Two Venezuelan banks to merge into country's largest financial institution

Jul 20, 2000 02:00 AM

Two major Venezuelan banks announced they will merge to form the country's largest financial institution with more than $ 4.3 bn in assets. Banco Mercantil, the country's second largest bank, will merge with Interbank, the banks' leaders confirmed in a joint press conference in the capital, Caracas.
Banco Mercantil president Gustavo Marturet said the new bank will retain the Banco Mercantil name but refused to label the merger a take-over. Venezuela's crowded banking sector is undergoing a consolidation. This latest deal follows the merger of Banco Union with local banker Banesco's savings and loan unit, Caja Familia, which, once completed, will become the country's second largest bank with almost $ 3 bn in assets.
Neither Marturet nor Interbank President Victor Gill specified when their deal would be completed. "We're announcing the initiation of a process," Marturet said. Marturet didn't specify the costs of the fusion, adding that details need to be worked out.
Marturet also suggested that the new institution will be large enough to fend off hostile take-overs. Between international and domestic operations, the new entity will have almost 400 branches, he noted.

The new institution's loan portfolio will total $ 2.2 bn, while consolidated deposits will amount to $ 3.5 bn, a Mercantil spokeswoman said. The projected market share of the new institution is 15 %. With more than 80 financial institutions serving Venezuela's 23 mm inhabitants, banking authorities say a shakeout is inevitable.
Interbank announced in May it is merging with Venezolana Savings and Loan pending regulatory approval. An ongoing economic recession has hurt many small banks. Despite a surge in the international price of oil, Venezuela's main export, the economy contracted 7 % last year, and has only grown by 0.3 % this year. The official unemployment level is 15 %, but private economists estimate it is closer to 20 %.

Source: AP
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