COUNTRY PROFILE
Total land area:................... 882,050 sq. km.
Official language:................. Spanish
Administrative divisions:....... 22 states and one federal dependency.The federal
dependency consists of 11 federally controlled
island groups with a total of 72 individual islands.
Legal system:....................... Based upon Spanish code law.
Executive branch:................. The president is chief of state and head of government.
Cabinet‹Council of Ministers appointed by the
president.
Legislative branch:............... Bicameral Congress of the Republic,consisting of a
Senate (53 seats, two from each state and the Federal
District, and retired presidents;members are elected
by popular vote to five-year terms) and Chamber of
Deputies (203 seats; members are elected by popular
vote to five-year terms).
Judicial branch:......................Supreme Court of Justice. Magistrates are elected by
both chambers in joint session.ECONOMIC PROFILE
Currency: Bolívar (B)
GDP: US$72 billion (1997)
Real GDP growth (at market prices): 5.1 (1997p)
GDP (average annual growth rate): 2.4 (1988-1997)
GDP per capita (1990 US$): 3,161.5 (1997)
Consumer price index (average annual growth rate): 50.0% (1997)
Nonfinancial public sector fiscal balance (% of GDP): 1.8 (1997)
Money supply (M1) (% of GDP): 7.9 (1997)
Interest rate (nominal average annual time deposit rate): 23.2 (1997p)
Current account balance: US$5.4 billion (1997)
Trade balance: US$10.9 billion (1997)
Main exports: Petroleum and derivatives, aluminum, steel.
Main imports: Machinery, transport equipment, chemicals, metals.
Nominal exchange rate (B/US$): 668 (1998)
Real effective exchange rate (Index 1990=100): 113.7 (1997)BANKING SYSTEM
Total number of banks in the system: 111
Types of banks: 30 commercial banks, 12 universal banks, 22 investment banks, 19 financial leasing companies, 8 mortgage
banks, 20 savings and loan institutions.
Total amount of assets: B$12.6 billion (September 1998)
Total amount of deposits: B$8,913.1 billion (September 1998)
Total amount of capital or net worth: B$1,724.5 billion (September 1998)BANKING INSTITUTIONS
I. Banking Supervision
1. The primary supervisor is the Superintendencia de Bancos
y Otras Instituciones Financieras (SUDEBAN).
2. SUDEBAN is an independent agency.
3. SUDEBAN reports to the Ministry of Finance or secretary of
the treasury for administrative purposes.
4. The supervisor examines every banking institution at least once
a year. Depending on the levels of risk and the quality of
bank administration, some banks may be inspected more
frequently.
5. This system classifies banks using categories from one to five.
Category 1 is a solid institution, while Category 5 is a
high-risk institution. Bank supervision is based on a banks
handling of risk and management in general. The frequency of
bank examinations depends on the risk of bank assets and level
of capitalization. In 1997, a new supervisory model was
developed to look at operations, risk management and equity.
Venezuela is currently revising and adapting CAMEL for official
use.
6. Unofficial use of CAMEL has been suspended in Venezuela
while a revision process is under way. Presently, examinations
are purely quantitative, looking at the entire banking
system's average and classifying banks as either above average,
average or below average.II. Consolidated Supervision
1. SUDEBAN performs consolidated supervision according to
reciprocal agreements reached with the banking supervisors of
Peru, Ecuador, Colombia and the Netherlands Antilles.
Negotiations are under way to extend a reciprocal arrangement to
Chile, Spain and the Cayman Islands.
2. According to Article 41 of Venezuela¹s Banking Law, prior
consent is required to open or close a branch in a foreign
country.
3. According to this law, prior consent is required from both
the home and host country to open or close a banking office
outside Venezuela.
4. Venezuela can request information from its cross-border
banking establishments in these countries.III. Interest Rates
1. Interest rates on loans are defined by the market. However,
the Central Bank influences the rate that individual banks fix
through a mechanism known as títulos de estabilización monetaria.
2. The Central Bank also uses this mechanism to influence individual
banks' interest rates on deposits, which are defined by the
market.IV. Deposit Insurance
1. Deposits are insured by the Fondo de Garantía de Depósitos y
Protección Bancaria (FOGADE).
2. The regulation in force establishes that deposits are guaranteed in
local currency for an amount up to 4 million bolívares per
depositor, per bank. Any type of deposit is covered.V. Trade Finance
1. Venezuelan law does not define trade finance. In practice,
however, trade finance is the financing of export or import
operations. Trade finance receives the same legal treatment as
the financing of domestic operations.
2. Venezuela¹s Banco de Comercio Exterior, C.A. bears the risk
associated with trade finance on loans originating through it.
Otherwise, private banks bear the risk associated with trade
finance.
3. Trade finance operations receive the same treatment as domestic
operations with respect to order of payments in cases of
liquidation.
4. In cases of liquidation, the lending bank has the obligation to
create provisions pertinent to the situation. The amount of
reserves depends on the collateral that supports the loan.VI. Capital Adequacy
1. The minimum capital required to open a banking institution
depends on the type of institution:Institution National Regional
Universal banks 3 billion bolívares 1.5 billion bolívares
Commercial banks 1.2 billion bolívares 600 million bolívares
Mortgage banks 600 million bolívares 400 million bolívares
Investment banks 700 million bolívares 350 million bolívares
Leasing 400 million bolívares 200 million bolívares
Money market funds 400 million bolívares 200 million bolívaresBanking institutions must also maintain a minimum capital reserve of
8% of risk-weighted assets. Monthly figures from the entire banking
system are averaged. Those banks falling below the average are
examined using CAMEL.
2. In addition to the above, banking institutions should maintain
minimum equity the equivalent of 8% of risk-weighted assets.
3. Capital adequacy is measured according to the Basle Accords.VII. Asset Quality
1. Loans are classified according to the norms established by
CEMLA. The categories are as follows:Category Definition Commercial Consumer Mortgage Construction
A Normal risk 0% 0% 0% 0%
B Potential risk 3% 10% 5% N/A
C Real risk 15% 30% 15% 15%
D High risk 60% 60% 50% 60%
E Total loss 95% 95% 95% N/A2. Minimum general reserve requirements are as follows: 1% of total loan
portfolio, 2% of total investment portfolio.
3. The legal lending limit is 10% of net worth both with or without collateral.
The limit is 20% for inside dealings.
4. The investment portfolio is categorized as either temporary, with maturity
less than 90 days, or permanent, with maturity later than 90 days. Both
types of portfolios are valued monthly.
5. Investment portfolios are marked to market monthly.
6. Changes in value due to measuring against the market affect the
profit and loss statement.VIII. Liabilities
1. Minimum reserve requirements are 17% for demand deposit accounts, term
deposits, short-term bank loans, local currency and foreign currency.
Biannually, banks must pay 1% of total deposits to FOGADE, the deposit
insurance fund. The formula for calculating reserves is 17% of deposits
and liability operations, according to Resolution 98-08-02 of the Central
Bank of Venezuela, August 13, 1998.
2. Banks can offer demand deposit accounts, savings accounts and time
deposit accounts in local currency, but not in foreign currency.
3. Current legislation does not establish a limit on the deposits an institution
can accept.
4. There is no limit on the concentration of deposits.