The strategies used to recover assets depend on the original program in question, by virtue of the applicable legal regime and the entity that executes the recovery operations.In all events, the recovery mechanisms used depend on the special characteristics of each asset:

Loan Portfolios

Loan portfolios are made up of the loans under 200 million Pesos, either commercial, mortgage, credit card, or consumer.

As long as loans are in the banks that originated them, the banks will administer them and make recovery decisions, following the policies they use for their own portfolio, by virtue of their responsibility as trustee and/or contractual agent.

Notwithstanding, IPAB may order other processes for recovery of loan portfolios, among them the following:

1. Package Sale.Consists of selling a specific loan portfolio by means of a closed envelope public bidding, directed to portfolio management companies and/or other financial entities;
2. Assignment of Rights and Administration.Consists of taking bids on loan portfolio management services granting the winning bidder a share in the rights to the cash flows resulting from collections.The winning bidders are those that submit the highest bid to take part in such processes and satisfy the technical requisites to take charge of their management; and
3. Assignment in Pure Administration.Contracting of a third party specialist to administer and recover loan portfolios and other assets, by means of a public bidding process, in which the winner is the bidder that offers the lowest fees.

Corporate Assets

Corporate Assets are understood as credits or other securities in excess of 200 million pesos granted to a single debtor or group of debtors (Corporate Credit), and Stockholdings in corporations different from banks.

The primary mechanisms for administration and recovery of Corporate Credits are as follows:

1. Payments in Cash and Payment in Lieu.A scheme used when Debtors or interested third parties claim to have liquid funds or real estate sufficient to submit payment proposals to liquidate their debts.
2. Financial Restructuring.Depending on the debtor’s payment capacity, banks analyze and evaluate the possibility of restructuring their debts in order to ensure recovery in the medium or long term.It is formalized with the signing of Judicial Agreements with the purpose of not losing the banks’ guarantees and position in legal proceedings in case of default.Having restructured the debts, the banks seek to place them on the market by means of public auction.
3. Capitalizations. A scheme implemented when Debtors claim to have the intention to pay and have favorable future growth forecasts, but lack sufficient financial capacity to cover all their debt.In such cases, the amount of the debt that cannot be paid is converted to shares held by the banks in which IPAB has a direct or indirect share.
4. Sale by Public Auction.If it proves impossible to implement any of the aforementioned mechanisms, IPAB may opt to sell corporate credit by means of a public bidding or auction.

In the case of Corporate Stock, recovery is achieved mainly by means of the following mechanisms:

1. Sale by Public Auction.Consists of selling shares through a process of public bidding or auction, directed to portfolio management companies, financial entities, and the investing public in general.
2. Withdrawal of Capital.The exercise of all shareholders’ right to withdraw their shares in the corporation’s capital stock, which is provided for in Article 220 of the General Corporations Act.
3. Reduction in Capital.A resolution of the Shareholders’ meeting whereby capital is reimbursed to the shareholders in proportion to their stockholdings.
4. Sale through the Securities Market.This mechanism consists of selling stocks and other securities on the stock exchange and, among its other advantages, allows assets to be moved quickly; it has also been considered a natural mechanism for auctioning by the IPAB Governing Board.
5. Liquidation of Corporations and Collection of Equity.Consists of dissolving and liquidating the corporation in order to recover its value through the liquidation share corresponding to IPAB.

Stocks require active participation by IPAB, within its sphere of authority and competency, reconciling the positions of other shareholders and/or creditors and taking various actions with the authorities in order to help implement the recovery strategies defined.

Real and Moveable Assets

Real and moveable assets include all kinds of assets foreclosed on or received as payment in lieu, including furniture and equipment, automobiles, works of art, jewelry, clothing, decorative items, memberships, land, homes, properties, commercial locales, and buildings, among others.

Recovery of such Assets is achieved through public auctions with appraised values determined by third party specialists based on the applicable criteria established by the CNBV.Depending on the characteristics of the particular asset, the following recovery mechanisms are used:

1. Individual Sale.Sale through auctions for assets which, due to their importance and nature, offer the greatest possible recovery value when sold individually.

• Major Real Estate with Commercial Potential. Real estate whose value exceeds 10 million pesos, including individual properties or natural units, understood as individual properties on a single location, whose combined value exceeds the aforementioned figure.

• Minor Real Estate with Prior Offer.Minor real estate with a specific purchase offer.

• Especial Moveable Assets.Groups of Assets that require a process of specialized marketing to sell, as in the case of boats, luxury automobiles, certain kinds of machinery, jewelry, and access and usage rights in clubs and associations.

• Recognized and Cataloged Works of Art.To sell this type of assets, a specialized auction house is contracted.Usually, decorative works with artistic value are included in auctions of art works to draw attention from another segment of buyers.

1. Package or Batch Sales.Sale through collective auctions, involving assets for which individual recovery is difficult and which have similar characteristics.

• Minor Real Estate in Packages.This strategy involves group sales of properties with little or no commercial potential, some of which have been the object of auctions that have been declared abandoned for lack of interested buyers.
• Batch Sales of Moveable Assets in Warehouses.These Assets are characterized by being for common use and not requiring a specialized process to sell.They include office furniture and equipment, textiles, housewares, construction materials, automotive parts, electrical material, communications equipment, computer, hardware, and scrap, among others.
• Decorative items.Theseassets may be sold at auctions of assets of a different kind.