On November 14th, Banpro Grupo Promerica issued $200 million in bonds on the international market for a six-year term under the 144A format.
The bank announced that the issuance was made by Promerica Financial Corporation (PFC), its main shareholder, and that the issue was structured by Bank of America Merrill Lynch and Credit Suisse.
Ramiro Ortiz Mayorga, chairman of the board and CEO of Promerica, explained to Elnuevodiario.com.ni that "...
Because of the adjustments made by the Central Bank to interest rates in recent days, financial institutions in Costa Rica will be forced to raise interest rates on savings in local currency.
Arguing that forecasts suggest that inflation in 2019 could be above the upper limit of the target range, on November 1st the Central Bank of Costa Rica (BCCR) decided to raise the monetary policy rate from 5% to 5.25%.
From July 2017 to September 2018, the percentage of loans in dollars with payment arrears over 90 days or in legal collection increased from 1.57% to 2.95%.
The default on dollar loans is still under 3%, which is still considered normal. However, according to the trend reported in recent months in the records of the General Superintendence of Financial Entities (Sugef), the indicator is likely to exceed the 3% barrier.
In Costa Rica a law proposal pretends to reduce by 50% the bank fees on loans for businesses and SMEs, as well as credits for social housing and lower class.
The law project, which was presented to the Congress by the representative, Yorleny Leon, aims to reduce fees in the formalization of bank loans, which currently range between 8% and 10% of total credit.
In Costa Rica, between January 1st and September 21st, 340 suspicious financial transactions were reported, of which 83% were committed by banks.
According to the Costa Rican Institute on Drugs, among the most reported activities are: construction sector, services, rentals, property agents, activities related to software and information technology, automotive sector, legal activities, fishing, air transport, among others.
Explained in part by doubts about the economic future in the short term, in Costa Rica credit granted to companies and individuals went from growing at an annual rate of 8% in January to 4% in June of this year.
According to figures from the Central Bank of Costa Rica, in the first six months of the year credit to the private sector has reported a clear downward trend, since in January the amount registered amounted to $34.072 billion and the increase compared to the same month in 2017 was 7.9%.
The Legislative Assembly has approved the absorption of Bancredito by Banco de Costa Rica, which must take on both the entity's assets and its obligations.
After determining that Banco Crédito Agrícola de Cartago (Bancrédito) was not financially viable, last March the National Council of Supervision of the Financial System (Conassif) recommended the absorption of the financial institution, a process that was completed yesterday when the Assembly voted in favor of the suggestion.
The deterioration of the economy and rising unemployment are the main reasons behind the difficulties faced by companies and individuals in Costa Rica in paying back their bank loans.
According to figures from the General Superintendence of Financial Entities, between January 2017 and July 2018, the percentage of loans in defaults for more than 90 days or in judicial collection, went from 1.65% to 2.51%, showing an upward trend in recent months.
The Basic Passive Rate fell from 5.95% to 5.85%, while the Effective Rate in Dollars increased from 2.39% to 2.42%.
The Central Bank of Costa Rica published, on the afternoon of Wednesday, September 5, news that the Passive Base Rate fell, this week by 0.10% and the level at which it will remain until next Wednesday September 12 is 5.85%.
In Costa Rica, the active participation of the government issuing debt in the local market and the uncertainty over fiscal reform are some of the reasons behind the sharp slowdown in growth of credit to the private sector.
Although awards of loans to the private sector are still growing, they is doing so at a slower pace.According to official figures between January and June of this year, the inter-annual growth rate of the total credit portfolio went from 9.25% to 3.08%, which is equivalent to a drop of six percentage points.
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.
The balance of credit card debt in Costa Rica doubled in the last eight years, going from $1 billion in April 2010 to just over $2 billion in the same month in 2018.
The balance of credit card debtdoubled in the last eight years, going from $1.005 billion in April 2010 to $2.095 billion in April 2018, the Ministry of Economy, Industry and Commerce (MEIC) has revealed, by means of a report prepared by the Directorate of Economic and Market Research.
Scotiabank has announced that on July 3 it had formally completed a merger with Citibank, meaning that its client base will increase from 110,000 to 282,000.
The Central Bank of Costa Rica has increased to $27 million the minimum amount of capital required by banks to operate, and to $5 million the minimum amount for financial companies.
Yesterday the Central Bank agreement which establishes the changes was published in the official newspaper, La Gaceta, The minimum operating capital for private banks increased by 5.8%, rising from $25.6 million to $27.1 million.In the case of financial companies, the increase was from $5.1 million to $5.4 million.
From June 2017 to May 2018, the average default rate of the Costa Rican financial system's credit portfolio increased from 1.36% to 2.14%.
According to figures from the General Superintendence of Financial Institutions (Sugef), between April and May of this year, Banco Nacional de Costa Rica (BNCR) saw an increased in its arrears of greater than 90 days and judicial collection from 2.65% to 4.18%, thus surpassing the 3% that is established as the prudent maximum limit.