The 1994 banking crisis occurred in

Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...

when a number of the banks of Venezuela were taken over by the government. The first to fail, in January 1994, was Banco Latino, the country's second-largest bank. Later, two banks accounting for 18% of total deposits ( Banco Consolidado and

Banco de Venezuela Banco de Venezuela (abbreviated: BDV) is an international universal bank based in Caracas. It was the market leader in Venezuela until 2007, when it fell to third place, with an 11.3% market share for deposits; its major competitors are Banesco, ...

) also failed. On 9 August 1994, Banco de Venezuela became the tenth bank bailed out by the Venezuelan government during the crisis, with the government taking a majority stake for an estimated at US$294m. In total, between January 1994 and August 1995 17 of the country's 49 commercial banks, as well as some subsidiaries, failed - representing 53% of the system assets. Estimates of the total cost of the bailout range from 18 to 31% of GDP; one estimate gives the total cost of the bank bailouts as 1.8 trillion Bolivars, or $12bn.Molano, 1997
Financial reverberations: the Latin American banking system during the mid-1990s
SBC Warburg Working Paper, Social Science Research Network (1997).

Economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical liber ...

in the early 1990s and lax banking supervision had laid the seeds for the crisis, which was then triggered by the cumulative effects of a collapse in the oil price, which led to sharply reduced government spending and weakened the Venezuelan economy. Ruth de Krivoy, who was President of the Central Bank of Venezuela at the height of the crisis in 1994, later published a book on the episode.Da Costa, Mercedes (2001)
Collapse: The Venezuelan Banking Crisis of '94
''Finance & Development'', 1 March 2001

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Further reading