By Todd White

Madrid, April 25 (<a href=quote.bloomberg.com>Bloomberg) -- Santander Central Hispano SA Chairman Emilio Botin last year oversaw the first profit drop at Spain's biggest bank in 15 years, hurt by its Latin American business. He's shifting the focus to Europe to revive earnings.

Botin, who led almost $17 billion of acquisitions in Latin America in the past decade, is selling assets in the region and buying consumer-finance businesses across the European Union, which will grow to 25 member states from 15 next year. Botin also plans to open retail branches in Spain and hire 500 employees.

The strategy shift by the 68-year-old executive helped cushion a drop in first-quarter earnings, analysts said. Rising profit in Europe, and 11,800 job cuts around the world last year, partly offset a decline in Latin America, where Santander is the biggest bank. The Madrid-based company releases earnings Monday.

He's making a good wager,'' said Miguel Larruga, who owns Santander shares and manages the equivalent of $220 million at Ahorro Andaluz. The European Union is taking on new members, and economic growth is more certain than in Latin America.''

Santander shares have gained 13 percent in the last three months, compared with a 6 percent increase in shares of Banco Bilbao Vizcaya Argentaria SA, the No. 2 bank in Spain and Latin America. The 78-member Bloomberg Europe Banks and Financial Services Index has climbed 7 percent in the period.

Profit from retail banking in Latin America probably fell 32 percent in quarter, compared with a 15 percent gain in Europe, estimates Jose Luis de Mora, an analyst at Merrill Lynch & Co.

Currency Hedges

Currencies in Brazil, Mexico and Venezuela dropped against the euro in the past 12 months, leading Santander to post a 10 percent drop in first-quarter profit to 606 million euros ($664 million), the median estimate of six analysts surveyed shows.

The Brazilian real dropped 44 percent against the euro in the past 12 months, while the Venezuelan bolivar declined 58 percent against the single currency. The Mexican peso fell 31 percent.

``Latin America still hangs over earnings, but that's changing,'' said Jose Manuel Jimenez, who helps manage the equivalent of $7.7 billion at Grupo Generali in Madrid.

In February, Santander officials said the bank increased hedging against the impact of Latin American currencies. The bank also hedged 100 percent of the impact on reserves for the Mexican and Chilean peso, and 35 percent for the real. The Chilean peso has lost 26 percent against the euro in 12 months.

Consumer Finance

At the same time, Botin is expanding in Europe. In Spain, Botin plans to open 100 offices in 2003 and hire 500 employees, mostly in sales, at its flagship SCH retail bank. It has lost market share in Spanish loans after closing 1,700 branches in three years at SCH and its local Banesto unit.

Botin, who earned 2.47 million euros in salary and had 1.38 million euros in company loans in 2002, may also make more purchases in consumer finance following the 1.1 billion-euro acquisition of a German auto-leasing company two years ago, analysts said.

Last month Santander bought the remaining 50 percent of its Italian consumer finance company Finconsumo from San Paolo-IMI SpA. Eastern Europe is the next target, bank officials say.

Now's the time to get positioned in this business,'' said Roma Vinas, who owns Santander shares and helps manage the equivalent of $160 million at Privatbank in Barcelona. Consumer lending is risky because bad loans can balloon easily, though consumers will drive the business when the economy rebounds.''

Financing cars, appliances and credit cards earned a 25 percent return on equity last year, the 146-year-old Santander's top division by that measure after asset management.

Consumer finance probably surged 84 percent in the first quarter, Merrill's de Mora estimated.

Third Generation

Investors like this re-focus on Europe, especially on consumer finance,'' said Jean Baptiste Bellon, an analyst at Deutsche Bank who rates Santander a short-term buy.''

Botin, the third-generation of his family to head Santander, is cutting the bank's dependence on Latin America by selling assets, while rivals take advantage of a slowdown to buy them. ABN Amro Holding NV this month agreed to pay about $750 million in cash and stock for Brazilian bank Banco Sudameris Brasil SA.

