Government Intervention Weighs on Argentine, Ecuadorian and Venezuelan Banks

Banking sector outlooks remain negative for Argentina, Ecuador and Venezuela at third quarter, according to a new Fitch Ratings report. "The negative sector outlook for Ecuador, Argentina and Venezuela reflects concern that these systems are highly exposed to regulatory intervention and uncertainty, which limits the development of the systems, erodes bank earnings and challenges the banks' ability to cope with these countries' adverse economic environments," said Larisa Arteaga, Director, Latin American Financial Institutions. Decelerating economic growth in Argentina and Ecuador, as well a recession in Venezuela, have pressured banks' loan growth and profitability in 2015. Current economic conditions, in particular macroeconomic imbalances in Argentina and Venezuela, and externally driven monetary supply pressures and USD appreciation in Ecuador could negatively affect loan quality. More…