Venezuelan banks begin storing dollars

AT LEAST half a dozen Venezuelan banks have begun storing in vaults millions of dollars and euros accumulated in cash by businesses during an unexpected economic liberalisation by President Nicolas Maduro, according to sources.

Some $1.8 billion (R26bn) worth has entered Venezuela in the last year, according to three senior banking sources, as Maduro quietly dismantles 16 years of socialist regulations to salve the economy in the face of US sanctions and hyperinflation.

The cash comes mainly from remittances, often on trucks, by the millions of Venezuelans who have left in recent years, and from the Opec member’s oil and gold sales to allied nations like Turkey and Russia, sometimes by plane, the sources said.

The private banks’ new custodial service began discreetly in late 2019 and has not been previously reported in full. It is further evidence of how the ruling Socialist Party is allowing financial arrangements unthinkable for Venezuelans while dollar transactions were outlawed until 2018.

The service is only offered to wellknown firms with significant revenue and long-standing accounts, according to four finance industry senior executives. “It’s a service for traditional customers,” one said.

That is meant to avoid contact with companies linked to the government, which is under a broad sanctions programme by the administration of US President Donald Trump, who views Maduro’s government as an illegal dictatorship.

The sources asked for the banks not to be named for security reasons given the delicate context and crime problems.

Clients pay monthly commissions of 1% to 2% of the deposits, though for that they have instant access to the cash and regular security checks.

The bank custodial services only manage around 10% of all hard currency in Venezuela, two of the bank executives said, meaning the rest is in improvised storage.

The government did not respond to a request for comment. Though it has stopped enforcing long-standing currency and price control regulations, many of the rules remain on the books, so the situation could change quickly should Maduro shift tack.

Euros also enter the system from government payments to contractors and weekly central bank sales.