Sunday, 5 July 2020

State Bank Faced With Declining Revenues and Rise In Bad Debts Calls For Government Aid

(QCOSTARICA) Facing financial problems, the Costa Rica state bank, the Banco Crédito Agrícola de Cartago (Bancrédito) has put forth a plan that includes a call for the transfer of state businesses, the administration fo the PYMES and Conape funds and a cash injection of ¢6 billion colones.

The Banco Crédito Agrícola de Cartago (Bancrédito)
The Banco Crédito Agrícola de Cartago (Bancrédito)

The state bank also calls for a creation of an executive directive ordering public institutions to open current accounts with the Bancredito, among other items.

The plan is laid out in the Fortalecimiento Patrimonial de Bancrédito: Camino al Centenario (Capital Strengthening of the Bancrédito: Road to Centennial), to which bank chairman Jean-Jacques Oguilve, says was drawn up by the bank’s strategy committee.

- paying the bills -

“All these options are known to the Government, the Central Bank and the Sugef (superintendent of financial institutions). There are no secrets,” Oguilve said.

Welmer Ramos, Minister of the Economy, confirmed that within the Presidential Economic Council the different options for backing the Bancrédito are being discussed.

The Bancredito reports a rapid financial deterioration due to falling profits and a rise in bad debts.  Among the various options to shore up its operations, the bank wants back the management of the Fondo de Financiamiento para el Desarrollo (Finade), a fund it managed between 2008 and 2011, providing the financial institution more than ¢12 billion colones yearly in revenue.

In the proposal, the bank estimates a revenue stream of ¢3 billion colones yearly if public institutions are required to include the Bancredito among its banking policies.

Finally, a request for a ¢6 billion colones cash injection for the payment of legal benefits to some 200 employees.

- paying the bills -

In Costa Rica, the difference between the state banks and private is that, in the former the bank’s capital (the difference between assets and liabilities) is owned by the state. State banks also offer a degree of security since deposits are insured, somewhat like the Federal Deposit Insurance Corporation (FDIC) in the United States and the Canada Deposit Insurance Corporation (CDIC) that insures Canadians’ deposits held at Canadian banks in case of a bank failure.

The state banks are: Banco de Costa Rica (BCR), Banco Nacional (BNCR), Bancredito and the Banco Popular y Desarrollo Comunal (Popular).

The Banco Central Costa Rica (BCCR) makes banking policy in Costa Rica. The SUGEF (Superintendencia General de Entidades Financieras) – banking superintendent – enforces compliance.

Rico
Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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