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UPDATE 2-Venezuela fails to sell Stanford bank unit
March 20, 2009 / 8:19 PM / 9 years ago

UPDATE 2-Venezuela fails to sell Stanford bank unit

 * Only one offer presented at auction for tiny bank
 * Gov’t mum on whether it will try another auction
 * Venezuelans very exposed to Stanford fraud  (Adds background on Stanford Bank Venezuela, other details)
 CARACAS, March 20 (Reuters) - Venezuela failed on Friday to sell in an auction a small local bank previously owned by Allen Stanford, after seizing it to stop an online run on deposits related to fraud charges against the Texan billionaire.
 “We declare this void” said Rodolfo Porro, a finance ministry legal consultant reading from a statement at the auction issued by the board established to take over the bank last month.
 Only one offer was presented at Friday’s auction, by local finance firm Italcambio for $56 million, also below the minimum price established.
 The board did not say if the government would try to auction the bank again.
 Venezuela seized the bank from Allen Stanford to stem massive online withdrawals as the impact of a U.S. fraud case against the Texan billionaire spread through Latin America in February.
 The government of socialist President Hugo Chavez had said it would quickly sell Stanford Bank Venezuela, one of the country’s smallest commercial banks, whose $288 million assets represent just 0.2 percent of the nation’s banking system.
 Allen Stanford is charged in the United States with “massive fraud” related to his offshore unit Stanford International Bank and his Houston-based broker-dealer and investment units.
 U.S. authorities accused him of selling $8 billion in certificates of deposit with impossibly high interest rates.
 Venezuelans invested much more money in Stanford International than in the local unit, with the government estimating that up to $2.5 billion may have been entrusted by wealthy and middle-class individuals.
 Many Venezuelans, still smarting from a 1994-95 banking crisis that cost the country $11 billion, chose to keep savings offshore.
 Chavez said he will nationalize any bank that fails -- an idea that unnerves investors who do not trust the government to manage their money.
 On Thursday, Chavez said he was proceeding with the stalled purchase of the local unit of Spain’s Grupo Santander (SAN.MC), one of Venezuela’s largest banks.  (Reporting by Fabian Cambero, editing by Matthew Lewis)   

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