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By FABIOLA SANCHEZ
Associated Press Writer
Venezuela government intervenes in 4 banks81 days ago
(AP:CARACAS, Venezuela) Venezuela's government took over management of four private banks on Friday, citing noncompliance with banking regulations.
Finance Minister Ali Rodriguez announced the government intervened in the small banks Canarias, Confederado, Bolivar and ProVivienda (BanPro) after determining they were not complying with various regulations.
The four banks, which account for 5.7 percent of the Venezuelan banking sector, were purchased in September and October by a group of investors headed by businessman Ricardo Fernandez, who is involved in the food industry and sells products to a network of state-run subsidized markets known as Mercal.
There was no immediate reaction from Fernandez or other investors.
A series of problems were detected, including increases in capital without specifying the origin of the funds, Rodriguez said. He said when banks are sold, the government has an obligation to confirm the sources of the funds.
"The authorities made recommendations, measures, demands that systematically were not complied with," Rodriguez said at a news conference. He said that bringing the banks under state control will allow the government to "correct the problems that have appeared."
Rodriguez said the banks will remain open as usual while the government measures are in place. It's unclear how long that may be.
The four banks had been facing regulatory sanctions since late last year due to their noncompliance with rules against giving loans to companies under the same ownership, and with a prohibition on distributing dividends to shareholders, banking superintendent Edgar Hernandez told state media.
The rest of the Venezuelan financial system is operating as usual, said banker Victor Gill, head of the National Banking Council. He said the banking sector supports the government measures, saying they are aimed at protecting depositors.
In a similar action earlier this year, Venezuelan authorities in February seized temporary control of Stanford Bank SA _ which was previously controlled by Texas financier R. Allen Stanford _ after panicked clients withdrew an estimated $93 million, about 37 percent of the bank's deposits. That bank was auctioned off in May for the equivalent of $112 million to the only bidder, Venezuela's Banco Nacional de Credito.
President Hugo Chavez's government also has sought a bigger state role in the banking sector, and in May agreed to buy the formerly private-run Banco de Venezuela from Spain's Grupo Santander for about $1 billion.
With that acquisition, Chavez's government now has five commercial banks, which together account for about 21 percent of deposits and 16 percent of loans. Other banks remain in private hands.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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