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BanEcuador will forgive debts of up to USD 3,000 to 9% of its customers

Banecuador will forgive overdue loans for about 27,000 customers. Most of them are located on the coast, according to the head of the institute, Fernando Chiang.

As of July 27, 2022, BanEcuador will begin the process of canceling debts up to USD 3,000 that are overdue for more than 180 days, as stipulated in Executive Order 456, issued by President Guillermo Lasso.

The main beneficiaries are debtors from the Costa region.

In an interview with PRIMICIAS, Fernando Chiang, CEO of BanEcuador, explained who are the main beneficiaries of the operation and of new lines of credit at 5% interest per year.

How many customers will have debts up to $3,000 forgiven?

There are about 27,000 customers, which translates to about $44 million. We are preparing all the reports because this has to be approved by the board this week. Once this process has been met, we will begin debt forgiveness.

Do customers need to do any paperwork?

We are going to do it automatically so that it is not necessary for customers to go to the bank.

They will receive an SMS message or email, if they have one, telling them that a concession has been made.

For those customers who request a certificate, they can approach any of the bank’s representative offices. We expect proceedings to begin next week.

What is the recipe of the people who are going to give up debt, what kind of credits did they ask for?

The amnesty will cover all the sectors served by BanEcuador, but the largest number of placements the bank makes is in the agricultural sector, approximately 70% or 80%.

At the national level, the strength of the amnesty will focus on the province of Manabí, with 11.2 million US dollars; Guayas follows, with US$9.8 million; Los Ríos, with 9.2 million, while the entire share of Imbabura, Carchi, Cañar and Cotopaxi amounts to about 500,000 USD.

Indigenous people are concentrated in these areas and this is one of the demands to stop the Indigenous strike. Why is the portfolio less there?

It’s because of the behavior of debtors, the payment culture of the Sierra part is much more organized than on the Coast, it’s something cultural.

But with the decree we are talking about the country, there is not so much frequency in the Sierra, but it is important to say that there are also many indigenous people on the coast.

The pardon was confirmed in a law passed in November, but was for up to $10,000.

The Organic Law on Economic Development and Sustainability refers to debt forgiveness and indicates that it can be up to USD 10,000 and that it would be implemented by decree.

The decree already exists and says it is up to 3,000 USD. We must bear this in mind: the resources with which BanEcuador is financed belong to the public, therefore we must act with financial prudence.

Due to financial prudence, we have made the relevant provisions so that this does not affect us.

Fernando Chiang

What does this 44 million US dollars mean in the bank’s general portfolio?

For customers, this means 9% and, based on the operating amount, about 3% of the total portfolio. We have a portfolio of more or less USD 1,450 million in credits.

Banks have to categorize the portfolio and the micro portion is based on defaults.

We have clients A1, A2, A3, D1, D2, C, D, E, depending on the number of days missing. When a portfolio is already 180 days past due, it is rated E and requires a 100% write-off.

The other part of the ruling refers to units of 1%. How will they be implemented and what are the requirements?

The decree talks about a new credit line of 100 million US dollars, with capital from the bank and we are working on it. The units in this line would pay 5% annual interest and would have a life of 10 years.

This line will receive a four-point interest subsidy from different government portfolios.

And it covers the second part, which ranges from USD 5,001 to USD 20,000. It is a reinforcement to support and activate the country’s economy.

This is in addition to the Creating Opportunities program, which is up to USD 5,000 at a rate of 1% over a 30-year period.

The requirements are basic requirements, copy of identity card, voting certificate, loan application and some plan or plan that tells me what they are going to invest in so that the capital, which is subsidized, does not go astray.

We already have $66 million through June 20th and $9 million ready and in the works.

Fernando Chiang

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