Banks are expected to make risky loans and "provisions"





December 2, 2010, 02:10 AM | Provisions in the system increased by 2.4% in October Carjuan Cruz

ccruz@cadena-capriles.com

The increase recorded for the financial system in its stores in October, according to the Superintendency of Banks (Sudeban) reflects an anticipation of poor quality credits, ie, they can fall in arrears of payment, at least so Financial analysts estimate.

Behavior, experts believe, is due to the deterioration shows the national economy, which is reflected in the ability of paying customers.

However, they believe that among the main reasons are the loans that had been awarded to companies that now are expropriated.

Restructuring

Indeed, the status of the loans of these companies are on standby. Although the bank is even willing to restructure these loans, this process has not begun.

Meanwhile, the bank has had to provision for amounts up to 100% for some loans expropriated.

This means covering the resources of that credit, anticipating a possible loss, the goal is that this will not affect the income statement of the bank.

Expect more big risk stratum

The most significant increase was observed in banking especially in the largest stratum (Banesco, Provincial Trade and also the Bank of Venezuela).

The analysts explained that this behavior is that perhaps these institutions gave loans with higher amounts expropriated firms. And against a background where government policy appears to continue, banks prefer to be prevented.