional administrator of the full service bank fails to order the transfer of shares to which this article refers, the securities deposit institution in question must transfer such shares, for which a written request from IPAB’s Executive Secretary will suffice.

As long as the guaranteed obligations resulting from the loan granted by the Institute for the Protection of Banking Savings remain outstanding, IPAB will have full power to exercise the corporate and equity rights inherent to the shares representing the capital stock of the full service bank in question.The guarantee in favor of the Institute for the Protection of Banking Savings will be considered a matter of public interest and take precedence over any rights created on such instruments.Without prejudice to the foregoing, the shares representing the capital stock of the bank given in guarantee under the terms of this article may be subject to subsequent liens, provided they are related to operations intended to capitalize the bank and do not compromise the rights created in favor of IPAB.

LIC Article 122 Bis 9.The provisional administrator of the full service bank must publish notices in at least two wide circulation daily newspapers in the city where it has its legal domicile, to ensure that the holders of the shares representing the bank’s capital stock are duly advised of IPAB’s granting of the loan and its term and other pertinent terms and conditions.

Also, the provisional administrator must convene an extraordinary general shareholders’ meeting of the full service bank in question, which the holders of shares representing the bank's capital stock may attend.If necessary, the Institute for the Protection of Banking Savings, exercising the corporate and equity rights mentioned in the last paragraph of Article 122 Bis 8, will order an increase in capital in the amount necessary for the full service bank to satisfy the requirements for capitalization mentioned in Article 50 of this Law and to pay the loan granted by IPAB.

For the purposes of the preceding paragraph, the shareholders’ meeting of the bank in question, including the corresponding call, will be conducted in accordance with the provisions of Article 29 Bis 1 of this Law.

Shareholders that wish to subscribe and pay the shares resulting from the increase in capital to which this article refers must inform the provisional administrator so that the Institute for the Protection of Banking Savings, in exercise of the corporate and equity rights pertaining to it under the terms of this Law, may take the pertinent resolutions in the meeting held for the purpose.

LIC Article 122 Bis 10.When the meeting to which the preceding article refers has been held, the shareholders will be granted a term of four business days to subscribe and pay the shares issued as a result of the increase in capital, if any, that has been ordered.Such subscription of the increase in capital will be in proportion to the shareholders’ individual holdings and subject to prior absorption of the full service bank’s losses, to the extent corresponding to each shareholder.

As an exception to the provisions of the preceding paragraph, the shareholders will have the right to subscribe and pay shares in excess of those to which they are entitled under the terms of said paragraph, in the event that the shares issued by virtue of the increase in capital are not fully subscribed and paid in.The hypothesis to which this paragraph refers will be subject to the provisions of this Law on acquisition or transfer of shares representing the capital stock of full service banks.

In any event, the increase in capital effected under the terms of this Section must be sufficient to allow the full service bank to satisfy the requirements for capitalization mentioned in Article 50 of this Law.

LIC Article 122 Bis 11.If the shareholders subscribe and pay all the shares resulting from the increase in capital necessary for the full service bank to satisfy the requirements for capitalization mentioned in Article 50 of this Law, the provisional administrator will pay on the bank’s behalf the loan granted by the Institute for the Protection of Banking Savings under the terms of Article 122 Bis 7 above, in which case, the guarantee mentioned in Article 122 Bis 8 of this Law will be rendered null and void, and will instruct the corresponding securities deposit institution to transfer the shares representing the capital stock of the full service bank in question.

LIC Article 122 Bis 12.If the obligations resulting from the loan granted by the Institute for the Protection of Banking Savings under the terms of this Point are not fulfilled by the full service bank in the term agreed upon, IPAB will foreclose on the shares representing the bank’s capital stock given in guarantee under the terms of Article 122 Bis 8 of this Law and proceed to pay the shareholders the book value of each share, as applicable, based on the stockholders’ equity as reported in the last financial statements available on the date of such foreclosure.

The shares to which this article refers will pass for all pertinent effects to the Institute for the Protection of Banking Savings, except one, which will be transferred to the federal government.

To determine the book value of each share, the Institute for the Protection of Banking Savings, at the expense of the full service bank in question, must contract a third party specialist to audit the financial statements of the full service bank mentioned in the first paragraph of this article, in a term of no more than one hundred and twenty business days after such contracting.The aforementioned book value will be that resulting from the audit conducted by the third party specialist to whom this paragraph refers.Said value will be calculated based on the financial information of the full service bank in question, and from that requested to the National Banking and Securities Commission to such effects which the Commission obtained in exercise of its functions of inspection and oversight.The third party specialist must comply with the criteria for independence and impartiality that the CNBV determines in accordance with the provisions of Article 101 of this Law.

