Veneconomía (2004) | Venezuelan banking: trapped without exit?

Banks are going through a good time thanks to the high monetary liquidity existing and arising from exchange control and placement of the government securities of the National Public Debt (DPN). The State has become the primary client and debtor, while it has begun to lose its rationale: financial intermediation.

For Oscar Garcia Mendoza, president of Banco Venezolano de Credito, the financial system will resist even when the banking market is saturated in the short term as a result of loans from the government; although the level of deposits is decreased due to inflation and even though regaining the role of intermediation for the market is a difficult task due to high costs that it entails. “They are making very large profits and are delivering very substantial cash dividends. Some entities exaggeratedly ‘papered’ will liquedate their paper through inflation at some point. There will be certain banks with terrible credit portfolios that will have to disappear, others will survive pandering to the government and several more will pass ’squatting’ waiting for better times,” said Garcia Mendoza.

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