1. www.thedialogue.org January 13-26, 2011
BOARD OF ADVISORS FEATURED Q&A
Luis Anavitarte Franco Moccia
VP & Research Consultant
How Would Ecuador's Banking Referendum Affect the Economy?
Director, Gartner Inc. A constitutional referendum
Q
Edward L. business groups? Also, it would seem
Ernesto Armenteros Monahan Jr. planned in Ecuador would ask financial institutions would be banned
Vice President, Strategy Advisor citizens whether to limit banks from investing in stocks. Would insurers
Banco de Ahorro y to providing financial services also be banned from investing in stocks?
Crédito Unión S.A. Thomas Morante
Partner, only. Business interests outside the finan- Banning bank managers from holding
Holland & Knight, LLP cial sector could lead to conflicts of inter- stock would mean that bankers would
Richard Child
Founder, est, said the office of President Rafael essentially have to invest their equity over-
Manuel Orozco Correa. How would barring banks from seas. A similar ban on bank directors
Mattrix Group Director, Remittances
& Development holdings outside of the financial services would mean the end of functioning bank
Jeanne Del Casino Program, Inter- industry affect Ecuador's economy? boards, since it makes little sense to have
VP & Regional Credit American Dialogue Which companies would be most affect- board members that have no link whatso-
Officer, Latin American
Banks, Moody's ed, and how would it affect consumers? ever to the private economy. Consumers
Adalberto Palma-
Investors Service Gomez What are the chances for the referen- would not be directly affected, but some
Senior Partner, dum's passage? business groups would have to divest
Michael Diaz Jr. APERTURE S.C. Continued on page 3
Partner, Walter Spurrier, president of
A
Diaz, Reus & Targ, LLP Yoshihiro Sakai
Executive VP, Grupo Spurrier and director of
Ernesto Fernández Microfinance Weekly Analysis in Guayaquil,
Holmann International Corp. Ecuador: "If the question is
Chairman of the included in the referendum in its present
Board, Ayucus Jan Smith form (the referendum is still at a prelimi-
Former Managing
Tom Haider Director, nary stage), quite likely it would be
Consultant Kroll, Inc. approved, as bankers are not popular and
the president is. But the Constitutional
Earl Jarrett Roberto Teixeira Court could object that it curtails the
General Manager, da Costa
Board Member, rights of citizens—in this case, those of
Jamaica National
Building Society SulAmérica S/A bankers and bank directors—and that in Bradesco, Citibank Reportedly
itself is unconstitutional. The devil is in the Interested in PanAmericano
Thomas J. details. There are restrictions now on
Mackell Jr. investments in nonfinancial businesses by Brazil's Banco Bradesco and U.S.-
Chairman, banks. But many banks own insurance based Citigroup are reportedly interest-
United Benefits and
Pension Services Inc. companies. Would these investments be ed in buying Banco PanAmericano,
Subscribers may pose questions to the allowed, and thus, insurance be considered which is controlled by billionaire Silvio
Board of Advisors for the Featured Q&A by part of the financial business? In which Santos. See story on page 2.
contacting Editor Gene Kuleta at: case, will insurance companies be barred
gkuleta@thedialogue.org Masthead- File Photo: Brazilian Government.
