Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 08QUITO831, Ecuador Lowers Interest Rate Ceilings

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08QUITO831.
Reference ID Created Released Classification Origin
08QUITO831 2008-09-05 16:27 2011-05-02 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Quito
VZCZCXYZ0006
RR RUEHWEB

DE RUEHQT #0831/01 2491627
ZNR UUUUU ZZH
R 051627Z SEP 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 9338
INFO RUEHBO/AMEMBASSY BOGOTA 7720
RUEHCV/AMEMBASSY CARACAS 3161
RUEHLP/AMEMBASSY LA PAZ SEP LIMA 2780
RUEHGL/AMCONSUL GUAYAQUIL 3772
UNCLAS QUITO 000831 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV EC
SUBJECT:  Ecuador Lowers Interest Rate Ceilings 
 
Reftel:  07 Quito 1655 
 
1.  (SBU) Summary.  Empowered by a slightly modified year-old 
banking law, the Central Bank has steadily lowered maximum allowable 
interest rates for the banking sector since January 2008. 
Ironically, the Constitutional Court struck down a provision of the 
2007 banking law that provided transparent guidelines for 
establishing interest rate ceilings.  Without that provision, the 
Central Bank has continued to set interest rate ceilings, but is not 
using any publicly understood criteria and appears to be guided by a 
political desire to lower interest rates.  Despite the pressure on 
interest rates, large banks remain profitable.  However, 
micro-lending is taking a hit, as banks focus on more profitable 
corporate lending.  End summary. 
 
2.  (U) Ecuador's banking law entered into force in July 2007, 
establishing new guidelines for maximum lending rates (reftel).  The 
law stipulated that the Central Bank would establish maximum 
interest rates by market segment, based on the average of prevailing 
loan rates in the previous month for the segment plus a margin of 
two standard deviations.  The law also banned loan commissions, 
which had been an important source of income for many banks. 
However, by dividing the industry into market segments, and 
providing a reasonably large margin over the average prevailing 
interest rates, the new law allowed for banks to continue offering a 
wide range of products within each segment. 
 
 
3.  (SBU) In December, the Constitutional Court declared the 
methodology for setting maximum interest rates unconstitutional, but 
otherwise left the July banking law intact.  With that change, the 
Central Bank maintained its authority to set maximum interest rates, 
but was not bound by an established methodology.  Starting in 
January, the Central Bank has begun to steadily lower the maximum 
interest rates across all market segments.  Bankers complain that 
they are not aware of any methodology followed by the Central Bank, 
beyond a political objective of forcing down interest rates. 
 
4.  (U) Following are the maximum interest rates for  different 
market segments in January and August, showing a steady decline in 
each segment.  (Note:  The Central Bank establishes maximum interest 
rates each month.  For convenience we have left out the rates for 
the intervening months, each of which has been marginally lower than 
the preceding month.) 
 
Month                  January 2008    August 2008 
 
Commercial                 11.81           9.66 
Personal consumption       21.19          17.26 
Housing                    13.55          11.66 
Microcredit                27.98          25.50 
Subsistence microcredit    39.98          35.20 
 
5. (SBU) According to Cesar Robalino, President of the Ecuadorian 
Bankers' Association, the overall banking sector remains strong, 
even with lower interest rates.  However, given overall uncertainty, 
coupled with lower interest rates, banks are taking a more defensive 
position by increasing liquidity and building capital while slowing 
down lending.  As part of that retrenchment, they are beginning to 
shift business from high cost microcredit lending to low cost 
corporate lending.  Robalino noted that the large banks can more 
easily make those adjustments, while smaller banks have less 
flexibility.  In addition, smaller banks usually have higher 
marginal operating costs and are therefore particularly vulnerable 
to falling income as a result of lower interest rates and 
eliminating commissions. 
 
6.  (SBU) Comment:  President Correa took office determined to push 
down interest rates and bank commissions, which had been, on 
occasion, abusively high.  The 2007 banking law was drafted by 
Congress after it rejected a more draconian version submitted by the 
Correa Administration.  It did impose more limits on the banking 
sector, but also provided a relatively predictable and flexible 
interest rate cap system.  By overturning one provision of the law, 
the Constitutional Court effectively gave the Central Bank a free 
hand to set interest rates as it sees fit, without any constraining 
methodology.  At about the same time, turnover at the Central Bank 
board allowed Correa to appoint a majority of the board.  The board 
had taken what appears to be a political decision to squeeze down 
interest rates, although the process has been gradual and thus far 
has not been a threat to overall banking system. 
 
7.  (SBU) Comment, continued.  Ironically, a second objective of the 
Correa Administration has been to promote more competition in the 
banking sector and to encourage microcredit lending.  By moving 
forward with one objective, lowering interest rates, the government 
is undermining its other objective, since the lower rates favor the 
large banks and suppress microcredit loans. 
 
HODGES