(Antigua Sun) – A small, local bank in Venezuela previously owned by global businessmen, Sir R. Allen Stanford, failed to sell in an auction last Friday.
The bank was seized last month to stop an online run on deposits after Sir Allen was accused by the US Securities and Exchange Commission (SEC) of engaging in fraud.
Only one offer was presented at last week’s auction, by local finance firm Italcambio for $56 million, which was below the established minimum price.
It is unclear if the Venezuelan government will attempt to auction the bank again.
Venezuelan President, Hugo Chavez, stated last month that all efforts would be made to sell the Stanford Bank of Venezuela as quickly as possible.
The bank is one of the country’s smallest and represents just 0.2 per cent of the nation’s banking system with assets totalling $288 million.
Venezuelans are very much invested with Sir Allen, however the investments fall more into the offshore category.
On a whole, wealthy and middle-class individuals in Venezuela invested a lot more money in Stanford International than in the local unit. The government estimates that up to $2.5 billion may have been entrusted to Sir Allen’s offshore banking system.
After a banking crisis that cost the country $11 billion in the mid-90s, many Venezuelans were wary to invest their money in the country and chose instead to keep their savings in offshore banks.
Chavez has indicated in the past that he will nationalise any bank that fails, an idea that does not sit well with many investors, who may not think it wise to entrust the government with management of their savings.
The SEC’s investigation into Sir Allen is ongoing but no charges have been formally laid against him.