Recently approved Venezuelan banking legislation will bring Venezuela's banking laws into line With U.S. law and clear the way for Venezuelan banks to open offices in the United States, the head of the country's central bank said Thursday.

"We feel that problems have been overcome," said Ruth de Krivoy, president of Banco Central de Venezuela.

"The text of the new legislation sets out clear rules for effective supervision and for complying with international banking standards."

Venezuelan banks were effectively blocked from either opening new offices, or expanding their operations in the United States after Congress approved the Foreign Bank Supervision Enhancement Act in 1991.

U.S. Legal Hurdle

The law required foreign banks requesting approval for U.S. operations to prove they are subject to consolidated and comprehensive supervision by a single home-country regulator. And Venezuela has had no such banking supervisor.

As a result, a number of Venezuelan banks withdrew applications to the Federal Reserve Board to acquire banking operations in the United States.

Two years ago, for example, a consortium of Venezuelan banks and holding companies withdrew an application to acquire Miami-based Eagle National Bank.

Fed sources said the consortium, which included Consorcio Inversionista Bancaracas, Banco Caracas SACA, and Seguros Avila CA, withdrew their application after being told they we unlikely to obtain approval because Venezuelan banking regulators did not supervise bank on a consolidated and comprehensive basis.

Venezuela's President Ramon J. Velasquez signed the revised banking legislation into law earlier this month. It will take effect on January 1.

Ms. de Krivoy said the legislation will bring Venezuelan banking laws into line with internationally accepted rules and regulations and was part of a broader standardization of banking practices around the world.

"It's only logical that the globalization of markets be followed by a standardization in banking legislation," Ms. de Krivoy observed.

"We've replaced a highly overregulated concept of banking - with weak supervisory standards - with state-of-the-art supervision in terms of both domestic and international banking supervision."

The new law comes as central banks across Latin America are gaining broader autonomy and moving to reform outmoded financial market laws.

Two-Way Street

In addition to bringing requirements for Venezuelan banks into line with international practices, the new law eliminates existing legislation that barred foreign banks from doing business in Venezuela.

Venezuelan banking sources said they expect that U.S. and other foreign banks will seek to open or expand their activities in Venezuela after the new law takes effect next year.

Citicorp, the only U.S. bank with branches in Venezuela, is known to be interested in expanding its activities in Venezuela.

The Citicorp branches were set up before Venezuela barred foreign banks from operating in the country in the 1970s.

Other major provisions of the revised banking laws will:

* Permit so-called universal banking, or banks that engage in both deposit-taking, commercial lending, securities underwriting, and insurance underwriting

* Update the application process for establishing new banks and financial institutions.

* Require banks to have a minimum capital of 8% of their risk-weighted assets, but gives them two years to reach this level.

* Strengthen the role of Venezuela's superintendent of banks as an independent regulator of the country's banks.

* Raises the amount of deposits that are guaranteed to $9,800 from $2,450 in the event a bank fails.

* Sets new rules regarding financial reporting and auditing, including an obligation to consolidate and combine statements of interrelated financial institutions.

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