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Post by ozgringo on Oct 15, 2016 19:42:37 GMT -5
From www.financecolombia.com/fitch-ratings-colombian-banks-face-most-challenges-in-latin-america-after-brazil/“Among major Latin American economies, excluding Brazil, Colombian banks are facing the most-challenging environment, driven by the economic slowdown, exchange-rate volatility, and a financial profile that is not particularly robust,” said said Alejandro Garcia, managing director of Latin American financial institutions for Fitch, in a recent video. “Tight capital metrics recently drove a downgrade of Colombia’s two largest banks.” "In addition to the downgrades suffered by Bancolombia and Banco de Bogotá, Garcia says that most other major and medium-sized banks also have a negative rating outlook that is tied to the negative outlook it has put on Colombia’s sovereign rating." “Fitch does not rule out further negative rating actions among Colombian banks, either driven by a potential sovereign downgrade or capital metrics remaining at tight levels,” said Garcia. “Fitch is not particularly optimistic about the potential near-term trend of capital adequacy metrics, especially if local regulators do not vigorously address the widening difference between local and global capital standards.” "But much damage has already been done this year. After getting hit by Fitch earlier this summer, Colombia is now one of five Latin American sovereigns to which =the agency has assigned a negative outlook. The others are Brazil, Costa Rice, Ecuador, and Suriname."
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Post by Deleted on Oct 15, 2016 20:52:21 GMT -5
True--however one has to give credit to the banks for raising their interest rates to check inflation--
At least much more responsible versus the incompetent political U.S. Fed with phony economic numbers and 0 % rate the past 7 years--which has screwed the population and country--- except the wall street players
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Post by jabberwocky on Oct 16, 2016 10:59:41 GMT -5
The Fed has done a lousy job recently - rates should have risen well over a year ago.
From a banking perspective - my bank is not taking any more Colombian bank risk ( or Colombia sovereign risk) the banks have been down graded, we have a couple of small lines in place with a couple of banks but keeping a critical eye towards it. Course it could be worse - could be Brazil. Best rated country risk in S. America - Chile.
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Post by elexpatriado on Oct 19, 2016 20:54:38 GMT -5
The Fed has done a lousy job recently - rates should have risen well over a year ago. From a banking perspective - my bank is not taking any more Colombian bank risk ( or Colombia sovereign risk) the banks have been down graded, we have a couple of small lines in place with a couple of banks but keeping a critical eye towards it. Course it could be worse - could be Brazil. Best rated country risk in S. America - Chile. And all those guys think they have a "Guaranteed" 8% by parking their life savings in A BancoColombia CD.. There is a reason the rates is so high..Risk..Risk of bank expropriation, risk of DIAN expropriation, etc., etc If there was no or little risk they would be paying 2%, like in theUS
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Post by billyb on Oct 19, 2016 22:19:38 GMT -5
Actually, I think the high rates are more due to high currency exchange risks and inflation risks. Colombia, for all its problems, has never been a high expropriation risk, so that would probably be very low on the list of factors.
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Post by ozgringo on Oct 20, 2016 18:42:07 GMT -5
As the article states above..."especially if local regulators do not vigorously address the widening difference between local and global capital standards.”
Colombian banks have yet to meet Basell III regulations.
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Post by billforce on Oct 20, 2016 20:15:50 GMT -5
One basic reason that Colombian banks charge and in turn grant high interest is their "cost of money". International markets lend and charge high interest for the "USE OF MONEY" by participating banks, banks rarely lend their own money but use their money as collateral to "rent" money to lend. This is forfeiting money principally to other banks. The risk factor is programed into each short term loan relative to the risk classification for a certain bank like Bancolombia. Generally this money transfer is restricted to major institutions and is never seen by the public, it is large bank to large bank. IE: a Japanese bank needs a short term (maybe a day or a week) and the minimum truanch is $100,000,000.USD. The lender usually lends this money for a 1% or less rate.
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Post by sedelen on Oct 21, 2016 17:02:52 GMT -5
True--however one has to give credit to the banks for raising their interest rates to check inflation-- At least much more responsible versus the incompetent political U.S. Fed with phony economic numbers and 0 % rate the past 7 years--which has screwed the population and country--- except the wall street players Low interest rates spur economic growth, makes money cheap to borrow to finance things for people such as cars and houses, big ticket items that keep the economy moving forward, but not necessarily indefinitely. And indeed Wall Street does well, as does businesses. The people that have surely been hurt are the savers, the one's that would normally get some return from higher interest rates, from banking accounts, C/D's, and savings bonds. To that end it really has been a bust. There's a saying on Wall Street, "cash is trash" meaning you could do better investing in something else. For most of the time, that holds true, except when the market comes tumbling down, cash is a safe haven. But wait.............. there's the possibility of "negative" interest rates, it's already happening overseas, and the Fed here said it could become a possibility. So, how does that work? easy answer, you end up paying the bank to hold your money. I think if that were to happen a lot of people will be stuffing their pillows with cash. If we were to indeed have a recession soon (this economy has been getting long in the tooth) it would be hard to lower interest rates from where they are now, without going negative. I think, have thought all along, and said I didn't see much chance for an interest rate increase during the presidential election year. Now, they're talking December, so the election will be out of the way, and with the prospect of higher interest rates, I expect the exchange rate to remain favorable for awhile longer.
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Post by Deleted on Oct 21, 2016 18:50:43 GMT -5
1980 the prime rate was about 17% --The Vietnam war was financed on a credit card-- then the chicken finally came home to roost--
The U.S. did not have China elsewhere to finance the debt then--interest rates went up accordingly and responsibly-- At least in those days the U.S. did not start rolling the printing presses of worthless dollars-- Not today--roll those presses---
Globalization-- The repeal of the Glass-Steagall Act -- Ridiculous loans to countries which could never repay the debt and service in the first place-- Nations building of the world / financing another war in he mid-east --- again on a credit card
All vote for Hillary--after 30 years in public service she will fix all of this--- (At least the pacifists well)
Retired ex-pats living in Colombia ------- enjoy one's loving Colombia wife (well she was loving in the beginning at least)
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Post by suba on Oct 21, 2016 19:16:53 GMT -5
"1980 the prime rate was about 17%"
And every investment vehicle put in place to pay the capital back on interest only loans was based on a return of around that figure, fast forward to today and the same borrowers are taking loans to pay off huge shortfalls as the endowments failed to perform anywhere near that.
At least in Colombia they just stiff the borrower with high interest rates.
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Post by ozgringo on Oct 22, 2016 5:29:51 GMT -5
One thing for certain. It is an absolute nightmare transferring money to Bancolombia.
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Post by elexpatriado on Oct 22, 2016 9:16:32 GMT -5
One thing for certain. It is an absolute nightmare transferring money to Bancolombia. Have they started asking you to complete a formulario 160 yet ?
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