Eduardo Salgado: ‘I have been working in banking for some years and I have never seen what happens here (at CFN) with clients’

Last October 15, Eduardo Salgado, former vice president of Personal and Corporate Banking at Citibank and former general manager of the Terminal Terrestre de Guayaquil Foundation, completed 100 days in office as CFN’s general manager. In a conversation with Diario EL UNIVERSO, he detailed details of the state and the irregularities that he found in the entity, also revealed details about the imminent sale of Banco del Pacífico and alleged pressure in the liquidation process of Seguros Sucre.

How much has the CFN disbursed in credits?

From January to September $ 147 million in disbursements in what we call first-tier banking, direct banking, that is, customers come here through different channels.

We also have second-tier banking, which is where disbursements are made through the banks, the financial system. The CFN also at the time of the pandemic managed the National Guarantee Fund (…) that was done to help the worst hit areas of the economy and to Galapagos, there they have guaranteed around $ 20.4 million from January to September. After 2020 to September 2021, the CFN has made some deferrals due to the pandemic, $ 678.9 million have been restructured or deferred.

How is the CFN loan delinquency?

We do not want surprises and they say: no, you are the ones who caused the default. The default has been coming for a few years, not only since the pandemic, since 2020, but it comes practically since 2015 as the price of oil began to drop considerably.

In summary, since 2017 the problems begin, the unproductive portfolio begins to rise to impressive levels from $ 88 million to $ 336 million and the productive portfolio begins to fall from $ 1,671 million, in 2019, to $ 1,325 million. The provisions, which were never well made, were out of order, less than normal. The delinquency that was rising is at 20% in September, but we are going to try to control it at 14% or 15% (at the end of 2021), a good bank cannot have more than 5% of delinquent portfolio.

CFN already has a president and manager, a previous step to comply with the voluntary liquidation of Seguros Sucre

And the coercive processes?

There are internal and external mechanisms with the issue of justice, that if there is a debtors club here, the judicial ecosystem is supporting them in a certain way. We have coercive processes: in Guayaquil 977 processes with an amount of $ 278 million, in Quito 227 processes for $ 171.2 million. In total we have 1,204 processes with $ 449.1 million.

Most incredible of all, we have a total portfolio of 2,546 clients, when a development bank has to have at least 10,000 clients. In other words, the average credit here has been 2 or 3 million dollars, which is incredible, in a development bank that is not possible.

What do you mean by the debtors club?

I have been working in banking for a few years and I have never seen what happens here with clients. This club of debtors are professional debtors, there are some who come from the time of the nineties who owed them to x banks and do not pay for x reasons and now they return to this bank, in general to the bank, including the CFN and what is it. What do they do, since I can’t pay him, I’m going to give him a good thing. If you owe me money and you want to pay me with a good, I have to agree, and they want to force us through the judicial system, in general, to receive goods as a form of payment.

How many goods has CFN received as payment?

We have here almost $ 100 million that previous administrations have received (…). It is incredible what is happening, it is like the entire ecosystem is to defraud the public banks, when it is the people’s money that has to be recovered.

What are the CFN’s projections for the end of the year?

We believe that we could leave with a loss of $ 45 million, we no longer have the profits that (Banco del) Pacífico gave us (…) We are going to close, as I said, with a default of 14.5%, a coverage of the 110% would like to arrive, when most banks have 180%, we are going to give a little more loans, we must continue to be active, our first-floor and second-floor banking, we are going to lower operating expenses and recover portfolios, which means charging and restructure $ 393 million.

And that, this is how we are going to end up with a loss, because they cause us losses so that you know, because the Pacific does not give us so much utility and because Seguros Sucre is giving us losses, that is in the liquidation process; and because the CFN’s operation itself is not paying either.

We hired Deloitte to do a review of risk assets that are the portfolio, loans and investments, they will thoroughly review the documentation, promissory notes, the analyzes that have been made, mortgages, guarantees and they will define whether the provisions are well made or still more must be provisioned. This audit will be completed between 75 and 90 days.

Who finances the contract with Deloitte?

It is endorsed by the World Bank which has full knowledge and is financing this contract with Deloitte. In fact, the World Bank and the Monetary Fund want it to be done in several public banks, such as BanEcuador.

Speaking of BanEcuador, how is the merger process with the CFN that is proposed in the law that the Government presented?

