Venezuela takes over another bank for alleged financial problems, controls quarter of sector

Venezuela takes control of another private bank

CARACAS, Venezuela — Venezuela’s government said Monday it is taking over management of a private bank after discovering serious financial problems. The bank’s owner condemned the takeover as political retribution against him and the critical TV station he helped found.

Banco Federal, the country’s eighth largest bank, is owned by Nelson Mezerhane, an opponent of President Hugo Chavez who is also a minority shareholder of Globovision, the country’s last TV channel that takes a stridently anti-government line.

The government is temporarily shutting down Banco Federal, the country’s eighth-largest bank, due to its “serious financial situation,” said Humberto Ortega Diaz, the government’s state banking minister.

Customers lined up outside some branches Monday aiming to withdraw money before the shutdown took effect.

In the past seven months, the government has seized control of about a dozen small banks, in many cases saying it was necessary due to their financial problems. Those takeovers, combined with the nationalization of the country’s third-largest bank last year, have put about 30 percent of the banking sector under government control.

Banco Federal accounts for about 2.8 percent of the market.

Accounts in the bank were frozen to keep executives from moving funds to other businesses, Banking Superintendent Edgar Hernandez told a news conference. He said regulators took initial measures against the bank in October and it hasn’t overcome its weaknesses.

He said officials had demanded the bank increase its capital in Venezuelan currency by about $349 million. “What they proposed to provide didn’t reach 10 percent of the requirement,” he said.

Mezerhane, the bank’s president, told Globovision he was surprised by the announcement, and the accusations are “totally false.” He called the case an “outrage” and said it was politically motivated to punish Globovision.

As for the bank, Mezerhane predicted: “They’re going to destroy it.” He predicted the government would shut it down.

Venezuelan officials also issued an arrest warrant Friday for Globovision’s majority owner, Guillermo Zuloaga. Prosecutors want him jailed while he awaits trail on charges of usury and conspiracy for keeping 24 new vehicles stored at a home he owns.

Zuloaga, who also owns several car dealerships, has called those charges bogus and an attempt to intimidate him.

The action against Banco Federal came after Chavez warned Sunday that private banks would be wiped out if his government were to withdraw deposits. He said he isn’t planning to order any such withdrawal, but raised the possibility while discussing what he calls an “economic war” pitting the government against Venezuela’s economic elite.

Mezerhane said the response by banking regulators showed they were acting on the president’s orders. “Mission accomplished the next day,” the businessman said.

The government already withdrew large sums from accounts in Banco Federal last year in order to undermine the bank, Mezerhane said.

“There’s a premeditated, managed plan to asphyxiate those business people who are and have been co-founders of Globovision,” he said.

Mezerhane also acknowledged the government has been pressuring him for some time and “they asked me for… the head of (Alberto) Ravell,” the channel’s former director. Ravell said in February that he was forced to resign due to differences with the channel’s owners, and also that Mezerhane has been pressured by the government.