The Government said that it had agreed to finally buy Banco de Venezuela, an affiliate of Banco Santander and it would close the transaction on May 22nd. This is not the first time the Government claims to have closed the deal, but what is perhaps most ironic is that at the same time it was announced the Government would intervene Banco Industrial de Venezuela, the state’s largest bank, after it found “irregularities” and losses of the order of US$ 90 million.
Banco Industrial de Venezuela has been capitalized twice during Chavez’ ten years in office and one of the reason to buy Banco de Venezuela is the stupid belief that if purchased, will magically run itself well in the hands of the Government. Banco Industrial de Venezuela managed these huge losses at a time when private commercial banks are making 20-30% returns on equity despite the extreme regulation by the Government.
Thus, another one billion dollar Chavez whim is completed and you can be assured that in a couple of years Banco de Venezuela will be run with the same lack of criteria as Banco Industrial.
Another billion down the drain…