The final cost of Ecuador’s banking crisis is still unknown. Most
deposits in the failed private sector banks were covered either by
cash payments from a government agency, the AGD, which supposedly
guaranteed all deposits in the sector, or by AGD bond issues
following dollarization. Management problems at the AGD caused a
change in its directorate last year, and its status and future role
are in doubt as much-amended legislation makes its way through
Congress.
The one remaining public-sector bank, Banco del Pacífico, has been
taken over by the Central Bank. It recently increased Pacífico’s
capital by $120 million and the bank is being prepared for
privatization by Interdin, a Spanish firm. It remains to be seen if
the bank – which has a non-performing loan rate of 45% – can be
turned round.
That leaves Filanbanco, a state-owned bank that collapsed in July
2001.
Some account holders deposits have been returned, in four stages.
Stage one covered deposits of up to $300, totaling $13.9 million.
Depositors were paid in cash by Banco del Pacífico. Stage two
covered deposits of $300 to $3,000, totaling $53.4 million. These
deposits were transferred to private sector banks, who accepted
government bonds to the same value. In stage three, covering
deposits of $3,000 to $10,000 to a total value of $48 million,
deposits were taken over by two banks – Banco del Pichincha and
Banco de Guayaquil – in exchange for Filanbanco’s Visa and American
Express credit card assets. Stage four covered deposits of $10,000
to $15,000 and CD accounts up to $15,000, to a total of $120
million. Private banks taking over these accounts received $108
million in bonds, the rest in cash.
Vicente Vallarino of Banco Bolivariano, one of the private banks
taking part in the transactions, says the banks were willing to
accept the government bonds “as an opportunity to help the
financial system to become more consolidated.” He says the bonds –
with tenors of two, three and four years and coupon of 6% – are
more tradable than other government debt. He says a measure of the
operation’s success is that 80% of deposits transferred to private
banks have remained intact. He adds: “Most important is the fiscal
state of the government and its ability to pay its debt on time,
and not reprogram it as it did with internal debt in 2000. The
fiscal situation today is quite different. The internal revenue
service is doing a fantastic job.”
What’s not clear is whether the private sector will be willing to
help sort out Filanbanco’s remaining $697 million in outstanding
liabilities.