- Thread starter mullinsca
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Scotia Bank
Such as what? Will they be taken down like the dominican banks when the government needs Dollars? Yes they will because they come under Dominican Banking regulations.
Question Scott? have the Dominican Government taken any Dollars out of any of the Dominican Banks yet?
I am not aware of the Dominican government grabbing the dollars from foreigners with bank accounts, but there have been instances where accounts were frozen for periods of time because the government was very low on dollars.
The risk, I believe, is not that the government is going to steal your money but that you may not be able to get access to your dollars at at the time you want them.
Of course, if the bank goes down because of its poor investment policies, etc., then depositers may be left with little or nothing. There is no deposit insurance like there is in the US.
But then US banks aren't paying the same interest rates as are banks in the DR. Whether it is the stock market or the bank, there is usually a relationship between risk and reward.
The risk, I believe, is not that the government is going to steal your money but that you may not be able to get access to your dollars at at the time you want them.
Of course, if the bank goes down because of its poor investment policies, etc., then depositers may be left with little or nothing. There is no deposit insurance like there is in the US.
But then US banks aren't paying the same interest rates as are banks in the DR. Whether it is the stock market or the bank, there is usually a relationship between risk and reward.
Hey! Ask something specific, for Pete's sake.
And not just for Pete for the rest of us. Maybe ask a specific question vs. abstract generalities.
Scotiabank DR is a subsidiary of Scotiabank in Canada which is in great shape but it isn't in the DR. The point being made, is that if the DR government chose, like in Argentina to hammer the local bank subs with regulations as to liquidity or access to funds, you are as screwed as the rest of the depositors since this is NOT a deposit in the CDN branch of said bank and not insured as such either.
So if you want to have offshore deposits and 8% rates in US$ then you take a risk (vs. say 2% in CDN funds in Toronto) . Since you didn't ASK anything specific, people are assuming you don't want a job there or a Visa card as alternatives to the deposit issue.
mullinsca said:Hello,
I came on this site to get some helpful information. What is up? Do some of you all hate the DOminican Republic? I am so confused that I do not know who to listen to.
And not just for Pete for the rest of us. Maybe ask a specific question vs. abstract generalities.
Scotiabank DR is a subsidiary of Scotiabank in Canada which is in great shape but it isn't in the DR. The point being made, is that if the DR government chose, like in Argentina to hammer the local bank subs with regulations as to liquidity or access to funds, you are as screwed as the rest of the depositors since this is NOT a deposit in the CDN branch of said bank and not insured as such either.
So if you want to have offshore deposits and 8% rates in US$ then you take a risk (vs. say 2% in CDN funds in Toronto) . Since you didn't ASK anything specific, people are assuming you don't want a job there or a Visa card as alternatives to the deposit issue.
Scotiabank
As a point of fact, please take note that Scotiabank D.R. is not a subsidiary of The Bank of Nova Scotia in Canada. It is a branch albeit its local operations are subject to D.R. banking regulations. As such, local deposits are protected by Canadian Depository Insurance up to Cdn$60,000 per account in the event that The Bank of Nova Scotia (Canada) enters bankruptcy. Granted this would be highly unlikely given that Scotiabank reported assets of over $296 billion as at Oct. 31, 2002 and average annual earnings of over $1.8 billion in the last three years.
Banks are governed locally by the Superintendent of Banks and the Central Bank, not by the government, albeit there are political connections given that the government elects the Governor of the Central Bank. Hopefully this will be changed by government in the future to improve the impartiality of how financial institutions are governed in the D.R.
Because of this political connection, and in the interest of demonstrating impartiality, the Central Bank applies monetary policy (relatively) equally to all banks. It is not in the habit of applying rules to one bank and not to another, although its audit abilities fell into question following the Baninter affair. It promptly increased the amount of due diligence it undertakes, as evidenced by the shareholders of Bancredito and Banco Mercantil taking steps to inject equity to cover similar holes in their banks. Clearly they did not want the Central Bank to have to intervene on their operations, nor risk being accused of possible questionable lending activities. Such injections probably resulted from pressure applied by the Central Bank on the respective bank shareholders, as the Central Bank could not risk an additional bank failure following Baninter. The impact on the monetary system would have been potentially, irreversible.
With the flight of the Peso relative to the USD, the Central Bank took steps to control the amount of Pesos converted into USDs as it is permitted to do so under local regulations. So it increased the reserve requirements for banks, offered high interest rates for Peso deposits to dry up the money supply, and sought IMF funding to support the Peso. This reduces the amount of Pesos that can be converted into USDs, while having a ready supply of foreign currency available to support the Peso. Unfortunately, there are risks to such actions, such as public awareness and the flight risk of dollars out of the country with the expectation that at some point, such controls will be removed and the Peso will depreciate further in the future.
Unfortunately, with the recent exodus of the IMF, the government does not have USDs to support the Peso and most recently announced that only USDs that come into the country naturally through foreign trade and tourism will be available for purchase. This will undoubtedly cause further devaluation of the Peso. Certainly, the return of the IMF is a must to obtain Peso stability moving forward.
I believe Ken is correct in saying that there has not been a situation where the Government has taken dollars from depositors accounts. To do so would be quasi political suicide, and any government would only consider such action as a step of last resort. All other avenues would be sought out first before taking such dramatic steps, as it would undermine the entire financial system. Certainly, it does not appear that Scotiabank believes such action would be entertained or else it would not have purchased Baninter's branch system and invested for the long-term in the Dominican Republic.
I hope this is helpful.