-End from having linkages with nonfinancial
Inside This Issue
FEATURED Q&A: How Would Ecuador's Jamaican Lower House Approves Inflation, Peso Shortage Drive
Banking Referendum Affect the Economy?.......1 Wider Protections for Depositors........................2 Up Argentine Credit Card Debt ............................3
Bradesco, Citibank Express Interest Mexico's Gruma to Sell Most Subscriber Notice: Yoshihiro Sakai Joins
in Buying Banco PanAmericano..........................2 of Stake in Banorte ................................................2 Financial Services Advisor Board .......................4
Santander Chile Planning to Chile's CorpBanca Reports Political and Economic News:
Increase Loans to $5.5 Billion ..............................2 38.7% Increase in Profit for 2010 .........................3 Haiti, Brazil, Cuba and More.............................4-5
Copyright © 2011, Inter-American Dialogue Page 1 of 6

2. Inter-American Dialogue’s Financial Services Advisor January 13-26, 2010
FINANCIAL SERVICES BRIEFS Financial Services News
Mexico's Gruma to Sell
Most of Stake in Banorte Bradesco, Citibank Express Interest told El Mercurio in an interview published
Mexico's Gruma said Jan. 21 that it in Buying Banco PanAmericano Jan. 22. An increase of that size would
is planning to sell most of its stake amount to a 17 percent increase from
Brazil's Banco Bradesco and U.S.-based 2010. The bank is seeking to boost loans
in Grupo Financiero Banorte
Citigroup have expressed interest in buy- to $18 billion within three years and the
through a secondary offering, Dow ing Banco PanAmericano, Brazilian increase would come mainly from financ-
Jones reported. Gruma, a maker of newspaper Folha de São Paulo reported ing to medium and small enterprises and
corn flour and tortillas, has an 8.8 Jan. 22. However, Silvio Santos, who con- individuals, Mauricio Larraín told the
percent stake in the banking group. trols the Brazil-based bank that received Santiago-based newspaper. The bank
In a filing with Mexico's stock an emergency injection of capital last year, wants to add 80,000 new customers and
exchange, Gruma said its global open 20 new branches to add to the more
offering of as many as 156 million than 400 currently operating in the coun-
shares of Banorte will be made try, said Larraín. After the global financial
PanAmericano received an crisis, Santander Chile became the
through a public offering in Mexico
and a private offering in the United emergency capital injection of Spanish bank's fourth largest operation,
States and other foreign countries. after Brazil, Spain and Britain. The
approximately $1.5 billion Chilean unit contributed 8 percent of
BofA Merrill Lynch Names Rosen in November. Santander's total profits. Santander
To Investment Banking Post Chile's growth will be funded through the
bank's profits and bond sales in Chile, the
Bank of America Merrill Lynch became reluctant to sell PanAmericano United States, Europe and Asia, said
announced Jan. 12 that it has named when negotiations began looking into a Larraín.
Mark Rosen as its head of Latin possible selling price for the bank, the
American investment banking. newspaper reported. Officials from Jamaican Lower House Approves
Based in New York, Rosen will be Bradesco, Citibank and PanAmericano Wider Protections for Depositors
responsible for the company's refused to publicly comment for the
investment banking franchise for the report, which cited unnamed executives Jamaica's House of Representatives has
entire region except for Brazil. who are part of the discussions. Santos' approved a package of wider protections
Before joining Bank of America holding group, Grupo Silvio Santos on for depositors under the country's
Merrill Lynch, Rosen worked at Nov. 9 borrowed approximately 2.5 billion Deposit Insurance Act, the Jamaica
Credit Suisse for 12 years as head of reais ($1.5 billion) from Brazil's Deposit Gleaner reported Jan. 21. The changes,
Insurance Fund, a nongovernmental which still must pass the Senate to take
Latin American and Caribbean
banking guarantor, after the country's effect, affect depositors with trust
financial institutions investment central bank discovered accounting prob- accounts and in instances where financial
banking. Before that he was head of lems in PanAmericano's books. institutions merge. Now, the Jamaica
Latin American M&A at Barclays. PanAmericano's controlling shareholders, Deposit Insurance Corporation, or JDIC,
which include Brazil-based Caixa will be able to make direct payments to
Allpoint Network Adds More
Than 2,500 ATMs in Mexico Econômica Federal, have previously said depositors who have accounts in dis-
PanAmericano is not for sale, Reuters tressed banks and other financial institu-
U.S.-based interbank network reported. Nevertheless, speculation has tions when the
Allpoint said Jan. 18 that it has continued about a possible acquisition of accounts are part of a
added 2,500 automated teller the bank. Brazilian lender Banco BMG, trust. Previously, the
machines in Mexico in locations which specializes in loans to consumers, is corporation was lim-
including OXXO convenience stores. also reportedly interested in taking over ited to making one
The machines are owned by PanAmericano. payment of as much
Cardtronics, the world's largest non- as 600,000 Jamaican
bank owner of ATMs, said Bethesda,
Santander Chile Planning to dollars ($7,080) for
Increase Loans to $5.5 Billion each trust account. McKain
Md.-based Allpoint. The company The changes give each File Photo: JDIC.