The Institute for the Protection of Banking Savings must pay for the shares in a term of no more than sixty business days, counted from the date of foreclosure.

If the foreclosure value of the shares is less than the balance of the loan on the foreclosure date, the full service bank must pay IPAB the difference between the two amounts in a term of no more than two business days counted from the appraisal of the book value of the shares under the terms of this article.

To protect the interests of the saving public, the system of payments, and the public interest in general, the securities deposit institution authorized under the terms of the Securities Market Act in which the shares in question are deposited will transfer them to the accounts indicated by the Institute for the Protection of Banking Savings for which a written request from the Executive Secretary will suffice.

The holders of the shares at the time of foreclosure under the terms of this article may challenge only the foreclosure value.For this purpose, such shareholders will designate a joint representative who will participate in the procedure to designate, by mutual agreement with the Institute for the Protection of Banking Savings, a third party specialist, who will issue an opinion on the book value of the shares in question.

LIC Article 122 Bis 13.When the shares have been foreclosed on in accordance with the preceding article, the provisional administrator, under the terms of the resolution of the IPAB Governing Board mentioned in Article 122 Bis, Item II, paragraph a), of this Law, will convene an extraordinary general shareholders’ meeting so that IPAB may resolve to make the capital contributions necessary for the full service bank to satisfy the requirements for capitalization mentioned in Article 50 of this Law, as follows:

I. The necessary actions must be taken to apply the positive items in the stockholders’ equity of the full service bank different from the capital stock to negative items in the stockholders’ equity, including the absorption of the bank’s losses; and

II. When the application to which the preceding item refers has been made, if negative items in the stockholders’ equity remain, the capital stock must be reduced accordingly.Then the capital must be increased by the amount necessary for the full service bank to satisfy the requirements for capitalization mentioned in Article 50 of this Law, which will include capitalization of the loan granted by the Institute for the Protection of Banking Savings, in accordance with Article 122 Bis 7 of this Law, and subscription and payment of the corresponding shares by IPAB.

LIC Article 122 Bis 14.When the actions to which the preceding article refers have been taken, the Institute for the Protection of Banking Savings will proceed to sell the shares in a maximum term of six months and in accordance with the provisions of Title Three of the Law of Banking Savings Protection.The aforementioned term may be extended by the IPAB Governing Board, one time only, for an identical term.

The shares sold by the Institute for the Protection of Banking Savings pursuant to this article may not be acquired by persons that have had control of the full service bank in question, in accordance with the pertinent provisions of this Law, on the date of granting of the loan mentioned in Article 122 Bis 7, and on the date of foreclosure of the shares under the terms of Article 122 Bis 12 of this Law.

LIC Article 122 Bis 15.To protect the interests of the saving public, the system of payments, and the public interest in general, the bylaws and the stock certificates representing the capital stock of full service banks must expressly contemplate the provisions of Articles 122 Bis 7 to 122 Bis 14 of this Law, and the shareholders’ irrevocable consent to the application of such articles if the hypotheses contemplated therein are actualized.

LIC Article 122 Bis 20

In the cases where partial payment of obligations assumed by the bank in dissolution and liquidation has been ordered in accordance with the provisions of Article 122 Bis, Item II, paragraph b), of this Law, the Institute for the Protection of Banking Savings, in substitution of the bank in liquidation, will proceed to make a partial payment of all payment obligations for which the bank is liable that are not guaranteed under the terms of the Law of Banking Savings Protection, and those which, being guaranteed, exceed the limit established in Article 11 of said Law, regardless of whether a single party is the bank’s creditor for more than one of the operations mentioned in this article.

Under no circumstances may the Institute for the Protection of Banking Savings make the partial payment to which this article refers in relation to obligations of the bank in dissolution and liquidation mentioned in Article 10, Items II, IV, and V, of the Law of Banking Savings Protection, or subordinate obligations that the bank in question has issued.

The Institute for the Protection of Banking Savings will pay the amount determined by applying the percentage that the Committee on Financial Stability has determined under the terms of Article 29 Bis 6 of this Law to the balance of the obligations mentioned in the first paragraph of this article, considering the full amount of principal and accessories.

The Institute for the Protection of Banking Savings must notify the bank in dissolution and liquidation, and the general public, of the percentage of the bank’s obligations IPAB intends to cover and the schedule on which it intends to make the corresponding payments.As an exception to the provisions of Article 4 of the Law of Banking Savings Protection, IPAB will give the notice to which this article refers by publication in two daily newspapers with nationwide circulation and through other means of communication that IPAB considers appropriate.The notice in question must be given no later than the business day after the publication concerning revocation of the authorization granted to the full service bank to organize and operate in such capacity is published.

