Credit risk is main weakness of banking system in Cape Verde

14 September 2011

Praia, Cape Verde, 14 Sept – Credit risk is the main vulnerability of the Cape Verdean banking system, particularly in the areas of housing, construction and consumer loans, according to the Bank of Cape Verde (BCV).

The BCV’s Financial Stability Report for 2010 showed that the portfolio’s high exposure to the real estate sector and a reduced number of customers is a further risk to the national banking system.

According to the report banks have significantly raised their equity and a substantial boost to provisions.

In relation to the stock market, the report said that, “this sector has been gaining importance and contributing to the funding of the economy and consolidation of the financial system.”

The BCV said, however, that the operations carry risks, both to the market directly, and indirectly for the banking sector and, ultimately, to public accounts.

The Stability Report is an annual publication of the BCV that describes the development of the country’s financial system and analyses all the sources of risk and vulnerabilities in the markets and the Cape Verdean financial system. (macauhub)