VZCZCXRO3145
PP RUEHLMC
DE RUEHMU #2456 3131554
ZNR UUUUU ZZH
P 091554Z NOV 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 1661
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC

UNCLAS MANAGUA 002456 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS OPIC FOR ZHEN HAN 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR 
 
E.O. 12958: N/A 
TAGS: EINV ECON NU
SUBJECT: NICARAGUA: COMMENTS ON PROPOSED THIRD OPIC FINANCING FOR 
BANCENTRO S.A. 
 
REF: A. STATE 150812; B. MANAGUA 2185 
 
¶1. (U) Summary: Ref A seeks post's comments on housing in Nicaragua, 
Bancentro, and Bancentro owner Roberto Zamora in regard to a 
proposed OPIC direct loan of $7 million to Bancentro to finance 
housing mortgages for Nicaraguans affected by Hurricane Felix.  Many 
Nicaraguans, especially among the 50% who live in poverty, lack 
adequate housing.  Fitch Ratings grades Bancentro's long-term risk 
at A, but the bank faces possible financial repercussions related to 
acquisition of nonperforming assets in a 2001 liquidation of failing 
banks.  Post has no derogatory information on Roberto Zamora or his 
family members.  End Summary. 
 
¶2. (U) Ref A seeks post's comments on housing in Nicaragua, 
Bancentro, and owner Roberto Zamora in regard to a proposed OPIC 
direct loan of $7 million to Bancentro to finance housing. 
 
¶3. (U) Many Nicaraguans, especially among the 50% who live in 
poverty, lack adequate housing.  According to Nicaragua's 2005 
housing census, there is a deficit of more than 600,000 units; this 
deficit is growing by 28,000 units per year.  Approximately 70% of 
this deficit is housing for low-income Nicaraguans who seek less 
expensive houses.  Most of these low-income buyers would require 
long-term, low-interest mortgages to purchase housing.  Exacerbating 
the housing deficit, in September Hurricane Felix destroyed 10,145 
houses and damaged another 9,057, primarily in the impoverished 
Northern Atlantic Autonomous Region (RAAN), the region targeted by 
this proposed OPIC financing.  On these development grounds, we 
strongly support this proposed OPIC loan. 
 
¶4. (SBU) Bancentro, founded in 1991, is one of seven privately owned 
banks operating in Nicaragua. The Superintendency of Banks reports 
that Bancentro is in good standing.  In October 2007, Fitch Ratings 
reaffirmed Bancentro's long-term risk as A and short-term risk as 
F1.  Fitch also graded Bancentro's outlook as "stable."  According 
to Fitch, these ratings reflect Bancentro's "solid position in the 
market, improvements in the quality of [its] loan portfolio . . . an 
extensive depositor base . . . and a varied income base." 
 
¶5. (SBU) In 2001, Bancentro was one of several banks that 
participated in the liquidation of four failing banks.  The Central 
Bank gave Bancentro $40.8 million in Negotiable Indemnification 
Certificates (CENIs) to compensate Bancentro for nonperforming 
assets assumed from Banco Mercantil.  At the time of the 
transaction, Eduardo Montealegre, currently leader of the opposition 
National Liberal Alliance (ALN) party, was Bancentro's general 
manager and a shareholder.  When Montealegre became finance minister 
in 2003, he resigned and sold his shares.  The Office of the 
Controller General -- run by loyalists of convicted felon and former 
president Arnoldo Aleman -- has since accused Montealegre of 
benefiting from the deal.  [Comment: We view this as an attempt to 
slander Montealegre for political purposes.  End Comment.]  Some 
economists and politicians have called for a moratorium on Central 
Bank CENI payments to redirect budget resources toward Hurricane 
Felix recovery efforts.  However, Central Bank President Antenor 
Rosales has categorically stated that the Central Bank will continue 
to make payments.  Ref B provides additional information on this 
issue. 
 
¶6. (SBU) Post has no derogatory information on Roberto Zamora or his 
family members.  In the eyes of the public, his bank is identified 
with the ALN.  However, Mr. Zamora maintains relations with many 
Nicaraguan political leaders, including President Ortega of the 
FSLN. 
 
TRIVELLI