Finance Ministry Takes Custody of Industrial Bank, Nearly Finalizes Nationalization of Bank of Venezuela

by James Suggett, May 15th 2009-

Mérida, May 14th 2009 ( -- On Thursday, the Venezuelan Finance Ministry announced it would take custody of the state-owned Industrial Bank of Venezuela (BIV). The Ministry also met with officials from the Spanish Santander banking group to finalize a compensation agreement for the Bank of Venezuela, which was nationalized last year.

The Superintendent of Banks and Other Financial Institutions (SUDEBAN) filed the official resolution to intervene in the BIV early on Thursday. A commission headed by Finance Ministry officials will be in charge of the monitoring, and report back to SUDEBAN every sixty days.

Finance Minister Ali Rodriguez assured that the bank will continue operating "normally" and that all deposits are guaranteed. "The BIV can count on the complete backing of the Venezuelan state and not only are deposits guaranteed, the bank will be an effective tool for the objectives planned by the Venezuelan state," said Rodriguez on Thursday.

The BIV is 76% state-owned and holds the majority of the Venezuelan state's domestic deposits.

According to the newspaper El Universal, the BIV's profits shrunk by 26.6 million bolivars ($12.4 million) in March, and by 52 million bolivars ($24.2 million) in the first quarter of this year, after declining by more than 100 million bolivars ($46.5 million) last year, amidst the onset of the world economic crisis.

Nationalization of the Bank of Venezuela

President Hugo Chávez announced on Thursday that a final compensation agreement should be reached with the Santander group within ten days for the nationalization of the Bank of Venezuela, which occurred last July 31st.

"Ali [Rodriguez] is closing the deal with the owners of the Bank of Venezuela, in order to convert this financial institution into social property at the service of all Venezuelans," said Chávez.

The Santander group has owned 96% of the Bank of Venezuela since 1996. It had been attempting to sell the bank to a private Venezuelan banker at the time of the nationalization. In the second semester of 2007, the bank held 11.3% of total deposits in Venezuela, ranking it among the largest banks in the country, according to its 2007 financial report.