The Honduran government said it would guarantee deposits up to $9,000 for the 220,000 customers of the country’s Banco Continental, which is being shuttered because its owners are accused in the U.S. of laundering money for drug traffickers.
The president of Honduras’ banking regulator, Ethel Deras, said the government would begin this week compensating all depositors up to 200,000 lempiras ($9,000). After that, remaining funds will be paid out according to the country’s banking law. The banking commission assured there were sufficient funds to cover all parties due.
The Honduran government announced Saturday night the closure of Banco Continental, the cornerstone of a family-owned conglomerate of businesses that includes media, financial services, real estate and construction firms. Following the announcement, hundreds of customers lined up at bank branches to withdraw their savings.
The banking commission announced Monday that all bank branches and ATMs would be closed to the public at least until Wednesday and that the commission would make a public announcement when the payouts were to begin.
Clients of Banco Continental lined up outside of branches on Saturday to withdraw their money.
Largas filas en agencias de Banco Continental clientes tienen temor tras denuncia del Depto. del Tesoro a Rosenthal pic.twitter.com/imfuu2nwyY
— Jaqueline Redondo (@JackyRedondo) October 10, 2015
Grupo Continental listed under Kingpin Act
The bank’s problems started last week when the U.S. Treasury Department announced that its parent company, Grupo Continental, and other assets held by Honduras’ powerful Rosenthal family were being listed under the Kingpin Act as linked to illicit drug activities.
At the same time the U.S. Justice Department unsealed an indictment against Jaime Rosenthal Oliva, president of Banco Continental, his son Yani Benjamín Rosenthal and nephew Yankel Rosenthal for allegedly laundering money for Central American drug traffickers. Yankel Rosenthal was arrested at the Miami airport on Oct. 6.
The family has said the men are innocent and has pledged to clear their names in court. In the meantime, they’ve been working to maintain loyalty among Hondurans.
Employees of Banco Continental protested Sunday against the forced liquidation of the bank:
Empleados de continental protestan en contra de la liquidación forzosa de Banco Continental. pic.twitter.com/15TRAv2epF
— Radio HRN (@radiohrn) October 12, 2015
Rosenthal Oliva — who was vice president of Honduras from 1986 to 1990 — requested that the government allow the company to voluntarily liquidate, but the request was denied. The banking commission said that because the U.S. Treasury Department’s froze the bank’s foreign assets, its solvency had dropped to below the legal limit, forcing the government to liquidate.
Besides concerns from Banco Continental customers, the accusations against the Rosenthals have left thousands of Hondurans wondering whether they’ll still have a job. A communiqué from Jaime Rosenthal Oliva, printed in the Tiempo daily newspaper, which he owns, states that the family’s firms contribute 5 percent of the country’s gross domestic product. Grupo Continental employes more than 11,000 people, Rosenthal Oliva stated.
With information from AFP