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LATIN AMERICA |
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Latin American
Banks Sound and Safe,
According to S&P Ratings
Most Latin American banks "will end the
period (second quarter) with gains, despite
the fact that the economic base contracted,
which caused a reduction in activities and
in the rhythm of growth," said a study
released in Mexico.
Standard & Poor's analyst Angelica Bala said
that "in the banks that we rate, we don't
see problems in any banking systems as seen
in the United States, Europe and Asia."
Latin American banks escaped the same
liquidity crisis because they did not
operate sophisticated lending instruments
such as credit derivatives, Bala added.
The private credit sector across
Latin America represents an average 20% of
GDP, compared with around 80% of the Spanish
economy and around 100% in the United
States. Latin American banks would, however,
suffer a more severe drop in activity
between 2009 and 2010, the agency warned.
Capitalization and liquidity in banks in
Brazil, the region's largest economy, would
help protect the impact of a drop in assets
and investments, it added.
Latin America's economy is predicted to drop
1.9% this year, although positive signs for
the year end could result in a 1.5% overall
shrinkage, according to the United Nations
Economic Commission for Latin America and
the Caribbean, Cepal.
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