already has ATMs in the United The Chilean unit of Banco Santander is individual depositor
States, Britain and Australia and says planning to increase loans to $5.5 billion in the trust protection for that amount.
it operates the world's largest sur- this year as it works to attract more clients "Now we can recognize each beneficiary,
charge-free ATM network. to the bank, Santander Chile's president rather than just the trustee," said the
Copyright © 2011, Inter-American Dialogue Page 2 of 6

3. Inter-American Dialogue’s Financial Services Advisor January 13-26, 2010
JDIC's chief executive offer, Antoinette Featured Q&A
McKain. In addition, the changes also Continued from page 1
allow depositors to make separate claims themselves from holdings –either finan- too. The mandatory divesture of finan-
if they have accounts in two or more cial or nonfinancial, according to their cial assets would severely damage local
institutions that are forced to merge preference. Much would also depend on investment in small markets like
under distressed circumstances. how the constitutional mandate would Ecuador. Financial regulation is a techni-
Claimants must file for compensation be regulated through laws, and the latter cal issue that should not be decided by
within two years of any mergers. "We have through regulations." referendums. The solvency risk to avoid
been trying to get these changes in place
Franco Moccia, member of the
A
for a long time now," said McKain.
Financial Services Advisor
Chile's CorpBanca Reports 38.7% board, consultant and former
Increase in Profit for 2010 president of Citibank Ecuador:
"Technical and regulatory matters, such
“ Financial regulation is a
technical issue that should not be
Chilean bank CorpBanca, the country's as financial regulations, are unlikely to be
fifth largest in terms of loans, said Jan. 14
in a preliminary earnings report it a had
effective if they are set by national refer-
endums. Would other financial regula-
decided through referendums. ”
— Franco Moccia
net income of $241.5 million for the year tion matters such as mandatory cash
2010, a 38.7 percent increase from the requirements, net worth needs etc. be
previous year, Dow Jones reported. discussed at a national level and decided
Earlier this month, CorpBanca said it will via referendums too? Efficient capital
use a planned $750 million capital markets have independent financial channeling deposit money to companies
increase to boost lending to large Chilean authorities with technical skills to deal related to banks' owners is effectively
corporations, Bloomberg News reported. with these issues. Almost everywhere an regulated by tools different than pro-
Banco do Brasil is in negotiations with interest rate cap would be approved by a hibiting financial institutions owners to
CorpBanca over the investment. referendum creating the severe market have assets in other industries. The
distortion in a competitive financial Ecuadorean government initiative looks
Credit Card News market. Financial regulation to avoid
lending to related parties is standard in
like a political battle against specific
financial institutions rather than a regu-
financial markets and is designed to latory matter and, if approved, will nega-
Inflation, Peso Shortage Drive Up avoid solvency problems. The risk is mit- tively impact local and foreign direct
Argentine Credit Card Debt igated by setting a very small percentage investment."
