BANKS

Costa Rica 2019 | FINANCE | B2B

With new fiscal reform approved, it is only a matter of time before the Costa Rican economy starts leveraging its potential to cash in on opportunities knocking at its door.

Silvio Lacayo Beeche
SILVIO LACAYO BEECHE
CEO
DESYFIN
Douglas Soto Leitón
DOUGLAS SOTO LEITÓN
General Manager
Banco de Costa Rica (BCR)

How would you describe the current state of the financial sector in Costa Rica?

SILVIO LACAYO BEECHE Costa Rica's financial sector is highly stable, mature, secure, and regulated. We have been adopting Basel II and III best practices, not only in risk management, but also in financial operations. The bank's equity ratio is at 2:1. There are still many challenges to work through. Currently, the first challenge is the economic stability of the country itself and all its variables. It is great for Costa Rica that the US economy is doing extremely well, its unemployment rate is down, and interest rates are going up. Also, Costa Rica's GDP is growing by 2.7%. All these help the country's economy and are great news for the Costa Rican financial sector.

DOUGLAS SOTO LEITÓN The economy is recovering mainly due to the fact that the government has fresh funds and is making a series of strong investments focused along two axes. One is to reactivate investment in public work, while the other is to reduce the paperwork for new businesses. From an external point of view, we are a small and open economy. More than 40% of our exports go to the US, and at the moment the US economy is growing, which means we need that external market to develop. Costa Rica has been investing heavily in education for 50 years, as well as in traditional and non-traditional export products. Thus, once fiscal reform is properly implemented, Costa Rica will have several opportunities to grow.

What commercial formula is DESYFIN putting in place to prepare for new products coming in 2020 and 2021?

SLB We target mobile financing. We have Fintech projects in development that would allow us to get closer to the market. It is not only about mobile banking products, but extending our internet services and our vendor program, which we have enlarged. In 2018, DESYFIN was the only vendor in Costa Rica to be CISCO approved. We are focusing significantly on leasing and the purchase of CAPEX or assets for companies, as well as working-capital loans and the factoring business. We have changed the way we reach out to our customers with special apps. We will be top of the line in this field in the coming two or three years.

What financial solutions do you offer in corporate banking, and what other products do you want to include in your portfolio?

DSL We offer credit, factoring, cash management, international trade, and so on. With BICSA, we started a digital government project that allows us to make a transversal cross between citizen services, the government, and financial products. One of the pillars that we will pay closer attention to is financial education. We have a product called Tucán with which we can reach rural areas. The product offers over 40 services and allows small entrepreneurs to earn extraordinary income, and we plan to expand its service across the country. We provide the traceability and growth from corporate banking to individual banking, at the same time strengthening SMEs.

What are DESYFIN's future expansion plans and goals?

SLB Three years ago, we sold 23% of DESYFIN's holding company stock to Norfund, a Norwegian government fund that manages money from oil and natural gas exploration. That was a step for us to get a new partner and new equity to prepare for further growth. DESYFIN's business plan is to open in at least two more countries. Panama will be first, and we are waiting to see what happens in the region to determine the second one. We then plan to consolidate for about four or five years and then maybe seek out a new investor, such as an international banking group. For 2019, we will focus on technology and leasing. Leasing products and opening more alliances in this field will help us reach out to customers more directly and grow our loan portfolio. DESYFIN has its own credit card product; however, that only represents 2% of its assets. We are more into the SME CAPEX and financing fields and will continue to focus on these in 2019.

How open is BCR to partnering with foreign investment groups?

DSL We have a strategic partner in El Banco Internacional de Costa Rica. We will leverage this partnership and represent those investors at the regional level. We are the second-largest bank in the country by assets, and our focus as a state bank is to serve citizens. However, the bank's strength is in corporate banking since 58% of its credit is to corporate companies, and we are working on having a greater presence in personal banking.