The Peruvian government today issued a decree to tkae control of 10 banks, six finance corporations and 16 insurance companies while congress considers President Alan Garcia's plan to expropriate them.
A three-member team will take over management from each organization's board of directors. The decree sets a 120-day period for congressional action approving the takeovers, but this could be extended. Congressil will reconvene next month and is expected to give the matter priority treatment. It also must decide on how and when former shareholders in the expropriated companies will be compensated.
Garcia, speaking at a political rally Tuesday, called the expr"opriation the most revolutionary measure ever taken in the hsitory of Peru." He added, "The banks are not going to have privileged [clients] any more."
The decree did not mention the seven foreign banks operating in Peru, and a source close to the presidency said they would be not expropriated. They will continue their activities, which have been gradually reduced over the past two years as a result of Garcia's antagonistic prosition on Peru's foreign debt held by commercial banks.
However, two cases are yet to be cleared up. The French bank Credit Lyonais owns 10 percent of the Banco de Lima and has a management contract. The Italian-owned Sudameris Banking Group of Paris owns a 19 percent stake in the Banco de Credit, the largest commercial bank in Peru. It is not clear if these interests are affected by the takeover.
The Peruvian government already controls a majority of banking operations. According to official figures, state-related banks give 82 percent of cret and hold 70 percent deposits.
Bank executives were not available for comment on the government's move.