Since the beginning of the political crisis in the country, several banks have decided to close some of their service centers, and only during the first half of 2019 have 56 branches been reported closed.
In April 2018, the country plunged into a political crisis that has dragged the economy into recession. As a result of this problem, official figures indicate that 49 bank branches were closed last year and 56 more were closed between January and June 2019.
In Nicaragua, between the end of March and the beginning of September, deposits in the banking sector fell by 19%, affected by the socio-political crisis in the country.
According to the most recent data from the Central Bank of Nicaragua (BCN), deposits in foreign currency up to September 6 totaled $3.31 billion, less than the $3.34 billioncounted at the end of August. In the case of deposits in córdobas, they reported a slight increase in the periods in question, rising from 35,326 million to 35,595 million.
As of September, credit granted by the financial system registered a year-on-year increase of 16%, driven by commercial credit and personal loans, which grew by 14% and 15%, respectively.
From a financial report by the Central Bank:
The financial system remains stable as of September. The loan portfolio grew by 15.6 percent year-on-year.The risk indicators continue below the average for the region and the liquidity of the system was above 31 percent. In relation to deposits,an interannual growth of 8.7 percentwasobserved (10.9% in September 2016).Finally, the indicators on profitability, solvency and capital have been found to be stable throughout the year.
Resources from bank funds totaled $128 million, thanks to increased deposits and other net liabilities, and a decrease in investments made abroad.
From a statement issued by the Central Bank:
The Central Bank of Nicaragua (BCN) reports that on March 18, 2016 it has published its Monetary and Financial Report for the month of February 2016.
The NCB report notes that balances the national financial system (SFN by its initials in Spanish), in January 2016, showed a favorable performance. Therefore, the balance of the loan portfolio of the SFN registered a growth of 21.9%, while total deposits recorded an increase of 13.8%. Meanwhile, liquidity in the financial system remained at adequate levels, placing the ratio of availability to deposits at 32.4%. Finally, profitability indicators remain on a positive trend, associated in part to with the improved quality of the loan portfolio.
The loan portfolio grew by 23% in December 2015, up from 19.4% a year earlier, confirming the momentum of the Nicaraguan banking sector.
From the Monetary and Financial Report by the Central Bank of Nicaragua (BCN):
In 2015 the National Financial System (SFN) continued to perform favorably in most of its indicators, with the most noteworthy being the dynamism of the loan portfolio and deposits.
From August 2014 to August 2015 more than 11,500 new jobs were created in institutions in this sector, which represents an annual growth of 18%.
The employment data in the sector reflects the fact that "... the Nicaraguan financial system continues to perform well, with healthy growth in deposits and the loan portfolio."
An article on Elnuevodiario.com.ni reports that "...
At the end of June the credit portfolio of the banking system recorded an increase of 21.5%, with loans to the commercial sector, personal and industry seeing the most demand.
Despite being the smallest national bank in the Central America, it is the one that has reported the highest growth in its loan portfolio during 2014, growing by 21.55% at the end of the first half of 2014.
In a year savings in the banking system both in local and foreign currency increased from $3.5 billion to $4.2 billion.
The economic dynamism has increased the savings capacity of Nicaraguans, which is reflected in the figures for savings and fixed term deposits in the domestic financial system.
From a Monetary and Financial report by the Central Bank of Nicaragua:
Security of documents is being reinforced using a new type of paper, watermarks, and visible and invisible fibers.
The Central Bank of Nicaragua (BCN) and the Association of Private Banks have agreed to implement, as of March 15, a series of reforms for bank checks. The goal is to stop the falsification of instruments such as these used to transfer money.
Experts say that it will take time for private banks to lower interest rates.
With the aim of giving Nicaraguan banks greater flexibility and enabling them to create more liquidity, the country's central bank has decided to reduce the mandatory reserves a bank must have.
While analysts questioned believe that banks are unlikely to cut their interest rates immediately, this measure will mean that banks can reduce the amount they keep in reserve with the central bank and therefore release more credit, which should help stimulate the economy.
Private sector loans dropped $31 million in February.
The Central Bank of Nicaragua believes this happens because banks are much more cautions when lending.
An article in La Prensa rports that “most loans ($13 million) went to the agricultural sector, while reductions were recorded in commercial and industrial loans, as well as credit cards”.
The Central Bank announced that the daily legal reserve requirement will now be 12%, while it now stands at 16.25% weekly.
According to Antenor Rosales, president of the Bank, financial institutions must maintain a minimum reserve of 15% biweekly and a daily minimum reserve of 12%.
Economist Rene Vallecillo spoke to El Nuevo Diario de Nicaragua on the economic effects this can produce.
The volume of total deposits accounted for 50% of GDP and becomes mostly government debt.
El Nuevo Diario reports, "in that sense, the Central Bank managed not only to extract resources from the economy, but also strengthened the country's international reserves, while private financial institutions also bought government securities, instruments used to finance the nation´s deficit."
The banking regulator has requested shareholders to begin the liquidation process of the financial institution.
The head of Nicaragua's Banking and Finance Regulator (SIBOIF), Víctor Urcuyo, has said that the decision does not impact on the bank's customers since, "the vast majority have already received their money".
La Prensa reports comments from the Nicaraguan Central Bank's president, Antenor Rosales: "The social contract will be disolved, assets liquidated and the company's register deleted. The subsequent liquidation process should take longer than a year".
The Nicaraguan Association of Micro-Finance Institutions (ASOMIF) has offered to assist in the recovery of Banex.
Alfredo Alaniz, ASOMIF's executive director, commented that in meetings held with Nicaragua's banking regulator and central bank authorities those present agreed on the need for the institution to continue its operations whether as a bank or as a finance company.