After the bank was taken over because of its inclusion in the Clinton List drawn up by the U.S. Treasury Department, the Superintendency of Banks has ordered its reorganization and sale to another bank.
From a statement issued by the Superintendency of Banks in Panama:
Through Resolution SBP-0116-2016 of July 1, 2016, the Superintendency of Banks has ordered the reorganization of Balboa Bank & Trust Corp., effective from the date July 4, 2016 at 2:30 pm, taking into consideration the recommendations of the Interim Administrator.The reorganization of the bank aims to fulfill three basic objectives:• To protect the best interests of depositors;• To minimize any loss of value of the bank to the detriment of depositors and•Reduce any adverse impact on the banking system. The decision to reorganize the bank will allow choices to be made that aim to give greater security to depositors and creditors of Balboa Bank & Trust Corp. for an early normalization of the situation in the bank and access to all of its funds.
It is difficult to understand - especially because it has been made public - how a major state bank has described the International Bank of Costa Rica as "high risk" while another main state bank has stated the opposite.
EDITORIAL
The banks involved are Banco de Costa Rica (BCR) and Banco Nacional (BN). Between them they are the owners of Banco Internacional de Costa Rica (BICSA), with 51% of the shares the first and 49% of the second.
In response to rumors of more interventions into financial institutions, the Superintendency of Banks in Panama says that they are unfounded, highlighting the strength of the banking system.
From a statement issued by the Superintendency of Banks of Panama:
The Superintendency of Banks in Panama made public knowledge, that as a result of taking operational and administrative control of Balboa Bank & Trust and its subsidiaries a number of comments and news stories have arisen which do not have any foundation regarding future actions that may be taken by this institution on other banks, or conditions of vulnerability of some institutions in our banking system.
Fitch Ratings predicts headwinds and higher risks for banks in Central American countries in 2016, resulting in lower credit growth.
From a report by Fitch Ratings Central America:
Headwind: Central American Banking systems face greater risks in 2016. A slowdown in growth of gross domestic product (GDP) in the region and, consequently, lower credit growth is anticipated.
The criticism attracted by the latest "commercial" venture by the State Bank of Costa Rica should not stick to just the surface of the fairytale castle and pink marketing campaign, but should go to the heart of the concept of state banks, which today have degenerated into simple banking institutions with commercial privileges.
EDITORIAL
This is precisely what Sebastian Hernandez does in his lucid analysis of the launch of the new brand Banca Kristal in new branches of Banco de Costa Rica, an exclusive service for women, and one which is painted pink.
It has been announced that the Guatemalan bank has acquired assets belonging to the Honduran group estimated at $108 million.
As part of the process of forced liquidation of Banco Continental, which began on October 12, the Bank founded in Guatemala acquired 32% of the assets, which has an estimated total value of $225 million.
Between 2011 and 2014 the number of people with bank accounts grew in all Central American countries, with noteworthy growth in El Salvador of 23%.
In Guatemala bankariztion grew by 19% in the period in question, reaching 9.2 million people with at least one bank account. In Honduras' growth was 11%, Costa Rica's 14%, Panama's 19%, and in Nicaragua, the increase was only 5%.
The business group chaired by the Panamanian Stanley Motta may be interested in acquiring units of Citi's consumer banking operations in Panama and Costa Rica.
It is not yet been revealed which of Citibank' consumer banking companies in Panama and Costa Rica they may be interested in acquiring. However, potential stakeholders include the General Bank of Panama and Grupo ASSA, which in addition to being insurers, also runs La Hipotecaria.
It has been reported that the Spanish firm Banco Popular has abandoned the negotiations for the purchase of Citigroup's consumer banking unit in the region.
Reports published by Bloomberg.com indicate that a purchase of consumer banking operations in the region would not be aligned to the strategic plan of the Spanish Banco Popular SA, who for weeks had been holding negotiations with Citigroup.
Citigroup could be soon finalizing the sale of its consumer banking operations in Central America with Bank of Spain, which could be paying $1.5 billion.
A report on Bloomberg.com noted that negotiations between the US bank and the Spanish bank are very advanced, and only the only thing left is to define the final value of the transaction, which could amount to $1.5 billion, according to unnamed sources cited by Bloomberg.
Aside from the Colombian Grupo Aval, the Spanish company Banco Popular may also be in negotiations to acquire Citi's entire consumer banking operation in Central America.
The sixth largest bank in Spain, which at the moment has no presence in Central America, could be interested in acquiring the consumer banking operation that Citi has put up for sale in Costa Rica, El Salvador, Guatemala, Nicaragua and Panama.
Slow growth is projected in El Salvador, very good performance in Nicaragua, stability in Panama, more competition in Guatemala and moderate growth in Costa Rica.
From a report by Fitch Ratings entitled "2015 Perspectives: Central American Banks":
Costa Rica:
Fitch Ratings has revised the outlook for the sector from positive to stable, because the agency does not anticipate substantial improvements in respect to the previous year.
The banks Davivienda and Grupo Aval, already present in Central America, could be in talks with Citi to acquire its consumer banking operations in the region.
The sale of assets of Citigroup in 7 countries in Latin America represents an expansion opportunity for Colombian banks. Bloomberg reports cited by Elfinancierocr.com note that in the case of Banco Davivienda, it's interest is soley in the consumer banking units in Peru and Guatemala.
The microcredit portfolio in Latin America and the Caribbean is worth over $40 billion, is awarded by more than 1,000 institutions, and reaches more than 22 million customers.
From a statement issued by the Inter-American Development Bank (IDB):
A new report documents significant expansion of microcredit in Latin America and the Caribbean
GUAYAQUIL, Ecuador - Microcredit in Latin America and the Caribbean remains strong and continues its expansion of the last decade, experiencing an increase in their number of customers, a variety of institutions and a downward trend in interest rates according to new data released here today by the Multilateral Investment Fund (MIF), a member of the IDB Group.
Analysis by Fitch Ratings projects that banks in the region will maintain strong balance sheets and have stable profitability in 2014.
Excerpted from Fitch Ratings:
Differential Growth and Opportunities: Low financial depth, in most systems, continues to provide significant opportunities for expansion of bank balance sheets; although this is limited by low average income levels.