Revolutionary Banking

March 28, 2005

The revolution created two new and revolutionary banks to help the
“people”: The People’s bank and the Women’s bank. However,
in a country where the private banking system has had obscene profits
for the last few years, the banks created by Chavez leave a lot to be desired as banking institutions and will have to be capitalized (again!) soon.

The people’s bank lost Bs. 3.7 billion in 2004 on revenues of 5.6
billion and expenses of 9.3 billion. During that year 40% of
loans outstanding were behind, compared with only 2% in the private
banking system.

The Women’s bank lost 1.47 billion Bs. with a morosity of 52%.

Of course, both institutions have spent lots of money in systems and
travel. Both banks are already on their second information system in
three years and the travel has been made in order to learn of similar
experiences in other countries. Either those experiences were not too
succesful, or the people sent on these trips failed to learn very much
during their travels.

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