The information below provides details about the Uruguay banking system, and details on opening a Uruguay offshore bank account. You will find details on the laws and regulations that govern the banking system, as well as a list of local and international banks that operate in Uruguay.
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Since the restructuring of Uruguay’s banking sector in 2002, there has been significant consolidation. The sector currently comprises two state-owned banks, Banco de la Republica Oriental del Uruguay (BROU) and Banco Hipotecario Uruguay (BHU), 13 private banks, including Nuevo Banco Comercial (NBC), and a number of credit cooperatives. NBC has the most extensive branch network among private banks and is the only one with a truly national reach. In many cities, it is the sole bank alongside BROU.
The Central Bank formulates monetary and exchange policies in coordination with the Executive Branch, issues currency, and manages the country’s international reserves. It also supervises banks and insurance firms. It has no retail operations.
BROU is Uruguay’s largest bank, and offers loans at the lowest rates and best terms. As of November 2002, it held 40% of overall private sector deposits and had provided over one-third of total credits to the resident private sector. As a result of the banking crisis, in August 2002, BROU froze dollar-denominated time deposits and established a schedule for their repayment in annual installments over a three-year period (25% of the deposit in the first year, 35% in the second and 45% in the third). In July 2002, the government ordered the temporary closure of the banking system to head off a dangerous run on bank accounts, which had drained the country’s foreign reserves from US$3.1 billion at the end of 2001 to US$655 million by mid-2002.
In 2003, BROU unfroze the first tranche of time deposits almost two months ahead of schedule. Nevertheless, the vast majority of depositors kept their savings at the bank.
The mortgage bank, BHU, is the leading supplier of housing loans. During the banking crisis, the government transferred BHU’s dollar-denominated time deposits to BROU. The Uruguayan Government has agreed with the IMF to restructure and strengthen BHU as a result of BHU’s severe financial difficulties.
Insurance provision was a government monopoly until the mid-1990s. In 1996, a law was passed to demonopolize the insurance sector, except for workers´ compensation. Private firms are now allowed to compete with the government-owned provider, Banco de Seguros del Estado (BSE).
The 2002 banking crisis resulted in the closure of four banks (Banco Comercial, Banco de Credito, Banco Montevideo and Banco Caja Obrera) and the creation of a new one (Nuevo Banco Comercial), which is comprised of the assets and liabilities of all of the closed banks except for Banco de Credito. Although Nuevo Banco Comercial is 100% government-owned, it is privately operated. Banco de Credito (formerly 51% owned by the government and 49% by the Moon Group) has been permanently closed. Advent International, the global private equity firm, recently announced an agreement to acquire Nuevo Banco Comercial S.A. (NBC), Uruguay’s largest commercial bank, from the Uruguayan government. The total value of the transaction is US$167 million. The acquisition is subject to regulatory approval and is expected to close in December 2005. This will be the sixth investment Advent has made in the financial services sector in Latin America, a sector in which it has substantial experience.
Private banks supply Uruguay’s private sector with short-term, dollar-denominated credit and receive mostly dollar-denominated deposits (almost 95% of the private sector’s deposits in the private commercial banking system are dollar-denominated.) Most private banks, including US-owned ones, successfully weathered last year’s banking crisis and honored all their deposits in a timely manner.
Uruguay had traditionally been regarded as a safe-haven for Argentine depositors, and before the 2002 banking crisis, they held about 40% of total deposits. However, many Argentine depositors withdrew their deposits in 2002 and their share dropped to about 30% by the end of 2002.
Offshore financial institutions operate with limited functions – e.g. they may neither accept resident deposits nor offer checking account services.
Financial Institutions Operating
Some of the local and foreign banks operating in Uruguay:
Banco de la Republica Oriental del Uruguay (BROU)
Banco Hipotecario del Uruguay (BHU)
Nuevo Banco Commercial
Banco Santander Uruguay
HSBC Bank (Uruguay) S.A.
Lloyds TSB Bank Plc
Banco Bilbao Vizcaya Argentaria
Banca Nazionale del Lavoro
American Express Bank