Isn't the face of Chavez on the frontpage of their site?
The real story, however, is that the Venezuelan state put a huge amount of public money in the banks that collapsed. The money that was lost is not corporate money but state money. People have been warning about this possible outcome for the last 2 years, the Venezuelan SEC has been trying to stop these oligarchs from expanding their activities because it was obvious that they lacked the real funds, but they have been protected by top government officials... until their system broke down a month ago.
Why were these oligarchs (who btw happen to be associates, friends and there's even the brother of one top minister) protected? Chavista parties are insisting to get a different explanation than the simplistic and cynical "restructuring".
Where's the money?
Which complicities inside the government allowed these chavista businessmen to operate illegaly for years?
...
Mushroomed para-state banks
We want mergers
The collapse of Bolívar, Banpro, Confederado, Canarias, BaNorte, Real, Central and Baninvest has unveiled the crisis of a para-state financial system, oxygenated with public funds and meekly regulated.
It is a bank mishap with few affected account holders, where most deposits come from state agencies.
At October, according to official numbers, a third of the deposits in savings, checking and fixed-term accounts came from the public sector. Taking into account other means to capture Bolivars, such as overnight and money markets, cases like Canarias, where 41.5 percent of the money was provided by the Venezuelan State, come to the fore.
Most of the funds administered through trust funds are not free from such peculiarity. By the end of June 2009, 52.69 percent of the funds administered by Canarias under this scheme came from public agencies. In the case of Banpro, it was 53.22 percent; Central, 84.44 percent, Confederado 78.22 percent and in Bolívar, the astronomic sum of 94.94 percent.
Another characteristic feature points to feeble solvency indicators, as shown in December 2008, where in four cases there was noncompliance of a regulation under which the money of bank owners should account for at least 8 percent of the assets.
On that date, Bolívar capitalization index amounted only to 7.30 percent, 5.74 percent at Confederado, 5.5 percent at Central, and 5.15 percent at BaNorte.
Heavy notes
Pursuant to the regulations, Venezuelan banks should have foreign currency or bonds and notes in foreign currency for no more than 30 percent of the equity. However, seized banks, together with other banks in the system, devised a method that was ignored by the authorities for quite a while.
The engineering entailed buying bonds or notes in foreign currency, made by the Ministry of Finance with Ecuadorian and Argentinean securities, which were deposited in foreign banks, including, among others, Lehman Brothers and Merill Lynch.
In turn, these institutions issued notes in Bolivars, backed up by the US dollars and notes received in deposits, and delivered them to Venezuelan banks.
In this way, the balances showed notes in bolivars instead of foreign currency.
On May 19th, 2008, the Ministry of Finance resolved to dismantle the thick structured notes and forced a number of banks to sell the bonds. Among them, Central, Banpro, Bolívar, Canarias and Confederado applied for a longer term by alleging that otherwise they could face heavy losses.
Financial analysts note that the authorities let the business of structured notes thrive for more than one year among the banks, particularly para-state banks.
Funds and boards
Despite submitting documents, meeting requirements and hiring attorneys, Ricardo Fernández Barrueco failed to make the Banks Superintendence approve the source of the funds for the purchase of Bolívar and Banpro. However, he succeeded in changing the boards of directors and put instead his trusted staff.
The application for purchase of the two banks was filed on December 30th, 2008. Without the prior approval of the operation in July 2009, the board of directors of Bolívar changed when José López Pernalette, nowadays banned from leaving the country, replaced Gustavo Morales as president of the bank.
In Banpro, José López Pernalette also took over and replaced Guido González as president.
Oddly enough, the Banks Superintendence granted these changes in the board of directors which allowed in the practice a new management close to Ricardo Fernández.
In addition, the Banks Superintendence should certify that the members of the board of a bank meet the requirements of "expertise, honesty and good standing" as set forth in the Banks Law.
In accordance with the standards of the organization, established in resolutions in 2005, the prior consent of the Banks Superintendence is needed to change a board.
The changes in the boards of directors provided for the granting of million bolivars in credits to Fernández Barrueco's companies.
The episode of BaNorte
One year and seven months earlier, according to sources close to the operation, José Zambrano bought Carlos Gil all his interest in BaNorte.
Gil was allowed to sell and the shares transfer was made through the Caracas Stock Exchange for USD 16 million at the parallel exchange rate in force at that time.
While he headed BaNorte for more than one and a half years, financial sources claimed that, surprisingly, Zambrano never received an approval for the source of the funds.
The Banks Superintendence noted among the reasons for the seizure of BaNorte that "it had been subject to administrative measures by the supervising authority and its application for transfer of shares had been challenged."
Zuma Seguros is also included in Zambrano's trust.
Link
http://english.eluniversal.com/2009/12/18/en_ing_esp_mushroomed-para-stat_18A3207371.shtml
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