- Thread starter jerryme
- Start date
Safest DR Bank ?
Without trying to sound pessimistic, safe and dr bank do not belong together in the same sentence.
In argentina, plenty of people had money in US branch banks. They had no luck getting their money out from them.
In argentina, plenty of people had money in US branch banks. They had no luck getting their money out from them.
Scotiabank is Canadian owned..........
however when in a foriegn country they must abide by the rules of the country the branch is in.
They lost a mint when Argentina went down the tubes. The people didn't lose their funds - but they were converted from US$ to the "new" worthless Argentinian currency.
Details can be found in the annual Scotiabank financial statements for that time period. Lots was written in the media about it so a web search should also provide more info.
That said I'd rather have my money in Scotiabank than any other except maybe Banco Popular.
however when in a foriegn country they must abide by the rules of the country the branch is in.
They lost a mint when Argentina went down the tubes. The people didn't lose their funds - but they were converted from US$ to the "new" worthless Argentinian currency.
Details can be found in the annual Scotiabank financial statements for that time period. Lots was written in the media about it so a web search should also provide more info.
That said I'd rather have my money in Scotiabank than any other except maybe Banco Popular.
The Safest Bank in the DR is in.............
Bahamas, Cayman, Barbados, Turks and Caicos, anywhere there is a big offshore private banking industry. Pick a good sized CDN, US or UK bank and get your funds via ATM, Credit Card advance, draft mailed by your banker to the DR using FedEx.
The premium rates at all DR-based banks come with a risk (pesos because they are worthless, US$ because of demand for US$) . Scotia is a fine Canadan bank in Canada ( and in the aforementioned Private banking locations) - if and when there is/was a Argentinian type problem we've seen them walk away form US$400 Million investment when hope was lost, and they'd do it again.
I don't think you have a lot of solvency concerns but liquidity, e.g. CAN you get at the funds at maturity if the Central bank says no? No.
jerryme said:
Bahamas, Cayman, Barbados, Turks and Caicos, anywhere there is a big offshore private banking industry. Pick a good sized CDN, US or UK bank and get your funds via ATM, Credit Card advance, draft mailed by your banker to the DR using FedEx.
The premium rates at all DR-based banks come with a risk (pesos because they are worthless, US$ because of demand for US$) . Scotia is a fine Canadan bank in Canada ( and in the aforementioned Private banking locations) - if and when there is/was a Argentinian type problem we've seen them walk away form US$400 Million investment when hope was lost, and they'd do it again.
I don't think you have a lot of solvency concerns but liquidity, e.g. CAN you get at the funds at maturity if the Central bank says no? No.
Banco de Reservas by far the only choice if you want to have it both ways: security and not have the bank close it's doors for good, I know of many "Banks" in the DR that have come and go like the flu, others stay but they lack any support should the majority of account holders have the rush of getting half of their money out like in Argentina, the banks mentioned before here like the Canada and else are just that Banks with foreign names on them, to hint they are any better than Baninter it's just as ignorant as saying the Yankees always win the world series(wink), it's a matter of acountability not security, these are overseen by a flock of foreign institutions yet if ENRON will teach anything it would be "Nobody is Safe" so I don't see the point of going about putting money into Cayman Island bank accounts unless you own a few million dollars, else just keep your money where it is, since the DR has proven to be a better shot than those who lost all to ENRON without a trace or hopes of getting a dime back, as long as DR represents an interest to the US it will enjoy the support and bail outs of the IMF and WB, Next on line please---teller 3 is open!