``Investors were glad Santander didn't buy Sudameris,'' said Deutsche Bank's Bellon.

Last year, Botin sold $7 billion of assets, including a quarter of the Serfin unit, Mexico's third-biggest bank, to Bank of America Corp. The sale probably yielded a first-quarter capital gain of 600 million euros, analysts estimate.

Latin America will probably account for 29 percent of Santander's total profit this year, down from 35 percent in 2002, according to analysts at Morgan Stanley. Rising profit in Europe and lower losses in Latin America should enable Santander to post an increase in profit again in the full year, analysts said. Last Updated: April 24, 2003 19:02 EDT

<a href=reuters.com>Reuters Thu April 24, 2003 06:35 PM ET By Pascal Fletcher

CARACAS, Venezuela, April 24 (Reuters) - Venezuelan President Hugo Chavez thumbed his nose at international lenders on Thursday, saying his government would rather go without loans than accept the kind of conditions imposed by institutions like the International Monetary Fund.

Underlining his fiercely nationalistic rule of the world's No. 5 oil exporter, the populist former paratrooper said his government would not accept any foreign meddling or imposed policy recommendations as it pressed ahead with his self-styled "Bolivarian Revolution."

"Nobody has come here to impose the measures that we have adopted, are adopting or will adopt. We don't accept that," Chavez told businessmen in Maracay, west of Caracas.

In a jibe at the reluctance of some multilateral financial institutions and foreign banks to lend to his government, he said: "Well, if they don't want to lend money to us, then don't. This is a sovereign and independent country".

He said Venezuela would not accept the kind of economic reforms demanded by the IMF in its loan or debt restructuring deals. "The kind of packages the IMF wants to apply to a country as a condition for lending money ... no, no, no".

Venezuela, which earns most of its export revenues from oil sales, is currently in a deep recession. The country has not asked the IMF for aid, but has reportedly sought loans from other multilateral lenders.

Chavez's defiant comments followed his decision this week to bring back as his planning minister Jorge Giordani, a 62-year-old, leftist academic.

Giordani replaced economist Felipe Perez who was fired after disagreements over policies.

In an earlier stint as planning minister, Giordani led the government's economic team until May of last year. He is closely associated with Chavez's interventionist economic policies that are bitterly contested by business and labor opponents.

These include tightening state control over the oil sector and agrarian reforms that call for the expropriation of idle rural estates for redistribution to landless peasants.

After surviving a crippling opposition strike in December and January and a short-lived coup last year, populist Chavez has stepped up his revolutionary rhetoric, railing against what he calls "neo-liberal capitalism", the IMF and U.S. efforts to create a hemisphere-wide free trade zone in the Americas.

RADICAL RHETORIC, BUT DEBTS HONORED

Venezuela's political and economic turmoil has pushed the oil-reliant country into one of the deepest recessions in its recent history. Chavez's latest comments were unlikely to help ongoing efforts by his government to raise fresh funds abroad or negotiate a voluntary external debt swap.

However, analysts said the negative impact of Chavez's radical image and rhetoric was tempered by the apparently swift recovery of Venezuela's strategic oil sector following the opposition strike, which fizzled out in early February.

Chavez said oil output was currently 3.2 million barrels per day, slightly higher than output levels before the strike.

Analysts noted that despite the president's frequent anti-capitalist outbursts, his government had so far continued to honor its external debt payment obligations.

"I think people can see him getting more radical, but they have largely bought into the idea of him paying the external debt," Michael Gavin, head of emerging markets research at UBS Warburg, told Reuters.

Gavin said there was some concern that Giordani, who dominated the government's economic policy between 1999 and 2002, might clash with Finance Minister Tobias Nobrega, who over the past year has tried to woo international markets and is working on the proposed voluntary external debt swap.

"If you have tensions between Giordani and Nobrega, it will be difficult to do," Gavin said.

U.S. investment bank J.P. Morgan said Thursday it had cut Venezuela's bonds to neutral in its model emerging bond portfolio, citing the likelihood of a lower oil price, and the appointment of Giordani.

