Total land area:........................ 108,430 sq. km.
Official language:...................... Spanish; Indian dialects widely spoken.
Administrative divisions:........... 22 departments
Legal system:........................... Civil law; judicial review of legislative acts; has not
accepted compulsory ICJ jurisdiction.
Executive branch:..................... President; Council of Ministers appointed by the president.
Legislative branch:.....................Congress of the Republic (80 seats).
Judicial branch:........................ Supreme Court of Justice. The Court of Constitutionality
is presided over by the president of the Supreme Court;
judges are elected for a five-year term by Congress.
ECONOMIC PROFILE
Currency: Quetzal (Q)
GDP: US$10.4 billion (1997)
Real GDP growth: 4.1 (1997p)
GDP (average annual growth rate): 1.3 (1988-1997)
GDP per capita (1990 US$): 989.8 (1997)
Consumer price index (average annual growth rate): 9.2 (1997)
Central government fiscal balance (% of current GDP): -1.1 (1997)
Money supply (M1) (% of current GDP): 8.3 (1997)
Interest rate: 18.9 (1997p)
Current account balance: -US$0.66 billion (1997)
Trade balance: -US$0.94 billion (1997)
Main exports: Coffee, sugar, bananas, cardamom, beef.
Main imports: Fuel and petroleum products, machinery, grain, fertilizers,
motor vehicles.
Nominal exchange rate (Q/US$): 6.2 (1997)
Real effective exchange rate (Index 1990=100): 66.1 (1997)
BANKING SYSTEM
Total number of banks in the system: 35
Types of banks: Commercial banks and mortgage banks
Total amount of assets: US$5.2 billion
Total amount of deposits: US$3.3 billion
Total amount of capital or net worth: US$0.4 billion
BANKING INSTITUTIONS
I. Banking Supervision
1. The Superintendencia
de Bancos is responsible for supervising banking
organizations.
2. This is not an
autonomous entity; it is a nonregulatory and technical entity
of the Central Bank structure that acts under the direction of the Monetary
Board. One of its functions is to supervise liquidity, solvency, strong
equity
and the safety and soundness of the banking system.
3. The supervisory
authority reports to the Monetary Board.
4. The frequency of
examinations depends on the level of risk of the institution.
Frequency varies between permanent and sporadic supervision.
5. The categories
of banking supervision are as follows:
Category
Definition
Criteria (Level of Supervision)
1
Good
Minimum
2
Satisfactory
Some or normal
3
With some problems Greater
4
With serious problems Special attention
5
In crisis
Permanent
6. Guatemala¹s banking
supervision is based on a system denominated by the
acronym SUPER: Liquidity (Situación de liquidez); Profits (Utilidades);
Equity (Patrimonio); Management (Eficiencia administrativa); and Asset,
Deposits and Operations risk (Riesgo de activos, de depósitos, y
de operaciones).
The system evaluates each institution using a weighted ratio with a scale
from one
to five. One is the best rating and five is the worst.
II. Consolidated Supervision
1. Guatemala has no
system of consolidated supervision at this time.
2. The authorization
for opening or closing a subsidiary or an affiliated entity is not
contemplated within banking regulations. However, prior authorization
from the
Monetary Board is required for opening an agency or a branch. The closing
of a
branch or an agency must also be processed by the Superintendencia de Bancos.
3. The authorization
to open a foreign banking entity in Guatemala is not contemplated
by the regulations governing banking entities, agencies, and branch mergers
and
acquisitions. Headquarter approval and notification to the supervisory
authority
are required to close a foreign branch.
4. Guatemala has the
right to gather information from its cross-border establishments
in the case of bilateral agreements with the host country. Banking regulations
require
the supervisory authority of the host country to provide the Guatemalan
supervisory
authority with any needed information in a formal and notarized document.
III. Interest Rates
1. Interest
rates for loans are determined by the market. As part of the
modernization of the financial system initiated in 1989, the Monetary Board
decided to abstain from fixing the interest rates for assets. Each bank
is free
to establish its own terms.
2. Interest
rates for deposits are determined by the market following the pattern
described above.
IV. Deposit Insurance
1. Deposits
are not insured at this time, but the supervisory authority has proposed
the creation of a Savings Protection Fund. The objective of this proposal
is to
guarantee the recovery of savings in cases of liquidation or bankruptcy
of a private
banking institution, or the agency or branch of a foreign bank.
2. The proposed
fund will pay a maximum of 20,000 quetzales per person or entity
for savings deposits in a private domestic or private banking institution
undergoing
liquidation or bankruptcy.
V. Trade Finance
1. Guatemala
defines trade finance as the financing of exports and imports through
lines of credit that banks obtain through their own correspondent banking
networks with the previous authorization of the Monetary Board.
2. The sovereign
does not bear the risk of trade financing vehicles.
3. Liquidation
is covered in Section Three of the Commercial Code, which dictates the
following order of payment: liquidation costs, corporate debts, debts to
partners, and
distribution of profits. Trade finance is considered corporate debt.
4. The banking
system does not make specific provisions or require reserves for
treatment of trade finance obligations during bank liquidations.
VI. Capital Adequacy
1. The minimum
required capital to open a bank is 20.8 million quetzales (equal to
US$3,199,645.58 as of September 25, 1998).
2. The minimum
required capital to maintain a bank¹s operations is not a fixed amount;
rather, it is 8% of weighted assets.
3. Banks should
maintain a minimum equity according to risk assets and contingencies.
The minimum equity requirement is 8% of assets and contingencies, weighted
as follows:
0% of 8% for liquid and short-term assets.
10% of 8% for domestic currency investments and securities guaranteed by
the
Guatemalan government.
20% of 8% for assets provided to development multilateral institutions,
deposits
in the supervisory authority, up-to-a-year trade finance, and deposits,
loans
and other investments in or guaranteed by foreign banking institutions.
50% of 8% for mortgage and other real estate loans.
100% of 8% for loans granted to the domestic and foreign private sectors,
foreign governmental credits to be invested in securities, borrowings from
foreign banks not included in the previous categories and repurchase agreements.
VII. Asset Quality
1. The banking
authority has instituted the following loan classifications:
Loan Classification Definition (Past Due) % of ReservesIn case of doubtful recovery of investments, the supervisory authority can order a
A Up to one month 0
B One to three months 5
C Three to six months 20
D Six to 12 month 50
E More than 12 months 100
bank to exceed the percentages referred to above.
2. There are no reserve requirements for assets.
3. The legal lending limit for a single customer is 20% of the bank's total capital.
This applies to loans with or without collateral.
4. No criteria are used to classify investment portfolio.
5. Investment categories and their valuation are not applicable
6. The impact on the profit and loss statement is not applicable
VIII. Liabilities
1. Reserves on liabilities
are as follows:
Liabilities
Minimum Reserve Requirement
Demand deposits
19.6%
Time deposits
19.6%
Deposits in local currency
19.6%
Deposits in foreign currency
19.6%
2. Banks offer all
deposits in local currency. Only demand deposits for international
organizations and diplomatic corps are offered in foreign currency.
A proposed
regulation will consider types of deposits of less than 30 days and will
apply to native
or foreign individuals and corporate deposits regardless of origin.
3. There is no limit
on the amount of deposits banks can accept.
4. There are no limits
on the levels of concentration for specific types of deposits.