The payment schedule to which the preceding paragraph refers must include, as minimum, the terms and conditions on which the Institute for the Protection of Banking Savings intends to pay the obligations assumed by the bank in dissolution and liquidation subject to the partial payment to which this article refers, expressly indicating the order and initial amount to be paid and the planned schedule for payment of the remainder.In any event, IPAB must pay the first installment no later than the second business day immediately after it receives the corresponding payment request.In its first installment, the Institute for the Protection of Banking Savings will cover the total percentage that the Committee on Financial Stability has determined in accordance with the provisions of Article 29 Bis 6 of this Law.The planned schedule for subsequent installments may not exceed ninety calendar days counted from the date of the publication concerning revocation of the authorization granted to the full service bank to organize and operate in such capacity.

To receive the partial payment to which this article refers, within sixty calendar days after the date of the publication concerning revocation of the authorization granted to the full service bank to organize and operate in such capacity the beneficiaries of the operations mentioned herein must file a payment request attaching copies of the contracts, account statements, or other documentation evidencing the operations to which this article refers that they have executed with the bank in dissolution and liquidation.

In the case of operations in which the creditors of the bank in dissolution and liquidation are other credit institutions or institutional investors mentioned in the Securities Market Act, the Institute for the Protection of Banking Savings may negotiate payment by means of subscription of payment instruments drawn on IPAB, which will be covered with the guarantee mentioned in Article 45 of the Law of Banking Savings Protection.

The Institute for the Protection of Banking Savings will pay the obligations of the bank in dissolution and liquidation to which this article refers in Mexican currency, regardless of the currency in which such obligations are denominated.In the case of operations denominated in foreign currency, IPAB will proceed in accordance with the provisions of Article 8 of the Monetary Law of the United Mexican States.After the first installment is paid, the remainder will be fixed in investment units from the day the first installment is paid, considering the value of the investment unit on that date.Subsequent payments will be made in Mexican currency, converting the amount denominated in investment units using the present value of the investment unit on the day IPAB makes the corresponding payment.

To determine the amount which, under the terms of this article, the Institute for the Protection of Banking Savings must pay on the payment obligations of the bank in dissolution and liquidation, resulting from framework, regulatory, or specific agreements, executed in relation to derivative, repurchase, securities loan, or other equivalent financial operations in which the bank in question may be obligor and simultaneously creditor of the same counterpart, which may be expressed in monetary terms, IPAB will apply the percentage determined by the Committee on Financial Stability to the resulting balance payable by the bank in dissolution and liquidation, after applying the offsetting mentioned in Article 122 Bis 23 of this Law.

The unpaid balance of obligations of the bank in dissolution and liquidation that is not paid by the Institute for the Protection of Banking Savings under the terms of this article, may be claimed from the bank, observing the creditor priority established in this Law.

The provisions of this article are without prejudice to the provisions of this Law and of the Law of Banking Savings Protection in relation to procedures for payment of guaranteed obligations assumed by the Institute for the Protection of Banking Savings.Likewise, the partial payment to which this precept refers is independent of the functions of liquidator in full service banks that IPAB is authorized to perform under the terms of this Law and the Law of Banking Savings Protection, and accordingly there will be no need for prior entry of its appointment as liquidator in the Public Registry of Commerce for IPAB to make the partial payment to which this article refers.

Article 28 of the Law to Regulate Financial Groups

The holding company and each of the financial entities in a group will subscribe an agreement whereby:

I.- The holding company will respond jointly and severally and without limitation for performance of obligations assumed by the financial entities in the group, corresponding to activities in which such entities have engaged prior to their inclusion in the group, and

II. The holding company will respond without limitation for the losses of each and every one of such entities.In the event that the holding company’s equity proves insufficient to respond for liabilities that arise simultaneously in relation to the financial entities in the group, such liabilities will be covered first for the credit institution pertaining to the group and then prorated for the other entities in the group until the holding company’s equity is exhausted.

For this purpose, the relationship between the percentages each entity’s share in the capital represents in the holding company's capital will be taken into account.

For the purposes of this Law, a financial entity pertaining to a financial group will be understood to have losses when that entity's assets are insufficient to meet its payment obligations.

The aforementioned liabilities will be expressly provided for in the holding company's bylaws.

The aforementioned agreement must expressly stipulate that the financial entities in the group will not respond for losses of the holding company or for those of other members of the group.