US authorities fine Banco Industrial US$1.8mn, order it to stop operating

Monday, April 18, 2011

US authorities have fined Venezuelan state bank Banco Industrial de Venezuela a total of US$1.8mn and ordered it to stop operating in the US until it gets its house in order.

The joint order from the Board of Governors of the Federal Reserve System, the New York State Banking Department and the Florida Office of Financial Regulation requires the bank to stop making loans and taking deposits.

"BIV will also be required to submit acceptable plans to make a number of improvements at the agencies," a joint press release reads. "BIV will also be required to adhere to regulatory reporting deadlines."

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The regulators said the bank must submit financial statements that have been audited by "an acceptable independent, internationally recognized accounting firm."

Each of the three regulators fined the bank US$600,000.

Banco Industrial de Venezuela was subjected to an administrative intervention by local regulators in 2009 based on its extremely low capital adequacy ratio.

The bank emerged from that intervention in January, yet it maintains high delinquency rates of around 30%.