MSF Informe Anual Ingles 2009 DEF:Maquetación 1

Transcription

ANNUAL
REPORT 2009
ANNUAL
REPORT 2009
C ONTENTS
Mercantil’s Stock Performance
4
Financial Highligths
5
Board of Directors and Administration
6
Notice of Ordinary General Shareholders’ Meeting
7
Board of Directors’ Report
9
Statutory Auditors’ Report
21
Financial Statements
23
Economic Climate
29
Strategic Positioning
33
Management Discussion and Analysis
35
Business Management Report
45
Quality of Service and Operating Efficiency
59
Human Resources
63
Risk Management
67
Performance of Subsidiaries
75
Credit Ratings
83
Prevention and Control of
Money Laundering
85
Internal Auditing
87
Social Commitment
89
Corporate Governance
93
Report of the Board of Directors on
Compliance with Corporate Governance
101
Awards and Acknowledgements
102
Management
105
Subsidiaries and
Corporate Contacts
111
ADRIÁN, PUJOL
ADRIÁN PUJOL
Caracas desde El Estanque • 1999
Acrylic on canvas • 128 x 206 cm
Born in Palma de Mallorca in 1948 where he studied at the Escuela de Artes Aplicadas y Oficios Artísticos and
then at the Escuela Superior de Bellas Artes de San Jorge, Barcelona, Spain. Moved to Venezuela in 1974 and
joined the Centro de Enseñanza Gráfica in Caracas. Pujol furthered his research into pictorial techniques to
use visual textures that resemble crumbling walls or worn textiles. He also incorporates everyday elements such
as bicycles or huge water bottles. During the eighties one of the central themes of his work was automobiles
on dislocated planes. Later on, towards the end of this decade, he focused entirely on landscapes.
Mercantil is Venezuela’s leading financial
services provider with an equity base of Bs 4,880 million (US$ 2,275 million). It operates in 10
countries in the Americas, Europe and Asia. Its shares are listed on the Caracas Stock
Exchange (MVZ.A and MVZ.B) and in the over-the-counter market (OTC) in the United States
of America through a Level 1 ADR program (MSFZY and MSFJY).
The mission of Mercantil Servicios Financieros is to “fulfill the expectations of individuals and
the community where it operates, by providing excellent financial products and services in different
market segments, adding value for its shareholders through the efficient use of the available
resources.”
Mercantil Banco Universal, founded 85 years ago (1925), is Mercantil’s main subsidiary in
Venezuela. As of December 31, 2009, it has a network of 297 branches, one agency in Coral
Gables, Florida, USA, a branch in Curaçao and representative offices, in Bogota, Lima, Mexico,
Sao Paulo, New York and Hong Kong. Mercantil Commercebank, N.A. with 15 branches in
South Florida, one in New York, one in Houston and a loan production office in Weston,
Florida; Mercantil Bank (Schweiz) AG in Switzerland; Mercantil Bank Curaçao N.V. in Curaçao;
Mercantil Bank (Panama) in Panama; Mercantil Bank and Trust, Limited (Cayman) in the
Cayman Islands; Mercantil Merinvest, C.A.; Mercantil Seguros with 32 customer services
offices and Mercantil Inversiones y Valores, a holding for other minority investments.
Since its foundation, Mercantil has played an active role in the country’s development by
financing trade, agriculture and industry in Venezuela. Moreover, it demonstrates its social
commitment by helping different sectors of the community in Venezuela through Fundación
Mercantil, and in South Florida, USA through its subsidiary Mercantil Commercebank, N.A.
Mercantil Servicios Financieros
3
Mercantil’s
Stock Performance
"Caracas Stock Exchange: MVZ.A & MVZ.B
NYSE Level 1 ADR’s : MSFZY & MSFJY"
Year Ended
Earnings per share
2009
2009
2008
2007
2006
2005
US$(4)
bolivars
bolivars
bolivars
bolivars
bolivars
3.71
7.95
9.53
7.96
5.76
7.56
8.63
8.63
18.50
18.50
17.53
17.53
31.00
33.00
42.89
43.26
17.90
18.24
2.3
2.3
1.8
1.8
3.9
4.1
7.5
7.5
2.4
2.4
47.50
39.56
32.77
25.88
21.62
0.4
0.4
0.4
0.4
0.9
1.0
1,7
1.7
0.8
0.8
59,733,553
42,992,256
60,092,098
43,275,460
60,335,793
43,645,654
41,476,057
30,043,282
41,679,888
30,108,375
26,289
32,049
16,095
6,476
43,299
6,792
56,307
35,865
34,683
21,343
1.36
1.02
2 for each 5
0.78
1.90
2 for each 5
1.38
7.4
7.4
5.8
5.8
2.5
2.4
4.4
4.4
7.7
7.6
(1)
Closing Price (2)
Class A share
Class B share
Market price/ Earnings per share
(1)
Class A share
Class B share
Book value per share (3)
Market price / book value
22.15
(3)
Class A share
Class B share
Number of outstanding shares
Class A share
Class B share
Daily Average Traded Volume (Shares)
Class A share
Class B share
Paid Dividends
In stock (new shares for each share held)
In cash (Bs per share)
0.63
Cash dividends for the year / Market price (%)
Class A share
Class B share
(1) Calculated over weighted average shares (issued shares minus repurchased shares) adjusted by stock dividend.
(2) Recalculated considering stock dividend paid in May 2007 to facilitate price comparisons for the periods reported.
(3) Calculated over outstanding shares (issued shares minus repurchased shares) adjusted by stock dividend and by the conversion of 10 common shares into 1 new common share.
(4) Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2.1446/1US$. Exchange control has been in place in Venezuela since February 2003.
Market Quote for Mercantil Class A and B Shares
vs. Caracas Stock Exchange (CSE) Index
50
Price MVZ/A
Adjusted CSE
45
Price MVZ/B
40
35
30
25
20
15
10
5
(1)
(1)
No significant stock exchange activities at this time
A n n u a l Re p o r t 2 0 0 9
4
dec-09
jun-09
dec-08
jun-08
dec-07
jun-07
dec-06
jun-06
dec-05
jun-05
dec-04
jun-04
dec-03
jun-03
dec-02
jun-02
dec-01
jun-01
dec-00
jun-00
dec-99
0
Financial Highlights
Earnings Consolidated
(In thousands of Bs and millions of US$, except percentages and other indicators)
Year Ended
2009
2009
2008
2007
2006
2005
US$(1)
bolivars
bolivars
bolivars
bolivars
bolivars
24,748
12,654
19,980
2,275
53,074,810
27,137,723
42,847,704
4,879,810
46,829,877
22,219,115
36,211,367
4,089,040
39,049,552
19,338,492
31,287,613
3,407,614
31,716,967
14,572,267
25,246,872
2,589,423
24,274,508
11,294,697
19,479,501
2,168,526
942
644
1,321
371
2,019,894
1,380,584
2,833,762
795,692
2,202,576
1,211,818
2,545,578
958,987
1,786,025
1,021,098
2,019,535
783,333
1,330,407
857,851
1,625,319
555,734
969,911
938,285
1,204,404
721,578
7.3%
37.8%
17.8%
1.6%
7.9%
35.7%
24.9%
2.2%
6.5%
38.5%
27.4%
2.2%
6.3%
40.3%
23.6%
2.1%
5.8%
50.1%
37.1%
3.6%
18.3%
18.3%
9.2%
18.5%
18.5%
8.7%
16.7%
16.7%
8.7%
16.3%
16.4%
8.2%
17.0%
17.2%
8.9%
3.3%
96.5%
3.2%
2.5%
110.6%
2.7%
0.6%
285.7%
1.8%
0.7%
264.3%
2.0%
0.3%
632.8%
2.0%
5.4%
58.4%
5.6%
57.7%
5.4%
61.3%
5.8%
64.2%
5.7%
55.4%
22.1%
54.9%
21.4%
61.6%
19.6%
56.3%
15.1%
62.5%
9.9%
61.3%
65.4%
78.1%
96.7%
63.1%
79.4%
102.6%
62.9%
79.5%
99.2%
58.9%
84.2%
105.8%
59.2%
88.5%
110.3%
8,961
872
9,215
965
9,114
1,018
8,647
900
7,841
771
329
21
6
356
20
6
351
20
6
341
21
6
332
21
5
1,379
41,027
1,435
37,655
1,436
32,278
1,222
25,987
1,025
19,022
Balance Sheet (1)
Total Assets
Loan Portfolio (Net)
Deposits
Shareholders’ Equity
Income Statement (2)
Net Interest Income
Commissions and Other Income
Operating Expenses
Net Income
Profitability Indicators (%)
Net Interest Income / Average Financial Assets (NIM)
Commissions and Other Income / Total Income
Net Earnings for the Year / Average Equity (ROE)
Net Earnings for the Year / Average Assets (ROA)
Capital Adequacy Indicators (%)
Equity / Risk-Weighted Assets (regulatory minimum 8%) (3)
Equity / Risk-Weighted Assets (BIS) (4)
Equity / Assets
Loan Portfolio Quality Indicators (%)
Past-Due and Non-Performing Loans / Gross Loan Portfolio
Allowances for Loan Losses / Past-Due + Non-Performing Loans
Allowances for Loan Losses / Gross Loan Portfolio
Efficiency Indicators (%)
Operating Expenses / Average Total Assets
Operating Expenses / Total Income
Liquidity Indicators (%)
Cash and Due from Banks / Deposits
Cash and Due from Banks and Investment Portfolio / Deposits
Other Indicators (%)
Gross Loans / Deposits
Financial Assets / Total Assets
Financial Assets / Deposits
Number of Employees
Employees in Venezuela
Employees Abroad
Banking Distribution Network
Branches in Venezuela (6)
Branches Abroad
Representative Offices
Automatic Teller Machines (ATM)
Point of Sale Terminals (POS) (5)
(1) And (2) Dollar figures are given for reference purposes only and are converted at the controlled exchange rate at December 31, 2009 of Bs 2.1446/1US$. Exchange control has been in place in Venezuela since
February 2003.
(3) In accordance with the standards of the Venezuelan National Securities Commission (CNV).
(4) Calculated using Consolidated Financial Statements adjusted for inflation up to 1999 in accordance with international Accounting Standard No. 29 (IAS-29) and following the standards of the Basel Committee
on Banking Supervision of the Bank for International Settlements.
(5) Physical points of sale.
(6) Excludes employees head office.
5
Board of Directors
Principal Directors
Gustavo A. Marturet
President
Administration
Alejandro González Sosa
Executive President
Gustavo A. Marturet *
President
Gustavo J. Vollmer H.2
Alfredo Travieso P.2
Luis A. Romero M.1
Gustavo Vollmer A.3
Jonathan Coles W.1
Víctor J. Sierra A.2
Roberto Vainrub A.3
Miguel A. Capriles L.3
Alternate Directors
Luis A. Sanabria U.2
Oscar A. Machado K.1
Eduardo Mier y Terán1
Luis Esteban Palacios W.2
Gustavo Galdo C.3
Gonzalo Mendoza M.2
Germán Sánchez Myles3
Luis A. Marturet M.3
Carlos Hellmund B.3
Gustavo Machado C.1
Francisco Monaldi M.1
Federico Vollmer A.1
Claudio Dolman C.1
Carlos Zuloaga T.1
Nerio Rosales R.
Armando Leirós R.
Miguel A. Capriles C.1
Luis Pedro España N.3
Phillip Henríquez S.
Alberto Sosa S.3
Guillermo Ponce Trujillo
Secretary
Alternate
Secretary
Julio Peña Bacalao
Alejandro González Sosa *
Executive President
Nerio Rosales Rengifo *
Global Commercial and Personal Banking Manager
Philip Henríquez S. *
Global Corporate and Investment Banking Manager
Rosa M. de Costantino *
Global Private Banking and Wealth
Management Manager
Alfonso Figueredo D. *
Global Chief Financial Officer
Millar Wilson *
Global International Operations Manager
Fernando Figueredo M. *
Global Chief Risk Officer
Armando Leirós R. *
Global Operations and Technology Manager
Luis Alberto Fernandes *
Global Chief Legal Counsel
Alberto Benshimol M. *
Insurance and New Financial Businesses Manager
Luis Calvo Blesa *
Global Office of the Presidency Manager
Secretary of the Board of Directors
Principal
Statutory Auditor
Francisco Torres Pantin
Leopoldo Machado Espinoza
Julio Peña Bacalao
Alternate Secretary
Alternate
Statutory Auditor
Umberto Chirico
Manuel Martínez Abreu
Toribio Cabeza León
Global Audit Manager
Legal
Counsel
Luis Alberto Fernandes
Alternate
Legal Counsel
Salvador Chang
Global Strategic Planning Manager
* Member of the Executive Committee
Pedro Reyes O.
Note: The Audit, Compensation and Risk Committees were created pursuant
to the provisions of the By-laws and in accordance with a resolution by the
Board of Directors. These committees are made up of Independent Directors,
which are attended by the President and the Executive President (ex-officio).
1
2
3
Member of the Audit Committee
Member of the Compensation Committee
Member of the Risk Committee
6
Notice of Ordinary General
Shareholders’ Meeting
MERCANTIL SERVICIOS FINANCIEROS, C.A.
Authorized Capital Bs 308,811,720.00
Subscribed and Paid-in Capital Bs 154,405,860.00
Caracas - Venezuela
Notice of an Ordinary General Shareholders’ Meeting by agreement of the Board of Directors, to be held at the Company’s Head Office,
Avenida Andrés Bello N° 1, Edificio Mercantil at 04:00:00 AM p.m. on March 26, 2010, with the following agenda:
1. Review the Report submitted by the Board of Directors and the Company’s Audited Financial Statements at December 31, 2009, subject
to consideration of the Statutory Auditors’ Report.
2. Submit the Board of Directors' Report on the Degree of Compliance with the Principles of Corporate Governance contained in Resolution
N° 19-1-2005 of the Venezuelan Securities Commission (CNV) dated February 2, 2005.
3. Appoint the Board Members and their Alternates and establish the fees of all the members of the Board of Directors, in keeping with the
Company Bylaws.
4. Appoint the Statutory Auditors and their Alternates and establish their fees.
5. Consider the “Proposal for the Twenty-first Phase of the Company’s Stock Repurchase Program presented by the Board of Directors of
Mercantil Servicios Financieros, C.A., to the Ordinary General Shareholders’ Meeting on March 26, 2010.”
6. Consider the “Proposal to declare the dividends for 2010 of Mercantil Servicios Financieros, C.A., presented by the Board of Directors to
the Ordinary General Shareholders’ Meeting on March 26, 2010.”
N.B. The shareholders are hereby informed that: 1) The Balance Sheet, Income Statement, Statement of Shareholders’ Equity and Statement
of Cash Flow for the year ended December 31, 2009, duly examined by External Auditors Espiñeira, Sheldon y Asociados, the Statutory
Auditors’ Report and the Board of Directors’ Report; 2) The Report presented by the Board of Directors on the Degree of Compliance with
the Principles of Corporate Governance; 3) the “Proposal for the Twenty-first Phase of the Company's Stock Repurchase Program submitted
by the Board of Directors of Mercantil Servicios Financieros, C.A., to the Ordinary General Meeting of Shareholders held on March 26, 2010,
and 4) The list of candidates for election as Statutory Auditors and their Alternates, will be available for review 15 days prior to the date of
the Meeting at the office of the Secretary of the Board of Directors of the Company at the following address: Avenida Andrés Bello N° 1,
Edificio Mercantil, piso 35, Caracas. The “Proposal to declare the dividends for 2010 of Mercantil Servicios Financieros, C.A., submitted by
the Board of Directors to the Ordinary General Meeting of Shareholders on March 26, 2010” is available at the office of the Secretary of
the Board of Directors of the Company at Avenida Andrés Bello N° 1, Edificio Mercantil, piso 35, Caracas. In accordance with the provisions
of the Company’s Bylaws, the Shareholders are hereby informed that ownership of each group of Common Class “A” shares representing
at least twenty per cent (20%) of the capital subscribed by those shares, affords the right to nominate and appoint one Director and the
corresponding Alternates.
Caracas, February 25, 2010
On Behalf of Mercantil Servicios Financieros, C.A.
Secretary of the Board of Directors
7
OSCAR PELLEGRINO
OSCAR PELLEGRINO
Untitled • undated
Acrylic on paper • 61.6 x 45.5 cm
Born in Caracas, Venezuela (1947-1991). A self-taught painter with a degree in Architecture from Universidad
Central de Venezuela. Influenced by the works of great European artists of the 70’s, his work leans towards
neo-expressionism and calls into question the traditional precepts of painting. His clearly free-flowing style
earned him a significant place among his generation of painters during the 80’s.
Board of
Directors’ Report
Dear Shareholders,
We are pleased to submit for your consideration Mercantil Servicios Financieros’ consolidated
results and main activities for the second half of 2009 as well as for the whole year.
The Financial Statements of Mercantil Servicios Financieros included in this report, consolidate
the activities of its subsidiaries and were prepared in accordance with the standards of the
Venezuelan Securities Commission (CNV). They are also presented in inflation-adjusted values
as supplemental information. They have been examined by the Company’s external auditors
Espiñeira, Sheldon y Asociados, whose report is attached hereto.
Financial Results
Mercantil reported Bs 796 million (US$ 371 million*) in net income, of which Bs 305 million
corresponds to the first half of the year and Bs 491 million to the second.
The main contributors to these profits were Mercantil, C.A., Banco Universal, with Bs 644
million; Mercantil Seguros, C.A. with Bs 202 million; Mercantil Merinvest, C.A. with Bs 49
million; and Mercantil on its own and other subsidiaries with Bs 21 million. The Mercantil
Commercebank Florida Bancorp subsidiary obtained negative income of US$ 31 million after
its loan portfolio provisioning of US$ 132 million in accordance with the Bank’s policy to
guarantee an adequate level of reserves and cope with the unfavorable circumstances
surrounding the US economy, particularly in Florida state. Therefore, following the
reconciliation of accounts required to meet the standards of the Venezuelan Securities
Commission (CNV), Mercantil Servicios Financieros registered Bs 120 million in negative net
income for this subsidiary. The Mercantil Commercebank, N.A. subsidiary posted US$ 25.7
million in negative net income in 2009, and US$ 6.2 million in positive income for the fourth
quarter, reflecting a sustained improvement for the Bank. Mercantil Commercebank N.A. is
positioned as one of Florida’s five largest banks.
* Dollar figures are given for reference purposes only and are
converted at the exchange rate of Bs 2.1446/1US$ Exchange control
has been in place in Venezuela since February 2003
9
Mercantil Servicios Financieros’ Total Assets grew 13.3% to Bs. 53,075 million (US$ 24,748
million*) compared to December 2008 and Shareholders’ Equity increased 19.3% to Bs 4,880
million (US$ 2,275 million*) over the same period.
Net loans grew 22.1% to Bs 27,138 million (US$ 12,654 million*), compared with Bs 22,219
million (US$ 10,360 million*) at the close of 2008. Loan portfolio quality remained at
satisfactory levels. The ratio of Past Due and Non-performing Loans to Gross Loans was 3.3%,
considering the overall loan portfolio of Mercantil Servicios Financieros, which consolidates
the portfolios of Mercantil, C.A., Banco Universal, Mercantil Commercebank Florida Bancorp,
Mercantil Bank (Schweiz) AG, Mercantil Bank Curaçao N.V. and Mercantil Bank (Panama),
S.A. This ratio was 2.5% at the close of 2008. The ratio of Allowances for Loan Losses over
Past Due and Non-performing Loans was 96.5%, compared with 110.6% at the close of 2008.
The efficiency ratio measured by calculating operating expenses as a percentage of average
assets, was 5.4%, compared to 5.6% in 2008; while the efficiency ratio, measured by calculating
operating expenses as a percentage of total income was 58.4%, versus 57.7% in 2008.
The Equity/Risk-Weighted Assets ratio was 18.3% (regulatory minimum 8%). This ratio was
18.5% in 2008. It is determined according to the guidelines of the Venezuelan Securities
Commission (CNV) which are based on the standards of the Basel Committee on Banking
Supervision of the Bank for International Settlements.
Net income per share in 2009 was Bs. 7.95 (US$ 3.71*), 16.6% less than the Bs. 9.53 (US$ 4.44*)
obtained in 2008.
During the second semester, the third and fourth portions of the ordinary cash dividend of Bs
28,822,183.60 (Bs 0.14 per share) and an extraordinary cash dividend of Bs 41,221,865.60 (Bs
0.40 per share), were paid out. These amounts, in addition to the amounts paid out in the
first half of the year, which corresponded to the first and second portions of the ordinary cash
dividend totaling Bs 28,908,792.08 (Bs 0.14 per share) and to the extraordinary cash dividend
totaling Bs 41,287,448.80 (Bs 0.40 per share), amounted to Bs 140,240,290.08, which is more
than sufficient to meet the regulations of the Capital Market Law on this matter. With the
payment of the first and second portions of the ordinary cash dividend and the first portion
of the extraordinary cash dividend, the requirements of the Capital Market Law on the
payment of cash dividends were more than satisfied in 2009.
