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Crisis in Venezuela; earnings highlights

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Crisis in Venezuela; earnings highlights

S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.

Crisis in Venezuela

*Venezuela inaugurated a newly elected constituent assembly Aug. 4 that could rewrite the constitution, dissolve state institutions and give vast powers to President Nicolas Maduro's ruling socialist party.

* Two Venezuelan opposition leaders were taken from their homes by security forces in overnight raids Aug. 1, after they reportedly called for protests against a new constituent assembly that will override Congress and rewrite the country's constitution.

* Smartmatic, which has provided election technology and support services in Venezuela since 2004, said the the July 30 elections for the new constituent assembly in the country were rigged.

* Venezuela's state prosecutor said she has started an investigation into allegations that the country's election council had manipulated turnout figures for the election.

* U.S. President Donald Trump's administration imposed sanctions against Venezuelan President Nicolás Maduro a day after the elections.

* The South American trade bloc Mercosur will reportedly meet Aug. 5 to suspend Venezuela indefinitely and disallow it from rejoining until it restores democracy.

* Meanwhile, European Parliament President Antonio Tajani called for sanctions on Venezuelan government officials including Maduro following the arrest of the country's opposition leaders.

* United Nations' regional organization ECLAC expects Venezuela's GDP will contract by 7.2% in 2017.

Earnings highlights

* Banco ABC Brasil SA posted a recurring net income of 107.1 million Brazilian reais for the second quarter, slightly up from the 104.1 million reais in the year-ago period.

* Itaú Unibanco Holding SA posted a 10.7% rise in second-quarter recurring net income, hitting 6.17 billion reais.

* BTG Pactual Group posted net profit for the quarter of 503 million reais, halving from a year-ago profit of 1.00 billion reais.

* Banco de Credito e Inversiones SA reported net income in the second quarter of 90.44 billion Chilean pesos, up 3.17% from the year-ago period.

* Banco de Chile booked a 5.9% year-over-year growth in its net income in the second quarter, coming to 159.82 billion pesos.

* Itaú CorpBanca reported recurring net income attributable to shareholders of 49.52 billion pesos for the second quarter, down 8.6% from the year-ago period.

* The Chilean banking sector's net profit hit 193.20 billion pesos in June, up 16.04% year over year.

Credit research

* Banco Central de la República Dominicana's order for banks to allocate a portion of their legal reserves to lending to specific sectors is a credit negative for the banks, Moody's said.

* Brazil's new rule establishing a net stable funding ratio next year will further strengthen banks' liquidity framework and should be a credit positive for the system, Fitch Ratings said.

In other news

* Panama's banking regulator SBP extended the reorganization process for Balboa Bank & Trust Corp. to 75 days starting July 29, to give the parties time to complete the process.

* Banco Pine SA launched its digital investment banking platform, Pine Online.

* Banco de la Nación Argentina said it is merging the units Nación AFJP and Nación Servicios, under the name of the latter.

* Banco del Estado de Chile reached an agreement on the basis of collective bargaining with trade unions in line with the country's new labor law but without defining the minimum services issue.

* Consumer association 'Consumidores Financieros, Asociación Civil para su Defensa' filed a class-action lawsuit against Banco Columbia SA over credit card commissions.

Featured this week on S&P Global Market Intelligence

* Higher rates continue to buoy profit at Mexico's largest banks: Mexico's largest banks posted a 23.8% jump in second-quarter net profit as a rising rate environment continued to help boost net interest income compared to year-ago levels.

* Best of the Web: Private players replaced state-owned companies as Argentina's biggest borrowers; economic growth in Latin America is dragged down by political risks in its biggest economies; and Mexico's growth prospects are now seen to rely more on domestic issues.

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

* Ratings Roundup: A summary of various ratings actions on Latin American financial institutions and economies.