In El Salvador, any business or individual can act as a financial intermediary with the support of a financial institution.
The regulation, which will take effect on August 1, enables banks to make agreements with third parties who can receive deposits from the public or lend money, up to certain limits, backed by a financial institution.
The model, which is already operating in countries like Colombia, seeks to expand the scope of financial services beyond bank branches.
The Monetary Board has issued regulations governing the registration of local rating agencies, and the requirement for all financial institutions to be qualified.
In addition the Monetary Board (MB), published the regulation on Concentration in Contingencies and Investments as well as issues related to the operating permits for offshore entities, regulations that are part of the changes made to the Banking Act and financial groups that were in effect before April 1.
Rating agencies registration is now mandatory and banking institutions must be rated by one of them.
Rating agencies will have to submit their paperwork to the Superintendency of Banks (SIB). According to the chairman of the Monetary Board (JM) and the Bank of Guatemala (Banguat), Edgar Barquin, "among the amendments to the Law on Banks and Financial Groups is the addition that now banks must have a risk rating" .
From May 30, the technical rules on credit cards issued by the non-banking commercial sector will be in effect in El Salvador.
A statement from the Ministry of Economy reads:
The Minister of Economy, Armando Flores signed for publication in the Official Journal, this May 29, standards for credit cards, which allow development of the application of the provisions of the Law on Credit Cards, in a more effective and efficient form, favoring cardholders from the nonbank trade sector.
The urgency to pass the tax reform, among other things, has taken center stage in the government's agenda of issues.
The removal from the list of countries classified as tax havens, and the priority that the government has given other issues has meant that the discussion and approval of the Law on Fiscal Standards and Transparency, which contemplates the possibility of lifting the secrecy in banking in certain cases has been relegated.
They argue that rates cannot be lowered any more, and they would prefer regulations issued by the Superintendence instead of new laws.
Juan Carlos Arguello, president of Asobanp (Association of Private Banks of Nicaragua) said that the sector does not support an amendment to Law 515 of Credit Cards, as they consider more convenient to have regulations issued by the Superintendency of Banks, as this would be "less disruptive to the system", he said.
Sugef will classify banking entities in three groups, based on their capital adequacy ratio.
According to the regulation proposed by the Sugef, the supervisor of the financial system, the first level will include entities with a ratio of 14% or more, the second will group entities with ratios between 12% and 14%, while the third will include those with a ratio between 10% and 12%.
Banks in Guatemala will have to increase their capital from 10% to 14% when granting loans in U.S. dollars to people with incomes in quetzales.
Banking Superintendent Edgar Barquín explained that the measure, which affects a third of the entire loan portfolio in dollars -$982 million-, will force banks in the system to increase their capital in $48 million.
Tomorrow the Superintendence of Banks (SIB) will request that the Monetary Board approve a modification of the Regulations for Credit Risk Management.
Even though bank portfolios in arrears are not at a critical level, the SIB will request that the Monetary Board make the changes to the rules in order for banks to increase their reserves for bad debts (loans).
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