Bancolombia S.A. : Colombia To Tighten Rules On Banks As Past-Due Loans Increase
05/18/2012| 10:50am US/Eastern
Colombian Finance Minister Juan Carlos Echeverry said Friday the government plans to force some banks to increase their reserves on new consumer loans amid a worrisome rise in past-due credit.
The planned steps "aim for stability in the financial system and in particular consumer loans," Echeverry said. "We've been worried that there's been a rise, still moderate, in some consumer loans in some financial institutions."
The minister said past-due loans declined 6% last year, but this year have risen 26%, "which worries us."
Colombia's top lending institution, Bancolombia (BCOLOMBIA.BO, CIB), reported in its first-quarter earnings report a rise in delinquent loans, which has been partially to blame for a selloff in the bank's shares over the past two weeks.
Bancolombia said in a conference call last week the delinquencies were mostly on the consumer side, and said it planned to instead try to increase corporate loans.
Colombia's economy has been strong for several years, fueled by a boom in oil production, but recent data suggest growth is beginning to slow. The central bank, however, still say it expects the economy to grow 5% this year.
Outstanding consumer loans in Colombia total some 62 trillion pesos ($34.2 billion).
-By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; email@example.com