Banks Adjust to Costa Rica Credit Crunch

The ceiling on the growth of the loan portfolios imposed on Costa Rican banks has forced financial institutions to adjust their lending strategies.

Monday, February 11, 2013

Elfinancierocr.com reports that "The Central Bank of Costa Rica (BCCR by its initials in Spanish) established a ceiling of 9% on the growth that credit loans might have between February and October this year. In 12 months, the figure will rise to 12%. "

It has been noted that the restriction will primarily affect credit in foreign currency, which by the end of 2012 made up 48% of the total loans in the country.

Gerardo Porras, corporate general manager of Banco Popular, said: "We will have to adjust the placement strategy in both the amount and the currency. This could have effects on profitability and on the number of customers to whom we can lend. '

Banco Lafise will endeavor to focus on more profitable loan products, and Promerica will direct its efforts towards activities that generate dollars such as tourism, services and agricultural exports.

These shifts in strategy by financial institutions will not fail to affect those who wish to obtain credit in dollars, as many predict that interest rates on these operations will tend to rise.



More on this topic

Requirements for Dollar Loans Made More Flexible

July 2018

In order to try to stop the deceleration in the issue of loans in dollars, authorities in Costa Rica have decided to soften the rules required of banks who grant loans in this currency.

The National Council of Supervision of the Financial System (Conassif) has decided to temporarily reverse the stricter measures that banks must comply with when granting loans in foreign currency to those who generate income in Colones, with the aim of counteracting the deceleration that has been seen in the issue of bank loans.

Banking Costa Rica: More Reserves for Dollar Loans

August 2015

The Financial Superintendency plans to increase reserve requirements for banks that lend in dollars to companies that do not generate revenue in that currency.

As a measure to prevent the growth of dollar loans to individuals and companies that do not generate income in this currency, the Superintendent of Financial Institutions (SUGEF) said it plans to raise reserve requirements for financial institutions and banks in order to address payments in arrears by debtors. Currently the requirement is 0.5% of the balance due.

Costa Rica: Bank Lending Slows

August 2014

The scare liquidity of colones explains the lower growth of loans in this currency, while credit growth in dollars continues to lose strength.

Added to the diminished liquidity in colones putting downward pressure on credit growth in that currency, is uncertainty at enterprise-level over recent changes in the exchange rate and lower credit demand for real estate projects, power generation and tourism, as explained by bankers to Nacion.com.

Costa Rica: More Filters for Lending

May 2013

Credit histories of businesses and individuals will be more thoroughly reviewed, as well as their actual repayment capacity.

"We want entities to analyze peoples's debts with everyone, because they may have a loan here and there, and in the end owe millions," said Javier Cascante, chief of the General Superintendence of Financial Entities (Sugef).

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