Banco de Venezuela (BdV) appears to be having dollar liquidity problems. A source with deep familiarity of the industry tells us that BdV has refused access to their deposits to at least two multinational companies seeking to transfer their own dollars abroad.



When the official asked BdV to transfer half of the original sum, BdV refused again, saying the request was still too large.



One company official, who asked neither he nor his firm be named, reports that when he asked BdV to transfer his company’s dollar deposits to accounts abroad, the bank refused on the grounds that the request was too large. When the official asked BdV to transfer half of the original sum, BdV refused again, saying the request was still too large. In the end, the BdV only let his company transfer a small fraction of the initial request out of the bank, and with several weeks of delay. The other company official reports similar delays and denials. Both officials say they’ve heard of similar problems at other companies as well.

To be clear: these denials and delays are occurring to firms trying to withdraw their dollar-deposits from the BdV. They are not occurring to deposits in bolivares. (This is what you’d expect: if the BdV ever has a bolivar liquidity problem, it can phone the Central Bank and ask for some some freshly printed bolivares: problem solved.)

Why do multinationals keep dollars at BdV? It all goes back to Convenio Cambiario 20, which the government set out in June 2012 to obtain more control over the dollars it sold through official FX channels.



So why the denials and delays? We can only speculate.



The Convenio directed private and state-owned banks to offer accounts in dollars. Clients were required to deposit dollars bought through official FX channels in those accounts. The banks in turn deposited the dollars at the Central Bank, which had oversight over every transaction.

In the last two years, the government restricted the sale of PDVSA’s dollars to clients of state-owned banks. All large multinationals and private businesses reliant on official FX allocations were forced to open accounts at the BdV as a result.

So why the denials and delays? We can only speculate. It’s tempting to think that BdV’s been instructed to direct dollar holdings to accounts that will disburse roughly $4 billion in bond payments coming due in November, or to PDVSA’s pension fund or other public sector entities that are widely believed to be repurchasing bonds to reduce upcoming payments.

But we shouldn’t jump to conclusions: BdV might just be facing a classic liquidity problem if too many clients are asking to withdraw their dollar deposits at the same time and the bank’s dollars are parked in illiquid assets, such as long term loans. Or the dollars might also have been spent to import essential food and medicine.

All we can do is speculate, because they sure won’t tell us.