Inflation rise affects banks

The credit rating company Fitch warned that rising interest rates and out-of-control inflation could cause debtors to default on their loans.

Wednesday, July 9, 2008

Maurice Choussy, executive director of Fitch Centroamérica, said the rise in inflation is affecting the ability to pay for both families and businesses.
As well, he said, they must face the high costs of primary materials and salary demands from employees.
Speaking in Guatemala at the semainar "Lessons Learned from the U.S. Sub-Prime Crisis," organized by the Superintendent of Banks, Choussy said, "After 15 years of rosy conditions, world economic conditions have changed. We're having inflation we haven't seen since the 1970s and very, very low interest rates. They will have to return to normal levels."

More on this topic

Central American Banks: Special Report

September 2009

Fitch Ratings issued a special report: "Central American Banking: Evolution of the Crisis and Learnt Lessons".

In Fitch's opinion, the negative impact the international crisis had on Central American banks was very evident in 2009. The current economic context poses growing risks for the sector, as well as an important challenge for this year.

SMEs: Precautions in Credit Sales

April 2009

The crisis has rapidly increased the levels of delinquencies, and getting paid on time and in form may be vital for an SME.

Maintaining liquidity has become a golden rule for businesses and one way to keep cash on hand is to simply stop paying suppliers. Of course, those who suffer most are companies that do not have bargaining power due to their size to recover unpaid debts and to devote resources to an adequate analysis of the risks of extending credit to each buyer.

Central American Banks: Annual Results and Perspectives

April 2009

Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.

The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.

Panama Banking system with $14 billion in liquidity

October 2008

The Panama Banking system has a liquidity of $14 billion and $115 million is affected by the credit crisis.

The Panama Superintendent of Banks, Olegario Barrelier, declared to the National Assembly that the $115 million affected by the crisis represent "a very low proportion" when compared to the $51 billion in assets in the national banking system or the $75 billion in the international banking center.

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