The news got me reaching home tonight. There was yet another never ending cadena at lunch time and Chavez announced that he was nationalizing the Banco de Venezuela, the "venerable" old bank of Venezuela that was bought by the Banco de Santander after it went bankrupt under Caldera. As far as nationalizations make sense, this one ought to be the least sensible one of the lot.
To begin with there are better banks than that one to nationalize, if you really want to get a bank (I am not getting into the argument detail as I am sure that Miguel will come with an enlightening post tonight).
Second, the state does not need a new bank: it already has Banco Industrial (always losing money), Banfoandes (of more than obscure accounting, and used a lot to give money away to Chavez allies) and a plethora of "banks for the people" Banco del Pueblo, Banmujer, Banco del Tesoro, Banco X and Banco Y. Why, oh why, another bank?
Third, the nationalizations of CANTV and ELECAR are already showing sings of obvious failure as the service they provided has decreased, some places dramatically. We are now expecting CEMEX and SIDOR to start failing any time soon. The government has DEFINITELY SHOWN that it cannot handle such complex companies. And it is going to get into an even more complex one?!?!?!?!?! Besides, let's not go into the biggest failure of nationalizations, image wise, TeVes, who in replacing RCTV has only succeeded in getting the lowest ratings around.
The chavista administration is full of incompetent folks but even they know full well that they are up to their necks in things they are unable to manage successfully. They are not THAT stupid.
So why are they jumping on yet another heavy burden? Many possible reasons, you can make your own cocktail out of them.
It is yet another cheap emotional chauvinistic bolivarian feel good moment, and Chavez himself said it today: the name is Banco de Venezuela!!!! Is there any other reason really needed?
The government has more and more trouble finding jobs for all the people it is graduating with useless degrees from chavista educational jokes: a bank can easily absorb hundreds and thousands of "trainees", "low clerks" and what not. These people are not finding jobs in the private sector, which at any rate is not hiring this year.
The loot is great. Banco de Venezuela, as a company of the Santander group in Spain, is allowed to send back home over a 100 million euros a year. The new bolivarian directors of the bank will make sure that these are spread around the new bolivarian board. You know, bolivarian, as in love for the Bolivar (and US Dollar, and Euro, and Pound, and Yen...). Because if you think that the new management is going to generate 100 million Euros of benefits a year and give it to the state budget, then I should talk to you about that bridge I am trying to sell in Brooklyn.
It is a revenge against Spain. Well, sort off, as the Santander Group might be quite relieved to get at least the book value of the Bank. I mean, they will be bought out and the price will be paid at 2.15 for a US dollar! So maybe the chavista idiots might think that Chavez did good but as far as I know people have long stopped begin excited about nationalizations.
They need the widespread coverage of the Banco de Venezuela. True, it has a better coverage than any of the state banks, but after ten years of chavismo how come the state banks have not been able to reach every nook and cranny of the country? Why?
It is election year: what better way to make people forgive about your failures than getting your hands on the bank that represent about 10% of the country accounts? "Un train peut en cacher un autre"
And what will this mean for us?
Nothing really (besides what it will cost us, of course, but that we will find out later in more inflation, more corruption, etc...). The Banco de Venezuela has already an awful reputation as far as service (as the Banco Provincial, the other Spanish bank, does). These banks really operate in ex-colonies and they have that mentality. I, for one, will not defend the Spanish banks in Venezuela (well, they should at least get their real value, but their owners will not be missed, by all of us who have had to put up with their dismal services).
At work in San Felipe, on the rare instances that we must visit the Banco de Venezuela, it is a fight as to whose turn it is to go. The lines are endless, and when "misiones" pay day comes, well, the line goes around the block!!!! The chutzpah of that bank was such that when they bought the Banco Caracas, they closed its San Felipe agency, fusing it with their already overburdened agency, without expanding it!!! Cost cutting, you know, to get back the purchase of Banco Caracas. On another day I was offered, without even asking for it, a "titanium" card from the Banco de Venezuela, with constant phone calls and all (I have no account nor our business with them, nor provide my cel phone number to anyone, so it is a mystery for me why they were after me: in Venezuela it does not work as in the US, usually it is your bank that manages your credit record and offers you stuff if you behave well). I told them that since their service was so lousy I would only accept it if I had a special line/booth for my dealings with them. That was the end of it :)
No, what it really means for us is that the very little foreign investment reaching us will dwindle further. Who is going to invest in a country where the president suddenly decides that he needs your business, for no real reason?
And everyday we will become more and more a nation of bureaucrats, dominated by our fear that Chavez will take our job away. Period.
UPDATE: indeed, as expected, Miguel gives all the horrid financial details. Telling us all that CV are goign to fly tomorrow. He promises Chavez an empty shell once the purchase is completed.