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Peruvian Congress may opt to save Agrobanco, scrap Mi Agro plan

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Peruvian Congress may opt to save Agrobanco, scrap Mi Agro plan

The Peruvian congress might scrap plans to convert troubled state-run development bank Banco Agropecuario, or Agrobanco, to a new entity called Mi Agro, as the proposal seemingly lacks support in Congress, Gestión reported.

Members of the congressional committee on agriculture believe Agrobanco can still be saved and envision a plan under which the delinquent portfolio will be separated from the bank and managed by another entity, after being encouraged by meetings with the bank's president Luis Palomino. That proposal will be discussed in the legislature next week.

According to the publication, foreign investment funds have expressed an interest in acquiring the bank's nonperforming portfolio.

The move comes as Peru's agriculture ministry has recovered about 350 million soles of overdue debt owed to Agrobanco so far this year. The government-owned bank started with debt worth 800 million soles in April. The ministry is aiming to recover another 145 million soles in outstanding loans before the end of the year.

The government had been proposing Mi Agro's absorption of Agrobanco, which has been facing rising loan delinquencies amid allegations of crimes and irregularities in the granting of loans, resulting in an emergency restructuring of the bank.

As of Sept. 5, US$1 was equivalent to 3.32 Peruvian soles.