Bolivia’s New Financial Sector Law to Restrain Bank Activities


Bolivian President Evo Morales has signed a new financial sector law that will have a “significant” impact on restraining the profitability of the country’s private banking sector, according to Fitch Ratings.

Morales’s Administration was clearly not comfortable with the sector’s high profitability averaging for last year a 17 percent return on equity, Cesar Arias said, a sovereign ratings analyst with Fitch.

The new Ley de Servicios Financieros 393 will bring major changes and an tightening of banks’ solvency requirements in line with the international Basel standards. The law creates a financial stability council, or Consejo de Estabilidad Financiera, which has ninety days to issue new regulations and guidelines overseeing, among other things, deposit rates floors, lending rates ceilings, and mandatory lending allocations to certain sectors of the economy.

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Arias noted these actions will be done by decree and “could create additional uncertainty” for Bolivia’s private banking sector.

Source: BNAmericas. Read More »

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