of the bank net worth to be lent to 'relat-
César Coronel Jones, founding
A
Accelerating inflation and a shortage of ed parties' vis-à-vis a bigger percentage
pesos in Argentina is driving Argentines' allowed for unrelated borrowers. The partner at Coronel & Pérez in
credit card debt to record levels as con- related parties' definition goes from per- Guayaquil, Ecuador: "At the
sumers meet difficulties finding cash to centage of direct and indirect ownership moment, President Correa's
purchase goods, Bloomberg News report- to financial supervisor opinion. Small referendum has high possibilities of been
ed Jan. 24. In December, Argentines capital markets usually have local con- approved due to the president's high
charged 26 billion pesos ($6.6 billion) on glomerates with portfolios diversified in popularity and the significant political
different industries and usually have capital that is invested in the referen-
financial institutions in their portfolios dum. However, there is a risk that the
Continued on page 6
Private economists believe
Argentina's annual
the United States, which stands at 14 per- high as 27 percent. "It makes sense to use
rate of inflation is as cent. Soaring consumer prices are push- credit cards because, first, you don't have
ing down the savings rate in Argentina, the cash but, on top of that, real rates are
high as 27 percent.
where borrowers are wary of banks in the so negative, and sometimes there are pro-
wake of the government's $95 billion debt motions where you pay for purchases
default a decade ago, Daniel Volberg, an over 12 months," Boris Segura, an econo-
credit cards, a 49 percent increase from economist at Morgan Stanley in New mist at Nomura Securities International
the same month a year earlier, according York, told Bloomberg News. The govern- in New York, told the news service.
to the central bank. Argentine credit cards ment said annual inflation totaled 10.9 Climbing prices for food and commodi-
carry an average interest rate of 30.5 per- percent last year, but private economists ties, along with the U.S. Federal Reserve's
cent, more than twice the average rate in believe the actual rate of inflation is as printing of dollars to spur the U.S. econo-
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4. Inter-American Dialogue’s Financial Services Advisor January 13-26, 2010
my are stoking inflation concerns around
the world. Subscriber Notice
Political News Yoshihiro Sakai Joins Financial Services Advisor Board
The Financial Services Advisor is pleased to announce that Yoshihiro Sakai, executive
Duvalier: Desire to Participate in vice president and chief financial officer of Microfinance International Corp. in
Reconstruction Spurred Return Washington has joined the Board of Advisors.
Former Haitian dictator Jean-Claude
Sakai joined Microfinance International last year after serving as
"Baby Doc" Duvalier said Jan. 21 that he
senior advisor and senior economist at the Development Bank of
returned to Haiti on Jan. 16 so that he
Japan, the Japanese government's finance arm. In that position, he
could participate in the impoverished
was in charge of international business management and focused
country's reconstruction after its deadly
largely on China.
earthquake a year ago, the Associated
Press reported. "When I made the deci-
Prior to his work at the Development Bank of Japan, Sakai worked
sion to come back to Haiti to commemo-
as leader of corporate strategy and managing director of Nomura
rate this sad anniversary with you, in our Sakai
Holdings in both New York and Tokyo, where he designed
country, I was ready for any kind of per- File Photo: MFI.
Nomura's global management structure and global strategy.
secution," Duvalier, 59, told reporters in
Port-au-Prince. "But I believe that the
Before that, Sakai worked for 15 years at the Bank of Japan, the country's central bank,
desire to participate by your side in this
in several management, operational and executive positions. Sakai directed and was
collaboration for the national reconstruc-
involved in negotiations with foreign monetary authorities on behalf of the central
tion far outweighs any harassment I could
bank. He also was manager of the bank's Financial and Payment System Office and
face." A Haitian court is currently weigh-
senior examiner in the Banking Supervision Division and an officer of market opera-
ing whether Duvalier should be tried on
tion in the Credit and Market Management Department.
In addition, Sakai has been a fellow of the American Enterprise Institute and an
adjunct fellow of the Center for Strategic and International Studies. He earned a mas-
ter of business administration from the Stern School of Business at New York
University and a master's degree in criminal justice from Boston University.
