Venezuela Merges Nationalised Banks to Form New Bicentenary Bank

Caracas, December 22, 2009 (venezuelanalysis.com) – Venezuela merged three recently nationalised banks with a larger public sector bank to form the new Banco Bicentenario, or Bicentenary Bank. The new bank began operations on Monday with a network of 390 offices throughout the country.

Bolívar, Central and Confederado Banks were among eight banks taken over by the government in late November as a result of a mini banking crisis that prompted the arrest of a number of prominent bankers for violation of banking regulations.

As a result of the merger of the three banks with the already state-owned bank, Banfoandes, it is estimated that the Bicentenary Bank now holds nearly 20% of all deposits in Venezuela.

The measure reportedly boosts overall public sector control of the banking system to between 20-25%.

According to former Finance Minister and member of the United Socialist Party of Venezuela (PSUV) Rodrigo Cabezas, the Bicentenary Bank now ranks as the country’s fourth largest bank in terms of assets and fifth in terms of deposits.

Five other small banks which authorities recently took over, remain closed: Canarias, Real, ProVivienda (BanPro), Baninvest Banca de Inversion and BaNorte.

The government has also nationalised a private insurance company linked with three of the closed banks, Seguros La Previsora, and will use it to launch a state-owned insurance company.

The creation of the Bicentenary bank aims to strengthen the Venezuelan banking system and promote inclusion of Venezuelans who were traditionally excluded from accessing private bank services.

The new bank would grant “housing credits to a group of people who applied for a loan and were denied the credit; they [the private banks] only give credit to rich people…That is capitalism: not giving rights to the poor,” Venezuelan President Hugo Chávez said during his weekly television program on Sunday.

The government said that highly qualified and experienced personnel will serve regular and potential clients of the new bank and present them the list of products and services.

The government intervention into the group of private banks in order to guarantee of the savings of hundreds of thousands of Venezuelans has boosted Chavez’s popularity rating, currently at 60%, by at least 5 percentage points according to various experts.

The latest poll by the Venezuelan Institute of Data Analysis (IVAD) shows that 61% of Venezuelans approve of the governments interventions in the banking sector, while 39% disapprove.