Venezuela has grabbed many headlines in recent months, ranging from national and international political diatribes, to drug wars, to president Hugo Chavez's intrusion in private sector deals.

At the end of May, Spanish lender and long-standing Latin American player Santander agreed to sell Banco de Venezuela to the country's government for $1.05bn, following Mr Chavez's intervention in an initial deal that was struck last year between Santander and a local group of private investors. The Spanish bank has been disposing of domestic and international assets to strengthen its capital ratios.

The Venezuelan government's interference does not stop at nationalisation ambitions, it extends to a series of banking controls and restrictions that have affected lenders' capital and their ability to weather any downturn in the economy. Much has to be said, therefore, about the banks that managed to have a successful financial year in 2008 despite impositions on which sectors to lend to and controls on fee levels and spreads.

Banco de Venezuela, the fourth largest lender by both assets and Tier 1 capital, ended 2008 with the highest pre-tax profit in the country, at $309m. BBVA Banco Provincial, a subsidiary of Santander's domestic and international rival, closed its latest financial year with the second highest pre-tax profit result, at $289m, followed in third position by locally owned Banesco Banco Universal, with $214m. Banesco is also Venezuela's largest bank, with $17.34bn in assets, and it has the best loans-to-deposits ratio in the country.

In fact, it is the locally owned banks that occupy all the other top positions of the loans-to-deposits ranking, with Banco Exterior, Banco Occidental de Descuento and Mercantil Servicios Financieros in second, third and fourth places, respectively.

The cost-to-income ratios are also best for locally owned players. Banco Occidental tops the table with 56.7%, followed by Banesco with 79.8% and Mercantil with 93.4%.

Interestingly, the smallest of these outfits, Banco Exterior, recorded the highest return on equity (ROE), at 27.59%. Banco Exterior's assets are dwarfed by those of its peers - Banco Occidental, for example, has assets more than 20 times bigger. Banco Exterior's Tier 1 capital, however, is less than half that of Banco Occidental and its profits are twice as big.

Banco de Venezuela confirms its profitability with a healthy 26.43% ROE ratio, only marginally smaller than that of Banco Exterior and far bigger than Banesco's 15.65%. Mr Chavez's government has indeed laid its hands on a lucrative bank.

Top Venezuelan Banks by Return on Equity (ROE) (As At 31.12.2008)

Top Venezuelan Banks by Return on Equity (ROE) (As At 31.12.2008)

Top Venezuelan Banks by Cost/Income (As at 31/12/2008)

Top Venezuelan Banks by Cost/Income (As at 31/12/2008)

Venezuelan Banks Loans/Deposits (As at 31/12/2008)

Venezuelan Banks Loans/Deposits (As at 31/12/2008)

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