March 8, 2019 / 1:12 AM / 5 months ago

Nicaragua Congress approves purchase of bank tied to Venezuela's PDVSA

MANAGUA, March 7 (Reuters) - Nicaraguan lawmakers voted on Thursday to authorize a $23 million government purchase of Bancorp, a financial institution that has been sanctioned by the United States for its links to Venezuelan state-owned oil company PDVSA.

The acquisition is seen as a way to protect the bank from the tough U.S. sanctions that were enacted in late January and aimed at depriving embattled Venezuelan President Nicolas Maduro from obtaining proceeds from PDVSA, especially its Houston-based subsidiary Citgo Petroleum.

The government of President Daniel Ortega, one of Maduro’s few remaining allies in Latin America, formally asked lawmakers to make the purchase, filing an “urgent” request to do so on Wednesday.

Lawmakers from Ortega’s ruling Sandinista National Liberation Front (FSLN), who hold a majority in Congress, voted for the measure.

Bancorp was created in 2015 as a subsidiary of Alba de Nicaragua, known locally as Albanisa, a joint venture between Venezuela’s PDVSA and Petroleos de Nicaragua, the country’s state-owned oil firm, according to statements from government officials at the time of its creation.

Bancorp officials, however, deny that Albanisa or Petroleos de Venezuela, as PDVSA is formally known, have stakes in the bank or influence its operations.

Last month, the U.S. assistant secretary of state for Western Hemisphere affairs, Kimberly Breier, singled out both Albanisa and Bancorp as falling under the new sanctions.

“Sanctions on @PDVSA also target ALBANISA, Bancorp & all majority owned subsidiaries. We will continue to hold the Ortega regime accountable,” Breier wrote in a post on Twitter.

Ortega’s domestic opposition in the Congress sharply criticized the purchase.

“Buying a bank that’s contaminated by PDVSA money is a wrong-headed, infuriating decision that exposes the state to U.S. sanctions,” said Azucena Castillo, a congresswoman with the opposition Liberal Constitutionalist Party (PLC) during the heated legislative debate on Thursday.

Lawmakers voted to finance the Bancorp purchase with a six-year bond issuance.

Reporting by Ismael Lopez; Writing by David Alire Garcia; Editing by Leslie Adler

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