Guatemala: Crisis? What crisis?
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BANKING

Guatemala: Crisis? What crisis?

Willy Zapata, Guatemala’s head of banking supervision, is not easily shaken. When Euromoney met him late in the evening recently, his offices were under siege from angry depositors in the second bank to collapse in as many months. Armed guards barred the gates.

In October 2006 Bancafé, the country’s fourth-largest bank, fell – at least partly a victim of the Refco scandal. Just as the country was recovering, executives from a smaller institution, Banco de Comercio, the country’s 15th-largest onshore institution, "handed the bank’s keys" to the supervisor and went on the run. This somewhat undermined their initial claims that the collapse was a result of customer jitters in the wake of the Bancafé failure.

Political embarrassments aside – Bancafé had close links to president Oscar Berger – the double collapse has raised questions about systemic problems in the industry. In less than three months, two banks, two non-bank finance companies and a stockbrokerage had collapsed. At the end of November 2006 there was also a run on deposits triggered by unsubstantiated rumours of intervention at the second-largest bank, Banco G&T Continental. In a further blow to public confidence, during the first week of December, ATMs started to run out of cash and banks limited withdrawals because they had too few notes. It was perhaps this that prompted Euromoney’s taxi driver to claim that the biggest problem in Guatemala (which, among other big problems, has one of the highest murder rates in the world) was that "no-one has any confidence in the banking system".

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