The Bolivian financial regulator said it will offer savings deposited in struggling financial firm Banco Fassil to other banks that can guarantee withdrawals, a process that could last a month. A forced liquidation of assets may be considered if that fails.
(Bloomberg) — The Bolivian financial regulator said it will offer savings deposited in struggling financial firm Banco Fassil to other banks that can guarantee withdrawals, a process that could last a month. A forced liquidation of assets may be considered if that fails.
Fassil has reported liquidity problems since the beginning of the year but the situation worsened in March, when the entity cut its credit and debit card services and interrupted online transfers. Long queues formed outside the bank’s offices all over the country, mainly in the cities of Santa Cruz and La Paz as many clients withdrew their savings.
“For the first time in the history of Bolivia, the size of a bank does not allow a single bank to be awarded all the deposits, it’s too big,” said Reynaldo Yujra, director of regulator ASFI, in a press conference Wednesday.
ASFI will publish which banks will receive Fassil’s deposits and credit portfolios on May 12. Another 10 days will be required for people to access their money in the new accounts.
Yujra said the reason for Fassil’s intervention isn’t a bankruptcy, but a “cessation of payments,” a situation due to poor management and practices. The rest of the financial system remains stable despite the dollar shortage in the country, he said.
If the transfer of Banco Fassil savings and credits to other banks fails, the regulator will use the “saver protection fund,” administered by the central bank, or, in an extreme case, a forced liquidation. Whatever remains of the bank, once clients’ savings are returned, will be liquidated to meet other liabilites, ASFI said.
Arrest warrants were issued for at least four executives of Banco Fassil for financial crimes.
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