The ability of Chavismo to waste money due to sheer incompetence and idiotic idealism is simply remarkable. Not content with wasting money in nationalizing companies that now give losses, or wasting money in nationalizing banks in Venezuela, the latest failure of Chavista management reaches now Uruguay and unfortunately, those responsible for this silly investment remain today in positions of power in the Government’s financial system.
The story begins in 2006 when Uruguayan coop bank Cofac went under and Venezuela’s development bank Bandes decided to take over the institution which had about 35 branches and some 120,000 depositors. You may wonder what Venezuela is doing helping a country with a higher GDP per capita than Venezuela and little poverty, but that is one of the mysteries of Chavismo, the ability to waste money abroad when people suffer at home, but I digress.
So, some genius at Bandes (more on whom later) decided to save this coop bank in Uruguay, rather than use the money here. It was a time of higher (relative) oil prices and Chavismo spreading around Latin America and the world. Bandes financed the institution, taking over all of its workers and assuming all deposits. Bandes Venezuela created Bandes Uruguay to help small industries in that country in a bank with “solidarity” at the core of its basic concept.
Except that four years later Chavista management, the same one that lost Banco Industrial’s capital three times in eleven years managed (surprise, surprise!) to lose in 2009 alone US$ 22.5 million while the banks’ capital is US$ 30 million. The bank also lost money in 2007 and 2008, what did you expect?
By now, Uruguayan authorities are talking, once again, about Venezuela capitalizing the bank (The alternative is bankruptcy). Of course, it does not look like the bank will do well in the future anyway.
And who, you may wonder, was the man (military, of course!) at Bandes that decided on this strategy of helping Uruguay with this investment? None other that Captain Hernandez Behrens, then President of Bandes and who has been Superintendent of Banks for almost two years presiding over the demise of eleven banks. Moreover, reportedly Chavez decided to eat his financial bolibourgeois class to save Hernandez Behren’ behind.
Maybe it wasn’t worth it…