* Dollar figures are given for reference purposes only and are
converted at the exchange rate of Bs 2.1446/1US$. Exchange control
has been in place in Venezuela since February 2003
10
During the second half of the year Mercantil issued series 2009-I of the bond program
and series 2008-II and 2009-I of the commercial paper program. The Company’s issued
Bs 370,000,000 of debt, distributed as follows: Bs 60,000,000 in unsecured bonds and
Bs 310,000,000 in commercial paper. At year end, Bs 326,008,800 of debt was outstanding
(Bs 196,008,800 in unsecured bonds and Bs 130,000,000 in commercial paper). This was
Bs 2,113,800 more in unsecured bonds and Bs 10,206,500 more in commercial paper than in the
first half of 2009. Mercantil is also in the process of authorizing the 2009-II commercial paper
and 2009-II unsecured bond programs in the amounts of Bs 100,000,000 and Bs 90,000,000,
respectively. The Stock Repurchase Program initiated in May 2000 is currently in its Twentieth
Phase and was approved at the Shareholders’ Meeting held on September 25, 2009. Between
July 1 and December 31, 2009, a total of 333,427 shares constituting treasury stock were
acquired through the Program, of which 164,088 are common Class “A” shares and 169,339
common Class “B” shares. At the close of 2009, Mercantil’s treasury stock position was 1,257,918
shares (603,207 of common “A" shares and 654,711 common “B” shares). The Board of
Directors Meeting at its September 24, 2009 meeting, acting in accordance with the
authorization given at the General Meetings of Shareholders to execute the Repurchase
Program, and in keeping with the provisions of the Capital Market Law, agreed to redeem
1,046,487 shares (489,538 common “A” shares and 556,949 common “B” shares), reducing the
capital stock by Bs 1,569,730.50. The reduction was verified on January 22, 2010 once the term
established in Article 22 of the Code of Commerce had elapsed.
11
In its October 2009 review, the global risk rating agency Fitch Ratings ratified the national risk
rating of commercial paper issues at level “A1" and of unsecured bonds at level “A2”. Additionally
Fitch Ratings ratified Mercantil Servicios Financieros’ short term rating of F-1+(ven).
Fitch’s most recent national rating for Mercantil Banco Universal improved from AA (Ven) to
AA+ (Ven) for long-term investments and from F1 (Ven) to F1+ (Ven) for short-term investments,
and it ratified its international B+ long-term and B short-term rating, as well as its individual
D rating. It also considers the Institution’s outlook to be stable.
Global risk rating agency Moody Investors Service lowered its rating for Mercantil Banco
Universal from D- to E+. Moody’s rating for deposits in legal tender, was B1. Moody’s review
took into account the uncertainty prevailing in the business environment for the Venezuelan
banking system after the government’s intervention of a number of banks at the end of 2009.
In November 2009, Fitch Ratings downgraded its long and short-term rating for Mercantil
Commercebank Florida Bancorp and Mercantil Commercebank N.A. from BBB-/F3 to BB/B
and also lowered the Bank’s individual rating from C to C/D. The downgrade was due to a
deterioration of the results achieved by the bank.
12
Economic Climate
Global
The global economy regained momentum in the second half of the year, driven especially by
China and India which grew 8.2% and 5.2%, respectively. The improvement in the OECD
countries, which was slower and less marked, were due to the counter-cyclical effects of the
monetary and fiscal policies implemented, a slight rebound in trade and consumer spending. The
world economy could register a 1% decline during the year, though in the developed countries
it might be 3.4%, contrasting with 2% growth in the emerging and developing countries.
Estados Unidos United States
After four quarters of negative earnings, in the third quarter of 2009 the US economy picked
up, with 2.2% GDP growth. It is estimated that the contraction for 2009 will be -2.5%,
exceeding the recessions of 1982 (-2%) and 1991 (-0.3%). The key explanations for this economic
upturn are the expansive monetary and fiscal policies implemented in the United States.
Throughout the year the Federal Reserve left short-term interest rates unchanged, averaging
just 0.13%, and it developed a fiscal incentive program of around US$ 65 billion through tax
credits and unemployment benefits. The acute depreciation of the dollar explains the export
growth of 17.8% and 4.7% registered in the last two quarters. Despite this, a degree of
pessimism looms over the job market with unemployment at 10%, across the commercial real
estate sector and the credit market, due to the continued deleveraging of households.
Latin America
Regional GDP underwent a 1.8% contraction (-2.8% per capita), unemployment rebounded
to 8.3% and inflation slipped to just 4.5%, so with few exceptions real salaries continued their
rising trend. Exports fell in terms of volume (-9.6%), and value (-23.4%) and some countries
registered a reduction in immigrants’ remittances, revenue from tourism and credit. The
balance of payments closed with a deficit equivalent to 0.5% of GDP.
With the exception of government spending, the other components of aggregate demand
fell, causing a 4% decline in domestic spending. The counter-cyclical fiscal effort resulted in
a primary deficit of 1% of the GDP.
13
Venezuela
The Venezuelan economy ended a five-year cycle of expansion with a 2.9% drop in GDP, a slight
rise in unemployment to 6.6% and a -8.1% fall in domestic aggregate demand, due to a 2.6%
decline in consumer spending and a 7.6% reduction in fixed capital formation (-3.3% in 2008)
and a 2.1% expansion of government spending. Inflation registered a 25.1% downturn (30.9%
in 2008), because of reduced pressure on the demand and liquidity, above all liquidity obtained
from fiscal sources.
With Venezuelan oil basket prices closing at US $6.7/bbl and imports down by around
US$10,000 million, the balance of trade surplus reached US$ 22,583 million. The deficits in the
Service Account (US$10,006 million) and the Capital and Financial Account (US$ 15,331 million,
plus US$ 4,545 million for Errors and Omissions), brought the global Balance of Payments
deficit to US$ 7,297 million.
Although fiscal management intensified still further, the fall in ordinary revenue, above all oil
revenue, led to a Central Government financial deficit of -5%.
Money supply grew by just 21.6%, influenced by the fiscal adjustment, despite the expansive
monetary policy and a reduction in the cost of financial aid.
Lending rates for savings and term instruments averaged 13.5% and 16.2%, and deposit rates
were 20.7%.
Products and Services
New products and services were developed and made available in 2009 to meet customers’
growing needs.
The strategy of the Mercantil, C.A., Banco Universal subsidiary to offer banking services and
products to the Majorities through its Mercantil’s Ally network, has advanced significantly.
Currently 116 service points are operating through Mercantil's Ally correspondent trading
desks and trading points located in different sectors of the Greater Caracas area and Vargas
and Miranda states.
14
A series of products designed to meet the needs of the Majorities Banking segment is now
available through Mercantil’s Ally. These include the Tarjeta Efectivo cash card, CrediSan
Mercantil and a fuller range of microcredit options.
Mercantil Banco remains the leader in terms of expansion and positioning in the market. In
October the bank began to migrate its card platform to chip technology to give its customers
more security when carrying out transactions using the Llave Mercantil smart debit card at
ATMs in the Mercantil network.
The Llave Mercantil smart card, the first debit card with an inbuilt chip, incorporates state-ofthe-art technology consisting of a latest generation microprocessor or chip, to provide
customers with additional security when undertaking transactions at ATMs with chip
technology enabled. Mercantil is the first bank in Venezuela certified to issue Maestro debit
cards with an inbuilt chip and its ATMs are globally certified, which positions Mercantil as
the first bank in the country to use these high-security devices. The combination of the Smart
Debit Card and the Smart ATM means that transactions carried out on the Bank’s ATM
network are now far more secure.
The results of the annual follow-up audit conducted by the Venezuelan Standardization and
Quality Certification Institute (Fondonorma), in accordance with the ISO 9001:2008,
demonstrated the commitment of the Company, the staff and Management to the system,
and highlighted the enhancements introduced during the year. Eleven lines of service were
audited in line with this year’s ISO requirements: CAM, Online Banking, Home delivery of
checkbooks, Préstame instant loans, corporate client securities, Teller Line, Promissory Notes
for businesses, ATM network, credit cards and Employee Trust.
15
The office network comprises 298 banking centers; in addition there are 1,355 ATMs and 41,027
points of sale located in 30,227 establishments. There are now 6,955 points of sale available
for the Cestaticket Accor Services Electronic Meal Voucher Card located in 6,120 establishments.
Mercantil Seguros is Venezuela’s third largest insurance company in terms of net collected
premiums with 9.1% of the insurance market. During 2009 it continued to expand and improve
its network of offices and customer service points. A new office was opened in Puerto Cabello,
Carabobo state and the Maturin and Porlamar offices were moved and new express service
modules set up in Caracas to handle vehicle claims. The expansion of services to customers
and intermediaries includes a new invoicing and payments platform available on Mercantil
Banco’s website to make transactions easier for policyholders. Changes were also made to
the automatic vehicle and health insurance renewal processes.
Mercantil offers customers affiliated to Mercantil Merinvest’s Investment Brokerage Account
the possibility of placing their purchase orders for the Combined Sovereign Bond offer 2019
and 2024 through its electronic Mercantil Online Banking channel.
During 2009, Mercantil Servicios de Inversión increased its third party investment portfolios
14% compared with 2008, to Bs 5,382 million. The Mercantil Sociedad Administradora de
Entidades de Inversión Colectiva subsidiary remains Venezuela’s mutual fund industry leader.
The Mercantil Mutual Fund Fixed Income Portfolio has Bs 378.2 million in equity, 33% more
than in 2008. The reason for this is the 28% growth of the equity of the Mercantil Investment
Portfolio to Bs 208.4 million and the 40% growth of the Plan Crecer product to Bs 16.7 million.
Last October the Mercantil Bank (Panama) subsidiary in Panama made its
www.mercantilbankpanama.com website and its Personal Mercantil Online Banking services
(Mercantil Banca en Línea para Personas) and its Autobanco service available to its customers.
Prevention and Control of Money Laundering
Money laundering prevention and control is a priority for Mercantil and is part of our
organizational culture. The Company has maintained the internal control and monitoring
standards necessary to ensure early detection of money laundering operations in each of the
activities of its subsidiaries and has stepped up staff training in this area.
To ensure compliance with anti-money laundering legislation, Mercantil has a
“Comprehensive Money Laundering Prevention and Control System” in place in Venezuela
and its foreign subsidiaries, as well as Operational and Follow-Up, and Monitoring and
Oversight plans. It systematically applies its “Know your Customer” policy which is the pivotal
point of its anti-money laundering program.
16
Corporate Social Responsibility
Since Mercantil was created more than 80 years ago, it has been fostering, promoting and
supporting social development programs and one of its corporate values is “to be an integral
institution and an important factor in the development of the communities and areas it
serves.”
In 2009 Mercantil Servicios Financieros channeled its social investments through Fundación
Mercantil and its subsidiaries in Venezuela and the United States. These totaled Bs 10.6
million, of which 45% went to finance projects and programs implemented by a series of
educational institutions and 55% to social development, cultural, health and religious
institutions.
During the year Mercantil continued to support basic education in Venezuela through its
“Give your School a Helping Hand” program which fosters the repair and maintenance of
school buildings nationwide, and the conservation of the environment within which they
function.
Mercantil is also involved in supporting Higher Education through ongoing programs
implemented in conjunction with various public and private national universities, providing
backing both for activities to foster the academic development of students and infrastructure
and research projects at those education institutes.
It also directly supported the work undertaken through programs and activities designed to
handle priority issues in the field of food and nutrition, prevention, training, health and
culture, by private and public social development organizations such as: Fundación Amigos
del Niño con Cáncer, Fundación Cardioamigos, Comedores Madre Teresa de Calcuta, Hospital
de Niños “J. M. de los Ríos”, Dividendo Voluntario para la Comunidad, Fundaprocura,
Fundación Camerata de Caracas, Fundación Contra la Parálisis Infantil, Cáritas de Venezuela
and the Venezuelan Red Cross.
In line with its social commitment, Mercantil supported a number of programs in the United
States, mainly in South Florida, including those of the following organizations: Habitat for
Humanity, the Anti-Cancer League, Florida International University and the Julliard School
in New York. Within the framework of the Reinvestment Act (CRA) community program, it
also provides backing for a number of institutions that directly promote the social
development of low-income communities.
Special mention is due to volunteers among Mercantil’s staff who gave generously of their
time to take part in a variety of community activities.
Acknowledgements
In April 2009, Mercantil Servicios Financieros was included in the ranking of the world’s top
2000 financial institutions according to a survey by Forbes magazine. The Company was
ranked at 1,333, climbing 134 positions since 2008 and was the only Venezuelan financial
institution listed.
17
In its February 2009 edition, Global Finance magazine awarded Mercantil Banco Universal its
”World’s Best Trade Finance Providers 2009” prize for Venezuela. This prize is for financial
institutions with the highest volume of transactions, range of global coverage, customer
services, competitiveness in prices and technological innovation in the world.
Also in its July 2009 edition, Mercantil Banco Universal was rated the Best Consumer Internet
Bank in Venezuela for the second time running.
Dinero magazine published its July edition the results of a survey on “The brands executives
prefer” conducted among 289 executives from different professions in Venezuela’s main cities,
in which the Mercantil Banco subsidiary ranked at the bank preferred by executives to handle
their main accounts, while Mercantil Seguros was their second insurance company of choice.
In March, 2009 Mercantil Commercebank won the Greater Miami Chamber of Commerce’s
Top 100 Minority Business Award. Of the 100 companies that classified as finalists, ten of
them received prizes in various different categories. Mercantil Commercebank was the winner
in the "Employee Workplace Initiatives” category.
In its December 2009 edition, The Banker chose Mercantil Banco Universal as the: Best Bank
in Venezuela in 2009 thanks to its outstanding financial results. The magazine emphasized the
high profit yield maintained by Mercantil Banco Universal, characterized by its sound
organizational structure, optimum risk management and adequate level of capitalization. The
Banker highlighted the creation of the new "Mercantil's Ally" network of service points which
provide banking services and innovative products to segments of the population that had
previously lacked any banking presence.
Development and Working Environment
The new Collective Bargaining Agreement was signed in December and will remain in force
for two years, from 2010-2012. It will benefit more than 7000 workers and contains
improvements to their most important benefits. The main aspects include increases in cover
for Hospitalization, Surgery and Maternity for workers and their relatives and for Visual and
Auditive Health; School Materials and Family Allowances, number and value of scholarships
for workers and aid for children and students. The Board of Directors acknowledges once again
the cordial nature of relations between the National Federation of Workers of Mercantil, C.A.,
Banco Universal and its affiliated unions, which made it possible for Mercantil’s workers to
have a Collective Bargaining Agreement that gives them some very competitive economic
and social benefits. Furthermore, relations between bank officials and employees have
continued to evolve within the traditional spirit of harmony and cooperation and the Board
of Directors wishes to acknowledge them for their efficiency and dedication.
Special mention should be made by the Company and its subsidiaries efforts to design and
implement ongoing training and development programs to allow all the staff to improve their
professional level and keep their knowledge up to date.
18
In March, for the fourth time running the Great Place to Work® Institute, recognized the
Mercantil, C.A., Banco Universal subsidiary as the only financial institution on the list of the
companies in Venezuela with the best working environment, based on the results of surveys
conducted by the Institute on the Company’s organizational climate and its HR management
practices.
For the second time Mercantil Seguros was acknowledged in the fourth Organizational
Climate Survey conducted by the Great Place to Work® Institute, coming in at sixteenth and
being the only company in the insurance sector to be included in the ranking.
Pursuant to a Resolution passed by the Venezuelan Securities Commission (CNV), according
to form CNV-FG-010, Bs 3,257,075.97 in remunerations were paid to Company’s Directors and
Executives during the second semester.
During 2009, a number of Alternate Directors attended Board meetings, either standing in for
Directors in their absence, or as invitees. On the occasion of the President’s and the Executive
President’s temporary absences, some of the Executive President’s functions were delegated
to members of the Executive Committee.
Yours sincerely,
Gustavo A. Marturet
Gustavo J. Vollmer H.
Alfredo Travieso P.
Luis A. Romero M.
Gustavo J. Vollmer A.
Jonathan Coles W.
Víctor J. Sierra A.
Roberto Vainrub A.
Miguel Ángel Capriles López
19
MARGOT, RÖMER
MARGOT RÖMER
Emblema vacío #5 • 1995
Oil and lithographic ink on canvas • 110 x 200 cm
Born in Caracas, Venezuela (1938-2005). Attended the Escuela Cristóbal Rojas,the Centro de Enseñanza Gráfica
de Caracas and the Taller de Grabado Luisa Palacios. Her searches led her to propose plastic experimentations
inspired by the novel samplings of popular culture and the critical content of American pop art in response to
the commercial exploitation of abstract expressionism.
Statutory Auditors’ Report
To the
Shareholders of
Mercantil Servicios Financieros, C.A.
Dear Shareholders,
In our capacity as the Company’s Statutory Auditors, and in conformity with the provisions of
Articles 287 and 311 of the Commercial Code, the Article 128 of the Capital Market Law and the
Professional Standards relating to Statutory Auditors, we are pleased to inform you that we have
examined the consolidated balance sheet of Mercantil Servicios Financieros, C.A. and its
subsidiaries at December 31, 2009 and the related consolidated income statements and
statement of shareholders’ equity and cash flows for the period then ended. The preparation of
these financial statements and their notes is the responsibility of the Management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We were appointed by The Ordinary General Meeting of Shareholders, which we attended, on
September 25, 2009.
Our examination was conducted in accordance with generally accepted auditing standards and
as such included selective tests of the accounting records and other audit procedures we deemed
necessary under the circumstances. We have also taken into account the Report of external
auditors Espiñeira, Sheldon y Asociados for the same period, which should be treated as an
integral part of this report, with whose content we agree, and which we attach hereto.
Based on our analysis, we can confirm that the Company maintains adequate controls over its
loan and investment portfolios which are subject to ongoing analysis and monitoring so that the
appropriate provisions can be created. The Company also maintains the provisions prescribed in
its Bylaws and declares and pays the dividends to which it is obligated under its Bylaws and the
Law. Further, the Company’s internal accounting controls and policies justify our view that there
is no current or potential risk of conditions that are likely to weaken its financial position.
In our opinion, the aforementioned consolidated financial statements present fairly the financial
position of Mercantil Servicios Financieros, C.A. and its subsidiaries at December 31, 2009 and
the results of their operations and cash flows for the period then ended, in conformity with the
Venezuelan Securities Commission (CNV). The Company presents the consolidated financial
statements in inflation-adjusted values as supplemental information.
Yours sincerely,
Leopoldo Machado Espinoza
Umberto Chirico
Statutory Auditor
Alternate Statutory Auditor
Encl. Report of “Espiñeira, Sheldon y Asociados”.
21
RAFAEL BARRIOS
RAFAEL BARRIOS
Trifásica levitante • 1987
Lacquered iron • 177 x 142 x 50 cm
Born to Venezuelan parents in Louisiana, USA in 1947. Graduated in Art, Communication and Design from the
Ontario College of Art in Toronto, Canada. Winner of some important national and international awards. His
sculptural work is a testimony to his own ideas about man’s space and place as a prime reference.
Financial Statements
(Pursuant to the standards of the
Venezuelan National Securities Commission - CNV)
Balance Sheet
Unconsolidated
(in thousands of Bs.)
2009
2008
2007
Year Ended
bolivars
bolivars
bolivars
7,682
5,229,544
36,751
5,273,977
15,908
4,333,012
66,258
4,415,178
6,543
3,881,759
100,520
3,988,822
Total Liabilities
326,009
68,158
394,167
191,374
134,764
326,138
394,968
186,240
581,208
4,879,810
4,089,040
3,407,614
Total Liabilities and Shareholders’ Equity
5,273,977
4,415,178
3,988,822
Assets
Cash and Due from Banks
Investment Portfolio
Other Assets
Total Assets
Liabilities and Shareholders’ Equity
Unsecured Bonds and Commercial Papers
Other Liabilities
Income Statement
Unconsolidated
(in thousands of Bs.)
2009
2008
2007
Year Ended
bolivars
bolivars
bolivars
4,018
15,440
23,470
967,357
971,375
1,170,764
1,186,204
916,787
940,257
(132,360)
(43,323)
(175,683)
(159,628)
(67,589)
(227,217)
(89,988)
(66,936)
(156,924)
795,692
958,987
783,333
Income
Financial Income
Equity Investments
in subsidiaries
Total Income
Expenses
Operating
Financial
Income Tax
Total Expenses
Net Income
Alejandro González
Alfonso Figueredo Davis
Isabel Pérez Sanchis
Gustavo A. Marturet
Executive President
Corporate Comptroller
President
23
Consolidated
Balance Sheet
(In thousands of Bs and millons of US$)
Year Ended
2009
2009
2008
2007
2006
2005
US$ (1)
bolivars
bolivars
bolivars
bolivars
bolivars
374
3,578
17
260
191
0
801,598
7,673,511
36,820
557,517
410,612
0
692,405
6,112,488
31,819
559,096
343,301
(8)
422,006
5,213,551
4,238
110,590
378,624
(315)
346,024
2,911,146
2,867
60,277
499,530
(230)
279,218
1,245,753
2,654
99,434
303,895
(186)
4,420
9,480,058
7,739,101
6,128,694
3,819,614
1,930,768
33
4,727
213
9
946
620
71,772
10,136,710
456,373
19,971
2,029,133
1,330,133
56,581
5,587,336
641,453
45,088
8,113,010
128,188
260,393
5,910,348
1,096,678
33,520
3,995,194
176,074
398,438
6,272,875
657,125
16,294
4,305,053
309,436
122,553
5,769,223
812,221
76,512
3,096,957
123,179
6,549
14,044,092
14,571,656
11,472,207
11,959,221
10,000,645
137
293,880
312,012
324,579
92,808
0
Current
Restructured
Past-Due
In Litigation
12,598
41
398
33
27,017,149
87,870
854,373
71,056
22,229,944
49,413
541,868
24,219
19,545,543
24,644
116,978
7,779
14,726,303
28,414
103,767
7,283
11,457,264
30,583
31,723
4,531
(Allowance for losses on Loan Portfolio)
13,070
( 416)
12,654
28,030,448
( 892,725)
27,137,723
22,845,444
( 626,329)
22,219,115
19,694,944
( 356,452)
19,338,492
14,865,767
( 293,500)
14,572,267
11,524,101
( 229,404)
11,294,697
141
71
24
228
523
301,846
153,336
51,453
490.039
1,122,383
322,388
92,556
25,243
514,814
1,032,992
245,939
57,318
22,462
426,255
1,033,606
186,174
36,784
5,068
319,368
725,663
157,619
26,107
6,633
267,556
590,483
24,748
53,074,810
46,829,877
39,049,552
31,716,967
24,274,508
Assets
Central Bank of Venezuela
Venezuelan Banks and other Financial Institutions
Foreing Banks and Other Financial Institutions
Pending Cash Items
(Allowance for Cash and Due from banks)
Invesments Portfolio
Invesments in Trading Securities
Invesments in Securities Available-for-Sale
Invesments in Securities Held-to-Maturity
Share Trading Portfolio
Invesments in Time Deposits and Placements
Restricted Investments and Repos
Financial Direct Assets
Loan Portfolio
Interest and Commissions Receivable
Long-Term Investments
Assets Available for Sale
Property and Equipment
Other Assets
Total Assets
(1)
Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2.1446/1US$. Exchange control has been in place in Venezuela since February 2003.