There is a new manager, Mauricio Salem. BanEcuador is smaller than ours, we have more or less $ 3,500 million of assets, BanEcuador seems to me that it has $ 1,200 million of assets, but we are straightening them both, Mauricio is going to be in charge of straightening his building and we our; and once they are straightened we can put them together in a kind of Twin Towers, The merger is going to take place, but it is not immediate, first the procedures, norms and the fight against corruption must be given.

Is the La Clementina ranch involved in these coercive processes?

The La Clementina operation was recently declared overdue by the CFN and notified by Fidunegocios, which is the trustee in charge of the administration.

The debt was $ 80 million in 2014, some forests were sold and it fell to $ 75 million.

The creditor is the CFN, the debtor is Cooproclem and the fiduciary manages this situation, but with an autonomous patrimony, that is, as long as they do not pay the loan, the property remains in the autonomous patrimony of the trust, thus it has been operating since 2014, They never paid the capital, there was no interest payment, but they gave two novations, that is, they cancel the loan and give a new one and part of that interest is extended to pay further, some very cool figures that the administrations have made here above, they are very creative.

And at what stage are you still in that process?

The trustee notified the expired term and the administration is with a depositary, Freddy Serrano, appointed by the CFN, but the trustee is paying his fees, this is how it is so far before going to the public auction.

Hacienda La Clementina served three weeks paralyzed, without income and with the risk of losing its production

When will this auction be?

We have to make the new appraisal of how the farm is, that is in process, I would say that we would have results around November 25 and then at the end of November we invite legal entities that want to participate in the auction and we think that until the end of November could be awarded to the new owner. After that there is a first negotiation date and this would be until January 13 and the second date after 90 days that can be until February 27, which we would have the final offer of the interested parties for analysis.

Is there already interest from potential buyers?

We believe that there will be several participants, several bidders, there will not be a single company, the former owner, I know that there are people from outside interested even, as well as in the Banco del Pacífico.

When will the sale process of Banco del Pacífico begin?

The Banco del Pacífico is being cleaned up in its balance sheets and it is estimated that the public bidding for its sale will be held in the middle of next year, the bidding and bidding rules will be drawn up. What we want is for foreign investors with experience in finance to come and this is convenient for the country because obviously it is going to see more competition. I know that there are already interested parties from several countries, there are from Peru, there are from Colombia, I imagine that from Mexico as well, normally the banks move to other countries as their investors move.

The sale of the Pacific is something that several previous CFN managers and boards of directors have already announced, but it was always postponed. Will this process advance?

Yes, there is a new board of directors, the guideline that is the sale by the Government, the majority shareholder that we are and that I represent is very clear. The team that you are managing has been hired for that, to prepare it for the sale.

What is the situation of Seguros Sucre?

When we suddenly arrived, the director resigned, the decree of the president number 82 was already in force that said that you have to go to voluntary liquidation, so we began to see, talking to the administration of that time, what are the accounts receivable, the audits, they had nothing, they had an external audit, but that did not tell you the reality of the company, a liquidation balance to be able to liquidate, there was none of that, so we began to receive such pressure from the Superintendency of Companies that we make adjustments accountants that put us close to forced liquidation, when there is no liquidation balance and we have not completed the forensic audit for which Deloitte was hired.

Millionaire payments without support, fines and uncollected portfolio, main findings of the Comptroller’s Office within Seguros Sucre

What term did the Superintendency give them?

The Superintendency tells us that it will give us until November 5, but we are not enough.

And why this pressure?

We do not understand this pressure to make adjustments that lead us to this liquidation on the part of the National Administration. But look at what we are going to do: we are going to review potential undue payments to third parties, insurance brokers or advisers linked to the administration of insurance or for additional services, inappropriate disclosures of financial information derived from transactions, potential conflict of interest between people that have been syndicated in other countries with people from here, possible irregularities in commercial relations with brokers or insurance brokers that do not have the authorization of the Superintendency of Companies, unusual variations in insured amounts and premiums in contracts, outflows of money abroad to unrelated companies. All that is what we are doing, it is super important that they let us work to be able to continue with the liquidation balance.

What is your vision of the CFN in the future?

That the CFN will be a mixed bank, first and second floor and that our target segment will be SMEs with sales up to $ 5 million per year and an average credit of $ 100,000, to: diversify risk, serve more than 25,000 clients and be truly a development bank, which uses technology.