Nicaraguan Bank Shut Down After US Imposes Sanctions for Alleged Financial Misdeeds

A Nicaraguan bank closely tied to President Daniel Ortega’s government has been forced to shut down after the United States imposed sanctions for allegedly facilitating financial wrongdoing on behalf of Venezuela’s state-owned oil company.

A committee has been formed to oversee the liquidation and ensure employee payments.

Background

Bancorp, one of three directors told The Associated Press late Wednesday that the country’s superintendent for banks and financial institutions had accepted the bank’s request for a “voluntary dissolution”. This move will leave 106 employees without jobs. However, Bancorp claims it was solvent and deposits will be returned to clients.

US Sanctions

The US national security adviser John Bolton announced new sanctions against the bank last week, labeling it a “slush fund” for Ortega, who has faced anti-government protests for over a year. The US had already sanctioned Bancorp due to its ties with Venezuela.

Allegations of Corruption and Money Laundering

The US Treasury Department cited Bancorp for its role in corruption and money laundering to benefit individuals within Ortega’s regime. As a result, the bank was blocked from operating in the US financial markets.

Ties to Venezuelan State Oil Company

Bancorp was founded in 2014 to manage funds of Nicaraguan companies backed by Venezuelan money. It was established by Alba de Nicaragua (Albanisa), a consortium of companies controlled by Ortega loyalists that emerged from an oil agreement signed between Venezuela and Nicaragua seven years earlier.

Venezuela’s state oil company, PDVSA, holds a 51% stake in Albanisa, while Nicaragua’s state oil company Petronic owns 49%. Bancorp issued a statement this week denying any ties with Venezuelan entities.

Nicaraguan Government’s Response

Eduardo Holmann Chamorro, one of Bancorp’s directors, claimed the bank had been “demonized” and isolated by other Nicaraguan banks before the US imposed sanctions. He believes that the banking community did not want Bancorp to continue operating.

Nicaragua’s parliament approved the government’s purchase of Bancorp’s shares for $22.8 million in March, but the transaction was never completed due to pressure from Washington.

Impact on Financial Sector

José Adán Aguerri, president of Nicaragua’s Superior Council of Private Business, believes that the US sanctions prevented Ortega from creating a state bank with Bancorp’s funds, which could have endangered other financial institutions, including the Central Bank.