Banks could raise interest rates to compensate for new asset tax - Feller Rate

Friday, September 16, 2011

Banks in the Dominican Republic are likely to raise lending rates to compensate for new fiscal obligations, Roxana Silva, country director for Chile-based ratings agency Feller Rate, told BNamericas.

Under the fiscal reform enacted in March, the Dominican Republic's government levied a 1% tax on commercial banks' assets to help bridge the country's budget deficit.

"We understand that the fiscal reform will affect the results of the financial institutions and are evaluating the magnitude of the impact in relation to the alleviating measures each one of them takes," Silva said.

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Dominican banking regulator Superbanco has previously said the new tax will affect the financial system's growth, solvency and efficiency.