Saturday with Dominican President Brazil to Create Nationwide
Leonel Fernández to discuss Haiti's Disaster Prevention System
cholera epidemic and political crisis. The
Duvalier country's political future remains in In the wake of floods and mudslides that
File Photo: Le Nouvelliste. question after the inconclusive first- are confirmed to have killed more than
round presidential election Nov. 28. A 800 people in areas north of Rio de
charges including corruption, embezzle- runoff that had been scheduled for Jan. 16 Janeiro, Brazil will create a new disaster-
ment and torture. The charges stem from was postponed and has not been resched- prevention system, officials said Jan. 20,
his 1971-1986 rule, which ended with his uled. On Jan. 21, the U.S. State the Associated Press reported. In addi-
flying into exile following a popular Department revoked the visas of about a tion, the country's government will
revolt. He has spent most of the past 25 dozen Haitian government officials in an spend $6.7 billion through 2014 on
years in France. Since his return to Haiti, effort to pressure the government to drop drainage and other similar projects in an
Duvalier has largely remained holed up in its preferred candidate, Jude Célestin, attempt to prevent future flooding, said
a Port-au-Prince luxury hotel and in a from the presidential ballot. An Planning Minister Miriam Belchoir. "We
private residence. Haitian President René Organization of American States review will prioritize those places where experts
Préval said Jan. 22 in the Dominican found that former first lady Mirlande say the problems are most serious,"
Republic that Duvalier was within his Manigat and popular singer Michel Belchoir said in a statement, the AP
rights to return to Haiti, but added he "Sweet Micky" Martelly were the top vote- reported. The government will invest
must now face justice. "If Duvalier is not getters in the first round and should $5.9 billion on initiatives to improve
in prison now, it is because he has not yet advance to the runoff instead of Célestin. drainage and the remainder on hillside-
been tried," said Préval, the AP reported. Préval last week was reportedly displeased stabilization projects. Municipalities that
Préval and Haitian Prime Minister Jean- by the OAS report but he has not publicly submit plans for such projects will be eli-
Max Bellerive met for four hours commented on it. gible to receive about half of that fund-
Copyright © 2011, Inter-American Dialogue Page 4 of 6

5. Inter-American Dialogue’s Financial Services Advisor January 13-26, 2010
ing, Belchoir added. Every year, Brazil new controls to stem the flow of weapons POLITICAL & ECONOMIC BRIEFS
suffers widespread floods and mudslides, into Mexico as part of its efforts to help
but the disasters that have occurred in Mexico fight the cartels. The administra- Cuba Halts Mail Deliveries
the past week could become the worst tion is committed to "doing what could be to the United States
natural disaster the country has ever done" to require U.S. gun dealers near the Cuba's state postal service
faced. In addition, a new early-warning announced Jan. 21 that it has sus-
system will use radar and a recently pur- pended deliveries to the United
chased supercomputer to help authori- States as a result of security meas-
ties monitor severe weather, providing
ures that have led to the return of
authorities more
time to order evacua-
“ The drug traffickers are U.S.-bound mail to the island,
not going to give up without Agence France-Presse reported.
tions if necessary,
said
Mercadante,
Aloízio
the
a terrible fight. ” Direct mail service between the two
countries was halted in 1963, but
— Hillary Clinton
country's science and talks in 2009 led to deliveries routed
technology minister. through Mexico and Canada. State
The government has Department officials said the United
Mercadente not yet determined States has not imposed new restric-
File Photo: Brazilian
the system's cost, he Mexican border to report instances in tions on Cuban mail and that serv-
Government. told radio reporters which buyers purchase several high-pow- ice interruptions are likely due to
in an interview. On ered rifles, the cartels' weapon of choice. third country air carriers' inability
Jan. 19, the World Bank said it may fund Already, Washington has provided Mexico
to transport additional mail.
