Banks/Banking in Venezuela
Banks in Venezuela showed extensive infrastructure in finance and displayed growth from 1950s to 1980s.
The financial services in 1989 comprised of 41 commercial banks, 29 finance companies, 23 government finance institutions, 29 loan and savings associations, 16 mortgage banks and scores of related entities namely liquid asset funds, insurance companies, brokerage houses, pension funds, stock exchange and foreign exchange traders.
In 1970s the immense oil profits prompted rapid financial institutions expansion. During 1980s, the financial system was disrupted to a great extent and led the intervention of government to some companies that forced few to close down.
The Central bank of Venezuela is one of the top banks in Venezuela and with the assistance from World Bank it has become modernizes and has consolidated with private financial systems in early 1990s.
These banks in Venezuela worked towards restructuring and improving the regulatory bodies namely the Superintendency of Banks, the National Securities Commission, the Superintendency of Insurance and the Deposit Insurance Corporation. However, the financial authorities liberalized the interest rate policies and restricted financial markets.
There are 41 commercial banks in Venezuela and hundreds of branch offices representing the private financial system. The commercial banks as per 1989 financial system held nearly 70% of total assets. The lending policies of banks in Venezuela were conservative emphasizing personal relationships and favoring high liquidity ratios. Banks financed the short term credit needs, reserving long-term financing with government finance institutions.
The industry of banking in Venezuela in 1989 was highly concentrated with six major banks and its affiliates dominate the industry with 63% total bank deposits as well as 57% financial system assets.
The largest commercial banks as per 1989 records were Banco de Venezuela, Banco Provincial, Banco Latino and Banco Mercantil. However, the 15 medium-sized banks managed bank deposits to 29%, whereas 20 small banks had only deposits to 8%. However, among 41 banks, 30 were private banks owned locally, 2 were owned privately with few foreign interests and the remaining 9 were government owned banks.
There are local banks that balk at the very prospect of facing outside competition from larger capitalized foreign banks. Conversely, the public sector banks operated as commercial entities.