Footnoter added to rick toronto:
I know of several banks in the off shores you mentioned here before go the way of DODO and took the clients money with them, no US$ or any for that matter, even the US is not inmune to this if you check the FDIC terms of the security you'll quickly find out it's more of a gimmick offered by banks to attract customers than an actual money saving tool to recap your funds, the only reason US banks are not folding with the cliens funds it's because of the estringent Banking Dept. rules and overseeing plain and simple add the fact that 90% of the star up or small banks are swallowed by big guns as soon as their client base grows into the 10,000 heads and you can see how this levels the playing field for so many large banks in the US, not so in the DR where the bank I mentioned Reservas hasn't the slightest support or convenience of said banks, If you think nesting offshores it's a great idea then I'll take a hard look at your stock options, I think you opt for investing in so called safe markets where you get pennies on the dollar, risks are something that comes with territory and you have to know the field to play in them, no one market is safe but just that it seens to be on the other hand let me know how many times Reservas went thru a crisis or closed it's doors? So then I should take all my money out of there and send it to the Caymans or like to be safe? I know of more bank failures than you can imagine including many in Canada where the banking system lacks by jetlag to the DR in many aspects, there's nothing sure but death and Taxes of course! (oh yeah... and a cruise missile up your buttocks if you mess with us)
Footnoter added to rick toronto:
I know of several banks in the off shores you mentioned here before go the way of DODO and took the clients money with them, no US$ or any for that matter, even the US is not inmune to this if you check the FDIC terms of the security you'll quickly find out it's more of a gimmick offered by banks to attract customers than an actual money saving tool to recap your funds, the only reason US banks are not folding with the cliens funds it's because of the estringent Banking Dept. rules and overseeing plain and simple add the fact that 90% of the star up or small banks are swallowed by big guns as soon as their client base grows into the 10,000 heads and you can see how this levels the playing field for so many large banks in the US, not so in the DR where the bank I mentioned Reservas hasn't the slightest support or convenience of said banks, If you think nesting offshores it's a great idea then I'll take a hard look at your stock options, I think you opt for investing in so called safe markets where you get pennies on the dollar, risks are something that comes with territory and you have to know the field to play in them, no one market is safe but just that it seens to be on the other hand let me know how many times Reservas went thru a crisis or closed it's doors? So then I should take all my money out of there and send it to the Caymans or like to be safe? I know of more bank failures than you can imagine including many in Canada where the banking system lacks by jetlag to the DR in many aspects, there's nothing sure but death and Taxes of course! (oh yeah... and a cruise missile up your buttocks if you mess with us)
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B de R
Just because Reservas is "owned" if you will by the central bank doesn't make it any more or less likely in a liquidity crisis to pay out whatever you want especially in US$. Any DR bank is too risky for your nest egg. B de R is a fine bank for working funds, a few thousand $ maybe that you can risk.
Just because Reservas is "owned" if you will by the central bank doesn't make it any more or less likely in a liquidity crisis to pay out whatever you want especially in US$. Any DR bank is too risky for your nest egg. B de R is a fine bank for working funds, a few thousand $ maybe that you can risk.
Don't be Ridiculous
Tell me in which typical offshore private banking locations (like those mentioned - Caribbean, Bahamas, Caymans) which Canadian big 5 bank, big name brand US bank ,say like Citi or B of A or a UK bank like Barclays, etc., has gone broke and taken the depositors money with them.
While you're at it elaborate on the Canadian bank failures you mentioned (here's what you said: know of more bank failures than you can imagine including many in Canada where the banking system lacks by jetlag to the DR in many aspects,)
Who exactly? Other than CCB which was a DR-like high interest offering mess that attracted people too stupid to consider that if they offer 4% more than everyone else they are probably pretty risky. And that was a LONG time ago.
The comparison of the North American regulatory system and especially the CDN regulatory environment to DR bank regulators (who did a FINE job of monitoring Baninter) is so ridiculous as to be laughable.
To the OP: don't put a lot of money in DR banks period. Ask why you are getting 19% (and I am not sure you are on US$ anyway). You can have 50% on pesos.
PICHARDO said:
Tell me in which typical offshore private banking locations (like those mentioned - Caribbean, Bahamas, Caymans) which Canadian big 5 bank, big name brand US bank ,say like Citi or B of A or a UK bank like Barclays, etc., has gone broke and taken the depositors money with them.
While you're at it elaborate on the Canadian bank failures you mentioned (here's what you said: know of more bank failures than you can imagine including many in Canada where the banking system lacks by jetlag to the DR in many aspects,)
Who exactly? Other than CCB which was a DR-like high interest offering mess that attracted people too stupid to consider that if they offer 4% more than everyone else they are probably pretty risky. And that was a LONG time ago.
The comparison of the North American regulatory system and especially the CDN regulatory environment to DR bank regulators (who did a FINE job of monitoring Baninter) is so ridiculous as to be laughable.
To the OP: don't put a lot of money in DR banks period. Ask why you are getting 19% (and I am not sure you are on US$ anyway). You can have 50% on pesos.
