Banks look to integration in the U.s. Market
Young and innovative financial institutions are setting high banking standards for the Central American region

Banco Credomatic received an ISO9000 quality award for its high standards

The Honduran banking sector has been experiencing a period of consolidation and modernization with more to come. The government has improved transparency, tightening legislation and strengthening the regulatory prowess of the national bank.

Arturo Alvarado, Minister of Finance, thinks the effects of CAFTA will be felt throughout the banking sector with the opening of new markets and the advent of greater competition. There are already links between some local finance institutions and larger U.S. players. “In the case of Honduras, we have a very strong integration with the American market,” he says.

Banco Credomatic is one of the more innovative players in the market. Although it is fairly young, obtaining a license in 1997, it is part of a much larger and longer established regional financial group. It was one of the first in the region to implement an ATM network, credit cards, direct debits and other electronic transfers. Alberto Galeano Burgos, President of Banco Credomatic, says: “All of our ATM networks are connected to the VISA, Master Card, American Express and Diner’s Club global networks. In this way our customers can take out cash using their credit cards at ATMs all around the world. These transactions represent a high volume of business for Credomatic. We are expanding our services and having success in doing so.” He adds that the bank recently received an international ISO9000 quality award for its high standards. “We are currently developing a company culture focused on the quality of the services we offer both external and internal clients.” He feels regional integration is a positive thing for the financial sector, creating a larger market and helping to raise standards. “This is why, as a group, we see ourselves as a regional bank.”

ALBERTO GALEANO BURGOS President of Banco Credomatic

JAVIER ATALA FARAJ Vice President and General Manager of Banco Ficohsa

Others are making an impression further away. Banco Ficohsa, another young bank founded in 1994, has aimed for the U.S. market. It has established three branches in Florida and one in Georgia under the name Ficohsa Express. There are ambitious plans for growth in New York, Virginia, North Carolina, and California. Javier Atala Faraj, Vice President and General Manager, says the branches help customers remit money back to their families in Honduras. By the end of 2003, the total volume of remittances to Honduras could exceed $1bn. Banco Ficohsa has also made its mark on the technology front with the first on-line banking service in Honduras. There is plenty of appetite to assist foreign investors too. “I think foreign companies will need the bank’s services, such as loans and other services, and we are prepared for this.”

Banco Ficensa is another important local bank with a regional presence combining local know-how with the very best banking practices. Its customers include corporate clients from the U.S., Europe, and across Central America. Established in 1974 as a private institution, it is also nurturing its links with the U.S. market. Correspondent banks include Citibank and Bank of America. Roque Rivera Ribas, Executive Vice President and General Manager of Banco Ficensa, agrees there will only be room for those institutions operating at international standards. He also sees a niche to support the 600,000 Hondurans living in the U.S., which regularly send home money. “We can take care of those people.” On the regional side, he believes CAFTA will create a more conducive environment for finance business. Improvements to the banking code are already marked out clearly. “The banks can take more risks with a more stable legal framework.”