Fomento Bank has accumulated millions in losses

Rafael Correa and the BNF losses

Losses totaling $ 117 million according to the firm Bank Watch Ratings that published the latest risk rating of the National Development Bank (BNF, for its Spanish acronym) in December 2012: BBB-, which means that “this institution has good credit. Although some minor obstacles are obvious, these are not serious and / or are perfectly manageable in a short term.”

“If that bank keeps going the same way I am seriously considering closing it and find an alternative,” said the Ecuadorian President Rafael Correa, regarding the BNF, in late April, for the slow attention to beneficiaries of Human Development Credit and after finding the agricultural machinery stored and unused in warehouses of that financial institution. Correa even mentioned that if he closes the BNF the loans could be delivered through a second-tier banks.

The BNF has maintained its rating since December 2008, according to the analysis of the rating firm, but there is evidence that there are problems that are not overcome and  getting worse.

By the end of the year 2012 the bank registered a gain of $ 495 000, but has an accumulated balance of losses for more than a decade, reaching the $ 117 million.

The portfolio, until  December 2012, totals $ 858 million. In relation to September 2012, in December of that year, the gross productive portfolio declined at 1.9% per year, the portfolio at risk grew  16% annually and the late payments rose from 12.5% to 14.2 %.

The analysis also highlights that although the legislation gives administrative and financial autonomy to the BNF, there is political interference in the decision-making process.