Puerto Rico's first bank began operations in 1850. As of 2003, there were 14 commercial banks in Puerto Rico (most are local corporations, with the rest being US branches and foreign interests). The government owns and operates two banks, the Government Development Bank and the Economic Development Bank. Banco Popular de Puerto Rico continues to be the largest domestic bank in Puerto Rico, with $18 billion in assets and 200 branches (2003), followed by Banco Santander Puerto Rico, with $7.5 billion in assets in 2002 and 66 branches. Both are subsidiaries of bank holding companies, the former incorporated in Puerto Rico, the latter in Spain.
Since 1992, a new type of institution has flourished in Puerto Rico, promoted by the government: the international banking entity. International banking entities are completely tax-exempt but can only receive deposits from non-residents. As the end of 2002, there were 34 international banking entities in Puerto Rico with total combined assets of $50 billion. Citibank controls 40% of these assets.
The credit union industry is also thriving in Puerto Rico. There were 144 credit unions throughout the island in 2002.
US corporations no longer operate tax-free in Puerto Rico. Amendments made to the US Internal Revenue Code tax laws require the payment of federal taxes on a portion of their income.
In addition to the Government Development Bank, founded in 1948, the Economic Development Bank for Puerto Rico, created in 1985, fosters the development of local businesses engaged in agriculture, manufacturing, commerce, and other services, thus decreasing the need to import goods and services. The Economic Development Bank's loan portfolio was $128.7 million in 2003, and loan disbursements amounted to $82.7 million. The average of loan principal by sector in 2003 was: agriculture, 30%; services, 27%; business, 23%; manufacturing, 14%; and tourism, 6%. The Government Development Bank's liquidity increased 69.4% in fiscal year 2002, with $2.2 billion in reported capital. Banks in Puerto Rico are insured by the Federal Deposit Insurance Corporation (FDIC). Automatic teller machines are located all across the island.