Regulation, Loan Watch: Costa Rica watchdog plans, Mexico mortgage boost

Costa Rica's financial system watchdog Sugef is drawing up plans to oversee the operations of so-called solidarity associations.

These employer-organized bodies have a loan portfolio of 2bn colons (US$3.05mn), local paper La Nación reported. The amount is the equivalent of the combined portfolios of the country's seven smallest private banks.

"At some point soon this group will be supervised as it is an important player in the financial system," Sugef chief Javier Cascante was quoted as saying.

According to the NGO Solidarity Center, based in Washington DC, Costa Rican solidarity associations are established to prevent workers from forming autonomous, independent unions.

"Through these 'solidarity associations, employers implement 'direct bargaining' arrangements (solidarisimo) that essentially eliminate private-sector collective bargaining," Solidarity Center says on its website.

The associations held 6.43bn colons in assets at the end of last year, the paper reported, citing data from the Costa Rican solidarity movement.

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The Inter-American Investment Corporation (IIC), the private sector arm of the IDB Group, awarded a Mexican mortgage trust a 1.40bn-peso (US$2.45mn) revolving loan.

Fideicomiso Hipotecario (FHipo) will use the funds to offer a new mortgage instrument.

"Specifically, FHipo will provide liquidity to mortgage originators through the purchase of mortgages. The company will provide these originators with access to new sources of funding and liquidity, which will allow them to expand the amount of loans to a larger number of Mexican families, particularly in segments of the population currently neglected by commercial banks," IIC said in a statement.

Earlier this month the IIC said the amount of funds it invests, and mobilizes, in Latin America was growing.