Financial system strengthened

By Pittaluga Abogados

The Uruguayan financial market finds itself in a period of solid development, soundness, high liquidity, and strong performance, in line with the economic growth the country has enjoyed in recent years. The strength of the Uruguayan financial system is reflected in the national and international investment grades awarded to the leading financial institutions that operate in the country.

Uruguay’s financial system is formed by two state-owned banks, nine private banks, and a wide range of non-bank financial institutions that are firmly established in the country. Financial activity is regulated and overseen by the Central Bank of Uruguay (BCU) through the Financial Services Supervisory Authority (SSF), based on the standards of the Basel Committee on Banking Supervision. One of the characteristics of Uruguay’s banking system is the high participation of state banks. There are currently 299 bank branches in the country, including both public and private banks, employing a combined workforce of more than 8,000 people. Deposits are concentrated primarily in the private banks, which account for 55 percent of all deposits, and the tendency has been toward a greater proportion of resident deposits.

Credits granted by the banking system as a whole to the non-financial private sector saw significant growth over the last decade. Sixty percent of all loans are granted to companies and the other 40 percent are personal loans, which are in turn divided into consumer loans (22 percent) and mortgage loans (18 percent). Uruguay is making great progress in terms of enhancing the efficiency of its payment system, including by encouraging the use of electronic payment methods instead of cash. In this sense, the government is implementing a Financial Inclusion Program (PIF) to enable all Uruguayans to access and use financial services.