What Happened When Victor Vargas Tried to Buy Banco de Venezuela?
In 2008, Victor Vargas met with the leaders of Banco Santander, a major bank based in Spain. Vargas owns a major Venezuelan bank, Banco Occidental de Descuento (BOD). On behalf of BOD, Vargas was interested in buying Banco de Venezuela, a local Venezuelan bank, that Santander owned.
After a series of meetings, the two banks agreed to the purchase. As part of the agreement, BOD put down a $150 million down payment.
|The BOD Tower|
By Andrew1393 (Own work) [CC BY-SA 4.0], via Wikimedia Commons
Venezuelan Government Officials Approved the PurchaseVenezuelan law requires the Venezuelan government to approve bank purchases. After signing the agreement with Santander, Vargas and the BOD management team met with Venezuelan government authorities who oversee the country's financial industry. BOD submitted all the requirements to the authorities, and the government approved the purchase.
Chavez Attempted to Takeover BDVAfter BOD and Santander agreed to the purchase, and after Venezuelan officials put their stamp of approval on it, President Hugo Chavez abruptly intervened.
|President of Venezuela Hugo Chavez |
By Victor Soares/ABr (Agência Brasil) [CC BY 3.0 br], via Wikimedia Commons
One night, Chavez appeared on live Venezuelan television. He denounced BOD's purchase of Banco de Venezuela and announced instead that the government would buy the bank instead.
Vargas and BOD Lost $150 Million DepositAfter Chavez reversed course on the deal between BOD and Santander, Vargas contacted Santander. He wanted his bank's $150 million down payment returned.
Santander refused to refund the down payment.
BOD Sued Santander in a Spanish Court to Recover Down PaymentCiting the contract between BOD and Banco Santander, BOD filed a lawsuit in 26th Court of First Instance in Madrid, Spain. (In Spain, "courts of first instance" are the the main courts with jurisdiction over civil cases.)
The lawsuit demanded that Santander return the $150 million down payment.
In October 2010, the court ordered Santander to return the money plus the interest that had accrued since 2008.
Santander Appealed and WonAfter a lengthy court battle that took 4 years, in 2014 the Supreme Court of Spain reversed the lower court's decision. The Supreme Court threw out the court's order that Santander must return the $150 down payment.
BOD Filed AppealSoon after the Supreme Court's ruling, BOD filed a request with the same court to annul the decision.
The case is still pending.
- For details about the battle between B.O.D. and Banco Santander, click here.
- You can download the document with all the facts of the case by clicking here.