Bank loan portfolio hit by expropriations

In a context where the government has expropriated, seized or occupied a long list of companies and assets, loans granted by Venezuelan banks to firms hit by those measures are feeling the effects of late payment.

When this occurs, financial institutions are obliged to establish loan loss provisions, and put aside money to cope with bad debts.

However, the Superintendence of Banks and other Financial Institutions (Sudeban) has issued a resolution which provides for fewer provisions set for loans to businesses and individuals whose assets have been seized.

Sudeban reported that the resolution seeks to "minimize the effect of this situation (expropriation) in the bank's financial statements."

The resolution will be in force from December 1, 2011 to November 30, 2013.