On Monday, authorities closed the banks owned by a wealthy businessman, Ricardo Fernandez Barruecos, who has close ties to the government, citing internal irregularities.
The four banks accounted for just 6 per cent of the South American nation’s deposits, and their administration was taken over by the government on November 20 for violations of solvency regulations and unexplained capital increases.
The closure of Banco Confederado, Banco Canarias, Banco Provivienda and bolivar Banco brought hundreds of worried depositors onto the streets, and sparked talk that more banks may also be closed or taken over by the state.
Reviving memories of a 1994 financial crisis that wiped out half of Venezuela’s banks, opposition TV stations have been running stories of stranded depositors, though the government says it is protecting those affected by this week’s closures.
“We have our radar switched on to another group of banks,” Chavez said in a speech, without giving more details.
“Rest assured that if I was forced to intervene in all the private Venezuelan banking (system), I will do that.”
The action on the four banks raised pressure on other firms already hit by recession, said Goldman Sachs analyst Alberto Ramos. “Depositors remain agitated …. There are also reports that a number of brokerage houses are experiencing some distress.”
The Venezuelan Prosecutor’s Office said on Wednesday that its agents raided the Interbursa brokerage on Tuesday and the U21 brokerage last Wednesday as part of the probe into the four banks which were taken over.
Chavez said if it turned out Venezuela’s wealthy elite was behind telephone calls and Internet messages aimed at sparking a bank run, then it would backfire against them, and the “private banking system would fall.”
Critics blame Chavez allies, whom they brand “Bolibourgeoisie” after Chavez’s idol and independence hero Simon Bolivar, for milking and mismanaging some banks.
Fernandez Barruecos, the four banks’ jailed owner, faces up to 10 years in prison if convicted for crimes related to the banks’ operations, the Prosecutor’s Office said last week.
“Fernandez Barruecos has fallen from grace after using his privileged position for self-enrichment by illegally using depositors’ money in financial institutions he had bought over the last year and lending it to his own businesses,” wrote Eurasia Group analyst Patrick Esteruelas.
“The government has likely intervened (in) these (four) financial institutions … as a result of an internal power struggle and clumsy settlement of accounts,” he added.
Chavez said the old guard wealthy elite were the real “mafia” who were fanning fears in the financial sector.
“I blame all the oligarchy for causing the problems of capitalism, corruption and a barrage of attacks that try to generate (bank) runs,” he said.
On Sunday, Chavez, a socialist, said he would not hesitate to nationalize any private banks failing to sufficiently help national development and lend to the poor.
