Puerto Rico Economic Pulse ©

May 2006: Braving the Changing Tide

An overview of the banking sector in Puerto Rico

Banks are of the undisputable leaders of local firms in PR. They have grown at an impressive pace, and have backed consumers’ avid spending. In the aftermath of September 11, some investors found a shelter in PR bank stocks to bypass financial blues on the mainland. However, the tide has changed and the giants of the local economy are not living their best days. Plummeting stocks, an inverted yield curve, new taxes, and a fiscal mess on the island have darkened banks’ landscape. This issue reviews the situation of the banking sector and analyzes the upcoming tough times and the many challenges and opportunities lying ahead.