This past January 3, DS 5096 was promulgated, which establishes that Multiple Banks and SME Banks must allocate 6% of their net profits to fulfill the social function of financial services; The decree indicates that there is a maximum period of thirty (30) computable business days from the date on which the Shareholders’ Meeting is held to approve the destination of the profits, which will definitively and irrevocably transfer the corresponding amount to the determined percentage.
The net profits will correspond to the 2023 management, so far the ASFI did not provide the data with which it closed last year, however, the private banking profits as of November 2023 were Bs. 1,653 million; The Minister of Economy estimates that 6% of the profits of private banks in 2023 is approximately $15.7 million, which must be allocated to social functions as established by DS 5096.
This regulation, from a social point of view, seeks to make credit conditions more flexible and improve access to credit granted by private banks, which, as the minister said, could be used for social housing, loans to union members, and others; To this end, 6% of the net profits will be used as guarantee funds to finance their credit operations, something similar to what happens in the FOGAVISP Social Interest Housing Credit Guarantee Fund. It is expected that it will not have a political purpose, in the search for electoral support or that there will be favoring of certain sectors related to the central government.
The other side is the private banks, which consider this decree as something negative, since they are intervening in their private activity, through a partial “confiscation” of their profits, since they will not be used for operating capital or investment of the same banks, but as guarantee funds for various types of credits; In other words, private resources will be used to finance public policies, where the freedom of destiny or use of your own profits has been lost.
Without a doubt, beyond the social credit objective, this decree could discourage private investment, slow our economic growth and negatively affect our credit ratings and investment abroad, since this compresses economic freedom, violates the private sector and limits the economic and legal security in the country, which has already happened, to a certain extent, with the banking law. The purpose of this regulation is not discussed, but rather the means, since if the guarantee funds were with state resources it would be totally different, but the fact that profits are “intervened” is worrying. It may be due to lack of own resources or simply a way to draw the line at private banking, time will tell.
2024-01-06 00:10:06
#Social #credit #banking #confiscation
