A report from Fitch indicates that only in 2011 the Banks of Central America will reach profitabilitye levels that could be compared to those before the crisis.
Fitch thinks that the majority of Central America's banking systems will earn more profits than in 2009, but it will not be until 2011 when they reach profitability levels comparable to the ones they had before the crisis. The perspectives of financial performance for the Nicaraguan Banking System are less favorable than the rest of the region; meanwhile the possibility that results in Costa Rica surpass the ones in 2009'will depend basically on the evolution of the currency exchange rate.
Luis Carlos Sarmiento Angulo, one of the richest men on earth, is the owner of Grupo Aval, which controls some of the largest banks in Colombia.
Grupo Aval agreed to purchase 100% of the shares of BAC-Credomatic from GE Capital for $1.9 billion. Currently, GE owns 75% of BAC-Credomatic and agreed to buy the remaining 25% to sell it to Grupo Aval.
Banking liquidity in cordobas increased from 32% in 2008 to 48% in 2009, and in U.S. dollars it raised from 30.4% to 41%.
Economists also remark that yields dropped in the last months of 2009.
“In 2008, the average return over capital was 17.2%, a figure that dropped to 5.5% on December 2009… Additionally, while loans decreased, deposits increased”, reported El nuevodiario.com.ni.
The rate of growth of banking transactions has diminished considerably when compared to last year.
According to data from the Banking Superintendence, from January to May the operational profit of the entire financial system was $19 million, 34% less than the same period of 2008.
Víctor Urcuyo, Banking Superintendent, told newspaper Laprensa.com.ni that "...national banks have enough liquidity, even with growing arrears".
As in Panama, there are hundreds of millions of untapped dollars in loans that were obtained to prevent illiquidity in the Costa Rican banking system.
The government of Costa Rica rejected the loan for $500 million that the Inter-American Development Bank (IADB) had granted at the end of 2008 and for which the approval by the Legislative Assembly had already been obtained.
With the loan, the Central Bank will face "temporary liquidity contingencies” and give backing to public bank deposits in the domestic financial system.
With the creation of a Special Assistance Line (Lafex), the Central Bank could rescue domestic financial institutions that are having liquidity problems.
Antenor Rosales told Laprensa.com.ni: "It is one of the efforts of the Government, particularly the Nicaraguan Central Bank, to ensure all measures that guarantee a financial system that has solvency and liquidity. It is not about a fund in particular, but a dedicated line that gives these entities security so that they can continue to lend."
Less requirements by the financial system to get loans for production and home acquisition.
According to the EL Nuevo Diario.com.ni: "One of the measures was to relax the Regulation for the Credit Risk Management, which came into effect on January 1, as authorized by the SIB.
The Superintendents of Banks are meeting in Managua to study how to standardize banking supervision rules for the countries in the region.
The Nicaraguan Superintendent of Banks, Victor Urcuyo, said, according to elsalvador.com: "Currently the banks have to consolidate their financial statements and the supervisor of origin goes to the various countries to do the inspections. At the meeting they will also discuss "the credit risk management rule" which establishes the parameters for evaluating the various types of credit so that they can be the same throughout Central America."
The Nicaraguan financial system is getting stronger everyday and its credit portfolio throughout the country is growing, the banking system is growing at a bi-annual rate of 25.1%.
According to official reports from the Central Bank of Nicaragua (BCN) for July 2008, the credit portfolio managed by the seven banks and thre financial organizations in the country under the supervision of the Superintendence of Banks is at total of 44.7 million cordabas ($117.8 million). Commercial credit is the strongest, followed by mortgages, and then personal loans.
The process of consolidating banking services in Central America is linked to the entrance of international banks into the region and the potential for attracting new customers to use banking services.
In the last two years, there's been a change in the way consolidation takes place.
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