Best regards.
fcred
As a point of fact, please take note that Scotiabank D.R. is not a subsidiary of The Bank of Nova Scotia in Canada. It is a branch albeit its local operations are subject to D.R. banking regulations. As such, local deposits are protected by Canadian Depository Insurance up to Cdn$60,000 per account in the event that The Bank of Nova Scotia (Canada) enters bankruptcy. Granted this would be highly unlikely given that Scotiabank reported assets of over $296 billion as at Oct. 31, 2002 and average annual earnings of over $1.8 billion in the last three years.
Banks are governed locally by the Superintendent of Banks and the Central Bank, not by the government, albeit there are political connections given that the government elects the Governor of the Central Bank. Hopefully this will be changed by government in the future to improve the impartiality of how financial institutions are governed in the D.R.
Because of this political connection, and in the interest of demonstrating impartiality, the Central Bank applies monetary policy (relatively) equally to all banks. It is not in the habit of applying rules to one bank and not to another, although its audit abilities fell into question following the Baninter affair. It promptly increased the amount of due diligence it undertakes, as evidenced by the shareholders of Bancredito and Banco Mercantil taking steps to inject equity to cover similar holes in their banks. Clearly they did not want the Central Bank to have to intervene on their operations, nor risk being accused of possible questionable lending activities. Such injections probably resulted from pressure applied by the Central Bank on the respective bank shareholders, as the Central Bank could not risk an additional bank failure following Baninter. The impact on the monetary system would have been potentially, irreversible.
With the flight of the Peso relative to the USD, the Central Bank took steps to control the amount of Pesos converted into USDs as it is permitted to do so under local regulations. So it increased the reserve requirements for banks, offered high interest rates for Peso deposits to dry up the money supply, and sought IMF funding to support the Peso. This reduces the amount of Pesos that can be converted into USDs, while having a ready supply of foreign currency available to support the Peso. Unfortunately, there are risks to such actions, such as public awareness and the flight risk of dollars out of the country with the expectation that at some point, such controls will be removed and the Peso will depreciate further in the future.
Unfortunately, with the recent exodus of the IMF, the government does not have USDs to support the Peso and most recently announced that only USDs that come into the country naturally through foreign trade and tourism will be available for purchase. This will undoubtedly cause further devaluation of the Peso. Certainly, the return of the IMF is a must to obtain Peso stability moving forward.
I believe Ken is correct in saying that there has not been a situation where the Government has taken dollars from depositors accounts. To do so would be quasi political suicide, and any government would only consider such action as a step of last resort. All other avenues would be sought out first before taking such dramatic steps, as it would undermine the entire financial system. Certainly, it does not appear that Scotiabank believes such action would be entertained or else it would not have purchased Baninter's branch system and invested for the long-term in the Dominican Republic.
I hope this is helpful.
Best regards.
fcred
You will have to check, but I am pretty sure that Scotiabank has both Peso and USD savings accounts. The USD dollar accounts are savings accounts only. They are not chequing accounts. To issue cheques, you have to ask for a manager's cheque, and there is typically a related charge. This is standard for USD accounts in D.R. banks.
Again, hope this helps.
fcred
p.s. thank's for the intellegent reply comment... preparing a balanced writing built on facts represents an effort that few are prepared to make.
Again, hope this helps.
fcred
p.s. thank's for the intellegent reply comment... preparing a balanced writing built on facts represents an effort that few are prepared to make.
Scotiabank
fcred said:It is a branch albeit its local operations are subject to D.R. banking regulations. As such, local deposits are protected by Canadian Depository Insurance up to Cdn$60,000 per account in the event that The Bank of Nova Scotia (Canada) enters bankruptcy.
By local deposits I hope you mean canadian dollars in canada.
Dominican accounts are not covered by the Canadian Depository Insurance.
In fact US $ in canada are not even covered.
Same thing in the states Foreign branches are not covered by the FDI.
Not yet but they have in other countries that have gone through what the DR is presently going through. Ecuador and Argentina are examples.ERICKXSON said:Question Scott? have the Dominican Government taken any Dollars out of any of the Dominican Banks yet?
When you borrow more money than you can possibly pay back but you need foreign oil to keep the country operative, when you run out of dollars you take them from where you can.
I don't trust any Banks in the DR whether foreign or domestic with the financial situation there the way it is. Not that I don't think there can be more Baninters which I think there can be and you may get screwed for other reasons but because they have borrowed more money than I think they can possibly repay.
Scott
Paul,
You may be right.. I looked into it, but could not get a definitive answer from the Scotiabank representatives I spoke with today. It is an interesting legal question as to whether it applies to all accounts (Peso, USDs or only to Cdn dollar accounts).
Scotiabank does not appear to have Canadian dollar accounts, so I guess it goes without saying that it does not apply to these since they don't have any... whether it applies to USD and Pesos probably depends on how the Superintendent of Banks in Canada classifies off-shore Peso and USDs accounts as a liability on Scotiabank's general ledger in Canada.
Do you have any legal evidence to support that it would not be covered? If not, not to worry, I am curious now, so I am checking. Notwithstanding, I think it is a mute point given that it would only kick in if Scotiabank filed for backruptcy, which is unlikely given its financial strength.
fcred
You may be right.. I looked into it, but could not get a definitive answer from the Scotiabank representatives I spoke with today. It is an interesting legal question as to whether it applies to all accounts (Peso, USDs or only to Cdn dollar accounts).
Scotiabank does not appear to have Canadian dollar accounts, so I guess it goes without saying that it does not apply to these since they don't have any... whether it applies to USD and Pesos probably depends on how the Superintendent of Banks in Canada classifies off-shore Peso and USDs accounts as a liability on Scotiabank's general ledger in Canada.
Do you have any legal evidence to support that it would not be covered? If not, not to worry, I am curious now, so I am checking. Notwithstanding, I think it is a mute point given that it would only kick in if Scotiabank filed for backruptcy, which is unlikely given its financial strength.
fcred