Wednesday, March 29, 2023

The banking sector in Puerto Rico “is solid and safe” after bankruptcy in the US

The Office of the Commissioner of Financial Institutions (OCIF) in Puerto Rico assured this Monday that the banking sector on the island “is solid and safe” after the collapse of Silicon Valley Bank (SVB) and Signature Bank.

This was expressed in a press release released this Monday by the OCIF commissioner, Natalia Zequeira Díaz, in the face of any repercussions that the intervention of the Federal Deposit Insurance Corporation in the SVB and Signature Bank could cause, after their bankruptcy announcement. last weekend.

“Banks in Puerto Rico are sufficiently well capitalized and strategically diversified, so their clients’ deposits are completely safe and do not face any risk” in view of the problems that have arisen in the aforementioned banks, Zequeira Díaz assured.

“The problems that plague Silicon Valley Bank and Signature Bank are particular to them, not to the banking system in general,” he emphasized.

Zequeira, in turn, echoed the announcement made by the President of the United States, Joe Biden, regarding the prompt intervention of the Federal Deposit Insurance Corporation (FDIC) in said entities, which resulted “in the Their clients’ deposits are safeguarded and depositors have access to their cash this morning.”

“The banking system is safe and deposits are safe,” President Biden assured this Monday.

According to Zequeira, although the island’s banking system should not face repercussions for the problems of the two intervened banks in California and New York, respectively, his office will maintain rigorous surveillance in the coming days to ensure that this is the case.

The California-based SVB announced last Wednesday that it was going to seek a capital increase to try to cope with financial difficulties that led it to dump some US$21 billion worth of investments, at a loss of about US$ $1.8 billion.

That announcement led many clients to withdraw their funds, after which regulators had to close the bank on Friday for lack of liquidity.

Subsequently, the company’s stock price plunged, which in turn affected the banking sector in the United States and other countries.

The Treasury Department, the Federal Reserve and the FDIC announced Sunday that customers will have access starting Monday to all money deposited at the SVB and promised a similar plan for Signature Bank.

Biden, in turn, advanced that the managers of those banks “will be fired” and stressed, as the regulators pointed out the day before, that shareholders will not be protected.


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