Financial Crime World

Banking Regulation in Ecuador: A Comprehensive Guide

Capital Adequacy Guidelines

The Superintendency of Banks in Ecuador has established strict capital adequacy guidelines to ensure the stability and soundness of the banking system.

  • Minimum CAR requirement: 9% of risk-weighted assets
  • Consequences of non-compliance:
    • Corrective measures will be implemented before liquidation if a bank fails to meet the CAR requirement.
    • Insufficient capitalization can lead to mandatory liquidation.

Enforcement Mechanisms

The oversight agency takes a proactive approach in addressing undercapitalized banks, ensuring their stability and protecting depositors’ interests.

  • Capital increase: The Superintendency of Banks may order a bank to increase its capital to meet regulatory requirements.
  • Corrective measures: A series of corrective actions will be taken, including the appointment of a receiver, if necessary.

Insolvency Procedures

In cases where a bank becomes insolvent, the Superintendency of Banks ensures that all levels of supervision are exhausted before initiating liquidation proceedings.

  • Liquidation process:
    • The Superintendency of Banks will issue a resolution ordering the liquidation and appointing a liquidator.
    • The liquidator’s primary responsibility is to collect credit in favor of the bank and make payments according to the priority order established by law.

Ownership Restrictions

The regulation defines controlling interest based on ownership percentages, ensuring that no individual or company has excessive influence over the financial institution.

  • Direct controlling interest: 6% or more of subscribed and paid-in capital or capital stock.
  • Indirect controlling interest: At least a 1% stockholding in the financial institution’s subscribed and paid-in capital.

Implications for Controlling Entities

The regulation and oversight entities have broad powers to regulate and oversee the financial sector, ensuring that all financial institutions operate within established guidelines.

  • Regulatory powers: The entities may monitor, audit, intervene in, oversee, and supervise all financial institutions.