Peru's New Banking Rules to Ease Social Conflict, Regulator Says

  • Lenders to undertake assessment of social, environmental risk
  • Rules apply to all projects costing more than $10 million

Peruvian banks will have to undertake social and environment risk assessments for corporate loans as the country seeks to reduce conflicts with local communities in industries such as mining, according to the chief financial regulator.

Banks are in the process of adapting to the new rules, which take effect March 1 and require additional due diligence for lending to all projects exceeding $10 million, Daniel Schydlowsky, Peru’s superintendent for banking, insurance and pension funds, told reporters in Lima.

“By better anticipating potential conflicts, they can be avoided, which saves costs and everyone is better off,” Schydlowsky said.

Environmental protests in Peru have halted mine projects by companies including Newmont Mining Corp. and Southern Copper Corp., fueling a slide in investment in the world’s third-largest copper producer. Peruvian banks support the new rules, Schydlowsky said. The “small” increase to the cost of the loan resulting from the assessments will be more than compensated by reduced social conflict in the long term, he said.

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