Dominican Republic: BanReservas’ new mission challenges status quo

Enrique Ramírez, CEO of the Dominican Republic’s BanReservas, denies that the overhaul of the state-owned bank is intended to compete head-on with banks in the private sector. Analysts have questioned, whether or not the newly invigorated public bank – Ramírez joined in July 2013 from Citi – will be used as a policy instrument to put pressure on the big margins at privately held banks. For example, last year Banco Popular enjoyed a 32.4% return on equity and 2.5% return on assets, while the consolidation that followed the country’s banking crisis in 2004 has minimized competition in the sector.

“We are not trying to compete to force down the interest rate or the margin, we are just taking a new approach and [focusing on] good service to help develop those sectors of the economy that the government has defined as key to the development of the market and the economic policies of president [Danib] Medina,” says Ramírez. “We are not here to distort the market and take advantage of our low cost of funds.”

Ramírez points to investments in the development of export sectors, such as the bank’s pilot project to develop the country’s private-sector producers of bananas. The industry’s exports are currently worth about $350 million a year and the bank has recently signed an agreement with the largest association of producers that aims to boost exports to $500 million within three years. “We will provide the resources to accelerate production, increase the speed of imports of raw materials they need and even help them with the refrigeration system they need to use before shipping.” As well as supply finance, the bank has shown its commitment by opening branches in the northwest of the island to provide personnel to partner in the project. Similar projects are planned for producers of Chinese vegetables, pineapples and greenhouses. The bank also hopes to increase its participation in the tourist industry, one of the country’s biggest generators of income.

At the same time, the bank is also revolutionizing its retail operations. Ramírez is using his private-sector experience to focus on customer service to the bank’s consumer and corporate client base. “When I arrived I found a bank with a very old structure, with silos that didn’t communicate to each other,” he says. “We changed the structure to one that is much more flexible and efficient and it is much easier to go through the approval process.”

For more information visit Euromoney

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