- Title: VENEZUELA: Undaunted by the financial crisis nationalization drive marches on
- Date: 23rd May 2009
- Summary: NEWS CONFERENCE EXTERIOR OF BANCO DE VENEZUELA BUILDING VENEZUELAN PEOPLE WALKING ON THE STREET BANCO DE VENEZUELA VARIOUS OF VENEZUELANS TAKING OUT MONEY FROM ATM MACHINES
- Embargoed: 7th June 2009 13:00
- Topics: Economic News,Domestic Politics
- Reuters ID: LVA4GG98S7OJKEHSB2XCBFDXBT3J
- Story Text: Banco Santander said on Friday (May 22) it agreed to sell its stake in Banco de Venezuela to the country's government for $1.050 billion.
Venezuelan leader Hugo Chavez originally announced the takeover in 2008 at the height of the global oil boom, but the OPEC nation's finances have suffered since last year's tumble in crude prices.
The agreement to buy out the Banco de Venezuela, one of the largest in the Latin American country, will be paid off via installments so as to permit the Santander Group the repatriation of dividends in national currency.
The final agreement was signed at the office of Venezuelan Vice President, Ramon Carrizales.
Among those taking part in the signing included Banco de Venezuela President Michael Goguikian and Venezuelan Finance Minister Ali Rodriguez Araque.
Presiding over the signing, Carrizales described the agreement as amicable.
"Just a few minutes ago, the agreement for the purchase of the Banco de Venezuela was finalized, capping off months of negotiations. It's an agreement that is beneficial for both parties, in which a series of obligations is established for both parties," the Venezuelan Vice President said.
With Goguikian listening on, Carrizales explained Caracas's payout scheme.
"The final price is some US$ 1.050 billion dollars at the time of the signing, which will take effect on July 3, 2009. We will US$ 630 million on that day. And then the buyout will be paid off with an installment of US$ 210 million due by October 3, 2009, and with another round of US$ 210 million due by December 30, 2009," the vice president said, referring to the July 3 date, when the Venezuelan state will take over operations of the bank.
The agreement will allow Santander to repatriate dividends of US$ 182.4 million on May 27, and US$ 122.3 million on July 3, amid the strict exchange system in operation in Venezuela since 2003.
The president Banco de Venezuela concurred that the negotiation took place in a friendly atmosphere.
"We are here to recognize to all of you that the Santander Group is extremely satisfied with the agreement reached with the Bolivarian Republic of Venezuela and to also say that the agreement and the negotiations have been conducted with complete and total cordiality, through mutual dialogue and that at the end of the day I think we've reached an agreement that's both satisfactory as much for the republic as for the Santander Bank. Thank you all," Goguikian said.
Chavez, a self-described socialist leader, has nationalized large firms controlled by foreign investors since 2007, and has continued the push this year in spite of the drop in oil prices that has taken a toll on the country's reserves.
The former paramilitary has assured that the Banco de Venezuela will be converted into "social property" as part of the consolidation of the Venezuelan financial system, in spite of the operating problems at several of the public institutions.
Santander possesses around 98 per cent of the Banco de Venezuela, which was privatized in 1996 for US$ 351 million following a devastating national financial crisis that rocked the country in 1994 and 1995.
The buyout of the unit, with 285 offices and 3.2 million clients in the country, will allow Chavez to increase his influence in the banking sector, one of the most profitable in the country thanks to the peak in oil prices in recent years.
After winning a referendum in February that will allow him to stand for continuous reelection as president, Chavez has put in motion plans for the state to be the leading economic power in the country.
Just days earlier, Chavez oversaw the expropriation of more than 70 oil businesses, thousands of hectares of private property and food processing plants.
And on Thursday night, he ordered the nationalization of several brick processing plants, some associates with iron producing outfits, as well as one of the largest ceramic firms in the nation.
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