Alejandro González
Gustavo A. Marturet
Executive President
President
24
Consolidated
Balance Sheet
Year Ended
Liabilities and Shareholders’ Equity
2009
2009
2008
2007
2006
2005
US$ (1)
bolivars
bolivars
bolivars
bolivars
bolivars
4,849
5,704
6,482
2,944
10,398,275
12,232,187
13,902,051
6,315,191
7,789,967
9,642,957
11,427,879
7,350,564
6,644,492
8,188,269
8,777,472
7,677,380
5,128,745
6,221,425
7,160,491
6,736,211
3,326,303
4,670,412
5,316,585
6,166,201
19,980
42,847,704
36,211,367
31,287,613
25,246,872
19,479,501
146
312,394
173,922
356,144
259,087
170,583
146
312,394
173,922
356,144
259,087
170,583
56
0
0
202
170
337
11
1
120,319
0
456
432,673
364,146
722,730
22,999
2,137
112,502
0
2,649
325,443
1,870,860
776,345
61,256
2,904
161,279
72,000
64,597
80,081
588,320
681,983
115,049
3,488
267,726
100,000
163,367
83,711
395,286
581,313
140,046
5,168
176,537
45,000
83,653
189,173
0
261,955
78,422
138,858
777
1,665,460
3,151,959
1,766,797
1,736,617
973,598
13
1,443
114
27,138
3,094,804
244,656
37,751
2,918,561
244,656
47,771
1,936,796
244,656
37,130
1,576,382
268,247
40,080
1,246,326
193,186
22.472
48,192,156
42,738,216
35,639,777
29,124,335
22,103,274
1
2,844
2,621
2,161
3,209
2,708
73
89
95
78
155,976
191,709
203,894
166,715
155,976
191,709
201,279
166,715
156,479
191,709
201,668
166,715
107,717
191,709
52,304
166,715
113,352
191,709
53,890
166,715
131
1.829
( 14)
280,144
3,922,188
( 29,319)
279,497
3,273,354
( 16,515)
273,672
2,447,230
( 12,900)
267,820
1,823,396
( 13,950)
275,270
1,492,805
( 139,197)
( 18)
( 37,820)
( 32,472)
( 29,127)
( 25,170)
( 25,292)
12
26,323
(130,503)
12,168
18,882
39,274
2,275
4,879,810
4,089,040
3,407,614
2,589,423
2,168,526
24,748
53,074,810
46,829,877
39,049,552
31,716,967
24,274,508
Liabilities
Deposits
Non-Interest Bearing Checking Accounts
Interest Bearing Cheking Accounts
Saving Deposits
Time Deposits
Debt Authorized by the
National Securities Commission
Publicly Offered
Debt Securities
Financial Liabilities
Obligations with Banks and Savings and Loan Institutions
In Venezuela up to one year
In Venezuela for more than one year
Abroad up to one year
Abroad for more than one year
Financial liabilities indexed to Securities
Liabilities Under Repurchase Agreements
Other Liabilities up to one year
Other Liabilities for more than one year
Interest and Commissions Payable
Other Liabilities
Subordinated Debt
Total Liabilities
Minority Interest in Consolidated Subsidiaries
Capital
Paid-Up Capital
Maintenance of Paid-In Capital
Premium for Issuing Stock
Capital Reserves
Adjustment for Conversion of Net Assets
by Subsidiaries Abroad
Retained Earnings
Shares Repurchased and Held by Subsidiaries
Repurchased shares restricted
for employees´ stock option plan
Unrealized Gain from Adjustment at
Market Value of Investments
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
(1)
Alejandro González
Gustavo A. Marturet
Executive President
President
25
Consolidated
Income Statement
Year Ended
2009
2009
2008
2007
2006
2005
US$ (1)
bolivars
bolivars
bolivars
bolivars
bolivars
Income from Cash and Due from Banks
Income from Investment Portfolio
Income from Loan Portfolio
Income from Financial Assets
5
512
1,627
20
11,179
1,099,090
3,488,723
42,019
33,787
957,586
3,450,762
31,951
11,525
796,618
2,218,304
29,838
16,505
678,562
1,585,296
1,132
9,176
618,697
1,043,729
0
Total Interest Income
2,164
4,641,011
4,474,086
3,056,285
2,281,495
1,.671,602
Interest on Demand and Savings Deposits
Interest on Time Deposits
Interest on Securities issued by the institution
Interest on Financial Liabilities
(609)
(105)
(58)
(79)
(1,305,262)
(226,191)
(124,809)
(170,204)
(1,059,657)
(428,639)
(153,584)
(156,442)
(532,103)
(392,150)
(88,407)
(30,703)
(361,659)
(374,582)
(29,180)
(77,289)
(227,307)
(324,709)
(17,240)
(66,220)
Total Interest Expenses
(852)
(1,826,466)
(1,798,322)
(1,143,363)
(842,710)
(635,476)
Net Interest Income
1,313
2,814,545
2,675,764
1,912,922
1,438,785
1,036,126
Provision for Losses on Loan Portfolio
Expense for Devaluation of Investments in
Available-for-Sale Securities
(354)
(759.658)
(473.188)
(126,897)
(108,378)
(66,215)
(16)
(34.993)
0
0
0
0
942
2,019,894
2,202,576
1,786,025
1,330,407
969,911
Trust Fund Operations
Foreing Currency Transactions
Commissions on Customer account Transactions
Commissions on Letters of Credit and Guarantees Granted
Equity in Long-Term Investment
Exchange Gains
Income on Sale of Investments Securities
Other income
23
1
108
9
30
1
93
380
48,265
2,106
230,693
19,138
64,774
2,350
198,947
814,311
42,673
3,067
183,740
31,113
66,478
(8,890)
258,919
634,718
40,682
3,765
181,808
32,576
41,333
(1,537)
184,632
537,839
38,816
2,020
153,105
24,622
32,909
9,494
149,389
447,496
33,680
1,250
99,250
21,080
22,644
126,427
324,231
309,723
Total Commissions and Other Income
644
1,380,584
1,211,818
1,021,098
857,851
938,285
1,062
(910)
2,278,612
(1,952,257)
1,666,930
(1,391,018)
1,061,618
(885,954)
675,611
(562,175)
443,353
(341,618)
152
326,355
275,912
175,664
113,436
101,735
1,738
3,726,833
3,690,306
2,982,787
2,301,694
2,009,929
(639)
(1,370,994)
(1,155,761)
(904,364)
(734,526)
(514,299)
(167)
(90)
(426)
(357,952)
(192,011)
(912,805)
(293,118)
(144,533)
(952,166)
(225,053)
(113,320)
(776,798)
(169,523)
(77,280)
(643,990)
(148,955)
(53,868)
(487,282)
(1,321)
(2,833,762)
(2,545,578)
(2,019,535)
(1,625,319)
(1,204,404)
417
893,071
1,144,728
963,252
676,375
805,527
(45)
0
( 96,890)
0
( 192,181)
7,068
( 188,552)
9,183
( 124,699)
5,938
( 80,138)
(2,721)
( 45)
( 96,890)
( 185,113)
( 179,369)
( 118,761)
( 82,859)
Minority Interest
(0)
( 489)
( 628)
( 550)
( 1,880)
( 1,090)
Net Income for the Year
371
795,692
958,987
783,333
555,734
721,578
Interest Income
Interest Expenses
Net Financial Margin
Insurance Premiums. Net of Claims
Premiums
Claims
Total Insurance Premiums. Net of Claims
Operating Income
Operating Expenses
Salaries and Employee Benefits
Depreciation, Property and Equipment Expenses,
Amortization of Intangibles and Other
Fees Paid to Regulatory Agencies
Other Operating Expenses
Total Operating Expenses
Net before Income taxes, Extraordinary items
and Minority Interest
Taxes
Current
Deferred
Total Taxes
(1)
Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2.1446/1US$. Exchange control has been in place in Venezuela since February 2003
Alejandro González
Gustavo A. Marturet
Executive President
President
26
ADRIÁN, PUJOL
ADRIÁN PUJOL
El Ávila desde Altamira II • 1994
ERNESTO LEÓN
ERNESTO LEÓN
Turpial Vegetal • 1985
Acrylic and oil on wood (veneer) • 110 x 122 x 0.4 cm
Born in Caracas, Venezuela in 1956. Studied art in Madrid, Mexico, Caracas and New York. Has won many
awards during his career. The approach he takes to depict detaches itself from academic truth. He proposes a
new iconography. The setting responds to the social, geographic, historic and cultural contrasts of the place that
from which it stems.
Economic Climate
Global
The global economy regained momentum in
the second half of the year, driven by the successful performance of a large proportion of the
emerging economies, especially the Asian giants like China and India which grew 8.2% and
5.2%, respectively during the year. The OECD countries’ recovery which was much slower and
less marked, was underpinned by the counter-cyclical effects of the monetary and fiscal
policies implemented, by a slight rebound in trade and by consumer spending. Initially the
global economy’s GDP could fall around 1% during the year, but performance is likely to be
very asymmetric. The GDP of the developed economies as a whole, which were directly
affected by the financial markets, fell 3.4 percentage points, contrasting with around 2%
growth in the emerging countries and the developing economies. Signs of an improvement
towards year end justified a gradual shift in economic diagnoses and consolidate the
hypothesis that the worst of the crisis is over. However, considerable asymmetries between
the performance of one economy and another, still latent signs of risk in credit markets
(commercial real estate) and the need to make additional adjustments to the balance sheets
of over-indebted households, indicate that the world economy is not exempt from risk.
United States
After four consecutive quarters of falling growth rates, the US economy entered a phase of
recovery, beginning in the third quarter of 2009 when the GDP registered a 2.2% deseasonalized
variation. Although no data is yet available on fourth quarter GDP growth, preliminary estimates
suggest around 3.7% growth. This would point to a GDP variation of -2.5% during the year, quite
a lot steeper than the downturns seen in the 1991 recession (-0.3%) and the 1982 recession (-2%).
Certainly, the monetary and fiscal policy actions, which have been broadly expansive in the
United States, are key to explaining why the economy picked up in the second half of the year.
It is important to note that during the year the Federal Reserve kept short-term interest rates on
the track at an annual average of 0.13%. A fiscal stimulus program of around US$ 65 billion was
executed during the fiscal year (October 2008 to October 2009) concentrating on tax credits and
unemployment benefit. An acute depreciation of the dollar also helped to boost export growth
in the last two quarters (17.% and 4.7% respectively). Despite the still prevalent negative
perception of the labor market (with unemployment up 10%), the concentration of new risks in
the commercial real estate sector and the likelihood of households undergoing a continued period
of deleveraging, have been affecting credit market volumes.
29
Latin America
The international financial crisis interrupted post-2003 regional growth, when total GDP declined
1.8% and per capita GDP by 2.8% (versus 4.1% and 3% respectively in 2008), although towards the
second half of the year signs the real sector looked set to recover. As domestic demand weakened,
inflation dropped to 4.5% (8.3% in 2008). Unemployment rebounded to 8.3% (7.4% in 2008), still
low compared to the average for the decade, and with few exceptions real salaries continued
their upwards trend. This negative growth of regional GDP was mainly due to a fall in export
volume (-9.6%) and export value (-23.4%), compounded in some countries by a decrease in
immigrants’ remittances, tourism revenue and credit. Poorly performing BOP current account
flows resulted in a deficit of 0.5% of GDP, similar to the 0.6% registered in 2008.
With the exception of government spending, which responded to counter-cyclical measures, the
other components of aggregate demand fell, leading to a total decline of 4% in domestic
spending. This fiscal effort, reinforced by the fall in tax revenue due both to the recession and the
fall in the export values, pushed the primary fiscal balance from a surplus equivalent to 1.4% of
GDP in 2008 to a primary deficit of 1% of GDP in the year just ended.
Taken in perspective, everything points to the likelihood of an economic recovery in the region
of 4.3% in 2010, although there is still reasonable doubt as to the ability to sustain this expansion
for longer.
Venezuela
The Venezuelan economy, as is the case in the rest of Latin America, closed its five-year cycle of
sustained expansion with a 2.9% decline in economic activity in 2009 (+4.8% in 2008). As has
been the norm while the fixed exchange rate has been in place, the worst performance registered
was in non-oil tradable activities, which decreased 5.1%, while non-tradable activities were down
by just 0.8%. Unemployment closed the year at 6.6% (6.1% during the same period in 2008). On
the expense side, domestic aggregate demand declined 8.1% (compared with 5.5% growth the
previous year) as a combined result of a decreases of 2.6% in consumer spending (+7.1% in 2008)
and 7.6% in fixed capital formation (-3.3% in 2008), and a 2.1% (6.7%) expansion of government
spending which was unable to reverse the effect of the contraction of the other components of
aggregate demand.
Accumulated inflation to December 2009, measured through the Consumer Price Index, was
25.1% (30.9% the previous year), with a slowdown in the rate at which prices vary that is consistent
with the reduced pressure from aggregate demand and a less expansive (particularly fiscally
sourced) liquidity.
30
Venezuelan oil basket prices declined from US$ 99.6/bbl in 2008 to US$ 61.7/bbl in 2009. Despite
imports falling by about US$ 10 billion, the drop in the value of exports reduced the balance of
trade surplus from US$ 45,656 in 2008 to US$ 22,583 million at the close of 2009. This balance was
not sufficient to offset deficits of US$ 10,006 million in the Service Account and US$ 15,331 million
in the Capital and Financial Account which, added to the negative balance resulting from Errors
and Omissions, brought the global Balance of Payments deficit to US$ 7,297 million.
Fiscal management contracted still further than 2008. Primary real per capita spending, which
had fallen -5.3% in 2008, was down again in 2009, this time by 15.4%, in response to the negative
external shock. Despite this, the unfavorable behavior of ordinary revenue, especially non-oil
income, brought the Central Government’s financial deficit of -1.2% in 2008 to -5% in 2009.
Monetary liquidity grew 21.6% in 2009 (26.8% in 2008), so that after taking inflation into account,
payment methods in real terms fell 4.2% (exceeding the real decline of 3.9% in 2008). This
behavior, which was significantly influenced by the fiscal adjustment, was in spite of the
Venezuelan Central Bank’s expansive monetary policy , and was reflected in a decrease in the
availability of regulated securities (CDs and Repos) from Bs 22.7 billion at the close of 2008 to
Bs 10.2 billion in 2009, along with a reduction in the cost of financial aid (repurchases, advances
and rediscounts) from 33.5% to 29.5% and of absorption operations by 6%, and 7% for 28-day and
56-day securities.
Deposit rates averaged 13.5% and 16.2% for savings and term
investments respectively, versus averages of 13.8% and 16.1%
Summary of Economic Performance
2008
2009
during 2008. Lending rates averaged 20.7%, 254 basis points less
than 2008 average. In real terms, both lending and deposit rates
Percentage variation of Gross
Domestic Product%
Total
Oil Sector
Non Oil Sector
4.8
2.5
5.1
-2.9
-6.1
-1.9
Exchange Rate. Bs./US$
Year End
Average
2.15
2.15
2.15
2.15
-
-
Inflation
Cumulative Variation
Annualized Variation
31.9
36.8
26.9
17.2
Interest Rates. Year Ended
Average Lending rates (6 main Banks)
90 day Time Deposits (6 main Banks)
21.7
17.6
18.9
15.0
registered negative values of -4.9% and -8.5%, respectively (versus
Exchange Rate Variation %
Year End
Average
-6.3% and -12% respectively in 2008).
Source: Central Bank of Venezuela and own calculations
31
ANTONIO LAZO
ANTONIO LAZO
Desnudo y paisaje • 1989
Acrylic and charcoal on canvas • 240 x 300 cm
Blas Antonio Graterol Lazo was born in Caracas in 1943. A multifaceted artist with solid training and teaching
experience. From his travels around North and South America and Europe he has taken an iconographic alphabet
whose roots lie in universal cultures, and incorporated them into his paintings and drawings which, influenced
by the Italian Trans-Avantgarde, break down the sense of art itself both formally and conceptually .
Strategic
Positioning
Mercantil has been implementing a global
business strategy based on the development of value proposals differentiated by client
segment that aim to satisfy their banking, insurance and investment needs. This strategy is
aligned with and based on the Company's corporate vision, long-term strategic vision and
principles and values.
Principles and Values
Mission
To fulfill the needs of the individuals
and communities where Mercantil has
presence by providing excellent financial
products and services in various market
segments, enhancing shareholder’s value
• To be the best provider of financial products and services, measured by the degree of
satisfaction of our customers’ needs.
• To be a modern and innovative institution, capable of anticipating the needs of our
customers and the actions of our competitors.
• To be the financial institution of reference in terms of service quality.
• To develop a high quality risk and asset and liability management.
by efficiently using our available
• To stay focused on operational efficiency, using technology to support the management
processes.
resources.
• To have the best and most capable staff.
Vision
To be the independent financial institution
of reference in the areas of banking, asset
management and insurance, in the
markets where we serve.
• To be a solidary institution and an important factor in the development of the communities
where we operate.
• To be recognized as an institution with proven and solid ethical principles.
• To have a broad stockholding base and be governed by the best principles of transparency
and access to information required by our shareholders and the securities market.
All year round Mercantil continued to make headway in its efforts to improve quality of service
for its customers through a timely and efficient response to their financial needs and by providing
them with the best products and services available through our network of offices and electronic
channels, incorporating new electronic banking functionalities and improving internal process
and customer services at banking centers. In turn, expanding the cross-selling of insurance, trust
fund, investment and brokerage products to traditional banking clients, creates a tighter bond
with our customers and increases our knowledge and awareness of their needs.
On an international scale, we are continuing to strengthen our local activity and presence in
the United States and Panama, developing new strategies to enable us to grow and diversify
our banking and investment services businesses and leveraging our operations in Europe, Latin
American and Asia. It is precisely there that our activity has been crucial for developing the
foreign trade, international private banking and investment services businesses. So, by making
major enhancements to our customer service model and our network of banking centers in
the United States, we aim to raise quality of service and operational efficiency levels to provide
greater satisfaction for our customers.
We intend to do all of the above while complying strictly with the regulations in force in the
countries in which we operate, maintaining a strong level of capitalization and heeding the
principles of transparency and sound management which, for Mercantil, are key to its strategic
positioning, to the nature of the institution and to its daily activity.
33
JORGE PIZZANI
JORGE PIZZANI
Overscape • 1988
Oil on jute • 186 x 240 cm
Born in 1949 in Acarigua, Portuguesa state. Studied at the Neumann Foundation’s Instituto de Diseño and then
at the Centro de Enseñanza Gráfica in Caracas. His paintings and drawings bring out his immense expressive
vitality. He began by creating anthropomorphic figures, later breaking up his figures to emphasize the
supremacy of gesture. During the 80's he focused on landscapes, a theme which, along with faces, will prevail
throughout his artistic career. Winner of numerous recognitions, among them the Salón Avellán award of the
Museo de Arte Contemporáneo de Caracas.
Management
Discussion and Analysis
Balance Sheet
A summarized balance sheet for 2009 is
shown below and the main variations by comparison with 2008 are commented on:
Summary of Consolidated
Balance Sheet
Year end
(In thousands of Bs and millions of US$
except percentages)
2009 Vs. 2007
Increase/
(Decrease)
bolivars
%
Increase/
(Decrease)
bolivars
%
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
24,748
53,074,810
46,829,877
39,049,552
6,244,933
13.3
14,025,258
35.9
6,549
14,044,092
14,571,656
11,472,207
(527,564)
(3.6)
2,571,885
22.4
Loan Portfolio, Net
12,654
27,137,723
22,219,115
19,338,492
4,918,608
22.1
7,799,231
40.3
Deposits
19,980
42,847,704
36,211,367
31,287,613
6,636,337
18.3
11,560,091
36.9
2,275
4,879,810
4,089,040
3,407,614
790,770
19.3
1,472,196
43.2
Trust Fund Assets
4,523
9,699,922
8,605,247
8,006,657
1,094,675
12.7
1,693,265
21.1
Total Assets
(1)
2009 Vs. 2008
The audited financial estatements and their notes can be found annexes to this report. The
accounting standars used are summarized at the end of this chapter.
Total Assets
Total assets are Bs 53,075 million (US$ 24,748 million)1, representing annual growth of 13.3%.
At December 31, 2009 the total consolidated assets of the Mercantil Banco Universal
Assets by Currency
(including overseas agencies) registered Bs 5,939 million (18.9%) year-on-year growth from to
Bs 53,075 million
(US$ 24,748 million)1
Year 2009
Bs 37,333 million (US$ 17,408 million)1 to Bs 31,394 million (US$ 14,639 million)1. At year end
Mercantil Banco Universal ranks second in the Venezuelan financial system in terms of total
assets with a 10.5% market share, while the leading institution has 12.3% and the country’s four
largest banks account for 39.3%.
