In the U.S., the FDIC insures your deposits up to a certain amount. Do banks in the DR have any similar protection for deposits?
Maybe you should follow your own advise and google BANINTER. In this case, the government did give back the money to the bank customers. In fact, the government went beyond the call of duty by returning more money than the amount that was legally backed by the government. This eventually created a major crises in the DR.Google Banniter in the DR.
Based on what happened there I would say there is not much protection.
Your post may be better off in the legal section of the forum. It would limit the type of answer like mine.
In the U.S., the FDIC insures your deposits up to a certain amount. Do banks in the DR have any similar protection for deposits?
Maybe you should follow your own advise and google BANINTER. In this case, the government did give back the money to the bank customers. In fact, the government went beyond the call of duty by returning more money than the amount that was legally backed by the government. This eventually created a major crises in the DR.
If you think the bank failure is a Dominican invention maybe you should read about the global financial crisis of 2008 and beyond.
I suggest you google BANINTER to read about the number of people that did lose their $$$$. It happened.
Anyone who thinks their money is safe in a DR bank is gullible. And... Yes it is true $$$ is unstable all over the world.
So what you are saying is that there was no problem with Baninter? Read the rest of your Wiki article. I could quote tons of stuff about the scandal but that is not my style.
Baninter was a disaster for the DR economy. There is no way you can dispute that!
Maybe you should follow your own advise and google BANINTER. In this case, the government did give back the money to the bank customers. In fact, the government went beyond the call of duty by returning more money than the amount that was legally backed by the government. This eventually created a major crises in the DR.
If you think the bank failure is a Dominican invention maybe you should read about the global financial crisis of 2008 and beyond.
I can`t confirm or deny that there is any coverage. But I have always heard that deposit accounts were indeed covered by deposit insurance up to a certain amount. I found this page on the internet that shows coverage of the equivilant of 13,900 US in 2010.
http://www.asba-supervision.org/PEF/el-cliente-bancario/el-seguro-de-los-depositos-1.shtml
I suppose the only sure way to know would be to ask the bank.
Based on the monetary law there is insurance coverage for deposits in a nominal amount.
Nonetheless, it is neither wise nor prudent to keep more money than you are willing to lose in any DR bank.
Bottom line......only keep what you are willing to lose in any third world, emerging economy banking system.....wealthy Dominicans know this lesson well.....and have changed their banking habits accordingly.
You made some valid points. Yet made the mistake often made around here: to NATIONALIZE anything and everything bad. It is not a personal or institutional problem...it is a Dominican problem.
Yet, the actual record shows otherwise. Do you know of ANY depositor that has EVER lost money because of a Banco Popular failure? If you do let us know. I don't recall that bank having EVER had any abnormal liquidity problem. I reckon their record is MUCH BETTER than that of many banks in the 'developed' world.
Choosing a bank is like most things: to do it right you must do serious research focused on the SPECIFIC individuals involved...not on everyone that lives near them, or was born near them, or shares a passport with them...but THEM, the specific individuals.
The way the people running BANINTER behaved, their bank's failure isn't suprising and could have been predicted.
On the other hand, see my comments on Banco Popular above. Banco del Progreso may be an even better choice, because the Vicini family is their main shareholder, and actually used their money to back depositors a few years ago when an unscrupulous officer cheated the bank (the only people to lose money were the bank owners, as it should). The Leon family is behind the BHD/Leon. If you don't know who the Vicinis and the Leons are, maybe you should find out, before lumping all Dominicans banks together.
And while you are at it, make sure to read about the recent global financial crisis and other crises of the past...and who caused them!
Based on the monetary law there is insurance coverage for deposits in a nominal amount.
Nonetheless, it is neither wise nor prudent to keep more money than you are willing to lose in any DR bank.
While the Baninter depositors were all made whole by the government...even though it had no obligation to do so...that may have been a one off event....as it sent the DR into its own financial crisis....wherein it needed to be rescued by the IMF.
So the question is, why did the DR go to its knees.....when it had no obligation to do so.
Some would argue they did it to instill confidence back into a banking system that had parallel secret off the books shadow banking both on and off the island.....and that makes a plausible explanation.....but, the real reason was that 85% of the deposits were held by just 10% of the depositors. In other words some wealthy and powerful people were about to lose it all.
Enter the government, who at the behest of those rich and powerful people decided to bail out the "bank." The government and then the IMF while saving everyone, really rescued a small number of deposit holders.....who had powerful government connections.
But even they went through some anguishing times as all deposits were frozen. Sammy Sosa who shilled for the bank and who presumably had large deposits there, arrived on the Island with a bevy of lawyers demanding the immediate return of his money. He, like everyone else, had to wait until the saga played out.
Fortunately, it played out well for those wealthy depositors who had the most to lose, but it was at a cost that the DR would pay for years to come.
Bottom line......only keep what you are willing to lose in any third world, emerging economy banking system.....wealthy Dominicans know this lesson well.....and have changed their banking habits accordingly.
Respectfully,
Playacaribe2
I'll have to correct you again. The BANINTER case was very bad for the tax payers. For the bank customers it was largely a nonissue. In fact, if the same had happened in the US (and banks have failed and do in the US) the most each would have received was $100K or whatever the insured limit was...they would NOT have received the entire deposit (if it exceeded the limit) as they did in the DR.Thank you for the excellent post. There is no doubt that the Baninter scandal changed the way people approached banking in the DR.
We would have to start a whole new thread to cover all the details. Thanks for taking the time to add more details.
I appreciate your comments, but my advice still stands.
And thank you for the banking history ownership.....but I already knew that...as well as being married to a family member of one of the banks founding families you mention.
Additionally, as a director of a financial institution in the US and Chair of its Credit Committee....I am concerned whether the DR banks would be able to pass a stress test of their balance sheets.
Finally, I am uniquely aware of the financial crisis and its causes....thus my advice regarding the amount of money one should keep in a DR bank.
You are entitled to your advise. However, it is full of contradictions.
If you do know the causes of the financial crisis, advising people to take their money to the very place(s) that caused the whole debacle is at best puzzling. The financial crisis was NOT caused by Dominican banks or institutions. How can that crisis lead you to advise against Dominican banks?
Most importantly, why do you insist in lumping together "DR banks" as if they were identical? I already explained that some of them have a very solid track record and/or are backed by wealthy and reputable families. Others less so. Each should be evaluated on its own merits, just like evaluating the creditworthiness of an individual.
Your position is the equivalent of saying that when evaluating the creditworthiness of a potential customer one should solely look at their nationality (or their citizenship/race/height, etc) as opposed to the specific details of the financial and historical profile being considered.