Repossessions Reminder of Crisis
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- Category: The Nation
- Published on Wednesday, March 23 2011 01:24
- Written by Rod Hughes
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The ghost of the 2008-9 worldwide economic crisis still stalks the staid halls of Costa Rica's commercial banks, reports the business newspaper El Financiero. It takes the form of property repossessions.
While the banks were expecting cash repayments of loans, they found themselves up to their eardrums (so to speak) in repossessed lots, homes and, to a lesser extent, motor vehicles.
So difficult was their position that it formed one of the reasons then-President Oscar Arias found it necessary in 2009 to use a budget surplus, followed by international loans, to provide a liquidity transfusion to the national banks.
Unlike Wall Street, it was not because Costa Rican banks were playing fast and loose with investor's money with imaginative hankypanky. Since the collapse and disappearance of Banco Anglo late in the 20th century (leading to repayment from taxpayer funds to reimburse depositors), the nationalized banks are among the most cautious in the world where loans are concerned.
Although repossessions rose 34% last year from the year before, it was nothing like the hectic 2009 when they jumped 131% from the year before. They amounted to nearly 102 billion colones last year, even dividing that figure by 500 colones per dollar, no small piece of change for a small country.
Make no mistake about it, despite bankers' greedy image, they would much rather take their pound of flesh from interest rates and have your orderly cash payments coming in. They are not comfortable in the real estate cum used car lot business.
Indeed, banks consulted by the paper say that, although the figures don't seem to reflect it, they are making every effort to readjust existing loans to avoid taking over the family home or car. "But in many cases, the situation is unsalvageable," lamented Banco Nacional assistant manager Bernardo Alfaro.