a project to reform Brazil's civil-defense hundreds of millions of dollars in sup-
system. In addition, the bank will provide port, including training and technology, Guatemala Extends State of Siege
a loan of $485 million to reconstruct and this year will provide the country an in Violence-Plagued Province
homes after this month's flooding and additional half-billion dollars worth of
also relocate people living in areas at risk equipment and training. Since Mexican Guatemala will extend a month-
of floods and mudslides. The death toll President Felipe Calderón launched his long state of siege that began on
after the floods are expected to reach offensive against the cartels at the begin- Dec. 19 in the province of Alta
1,000, said Mercadente, who added 5 mil- ning of his term in late 2006, more than Verapaz for an extra month, the
lion people live in at-risk areas. 34,600 people have been killed in drug- Associated Press reported Jan. 18.
related violence in Mexico. Guatemalan President Álvaro
Clinton Urges Mexico to Keep Colom said the efforts have been
Fighting 'Messy' Drug War Economic News successful but "more needs to be
done" in the area, which was taken
During a visit to the central Mexican city over by Mexico's Zetas drug gang in
of Guanajuato, U.S. Secretary of State Brazil's Central Bank Hikes Key 2008. The siege allows the army to
Hillary Clinton on Jan. 24 urged Mexico's Interest Rate to 11.25 Percent
conduct searches and detain sus-
government to continue fighting what she
called its "messy" war against drug cartels, Brazil's central bank on Jan. 19 raised its pects without warrants, ban gun
the Associated Press reported. "It is messy. benchmark overnight rate a half point to possession and control local media.
It causes lots of terrible things to be on the 11.25 percent, beginning a series of rate
Mexico's Central Bank Keeps
news," Clinton said after a meeting with increases amid rising concerns about Benchmark Rate at 4.5 Percent
her counterpart, Mexican Foreign inflation and a strengthening real,
Minister Patricia Espinosa. Mexico has no Bloomberg News reported. The bank's Mexico's central bank on Jan. 21
alternative other than fighting drug traf- policy committee, led by new central voted to keep its benchmark interest
fickers head-on, said Clinton. "The drug bank chief Alexandre Tombini, voted rate at 4.5 percent, saying that infla-
traffickers are not going to give up with- unanimously to boost the Selic rate for tion would continue to slow this
out a terrible fight. And they do things the first time since July. Inflation grew year despite an increase in global
that are just barbaric—like beheading more last month than economists had commodities prices, Bloomberg
people," she said. "It is meant to intimi- expected. The year-end inflation rate News reported. Luis Flores, an econ-
date. It is meant to have the public say, stood at 5.91 percent, the fastest calen-
omist at Ixe Grupo Financiero, told
'Just leave them alone and they won't dar-year rate since 2004 when inflation
the news service that the probability
bother me.' But a president cannot do increased 7.6 percent. The central bank's
that." Clinton also said the administration target for inflation is 4.5 percent, plus or of a rate increase will begin to rise
of U.S. President Barack Obama will use minus two percentage points. in six or seven months.
Copyright © 2011, Inter-American Dialogue Page 5 of 6

6. Inter-American Dialogue’s Financial Services Advisor January 13-26, 2010
Featured Q&A Financial Services Advisor
Continued from page 3 is published biweekly by the
opposition will find in the referendum banking sector per se. After years of eco- Inter-American Dialogue
Copyright © 2011
an opportunity to consolidate them- nomic and political turmoil, Ecuador is
selves and that a "No" campaign, sup- in the midst of an ongoing media war. Erik Brand
General Manager, Publishing
ported by various sectors, will take shape The private media remains concentrated ebrand@thedialogue.org
and backfire against the president. The in the hands of a limited number of
Gene Kuleta
fact that the referendum also includes powerful conglomerates, some with both Editor
other sensible issues, like the reorganiza- financial sector and media sector inter- gkuleta@thedialogue.org
ests. The conflict is part of an overall bat-
Rachel Sadon
tle between the left-populist government Reporter, Assistant Editor
“ The possible approval of and the traditional economic elite.
