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LATIN AMERICA |
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Venezuelan Private Bankers Help Calm Markets
And Depositors
CARACAS - A two-week banking crisis in
Venezuela seems to be settling down
following President Hugo Chavez announcement
that private banks will be respected but new
rules to make the system more transparent
and production-geared will begin to be
enforced.
Authorities last week closed seven small
private banks, representing 8% of total
deposits while prosecutors issued 30 arrest
warrants and 15 travel bans to bankers. The
situation forced the resignation of a
cabinet minister whose brother is pointed
out as one of the ring leaders of the
“speculative banking network”.
"Private banks will not be able to speculate
and their operations will be focused
primarily on financing productive activities
and not on financial speculation" said
Planning Minister Jorge Giordani, who heads
President Hugo Chavez' economic-policy team.
Giordani made his comments Monday during a
meeting of bankers and government officials
that included Chavez who has threatened
intervention even in the top banks, which so
far have proven solid and solvent.
"They were little banks governed by large
crooks" Chavez said who called on bankers to
abide the law. But he also appealed on large
financial institutions to help the state pay
the deposits of savers hit by the bank
closures.
Venezuelan banks' financial-market
activities are overwhelmingly concentrated
in the purchase of government bonds. Banks'
investment in government paper has jumped
50% in the last 12 months and stands at the
equivalent of 40 billion US dollars.
Banks are already forced to earmark nearly
half of their lending to industries such as
manufacturing, agriculture and tourism
following government guidelines. But it is
more profitable for them to invest in
government bonds than to give out loans.
The scandal was the first serious rift
between Chavez and a group of businessmen
who have grown wealthy from deals with, or
allowed by, his government. They are known
as the "Boli-burguesía" a combination of the
name Simon Bolivar, the liberator hero
worshipped by Chavez and the alleged
revolutionaries turned into “bourgeoisie”.
The most spectacular arrest targeted the
brother of cabinet minister Jesse Chacon, a
close Chavez ally who later stepped down.
"There's no sacred cow," Chavez said,
calling on his supporters to "tighten the
moral belt" and to set an example of
transparency and honesty.
Cabinet ministers and government legislators
have publicly admitted that tackling
corruption and rampant crime have become key
challenges for the Chavez administration
during current hard times in Venezuela's
oil-dependent economy and ahead of
legislative elections next year.
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