Rumors about the potential shutdown of Peru's troubled state-run Banco Agropecuario have led many of its borrowers to skip repayments to the development bank, resulting in an ever-worsening delinquency rate, Gestión reported.
According to the publication, the bank's delinquency rate is reaching more than 39%. "Farmers think that Agrobanco is about to close, so they do not make their payments anymore," a source "close to the operation" reportedly told Gestión.
Faced with a severely deteriorated loan portfolio, Agrobanco has been put under emergency restructuring focused on debt collection. The government has repeatedly denied speculation that the development bank will be shut down and that it would recapitalize Agrobanco with 450.0 million Peruvian soles in 2018.
Peru's agricultural ministry has, however, decided to strengthen the Agroperú development fund to be used as a "plan B" to disburse credit to farmers should the bank be forced to halt credit operations.
The bank's troubles came after years of what politicians and regulators alike have described as lackluster risk management control. Peru's Congress is looking into alleged crimes committed in the granting of Agrobanco's loans while the country's comptroller's office revealed irregularities in credits granted by the bank.
As of March 7, US$1 was equivalent to 3.26 Peruvian soles.
