Venezuelan Government Continues Restructure of Banking Sector

[Joanne98]

Mérida, December 18th 2009 (Venezuelanalysis.com) – The Venezuelan government announced on Wednesday that it will take control of a private insurance company that had contracted with the government to serve public sector employees. The move came amidst a month-old state intervention into the private banking and finance sector to combat fraud. Also, the National Assembly passed a banking law reform to increase depositor insurance and tighten banking regulations.

After determining that the insurance company Seguros La Previsora was two months behind on its payments for contracts with public institutions, the state decided to take over the administration of the company, President Hugo Chavez announced from Copenhagen, Denmark, where he is currently participating in the United Nations climate change conference.

Over the past month, the government opened national investigations of eight private banks, one state-owned bank (Banfoandes), and several stock brokerage firms for alleged fraud. Two of the banks were liquidated, two were rehabilitated and incorporated into Banfoandes, and four were fused into a new, state-owned bank called Banco Bicentenario. Several investigations are still pending.

National authorities have arrested ten bankers and issued arrest warrants for dozens of others in the crack down on fraud, including, most recently, the head of the national securities commission. They have also seized dozens of small companies, tens of thousands of hectares of land, and other such assets owned by the bankers who are under investigation, four of whom are suspected to have fled the country to avoid going to trial.

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http://www.venezuelanalysis.com/news/5015