Banks pull out of merger talks

Venezuelan banks Nuevo Mundo Banco Comercial and Fondo Comun Banco Universal have failed to conclude a merger agreement, citing differences over asset valuation, local daily El Universal reported. The country's banking regulator has officially received notification of the breakdown of merger talks started three months ago following Fondo Comun's signature of a letter of intent to merge with Nuevo Mundo, the paper said. A technical study undertaken by representatives of the two participating bodies concluded that despite synergies, certain irreversible differences over the assessment of assets rendered the proposed merger unsustainable. Neither Nuevo Mundo nor Fondo Comun will suffer any legal penalty on account of the annulment of the letter of intent and both financial institutions are free to undertake similar discussions in the future, the paper added. Fondo Comun Banco Universal began operations at the end of 2000 following the merger of local savings & loan company Fondo Comun Entidad de Ahorro and bank Republica. Fondo Comun is Venezuela's 12th largest bank in terms of assets, posting 509bn bolivares (US$318mn) as of end-May 2003. Nuevo Mundo Banco Comercial has a 0.5% stake in the local financial market with assets totalling 55.2bn bolivares (US$34.5mn).