"The reappointment of Jorge Giordani as Planning Minister and the possible departure of Finance Minister Nobrega could delay the external debt swap," said JPM.

Chavez, who is accused by foes of ruling like a dictator and trying to install Cuban-style communism, said his survival of last year's coup and the recent strike had strengthened his government.

"We're stronger, who can doubt it?" he said.

But even he acknowledged that the recent strike, which slashed vital oil production and exports for several months, had inflicted serious damage on the economy.

<a href=www.opinion.telegraph.co.uk>telegraph.co.uk

Whether or not the Iraq war was about oil, the post-war prospects depend on it. The price of the world's most precious commodity topped $30 a barrel at the start of last month, and pretty painful it felt, too, to those who use it, which means just about everyone.

Part of the rise was due to Sod's Law, the one that says that if one thing goes wrong, others will follow. Increased demand from the US military coincided with production shut-downs in Nigeria, civil unrest in Venezuela and (obviously) the disruption of production from Iraq.

The price surge produced hysterical headlines but (as was predicted here) the $30 barrel was a bear market waiting to happen, and now the forces that pushed up the price have gone into reverse. Yesterday Opec, the cartel which still tries to control the price, announced that $25 was fine by them, and they'd try and hold it there.

It looks a forlorn hope. The price is coming down, probably below $20, and perhaps well below. The boost this will give to the world economy underpins yesterday's relatively cheerful forecast from Jean-Philippe Cotis, chief economist at the OECD.

Is he right? Perhaps. After two years of stagnation and contraction, companies are mending their balance sheets and much of the surplus investment is being worked off, especially in the US. A recovery in business investment and world trade will follow, next year if not this.

For all its fine Paris premises, international reputation and pompous title, the Organisation for Economic Co-operation and Development is just another forecaster, but it comes nearer than most to agreeing with Gordon Brown's rosy view of prospects.

Our economy, it says, should grow by 2.6pc next year, too slow to prevent a further deterioration in the public finances, but fast enough to make us look good against our competitors. We will look positively racy when compared with the eurozone, where the OECD has chopped its forecast to just 1pc growth. In Germany, growth has almost stopped and thanks to the strength of the euro, prospects are getting worse.

A manufacturing economy in stagnation needs devaluation, not revaluation, but there's nothing the Bundesbank can do. Should Mr Brown need further convincing that his famous five tests to join the euro have not been passed, Germany provides a grim lesson. The single currency has been a thoroughly miserable experience for what was once Europe's most successful economy.

alertnet.org-Reuters, 24 Apr 2003 22:25:19 GMT

CARACAS, Venezuela, April 24 (Reuters) - Two dissident Venezuelan army captains have sought political asylum in the Dominican Republic, a year after they helped oust President Hugo Chavez in a brief coup, their lawyer said on Thursday.

Brothers Ricardo and Alfredo Salazar, who escorted Chavez to an island off the Venezuelan coast during April's rebellion, were at the Dominican Republic's embassy in eastern Caracas, attorney Alonso Medina told Reuters.

An embassy official would not comment.

The captains were the fourth and fifth Chavez opponents to seek asylum since the leftist former paratrooper made a spectacular return to power 48 hours after he was toppled.

Costa Rica granted refuge in March to union boss Carlos Ortega, who led an opposition strike in December and January to try to force Chavez into resigning.

Businessman Pedro Carmona, who briefly replaced Chavez in last year's coup, was allowed to leave for Colombia and navy rear-admiral Carlos Molina, who faced investigation for his role in the coup, was granted asylum in El Salvador.

Chavez has sought to bring to trial opposition leaders and former workers at the state oil company, who spearheaded the opposition strike, charging them with treason and rebellion.

The Salazar brothers were part of a group of dissident military officers involved in a Caracas plaza protest in October when they declared themselves in civil disobedience against the Chavez government.

