Venezuela Takes Operational Control Of Four Small Banks
NOVEMBER 20, 2009, 11:40 A.M. ET
CARACAS (Dow Jones)--The Venezuelan government took operational control of four small banks, citing a number of irregularities ranging from missing government-imposed lending quotas to failing to explain a capital expansion by the banks.
"It's an open-door intervention," Finance Minister Ali Rodriguez said Friday. "The banks will continue to operate as usual," he said. The measure is directed at Banco Confederado SA (BCF.CA), Banco Canarias de Venezuela CA (BCA.CA), Banco Provivienda and Bolivar Banco.
The intervention doesn't threaten the financial sector since the banks account for only about 6% of deposits in the country and are likely to continue operating normally.
A group of investors headed by local businessman Ricardo Fernandez controls the four banks. Fernandez also owns a number of food companies that supply a chain of government-subsidized grocery stores known as Mercal, which have been one of President Hugo Chavez's flagship projects.
Lorena Labarca, a spokeswoman for the banking group headed by Fernandez, said he was not available to comment.
Rodriguez said the banks didn't properly explain increases in capital, missed government-imposed quotas on lending for specific economic sectors and didn't comply with some banking indicators.
The intervention seems to have been triggered by a merger in process between some of the banks without the government's approval. Banking Superintendent Edgar Hernandez said Banco Provivienda recently purchased Banco Canarias through a stock exchange operation that was not allowed by the government.
Rodriguez and Hernandez, who gave a joint conference on Friday, tried to reassure the banks' clients, saying that their savings were safe and that the banks and all their branches would continue to operate normally.
Earlier this year, the government sold the local Stanford banking unit after the ponzi scheme charges against owner R. Allen Stanford threatened to spark a run on the bank. The government then sold the outfit to a local banking firm for $111.6 million.
-By Darcy Crowe, Dow Jones Newswires; (58) 414 249 6821; darcy.crowe@dowjones.com
