Prior to 1979, Nicaragua's banking system consisted of
Central Bank of Nicaragua and several domestic- and
commercial banks. One of the first acts of the Sandinista
government in 1979 was to nationalize the domestic banks.
banks were allowed to continue their operations but could
longer accept local deposits. In 1985 a new degree
control of the banking system by allowing the
privately owned local exchange houses.
In 1990 the National Assembly passed legislation
private banks to resume operations. In 1992 the largest
stateowned commercial bank was the National Development Bank
Nacional de Desarrollo--BND), originally established by
National Bank. Other state-owned commercial banks were the
of America (Banco de América--Bamer) and the Nicaraguan
Industry and Commerce (Banco Nicaragüense de Industria y
Comercio--Banic). The People's Bank (Banco Popular)
in business loans, and the Real Estate Bank (Banco
Bin) provided loans for housing. Three foreign banks
operations: Bank of America, Citibank, and Lloyds Bank.
The Inter-American Development Bank (IDB) was
restructuring Nicaragua's technically bankrupt banking
December 1991, the IDB approved a US$3 million technical
cooperation grant to restructure the Central Bank, and in
1992, it approved a US$3 million loan to a new commercial
the Mercantile Bank (Banco Mercantil). The Mercantile Bank
program was expected to make loans available to small- and
medium-sized private-sector enterprises and to finance
investments to bolster fixed assets and create permanent
capital. The Mercantile Bank was the first private bank to
established in Nicaragua since 1979. Three additional new
commercial banks were scheduled to open in 1992.
Restructuring of the National Financial System (Sistema
Financiero Nacional--SFN) was one of the key elements of
government's economic reform program. According to an
between President Chamorro and the World Bank, Banic was
merged with Bin. The BND would handle only rural credit
operations, and the People's Bank was to take over all
operations for small- and medium-sized industry.
operations, which had been managed exclusively by the
Bank since 1984, were transferred to the BND and Banic.
Central Bank would continue to handle operations
the central government, while the newly merged banks would
responsible for letters of credit, imports, transfers, and
The Central Bank also auctioned off one of the
largest exchange houses. This exchange house had been
in 1988 under the direction of the Financial Corporation
Nicaragua (Corporación Financiera de Nicaragua--Corfin).
the Central Bank authorized the exchange house to operate
foreign money exchange office as an agent of the bank. In
1991, Corfin voted to turn over its shares in the exchange
to the Central Bank so that the exchange house could be
Opponents charged that this sale was unconstitutional.
argued that the exchange house was the property of the
Bank and could not be transferred. The Federation of Bank
also charged that the new government banking policy was
the state bank while giving the advantage to the private
Data as of December 1993