Total land area:......................... 48,380 sq. km.
Official language:...................... Spanish
Administrative divisions:.......... 29 provinces and one district
Legal system:.......................... Based on French civil codes
Executive branch:................... President is chief of state and head of government. Cabinet nominated by the president.
Legislative branch:................... Bicameral National Congress
Judicial branch:....................... Supreme Court
ECONOMIC PROFILE
Currency: Dominican peso (RD$)
GDP: US$8.5 billion (1997p)
Real GDP growth (at market prices): 8.2 (1997)
GDP (average annual growth rate): 3.7 (1988-1997)
GDP per capita (1990 US$): 1,052.8 (1997)
Consumer price index (average annual growth rate): 6.7% (1997)
Central government fiscal balance (% of current GDP): 1.0 (1997)
Money supply (M1) (% of GDP): 9.7 (1997)
Interest rate: 21.0 (1997p)
Current account balance: -US$0.2249 billion (1997)
Trade balance: -US$1.8 billion (1997)
Main exports: Ferro-nickel, sugar, coffee, cocoa, gold and silver,
tobacco
Main imports: Primary goods, intermediate goods, consumer goods
Nominal exchange rate (RD$/US$) end of period: 14.4 (1997)
Real effective exchange rate (Index 1990=100): 79.1 (1997)
BANKING INSTITUTIONS
I. Banking Supervision
1. The primary supervisor
of the banking system is the Superintendencia de Bancos.
2. The Superintendencia
is a decentralized, dependent agency of the State Department.
The State Department is the equivalent of the Treasury Department in the
United
States.
3. The Superintendencia
reports to the Secretary of Finance and to the Monetary
Board, the ruling organism of the Central Bank.
4. General supervision
of banks is conducted at least once a year. The valuation of the
assets is examined biannually.
5. The Dominican Republic
is in the process of implementing supervision criteria.
6. The Dominican Republic
partially uses the CAMEL system, usually after taking into
consideration criteria which more directly affect the operations
of a particular
banking institution. At present, the government is deciding whether
to establish
the CAMEL system.
II. Consolidated Supervision
1. The Dominican Republic
does not perform consolidated supervision.
2. Prior consent from
the Dominican Republic is not required to open or close
a banking establishment in a foreign country.
3. Prior consent from
Dominican monetary authorities is required to open or
close a foreign banking establishment in the Dominican Republic.
4. The Dominican Republic
does not perform cross-border supervision.
III. Interest Rates
1. Interest rates
on loans are determined by the market. In the case of Central Bank
loans, interest rates are determined by the Monetary Board.
2. Interest rates
on deposits are determined by the market.
IV. Insurance on Deposits
1. There is no system
of deposit insurance; however, savings and loan associations
have access to such insurance through the Banco Nacional de la Vivienda
(BNV).
2. Insurance on deposits
in savings and loan associations is limited by account up to
RD$200,000 or US$13,986. In the event of bank failure, savings accounts
are
covered up to DR$3,000 or US$210.
V. Trade Finance
1. Dominican laws
and regulations do not define trade finance. International trade
operations are governed by the International Chamber of Commerce UCP 500
(Uniform Customs and Practices) and ICC 522 (Uniform Rules for Collections).
2. Banks bear the
risk of export, import, pre-export, working capital and capital
goods finance, letters of credit, acceptances and drafts.
3. No specific regulations
govern how to treat trade finance. In cases of liquidation,
savings deposits are satisfied after other categories of privileged credits
that may
exist.
4. The banking system
does not make specific provisions or require reserves for
treatment of trade finance obligations during bank liquidations. The only
internal
regulations that exist are prudential norms that limit contingent accounts
to three times
paid capital and reserves of the financial institution. Letters of credit
are included in
this category.
VI. Capital Adequacy
1. The official minimum
capital requirements to open a bank are as follows:
Type
of Institution
*RD$ (in millions)
**US$
Universal Bank
75.0
4,900.0
Commercial Bank
25.0
1,600.0
Mortgage Bank
10.0
700.0
Development Bank
8.0
500.0
Financing Company
2.0
100.0
*Additional 20% of legal reserve **US$1 = RD$15.39
2. To maintain bank
operations, the relation between basic capital adjusted over
risk-weighted assets contingencies must be maintained at a level greater
than 10%.
3. The measurement
of capital adequacy is as follows:
Percentage of Basic Capital/
Category Definition
(Risk-Weighted Assets and Contingencies)
1
Good
12%
2
Adequate 10%
3
Inadequate 8%
VII. Asset Quality
1. The loan portfolio is classified as follows:
Loan Classification
Definition
% of Reserves
A
Normal risk
0%
B
Potential risk
1%
C-1
Real risk
10%
C-2
Significant risk
20%
D-1
High risk
40%
D-2
Very high risk
60%
E
Total loss
100%
2. Minimum reserve requirements on bank assets are a generic provision
equivalent to 1% of the total loan portfolio. Other real estate owned
and
other goods received as loan payoffs are valued at the accounting value
and market values. Reserves should be 50% after two years and 100%
for the third and fourth years.
3. The legal lending limit for any one client is 30% of capital with collateral
and
15% without collateral.
4. Investment portfolio may be categorized according to the association of
the loan to the institution. For loans associated with the institution the legal
lending limit is 100%.
5. The investment portfolio is categorized as follows:Investment Category Valuation Method How Often Valued
A Normal risk Biannually
B Potential risk Biannually
C-1 Real risk Biannually
C-2 Significant risk Biannually
D-1 High risk Biannually
D-2 Very high risk Biannually
E Total loss BiannuallyInvestment portfolios must be measured biannually against market value.
Reserve requirements are established in different categories, depending
on the classification assigned.
6. The impact on the profit and loss statement is not applicable.VIII. Liabilities
1. The minimum reserve requirement on bank liabilities is 20% of total
deposits for commercial banks with regard to different types of
deposits: demand deposits, term deposits, short-term loans,
long-term loans, deposits in local currency, deposits in foreign
currency and others. For mortgage banks, the minimum reserve
requirement on bank liabilities is 10% of total deposits for
mortgage participation certificates and financial certificates, and 20%
for term deposits in local currency.
For development banks, the minimum reserve requirement is 10% for
development participation certificates, financial certificates, long-term
securities or investments and savings deposits, and 20% for
short-term securities or investments.
For financing companies, the minimum reserve requirement on bank
liabilities is 10% for investment certificates.
2. Banks can offer demand, savings and term deposits accounts in local
and foreign currencies.
3. There is no limit on the maximum amount of deposits that a banking
entity can accept.
4. There is no level of concentration for specific types of deposits.