The Government seeks to give banks more liquidity so that they can give loans. The productive loans are the priority.
Inject money into the economy to move it. At the end of June, the liquidity of the financial system will be recalculated in order to allow banks to have $ 800 million available for productive credits.
That was one of the announcements that the economic authorities made on Monday May 27, 2019.
“We have made a reform so that the Liquidity Fund is computed within the Domestic Liquidity Ratio. This will allow about $ 800 million dollars for banks to place (…) especially in favor of productive credit, “said Martinez.
In the letter of intent with the International Monetary Fund (IMF), the government said that it would make changes to the management of bank liquidity.
Marco Lopez, delegate of the President of the Republic before the Board of Monetary and Financial Policy and Regulation, explained that the contribution that the bank makes to the Liquidity Fund does in the Central Bank of Ecuador (BCE) and is currently considered as external liquidity For security.
“When considering what is done is to release, more or less, $ 800 million so that the bank can direct it towards credit (…) there is a firm commitment of the financial system to keep that money in Ecuador,” Lopez added.
In recent months, the placement of credit by banks has grown at a slower pace. According to the latest report from the Association of Private Banks of Ecuador (Asobanca), the gross loan portfolio grew by 8.7% until April of this year, compared to the same month last year. In 2018, credit grew at a rate of more than 10%.
Julio José Prado, CEO of Asobanca, told EXPRESO last week that with the measures the government seeks to implement in terms of liquidity, it will help “avoid a stronger fall” in the placement of credit this year.
“You do not have to create false expectations. We are not going to see a rebound in liquidity this year because conditions do not. But if we begin to adjust some of these technical regulations that we have had since 2014, even before, we can begin to give tools to the financial system to face this cooling process, “Prado added.
Sonia Zurita, professor of Finance of the Espace, of the Polytechnic School of the Coast (Espol), assured that the effect will be positive if the destiny of the credits that seeks to place is the suitable one, like loans to good clients or productive credits. There is also the possibility that indebted people may access new credits to pay their past commitments, which could be counterproductive for the client and the bank.
Another strategy that banks in the country are resorting to is to obtain financing or funds through multilateral organizations or international banks to, in turn, provide more loans. Three large banks in the country announced access to loans: Banco Pichincha, Banco Guayaquil and Banco del Pacífico.
The financing to banks
Banco Pichincha and the financial agency of the United States Government (OPIC, for its acronym in English) subscribed last week a financing agreement for $ 156 million to deliver mortgage loans and to women.
Last week, CAF – Development Bank of Latin America led the structuring of a $ 75 million financing for Banco Guayaquil, for the development of the country’s productive sector. It seeks to finance some 500 SMEs. peaceful
Banco del Pacífico obtained financing of $ 150 million, through a syndicated operation that had Credit Suisse as its lead agent. The loan will be used for loans for the productive sector. (I)