Panic withdrawals from Stanford causes Venezuela to seize the bank

On Thursday February 19 Venezuelan authorities seized a local branch of the Allen Stanford’s bank in order to impede massive withdrawals made online by the panicking consumers as the U.S. government initiated a fraud lawsuit against the Texan billionaire. The administration of Hugo Chavez announced that the Stanford Bank Venezuela, which is one of the country's smallest commercial banks, will be sold immediately and that there are some potential buyers available.

After the reports on the U.S. fraud case spread across Latin America clients in Venezuela started withdrawing funds from Stanford Bank Venezuela via Internet banking services. As reported by the Finance Minister Ali Rodriguez most depositors which are from the rich income classes are moving their funds online which drives the bank to a ‘precarious state’. Thereby the administration took a decision ‘to intervene’ and start ‘immediate sale’.

Stanford’s branches were closed on Thursday with all transaction suspended by the government as a part of the bank’s takeover. According to some observers the seizure of Stanford Bank Venezuela with $288 million in assets which represents just 0.2% of the country banking system won’t have a significant impact on the sector.