From the Rio Grande to Tierra del Fuego, many Latin American banking systems are today in a state of convulsion. Up and down the continent, banks are restructuring their portfolios or unloading bad debts on the state, merging or being taken over, or just plain going to the wall.The themes are often the same but the underlying causes are specific to each country. In Mexico, banks have been knocked sideways by mounting bad debts caused by the skyrocketing interest rates that followed Mexico's currency devaluation in December 1994. In Brazil, Latin America's biggest economy, the financial sector is recovering from last year's government-imposed credit squeeze and adjusting to life without hyper-inflation. In Argentina, where banks also enjoyed years of very high inflation, the sector has undergone a rapid consolidation, with scores of weaker banks taking their last gasp in 1995 as liquidity drained from the system. Even in booming Chile,...
