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Peru Banking
In 1987 the García government attempted to nationalize
Peru's
banks, financial institutions, and insurance companies.
Under the
legislation, which Congress approved despite a judicial
ruling
against the government's proposals, the government was to
hold 70
percent of shares of nationalized banks, with the
remaining 30
percent offered for sale to the public. The legislation
excluded
foreign banks operating in Peru from the nationalization
program
but prohibited them from opening any new branches in Peru.
This
set of proposals stimulated widespread public opposition
and
provoked a breakdown of cooperation between business
leaders and
the government. Private investment fell abruptly. García
attempted to pursue the nationalization despite all the
opposition, but adverse judicial rulings slowed
implementation
and finally killed the proposals.
In early 1991, Peru's financial system included four
development banks, twenty-two commercial banks, eight
credit
firms (financieras de crédito), fifteen
savings-and-loan
mutuals (mutuales), twelve municipal
savings-and-loans
institutions, and the Savings Bank of Lima (Caja de
Ahorros de
Lima). In May 1991, the Fujimori government introduced a
new
package of economic measures designed to liberalize the
banking
system. The government suspended the powers of the Central
Reserve Bank (Banco Central de Reservas, or BCR--hereafter
Central Bank) to set interest rates and allowed them to
float
according to market forces. It also stipulated that in the
future
foreign banks would be able to operate in Peru under the
same
conditions as Peruvian banks. In addition, it amended the
Agrarian Reform Law of 1969 by allowing farmers to put up
their
land as collateral for bank loans. When it went into
effect in
June 1991, the new banking law shook up the state banking
sector,
which employed 20,000 people and included six state-owned
banks.
The new law eliminated specialized banks, credit firms,
and
mortgage-lending mutuals, forcing them to reorganize as
commercial banks.
Data as of September 1992
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