The Mercantil Commercebank Florida Bancorp subsidiary (a holding of Mercantil
Commercebank, N.A.) posted US$ 5,948 million1 (Bs 12,756 million) in total assets, down 0.8%
from the US$ 5,998 million1 (Bs 12,863 million) registered in December 2008.
Mercantil Seguros registered Bs 2,184 million (US$ 1,019 million)1 in total assets, reflecting
Bs 626 million (23%) year-on-year growth compared with Bs 1,558 million (US% 726 million)
at the close of 2008.
(1)
Bolivars
71%
US Dollars
29%
35
The Swiss subsidiary, Mercantil Bank (Schweiz) A.G., registered US$ 330 million1 (Bs 708
Investments in Securities
by Issuer
million), in total assets at the close of December 2009, similar to the levels at the end of 2008,
Bs 14,044 million
(US$ 6,549 million) 1
Year 2009
year-on-year growth compared with US$ 775 million1 (Bs 1,662 million) at the end of 2008.
while its assets under management totaled US$ 815 million1 (Bs 1.748 million) reflecting 5.2%
At the close of 2009, investments totaled Bs 14,044 million (US$ 6,549 million)1, down Bs 528
million (3.6%) from Bs 14,572 million (US$ 6,794 million)1 in 2008. This variation includes: a)
3.9% reduction in the domestic operation, and b) 0.3% growth of the overseas operation in
dollar terms.
Total investments in Securities Issued or Guaranteed by the Venezuelan nation (excluding
the BCV) represent 0.8 times Mercantil’s equity and 7.8% of its assets. These securities are 0.8
times Mercantil Banco Universal’s equity and represent 7.6% of its assets. According to
Venezuelan Central Bank
22%
U.S. Government
23%
U.S. Government
Sponsored Agencies
17%
International Private Sector
information obtained from the Ministry of Economics and Finance at June 30, 2009, Mercantil
holds 3.8% of the public debt securities issued by the Venezuelan State .
Investments by maturity and yield at December 31, 2009 are broken down as follows:
4%
Venezuelan Government
29%
Venezuelan Private Sector
5%
Investments by Maturity and Yield
(in millions of Bs. except percentages)
Trading
Maturity
(years)
2
Market Value
Amortized cost
The yield of securities is based on amortized cost at year-end. Yield
is calculated by dividing income from securities (including premium
amortization or discounts) by amortized cost or market value.
5 Bs 1.831 are Central Bank placements with less than 60 days
maturity.
Bs. 2
Bs. Less than 1
From 1 to 5
Over 5
Available for
Sale
Bs. 2
Held to
Maturity
%4
Bs. 3
1,473
2,078
312
9.0%
12.1%
8.5%
101
772
5,401
10,137
5.0%
4.6%
5.1%
%4
158
9.6%
159
6.7%
22
106
11
456
1.4%
2.6%
8.4%
Shares
Bs. 2
Time Deposits
and Placements
Restricted
Investments
Bs. 2
TOTAL
Bs. 2
%
1,903 5
6.1%
1,288
5.9%
4,822
2,078
491
117
0.5%
9
2,029
0.4%
8
2
32
1,330
0.2%
4.9%
6.2%
320
880
5,453
14,044
%4
20
3
4
US$ Less than 1
From 1 to 5
Over 5
72
72
20
Investments at December 2009 by company, by issuer and by currency are distributed as
follow:
Breakdown of Investments by Issuer and Currency at December 31, 2009
(In millions of Bolivars and US$, except percentages)
U.S.
U.S. Agencies
Int’l Venezuelan Venezuelan
Central Government
Private Government Private
Bank
Venezuelan
Bolivars
Mercantil Banco Universal
Mercantil Seguros and others
Total Bs.
1
Dollar figures are given for reference purposes only and are
has been in place in Venezuela since February 2003.
6 Bs 492 million include US$ indexation clause.
US Dólares
Mercantil Commercebank
Florida Bancorp
Mercantil Seguros and others
Total US$
Breakdown %
36
Totales
Bs.
0
0
24
2,518 6
1,160
3,678
60
64
18
151
0
6,038
1,352
7,390
Totales
en US$ 1
293
0
1,347
106
1,513
939
81
1,084
44
220
282
0
55
206
0
18
18
2.330
480
3,103
21.8%
23.1%
16.5%
4.5%
29.3%
4.8%
100.0%
3,057
3,057
24
439
192
631
Loan Portfolio
Loan Portfolio by
Business Segment
At year end net loans totaled Bs 27,138 million (US$ 12,654 million)1, up 22.1% compared with
a consolidated level of Bs 22,219 million (US$ 10,361 million)1 in 2008. This variation includes:
Bs. 27,138 million
Year 2009
a) 22.8% growth of the domestic operation, and b) 0.7% reduction of the overseas operation
in dollar terms.
The ratio of Past-due and Nonperforming Loans to Gross Loans was 3.3%. At Mercantil Banco
Universal this indicator is 0.9%, compared with 2.4% for the Venezuelan financial system and
10.2% at Mercantil Commercebank (12.5% nonperforming loans). At December 31, 2009, 96.4%
of Mercantil’s loan portfolio was outstanding. The allowance for losses on loan portfolio
covers 96.5% of Past-due and Nonperforming Loans; this indicator is 378.9% at Mercantil
Banco Universal and 22.5% at Mercantil Commercebank.
Mercantil Banco Universal is Venezuela's leading bank in terms of tourism, and manufacturing
loans, and mortgages under the Mortgage Debtor Law (Ley Especial del Deudor Hipotecario),
Large Corporations
22%
with market shares of 16.3%, 20.3% and 16.9%, respectively. It also ranks second in terms of
SME’s
46%
Gross Loans and Agricultural Loans with market shares of 13.1% and 13.0% respectively.
Individuals
32%
Mercantil Banco Universal’s loan portfolio at the close of 2009 was broken down as follows:
Bs 20,040 million (US$ 9,345 million)1, reflecting 31.9% year-on-year growth compared to
Bs 15,190 million (US$ 7,083 million)1 in 2008.
Percentage of Mercantil Banco Universal’s required loan portfolio
for each Sector of the economy and applicable interest rates
Dec-09
Sector
Agriculture
Mortgage
Percentage of Compliance
Calculated on the average gross loans
at 12/31/2008 and 12/31/2007. Monthly
Compliance. Maximum per customer
5% of the current portfolio. Requires
the monthly increase of new customers.
Loan Portfolio must be distributed
among priority and non-priority items
according to the Ministry of Agriculture
and Land. 2
%
reached
%
required
Set weekly by the Central Bank
(BCV). At 12/31/2009 this is 13%.
24.0%4
21.0%
10.0%
Set semi-annually by the Housing
and Habitat Ministry, based on the
weighted average lending rate of leading banks in Venezuela. The social interest rate is currently set in
relation to borrowers’ total family
income and is between 4.66% and
14.39%.
3.0%
Within minimum and maximum
rates established by the Central
Bank. At 12/31/2009 the rate can
not be higher than 24%.
3.0%
Each month the Central Bank of Venezuela sets a preferential rate for
the sector. At 12/31/09 it is 16%, but
in some cases the Law on Credit for
the Tourism Sector provides that it
can be as low as 13%.
Calculated on the gross loan portfolio
at 12/31/2008, distributed as follows:
6% in long-term loans and 4% in shortterm loans. Annual Compliance.
14.3%
3% Calculated on the gross loan port-
Microcredits folio at 06/30/2009. Monthly Compliance.
3.4%
Tourism
1 Dollar figures are given for reference purposes only and are
has been in place in Venezuela since February 2003”.
2 At 12/31/2009 primary agricultural loans were 84.4% (81.2% for
priority items and 3.1% for non-priority items).
3 The Banks must earmark at least 10% of their gross loan portfolio
for manufacturing activities at December 31, 2009.
4 Includes Agricultural Bonds issued by the State under the
agricultural portfolio quota.
Industrial
at 12/31/2008. In September 2009 the
Ministry of Tourism stipulated that banks
must earmark 3% of their loan portfolio
for the tourism sector.
at 03/31/2009. Monthly Compliance.
37
Interest rates applicable
at December 2009
3.2%
Set by the Central Bank at 19%.
16.2%
3
10.0%
At the close of 2009, Mercantil Commercebank Florida Bancorp’s net loans totaled US$ 3,255
million1 (Bs 6,981 million). This was US$ 212 million1 (Bs 36 million) 7.0% more than the US$
3,043 million1 (Bs 6,526 million) recorded at the end of 2008. This portfolio is made up
primarily of commercial loans, mortgages and corporate credits.
Loan Portfolio
Classified by Status
Year end
(In thousands of Bs, except percentages)
Current
Restructured
Past Due
In Litigation
Total Gross Loans
2009 %
2008 %
2007 %
bolivars
bolivars
bolivars
27,017,149
87,870
854,373
71,056
28,030,448
96.4
0.3
3.1
0.2
100.0
22,229,944
49,413
541,868
24,219
22,845,444
97.3
0.2
2.4
0.1
100.0
19,545,543
24,644
116,978
7,779
19,694,944
99.2
0.1
0.6
0.1
100.0
Deposits
Deposits by
Business Segment
Deposits reached Bs 42,848 million (US$ 19,980 million)1 at the close of 2009, exceeding the
Bs 42,848 million
Year 2009
consolidated level of Bs 36,211 million (US$ 16,884 million)1 registered at the close of 2008 by
18.3%. This variation includes: a) 18.8% growth of the domestic operation, and b) 0.5%
reduction of the overseas operation in dollar terms.
Mercantil Banco Universal in Venezuela is the leading institution in the national banking
system with a 19.6% share of the savings deposit market; it also ranks second in terms of total
deposits including investments sold under repurchase agreement, with 11.3% of the market
At the close of 2009, Mercantil Banco Universal’s deposits registered 26.8% growth, from
Bs 25,389 million (US$ 11,839 million)1 in 2008 to Bs 32,197 million (US$ 15,013 million)1 .
Mercantil Commercebank’s deposits at December 31, 2009 totaled US$ 4,729 million1 (US$ 10,142
million), reflecting a 2.3% reduction of US$ 110 million1 (Bs 929 million) compared with
Large Corporations
25%
SME’s
22%
Individuals
53%
US$ 4,8391 million (Bs 10,379 million) at the end of 2008.
At December 31, 2009 shareholders’ equity registered 19.3% year-on-year growth from Bs 4,089
million (US$ 1,906 million)1 to Bs 4,880 million (US$ 2,275 million)1. The variation is mainly
due to: Bs 796 million in 2009 earnings; Bs 157 million increase from adjusting available-forsale investments to their market value and Bs 147 million reduction for cash dividends paid
out and for allowances for the minimum cash dividend payable in 2010, in keeping with the
provisions of the Capital Market Law; Bs 13 million from share buybacks in accordance with
the repurchase program approved, and Bs 3 million for shares repurchased and restricted
under the employee stock option plan.
1 Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2,1446/1US$. Exchange control has
been in place in Venezuela since February 2003.
38
Mercantil’s Equity/Assets ratio at December 31, 2009 is 9.2% and its Equity/Risk-Weighted
Assets ratio 18.3% (minimum requirement 8%), based on the standards of the Venezuelan
Securities Commission (CNV) (8.7% and 18.5% at December 31, 2008). For Mercantil Banco
Universal, the Equity/Assets ratio is 10.2%2 and the Equity/Risk-Weighted Assets ratio 17.0%
at December 31, 2009 (9.1% and 15.2% at December 31, 2008), based on the standards of the
Superintendency of Banks in Venezuela. For Mercantil Commercebank, N.A., these indicators
are 10.9% and 20.8% respectively, based on the standards of the Office of the Comptroller of
the Currency (8.9$ and 16.7% at December 31, 2008). The equity ratios of Mercantil and its
subsidiaries exceed the regulatory minimums.
Profit and Loss
The main variations between the figures for December 31, 2009 and December 31, 2008 are
summarized below:
2009 Vs. 2008
Financial Margin
Year Ended
(In thousands of Bs. and millions of US$
except percentages)
(1)
2009
2009
2008
US$(1)
bolivars
bolivars
2009 Vs. 2007
Increase/
Increase/
2007
(Decrease)
(Decrease)
bolivars bolivars
% bolivars
%
Interest Income
2,164
4,641,011
4,474,086
3,056,285
166,925
3.7
1,584,727
51.9
Interest Expense
(852)
(1,826,466)
(1,798,322)
(1,143,363)
28,144
1.6
683,103
59.7
Net Interest Income
1,313
2,814,545
2,675,764
1,912,922
138,781
5.2
901,623
47.1
Provision for losses on loan Portfolio
(354)
(759,658)
(473,188)
(126,897)
286,470
60.5
632,761
498.6
Expenses for Devaluation of
Available-for-Sale Securities
(16)
(34,993)
0
0
34,993
100.0
34,993
100.0
942
2,019,894
2,202,576
1,786,025
(182,682)
(8.3)
233,869
13.1
Net Interest Income
Net Interest Income during 2009 was Bs 2,815 million (US$ 1,313 million)1, 5,2% more than in
2008 when it reached Bs 2,676 million (US$ 1,248 million)1. This variation includes: a) 7.5% growth
of the domestic operation, and b) 2.3% reduction of the overseas operation in dollar terms.
The increase in net interest income in Venezuela is mainly the result of the increase in financial
intermediation from 63.1% at December 31, 2008 to 65.4% at December 31, 2009.
The net interest income/average financial assets ratio for 2009 was 7.4%, compared to 7.9%
in 2008.
1
2
Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2,1446/1US$. Exchange control has been in place in Venezuela since February 2003.
Obtained by dividing shareholders’ equity by total assets less investments in National Public Debt securities (DPN)
39
Allowance for Losses on Loan Portfolio
Expenses for Loan Portfolio provisions were recorded at Bs 760 million (US$ 354 million)1. This
brings the accumulated provision to Bs 893 million (US$ 416 million)1 as of December 31, 2009
and represents a 3.2% increase in total loans and 96.5% coverage of Past-due and
Nonperforming loans. Write-offs for the year under review were Bs 207 million in Venezuela
and US$ 128 million abroad.
The Mercantil Banco Universal subsidiary recorded Bs 477 million (US$ 222 million)1 in loan
portfolio allowances during 2009. This was due to loan portfolio growth and is intended to
increase the level of provisions for the agricultural, industrial and construction sectors.
The Mercantil Commercebank subsidiary recorded US$ 132 million1 (Bs 283 million) in loan
portfolio provisions during 2009, mainly for commercial activities and mortgages for
construction and housing.
Expenses due to Devaluation of Investments
in Available-for-Sale Securities
In the year ended December 31, 2009, Mercantil recorded Bs 35 million in the permanent
Devaluation of Investments in Available-for-Sale Securities account , mainly due to the difference
between the cost of securities represented by the value in the national market at the date of
purchase, and the fair value of securities purchased in October 2009 in the international foreign
currency-denominated securities market .
Distribution of Total Income
Bs 4,521 million
Year 2009
2009
2008
Financial Margin
62%
64%
Commissions and Insurance Premiums, Net
22%
19%
Earnings on sale of Investments in Securities
4%
6%
12%
11%
Other Income
(1)
Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2.1446/1US$. Exchange control has
been in place in Venezuela since February 2003.
40
Commissions, Other Income and
Insurance Premius
Year Ended
(In thousands of Bs and millions of US$
except percentages)
2009 Vs. 2007
Increase/
(Decrease)
bolivars
%
Increase/
(Decrease)
bolivars
%
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
942
2,019,894
2,202,576
1,786,025
(182,682)
(8.3)
233,869
13.1
644
1,380,584
1,211,818
1,021,098
168,766
13.9
359,487
35.2
152
326,355
275,912
175,664
50,443
18.3
150,691
85.8
1,738
3,726,833
3,690,306
2,982,787
36,527
1.0
744,047
24.9
Insurance Premiums, Net of Claims
Operating Income
(1)
2009 Vs. 2008
Commissions and Other Income increased 13.9% (Bs 169 million) in 2009 compared to 2008.
This was mainly due to:
• Bs 59 million (145%) increase in income from the recovery of written-off credits.
• Bs 48 million (250.7%) increase due to the valuation of derivatives operations .
• Bs 47 million (7.9%) increase in income from commissions, mainly due to the higher volume
of transactions.
• Bs 22 million (49.6%) income growth from financing insurance policies.
• Bs 11 million (126.4%) growth of income due to exchange differences.
• Bs 10 million (113.5%) growth of income due to yields from other accounts receivable.
• Bs 60 million (23.2%) decline in investment trading activity, because Bs 78 million in
provisions were recorded in 2009 as a result of valuing securities in foreign currency at the
official exchange rate in force in Venezuela.
Insurance premiums, net of commissions, reinsurance and claims totaled Bs 326 million
(US$ 152 million)1 in 2009, 18.3% higher than the Bs 276 million (US$ 129 million)1 recorded for
2008. This growth in earnings from the insurance business is mainly due to a 36.7% premium
growth to Bs 2,279 million in 2009, and 40.3% earned premium growth to Bs 1,952 million over
the same period. The technical result was Bs 86 million (US$ 40 million)1, 50% (Bs 28 million)
more than the Bs 58 million (US$ 27 million)1 recorded in 2008.
Operating Expenses
Year ended
(In thousands of Bs. and millions of US$
except percentages)
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
2009 Vs. 2007
Increase/
(Decrease)
bolivars
%
Increase/
(Decrease)
bolivars
%
24.9
Earnings from Financial Operation
1,738
3,726,833
3,690,306
2,982,787
36,527
1.0
744,047
Operating Expenses
(682)
(1,462,768)
(1,389,817)
(1,115,172)
72,951
5.2
347,596
31.2
Personal Expenses
(639)
(1,370,994)
(1,155,761)
(904,364)
215,233
18.6
466,630
51.6
(45)
(96,890)
(185,113)
(179,369)
(88,223)
(47.7)
(82,479)
(46.0)
Minority Interests
(0)
(489)
(628)
(550)
(139)
(22.1)
(61)
(11.0)
Net Income for the Year
371
795,692
958,987
783,333
(163,295)
(17.0)
12,359
1.6
Taxes (Current and Deferred)
(1)
2009
2009 Vs. 2008
41
Operating Expenses
Operating and personnel expenses registered 11.3% (Bs. 288 million) year-on-year growth,
due mainly to:
• Bs 215 million (18.6%) rise in Personnel Expenses. Higher expenses include the application
of salary increase policies. In Venezuela, Mercantil Banco Universal’s assets/employee ratio
rose from Bs 3.9 million in 2008 to Bs 4.9 million in 2009. At Mercantil Seguros, net
collected premiums by employee rose from Bs 1.4 million in 2008 to Bs 1.9 million in 2009.
The overseas business per employee indicator went from US$ 6.8 million to US$ 7.5 million
over the same period.
• Bs 65 million (22.1%) rise in Depreciation, Property and Equipment Expenses, Amortization
of Intangibles and Others.
• Bs 47 million (32.4%) increase in fees paid to regulatory bodies, mainly due to the larger
volume of operations.
• Bs 39 million (49.5%) reduction in advertising and marketing expenses.
The efficiency ratio measured by calculating Operating Expenses as a percentage of Average
Assets, was 5.4% in December 2009, versus 5.6% in December 2008. The ratio of Operating
Income to Total Income rose 58.4% in December 2009 from 57.7% in December 2008.
Over the last 12 months Venezuela registered 26.9% inflation. This variable has a significant
effect on Mercantil’s operating expenses.
Taxes and Contributions
Mercantil and its subsidiaries reported significant expenses for various types of taxes and
contributions corresponding to the year ended December 31, 2009.
In the case of operations carried out in Venezuela, these included: Bs 88.9 million in estimated
Corporate Income Tax payable; Bs 108.4 million in Value Added Tax, Bs 127.2 million in
municipal taxes; Bs 126.8 million in contributions Deposit Guarantee and Banking Protection
Fund (FOGADE); Bs 36.7 million in contributions to the Superintendency of Banks and Other
Financial Institutions, and Bs 6.1 million in contributions to the Superintendency of Insurance.
In the case of transactions outside Venezuela, Bs 7.0 million in expenses were recorded for
Corporate Income Tax; Bs 3.2 million for municipal taxes and other contributions, and Bs 22.9
million for contributions to the agencies responsible for regulating banking activities.
Mercantil Servicios Financieros and its subsidiaries also complied with other contributions
provided for in the pertinent legislation.
42
Summary of the Accounting Principles
Used to Prepare the Financial Statements
Venezuelan National Securities Commission (CNV)
Mercantil’s financial statements are presented based on the
accounting standards of the CNV. A summary of some of the
main accounting principles applied is given below:
Securities Held for Trading: Unrealized gains or losses
• Mercantil Bank (Schweiz) AG, bank in Switzerland and its
resulting from differences in fair value due to market
subsidiary Mercantil Bank and Trust Limited (Cayman) in the
fluctuations are included in the results for the period.
Cayman Islands.
Available-for-Sale Securities: Recorded at their fair value.
Unrealized gains or losses resulting from differences in fair
value and exchange rate fluctuations are included in
shareholders’ equity. Held-to-Maturity Securities: Recorded
at their acquisition cost, adjusted for amortization of
premiums or discounts. For all portfolio investments,
permanent losses resulting from decreases in fair value, are
recorded in the results for the period in which they occur.
• Mercantil Bank Curaçao, N.V., bank in Curaçao and its
subsidiary Mercantil Bank (Panama), S.A. in Panama.
