The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
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.
An agreement was reached to extend for 90 days more the intervention of Banco Crédito Agrícola de Cartago, while discussion takes place of the plan that would allow its absorption by another banking entity.
The National Council of Supervision of the Financial System decided on May 22 to extend for three more months the intervention of Bancredito, whose status, according to the authorities, continues to be of "financial infeasibility".
In Costa Rica, the financial supervisor recommended the Congress to apply the state guarantee to Bancredito and merge it with another public banking entity.
Luis Carlos Delgado, president of the National Council of Supervision of the Financial System (Conassif), "... confirmed to Nacion.com that (last week) they approved, in a definitive manner, the final report on the intervention of Banco Crédito Agrícola de Cartago (Bancredito), which concludes that the entity is no longer financially viable."
In line with the revision from stable to negative for the outlook for sovereign debt, Fitch Ratings has also downgraded the outlook for the debt of state banks and two private banks.
From a statement issued by Fitch Ratings:
Fitch Ratings-Monterrey/San Salvador-24 January 2018: Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of various Costa Rican banks and revised the Rating Outlook to Negative from Stable.
The Bank of Costa Rica has received approval to issue bonds and commercial papers in the Panamanian stock market for a total of up to $500 million.
At the end of September the Superintendency of the Securities Market of Panama (SMV) issued a resolution authorizing the Costa Rican state bank to issue bonds in dollars for up to $250 million and commercial paper up to the same amount.
At the end of the first half of 2017, private and public banks' profits fell by 9% and 17%, respectively, compared to the same period last year.
Figures from the Superintendency of Financial Entities (Sugef) indicate that as of June this year bank profits totaled $183 million, 14% less than in the first half of 2016.
The state bank will stop performing financial intermediation activities and, despite proof of its inefficiency, will be converted into a promotion and development bank.
From a statement issued by the President of Costa Rica:
The Governing Council, meeting at a shareholders meeting at Banco Crédito Agrícola de Cartago (Bancrédito), decided to accelerate the transformation of that entity into a promotion and development bank, by executing a plan that would allow the entity to gradually cease to perform financial intermediation activities before December 31, 2017.
Nothing is more harmful to an economy than preventing the death of companies that have proven themselves to be inefficient or, as in the case of Bancrédito of Costa Rica, not essential or even needed.
EDITORIAL
Banco Crédito Agrícola de Cartago wants the State of Costa Rica to capitalize it in order to cure it of the financial deterioration that arose due to its mismanagement.
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.
The banks Banco de Costa Rica, Banco Nacional and the Banco Industrial de Guatemala "will have to reduce the growth rate of their loans, since their core capital levels remain modest."
From Moody's press release:
Mexico, July 21, 2015 -- Central America's leading banks will need to slow the pace of their loan growth as their core capital levels remain modest, said Moody's Investors Service in a new report.
Investment groups interested in buying shares of Banco Produzcamos have until June 30 to submit their bids.
As announced by the Nicaraguan government in April , about 60% of the shares of the state bank Produzcamos will be sold to private entities, who will have time to present their proposals for purchase up until June 30, according to the notice published in the La Gaceta, Official Journal No. 103 of June 4, 2015.
The government authorized the issuance of shares of this bank to incorporate private partners into the entity and turn it into a joint venture.
It is projected that the private sector will be able to acquire up to 60% of the shares and the state would get the rest. Until February 2015 the credit portfolio of state bank amounted to $1.195 billion, according to data from the Superintendency of Banks and Other Financial Institutions (Siboif).
Fitch Ratings has revised from "stable" to "negative" its perspective for international long-term ratings of the private bank BAC San José and the state banks Banco Nacional, Banco Popular, Banco Internacional and Banco de Costa Rica.
From a statement issued by Fitch Ratings:
Fitch Ratings has revised the Outlook for international long-term ratings of four Costa Rican banks and a Panamanian subsidiary from Stable to Negative, after having revised the Perspective for Costa Rica's sovereign rating from stable to negative :
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.
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