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For years, Venezuelan billionaire Juan Carlos Escotet performed a balancing act: maintaining cordial relations with his country's populist government while discreetly re-engineering his banking group Banesco to shift its center of gravity away from his volatile homeland to Spain.
Now, following a deal in December 2013 to purchase nationalized NCG Banco SA from Spain's bank rescue fund for [euro]1 billion, Escotet is using a new Spanish base that is safe from any threat of confiscation or forced sale by Venezuelan authorities to ready a fresh drive into Latin America.
The purchase of NCG Banco, with assets of [euro]52.69 billion at the end of 2013, down from [euro]72 billion in 2011, shifts the center of gravity of Escotet's business to Spain. The Venezuelan's bid beat those of five others in the auction of NCG, which is bigger than the Caracas-based bank that has long formed the heart of his business and itself is controlled by a Spanish-registered holding company.
NCG, formerly known as Novacaixagalicia, may now be merged into Banco Etcheverría SA, the small Spanish bank in which Banesco International Financial Group became the main shareholder in 2012 and which plans to seek business in Latin America, according to a source linked to the Banesco group who did not want to be named when speaking with SNL Financial.
But first Escotet has to conclude negotiations with the European Commission. Under the Commission's terms set in 2012 for the sale of NCG, its new owner must reduce the bank's balance sheet by more than 60% by 2017 in comparison with 2010 and concentrate its business on loans to individuals and small businesses near its headquarters in Galicia in northwestern Spain.
Escotet is now hoping officials will relax the terms, according to both the Banesco-linked source and a union official.
"He wants the bank to recover and progress more quickly. As it is, the bank is set to shrink until 2017," said José Ramón del Pliego, an official at the UGT union representing NCG Banco workers who, together with other union leaders, held a meeting with Escotet April 4.
"What's being negotiated is to change as much as possible the conditions, to...