• by IPS Correspondents (caracas)
• Wednesday, December 14, 1994
• Inter Press Service

CARACAS, Dic 14 (IPS) - The Venezuelan Financial Emergency Board took over the mid-sized Progress and Republic banks on Wednesday, as part of the "third wave" of the worst financial crisis in the county's history.

With the take-over of these two institutions - controlled by Orlando Castro - the total number of banks to come under state control this year comes to 14, or 52 percent of banking activity, with 33 banks still in private hands.

The Financial Emergency Board intervened throughout Castro's financial group - which includes the two banks and two insurance companies - to "guarantee the continued financial, banking and security services," of the group and to protect its clients.

Chair of the Deposit Guarantee Fund, Norys Aguirre, said "the operations of these institutions are guaranteed along with the positions of their personnel."

The Progress Bank was the 13th largest private bank in Venezuela, with 229 million dollars in public deposits - 164 million of which is in savings accounts - 89 million dollars in loans and 112 million dollars invested in securities.

The Republic Bank was 14th in size, with 221 million dollars of deposits, (134 million in savings), 67 million in loans and securities of 34 million.

In both institutions, 96 percent of the accounts are for less than 23,500 dollars, meaning that by law the state has to guarantee the entire sum.

The Progress Group used received 297 million dollars of state aid to stave off bankruptsy in June, but finally could not raise enough capital to meet its commitments.

"We would have preferred the bank to stay in private hands, but despite all efforts, it had to be taken over," said Aguirre.

Jose Grasso of the Softline consultancy firm explained that even though the two banks were 13th and 14th, together their operations came sixth in the national ranking.

In January, the state took over the Latino bank, the second largest, setting off the financial crisis. The bank was temporarily reopened in April to pay out 1.8 billion dollars to depositors.

In June, eight small and medium sized banks were taken over after months of financial support costing an additional 2.8 billion dollars.

And in August and September, insolvency took the Consolidated and Venezuelan banks, with the state paying a token price and injecting capital to keep them open, an experience repeated in November with the smaller Andean bank.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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