Economic contraction affects the banking sector

In the midst of the recession scenario in the world, financial activities have been impacted. In the case of Venezuela, construction (-96%), financial institutions (-88.5%) and commerce (-80.5%) have presented a deficit in their actions between the periods of 2013 to 2019, according to the figures reported by the Central Bank of Venezuela (BCV).

For its part, Torino Economics highlights that in January 2019 the BCV announced the increase in the legal reserve rate close to 100%, entering into force in February of the same year, forcing commercial and universal banks to maintain 80% of public deposits held by the BCV.

Given this scenario, in March 2020 the BCV issued a resolution establishing the unification of the dual legal reserve regime reducing it to 93%, while this was happening financial intermediation reached 11.1%, one of the lowest points, according to the data reflected by the Superintendency of Institutions of the Banking Sector (Sudeban).

Banking sector in Venezuela

According to a report presented by Torino Economics, the Venezuelan banking sector closed in 2019 with 23 universal banks, 1 commercial bank, 2 banks under special laws, 3 micro-financial banks, and 1 municipal credit institute. Ensuring that the entities that operate in the public sector are the ones with the highest weighting in relation to their assets (78%), total deposits (59%) and equity by market share (71%).

Despite this, the bank is solvent. That is, it does not present high levels of delinquency and has a positive profitability in general terms, an action that is still afloat in the sector in the South American country.

K.Villarroel

Source: bancaynegocios