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Investment InsightBanking & Finance in Nicaragua - The New Revolution
I am certainly not a banking nor financial wizard so when faced with a topic beyond my "scope" I often seek counsel from those who do know, validity is indispensable. Bankers I have spoken to confirmed what I had heard and in fact cash deposits in Nicaraguan banks now total over US $2 Billion. That's a lot of cordobas (well actually many accounts are held in US dollars) but it is not a huge sum compared to world banking powerhouses. Then I realized how important this figure truly is owing to the fact that Nicaragua is only the size of New York and in the recent past there were no deposits to speak of. In the days of felonious dictatorships, overthrows and revolutions all of the money left Nicaragua, in a myriad of ways, and the banking system collapsed. I now comprehend the gravity of this sum, it is a very significant piece of information and it tells me a great deal about the financial institutions striving to make Nicaragua fiscally secure and also provide the purchasing power for residents and businesses to succeed. "Nicaragua has possibly the most stable banking system in Central America" says Leonel I. Poveda Sediles, Gerente Regional Zona Sur for Bancentro, one of Nicaragua's largest banking networks. Upon hearing this I was taken aback and immediately blurted out, "Why? How?" Mr. Poveda, a highly respected Nicaraguan with a very direct manner of speaking, explained the systems of checks and balances in place within Banco Central (Nicaragua's Central Reserve Bank). In short this entity was put into place to protect depositor's interests. Banco Central is comprised of a board that oversees loans and procedures from all banks within Nicaragua - even privately held ones such as Bancentro. This oversight includes daily reports of balances from all banks within Nicaragua no matter their size or international affiliation. Banco Central also has its own credit committee that must approve any loan originating in Nicaragua over US $500,000, no matter which bank is writing it. These regimens ensure consistency and security within the banking community thus creating a prudent financial environment. Banco Central also insures depositor's funds similar to the FDIC in the USA. Like elsewhere in the world Nicaraguan banks make money from using depositor's funds to issue loans and make other investments. The regulations in place within Nicaragua make obtaining a loan a simple process but it is not without due diligence nor protection for the bank and the borrower. Many banks within Nicaragua cooperate within the regulations of the Patriot Act, legislature enacted within the USA after the 9/11 attacks to prevent terrorists from laundering money. Some readers may gasp at this fact but I am including it only as a point to show the very close relations that actually exist between Nicaragua and the "Yankee Imperialists" to the north - despite what you may read in the press. Loans can be obtained, by residents and also by foreign investors, for anything from a vehicle purchase to a multi-million dollar development line of credit. Risk on the part of the bank determines the interest rate, which is currently from 8.5% to 12% for real estate loans. Terms also vary but as an example mortgages are generally 10 years in length. Banks in Nicaragua offer all services including online banking, credit cards and debit cards. The differences though are in the value added services such as personal bankers, smiling faces and even the lollipops on the counters - which left the US banks decades ago! The Nicaraguan government sees the value in a healthy banking system and it understands that competitive and reliable lending is crucial to a healthy future for their country. The new administration is vocal about this point, here is a translated quote from a recent La Prensa news article on the government's position in regards to lending in Nicaragua, it sends an irrefutable message... "A source from [Banco Central] assured that the banks and government are discussing and negotiating lower interest rates, extending payment periods and even providing a grace period for late payments." This statement speaks volumes on the direction Nicaragua is heading. During my voyage into the inner workings of finance here in Nicaragua I soon realized that I was discussing "first world" lingo while sitting on a pleasant shady terrace within the so-called "third world". Actuality struck me and is what prompted me to write this story. I realized that I, like so many living, investing and doing business here in Nicaragua right now, are witnessing an awesome transformation. Nicaragua is reshaping itself from a country wounded and torn apart by a revolution to gain personal freedom to a stronger, reinvigorated country in the midst of a NEW revolution to gain their due place on the world stage. Dramatic, yes, but oh so true, and the most unlikely of heroes may be leading the charge - the bankers! This sudden awareness prompted me to seek out other pertinent information... What I soon ascertained sent strong signals to my investment focused brain and the picture in my head of Nicaragua's future became clearer. Citigroup / Citibank (ever heard of them?) recently purchased Banco Uno, one of the top banking groups in Nicaragua. The word is that Citigroup will be using this brand to launch all sorts of financial products to serve Nicaragua. In 2006 GE Finance purchased a large portion of the BAC Bank, BAC is the leader in Nicaraguan banking and also a large player in Central America as a whole. HSBC recently opened their first branch in Nicaragua after