Friday 29 September 2023

Government contradicts BCR manager on sale of bank

BCR manager emphasized that privatization would not favor competition; President Chaves says BCR manager "has a very good salary and great position"

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29 September 2023 - At The Banks - Source: BCCR

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QCOSTARICA – “This is the right time to do it,” is the official response by the government, in contradiction of the general manager of the Banco de Costa Rica (BCR), Douglas Soto, on whether it is a good time to sell the banking entity within the framework of the legislative bill that is being discussed in Congress.

Douglas Soto, General Manager of the BCR (right), before the legislative commission, accompanied by the state bank’s legal manager, Manfred Sáenz. Photo: Legislative Assembly.

Soto expressed this week, before the Legislative Committee on Economic Affairs (Comisión de Asuntos Económicos de la Asamblea Legislativa) that the international situation and high interest rates mean that this is not the best time to sell the BCR.

Read more: Government sets BCR value at US$1.78 Billion Dollars

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The bank manager emphasized that, at present, it is necessary to assume more risks to place loans and it is more expensive due to the increase in rates, because the financial cost increases and demand for loans decreases.

La Nacion reported Soto added that the sale of BCR would be a severe blow to the country’s financial market, especially since it is an entity focused on loan placement in colones, with a portfolio of 75% in national currency and 25% in U.S. dollars.

“From the point of view of selling, the country would lose an important tool for sustainable development. As a bank official, personally, I cannot agree. The project has many significant shortcomings and omissions, in a business as complex as the BCR. The sale as it is exposed becomes quite complex,” Soto replied to Kattia Rivera, head of the Partido Liberación Nacional (PLN).

In his appearance before the legislative commission, the manager emphasized that privatization would not favor competition, but rather would allow a concentration of the placement of loans in colones, with the National Bank and the Banco Popular.

In addition, the sale of the bank would affect many communities where the BCR has branches, “places not very profitable to have branches, but where they are because the BCR’s mission is to promote social and economic development and competitiveness”.

According to the manager, many of these offices would surely be closed, since a private bank’s main objective is utility and not banking in rural areas.

President Chaves insinuates the lack of impartiality of the BCR manager when he talks about the sale of the bank
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On Wednesday, during a press conference following a cabinet meeting, President Rodrigo Chaves stated: “The numbers are overwhelming. That bank is more useful to the people of Costa Rica in private hands.”

The president questioned Soto’s impartiality to sell the bank that employs him.

“Don Douglas has an excellent job, but it will be up to him to present himself to those who buy the bank, if that becomes a reality, to offer his services,” he said.

“He has a very good salary in a position of great responsibility,” added Chaves.

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The president indicated that possible groups in Colombia, Brazil, Chile and other countries have an interest in purchasing the BCR, whose sale could be made in parts and not as a conglomerate.

For his part, the Minister of Finance, Nogui Acosta, supports Chaves’ to sell the BCR, in order to generate resources to mitigate the debt public.

“This is the right time to do it,” said Acosta, totally contrary to Soto’s criteria.

According to the Banco Central de Costa Rica (Central Bank), the sale would reduce public debt by 3 percentage points of the Gross Domestic Product (GDP), and this would translate into savings of ¢92 billion a year in interest payment on debt.

Representatives of the BCR Employees Union also take opposition to the sale of the bank.  Jonathan Blanco, general secretary of the union organization, commented that the sale “is to oppose the sale of the Social State of Law”.

According to the Department of Technical Services of the Legislative Assembly, the bill to allow the sale of the BCR will need 38 of the 55 votes.

The BCR headquartes in San Jose, Costa Rica

The Banco de Costa Ricais a state-owned commercial bank, establishing itself as one of the strongest banking companies in both Costa Rica and Central America, with some 4,300 employees, including those from subsidiaries, and of those 3,900 are from the bank itself.

The bank, founded on April 20, 1877 (145 years ago), began primarily as a private commercial bank until it was designated a currency issuer and exclusive manager of public revenues in the last decade of the 19th century. After the bank nationalization decree of 1948, the BCR became a financial entity with a major role in the development of the country.


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