VENEZUELA: Government says takes control of four struggling banks

Record ID: 560864

  • Title: VENEZUELA: Government says takes control of four struggling banks
  • Date: 21st November 2009
  • Summary: CARACAS, VENEZUELA (NOVEMBER 20, 2009) (REUTERS) VARIOUS OF BANCO CONFEREDADO, ONE OF THOSE TAKEN OVER GOVERNMENT (3 SHOTS)
  • Embargoed: 6th December 2009 12:00
  • Keywords:
  • Topics: Finance,Domestic Politics
  • Reuters ID: LVACH775X2F6M6UBG2J2046S8W00
  • Story Text: Venezuela has taken control of four small banks for a variety of operational problems including unexplained increases in capital, Finance Minister Ali Rodriguez said on Friday (November 20).
    The move is not seen as causing wider problems for the financial system, analysts said.
    Rodriguez named the four banks at a news conference Friday, saying there were concerns about their credit portfolios, problems explaining the source of funds and failure to comply with certain obligations.
    "There are four banks: Banco Canarias, an international bank, Banco Bolivar, a private bank, Banco Provivienda, a private bank, and Banco Confederado, a group-owned private bank. Shortly, the superintendent will explain what happened with these banks. But I can tell you beforehand that there were a series of cases where banks took on capital while failing to cite the source of that capital," the finance minister said.
    A local businessman had bought the four banks in recent years. Rodriguez assured clients of the banks that there would be no changes and that a plan will be quickly drawn up to correct their problems.
    "This intervention is an open-door intervention, which means the banks continue functioning normally. Clients will continue using the bank as they always have precisely because the authorities guarantee the health of Venezuela's banking system and in guaranteeing the health of the banking system they take measures to correct the problems that have been presented by these banks," he added.
    Banking superintendent Edgar Hernandez said authorities had been monitoring the four banks since the end of 2008. They had been subject to administrative measures for failing to comply with certain indicators. He said the purchase of the banks had also broken rules.
    Nervous clients like Yasmina Pineda flocked to a Banco Canarias branch in Caracas.
    "When I heard the news I was a little worried, but I came today and took out money and there was no problem. Everything seems normal. I think we have to give them a vote of confidence. If we all start to take our money out we are going to hurt the bank. We have to have a little confidence in the bank," Pineda said.
    Venezuelan Juan Rosa said the government intervention stopped him from opening an account.
    "I was going to open an account but I had to stop because they took control of it. I think there are two or three other banks as well," he said.
    Venezuela's banking sector is dominated by 10 banks which control 70 percent of the total funds. One analyst said the affected banks are very small and the government intervention was not likely to cause further problems in the system.
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