Bankers in Costa Rica are digesting what many see as unwelcome news.
Costa Rica | Banking Sector: Holding steady
Costa Rican banks are confronting tighter credit controls as authorities grapple with an explosion in dollar lending. The central bank insists such moves are a necessary evil
In February, the central bank slapped restrictions on the growth of their credit portfolios. At the same time, SUGEF, the banking regulator, is mulling a range of new measures to curb risk-taking.
As Fernando Naranjo, general manager at the country’s largest financial institution Banco Nacional de Costa Rica, puts it: “the restrictions are the hot button topic of the moment”.
The measures are designed to help Costa Rica deal with a number of burgeoning macroeconomic distortions: large spreads between local and US interest rates has led to an explosion in foreign currency lending, which jumped 17.8% in 2012.
Central bank governor Rodrigo Bolaños says the new directives will include more stringent provisioning and re-rating risks, particularly for dollar lending to clients without matching revenues, though he won’t speculate on exact measures before they are implemented.
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