Venezuelan Banks Shrivel as Inflation Roars, Credit Dries Up
Posted by WorldTimeNews on 8th November 2018
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The banks are unlikely to fold, due in large part to the huge potential upside if the economy turns around, according to financial industry consultants and bank executives.
“Of course we do not want to leave.
I trust that something will happen,” he added, without elaborating.
Meanwhile, the disappearance of credit threatens to aggravate an already brutal recession that has led hundreds of thousands to flee the country amid chronic product shortages, rising malnutrition and increased incidence of preventable disease.
Though private banks’ return on equity hit an eye-popping 115 percent in December of 2017, that was devoured by an estimated 2,600 percent inflation in the same month.
Citibank Venezuela began suspending accounts and credit cards to clients in 2017 as part of a strategy to minimize operations while it waited for the situation to improve, according to two industry sources.
The local affiliate of Citi reported a return on equity of -43.1 percent in December, according to regulatory data.
Citi declined to comment.
For large and medium-sized companies, local private banks lend no more than the equivalent of $25,000 and in almost all cases require guarantees in dollars, said one consultant who works for large companies operating in the country.
Most of those loans are for less than two years, according to a banking sector executive.

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    “I use them to buy bread, which is the only thing I can buy with them,” she said. “They used to get me out of trouble in an emergency situation. I showed my…

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