Archive for December 11th, 2009

Chavez Mafia Wars Chapter 3: BaNorte intervened

December 11, 2009

When Ricardo Fernandez Barrueco fell from grace three weeks ago, we were wondering what the reason was and whether this was a fight between groups or simply Chavez cleaning up the new wave bolibourgeois bankers. And on the third week of the Bolivarian Mafia Wars, Chavez shut down today BaNorte, the third bolibourgeois Chavista banking group. And while “liquidity” was cited as the reason for the intervention with closed doors, the truth is that BaNorte’s situation is not too different from the other two groups: Uncertain source of funds, sudden growth, large official deposits, new wave bankers who claim to be pro-Chavez.

Thus, only one banking group left and one has to wonder whether it will be taken over or not.

The problem is that there are after shocks to come from this financial earthquake, as the Government continues to say very litte about what is happening. Today for example, the only Government official who had been removed from his position, the Head of the Comision Nacional de Valores (Venezuela’s SEC equivalent), was actually arrested for his involvement with the intervened banks. What his participation in all this was is still unclear, but clearly the clean up is not over yet.

Whether Chavez had planned to clean up or not from the beginning is yet unknown. He may have decided to get rid of all his bolibourgeois bankers after the crisis grew beyond what he had expected. A full clean up of what his advisers had been telling him for months. But if that is the case, where will he stop? His Government has also intervened some insurance companies belonging to these banking groups, but nobody knows whether they are in good shape or not or if they were also looted.

Meanwhile, local market remain nervous. The swap rate went down at the beginning of the week only go to back up today. The Government claims it will reopen some of the intervened banks in ten days, but nobody seems to believe it. Thus, the money continues its flight to quality, whether the blue chip banks or hard currency as everyone awaits for the Government’s next step…