Significant changes in the banking industry have literally turned the Honduran financial sector inside out in recent years. Major international financial institutions have gobbled up Honduran banks left and right. For example, just last week, UK giant HSBC, the 3rd largest bank in the world, took over BGA (gobbled up a few years ago by another foreign bank ) and insurer El Ahorro Hondureño. Also, a Mexican Bank affiliated with the Elektra Housewares chain opened up for business as well. These are just two of the many examples of acquisitions by major foreign players in recent years.

Another factor to consider is the astronomic rise in “remesas” (funds sent to Honduras by Hondurans living and working abroad, mostly in the U.S.). This phenomenon generates an incredible $3 billion per year (in 2006, that figure was $2.359 billion), making it the number one sector of the Honduran economy (bigger than the total of all exports combined). As well, international reserves in Honduras have hit an all time high, topping out at $2.405 billion in 2006.

All this cash pouring into Honduras and the new found fever of international banking mergers and acquisitions have created a revolution in the Honduran banking sector, including new banks, new names, new branches, new drive-through windows in major cities, new banking products, increasingly sophisticated mass-market advertising and marketing of products and of course a huge increase in credit card penetration into the hands of Honduran consumers. The largest credit card issuer in Honduras is Banco Credomatic, also known as BAC, which is 51% owned by General Electric, which took control of the bank a couple of years back. As one might guess, credit card ownership in Honduras has gone from minuscule to mass market, as credit card companies and banks vie for market share of the ongoing boom in credit cards acquisition. Credit cards are well suited to the Central American consumer as the custom of small ¨ tide over ¨ loans are commonplace as a means to make ends meet for all manner of household, personal and unexpected expenses.

However this ¨plastic credit ´ comes at a hefty price as interest rates in Honduras on credit cards top out near 60% per year: a hefty price tag indeed, especially if one is making only minimum monthly payments.

Savings accounts have also become more popular in recent years. In 2005 Honduras had 2,026,911 accounts, by 2006 there were 2,275,317 accounts, an increase of 248,000 savings accounts. Deposits in these accounts went from Lps 18,893,487 million in 2004 to Lps 31,883,334 million in 2006. One interesting figure which speaks volumes to the strength ( or lack thereof ) in the Honduran economy as a whole is the size of the average savings account, with the national average hitting a paltry Lps 14,012, approximately $700 per account. Interestingly enough, fully 59% of all accounts and funds deposited, reside in just two departments; Francisco Morazan ( home to Tegucigalpa, the nations capital ) and Cortes ( home to San Pedro Sula, the industrial, business and export hub of the country ).

Interestingly, the department with the highest savings rate is the rural department of Ocotepeque, which borders El Salvador and Guatemala. Residents there have saved an average of Lps 25,108 per account. In Cortez for example, the average account has Lps 11,155 and in Francisco Morazan, Lps 14,690. Fully 83% of all accounts nationwide have less than Lps 10,000, which is about $500 and a minuscule 1,897 accounts in the entire country have more than Lps 1,000,000 or about $50,000, which represents only 1% of all accounts. This speaks volumes as to the lack of savings power of the vast majority and the inherent weakness of the Honduran economy in general. This elite group of account holders are holding 17% of the total of all funds deposited in the Honduran banking system . The most savings accounts were registered in Francisco Morazan, with 736,135 accounts, Cortez at 722,568 accounts. The fewest accounts were in the department of Gracias a Dios, with only one town (Puerto Lempira ) with banking services. Gracias a Dios, commonly known as ‘La Mosquitia’ is remote, similar in size to El Salvador but with a population of only 60,000. It has sporadic infrastructure at best and sparse modern amenities. Government statistics do not even give the number of bank accounts in La Mosquitia which is very telling as to the extent of a cash economy in Honduras´ most undeveloped and poorest region.