• Mercantil Merinvest, Casa de Bolsa, C.A., a securities
brokerage company in Venezuela, Mercantil Servicios de
Inversión, C.A. and Mercantil Sociedad Administradora de
Entidades de Inversión Colectiva, C.A.
Inflation Adjustment
Loan Portfolio
Loans are classified as past due when they are 30 days
overdue.
• Mercantil Seguros, C.A., insurance company in Venezuela.
Allowances for losses on loan portfolio are
determined through a collectibility assessment that quantifies
the amount to be set aside for each loan. These assessments
take into account such aspects as economic conditions, credit
risk by customer, credit history and the collateral received.
When evaluating loans for small amounts of the same nature,
these are grouped together to determine provisions.
According to CNV standards, Mercantil’s financial statements
must be presented in historic figures as of December 31, 1999.
Therefore, as of that date, Mercantil ceased to adjust for
inflation in its primary financial statements. As a result, fixed
assets, among others, are shown at their inflation-adjusted
value up to December 31, 1999. The market value determined
by independent assessments is greater than the cost adjusted
for inflation indicated above. New additions are being
recorded at their acquisition value. The audited financial
statements of Mercantil and subsidiary Mercantil, C.A. Banco
Recognition of income and expenditure
Universal at the close of 2008, prepared according to US
Income, costs and expenses are recorded as and when they
GAAP, are available on our website.
are earned or incurred. Interest earned on loan portfolios is
recorded as income when collected. The fluctuation in the
market value of derivatives is included in the income
statement for the period. Insurance premiums are recorded
as income when earned.
Accounting differences between CNV standards
applicable in Venezuela and US GAAP standards
The main accounting differences for Mercantil Commercebank
Florida Bancorp for the reconciliation of items under CNV and
US GAAP are:
Consolidation
• Deferred corporation tax (ISLR): US GAAP allows deferred
The consolidated financial statements include the accounts of
tax to be recognized for the total amount of loan portfolio
Mercantil and its subsidiaries and other institutions in which
loss allowances, while the CNV standards only allow
Mercantil has a controlling share. Its main subsidiaries are:
recognition of allowances for loans classified as high risk and
• Mercantil, C.A. Banco Universal, full-service bank in
unrecoverable.
Venezuela and its overseas agencies and branches.
• Provision for assets received in lieu of payment: The CNV
• Mercantil Commercebank, N.A., bank in the United States
standards stipulate a 100% allowance for real property
of America and its subsidiaries Mercantil Commercebank
received in lieu of payment after one year from the date of
Investment Services, Inc. and Mercantil Commercebank
incorporation; under US GAAP no amortization deadlines
Trust Company, N.A.
are established.
43
JULIO PACHECO RIVAS
JULIO PACHECO RIVAS
Ouroboros • 1987
Painted and assembled wood • 275 x 530 x 169 cm
Born in Caracas, Venezuela in 1953. Has lived in Paris since the 70’s and won many national and international
prizes. Considered self taught, his personal language reached maturity during the 80’s when he sketched a
world of expression on large formats, without textures or chromatic dissonances, accentuating volumes and
tenuous color contrasts.
Business Management Report
Commercial and Personal Banking
Mercantil is a financial services institution
that offers a portfolio of high quality products and services on the domestic market through
Mercantil C.A. Banco Universal, as well as on the international market, in the United States
in particular through its local subsidiary Mercantil Commercebank.
Commercial and Personal Banking plays a leading role in this area through a competitive
model of service geared strongly towards personalized customer service.
Deposits
Loans
Year 2009
Year 2009
Individuals
71%
Individuals
37%
Companies
29%
Companies
63%
The proportion of Mercantil Servicios Financieros’ loan portfolio handled by Global
Commercial and Personal Banking was Bs 21,559 million at the close of 2009, which accounts
for 79% of the entire portfolio. Venezuela’s contribution to this amount reflects 38% growth
over 2008. Global Commercial and Personal Banking has a 59% share of Mercantil
Commercebank’s total loans.
This unit handles Bs 32,177 million in deposits. Venezuelan activities account for a 73% share
of this amount which grew 25% over the previous year. Deposits in the United States grew
slightly, reaching US$ 3,994 million (Bs 8,573 million) and account for 85% of Mercantil
Commercebank’s total deposits.
45
At the close of 2009, Personal Banking achieved Bs 22,688 million (US$ 10,569 million) in total
deposits, 19% more than at the close of 2008. Deposits in Venezuela grew 25% and in the
United States 8%. Personal Banking’s loan portfolio grew 15% to Bs 8,050 during the year. In
Venezuela Personal Banking grew 29%, accounting for mainly by Credit Cards, Mortgages
and Promissory Notes.
In the United States, Personal Banking’s approach was redefined to continue providing
financial services to meet the needs of customers living abroad. Personal Banking
International’s customers were segmented into Upper Mass, Premium and Premium Plus
categories, according to their balances and the complexity of their financial needs.
In order to expand the Bank’s role in the US domestic market even further, Personal Banking
opened two new branches: The first in Palm Beach county and the second in Parkland, a
community in Broward county; bringing the total number of branches in the United States to
seventeen.
In 2009 Mercantil incorporated chip technology in its debit cards and ATMs in Venezuela to
provide advanced security for customers. It was the first bank in the country to launch this
technology.
Another important achievement for Personal Banking customers in Venezuela was the ability
to participate in the Capital Market through a Bs 620 million in investments in the Primary
and Secondary Markets.
In Venezuela, the network of Mercantil’s Ally contact points was further expanded in 2009 to
serve the Majorities Banking segment with 150 commercial alliances made up of
Correspondent Trading Desks and Correspondent Trading Points. Mercantil’s Ally offers the
unbanked sectors traditional banking services geared both to personal customers and groups
of entrepreneurs and giving them access to financial services in areas where, until now,
banking services had not been available.
Personal Banking
Deposits
Personal Banking
Loans
Year 2009
Year 2009
Mercantil Banco Universal 70%
Mercantil Commercebank 30%
46
7%
Commercial Banking’s consolidated loan portfolio grew 24% to Bs 13,509 million at the close
of 2009, driven by 47% growth in Venezuela. Deposits totaled Bs 1,376 million at the close of
2009, 82% of which came from Venezuela.
Commercial Banking in Venezuela have access to the Pronto Crédito Empresarial Mercantil
instant credit product for that segment’s short and long-term needs and to maximize the
profitability of their cash surpluses. At the close of 2009 more than 11,000 clients were
affiliated to the product. Through this product, customers in this segment have been given
corporate credit cards with limits in excess of Bs 89 million.
Commercial Banking in the United States in 2009 reviewed and consolidated the customer
services models, improving loan officers’ capacity to manage larger portfolios. This
consolidation contributed to a 34% increase in the size of the average portfolio managed per
executive.
The Bank achieved an important competitive edge by making it possible for international
business clients to open new accounts on line at www.mercantilcb.com. On this site foreign
companies have access to all the forms and requisites, including a detailed guide that shortens
the time it takes to open a new account. The enhanced process increased by 50% the average
monthly number of new accounts compared to the previous semester.
During 2009, the Real Estate segment focused on loan portfolio management, reducing loan
concentration in commercial property to a minimum. To mitigate the risk associated with new
loans, stricter standards and limits were implemented for several types of loans with property
as collateral.
Commercial Banking
Deposits
Commercial Banking
Loans
Year 2009
Year 2009
47
Corporate and Investment Banking
During 2009, Global Corporate and Investment Banking focused its strategy on the
continuous improvement of quality of service for its clients around the world through the
Corporate, Oil and Gas, and Financial Institutions segments at Mercantil Banco Universal,
Mercantil Commercebank and other Mercantil subsidiaries. Through the development of
innovative solutions and benchmark products, global business was promoted with emphasis
on the Venezuelan, US and Latin American markets.
To maximize the organizational changes made, actions have focused on the improvement of
client management, account plans and performance management, standardized everywhere.
In Venezuela, the USA and the different countries where Mercantil operates, the Global
Corporate and Investment Banking contributed towards the 2009 closing balance. Total loans
reached Bs 6,296 million (US$ 2,928 million). In terms of total deposits, Corporate and
Investment Banking culminated the year with a total volume of Bs 10,126 million (US$ 4,710
million).
At the close of 2009, the commercial relation of Corporate and Investment Banking Unit
involved 1, 208 economic groups at Mercantil Banco Universal and over 453 economic groups
in the USA and Latin America, which it dealt with through Mercantil Commercebank, N.A.
The Corporate and Investment Banking Unit continued to intensify its penetration of the
global market and implement its segmented value proposal for clients, strengthening the
products area to cover their emerging needs through the Corporate Products, Corporate
Finance and Capital Market Units.
Global Corporate and Investment
Banking / Loan Portfolio
Global Corporate and Investment Banking
Deposits (including investments sold under repurchased agreement)
Year 2009
Year 2009
Corporate/Oil and Gas
64%
Corporate/Oil and Gas
Financial Institutions
36%
Financial Institutions
7%
Public Sector
6%
48
87%
Corporate Banking
During 2009, the total deposits of Mercantil’s corporate clients in the different parts of the
world, where Corporate and Investment Banking provide their services, grew 22%, and by the
end of the year they reached Bs 7,845 million (US$ 3,649 million) with 99% corresponding to
the Venezuelan Corporate segment.
This allowed business in the Venezuelan Corporate segment to attain a higher growth level
(24%) consistent with the fast-growing market liquidity and rational rate of remuneration for
those deposits.
The Corporate and Investment Banking Unit’s loan portfolio fell 4% during 2008, closing at
Bs 3,490 million (US$ 1,623 million) at the close of 2009. This moderate behavior was in line
with the risk policies established by the institution given the conditions prevailing in the
market and particularly in the US and Latin America at the end of 2009.
Oil and Gas
This segment’s activity was affected by the fall of the oil GDP in Venezuela and declining oil
prices. The oil sector’s loan portfolio was Bs 559 million (US$ 260 million) at year end, down 14%
compared to the previous year.
This segment’s deposits in Mercantil registered a 5% upturn to Bs 896 million (US$ 417 million).
Financial Institutions and International Relations
In the global financial environment, the Financial Institutions and International Relations Unit
maintained a level of activity in keeping with Mercantil Servicios Financieros risk policy. In
Venezuela, the Unit maintained its loan and deposits volume of Bs 236 million and Bs 710
million respectively, emphasizing cross-selling of products and services to insurance
companies, securities brokerages, banks and diplomatic organizations.
Activity in Latin America was significant and focused on strategically increasing deposit levels,
always aligned with these markets’ perception of risk. This effort resulted in 83% year-onyear loan portfolio growth to US$ 935 million, and an impeccable loan quality ratio.
Important credit facilities were maintained in the case of Mercantil Servicios Financieros legal
vehicles around the world, enabling it to continue to meet all its clients’ requirements with
respect to foreign trade operations.
International Relations organized various talks, seminars and conferences for Mercantil’s clients,
associates and officers to pinpoint opportunities and threats to their business and activities.
49
Public Sector
The Public Sector area focused its effort in 2009 on optimizing its client portfolios. This led
to a reorganization and the inclusion of new clients in the portfolio traditionally managed by
this segment.
During 2009 emphasis continued to be placed on automating the processes of State
companies and institutions which resulted in a significant increase in the use of electronic
channels for the benefit of the parties, a consequent reduction of operating risks associated
with the volumes handled and substantially lower transaction costs associated with these
clients, all of which led to higher profitability per client.
At the close of 2009, Mercantil Banco Universal’s Public Sector deposits amounted to Bs 643
million, which represents 2.5% of the Institution’s total deposits and 1.7% of the Venezuelan
financial system’s share of the government deposit market.
With that level of penetration, Mercantil Banco Universal serves more than 150 different
government bodies and State institutions, offering a wide range of products, in particular
payroll and supplier payments; domestic tax collection, investment trusts, management and
social benefits.
Corporate Finance and Capital Markets
In 2009, through the Mercantil Merinvest subsidiary, Mercantil maintained its position of
leadership in the Corporate Finance and Capital Market sector in terms of bolivardenominated fixed-income investments in the primary market and placed Bs 135 million in
long-term and Bs 428 million in short-term fixed income securities issued by Venezuelan
corporations. Mercantil Merinvest structured Bs 535 million (95% ) of all the securities placed.
These securities were distributed among a broad base of small-scale investors and
institutional investors.
The financing needs of corporate clients were met through the bond market with Bs 111.9
million in short and medium-term securities.
Mercantil Servicios Financieros continued to receive support for its issues of short and longterm fixed-income securities. The Institution's requirements for financial advice, including
management of the Stock Repurchase Scheme, were also met.
During 2009 Mercantil Merinvest went ahead with the asset securitization structuring
process that will enable SMEs to use the Venezuelan capital market as a source of financing.
It is expected that the first issue will be placed during the first half of 2010.
50
Corporate Products
During 2009, the Corporate Products Unit focused its efforts on defining and implementing
a strategy to provide an efficient service, bring down costs and reduce operating risks. A goal
was set to encourage commercial clients to use the Mercantil Online Companies platform
through a joint campaign with the business segments to attract as many people as possible
to e-banking and promote the use of this channel. The structure was reviewed in 2009 and
changes made in the second half of the year, which produced a stronger team and increased
efficiency, reduced costs and made business relationships more profitable. The Corporate
Products Unit continued with its strategy to link up products and services within the
portfolios.
The Institution retained its place as leader in foreign trade, especially in operations through
ALADI. In September, the last months for which foreign trade statistics were published by
the Central Bank (BCV), Mercantil handled a market quota in the order of 22% of the
transactions processed under the official foreign exchange system. Once again Mercantil was
the foreign exchange operator that handled the largest volume of currency transactions for
its clients through Cadivi, boasting a 19% share and two whole percentage points more than
its closest competitor.
The Corporate Products area continued to coordinate events and sponsor companies in the
segment, supporting social and business initiatives and emphasizing how important it is for
the companies in our community to exercise social responsibility. Through this unit, Mercantil
ratified its commitment to the entrepreneurial culture of our country, participating once again
in the organization and development of the “Ideas” competition and coordinating Mercantil’s
role in “Innovex, Capital en Tecnología,” a company that provides advice on ideas for new
business and finances new ideas for business ventures.
51
Private Banking and Wealth Management
The understanding of customers’ needs and product cross-selling was the primary line of work
of Global Private Banking and Wealth Management in 2009. This work made it possible to
intensify consolidation of the Wealth Management business and attention to the affluent
customer segment in the different regions where Mercantil operates.
Private Banking and Wealth Management is made up of the Private Banking segment and the
Trust Fund and Capital market businesses in Venezuela, the United States and Switzerland,
and offers customers a broad spectrum of investment options.
In Venezuela, Mercantil Servicios de Inversión offers portfolio management services to third
parties. These were up 14% in 2009 compared with the previous year. The Mercantil Sociedad
Administradora de Entidades de Inversión Colectiva subsidiary which manages the FixedIncome Investment Portfolio Mutual Fund, maintains its position as industry leader. The
customer base grew 14% and the equity base 33%. Another product is Plan Crecer Mercantil
which is based on the programmed acquisition of mutual fund units, which expanded 40% at
year end.
A new Mercantil Online functionality was created under the Brokerage Services and Capital
Market activity in Venezuela, to place orders for government bond issues. This means
customers can buy bonds from the comfort of their homes or offices, which guarantees a
larger market share for Mercantil Merinvest Casa de Bolsa.
The drive to strengthen the Investment Brokerage Account and provide access to the capital
market continued and led to a 27% increase in new customers in 2009.
In the United States, the brokerage service is offered through Mercantil Commercebank
Investment Services, Inc. (MCIS), a subsidiary of Mercantil Commercebank, N.A., which has
operated since 2002. The company offers investment advisory services and securities
brokerage services to customers of Mercantil Servicios Financieros to meet their financial
needs. Securities and investment products can be bought, sold and held in custody in multiple
markets and currencies through MCIS brokerage services.
The company benefits from the more positive tendency of the financial markets with a 21%
increase in assets under management and a 22% expansion of its customer base. During 2009,
the investment portfolio management service was redesigned, which enabled better yields to
be obtained compared to the benchmark yields. The customer service survey conducted in
July and August revealed satisfaction levels of more than 80%.
The trust fund business is available to customers in Venezuela through Mercantil Banco
Universal and in the United States through Mercantil Commercebank Trust Company, N.A.
(MCTC), a trust bank regulated and supervised by the Comptroller of the Currency (OCC).
52
At the close of 2009, Fideicomiso de Mercantil Banco Universal registered 17% year-on-year
asset growth, represented mainly by the business sector. The achievements during the year
include the standardization of processes to maintain the quality of service offered, all of which
was part of a drive to improve this area and attain third-party certification.
In 2009, Mercantil Banco Universal’s Trust Fund obtained a high ranking in the customer
satisfaction surveys. One of the enhancements during the year was the post-sales mobile
messaging service using the electronic tools capability.
In the United States, Mercantil Commercebank Trust Company, N.A. provides financial
management services to safeguard and grow its customers’ equity through fiduciary products,
investment strategies and tailor-made solutions. A range of possible solutions is available
across multiple jurisdictions and through multilingual staff.
In 2009 it continued to grow in terms of volume of assets and number of accounts. At year
end, assets under management rose 34% compared to December 2008 and its customer base
increased 24%. It also carried out improvements to increase the level of service, making
changes to its internal procedures and strengthening its model for evaluating asset
management.
53
Insurance
At the close of 2009, the net collected premiums of Mercantil Seguros, a subsidiary of
Mercantil Servicios Financieros in Venezuela registered a year-on-year increase of 38% to Bs
2,801.9 million. Mercantil Seguros ranks third in the Venezuelan insurance market in terms of
net collected premiums with a 9.3% market share. The leading company has a 12.4% share.
The company equity and level of solvency are in conformity with the regulations in force. The
company’s equity totaled Bs 691 million. The company’s total assets were Bs 2,264 million at
year end.
The Board of Directors declared and paid out Bs 40 million in dividends in the first half of
2009 and Bs 25 million in the second.
Compulsory and voluntary reserves, including reserves for pending claims, are contained in
the figures presented. Technical reserves totaled Bs 1,329 million and investments
representing technical reserves reached Bs 1.674 million. The company has always maintained
a satisfactory liquidity ratio to cover commitments to insured, insurance advisors, suppliers
and reinsurers.
At the close of 2009, the automobile business accounted for 45% of insurance activity,
personal insurance for 44% and property & casualty insurance for 11%.
Profits rose 56.3% to Bs 200.7 million in 2009, due to technical and financial management.
During 2009, Mercantil Seguros continued to expand and improve its network of offices and
customer service points.
A new office was opened in Puerto Cabello, Carabobo state. The Maturin and Porlamar offices
were moved and new express service modules were set up in Caracas to handle vehicle claims.
The range of services available to customers and intermediaries via telephone, SMS and the
Internet was extended and the first phase of the design and programming program for
Mercantil Seguros On-line Service was completed. The latter will provide customers with
detailed information on their policies and premium financing and incorporates an online
mechanism to facilitate online payment. A platform was set up to allow policyholders to pay
their premiums quickly and easily on line. Changes were also made to the automatic vehicle
and health insurance renewal processes.
The result of improvements to cross-selling campaigns and efforts to attract new
intermediaries led to 61% client portfolio growth over the previous year.
The fact that Mercantil Seguros has the backing of world-class reinsurers helps mitigate the
risks that can typically arise in the insurance business.
54
Finance
Mercantil’s Treasury focused principally on the management of market risk factors during
2009, especially interest rate and liquidity risks, taking into account market conditions and
the vulnerability of banking on a global scale. An improvement was observed in the economic
and financial environment climate compared to the previous year, thanks to various programs
set in motion by the central banks to increase investor confidence.
In Venezuela, as of the second half of the year, the surplus of liquid assets in the financial
system was increased basically as a result of faster execution of public spending and the BCV’s
monetary policy. Lending and deposit rates remained stable during the year, and the last
quarter saw a higher yield on securities. The Mercantil Banco Universal subsidiary continued
to play an active role in the Venezuelan money market through interbank operations and
absorption instruments offered by the Central Bank of Venezuela.
Interest Rates of the Venezuelan Market
30.00%
Interest rates
25.00%
20.00%
15.00%
10.00%
5.00%
TAM_6 Principales
*TAM:
YTM DPN 1Y (TIF):
YTM DPN 1Y (Vebono):
YTM LT:
YTM_DPN 1Y (Vebono)
YTM_LT
Average lending rate for the 6 largest banks
Yield to maturity of 1 year government debt (Fixed Rate)
Yield to maturity of 1 year government debt (Variable Rate)
Yield to maturity auctioned Treasury Bills (Auctioned Treasury Bills)
55
12/18/09
11/20/09
12/04/09
11/06/09
10/23/09
10/09/09
09/11/09
09/25/09
08/14/09
08/28/09
07/17/09
07/31/09
06/19/09
YTM_DPN 1 Y (TIF)
07/03/09
05/22/09
06/05/09
05/08/09
04/10/09
04/24/09
03/13/09
03/27/09
02/13/09
02/27/09
01/16/09
01/30/09
01/02/09
0.00%
In April 2009, the Ministry of Economics and Finance began holding public auctions of 90-day
Treasury Bills. The National Office of Public Credit announced the domestic public debt (DPN)
assignment program for the sale of bonds at auction which included different versions of DPN
bonds (Vebonos, TIF, TIIC and the Agricultural Bond). Mercantil participated actively in the
weekly auctions and as a market maker in the secondary market, through the Mercantil Banco
Universal and Mercantil Merinvest Casa de Bolsa subsidiaries. By year end, these securities
were yielding higher returns, in line with the market trend.
