Bancafe Exposes Offshore Risks
Bancafe's meltdown in 2006 highlights areas where Guatemalan financial supervision can be improved.
It also spotlights the pitfalls of offshore banking.
The decision by monetary authorities to shut down
Guatemala's fourth largest bank, Banco del Café
(Bancafe), late last year appears to have had little effect on
other banks in the country. Analysts and financial regulators
view it as an isolated case that will not dent confidence in
Guatemala's banking system. But it may make participants at the
retail and wholesale level much more wary in dealings with
offshore financial institutions that are hard to regulate.
"The Bancafe problem should not have a big impact on the rest
of the financial system, however it is to be hoped that
regulation will be improved, above all in the areas of offshore
banking and transparency of information," says Mauricio
Choussy, managing director of Fitch Ratings in Central
Guatemala's Monetary Committee ordered the suspension of
Bancafe in October 2006, but the bank's problems...
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