Government closes Banco de Venezuela deal, another billion US dollars down the drain

May 23, 2009

The Venezuelan Government announced yesterday that it had agreed to buy Banco de Venezuela for US$ 1.05 billion, a waste of money as the Government is likely to slowly destroy the capabilities of the institution as revolutionary managers are put in place. The amount is in fcat much higher as the Government will also give Banco Santander US$ 122 million in dividends at the official rate of exchange of Bs. 2.15 per US$.

Banco Santander makes out like a bandit in the deal, the Venezuelan baking system is not worth ten billions dollars as the transaction suggests. Additionally, Santander paid for the bank in its privatization some three hundred million dollars and in the Chavez years, it was making 50%-plus returns on equity.

Thus, despite what The Economist says that Venezuela is ranked 81 out of 82 for the enviroment for businesses, some businesses do better than others and Santander and its shareholders certainly did well getting out early. Well, hopefully getting out, as Santander will receive US$ 630 millions in July and the rest in two IOU’s for 210 million payables in October and December.

But perhaps Santander’s best deal is that it is getting money out, something that will get more and more difficult if oil prices do not rbeound. Were Chavez to nationalize the whole financial system, for example, you can be sure nobody would get paid. Of course, Santader leaves now in the hands of the revolutionary Government all of the databases of the bank, which will certainy make some people very nervous. I would be too, fortunately, I have not had an account there for years.

4 Responses to “Government closes Banco de Venezuela deal, another billion US dollars down the drain”

  1. revbob22 Says:

    Hey, Santander paid like 300 million for the bank, and sold shares to private investors. Even if they miss out on the 420 million, they’re still in the green.

  2. Theo Says:

    It’s a good deal for Banco Santander. They didn’t have to do a write off or goodwill write down on the banks financial statement. Which is good for the bank.
    And thats good for Spanish government, the economic times being as they are.

    Not that I’m inferring any nefarious connections between the socialist government of Spain and the Venezuelan, corruptions wise. No. ¡No sir!

  3. John Doe Says:

    The Chaburros Government did manage to deliver a great deal to Grupo Santander; Mr Botin might be very happy by taking some green cash back to Spain and leaving behind some rotten shell agencies with a worth equivalent to its old smelly and battered furniture….
    “done deal Mr. Cahvez, thank you very much!!!!!!”


  4. [...] VENEZUELA Venezuela again in the news, as Chávez closes Globovisión, and takes over more sectors of the economy. Government closes Banco de Venezuela deal, another billion US dollars down the drain [...]


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