April 15, 2011

Cease and desist order and assessment of civil money penalties against Banco Industrial de Venezuela

Board of Governors of the Federal Reserve System
Florida Office of Financial Regulation
New York State Banking Department

For immediate release

The Board of Governors of the Federal Reserve System, the New York State Banking Department (NYSBD), and the Florida Office of Financial Regulation (OFR) Friday announced the issuance of a consent Cease and Desist Order and Assessment of Civil Money Penalties totaling $1.8 million against Banco Industrial de Venezuela, C.A. (BIV), Caracas, Venezuela, and BIV's agencies in New York and Miami.

The order is designed to address deficiencies revealed in repeated examinations of the agencies by the Federal Reserve and the state supervisors. The order also addresses issues relating to BIV's financial condition and the lack of audited financial statements.

The order restricts BIV's U.S. agencies from making new loans or taking on new customers without the approval of its U.S. banking supervisors. BIV will also be required to submit acceptable plans to make a number of improvements at the agencies, including in management and home office oversight, internal and operational controls, asset quality, investment securities procedures, and internal audit. BIV will also be required to adhere to regulatory reporting deadlines.

The order requires that BIV submit financial statements for each of the agencies and for the consolidated organization that have been audited by an acceptable independent, internationally recognized accounting firm.

BIV and the agencies are subject to a Written Agreement issued by the supervisors in July 2006. Provisions of the Written Agreement remain in place that involve compliance, particularly Anti-Money Laundering and Office of Foreign Assets Control procedures. Other provisions of the Written Agreement are superseded by this consent order.

BIV has also agreed to pay $600,000 each to the Board of Governors, the NYSBD, and the OFR as a result of allegedly unsafe and unsound practices, and late-filed and insufficient financial information submitted to the supervisors.

BIV is owned by ministries of the Venezuelan state. BIV was subject to an intervention by the Venezuelan government in May 2009--a form of conservatorship under Venezuelan law. In January 2011, the intervention was lifted.

Media Contacts:
Media Contacts:
Federal Reserve Barbara Hagenbaugh (202) 452-2955
Florida Office of Financial Regulation Flora Beal (850) 410-9709
New York State Banking Department Contact Name (212) 709-1691
Last Update: April 15, 2011