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The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

If trading dollars is outlawed, only outlaws will trade dollars. This, to adapt a slogan about gun control from America’s National Rifle Association, increasingly describes Venezuela’s foreign-exchange market. New rules are pushing more currency traders into the black market, where they face lengthy jail sentences and heavy fines for helping others to finance non-priority imports or save in hard currency.

Late last year, the government announced a “unification” of the country’s notoriously complex currency control system, replacing a four-tiered structure with a three-tiered one. The first two tiers (BsF4.3:US$1 for priority imports and the public sector, and BsF5.4:US$1 for other purposes) are official and tightly controlled. The growing third tier is the illegal black market, where prices are reported to hover in the BsF8-10:US$1 range. This deeply opaque, unofficial tier is the one that businesses increasingly use to set prices for imported goods.

Read more at Financial Services Briefing: “In the shadows” (February 9th)

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The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

The headquarters of the Caracas Stock Exchange (CSE) in the upmarket business district of El Rosal are big, imposing and comatose. On one recent day, December 10th, the market handled a grand total of 11 trades worth only US$72,526. Just four stocks changed hands: one fell in price slightly, while three were unchanged.

It was a typical, soporific day at the CSE. Of the 60 companies listed in the exchange, fewer than half see their stocks traded with any frequency. Some shares go months without a trade, making Caracas home to one of the least liquid bourses in the world. It is, in effect, a zombie exchange.

Read more at Financial Services Briefing: “The living dead” (December 16th)

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

With new laws governing the insurance and securities markets already on the books, Venezuela’s unicameral National Assembly is continuing its revision of financial sector regulations by turning to banks. The National Assembly – which is dominated by supporters of President Hugo Chávez – passed the 135-page Banking Sector Institutions Act in a first vote on November 11th. Legislative leaders then allowed only a short, subsequent consultation period, with the National Assembly set soon to hold a second and final vote on the bill.

Almost a year after a wave of government intervention into more than a dozen small and medium-sized banks, the bill seeks to shrink the size of the industry by reducing the number of existing institutions and raising the bar for new ones to open. At the same time, several of the bill’s measures put a further pinch on the big banks, which are already dealing with a raft of loan portfolio quotas and interest rate caps. More viscerally, with the government recently embarking on an expropriation campaign including everything from cement producers to housing developments to agro-industrial suppliers, the bill raises the fear of easier bank takeovers.

Read more at Financial Services Briefing: “Assembly set to approve bank bill” (November 22nd)

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

The Venezuelan bank regulator moved to shut down Banco Federal, a firm linked to the political opposition, on June 14th. The bank is owned by Nelson Mezerhane, a director and founder of Globovisión, the only remaining anti-Chávez television station.

The move to intervene and shutter Banco Federal follows half a year of closures of financial institutions. This touched first banks at the end of last year and the beginning of 2010, and has more recently affected brokerage firms. Unlike Banco Federal, most of the firms closed earlier were run by men closely associated with, but who seemed to fall foul of, the government of Hugo Chávez.

Read more at Financial Services Briefing: “Another private lender shuttered” (June 14th)

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

That was quick. After less than a month in administration, three of the banks seized by the Venezuelan government late last month will reopen as units of Banco Bicentenario, a new state-run lender.

The new bank, which also includes the state’s Banfoandes, aims to bring to a close a recent string of seizures and closures, featuring eight mostly small lenders, a broker and an insurer. President Hugo Chávez will try to spin recent events as decisive actions to preserve confidence in the country’s banks. But none of the constituent parts of the new Banco Bicentenario are in particularly good shape, so the move is unlikely to stabilise an increasingly fragile financial system.

Read more at Financial Services Briefing: “Under new management” (December 15th)

Colombia’s financial regulator reported that banks in the country grew profits by 15% in the year to October. Lenders started the year strong—January profits were up 35% year-on-year—and have posted some equally impressive earnings in recent months.

The situation in Colombia is in stark contrast to neighbouring Venezuela. After seizing four banks and jailing their joint owner late last month, president Hugo Chávez told state television on Wednesday, “If I need to take over all the Venezuelan banks, I’ll do it.” The remaining privately-owned banks in the country should be “taking care,” he added, “because I’ve got my eye on them.” In the year to October, profits at banks in Venezuela fell by 2%. Given the current climate, this trend is unlikely to reverse any time soon.

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