Costa Rica approves Bancrédito financial plan
The Costa Rican government has backed a revised financial plan for beleaguered state-owned Banco Agrícola de Cargago (Bancrédito), which aims to cut costs and reorganize the corporate governance of the bank.
"[The Costa Rican government] is absolutely committed to the continuity and strengthening of Bancrédito within the national financial system," said finance minister Helio Fallas in a statement.
"We are making, and we will make, every necessary effort for it to come through."
The actions set forth in the plan, introduced by Bancrédito in March, "allow the bank to improve its management in the short- and medium-term and lays out the path for its transformation," said Fallas.
The bank's plan also seeks to diversify its credit offerings away from heavy concentration in loans to large private firms.
Financial regulator Sugef ordered Bancrédito to submit a new plan in February, after a previous one submitted at the close of 2016 was deemed insufficient.
Bancrédito's financial woes go back to 2012, when it lost its managerial financing role for the Finade development fund, which had contributed 12bn colones (US$22mn) in fees over four years.
The bank's financial position deteriorated in 2016 after its bottom-line was hit by several loan defaults.
Costa Rica's central bank (BNCR) has been key to Bancrédito's survival for several months, most recently injecting 2.0bn colones (US$3.6mn) into the bank, which is to be paid back through commissions received from March 2017 to July 2018.
"These and other actions implemented in recent months have made it possible for the bank to strengthen its income, return to making profits and avoid any situation with financial irregularity," said Fallas.
Bancrédito sold assets valued at more than 2.9bn colones in 2016, 70% of which were moved between September and December.
Adding this to the projected value of sales of additional assets in 2017, bank director Gerardo Porras said the bank will have raised a total of 6bn colones, as reported in local outlet El Financiero Costa Rica.
The bank is also planning to generate an additional 3bn colones in savings through a labor restructuring plan.
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