Best bank – Banco de Venezuela
Best local partner – Banco Mercantil
Best debt house – Citigroup
The top four banks in Venezuela all made pretty healthy profits in 2002, but none made more than Santander-owned Banco de Venezuela. Its return on equity, at 38.6%, was the second highest in all of Latin America, and its efficiency ratio dropped from 49.4% in 2001 to just 40.4% in 2002.
Even so, there’s not much to choose between Banco de Venezuela and the winner of our local partner award, Banco Mercantil, one of the best-run domestically owned banks in Latin America, and an institution that itself posted more than 38% in return on equity and more than $150 million in profit.
In fact, there’s little the Venezuelan banks can do in terms of charting their own course. Under president Hugo Chávez it is a country where anything can happen. If Chávez wanted to he could easily go after the banks. It’s anybody’s guess whether being foreign-owned is an advantage or a disadvantage in the eyes of the president. So the story of the Venezuelan banking system is going to be one of extreme uncertainty unless or until Chávez leaves office.
But the sovereign finances suffer under political uncertainty as well, and Citigroup helped Venezuela construct a series of local liability management transactions in December that totalled $2.4 billion and helped to reduce the risk that the country wouldn’t be able to roll over its short-term debt.
