Venezuelan Government Takes Over Three Banks, Sanctions Ten More

Venezuela’s Superintendency of Banks and Other Financial Institutions (SUDEBAN) announced that it has taken over three small private banks due to “serious” administrative problems on Monday.

Caracas, January 19, 2009 ( – Venezuela’s Superintendency of Banks and Other Financial Institutions (SUDEBAN) announced that it has taken over three small private banks, InverUnion, Banco Del Sol and Mi Casa due to “serious” administrative problems on Monday.

“The three entities have been subject to administrative action by the Supervisory Authority and their intervention has become necessary and urgent as their required recovery plans are not considered to be viable,” a SUDEBAN statement said.

The statement cited “serious administrative and managerial problems” in all three banks, “which has left them in a situation of illiquidity that does not allow them to cover their obligations in the short term.”

The auditors will decide whether rehabilitation is possible. If not, the banks will be liquidated, in which case the Deposit Guarantee and Banking Protection Fund (FOGADE) will guarantee customers savings.

“The government and financial authorities of the country will continue their efforts to ensure the health and stability of the domestic financial system and the protection of the rights and savings of all citizens,” the SUDEBAN statement continued.

The latest interventions follow government takeovers of eight small private banks after a fraud scandal in the country’s banking sector in November and December last year. Of the banks taken over, Canarias Bank, BanPro, Baninvest and Banco Realwere liquidated, while Confederado, Banco Bolivar, Banorte, and Central Banco Universal, were nationalised and merged with the state-owned bank Banfoandes, to form a new public investment bank called, Banco Bicentenario.

Ten bankers and public functionaries were arrested as a result of the scandal, including Ricardo Fernández Barrueco (former owner of Canarias Bank), Arné Chacón Escamillo, (the owner of Banco Real and brother of former Science and Technology Minister Jesse Chacon), and Antonio Márquez, (the former president of the National Securities Commission).

Judicial orders were also issued prohibiting a further 28 banking executives from leaving the country pending the outcome of the investigations. However, it is believed that 23 of the bankers have fled the country, including Alejandro Uzcátegui, a member of the board of directors of Banco Real and also president of Entrepreneurs for Venezuela (Empreven), – a nominally pro-government business federation.

The bankers are thought to be located in the United States, Spain, and Curacao.

In an unrelated case, the Criminal Chamber of the Supreme Court announced on January 18 an that it is initiating extradition proceedings for the former international operations manager of Canarias Bank, Ramon Javier Claparol Amposta who is in Spain and is wanted on charges of aggravated and continuous fraud and forging of bank documents.

SUDEBAN also sanctioned a further 10 banks on Tuesday with fines totalling more than 23 million bolivars, or US$5.34 million (at the 4.3 bolivar exchange rate), for failing to comply, during 2009, with financing regulations in the agricultural sector established by the Law of Credit for the Agricultural Sector.

The banks sanctioned include private banks; Banco Sofitasa Banco Universal, Banco Guayana, Bancos Carona, Banplus, Banco Federal, Banvalor Banco Comercial, Interunión Banco Comercial, Totalbank, Banco del Sur Banco Universal and the state-owned Banco de Venezuela.