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Bank of America in Argentina was one of the banks that told their customers to go fish. They got the same deal everyone else did. Some complained to the B of A in the US and were told they would have to take it up with their local branch.
IF I had the dollars
I think I would put them in Banco Santa Cruz for the interest that I want to finance my vacations.
I am not saying that this is the best or the "safest" bank in the DR, but it is one of the best ones for dealing in dollars.
Let me explain. The Banco Popular is probably the most solid bank, per se, but they do not have a lot of dollar clients. They work mostly in pesos. Same for Reservas and Scociabank. Santa Cruz was founded on money exchange and dollar clients. It is their fort?.
All that said, a few thousand in the bank for interest? I'd make sure you had some assurances of what interest you would be getting. If you are really worried about losing it, I would not even think of putting it here or anywhere except your US bank. Otherwise use Santa Cruz and enjoy the vacations.
HB
I think I would put them in Banco Santa Cruz for the interest that I want to finance my vacations.
I am not saying that this is the best or the "safest" bank in the DR, but it is one of the best ones for dealing in dollars.
Let me explain. The Banco Popular is probably the most solid bank, per se, but they do not have a lot of dollar clients. They work mostly in pesos. Same for Reservas and Scociabank. Santa Cruz was founded on money exchange and dollar clients. It is their fort?.
All that said, a few thousand in the bank for interest? I'd make sure you had some assurances of what interest you would be getting. If you are really worried about losing it, I would not even think of putting it here or anywhere except your US bank. Otherwise use Santa Cruz and enjoy the vacations.
HB
Even though interest rates reflect on lots of things
like risks, one has to always keep something in mind. A bank will always pay you a lower percentage for your deposits than it will charge you for a loan. If a bank charges 50% interest on it's loans, it could pay 20% interest on deposits. And the loan interest tend to be set by the Government based on the economic outlook of the economy. So, before people should speculate that the reason why interest rates are so high in the DR is because of the risk involve, that is only part of the story but not all of it. Interest rates tend to go hand in hand with inflation. The higher the inflation, the higher the interest rates on loans set by the government. Banks are allowed to go a few points above or below the official rate, but not by much.
And just because I feel like giving people economic tips, if you bought government bonds (in U.S. in this case), you might not want to dump them. Bonds tend to lose 10% of it's value for every point the interest rates rise and vice versa. Interest rates in the U.S. are rock bottom so the only thing that can happen now is for them to rise and guess what will happen to your bond. If you can't picture this, think of it this way. You buy a $10,000 government bond at 2% interest. If the official interest rate goes up to 3% you can only sell your bond for about $9,000. The reason lies in the fact that if you want to sell before the bond matures due to increasing interest rates, you are going to be competing against new government bonds selling at 3% interest rates. Another person that is interested in buying bonds will look at your offer and that of the government and if you try to sell your bonds for 10K at 2% what's going to stop that other person for simply buying a new bond from the government for 10k at 3%. So in such case a bond holder would only have one of two options. Sell the bond for less money that he/she paid for or simply wait until the bond expires where his/her full investment will be repaid by the government. Keep in mind that I'm talking here about U.S. government, the DR government could do the same promises but they could and have defaulted in the past.
like risks, one has to always keep something in mind. A bank will always pay you a lower percentage for your deposits than it will charge you for a loan. If a bank charges 50% interest on it's loans, it could pay 20% interest on deposits. And the loan interest tend to be set by the Government based on the economic outlook of the economy. So, before people should speculate that the reason why interest rates are so high in the DR is because of the risk involve, that is only part of the story but not all of it. Interest rates tend to go hand in hand with inflation. The higher the inflation, the higher the interest rates on loans set by the government. Banks are allowed to go a few points above or below the official rate, but not by much.
