Venezuela's leftist President Hugo Chavez issued a fresh warning against private banks Wednesday, threatening to place them all under government control two days after closing four institutions, according to the Wall Street Journal.
Upping the ante significantly, Chavez said he would not hesitate to intervene in the country's whole banking system. "You can be sure that if I need to intervene in all the banking system, I will do it," the self-declared socialist revolutionary said in a televised address Wednesday.
Chavez said his administration had a 24-hour situation room monitoring the banking system for any problems triggered by the two liquidations.
The president evidently sought to tame fears of a potential banking crisis in Venezuela after his government intervened in four banks and decided to liquidate two of them Monday. Their owner, Ricardo Fernandez Barrueco, is in jail on charges of illegally using depositors' money.
But the statement highlights worries that the failure of the four banks owned by Fernandez Barrueco could signal the beginning of a wider banking crisis. His banks accounted for about 6% of deposits in the financial system and the government is making efforts to show that most of the banks' clients will get their money back.
Chavez is also trying to use the four banks' failure to bolster the appeal of state-owned banks. "Private banking degenerated into mechanisms for speculation," Chavez said. "Here we will have hegemony of public banks," he said. A roster of state-run banks holds about 20% of deposits in the banking system.
The president dismissed the possibility of a banking crisis in Venezuela, calling it a bid by his foes to generate public alarm. "The oligarchy is trying to trigger a bank run to depose Chavez," he said, speaking of himself in the third person, as he at times does. A run on banks, he warned, "will result in the end of the private banking system, not Chavez."
Jose Grasso, an analyst with Caracas-based financial research firm Softline Consultores, said the government is probably keeping a close watch on some of the smaller banks. "The larger banks in general are in good shape, but there's little transparency on the conditions of the smaller ones," he said. A massive bank intervention by the government "would be a disaster and everybody will panic," Grasso said.
Chavez said his administration was running a 24-hour situation room tracking the banking system and that he spent 10 hours on Tuesday analyzing the banks.
Venezuela suffered a massive banking crisis in 1994, something that's still fresh in the memory of many Venezuelans. The wave of popular discontent triggered by the bank failures helped Chavez reach the presidency five years later.
Alberto Ramos, an economist with Goldman Sachs, wrote in a report Wednesday that, "although the intervened banks do not pose systemic risk, if the policy response is not adequate, increasingly nervous depositors may trigger a bank run and jolt the system."
Venezuelan bonds plunged on Wednesday. The country's benchmark 2034 sovereign bond fell 7 3/4 to 60 bid, according to Reuters. Its risk premium on JPMorgan's Emerging Markets Bond Index Global was 43 basis points wider at 1194, with the index down 5.36% on the day.
Behind the worries of a banking crisis is Fernandez Barrueco, a powerful businessman believed to be a close associate of high-ranking government officials.
The government announced Monday it will sell off Banco Canarias de Venezuela CA (BCA.CA) and Banco Provivienda, or Banpro, after an regulators found them to be insolvent. Bolivar Banco and Banco Confederado SA (BCF.CA), the two other banks, are in better shape, but state administrators will temporarily shut their doors during the intervention.
Chavez dismissed charges that some of his close collaborators acted as patrons for Fernandez Barrueco. The banker deserved to be behind bars, Chavez said, adding that his government could seize Fernandez Barrueco's food companies, which were the main source of his fortune and are some of the top suppliers to a government-subsidized chain of grocery stores.
아주경제= 인터넷뉴스팀 news@ajnews.co.kr
(아주경제=ajnews.co.kr) 무단전재 배포금지
Copyright ⓒ Aju Press All rights reserved.