Heads up: Treasury & Banking in Peru, Colombia and Ecuador
In Latin America, two giants dominate both the economy and the news – Brazil and Argentina. The other countries on the continent frequently pass under the corporate radar.
Peru, Colombia and Ecuador sit between the extremes. Ecuador is small and relatively poor, while Colombia and Peru are significant economies: most MNCs maintain a presence, but it is typically not their main focus.
Peru and Colombia also have turbulent recent political pasts: while they have recently enjoyed periods of relative peace and prosperity, that peace seems to be increasingly fragile. Colombia suffered a devastating earthquake just before the call.
Most peers on the call face similar challenges, mostly around the need to use local banks, and the resulting problems with managing cash.
Some points from the call:
- In Colombia, the main problem is the “cuatro por mil”, a tax on every financial transaction.
- Given the limited presence of international banks, peers are often obliged to work with local banks, especially if their business involves retail sales.
- Local banks’ electronic systems often make it difficult to manage accounts remotely and they can be modified without notice.
- Cash is still used more than treasurers would like.
- In Ecuador, repatriating cash is a challenge.
As is often the case in countries of intermediate size, treasurers accept solutions and ways of working they would prefer to avoid.
Further topics covered in our commentary: fiduciaria accounts, FX, electronic payments, QR codes, payment links, bank reporting, netting, hard currency, stablecoins, local borrowing, commercial paper, customs guarantees.
Banks discussed: Banco Agrario, Banco de Bogotá, Banco de Crédito del Perú (BCP), Banco de Guayaquil, Banco de la Nación, Banco del Pacífico, Banco Internacional, Banco Pichincha, Bancolombia, BBVA, Citi, Davibank, Davivienda, JPMorgan, Produbanco, Santander, Scotiabank.
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