And just because I feel like giving people economic tips, if you bought government bonds (in U.S. in this case), you might not want to dump them. Bonds tend to lose 10% of it's value for every point the interest rates rise and vice versa. Interest rates in the U.S. are rock bottom so the only thing that can happen now is for them to rise and guess what will happen to your bond. If you can't picture this, think of it this way. You buy a $10,000 government bond at 2% interest. If the official interest rate goes up to 3% you can only sell your bond for about $9,000. The reason lies in the fact that if you want to sell before the bond matures due to increasing interest rates, you are going to be competing against new government bonds selling at 3% interest rates. Another person that is interested in buying bonds will look at your offer and that of the government and if you try to sell your bonds for 10K at 2% what's going to stop that other person for simply buying a new bond from the government for 10k at 3%. So in such case a bond holder would only have one of two options. Sell the bond for less money that he/she paid for or simply wait until the bond expires where his/her full investment will be repaid by the government. Keep in mind that I'm talking here about U.S. government, the DR government could do the same promises but they could and have defaulted in the past.
Keep in mind that what I stated above about bonds pertains to the United States. I am not sure if it's the same deal in the DR (in theory it should be but, if there is tampering in the market or in capitalism, then the theory doesn't holds much weight).
He's About Right
Depending on the maturity of a bond a 50% increase in market rates (2% to 3%) for the like term will affect the value of a fixed rate 2% bond by probably 10% if not more. This specific example may be a little low on the 2% rate but the principle is why bonds now are such a dicey investment (unless held to maturity) , as rates are low and over the long term will tend to rise.
Add in the dismal ratings, huge risk and relative lack of liquidity of DR bonds I'd suspect rising rates would be amplified by 30% or more over an equivalent (e.g. rate, term) US , Canada , UK or other AA/AAA bond. First you have the risk, then the lack of a market relatively speaking then you have a rate rise, same issue, worse quality underlying.
In a few years when you are in high school, ask a math teacher about how fixed rate instruments have an inverse value to interest rate changes.
antspants said:
Depending on the maturity of a bond a 50% increase in market rates (2% to 3%) for the like term will affect the value of a fixed rate 2% bond by probably 10% if not more. This specific example may be a little low on the 2% rate but the principle is why bonds now are such a dicey investment (unless held to maturity) , as rates are low and over the long term will tend to rise.
Add in the dismal ratings, huge risk and relative lack of liquidity of DR bonds I'd suspect rising rates would be amplified by 30% or more over an equivalent (e.g. rate, term) US , Canada , UK or other AA/AAA bond. First you have the risk, then the lack of a market relatively speaking then you have a rate rise, same issue, worse quality underlying.
In a few years when you are in high school, ask a math teacher about how fixed rate instruments have an inverse value to interest rate changes.
Exactly
It has nothing to do with the amount, it has everything to do with the rate on the bond, term to maturity and the shift in rates which in the example was 50% increase at once. (2%--> 3%)
Here's a link - try a 20 yr bond, 2% (coupon) p.a., current YTM is also 2% pa, e.g. at par and $1000 value. (or $10,000 no difference). Price = $1000, of course, since it's at par.
Increase YTM to 3% (other bonds now yield 3% so this one has to yield 3% also or nobody will buy it) , price drops to $850, or 15%, since the coupons are only paying 2%, you have to drop the price to get 3%.
If the rates go the other way, to 1% the value rises to $1,397 or 39.75%.
Not that the DR bonds are only 5 year to maturity but a 5 year bond would lose 4.7% to $953 with that 1% move.
http://garnet.acns.fsu.edu/~ppeters/webwork/java/bondcal.htm
Start with this : 1+1+? and 2X2 = ?
When you solve those (no cheating, no fingers, no calculator) report back.
Now you gots some learnin's.
antspants said:
It has nothing to do with the amount, it has everything to do with the rate on the bond, term to maturity and the shift in rates which in the example was 50% increase at once. (2%--> 3%)
Here's a link - try a 20 yr bond, 2% (coupon) p.a., current YTM is also 2% pa, e.g. at par and $1000 value. (or $10,000 no difference). Price = $1000, of course, since it's at par.
Increase YTM to 3% (other bonds now yield 3% so this one has to yield 3% also or nobody will buy it) , price drops to $850, or 15%, since the coupons are only paying 2%, you have to drop the price to get 3%.
If the rates go the other way, to 1% the value rises to $1,397 or 39.75%.
Not that the DR bonds are only 5 year to maturity but a 5 year bond would lose 4.7% to $953 with that 1% move.
http://garnet.acns.fsu.edu/~ppeters/webwork/java/bondcal.htm
Start with this : 1+1+? and 2X2 = ?
When you solve those (no cheating, no fingers, no calculator) report back.
Now you gots some learnin's.