Companies are choose to seek financing in foreign banks, because they offer lower rates.
The Bank of Guatemala (Banguat) has revealed that domestic banks have lost their appeal compared to credit lines offered by foreign banks.
There seems to be a greater interest by Guatemalan companies in negotiating foreign loans, according to Banguat’s figures regarding transfers abroad for paying interest and capital repayments.
In order to encourage commercial business with Central America, the Lafise group has started operating in Colombia.
The bank has been operating for 26 years with offices in Nicaragua, Mexico, United States, Honduras, Spain, Costa Rica, Guatemala, Venezuela, Panama, El Salvador and the Dominican Republic.
Maria Paula Alban, at the Larepublica.co, interviewed the president and founder of Lafise, Roberto Zamora on his visit to the Colombian capital:
In recent years, electronic transfers have been growing at a rapid pace.
Bank managers agree that the use of electronic banking operations reduces transaction costs, being this the main reason for its growth.
Luis Lara, manager of the Banco Industrial (BI) told Prensalibre.com that the institution expects amount of electronic transactions made by the end of 2011 to exceed those of 2010 when they totaled $1,377 million.
In May, Panamanian banks led the earnings ranking in Central America, followed by Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua, in that order.
The report of the Risk Rating Agency, Riesgo Equilibrium, affiliated to Moody's, said that the region’s banking sector - which consists of 118 banks – is showing "substantial improvement" in profits and performance with respect to the global financial and economic crisis in 2008 and 2009.
With three agencies in San Salvador, Banco Industrial will begin operations.
Alicia Maria Mayorga, president of the institution in El Salvador said they already have planned an expansion for next year with the opening of new agencies and more products and services.
"Juan Miguel Torrebiarte, president of the BI corporation, said that the arrival in El Salvador is a major event for the financial group, because through this new bank they will consolidate their presence in the Central American Northern Triangle (Guatemala, El Salvador and Honduras ) as well as allowing them to offer their present and potential customers greater regional coverage and services to facilitate trade", reported Elperiodico.com.gt
Along with the growing demand for sugar, credit applications from producers and industrialist in the sector are also growing.
In April, the portfolio of loans granted by the financial system to sugar producers totalled $529 million, 58.5% higher than in the same period in 2010.
"Banco Industrial has the largest number of loans from the sugar sector in its portfolio, with $187 million worth, followed by Banco General de Panamá with (
In an attempt to attract more customers banks are diversifying their product portfolios.
One example is the Agromercantil Bank (Bam) who will soon launch a product called 'Hazlo sencillo' (Make it Simple), which will be accessible to the institution's debit card users. "The service will consist of rounding off cardholder's accounts and transferring the balance to a small savings account, where the owner will earn interest on those savings.", said the general manager of the institution, Luis Fernando Caceres, in an article in Siglo21.com.gt
The main shareholder of the new bank, which will open operations on 13 July, is the Panamanian holding company Bicapital Corporation.
As outlined in an article in Elperiodico.com.gt, Banco Industrial El Salvador will absorb the existing operations of the representative office of Banco Industrial Guatemala, which is already operating business loan services in El Salvador.
Banco Compartamos has announced the start of operations in Guatemala through a new subsidiary.
The offices of Compartamos SA are located in the departments of Quetzaltenango (Coatepeque and Quetzaltenango) Retalhuleu (in the town of the same name) and Suchitepequez (Mazatenango).
With this operation, Compartamos, S.A.B., de CV takes another step in its international expansion.
New risk management regulations are to be observed by banks, finance companies and offshore entities.
The regulations, consisting of five chapters, have been published by the Monetary Board (Junta Monetaria).
“Risk management, according to the resolution, includes the following types of risk: tolerance, credit, liquidity, market, operational, country, lines of business and prudential limits. " said an article on the Prensa Libre website.
The bank Hong Kong and Shanghai Banking Corporation (HSBC) argue that the main reason for the closure is the effects of the global economic crisis.
In October 2009 the bank had set up the office which was dedicated to providing services to importers, exporters, multinational and transnational companies as well as offering trade services, loans and foreign accounts.
Banco Compartamos plans to attract Guatemalan customers who have previously lacked access to traditional banking.
The company which specializes in Mexican microfinance plans to expand its operations in different countries throughout the region, including Guatemala.
The proximity to Mexico and the characteristics of potential customers are some of the reasons behind the decision to enter this market.
In Guatemala, 10% of banking operations are currently handled by banking agents.
Fernando Quiñónez interviewed Herbert Hernández from G&T Continental for Siglo21.com.gt on the importance of banking agents to the Guatemalan economy, which have handled transactions worth more than $700 million since their inception in 2003.
Hernández comments that, "we began with three (agents), and there were no more than three or four for a while.
In order to keep inflation in check, the central bank raised the rate to 4.75%.
The improvement experienced by the economy and escalating raw material prices are some of the reasons which has led the Central Bank of Guatemala (Banguat) to raise its interest rate, which controls the growth of prices in the country.
Journalist Dardón Diaz in his article for La Prensa Libre notes that, "when prices rise too much, Banguat has the option of increasing the rate and thus encouraging banks to take their investment capital to short term, this decreases less favorable credits and consumption, which causes prices to decline."