Banking the Revolution

The Venezuelan economy, which depends on oil for 90% of its export income, has been the most volatile in LatAm over the past two decades, creating real challenges for bankers. Juan Carlos Escotet, Banesco's president, has a reputation for being a shrewd operator. He has risen to the challenge and outflanked other bankers over the past five years to turn Banesco into Venezuela's top bank by assets. At the end of 2007, Banesco had total assets of $12.88 billion equivalent in bolivares - up 51% in a year. This put it ahead of the nearest domestic rival, Banco Mercanti. Banesco today is the result of eight mergers, most of which involved savings and loans entities in the 1990s to form Caja Familia. Managing a bank in Venezuela is no easy task under President Hugo Chavez. But ironically, Venezuelan banks have seen some of their most profitable times ever under the leftist firebrand. Banesco has captured the largest lending portfolio in Venezuela, accounting for almost 16% of the total held by the 10 largest banks. Banesco reported net profit of $323 million for full-year 2007, up a sturdy 58% on the $204 million netted the previous year. Banesco seeks to offset exposure to the inherent volatility at home by expanding fast overseas.