President Correa is highly sensitive to
rsadon@thedialogue.org
this referendum could media criticism and views the media as
Inter-American Dialogue
significantly change Ecuador's the primary opposition force. The presi-
dent is an astute campaigner and will Michael Shifter, President
business climate. ” likely garner enough support to pass the
referendum. The proposed change is
Peter Hakim, President Emeritus
— César Coronel Jones Katherine Anderson, V.P., Finance & Administration
likely to have less of an impact on the
banking system than the overall eco- Genaro Arriagada, Senior Fellow
tion of the judiciary and provisions to nomic environment and changes that Joan Caivano, Director, Special Projects
exert more control over the media, could have already been forced upon the bank- Paul Isbell, Visiting Senior Fellow
provoke a negative reaction and consoli- ing system in Ecuador. While the finan- Claudio Loser, Senior Fellow
date opposition forces against President cial system has enjoyed steady deposit
Nora Lustig, Senior Fellow
Correa. As for the possibility of prohibit- and credit growth during the past sever-
ing banks, their main shareholders and al years, we expect the pace of growth to Aurea Molto, Fellow
directors from controlling different busi- slow significantly in 2011-12 as a result Manuel Orozco, Director, Remittances
nesses, the impact could be very signifi- of general uncertainty about economic and Development Program
cant. Many groups have assets in stocks policy, as well as policies that are specifi- Tamara Ortega Goodspeed, Senior
that allow them to control or have signif- cally detrimental to the banking system. Associate, Education
icant presence in banks and this new law In 2007, the government passed a law Marifeli Pérez-Stable, Senior Fellow
will force them to sell their stock in aimed at lowering costs in the banking Jeffrey Puryear, Vice President, Social Policy
banks. Likewise, many important banks system by establishing maximum inter- Viron Vaky, Senior Fellow
and their shareholders or directors con- est rates and eliminating commissions.
trol commercial, industrial and agricul- In 2010, the government's interventions
tural enterprises and this new law will included a new requirement that banks The Inter-American Dialogue's Financial
force them to get rid of those businesses bring onshore liquid assets that they Services Advisor is published biweekly, with
or resign their bank positions. In sum, hold abroad. The banking system suffers the exception of major holidays, from
the possible approval of this referendum from a poor payment culture. The diffi- 1211 Connecticut Avenue, Suite 510
could significantly change Ecuador's culty in recovering loans and collateral Washington, DC 20036
Phone: 202-822-9002 Fax: 202-822-9553
business climate. Bankers will have to leads banks to roll over problem loans www.thedialogue.org
concentrate their investments in that rather than fully provision for them,
sector and won't be allowed to invest in which raises costs for banks. An extra Subscription Inquiries are welcomed at
other economic sectors. This could burden for private banks is that freetrial@thedialogue.org
encourage them to invest in foreign President Correa has actively sought to
The opinions expressed by the members of the Board
countries. Also, many nonfinancial com- expand the role of public sector banks in of Advisors and by guest commentators do not nec-
panies won't be able to associate with Ecuador. Historically debtors have selec- essarily represent those of the publisher. The analysis
banks in order to obtain investment." tively chosen to repay loans to private— is the sole view of each Advisor and does not neces-
not public—banks. This could signal sarily represent the views of their respective employ-
Richard Francis, director of ers or firms. The information in this report has been
A
problems for Ecuador down the road."
obtained from reliable sources, but neither its accu-
sovereign ratings at Standard racy and completeness, nor the opinions based there-
and Poor's in New York: "The on, are guaranteed. If you have any questions relating
real aim of the proposed The Advisor welcomes reactions to the to the contents of this publication, contact the edito-
change deals more with the long-stand- Q&A above. Readers can write editor rial offices of the Inter-American Dialogue. Contents
ing struggle between President Correa Gene Kuleta at gkuleta@thedialogue.org of this report may not be reproduced, stored in a
retrieval system, or transmitted without prior written
and the national media and less with the with comments. permission from the publisher.
Copyright © 2011, Inter-American Dialogue Page 6 of 6