Chavez Orders Transfer of $32 Million to Venezuela’s People’s Bank

Caracas, October 27, 2009 (venezuelanalysis.com) – Venezuelan President Hugo Chavez ordered the transfer of 69 million Bolivars (US$32.09 million) of the dividends obtained by the Bank of Venezuela during the first half of this year, to the Sovereign People’s Bank.

Chavez made the announcement at a special ceremony in the Teresa Careño Theatre in Caracas, celebrating ten years since the creation of the people’s bank.

The Sovereign Peoples Bank was one of the first financial institutions created by the Chavez government aimed at reducing poverty and boosting the economy through granting credits to small community and cooperative businesses.

“The Bank of Venezuela, in the first half of the year obtained 469 million Bolivars (US$218.1 million) in dividends and we managed to achieve, in the negotiations with the old owners, that the dividends remained here. We are going to pass these 69 million Bolivars to the People’s Bank as recognition of its efficiency, its efforts towards development, that it has made,” Chavez said.

Chavez ordered the nationalisation of the Bank of Venezuela, owned by the Spanish Santander Group, in July last year. Negotiations for the full transfer of the Bank to the Venezuelan state were finalised in May this year with the government paying out US$1.05 billion to acquire the bank.

Chavez argued that it was necessary to find ways for the banks that form part of the public finance system to compliment each other, so that the largest can help strengthen the smallest. The transfer of funds represented, “solidarity within the system,” he said.

With the injection of resources to the People’s Bank, the president contended that it would be transformed into a “first rate” financial entity with a greater capacity to grant credits to the people.

Throughout its ten years of existence the People’s Bank has delivered more than 46,000 credits totalling 339 million Bolivars (US$157.7 million) to organised communities, cooperatives, family businesses, and other grassroots organisations.

As of October 2009 it granted 4,201 loans totalling 40 million Bolivars, which has reportedly generated 23,000 direct and indirect jobs.

As part of the anniversary celebrations 536 credits were granted totalling 5.4 million Bolivars, distributed over all 24 states, to be invested in “socio-productive” projects submitted by municipal governments.

Chavez also called on the president of the Central Bank of Venezuela, Nelson Merentes, to sign an agreement to supply credit to the People’s Bank.

In order to do this the National Assembly is expanding and making changes to the law that grants these powers to BCV which are expected to be discussion in parliament next Thursday.

“This [the BCV] is a bank for socialism, it will have new values and the People’s Bank is the vanguard of socialist banking,” Chavez declared.

The People’s Bank, in alliance with the Women’s Bank, and the Agricultural Bank, “must revise the complete productive chain with a view towards the construction of socialism, to help us get rid of capitalism,” he added.