The National Assembly of Panama approved in third debate a bill that regulates the service of information on the credit history of consumers.
The legislative plenary approved in third debate initiative 424, which modifies Law 24 of 2002 related to this registration system in the Panamanian Credit Association (APC), in order to create a data model or credit information that is fair and balanced between financial agents and credit clients, the Assembly informed.
Fitch Ratings agreed to change the perspective of the region's banks from stable to negative, arguing that the current health crisis will affect financial institutions in all countries.
Considering the measures that countries have adopted in the last 15 days in economic matters, following the spread of covid-19, Fitch expects that there will be a decrease in the issuance of loans.
According to Fitch Ratings, banks in Nicaragua will continue to be pressured by the remaining effects of an economic contraction for the second consecutive year, a situation derived from the political crisis affecting the country.
Fitch Ratings decided to keep the country's risk rating at B, but changed the outlook from negative to stable, arguing that there are some signs of stabilization of Central Bank reserves and commercial bank deposits.
The revision of the outlook reflects the stabilization of central bank reserves and commercial bank deposits, a significant fiscal adjustment and social security reform that have reduced domestic financing needs and a pronounced external rebalancing that has facilitated the external financing requirement, the rating agency reported.
Late loans granted by public banks to small companies amounted to 5.5% in May, 3.8% in the case of medium-size companies and 3.3% in the case of large companies, a situation attributed to the economic slowdown.
The percentage of credits reported by the General Superintendence of Financial Entities (Sugef), refers to loans that went into default for more than 90 days and judicial collection, granted by public entities such as the National Bank, Banco de Costa Rica and Banco Popular.
With the aim of making the classification of debtors more flexible and reducing the risk of non-payment, in a context where delinquent loans keep on rising, Costa Rica authorized the modification of two regulations that apply to entities in the financial system.
The General Superintendence of Financial Entities (Sugef) and the National Council of Supervision of the Financial System (Conassif), informed that changes were made to the "Regulation for the qualification of debtors" and the "Regulation on management and evaluation of credit risk for the development banking system", which ultimately aim to give access to new credits to about 63 thousand people.
In Costa Rica, low economic activity and rising unemployment explain the 25% increase reported between February 2018 and the same month of 2019 in the value of assets acquired by banks to recover loans.
Figures from the General Superintendence of Financial Entities (Sugef) specify that between February 2018 and the same month of this year, the amount of goods and securities acquired by financial entities because people and companies did not pay their loans increased from $425 million to $533 million.
If the reforms to the Banking Law that are being discussed in the Congress are approved, cooperatives will have to start reporting information in their loan portfolios.
Legal initiative number 5157which is pending final approval, proposes, among other changes, including in the Credit Registration Information System (SIRC by its initials in Spanish) information from financial institutions that are not yet sending reports.
As of September, credit granted by the financial system registered a year-on-year increase of 16%, driven by commercial credit and personal loans, which grew by 14% and 15%, respectively.
From a financial report by the Central Bank:
The financial system remains stable as of September. The loan portfolio grew by 15.6 percent year-on-year.The risk indicators continue below the average for the region and the liquidity of the system was above 31 percent. In relation to deposits,an interannual growth of 8.7 percentwasobserved (10.9% in September 2016).Finally, the indicators on profitability, solvency and capital have been found to be stable throughout the year.
Trade and construction activities recorded the lowest demand for bank credit, which grew 6% in the first five months of the year compared to the same period in 2016.
Following trade and construction, electricity and water are the worst performers according to figures from the Guatemalan Superintendency of Banks.
By requiring banks to have additional capital requirements the Sugef aims to discourage consumer loans, mortgages and vehicles loans with long repayment terms.
Arguing that terms of over 30 years for housing loans and more than 5 in consumer loans encourages overindebtedness of Costa Ricans, the Superintendent of Financial Institutions (SUGEF) has presented a proposal toreform the ruleson capital adequacy of financial entities, in order to require entities that carry out these credit operations to have additional capital.
The Superintendency of Banks is working on an update of the regulation on credit risk management and a new regulation of corporate governance for insurers.
Jose Alejandro Arevalo, head of the Superintendency of Banks (SIB), told Dca.gob.gt that"... in the case of regulation 93-2005 they want to ensure that the valuation of assets which is presented every 4 months by banks reflects economic reality and the quality of the goods."
Details of the draft law with which the Bank of Guatemala aims to improve regulation and supervision of the financial system.
From a statement issued by the Bank of Guatemala:
The bill submitted by the Monetary Board of the Executive Agency and by the President of the Republic to the Congress of the Republic on September 12 2016, introduces necessary reforms to Decree No.
Moody's warns of the risks faced by banks in Central America in the context of a rising trend in interest rates and dollarization of their loan portfolios.
From a report by Moody's:
Mexico, September 14, 2016 -- Banks in Central America face rising asset risks as interest rates look set to rise in the region, pushing up debt service costs for borrowers, according to a report from Moody's Investors Service.
A bill being promoted by the executive branch seeks to authorize the Bank of Guatemala to finance the capitalization of a bank when it faces problems affecting financial stability.
The aim of this initiative is to adapt the rules on financial supervision and risk control to international standards, to prevent the stability of the domestic financial system from being affected when a bank has liquidity or solvency problems.