So, 90-day Treasury Bills, whose initial weighted average yield was 10.65% per annum,
attained an annual average of 9.79% at the end of the year and TIFs maturing at one year
yielded 11.23%, achieved 13.22% per annum at December 2009. The company also participated
actively in the international emerging markets securities market, through its Mercantil Bank
(Panama) subsidiary, mainly Venezuelan sovereign bonds. During the year the Ministry held
five auctions of bonds payable in bolivars and Mercantil participated in these processes mainly
as an intermediary for its customers through the Venezuelan subsidiaries mentioned above.
During the first quarter of 2009 liquidity conditions improved significantly compared to 2008.
Access to the professional fund market through different tools introduced by the Federal Reserve
meant that the credit market was not under any additional pressure. Financial assets appreciated
in 2009, the stock market improved significantly, the Dow Jones index was up 19% and S&P 500
almost 24%. Shares benefited considerably from investor trust and surplus liquidity.
Federal Reserve Interest Rates and US Treasury Bonds
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
Treasury 2 years
Treasury 10 years
Fed Funds
Dec-09
Oct-09
Nov-09
Jul-09
Aug-09
Sep-09
Jun-09
Apr-09
May-09
Feb-09
Mar-09
Dec-08
Jan-09
Oct-08
Nov-08
Jul-08
Aug-08
Sep-08
Jun-08
Apr-08
May-08
Mar-08
Jan-08
Feb-08
0.0%
*Treasury 2 years and 10 years: US Treasury bonds, 2 and 10 years maturity
Fed Funds: Federal Reserve interest rates
56
Credit spreads in the fixed income market narrowed considerably. The average swap spread
for the year was around 45 basis points, a dramatic change compared to the extreme levels
of over 100 basis points at the time of the Lehman Brothers crash in September 2008. This
effect drove up the prices of all the corporate issues of most credit qualities and strengthened
the unrealized gains of many financial institutions. The mortgage market also had much lower
yields, largely due to the mortgage-backed securities (MBS) purchase program implemented
by the Federal Reserve, which guaranteed the existence of an active purchasing agent for the
2009 availability.
The Federal Reserve made no changes at all to its marker rate, demonstrating the pressing
need for an economic reactivation. The Fed Funds rate for 2009 remained unchanged at
0.25%. The FDIC extended its deposit insurance program through 2013 to provide coverage
of up to US$ 250,000 per depositor
Treasury continued to handle an almost zero risk investment portfolio during 2009. US
government-backed securities still account for the bulk of the portfolio. Due to tight spreads
resulting from low interest rates, the cost of keeping funds liquid increased considerably.
Treasury took steps to maintain a fair balance between return and liquidity. Active management
of the investment portfolio was largely responsible for the appreciation of the values obtained
during 2009. Low rates also made it possible to take advantage of long-term financing.
Available for Sale and Held to maturity Investments
Commercebank, NA
1,400,000
Thousand de US$
1,200,000
1,000,000
800,000
600,000
400,000
200,000
57
Held to
Maturity
Private
Mortgages
Other
Investments
Short Term
Investments
December 2008
Government
Sponsored
Enterprises
December 2009
US Agencies
Guaranteed
0
CARLOS SOSA
CARLOS SOSA
Agenda Series (Polyptic) • 1989
Resins and acrylic on canvas • 141 x 70.6 cm each one
Born in Caracas in 1950. The artist is constantly developing his drawing, painting, design and installation art
skills. His work follows the lines of Venezuelan Informalism of the sixties, heavily characterized by gestures,
the handling of matter, and experimentation with industrial paints, asphalt and resins, which give his works
an earth-like nature that the artist transforms in his inner silence.
Quality of Service and
Operating Efficiency
During 2009, following the strategy to
develop greater capacities and improve quality of service, operating efficiency and efficacy,
the Operations and Technology area completed the projects to guarantee secure customer
transactions, protect the way customers’ information is handled, incorporate services to
enable cellphone access to electronic banking, and other important projects.
59
Mercantil's Distribution Channels
At the end of 2009 Mercantil Servicios Financieros’ distribution channels were made up of 329
Banking Centers, 1,355 ATMs, 41,027 Points of Sale, 250 Call Center Operators, 528 IVR ports
and the Personal Online Banking and Business Online Banking services.
To complement these channels and stimulate the Majorities segment, in 2009 Mercantil
Banco expanded the Mercantil’s Ally network to 110 service points consisting of
correspondent trading desks and correspondent trading points. A total of 4,522 products
(mainly Cash Cards and Credisan) have been placed through Mercantil’s Ally.
Customer interaction was also fostered during 2009 through the mobile messaging platform.
This substantially increased the volume of sms notifications sent out to customers in the
event of suspicious transaction alerts raised within the preventive monitoring system,
changes in data and affiliations, as well as transactions associated with the Credisan Ahorro
and Credisan Débito products, approvals of direct debits to accounts and Trust Funds and
credit card collection. At the close of December 2009, the 33% of all messages sent were
transaction notifications.
Major Projects
Mercantil’s major project developments in 2009 were:
Mercantil Banco
• First debit card in Venezuela with EMV (Europay International, Mastercard and Visa
International) based chip technology, and adaptation of ATM and Point of Sale electronic
channels to protect customer transactions. At the close of December 2009, a total of
424,564 debit card with chips had been delivered.
• Incorporation of the Personal Online Banking segment’s digital statement service to
enhance security in the handling of personal information and to facilitate instant access
by customers to credit card and savings account statements.
• Incorporation of the service for placing orders for primary market government bonds.
• Incorporation of the Invoice Collection service for the corporate and commercial segment
through Online Banking.
• Payment of domestic taxes (Income Tax and Value Added Tax) for companies affiliated to
Online Banking.
• Some of the most innovative offers in 2009 included the new version of Mercantil Móvil
Internet which gives easy access to Mercantil Online Banking by cellphone in order to make
payments and transfers and submit queries and applications for Préstame Mercantil.
60
• During 2009, Mercantil Banco Universal incorporated the Social Benefits Trust Fund and
Savings Funds (Fideicomiso Prestaciones Sociales y Fondos de Ahorro) line of service into the
ISO 9001:2008 based quality management system. The scope of the certification for the
application, processing, engraving and delivery of credit cards was extended and a further
eight lines certified in previous periods were ratified through maintenance audits conducted
by the certification entity Fondonorma, bringing the number of certified lines to 10.
The following are some of the most important projects executed in 2009 :
• Incorporation of the new Telephone Banking system gives customers 24/7 access to banking
services . The service includes enhancements to security aspects, such as improvements and
new functionalities connected mainly with third-party transfers using a pre-established table
of beneficiaries.
• Launch of the second phase of Global Account Opening to enable international customers to
open accounts, and incorporation of Secure Access Card (SAC) distribution through online
banking, to give customers instant access to their Secure Access Account from their personal
computers.
• Incorporation of the S1 Enterprise Platform for Online Banking which provides further customer
authentication security and competitive functionalities such as financial and personal
management reports, secure sms communications between businesses and the bank, and
approval flows.
TODO1
TODO1 is an alliance between Mercantil Servicios Financieros in Venezuela and Bancolombia
in Colombia, whose main objective is to develop and implement the Internet-based financial
services and new technologies for its associated entities. The following important projects
were implemented in 2009:
• Intensification of the business strategy based on the communication and sale of products
via the electronic channel. Mercantil Personal Online Banking was incorporated into the
Messaging Center so that customers can access segmented campaign information.
• Incorporation of the “Invoice Collection” functionality at Mercantil Personal Online Banking
and Mercantil Business Online Banking. This is a high financial value electronic collection
service for collection agencies that reduces the time currently taken by the collection process.
• Todo1 Services was evaluated for the fifth time under the SAS Type II standard (Statement
on Auditing Standards No 70) developed by the American Institute of Certified Public
Accountant ants, AICPA, obtaining best results ever.
61
CARLOS ZERPA
CARLOS ZERPA
El Dorado • 1987
Born in Valencia, Venezuela, in 1959. Studied in Milan and New York and has received important recognitions
throughout his career. Recovers and mixes popular iconography which he cultivates regardless of its differences
until they are dissolved. He inverts the terms of cultural subordination in a kitsch style, characterized by
crowding and a dazzling polychromy, propitiating formal ruptures and proposing new attitudes.
Human Resources
The Institution’s Human Capital related
activities were aimed mainly at developing workers' opportunities; improving and
strengthening the organizational climate; implementing new schemes of competencies;
modernizing the administrative and self-service platforms; adapting that area’s labor
legislation and maintaining harmonious relations with the unions at the subsidiaries in
Venezuela.
At December 31, 2009, Mercantil Servicios Financieros has 9,833 employees (10,212 at the
close of 2008), 91% of whom work for Mercantil Banco Universal, Mercantil Seguros,
Mercantil Merinvest and other Mercantil subsidiaries in Venezuela and 9% abroad, mainly at
Mercantil Commercebank in the United States.
In 2009, the Mercantil Banco Universal and Mercantil Seguros subsidiaries signed collective
bargaining agreements with their respective trade union organizations. These agreements
will remain in force for three years. The collective bargaining agreements afford workers a
series of important economic benefits that allow them to retain their competitive position in
the market and now extend the social benefits related to workers’ health, education and
families. In particular, they include aspects related to the new health insurance coverage
scheme for workers and their direct relatives, as well as Scholarship and Family Aid Programs.
The company reiterates the importance of its relationship with union representatives over
the years, during which time the parties have worked together to enhance workers’ benefits.
All of this has evolved within a framework of mutual respect and autonomy, taking into
account the circumstances and capacity of the company and the expectations of its workers.
During the year, more than 27,000 workers received over 281,000 man/hours of training in
Mercantil’s different training program categories in Venezuela and abroad. The compliance
programs and programs to update the operations, risk and business areas are particularly
important. More than 10,000 workers took part in training events in 2009.
63
Once again, Mercantil Banco Universal, Mercantil Seguros and Mercantil Merinvest strove
hard to ensure the compliance and implementation of the company’s internal processes and
adapt and modify them to comply with the current labor legislation provisions. The
dissemination and implementation of aspects related to the People with Disabilities Act and
the Family Protection Act in particular, reflect this effort. The process already under way to
elect security and labor health compliance delegates and to set up labor health and safety
committees in the different offices in the capital and the provinces, continued.
Within the framework of the project to improve management processes, during the year the
companies in Venezuela consolidated the new SAP Human Resource Technological Platform.
This new platform entailed reviewing all the HR processes and bringing them in line with best
practices. The “Somos Mercantil Intranet” portal was launched. Employees can access it to
self-manage their main administrative issues and any other issues related to services, plans
and benefits.
For the fifth year running the internationally renowned Great Place to Work Institute®
conducted an organizational climate survey on Mercantil in which 70% of the staff
participated. The results of the survey reveal that 88% of workers at subsidiaries in Venezuela
and abroad felt that Mercantil is “a great place to work.” It should be noted that 87% of the
workers evaluated the honesty, values and ethics dimensions at Mercantil as highly positive.
Both Mercantil Banco Universal and Mercantil Seguros were once again selected in 2009 as
two of the best companies to work for in Venezuela.
64
ERNESTO, LEÓN
ERNESTO LEÓN
Porrón con plantas • 1986
Acrylic paint on wood • 122 x 110 cm
JULIO PACHECO RIVAS
JULIO PACHECO RIVAS
Área de protocolos inconfesables • 1989
Graphite and crayon on paper • 74 x 212 cm
Risk Management
Good risk management is key to Mercantil’s
competitive strategy and its ability to generate value. In 2009, anticipating the impact of the
crisis in global financial markets, Mercantil’s Risk Management Unit took a number of steps
to mitigate its effect on the portfolios of its subsidiaries.
During 2009, Mercantil continued to boost risk culture across the organization. It aligned
actions and behaviors with the strategic objectives set through the consolidation of corporate
values, a clear understanding of risk, staff training, development of advanced internal models
and tools, process automation and IT implementation.
67
Credit Risk
Credit risk management is conceived globally at Mercantil to respond to the common
principles and organizational criteria of its subsidiaries. A set of credit policies, procedures and
management tools is available for developing good global risk management; these are
constantly evolving to guarantee a better and more sophisticated process.
The progress achieved in credit risk management at Mercantil was instrumental in keeping
loan portfolio growth at an acceptable risk level in 2009. The Institution’s credit risk exposure
increased 23.7% to Bs 34.4 billion by contrast with Bs 27.8 billion in 2008.
The following figure illustrates the global risk exposure (which includes direct, contingent
and issuer risk), by country and type of client, showing the breakdown of credit risk exposure
as of December 2009.
Breakdown of Credit Risk by Country and Type of Customer
25%
20%
15%
10%
5%
Real Estate
Loans
Government
Sponsored
Agencies
Other Assets
Financial
Large
Corporations
Government
Individuals
BCV
Other
Companies
0%
Venezuelan
USA
Other Countries
Mercantil Servicios Financieros’ main global presence is in Venezuela with 74.5% credit risk
exposure, followed by the USA with 19.9% and other countries with 6.0%.
The greatest variations compared to 2008 were in the Venezuelan risk, which was 5.3% higher,
mainly due to a 44% increase in Venezuelan government risk and a 14% increase in other
business and personal risk. The United States risk in 2009 was down 18.9%, due to the slow
recovery of the US economy.
68
The distribution of Mercantil’s loan portafolio by clients’ economic activity is shown below:
Distribution of Mercantil’s loan portfolio by economic activity
ELECTRICITY, GAS AND WATER
0.1%
MINING EXPLOTATION
AND HIDROCARBONS
0.2%
TRANSPORTATION, WAREHOUSING
AND TELECOMUNICATIONS
Activity
SOCIAL AND PERSONAL
COMMUNITY SERVICIES
NO SPECIFIED ACTIVITIES
1.7%
3.0%
0.9%
MANUFACTURING INDUSTRIES
6.8%
CONSTRUCTION
9.3%
AGRICULTURE, FISHING AND FORESTRY
15.6%
TRADE, RESTAURANTS
AND HOTELS
25.6%
FINANCIAL INSTITUTIONS
AND INSURANCE
0.0%
36.8%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
An analysis of Mercantil’s loans by economic activity shows that 87.3% of the portfolio is
broken down as follows: financial institutions, insurance companies and others 36.8%;
wholesale and retail trade, restaurants and hotels 25.6%; agriculture, fisheries and forestry
15.6%, and construction 9.3%.
At the close of 2009, the 20 largest debtors account for 4% of Mercantil’s loan portfolio.
69
Market Risk
An institution is subject to market risk when the market conditions deteriorate and affect the
liquidity and value of the financial instruments in that institutions hold investment portfolios
or contingent positions, resulting in a loss for the institution. There are two basic types of
market risk: price risk and liquidity risk.
Each market factor and its effect on the organization’s risk profile is measured daily. To
accomplish this, Mercantil has a technological infrastructure and early warning systems.
Treasury employs this technology to monitor and track market risk. It then produces a series
of reports for Treasury’s risk-taking units and the corresponding management levels.
Mercantil’s trading activities were carried out in the Venezuelan fixed-income securities
market denominated in bolivars and in fixed-income securities in emerging markets, the latter
made up of Venezuelan government debt securities.
Price Risk Positions of Interest Rate Mismatch
The price risk involved in the mismatches between interest rates is caused by the assets and
liabilities duration gap. When adverse changes occur in the interest rate market, this gap can
impact the institution’s financial margin. To manage this risk, Mercantil quantifies the assets
and liabilities duration gap to reflect the sensitivity of the financial margin to changes in
interest rates over a 12 month period, and then measures and compares them against the
interest rate risk limits designed. The sensitivity of the financial margin to changes in interest
rates caused by their historic volatility is also quantified.
Liquidity Risk
Liquidity risk depends on the likelihood that a company will be unable to deliver funds or
financial assets, as agreed with a client or financial market counterpart, at any time or in any
place or currency. This risk is one of the major ones a financial institution could face in its
intermediation activity because it can trigger a host of different risks, one of the worst being
reputational (or franchise) risk. For Mercantil Servicios Financieros and its subsidiaries,
managing and measuring liquidity risk is considered a priority within the global risk and
business management of the organization.
70
Treasury is responsible for liquidity risk, which follows the liquidity policy parameters for
organizations outlined by the Board of Directors, through the Board of Directors Risk
Committee, the Global Risk Committee and the Assets and Liabilities Committee. An
organization’s global liquidity risk environment is monitored periodically and is the outcome
of the liquidity management process exercised by the Treasury in each of the financial vehicles
in which it participates.
The Assets and Liabilities Committee meets monthly and must make decisions on the liquidity
and structure of the financial balance sheet by presenting the evolution and trends of the
main factors that affect liquidity, measured by a series of tools and reports for optimizing the
management of assets and liabilities (analysis of liquid assets; short, medium and long-term
liquidity gap; liquidity indicators); balance sheet structure (evolution of balance sheet items),
among others.
These analyses and methodologies are complemented with reports known as Contingency
Funding Plans. These reports are used to evaluate an institution’s ability to meet extreme
deposit withdrawals which are modeled using liquidity studies of the institution and the
market, to establish primary and secondary reserve requirements and other sources of
liquidity needed to meet potential withdrawals.
71
Operational Risk
In the course of time, operational risk management has become more demanding at Mercantil
Servicios Financieros, given the complex economic climate and the dynamic financial activity
challenging the institution’s ability to satisfy the expectations of stakeholders while
complying with the regulators.
The qualitative and quantitative approach of operational risk management was maintained
during the year. Risks in critical processes for the organization were assessed and identified
and the information necessary for decision making was offered, with emphasis on the
importance of following up action plans for operational risk events to minimize their
occurrence.
The comparative study of how operational risk events behave over time is part of the
continuous risk management effort. Using information collected from past events in different
countries, risks are quantified and scenarios analyzed. The results are then used to estimate
economic capital, set goals and control expected losses.
A combination of training and awareness activities proved fundamental in reinforcing the
organization’s risk culture through a practical approach intended to motivate staff and help
prevent and mitigate operational risk.
Risk Management in Non-banking Activities
Priority was given in 2009 to the evaluation of insurance business processes with the greatest
inherent risk of fraud, interruption of operations, litigation and failures liable to affect
business continuity. Risks associated with information handled by platforms on which ecommerce and electronic operations for clients and suppliers run were also assessed.
72
JORGE PIZZANI
JORGE PIZZANI
De Goya (from the Acción GAN series) • 2005
ADRIÁN, PUJOL
ADRIÁN PUJOL
El Lajao • undated
Performance of Subsidiaries
Mercantil’s global business includes the company’s operations in Venezuela and abroad. Its
management results are presented in the Consolidated Financial Statements Review chapter.
A summary of Mercantil’s operations carried out through each subsidiary at December 31,
2009, and prepared in accordance with the accounting standards of the Venezuelan Securities
Commission (CNV), is presented below.
Mercantil Servicios Financieros (1)
(In thousands of Bs and millons of US$, except percentages)
as of December 31, 2009
4,879,810
Shareholders’ Equity US$(2)
2,275
Equity
Mercantil, C.A.
Banco Universal
Bs 3,351,453
1,563
US$(2)
Venezuelan
Main Activity
Universal
Bank
Main Subsidiaries
Mercantil
Commercebank
Florida Bancorp.
Bs 1,091,571
US$(2)
509
Holding
Mercantil
Internacional
Bs
231,150
108
US$(2)
Mercantil
Seguros, C.A.
Bs
524,640
245
US$(2)
Insurance in
Venezuela
Mercantil
Merinvest, C.A.
Bs
118,652
55
US$(2)
Commercial Bank,
Brokerage and
Trust
Services
in USA
International
Bank
Mercantil
Commercebank
N.A.
Mercantil Bank
(Schweiz), AG.
(Switzerland)
Mercantil Merinvest
Casa de Bolsa, C.A.
Mercantil
Commercebank
Investment
Services (MCIS)
Mercantil Bank
and Trust Limited
(Cayman)
(Cayman Islands)
Mercantil
Servicios de
Inversión, C.A.
Mercantil
Commercebank
Trust Company
(MCTC)
Mercantil Bank
Curaçao NV
(Curaçao)
Mercantil
Sociedad
Administradora
de Entidades
de Inversión
Colectiva, C.A.
Mercantil Bank
(Panama) S.A.
Investment
Banking, Mutual
Funds, Trading &
Brokerage in
Venezuela
Others
Bs
59,544
28
US$(2)
Other Non
Financial
Businesses
Total
(In thousand of Bs) (1)
36,935,307
6,666,092
20,039,669
32,071,634
12,710,360
4,997,601
6,980,184
9,931,355
1,049,537
880,307
117,870
844,715
2,052,175
1,364,892
0
0
111,207
63,487
0
0
216,224
71,713
0
0
53,074,810
14,044,092
27,137,723
42,847,704
643,737
(120,173)
23,582
202,373
49,395
(3,222)
795,692
Total Assets
Investments
Loan Portfolio, Net
Deposits
Net Income
for the Year
17,223
3,108
9,344
14,955
5,927
2,330
3,254
4,632
489
410
56
393
957
636
0
0
52
30
0
0
100
35
0
0
24,748
6,549
12,654
19,980
300
(56)
11
94
23
(1)
371
Number of Employees
7,430
790
49
1,439
51
74
9,833
Total Assets
Investments
Loan Portfolio, Net
Deposits
Net Income
for the Year
(In millions of US$) (2)
(1)
Financial Information presented in accordance with the standards of the Venezuelan National Securities Commission (CNV). Figures net of elimination of intercompany transactions.
