Banco Peravia Closing

Jan 9, 2004
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Closing? ......or being closed? Shades of Baninter et al.

Another reason to not keep a lot of money in DR banks.


Respectfully,
Playacaribe2
 

Mauricio

Gold
Nov 18, 2002
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arturo

Bronze
Mar 14, 2002
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bank closing

The media are questioning how top Banco Peravia executives were not barred from leaving the country. I doubt it is a coincidence they had access to quite a bit of money.

This latest incident is fundamentally similar to the Baninter catastrophe but it's not a fair comparison in terms of scale or macroeconomic impact. It is a healthy reminder that the risk factor for financial services and investment is relatively rather high.

Closing? ......or being closed? Shades of Baninter et al.

Another reason to not keep a lot of money in DR banks.


Respectfully,
Playacaribe2
 
Jan 9, 2004
10,898
2,226
113
This latest incident is fundamentally similar to the Baninter catastrophe but it's not a fair comparison in terms of scale or macroeconomic impact. It is a healthy reminder that the risk factor for financial services and investment is relatively rather high.


You are right, but this could be worse than Baninter....for the depositors.

This bank is much smaller...and I don't anticipate the government bailing out depositors on this one

Baninter was much larger and held assets of some wealthy and powerful people before they collapsed. Those powerful people got the government to in essence cover their deposits and make them whole. This in turn brought about the near collapse of the DR banking system...until the IMF bailed out the country that had bailed out the wealthy depositors.

It sure looks like, that right now, some depositors may have lost everything.

Respectfully,
Playacaribe2
 

arturo

Bronze
Mar 14, 2002
1,336
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El Nacional is reporting today that the Dominican banking regulator issued a guarantee that all Banco Peravia depositors will be made whole. I am with you, I would not bank on it. Apologies for the dreadful pun.

You are right, but this could be worse than Baninter....for the depositors.

This bank is much smaller...and I don't anticipate the government bailing out depositors on this one

Baninter was much larger and held assets of some wealthy and powerful people before they collapsed. Those powerful people got the government to in essence cover their deposits and make them whole. This in turn brought about the near collapse of the DR banking system...until the IMF bailed out the country that had bailed out the wealthy depositors.

It sure looks like, that right now, some depositors may have lost everything.

Respectfully,
Playacaribe2
 

Mauricio

Gold
Nov 18, 2002
5,607
7
38
I prefer that some individual deposit holders lose some of their savings than that the government again makes the mistake to cover for 100% of the deposits.
 
Jan 9, 2004
10,898
2,226
113
El Nacional is reporting today that the Dominican banking regulator issued a guarantee that all Banco Peravia depositors will be made whole. I am with you, I would not bank on it. Apologies for the dreadful pun.

What they ought to announce is that they intend to insure deposits for all banks, and pass regulations that all banks must hold capital on deposit at the Banco Central as a form of insurance and then audit them regularly for solvency/compliance.

That would at least establish some form of confidence in the banking system.

Respectfully,
Playacaribe2
 

Mauricio

Gold
Nov 18, 2002
5,607
7
38
What they ought to announce is that they intend to insure deposits for all banks, and pass regulations that all banks must hold capital on deposit at the Banco Central as a form of insurance and then audit them regularly for solvency/compliance.

That would at least establish some form of confidence in the banking system.

Respectfully,
Playacaribe2
Not only that. All the banks should be forced to pay up for a guarantee system of which the central bank can dispose in case of an emergency where they have to cover for the deposit holders. The latter only up to a certain amount, for example 3,000,000 pesos max. You want to keep more than that at 1 bank, no problem, but at your own risk.

High interest rates often means high risk.
 

arturo

Bronze
Mar 14, 2002
1,336
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48
bailout?

I have a strong feeling you are not a Banco Peravia depositor.

I prefer that some individual deposit holders lose some of their savings than that the government again makes the mistake to cover for 100% of the deposits.
 

arturo

Bronze
Mar 14, 2002
1,336
97
48
I agree, the FDIC model proved itself from the Great Depression, through nearly a dozen recessions, the 2009 depression, right up to today. It's not perfect but runs on banks have been rare and isolated in the US since its inception.
 

Mauricio

Gold
Nov 18, 2002
5,607
7
38
I have a strong feeling you are not a Banco Peravia depositor.

Yeah that's right, I'm not. But I do believe that when Banco Popular would collapse (disclaimer: they are not, I repeate they are NOT collapsing) I would feel the same. I think a system should be in place where the central bank or the government takes over and guarantees balances up to a certain amount (as an expression of the faith they have in their own supervision of the banking system) and this guarantee fund should be paid by contributions of the banks, or, in case of an emergency,the other banks should chip in.

If I know that the government only guarantees up to 50,000 dollars, I make sure I don't have more than 50,000 dollars with one bank, and besides I will base my decision on where to deposit my money on more than jut where can I get the highest interest rate.
 

Cdn_Gringo

Gold
Apr 29, 2014
8,671
1,133
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If you were to have a significant sum of money on deposit in the DR you'd be a candidate for the financial Darwin awards. Relatively easy to deposit here but difficult to move it off shore once here. Not a good idea to have more than you can afford to lose or abandon as the case may be.
 

drSix

Silver
Oct 13, 2013
1,323
0
36
Man, I wish I had to balls to open a DR bank account and have my pay check deposited here. Would save me $150 a month in wire/ bank fees
 

the gorgon

Platinum
Sep 16, 2010
33,997
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the interesting issue in all this is the fact that Venezuelan authorities sent correspondence to the Dominican embassy in Caracas, as far back as 2012, requesting that they investigate the principals from the bank, warning them that they planned to set up a money laundering operation here.

we know that these guys never met a criminal they didn't love. so, i guess they took their cuts and gave the guys free rein. after all, the deposit guarantees were not coming out of their pockets.
 

Cdn_Gringo

Gold
Apr 29, 2014
8,671
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113
For us, pension deposited at home. Every month I write a cheque and deposit to my USD savings account here. Cheque clears in Canada pretty quickly in about a week, but it takes BanReserva another 2 -3 weeks to make the funds available here. I don't mind the wait now that I am moving October funds in November etc. No fees... just time.
 

the gorgon

Platinum
Sep 16, 2010
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According to the letter from Carlos Herrera to ambassador Adonaida Medina, Gabriel Jim?nez had visited Venezuela several times and usually boasting "that in the Caribbean country he has bought the authorities in the financial field, so he does what he wants" .


acento.com.do/2014/economia/8198888-en-2012-en-venezuela-se-pidio-a-rd-investigar-a-ejecutivos-banco-peravia-que-ahora-huyeron/