Banks eye Venezuela investment, JPMorgan seen with advantage

By Saeed Azhar, Tatiana Bautzer and Marianna Parraga

NEW YORK/HOUSTON, Jan 9 (Reuters) - The U.S. engagement successful Venezuela's lipid assemblage offers a imaginable accidental for planetary banks, with JPMorgan Chase successful an advantageous spot owed to its past successful the state and past engagement with planetary commercialized financing.

A clutch of banks including JPMorgan and Citigroup person historically operated successful the country, but reduced operations oregon ​pulled retired successful the past fewer decades. U.S. banks now, however, whitethorn person the imaginable to vie for opportunities successful commercialized financing oregon financing concern successful lipid infrastructure, 1 root acquainted with the ‌situation said. Venezuela is nether an interim authorities aft the United States captured President Nicolas Maduro implicit the play and analysts stressed determination would inactive beryllium important challenges to doing business.

Among the banks, JPMorgan could person an borderline successful the country, wherever it has had a beingness for 60 ‌years. While JPM curtailed its banking and banal trading cognition successful 2002, it kept a dormant bureau successful Caracas for galore years, according to a 2nd root acquainted with the matter, adding that it could beryllium reactivated arsenic needed.

"JPMorgan is among the precise fewer U.S. banks with an bureau successful Venezuela, though enactment is minimal owed to existent restrictions," said María Paola Figueroa, Head of Frontier Latin America Research astatine the Institute of International Finance. "The imaginable reopening of the lipid assemblage and a broader economical betterment could make meaningful opportunities for overseas banks to re-enter the Venezuelan market, taxable to the easing of U.S. fiscal sanctions."

Venezuela has been nether U.S. sanctions since 2006, which were tightened successful 2017, prohibiting U.S. fiscal institutions from providing ⁠new wealth to the authorities oregon authorities lipid company, PDVSA. In 2019, Washington ‌imposed wide sanctions connected its lipid sector. Now the United States is readying to selectively rotation backmost sanctions connected Venezuela arsenic it begins selling Venezuelan oil. The Department of Energy connected Wednesday said that proceeds from lipid would settee successful U.S.-controlled accounts astatine planetary banks.

For JPMorgan, determination could beryllium respective avenues for involvement. One thought floated wrong the slope was ‍the anticipation of creating a commercialized slope to concern lipid exports, a 3rd root acquainted with the substance said, without specifying if authoritative discussions were taking place. The bank, which has a beardown beingness successful oil-producing regions specified arsenic the Middle East and Africa, has humanities precedence here, arsenic it led the consortium of banks that operated Trade Bank of Iraq, acceptable up successful 2003 aft the U.S.-led invasion.