75
Comments and a summary of the financial statements of Mercantil's main subsidiaries are
presented below, based on the accounting standards applicable to each of them, which explains why
they differ from the consolidated information presented according to the accounting standards of
the Venezuelan National Securities Commission (CNV). Mercantil C.A., Banco Universal, in
accordance with the standards of the Superintendency of Banks in Venezuela; Mercantil
Commercebank Florida Bancorp, according to US GAAP; Mercantil Seguros C.A., according to the
standards of the Superintendency of Insurance in Venezuela, and Mercantil Merinvest C.A., in
accordance with the standards of the Venezuelan National Securities Commission (CNV).
Mercantil Banco Universal’s total assets grew Bs 6,428 million (21.3%) compared to December
2008. During the year the loan portfolio grew Bs 4,949 million (32.3%) and deposits increased
Bs 7,209 million (29.1%). Loan portfolio quality remains very favorable, with a ratio of Pastdue and Nonperforming Loans to Gross Loans of 0.9%, compared to 2.4% for the Venezuelan
financial system as a whole.
At December 31, 2009, the Mercantil Banco Universal subsidiary ranks second in the
Venezuelan financial system in terms of Total Assets with a 10.5% market share. The leading
institution has a 12.3% share and Venezuela’s four main banks account for 39.3% of the
country’s financial system. Mercantil Banco Universal is Venezuela's leading bank in terms of
tourism, and manufacturing loans, and mortgages under the Mortgage Debtor Law (Ley
Especial del Deudor Hipotecario), with market shares of 16.3%, 20.3% and 16.9%, respectively.
It also ranks second in the Venezuelan financial system in terms of Gross Loans and
Agricultural Loans with market shares of 13.1% and 13.0% respectively. Mercantil Banco
Universal is the leading institution in the domestic banking system with 19.6% of savings
deposits; it also ranks second in terms of total deposits including investments sold under
repurchase agreement, with 11.3% of the market.
As of December 31, 2009 investments in securities were made up as follows: Certificates of
Deposit and other securities issued by the BCV with maturity under 30 days, 45.8%; securities
issued or guaranteed by the Venezuelan government, 48.9%; U.S. government-backed
securities, 3.9%, and securities issued by the Venezuelan and international private sector and
U.S. government-backed agencies, 1.4%.
76
Shareholders’ Equity grew Bs 591 million (21.8%) compared with December 2008, reaching
Bs 3,300 million at the close of December 2009. This increase includes mainly Bs 722 million
in accumulated net income for 2009 and a Bs 67 million increase due to the effect of
adjusting available-for-sale investments at their fair value. It also includes a decline of Bs
198 million corresponding to dividends paid in cash.
The equity/assets ratio at December 31, 2009 is 10.2%2 (minimum requirement 8%) and the
equity/risk-weighted assets according to the standards of the Superintendency of Banks in
Venezuela is 17.0% (minimum requirement 12%).
Net earnings for the year were Bs 722 million, down Bs 99 million (12.0%) compared to 2008.
This variation was mainly due to:
• Bs 235 million (10.5%) increase in net interest income to Bs 2,239 million. This increase
resulted mainly from the increase in the Financial Intermediation Ratio from 63.7% at
December 31, 2008 to 65.6% at December 31, 2009.
• Bs 164 million (52.5%) year-on-year increase in expenses for written-off loans and other
accounts receivable, compared with Bs 313 million in 2008, resulting from loan portfolio
growth and higher provisions for the commercial and construction sectors.
• Operating Expenses rose Bs 254 million (16.0%) compared with 2008, mainly due to the
following increases: Bs. 179 million (22.3%) in Personnel Expenses in line with the wage
increase policy; Bs 23 million (16.6%) increase in Maintenance Expenses, Depreciation of
Property and Equipment and Amortization of Intangibles, Bs 23 million (21.2%) in expenses
for outsourced services such as secure transportation and other services; and Bs 33 million
(24.9%) in fees paid to regulatory agencies. Over the last 12 months Venezuela registered
26.9% inflation. This variable has a significant impact on Mercantil Banco Universal’s
operating expenses.
(2) Obtained from dividing shareholders equity minus goodwill’s
amortizations by total assets minus Public Debt Securities.
Mercantil Banco Universal, Consolidated
Year Ended
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
Total Assets
17,071
36,609,791
30,181,479
22,997,523
2,778
5,956,675
6,220,556
3,608,182
Loan Portfolio, Net
9,460
20,287,426
15,338,403
12,432,519
Deposits
14,927
32,013,443
24,804,865
19,757,310
1,539
3,299,517
2,708,877
2,091,272
337
722,035
820,956
534,952
Equity
Net Earnings for the Year
Historic figures presented in accordance with the standars of the Venezuelan Superintendency of Banks and Other Financial Institutions.
(1) Dollar figures are given for reference purposes only and are converted at the exchange rate of Bs 2.1446/1US$. Exchange control has been in place in
Venezuela since February 2003.
77
Mercantil Commercebank Florida Bancorp
At December 31, 2009 Mercantil Commercebank Florida Bancorp registered a US$ 6,000 million
(0.4%) year-on-year reduction in total assets. The investment portfolio shrank 11.2% to US$
2,327 million over the same period and was composed of instruments issued by the U.S.
government (57.9%), U.S. government-backed agencies (40.3%) and private companies (1.8%).
Net loans registered 7.0% year-on-year growth to US$ 3,248 million and total deposits reached
US$ 4,400 million, up 0.9% compared to December 31, 2008.
During 2009 Mercantil Commercebank, N.A. registered US$ 115 million equity growth to US$
654 million.
Mercantil Commercebank Florida Bancorp posted a negative US$ 31 million in 2009 earnings
compared US$ 4 million in 2008. This decline is due to a US$ 55 increase in provisions for
residential mortgages and construction as a result of the fall in the value of commercial and
residential property experienced by this market in the United States in general and in South
Florida in particular during 2009.
The net interest income also declined US$ 26 million, due mainly to lower U.S. interest rates.
Earnings from operations involving the trading of securities issued by the U.S. government
and government-backed agencies increased US$ 35 million. Personnel expenses were US$ 17
million lower than in 2008.
The Bank registered positive earnings of US$ 85 million before loan portfolio and tax
allowances, 22.4% up on the US$ 70 million recorded for 2008.
The main capital adequacy indicators for Commercebank N.A. are 10.9% Equity/Assets and
20.8% Equity/Risk-Weighted Assets, in line with the standards of the Office of the Comptroller
of the Currency (OCC). In regulatory terms, a bank is considered well capitalized if these ratios
are 5% and 10%, respectively.
Consolidated
2009
2009
2008
US$(1)
bolivars
bolivars
bolivars
6,000
12,868,132
12,925,219
11,939,286
Invesments in Securities
2,327
4,990,797
5,617,216
4,641,054
Loan Portfolio, Net
3,248
6,965,365
6,508,484
6,431,181
Deposits
4,400
9,435,191
9,351,927
9,640,843
Equity
560
1,201,270
980,788
793,339
(31)
(66,249)
(8,205)
75,475
Year Ended
Total Assets
Figures according to the accounting principles generally accepted in the United States (US GAAP).
78
2007
Mercantil Seguros
Premium income in 2009 registered 38% year-on-year growth to Bs 2,802 million and reflects
a major achievement by the Company’s sales force. At the close of 2009, Mercantil Seguros
was Venezuela’s third insurance company in terms of net collected premiums, with a market
share of 9.3%.
The assets account at the close of 2009 totaled Bs 2,264 million, 33.4% higher than at December
31, 2008. The Company’s equity over the period increased 36.0% to Bs 691 million, which provides
a solvency margin that complies with the regulations in force.
The figures presented include all the mandatory and voluntary reserves required to guarantee the
Company’s operations, including outstanding claims reserves and end-of-period payments.
Guarantees and reserves total Bs 1,360 million (37.0% up on the previous year).
As of December 31, 2009, the Company’s investment portfolio was Bs 1,926 million, 35.8% more
than at the close of December 2008. Total Investments representing Technical Reserves were
Bs 1,674 million, 41.1% more than at the close of 2008, and sufficient liquidity levels were
maintained to meet commitments to policyholders, insurance advisors and reinsurers.
Net earned premiums from Individual Lines of Business rose 38.0% from Bs 956 million in 2008
to Bs 1,319 million in 2009, represented mainly by the health and automobile businesses.
The technical result2 for 2009 closed at Bs 86 million, with a combined ratio (COR)3 of 96.3%.
Net income in 2009 grew 56.3% to Bs 201 million compared to 2008, leveraged by positive
investment income.
Mercantil Seguros, C.A.
Year Ended
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
1,056
2,263,742
1,697,083
1,154,223
898
1,925,918
1,418,576
980,228
Equity
322
690,547
507,921
358,436
Total Assets
Net Premiums
94
200,664
128,368
69,056
1,307
2,801,933
2,029,800
1,413,800
Historic figures in accordance with the standars of the Venezuelan Superintendency of Insurance.
(2) Tecnical Result = earned premiums - incurred claims - operating expenses.
(3) Combined Ratio = (incurred claims + commissions + operating expenses) / earned premiums.
79
Holding Mercantil Internacional
The four main financial institutions consolidated under Holding Mercantil Internacional are:
Mercantil Bank Curaçao, N.V., in Curaçao; Mercantil Bank (Panamá) S.A. in Panama; Mercantil
Bank (Schweiz) AG, in Zurich, Switzerland and Mercantil Bank and Trust Limited (Cayman) in the
Cayman Islands.
The activity of Mercantil Bank (Schweiz) AG, which includes its Mercantil Bank and Trust Limited
(Cayman) subsidiary, remained at similar levels to 2008, reaching US$ 330 million in total assets
at December 31, 2009.
At December 31, 2009, Mercantil Bank (Panamá) S.A. has US$ 86 million in total assets, reflecting
95.9% growth compared to the close of 2008.
With US$ 509 million in total assets at December 31, 2009, Holding Mercantil Internacional’s
exceeded the previous year’s figure by 1.4%. Over the same period the investment portfolio
expanded 77,7%, from US$ 240 million to US$ 426 million.
It posted US$ 11 million in net annual income, mainly due to securities trading operations.
Holding Mercantil Internacional C.A.
Consolidated
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
Total Assets
509
1,091,268
1,075,835
1,023,245
426
914,241
514,380
440,936
55
117,870
503,287
539,548
Deposits
395
846,769
858,618
828,684
Equity
108
231,150
201,665
176,072
11
23,582
2,548
74
Year Ended
Loan Portfolio, Net
Figures in accordance with the standars of the Venezuelan National Securities Commission.
Mercantil Merinvest
Mercantil Merinvest’s subsidiaries include a securities brokerage company, and a mutual
fund and investment portfolio management company.
At December 31, 2009 Mercantil Merinvest registered Bs 134 million in total consolidated
assets, down 49.5% compared to 2008. This variation is reflected by the Bs 118 million yearon-year decline in securities-indexed financial asset operations carried out through Mercantil
Merinvest Casa de Bolsa, C.A. in 2009.
In January 2010 the Venezuelan Securities Commission (CNV) amended the Intermediation
Rules governing Brokerage Houses and Exchange Bureaus and suspended such agencies from
carrying out securities lending transactions, giving them a maximum of 90 days to settle
outstanding operations. At the close of February 2010 Merinvest registered no outstanding
securities lending operations.
80
Net income increased 29.2% from Bs 38 million to Bs 49 million at December 31, 2009, mainly
due to net yields from financial asset and liability transactions (increase in average volumes)
and lower operating expenses.
Mercantil Merinvest, Casa de Bolsa, C.A., continued to offer the Cuenta de Corretaje Merinvest
(CCM) product, which at the close of December 2009 had attracted 50,459 new clients
compared with 38,296 at the end of 2008.
Mercantil Merinvest, C.A.
Consolidated
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
Total Assets
63
134,097
265,455
328,877
30
64,647
83,530
91,723
Indexed Financial Assets
21
45,110
162,888
228,156
Equity
55
118,653
118,815
92,760
23
49,395
38,231
8,458
Year Ended
Figures in accordance with the standars of the Venezuelan National Securities Commission.
Other Non-Financial Businesses
Mercantil Inversiones y Valores
Mercantil Inversiones y Valores comprises Mercantil Servicios Financieros’ non-financial
companies, such as Servibien, Almacenadora Mercantil and other investments in securities.
Servibien’s main function is to sell off real estate and property owned by Mercantil Servicios
Financieros. In 2009 Servibien sold Bs 10.6 million worth of real estate. Mercantil Seguros held
10 private auctions of recovered automotive vehicles, bringing in Bs 40.4 million.
At the close of 2009, Mercantil Inversiones y Valores, C.A. registered Bs 71 million in assets
and Bs 67 million in liabilities.
Mercantil Inversiones y Valores
Consolidated
Year Ended
2009
2009
2008
2007
US$(1)
bolivars
bolivars
bolivars
Total Assets
33
70,949
146,891
85,721
Invesments in Securities
22
47,578
35,988
65,111
Equity
31
67,055
116,274
80,001
15
32,790
61,063
(5,735)
Figures in accordance with the Accounting Principles Generally Accepted in Venezuela.
81
OSCAR PELLEGRINO
OSCAR PELLEGRINO
Zona Inca • 1989
Paint and mixed media on canvas • 160 x 140 x 2.5 cm
Credit Ratings
Each year risk, Moody's Investors Service,
Fitch Ratings and Clave Sociedad Calificadora de Riesgo, carry out credit ratings on Mercantil
Servicios Financieros (Mercantil) and its subsidiaries, Mercantil Banco Universal C.A.,
Mercantil Commercebank Florida Bancorp and Mercantil Commercebank N.A.
The attached table shows the current credit ratings which reflect the solidity of Mercantil
and its subsidiaries in the countries where they do business.
Mercantil’s ratings reflect satisfactory financial indicators. Mercantil is among the highest
rated venezuelan issuers. According to Fitch's rating scale Mercantil has a very high credit
quality and its ratings reflect very low default risk. They also indicate very strong capacity for
payment of financial commitments. The ratings assigned to the Commercial Papers and
Unsecured bonds issued by Mercantil are the highest given to an issuer in Venezuela.
The national risk ratings for Mercantil Banco Universal are sustained by its deposit franchise,
sound deposit base, adequate performance and risk management culture, earning it the best
ratings given to a private financial institution in Venezuela. The international ratings are
largely predicated on Venezuela’s country risk.
The ratings for Mercantil Commercebank Florida Bancorp and Mercantil Commercebank N.A.
have been affected by the adverse state of the US economy, particularly in the state of Florida,
although they reflect financial flexibility in terms of their ability to meet their commitments.
Fitch Ratings indicates in its report the bank’s high level of liquidity with a high-quality shortterm investment portfolio.
Fitch Ratings
Clave
National Ratings
Long Term
Short Term
Unsecured Bonds (Long Term)
Commercial Papers (Short Term)
AA (Ven)
F1+ (Ven)
A2
A1
A2
A1
Fitch Ratings
Moody’s
AA+ (Ven)
F1+ (Ven)
-
B+
B
B+
B
D
B3
B1
E+
National Ratings
Long Term
Short Term
International Ratings
Long Term (foreign currency)
Short Term (foreign currency)
Long term (Local Currency)
Short term (Local Currency)
Individual
and Mercantil Commercebank N.A.
Fitch Ratings
National Ratings
Long Term (Deposits)
(only Mercantil Commercebank N.A.)
Long Term
Short Term
Individual
BB+
BB
B
C/D
83
MARGOT RÖMER
MARGOT RÖMER
Proyecto para cubrir con una bandera de seda la Silla de Caracas y Naiguatá • 1984
Oil on canvas • 80 x 244 cm
Prevention and Control of
Money Laundering
The mission of Mercantil’s Prevention and
Control of Money Laundering Unit is to ensure compliance with the Money Laundering
legislation in force in Venezuela and the other countries where Mercantil Servicios Financieros
operates, supporting the Organization through a systematic professional approach, to detect,
follow up and manage reputational risk due to money laundering and to provide data, analysis
and recommendations to the Banks’ customers and clients to guarantee that its performance
adheres to the regulations and best international practices in that field, such as the
recommendations of the Financial Action Task Force (GAFI), the Caribbean Financial Action
Task Force (GAFIC), the Wolfsberg Principles and the Customer Due Diligence for Banks of the
Basel Committee on Banking Supervision of the Bank for International Settlements.
85
The Control and Oversight mechanisms in place, mainly at the Mercantil Banco Universal,
Mercantil Seguros, Mercantil Merinvest, Mercantil Sociedad Administradora de Entidades de
Inversión Colectiva, Mercantil Bank Curaçao, Mercantil Bank (Panama), Mercantil Bank (Schweiz)
AG and Mercantil Commercebank subsidiaries, facilitate on the one hand the timely detection
of operations which, because of the nature of their activities, are presumed to involve money
laundering, and on the other to report them to the appropriate authorities.
The “Know your Customer” policy is crucial to the timely detection of operations presumed to
involve Money Laundering. Anti-Money Laundering compliance processes are reviewed on a
regular basis by the supervisory authorities of the different jurisdictions where Mercantil
Servicios Financieros operates and also by the Independent and Internal Auditors.
There is a “Comprehensive System for the Prevention and Control of Money Laundering” in place
to guarantee compliance with the regulations in force. It has a Compliance Officer, a
Multidisciplinary Committee, a Prevention and Control Unit and a Compliance Unit to monitor
areas liable to involve Money Laundering risks. There are also Operational, Follow-up, Evaluation
and Control Plans, a Code of Ethics, a Manual of Policies, Standards and Procedures for the
Prevention and Control of Money Laundering, and Training Programs.
Its action during 2009 focused mainly on strengthening coverage and minimizing Money
Laundering risks, by approving and setting policies, updating the Policies, Standards and
Procedures for the Prevention and Control of Money Laundering Manual, appointing compliance
staff in areas susceptible to risk, implementing new anti-money laundering administrative and
operating processes, training staff with special emphasis on those responsible for managing
processes that are the most sensitive to risk, and acquisition of state-of-the-art technology, all of
which has led to an efficient and effective structure and a highly professional risk management
process , within a climate of ongoing improvements.
Mercantil Servicios Financieros developed an extensive program of training courses and
workshops in which 9,511 employees participated.
Mercantil Servicios Financieros has an ongoing relationship with the regulatory bodies in the
different countries where it operates and maintains fluid and effective communications with
those agencies.
86
Internal Auditing
Mercantil’s Global Internal Audit Unit acts
independently, taking a systematic, disciplined approach to evaluate and improve the efficiency
of its risk management processes, internal controls and corporate governance. It is a user-oriented
Unit that employs professional staff and uses modern technology and sufficient material
resources to, contribute to its ability to achieve its Strategic Plan.
The work of Mercantil’s Global Internal Audit Unit is carried out in accordance with the
international framework for best professional internal audit practices established by the
Institute of Internal Auditors. The Unit conducts its assurance activities in accordance with the
Institute’s guidelines, for instance by increasing communication with the different levels of the
Organization regarding the activities of the Audit Unit in order to improve the Company’s
processes.
Annual Audit Planning covers general, follow-up, regulatory and corporate mandates reviews.
The Internal Audit Unit constantly measures, analyzes and monitors a series of performance
indicators to ensure that the different Internal Control processes are properly executed.
The Internal Audit Unit reports directly to the Board of Directors’ Audit Committee on structural
matters. It is made up of the following Units: Mercantil, C.A. Banco Universal Audit Unit, Wealth
Management Audit Unit, Mercantil Seguros Audit Unit and Mercantil Commercebank, Audit
Unit, which developed their review programs separately and obtained the following results:
885
24
70
100%
90%
80%
5
327
70%
60%
50%
8
71
2
8
18
1,050
352
12
83
68
75
48
61
40%
30%
435
11
40
547
20%
10%
0%
MERCANTIL
BANCO
WEALTH
MANAGEMENT
GENERAL AND FOLLOW-UP
MERCANTIL
SEGUROS
SPECIAL
MERCANTIL
COMMERCEBANK
QUALITY
MERCANTIL
PCLC *
* Prevention and Control of Money Laundering
During 2009, Mercantil’s Internal Audit Unit conducted 1,050 audits that helped strengthen
internal controls in its different units, affording priority to the processes with the highest risk
impact, by identifying risk gaps; following up the corrective action plans implemented by
Management; supporting the External Audit in checking the figures of the Financial Statement
items; meeting the requirements of the Regulatory Bodies on audit matters; making Money
Laundering Prevention and Control assessments and ascertaining that the Units complied
with the processes already certified and awaiting certification by Fondonorma in accordance
with ISO 9001:2008.
87
ERNESTO LEÓN
ERNESTO LEÓN
Bandera • 1986
Enamel and acrylic on wood (veneer) • 122 x 110 cm
Social Commitment
Ever since Mercantil was created 85 years ago
it has fostered, promoted and supported social development programs. One of its corporate
values is “to be a solidary institution and an important factor in the development of the
communities where we operate”.
The Company’s social investment in 2009 was channeled directly through Fundación
Mercantil and its subsidiaries in Venezuela and the United States. It totaled Bs 10.6 million
and includes Bs 998,529 in contributions made in accordance with the Science and Technology
Law to support research, health and new technology development projects.
To foster social development and improve the quality of life of the communities where it is
present, 45% of its contributions in this area were earmarked for educational institutions and
55% for social development, cultural, healthcare and religious institutions.
Education
Mercantil continued to provide support for Basic Education through the “Give your School a
Helping Hand” program which has been going strong for 27 years. Through this program,
implemented in conjunction with the Foundation for Educational Buildings (FEDE) under the
Ministry of Education, school buildings nationwide are repaired and maintained. Support was
also given for similar initiatives by a group of education institutions to broaden the scope of
the activities undertaken under the program.
Higher Education received support through academic training programs for students at
Mercantil’s Social Contributions
private and public universities to help prepare professionals for the future.
Year 2009
The Foundation deserves special mention for backing various student grant and scholarship
programs and equipping higher education institutions.
