After the events in the banking sector in the United States, Banco Popular ruled out that the government of Puerto Rico is withdrawing money from local banks and assured that the treasury is not concerned regarding the stability of local banks, said Gian Piovanetti, Director of the Private Equity Group of Popular Securities.
At a time when the Treasury Department is close to beginning the auction process to choose the bank where it will deposit more than $6,000 million, corresponding to the collections of this tax cycle, the Popular spokesman assured that it is a regular process in which the agencies analyze and choose proposals from the institutions.
The Treasury has accounts with Banco Popular and Citi Bank, which has a presence on the Island.
“They (the government) are analyzing different options, different proposals from various financial institutions, but currently Popular and the other banks have government deposits. We are not seeing withdrawals of that money to go to other financial institutions. When withdrawals occur, it is for a particular (public) use,” Piovanetti said.
According to the Summary of Bank Account Balances of the Government of Puerto Rico and its Instrumentalities, published by the Treasury, the central government has more than $18,000 million deposited in banks with a presence in Puerto Rico.
The executive insisted on the stability of the banks on the island, which he attributes to the fact that the investment portfolio —both Popular and FirstBank and Oriental Bank— is short-term, contrary to the long-term investments made by Silicone Valley Bank (SVB), which are exposed to fluctuations in values due to increases in interest rates.
Regarding the long-term investments that Popular has, he stressed that the bank “has no intention of selling these investment positions; They are investments that go up and down, depending on the rates, but they will not have an impact on the financial strength of the bank, ”he stressed.
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Piovanetti’s expressions occurred yesterday, following the Business Financing forum of the Banking, Finance and Cooperatives Committee of the Puerto Rico Chamber of Commerce, where the financial stability of the country’s banks and cooperatives was reiterated.
“Right now what we are hearing is that the three main banks —Banco Popular, FirstBank and Oriental Bank— have double or more, as in the case of Popular, the level of capital required by the FED (Federal Reserve), our regulator. , to measure the level of capitalization of the banks”, he added.
According to the data shared by the Puerto Rico Banking Association on the panel, these three banks were capitalizing between 12% and 17% for January of this year, which is double what the Federal Deposit Insurance Corporation requires of them. (FDIC), which is 6.5%.
“The (federal) Treasury indicates that the capital in Puerto Rico is a solid capital. What it gives us is stability ”, he expressed to THE SPOKESMAN Zoimé Álvarez Rubio, Executive Vice President of the Association of Banks.
Regarding the collapse of Silicon Valley Bank, which has disrupted markets in Europe and Asia, he indicated that economic events have global repercussions, but insisted that consumer money is safe in deposits of up to $250,000, as reported by the federal government.
Both Álvarez Rubio and Piovanetti explained that another positive aspect in Puerto Rico is credit health, with an average credit score of 711, by January 2023.
financing grows
In the Chamber of Commerce forum, both the banking and cooperative sectors exposed the constant demand for commercial financing, the growing interest in starting businesses and the positive projections for this year 2023.
According to Aurelio Arroyo, president of the Association of Cooperative Executives, Puerto Rico has registered an increase in small and medium-sized entrepreneurs seeking commercial financing to start their own business.
“We are seeing a growth of people and of financing or commercial development proponents at all (business) stages, from ‘startups’ and people with much broader developments,” Arroyo said.
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For his part, José Ramírez, executive director of Fidecoop, said that “cooperatives have become a real option to support the economic development of many small businesses.”
For the authorized public accountant (CPA), Jorge Aldarondo, senior vice president of Banco Popular’s Corporate Credit Division, the increase in commercial financing is due to the desire of Puerto Ricans to reinvent themselves.
“There is an appetite inside and outside of Puerto Rico for the acquisition of their own business,” he said.
“Actually, the economic activity that promotes financing is still going strong. We envision, with respect to the institution where I work, repeating the volumes that we saw in 2022,” Aldarondo stressed.
