After brokerages, are Venezuela’s banks the next target?

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Jacob Richter
After brokerages, are Venezuela’s banks the next target?

[url= brokerages, are Venezuela's banks the next target?[/url]


By Benedict Mander

The scary level of violent crime in Venezuela is in the spotlight, thanks to the government's complete failure to control the problem. [B]If only it were equally incompetent at fighting financial crime, a number of bankers must be thinking at the moment.[/B]

There is the president and six more executives of Banco del Sol, who have just been included on Interpol's "wanted" list. Among others, there are the four directors of Econoinvest, who have been wasting away in a prison cell since the government seized Venezuela's biggest broker three months ago. (Unfortunately for them, it's perfectly possible that they will stay there without being brought to trial for some time to come, if past experience is anything to go by. Certainly no judge will want to release them, even if she deems them innocent, after the notorious Afiuni affair.)

Some 43 brokerages have now been seized by the government and a bevy of brokers detained over suspected "irregularities" in trading on the unofficial "parallel" foreign exchange market, which was shut down in May. Ten of those 43 have been liquidated altogether, apparently because of solvency problems - although, curiously enough, that includes Econoinvest, whose liquidation was announced a few days ago even though its annual accounts published just before it was taken over showed it to be a perfectly profitable and well functioning business.

[B]Gone are the halcyon days when people could make vast sums of money practically overnight in Venezuela's financial sector, virtually unchecked.[/B] In fact, the game is up for brokerages altogether after a new capital markets law came into being last week, formalising their exclusion from trading in currency or dollar-denominated debt. (The fact that they are still allowed to trade local equities and securities isn't much comfort, given that Caracas's stock market has become a rather ghostly place since Hugo Chávez started nationalising all the big listed companies a few years ago - it traded an average of less than $500,000 a day last year and there is almost no investment banking or IPO business).

With brokers gone, [B]"Venezuelans will now be able to save, but no longer in rotten bourgeois brokerages so that they can take their money to the United States or to fiscal paradises," Chávez said.[/B] Well, it's certainly true that it has become a whole lot more difficult for Venezuelans to get their money out of the country and save it in a currency that preserves it value. But saving in bolívars has hardly become any more enticing, with galloping inflation continuing to gnaw away at bank accounts, where real interest rates are negative.

Indeed, now that he has dealt with the brokerages, [B]there is some concern that Venezuela's socialist president might now start thinking about increasing state control over those other servants of capitalism: the banks[/B]. Whether or not that will help to cure the ills of Venezuela's economy is a different issue.


The American Empire is slowly sinking as all evil empires eventually do. Resistance is futile.


With a 25 percent inflation rate, where are the people going to put thier money?

N.Beltov N.Beltov's picture

That's an interesting moniker. Is it true that it means "Phuck You" in Tagalog?