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Costa Rica's Bancrédito will speed up transformation into development bank


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Costa Rica's Bancrédito will speed up transformation into development bank

Costa Rica's financially burdened Banco Crédito Agrícola de Cartago, or Bancrédito, is planning to speed up its transformation into a development bank and cease its financial intermediation activities before the end of 2017, the government said in a news release dated May 26.

As part of its restructuring, the bank also plans to sell its commercial loan portfolio which was worth 433.73 billion Costa Rican colones in April, El Financiero reported the same day.

The changes are part of the bank's restructuring plan that was approved in March by the country's financial entity regulator, Sugef, in an effort to resolve the state-owned bank's financial woes.

The state-run entity will focus its future operations on trusts, tax collection, social assistance programs and other services to public and private institutions. Under the plan, "the bank does not close, it continues to operate, it continues to collect outstanding loans and continues to pay its creditors," Sergio Alfaro, minister of the presidency, said in the statement.

Alfaro said that putting a stop to the bank's commercial operations was justified due to the "enormous budget effort" that would have been required by the government to put the lender's finances back in order.

A special commission is being formed that will come up with an action plan to halt the financial intermediation process that must be submitted to Sugef by June 16.

The commission will be comprised of Costa Rica's central bank president, the commissioner of the presidential economic council, and Bancrédito's general manager. The government will also conduct an independent investigation into the reasons for the bank's financial failures, the news release noted.

Bancrédito will continue to operate during normal weekend hours to answer client questions about the process and conduct any normal operations, according to the statement.

The government started seeking options for the bank, including a bailout plan that was signed in February, when it was identified as being at risk of falling into financial irregularity.

As of May 26, US$1 was equivalent to 588.09 Costa Rican colones.