Foes of the populist Venezuelan leader accuse him of ruling the world's fifth largest oil exporter like a dictator and say his self-styled revolution is driving Venezuela to political and economic ruin.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, April 24, 2003 By: Mark Weisbrot

USA-based international commentarist Mark Weisbrot writes: With the war in Iraq receding from the media spotlight, the Bush Administration is now turning some attention to our traditional "back yard" of Latin America.

US Treasury Secretary John W. Snow has just completed a visit to Brazil, Ecuador, and Colombia. In Washington circles such attention is seen as a positive development. It is widely acknowledged that our government has no policy toward Latin America other than those dealing with drugs and terrorism, and this is not exactly the best way to make friends.

Anti-US sentiment in Latin America is running about as high as it has been since riots forced Vice-President Richard Nixon to cut short his 1958 goodwill tour of South America. The war in Iraq has been immensely unpopular, leaving many Latin Americans wondering what "regime change" might be next on Washington's hit list.

Closer to home, Latin Americans are increasingly rejecting "neoliberalismo," the economic experiment that their governments have adopted -- at Washington's urging -- over the last two decades. There can be no doubt as to the failure of this experiment, which has included indiscriminate opening to foreign trade and investment flows, large scale privatizations, and the widespread implementation of unsuccessful macro-economic policies advocated by the International Monetary Fund (IMF).

From 1980 to 2000, income per person in Latin America grew by only 7% over the whole period. In the pre-experimental years of 1960-1980, it grew by 75%. No statistical test is needed to see that something has gone terribly wrong.

The opening years of the 21st century are looking like the beginning of another "lost decade." The downturn of 2001-2002 in Latin America was its worst in nearly two decades. The current recovery is anemic: the IMF projects regional growth of 1.5% for the year, which would still leave income per person -- which is what matters for living standards -- stagnant for 2003.

And given the weakness in the US economy -- including a $3 trillion housing bubble that has yet to deflate -- things could turn out even worse. Latin America sends nearly two-thirds of its exports to the United States, so a recession in our economy tends to drag the rest of the Americas down with it.

Latin Americans have increasingly taken to the ballot box, as well as the streets, to demand more effective and fair economic policies. The elections of populist presidents -- Hugo Chavez in Venezuela in 1998 and 2000, Luis Inacio Lula Da Silva in Brazil (last October) and Lucio Gutierrez in Ecuador (November) are among the results of this rebellion.

Washington refuses to acknowledge that any of its economic policies have failed, and since the US Treasury Department controls the IMF -- which heads up a creditors' cartel that most developing countries must deal with -- it has a tremendous influence on economic decision-making throughout the region.

And for our government, the slogan appears to be "not one step back." Treasury Secretary Snow praised Brazil during his visit for its extraordinarily tight monetary and fiscal policies: short-term interest rates are set by the central bank at 26.5%, and the government is running a large (4% of GDP) primary budget surplus. (The primary surplus is the government's surplus excluding interest payments). The economy is unlikely to grow very much under these conditions, and it will be difficult if not impossible deliver on the social improvements for which millions of Brazilians voted.

In Argentina, the IMF recently signed an agreement that could easily stall the country's slow recovery after the worst depression in its history -- which was itself largely a product of the Fund-supported policies. Yet the IMF continues to prescribe the same medicine of fiscal and monetary austerity.

Other aspects of US foreign policy have stirred deep resentment in Latin America. The Bush administration's support for a military coup last April against the democratically-elected government of Venezuela was reminiscent of the worst outrages of the Cold War era. That seems to have been recognized here -- at least in most policy circles -- as a mistake. Not so for the long-term failure of Washington's economic policies, which have brought enormous harm to almost the entire region.

Until these change, the United States' standing among our southern neighbors will continue to decline.

Mark Weisbrot is Co-Director of the Center for Economic & Policy Research at 1621 Connecticut Ave NW, Suite 500, Washington, DC 20009-1052 -- +1 (202) 293-5380; Fax +1 (202) 588-1356.  You may email Mark Weisbrot at weisbrot@cepr.net

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