purchasing Banistmo. HSBC has struck it big in Mexico and elsewhere in Central America and they see Nicaragua as the place to be to keep their ride going. HSBC pledges to bring North American style mortgages and mutual funds to Nicaragua in 2008. And then I heard about CCAPPS - The Caribbean and Central American Private Payment System... CCAPPS is exciting and something that anyone interested in investing in Nicaragua should take notice of. CCAPPS will virtually erase financial borders in Central America when it comes to banking and payments. What this system will do is allow free travel of funds, no matter the currency, between Central American countries, including the Dominican Republic. This private system encompasses both personal and commercial sections of society and will streamline business in a huge way. Seamless electronic transfers between all countries involved will be fast, safe and secure. Gone are the financial frontiers of Central America! So readers, it is true, Nicaragua is in the midst of a new revolution but this time it is a positive one, will you be in a position to witness it? I know I will. Take into consideration the already excellent points of "first-in" opportunities, natural beauty, location, weather and political stability now being combined with modern financial and banking practices and the vision becomes even easier to see. With 30 Million residents in Central America (5.6 Million in Nicaragua) the world AND investors should be watching... are you? By Johnny Tortuga - "Equitable & Forthright Commentary" Send Comments to ~ jtortuga@lagunasa.com
Investor FocusRaw Land & "Land Banking" Investments - A Sampler
"Land Banking" is a term generally thrown around by large investment groups who speculate on growth and appreciation trends. Usually these purchases are large tracts and parcels, which are held for 10 years or more. Often these tracts see interim uses for farming, agriculture or timber to cover maintenance costs during the holding period but not always. Land banking is something that every investor should look at, especially now with clean-air and carbon credit demand on the rise and the availability of land diminishing. Prime real estate is disappearing fast in Nicaragua - holding some for future re-sale or use is a very wise decision. Land banking and raw land purchases do not pertain to huge parcels any longer. This same principal can also be applied (and profited from) on smaller pieces of land and for many different end uses. Many times investors will buy land to hold for themselves or for future generations. Nicaragua offers many opportunities in this regard. Available options include quality land in varying sizes and at prices that allow incredible room for future appreciation. Here are a few examples of raw land tracts that Laguna, SA has exclusive access to (prices in US dollars): - 500 acre ranch on Lake Nicaragua - $1.1 Million - 5 acre high traffic commercial parcels - $500,000 - 1 acre lots - lake access, close to Granada - $7,000 - 10 acre mini-ranches - lake access, near Granada - $50K - 50 acres prime oceanfront, 3 beaches - $6 Million - 20 acre residential development parcel - $400,000 - 1 to 5 acre view lots, close to services & lake - $5K per acre - 5 acre prime condo site, top location, sunsets - $1.2 Million Contact Us for details on any of the listed properties or to inquire about other possible purchases. *All properties listed here are currently available for purchase. Titles and legal status have been checked and title insurance is available. Laguna, SA represents quality properties only. Other parcels in varying sizes and locations are available. Some properties have services and infrastructure installed, others have it close by or adjacent, please inquire for full details.
Proyecto Laguna - Make a Difference!
Web site - www.proyectolaguna.com
Latest News & EventsNicaragua is and always will be in the news and for good reason. Here are some of the latest articles from around the globe....
* This issue's Facts & Figures information was provided by an independent market research analysis conducted by Calvet y Asociados. |
In this issueHOT Investment Tip!
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I was recently told that cash deposits and reserves within the Nicaraguan banking system are at the highest levels in decades and are climbing. CD purchases and savings account deposits are also strong, say many bankers, and loans - both personal and commercial - are on the rise. This is contrary to what many expected to be the case after Daniel Ortega was re-elected last year. How can this be true unless all of the "dooms day" advice and fear that was being uttered was just more bunk nonsense from an uninformed press and from the "herd mentality" nay-sayers?
Raw land is an excellent long term investment no matter where you are in the world. But raw land in Nicaragua can also be a good short to medium term investment. This is due to steadily escalating appreciation, expansion of infrastructure and global interest in Nicaraguan real estate.
Community outreach and empowerment is an important part of our work here within Nicaragua. We encourage all developers and investors to get involved on some level. Laguna, SA is proud to support Proyecto Laguna, a non-profit company currently working in the pueblo of Diria. The work performed by the dedicated team at Proyecto Laguna is making a difference on a daily basis. Their efforts are supported solely by donations and they need others to get involved. Please view their web site for complete details, even a small donation will make a direct impact in a child's life.
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