Archive for June 15th, 2010

Banco Federal intervened, obviously political, long overdue

June 15, 2010

So, Banco Federal was intervened yesterday, years late, politically timely. Just think, the Government via the Depositors Guarantee Fund now owns 20% of its media nemesis Globovision.

But I am getting ahead of myself.

Banco Federal had been in trouble for a long time, anyone that can read a balance sheet knew that. It participated eagerly in the “structured note” fiasco, had to cover some of the losses (US$ 60 million if I recall correctly) but in the end accounting smoke and mirrors was insufficient.

With the intervention of the banks of the “bolibourgeois” last November and December, rumors spread about Federal, fueled by none other than Hugo Chavez, who mentioned repeatedly on nationwide TV the name of the owner of the bank, saying he would have not trouble intervening his bank if necessary.

But he did have a problem with doing just that. The clumsy initial steps in the intervention of  a dozen or so banks, led to rumors about Federal being in trouble and the Government began to worry about the whole system shaking, if it acted too rashly. Thus, a decision was made to postpone the inevitable, until things “improved”. But things never improved much. In fact, Banco Federal stopped publishing its monthly financials in the newspapers, let alone its 2009 financials, which were never published, as the law mandates. Enough to make you want to stay as far away from the bank as possible. The bank had a lot of illiquid investments in its balance sheets that most specialists know what it means: I am hiding huge losses in those investments, hoping there will be a brighter day.

But the brighter day never came. The Government reportedly even gave Federal money to prop it up, but it was a lost cause. It was just a matter of having the excuse to do it. Intervening it was long overdue.

The Government pressured Globovision and its main owner Guillermo Zuloaga and Ravell was let go, Zuloaga was threatened with the charge of hoarding cars and later of accusing Chavez of murdering people. The second charge was harder to prove, thus they went bank to the hoarding.

But Globovision never changed its editorial line. Thus, the next to the last step was taken: Take over Mezerhane’s bank, which owned 20% of Globovision, and they did.

If this does not do it, then the TV station itself will be next, but maybe the owners can now be persuaded that the Dictator means business, they did not seem to understand it before.

Globovision is the only TV media outlet whose outpost is not sanitized and sterilized prior to broadcasting. There can be dozens of protests in Venezuela in any given day and only Globovision shows it, the normalcy in the rest of the media is somewhat scary.Orwell would have been proud of Venevision and the rest.

Thus, the next to last political decision has now been made: Seize Banco Federal. Will Chavez dare to take the next step in the sequence before the September elections? Will he go first for the banks? For the food division of Polar? Or for Globovision?

All three would be the magical trifecta for the Dictator, but can he afford to do it?