Peru's severance deposits up 22% at end-May

Peru's employment termination compensation CTS deposits in private sector banks reached a record 11bn soles (US$3.95bn) by the end of May, up 22.3% year-on-year, according to the latest figures from banking association Asbanc. The month's total was up 11.5% compared to November 2012. The months of May and November are seasonal peaks for CTS deposits when employers make semiannual CTS payments into worker's accounts. The increase was "in a context of growth in formal employment in the country," according to the release. The number of CTS account holders in private banks increased 6.99% year-on-year to 3.16mn, and increased 4.50% from November 2012. Dollarization of the CTS deposits has fallen to 46.3%, down 7.64% year-on-year and 2.25% compared to six months previous. Dollar-denominated deposits accounted for 91.6% of CTS deposits in private banks in October 1999. The higher interest rates on local currency-denominated deposits and decreases in the exchange rate have contributed to the decrease in dollar-denominated deposits. CTS is a type of severance payment known locally by its Spanish acronym.