Social Development and Healthcare Programs
Mercantil continues to back projects and initiatives by various organizations that work
directly with children, young people and senior citizens in need. The following institutions
were the main beneficiaries of the Foundation’s contributions in 2009: Comedores Madre
Teresa de Calcuta, FUNDAPROCURA, Asociación Civil Buena Voluntad, Hogar Vida Nueva, Centro
al Servicio de la Acción Popular (CESAP), Centro El Portal and Damas Salesianas. Mercantil has
demonstrated its commitment to society through support for specialized healthcare and
hospital programs for children, young people and adults. These include Fundación Amigos del
Education
45%
Social Welfare
26%
Niño con Cáncer, Fundación Cardioamigos, Sociedad Anticancerosa de Venezuela, Asociación
Culture
11%
Venezolana de Servicios de Salud de Orientación Cristiana, Hospital Ortopédico Infantil, Hospital
Health
7%
San Juan de Dios and the Venezuelan Red Cross.
Religious Institutions
11%
89
Culture, Quality of Life and Environment
Because Mercantil sees culture as a value worth stimulating, it fosters programs to disseminate
national artistic talent in the field of music, art and literature. The principal institutions supported
are Fundación del Estado para el Sistema Nacional de Orquestas Juveniles e Infantiles de Venezuela
(FESNOJIV), Orquesta Sinfónica Juvenil Simón Bolívar, Fundación Ballet Contemporáneo de
Caracas and Fundación Camerata de Caracas.
Mercantil promotes environmental conservation as a means of furthering initiatives to improve
people’s quality of life by protecting the country’s natural resources. The programs of Fundación
Tierra Viva, la Sociedad Amigos del Árbol (Sadarbol) and the Venezuelan Audubon Society are two
such examples.
Support for social work by religious institutions
Mercantil’s also supports religious institutions that carry out social work. It created the
permanent Solidaridad Mercantil – Cáritas fund to attend to national emergencies; and
contributes to the Archdioces and Dioces, Fundación para la Educación Eclesiástica Juan Pablo
II and Fundación Amigos del Seminario.
The “Online Donations” program in particular is an excellent initiative and an opportunity for
Mercantil’s customers and clients to learn about the work of the participating institutions and
make online contributions via the webpage.
U.S. Social Commitment
In the United States, Mercantil Commercebank demonstrates its social commitment,
particular in South Florida, by supporting programs of organizations such as Habitat for
Humanity, the Anti-Cancer League, Florida International University and the Julliard School
in New York. Within the framework of the Community Reinvestment Act (CRA), it also
provides backing for a number of institutions that directly promote the social development
of low-income communities.
Special mention is due to volunteers from Mercantil for their participation in the education,
social development and cultural activities of various community institutions.
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ADRIÁN, PUJOL
ADRIÁN PUJOL
Playa de Caruao • undated
Acrylic on linen • 112 x 154 cm
OSCAR PELLEGRINO
OSCAR PELLEGRINO
SEMINARIO • 1988
Acrovinylic paint, plaster and cement on wood • 120 x 365 x 2 cm
Corporate Governance
Mercantil Servicios Financieros is registered
in Venezuela and its shares are listed on the Caracas Stock Exchange. It also has a program of
Level 1 ADRs which are traded over the counter in the USA. Mercantil’s Corporate Governance
structure is based on its Bylaws, the Capital Market Law, the Code of Commerce and the
Resolutions issued by the Venezuelan Securities Commission (CNV) on the subject.
Ever since Mercantil was incorporated, its Administrators have maintained a close relationship
with their shareholders, customers, clients, creditors and employees, marked by the highest
professional and ethical principles to guarantee transparent, efficient and proper
management. The Corporate Governance structure has been designed to facilitate the
supervision and work of the Board of Directors and Management aimed at safeguarding the
interests of shareholders, customers, clients, creditors and staff alike.
Mercantil has not restricted its Corporate Governance activities to the requirements of the
standards. To remain at the forefront in this field, the Board of Directors and Management of
Mercantil study the latest trends in this area so that the Company’s Corporate Governance
structure can be adapted to current best practices.
It is important to highlight the development and execution during 2009 of the strategic
project to set up a unit in charge of the detecting and managing compliance risk arising from
violation of regulatory obligations through policies, methodologies and procedures capable
of strengthening the business model by eliminating or reducing exposure to associated risks.
Given the characteristics of the Company, Compliance focuses on the Mercantil, C.A., Banco
Universal subsidiary. During 2009 an exhaustive diagnosis was made of the Compliance
practices observed and executed. It was used to design the organizational structure of the
Unit that would be in charge of Compliance and the Unit’s roles, responsibilities, and
governance structure were defined. The work involved formulating the strategic agenda for
the next four years and its implementation plan which will begin by focusing on Mercantil
Banco Universal, and subsequently include Mercantil’s other subsidiaries and units, excluding
the Mercantil Commercebank, N.A. subsidiary, as it has a Compliance Unit for many years
now due to the legislation and supervision factors that govern its activities.
93
Another important aspect of Corporate Governance is the dividend policy formally ratified by
the Board of Directors, which has been in place for many years and informs shareholders
exactly when dividends will be declared and paid. In line with this policy, all proposals to
declare dividends must be made in accordance with the Law and the Bylaws on the matter, and
at least 50% of each year's profits must be distributed as stipulated by the Venezuelan
Securities Commission (CNV) and subject to regulatory compliance with the equity ratios
applicable, and in keeping with the company’s investment and development plans.
Based on the foregoing, the Board of Directors will submit to the consideration of the first
Ordinary Meeting of Shareholders held each year, the ordinary cash dividends proposal for
the second, third and fourth quarters of the year, as well as the proposal corresponding to
extraordinary dividends for the year, if applicable, which are payable in cash or in stock. It will
also submit the ordinary cash dividends proposal for the first quarter of the following year to
the second Ordinary General Shareholders’ Meeting each year.
Notwithstanding, the Board of Directors may at any time consider any dividend proposal it
deems to be in order.
All Mercantil’s activities are carried out according to the strictest ethical and professional
principles. Both Mercantil and its subsidiaries have Code of Ethics which encompass a series
of ethical principles and values that guide the Company’s decisions and activities. This Code
covers fundamental duties: probity, loyalty, efficiency, co-fraternity, honesty, sincerity, dignity
and law abidance.
It also establishes standards designed to regulate the treatment of possible conflicts of
interest and complements the provisions of the Bylaws in this area. These Bylaws stipulate
how such situations should be handled and ban Board Members from taking part in
discussions on any matters in which they, or their partners in civil or mercantile companies
have a personal interest, requiring that directors remain outside the meeting room until a
final decision is reached.
Mercantil’s governance structure is comprised by the Shareholders’ Meeting, followed by the
Board of Directors, with its Audit, Risk and Compensation Committees, the Executive
Committee, the President and Executive President, the Internal Auditor and the Compliance
Officer.
94
Board of Directors
The Board of Directors must act efficiently and in the interests of shareholders, creditors,
customers, employees and the community at large. The Board has responsibility for defining
corporate strategies, determining business policies and establishing and controlling the strategic
direction of the institution. It also supervises management of the organization’s various business
and support areas. It evaluates results by comparing them against previously approved plans and
strategies, performance in previous years and the general banking environment.
In line with best corporate governance practices, the majority of the Directors on the Board
of Directors of Mercantil Servicios Financieros are independent of its administration. This
independence is further proof of Mercantil’s commitment to international management
standards and best corporate government practices.
The Directors are highly qualified and well-versed in business and finance which guarantees their
performance. The Board of Directors is made up of 10 directors and 20 alternate directors. The
President and Executive President are chosen from the Board members and both these offices
can be held by the same person. The Board meets once a month and whenever else the President
deems necessary.
To ensure better transparency and control over management procedures, right from the
outset Mercantil’s Bylaws provided for the creation of the Compensation and Audit
Committees whose functions have been governed by the Bylaws of its main subsidiary, Banco
Mercantil, since 1981. An Ordinary Shareholders’ Meeting held in March 2006 passed a
proposal submitted by the Board of Directors to amend the stipulation in the Bylaws that had
been approved at a Board meeting on May 31, 2001 to give the Risk Committee legal status.
These Committees are comprised mainly of Directors who are independent from the bank’s
administration.
Consistent with tradition to adhere to best Corporate Governance practices, the Audit
Committee approved the Company Bylaws which describes the Committee’s purpose,
functions and responsibilities; its members are under obligation to prepare an annual
evaluation of their compliance therewith. It also states that its members must evaluate such
compliance each year and affirms the obligation that the majority of its members must be
independent from the bank’s administration, adding that at least one of them must have
considerable accountancy or financial management experience.
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Board of Directors Compensation Committee
Members
This Committee is responsible for setting the organization’s policy on staff pay and benefits and for approving the
(Coordinator)
Alfredo Travieso P.
Gonzalo Mendoza M.
Luis Esteban Palacios W.
Luis Alfredo Sanabria U.
Gustavo A. Marturet (Ex officio)
Alejandro González Sosa (Ex officio)
remuneration of the President, the Executive President and senior management., and informing the Board of Directors
accordingly. In 2009 the Compensation Committee met 10 times to report on the following matters: Review of the
annual remuneration of the President, Executive President and members of the Executive Committee; short and longterm management incentive programs of Mercantil and its subsidiaries in Venezuela and abroad; impact of the national
minimum wage increase; impact of the regulations on job security this year; policy on benefits related to the discussions
on the collective bargaining agreements of the Mercantil Banco Universal and Mercantil Seguros subsidiaries; review
of the fees of the Boards of Directors of Mercantil Servicios Financieros and its subsidiaries in Venezuela and abroad;
analysis of staff movement during the year; review of interest rates for special financing programs for staff from
subsidiaries in Venezuela; review of fees for counsel on legal, fiscal and migratory matters; succession policy and analysis
of process for nominating the Company’s President and Executive President for office; reports on initiatives to rationalize
staff expenses at subsidiaries in Venezuela and abroad; review of proposals by the Association of Mercantil Retirees
and Pensioners; reports for submission to the Venezuelan Securities Commission (CNV); complementary pension plan,
Plan Complementario de Pensiones de Jubilación Mercantil: actuarial results and adjustment of minimum pension under
the plan; analysis of executive compensation and its benchmark positioning.
Board of Directors Audit Committee
Members
The Committee has responsibility for reviewing and discussing accounting and management policies, opinions and
Luis A. Romero M.
(Coordinator)
Jonathan Coles W.
Eduardo Mier y Terán
Federico Vollmer A.
Gustavo Machado C.
Francisco Monaldi M.
Oscar Machado K.
Claudio Dolman C.
Carlos Zuloaga Travieso
Miguel Ángel Capriles Capriles
reports of the organization’s internal and external auditors, establishing Reserves, reviewing the Financial Statements
and their Notes and formulating recommendations to the Board on matters incumbent upon it. It also approves the
engagement and remuneration of external auditors. In 2009 the Audit Committee met 8 times to discuss the following
topics: review of the financial statements of Mercantil and its subsidiaries and the opinions of the external auditors on
those statements and the notes thereto; review of the internal audit activities of the Mercantil’s different subsidiaries
and anti-money laundering activities; review and approval of the Independent Auditors’ fees; review of the internal
control observed by the independent auditors; review of Mercantil’s financial statements at the close of 2008 in
accordance with US GAAP and Mercantil Banco Universal’s financial statements at the close of 2008, also under US
GAAP; review of the methodology used to rate and value investments; review of deferred tax; review of internal audit
quality assurance program; report on Compliance theory and practice at Mercantil; review of plans to issue financial
statements under IFRS.
Board of Directors Risk Committee
Members
Approves Mercantil’s risk profile, policies and limits. Optimizes the use of capital to support the approved risk profile. In 2009
Gustavo J. Vollmer A.
(Coordinator)
Roberto Vainrub
Miguel Ángel Capriles L.
Gustavo Galdo C.
Luis A. Marturet M.
Carlos Hellmund B.
Luis Pedro España N.
Alberto Sosa S.
Germán Sánchez Myles
the Risk Committee met 6 times and dealt with the following topics: consideration and setting of cross-border credit limits;
review adjustments and measures connected with credit risk, review individual borrower and economic group limits,
aggregate limits, provisions; status and management report on operational risk and market risk; insurance policy
management; follow-up of limits set by the Bolivarian Republic of Venezuela; review reports on the outcome of loan portfolio
revisions; setting market risk limits for different subsidiaries; valuation of investment portfolio; strategies, contingency
planning to deal with the AH1N1 pandemic.
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Executive Committee
Mercantil has an Executive Committee comprising a President and Executive President plus ten
senior managers from the Business and Support areas of the organization, which guarantees the
timely implementation of Mercantil’s decisions and strategies.
The Committee meets on a weekly basis and holds extraordinary meetings as required. It is
responsible for evaluating options and formulating recommendations on policy matters,
objectives, strategies and organization and submitting them to the Board of Directors for
consideration, as well as assisting and guiding Management in its efforts to implement the
policies adopted. It is also responsible for evaluating the results of the implementation.
President
The Chairman of the Board of Directors is the President of the Company. Is responsible for
steering the Company’s activities and its business, chairing Shareholders meetings, Board
meetings and meetings of the Executive Committee, and providing them with guidance on
setting the policies, goals and strategies to be followed when taking important decisions, in
accordance with the executive powers granted to them. Is also responsible for representing
the Company before political and administrative authorities and public and private entities.
In fulfillment of its attributions under the Bylaws, the Board of Directors resolved that the
Executive President of Mercantil Servicios Financieros, and also the Executive Presidents of
the Mercantil, C.A., Banco Universal and Mercantil Commercebank subsidiaries, shall report
to the President.
The following units also report to the President: Legal Counsel, Strategic Planning, Global Risk
Management, Human Resources, Institutional Marketing and Corporate Communications.
The Audit Unit and the Secretariat, which report directly to the Board of Directors, report to
the President on administrative matters. The President stands in for the Executive President
during his temporary absences, exercising the same powers and attributions.
Executive President
The Executive President is responsible for the executive management and coordination of the
company; submitting to the consideration of the President, the Board of Directors and the
Executive Committee any major policies, objectives, strategies and decisions and informing them
periodically of the results of their operations. Other responsibilities include designing,
establishing and developing the company’s organizational structure and appointing and removing
general managers, consultants and advisers as necessary. As mentioned, the Executive President
reports to the President, standing in for him during his temporary absences and exercising the
same powers and attributions.
The following Global Business and Support Units report to the Executive President: Commercial
and Personal Banking, Corporate and Investment Banking, Private Banking and Asset
Management, Finance, Insurance and New Business, Global Operations and Operations &
Technology. The Executive President is also responsible for the executive coordination of all
Mercantil’s subsidiaries.
97
Internal Auditor
In accordance with the regulations applicable to Mercantil and its subsidiaries, Mercantil has
an Internal Audit Manager who works in conjunction with the Audit Committee when the
overall operations of Mercantil and its subsidiaries are examined.
The Internal Audit Manager heads Mercantil’s Global Internal Audit Unit, which works with
the Audit Committee to design Mercantil’s internal audit plan. This plan is executed
throughout the year. The results of the internal audits are reviewed and discussed periodically
by the Audit Committee and the Board of Directors, so that any corrective action necessary
may be taken.
Compliance Officer
In accordance with the regulations on the matter, Mercantil has a Compliance Officer who
chairs the Committee on the Prevention and Control of Money Laundering and is responsible
for designing the Annual Operating Plan for the Prevention and Control of Money Laundering,
coordinating and supervising the Anti-Money Laundering Committee and the Money
Laundering Prevention and Compliance Unit, coordinating staff training activities on antimoney laundering and maintaining institutional relations with the regulatory bodies on the
matter. The Compliance Officer also advises the Audit Committee and the Board of Directors
on compliance with their anti-money laundering obligations under the legislation in force.
Disclosure of Information
Mercantil prepares and publishes the company’s financial statements on a semi-annual basis
in compliance with the standards of the regulatory bodies. The company also prepares a
quarterly report containing detailed information and precise economic and financial data, as
well as other relevant data for the market, which is disclosed to the general public, the
National Securities Commission and the Caracas Stock Exchange through nationwide
distribution methods, and by e-mail to analysts and participants in the local and international
markets. Information is distributed periodically to the Securities and Exchange Commission
in accordance with its obligation to maintain Mercantil’s Level 1 ADR program in the United
States of America. Financial information on the company is also available on the website of
the Mercantil Banco Universal subsidiary at www.bancomercantil.com. Thus Mercantil fulfills
the regulations on immediate dissemination of any information that may materially affect
the price of its shares.
Lastly, but certainly not least, Mercantil has an Investor Relations Unit, whose functions
include the timely disclosure of information to investors by different means, including events
and presentations.
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ERNESTO LEÓN
ERNESTO LEÓN
Máscaras • 1986
Acrylic on wood frame • 121 x 110 cm
ADRIÁN, PUJOL
ADRIÁN PUJOL
Playa Majagual • 1987
Report of the Board of Directors of Mercantil Servicios Financieros
on Compliance with the Corporate Governance Principles adopted
by the Venezuelan Securities Commission (CNV)
Pursuant to Resolution N° 19-1-2005 of the
Venezuelan National Securities Commission (CNV) dated February 2, 2005, published in
Official Gazette of the Bolivarian Republic of Venezuela N° 38,129 of February 17, 2005, the
Board of Directors of Mercantil Servicios Financieros submits to the Ordinary General
Shareholders’ Assembly of this report on the degree of compliance with the Principles of
Corporate Governance adopted by the Venezuelan National Securities Commission as
provided for in said Resolution.
Independent Members of the Board of Directors
At its February 25, 2010 meeting, the Board of Directors examined the independence of each
director and determined that, according to the criteria on the independence of Directors,
contained in the above-mentioned resolution, at least one fifth of the members of the Board of
Mercantil Servicios Financieros are independent directors. This means that Mercantil Servicios
Financieros complies with the provisions set out on this matter in the Resolution issued by the
Venezuelan Securities Commission (CNV) on the Principles of Corporate Governance whereby
at least one fifth of the Board of Directors must be comprised by independent directors.
In order to meet the level of transparency and disclosure required on this matter, the report
distributed to the shareholders contains a brief resume on each Director.
Audit Committee
All the members who vote on the Audit Committee of Mercantil Servicios Financieros are
independent directors, according to the criteria on the independence of directors contained in
said Resolution. Gustavo A. Marturet and Alejandro González Sosa, in their capacity as President
and Executive President of the Company, respectively, attend this Committee as ex officio
members. The Audit Committee has and exercises responsibilities in matters regarding the
Principles of Corporate Governance. The Committee also deals with other matters. The chapter
of the report that refers to Corporate Governance lists the matters dealt with by this Committee
in 2009. The resumes of all the members are included in this report.
In view of the above, it can be said that Mercantil Servicios Financieros fulfills all the Corporate
Governance Principles adopted by the Venezuelan Securities Commission (CNV).
101
Awards and Acknowledgements
Mercantil Servicios Financieros and its
subsidiaries received various recognitions in 2009 from internationally prestigious institutions
and publications.
• In April, Forbes Magazine ranked Mercantil Servicios Financieros (Mercantil) as the leading
Venezuelan institution and the only one in the country’s financial system on its list of the
top 2000 financial institutions in the world, according to the results of its survey. Mercantil
Servicios Financieros was ranked number 1,333 and is one of the leading financial services
companies in Latin America. In this oportunity, Mercantil moves forward 134 positions since
2008.
• In February, Global Finance magazine awarded Mercantil Banco Universal its “World’s Best
Trade Finance Providers 2009” prize for Venezuela. This prize acknowledges the financial
institutions that have the highest volume of transactions, range of global coverage,
customer services, competitiveness in prices and technological innovation in the world.
• In March 2009, for the fourth time running, the Great Place to Work® Institute ranked
Mercantil Banco Universal among the best 20 companies to work for in Venezuela. It was
also the financial institution with the best workplace environment. Different national and
multinational companies took part in the survey conducted by the Great Place to Work®
Institute.
• In July, Mercantil Banco Universal was acknowledged by Global Finance magazine as the
Best Consumer Internet Bank in Venezuela. This result was obtained thanks to the strategic
strength of its Online Banking, the benefits it offers customers, and deposits by the new
users of the Online Banking service.
• In July, Dinero magazine ranked Mercantil Banco Universal as the bank preferred by
executives to handle their main accounts, according to the results of a survey of 289
executives from different professions in Venezuela’s main cities.
• In October, in Mercantil Banco Universal’s annual follow up of the audit conducted in
accordance with ISO 9001:2008, the Venezuelan Standardization and Quality Certification
Institute (Fondonorma) ratified the certification of the bank’s lines of services and granted
a new one, bringing the total number of lines of service certified in 2009 to ten. The ten
certified lines of service are: CAM, Online Banking, Home delivery of checkbooks, Préstame
instant loans, corporate client securities, Teller Line, Promissory Notes for businesses, ATM
network, credit cards and Employee Trust.
102
• In November, Global Finance magazine recognized Mercantil Banco Universal, for the
second year running, as the "World´s Best Foreign Exchange Bank” in Venezuela.
• In its December 2009 edition, The Banker chose Mercantil Banco Universal as the: Best
Bank in Venezuela in 2009 thanks to its outstanding financial results. The magazine
emphasized the high profit yield maintained by Mercantil Banco Universal, characterized
by its sound organizational structure, optimum risk management and adequate level of
capitalization. The Banker highlighted the creation of the new "Mercantil's Ally" network of
service points which provide banking services and innovative products to sectors of the
population where there was no banking presence.
Mercantil Seguros
• In March, for the second time running, the Great Place to Work ® Institute included
Mercantil Seguros among the top twenty companies to work for in Venezuela and was the
only company in the insurance sector to be included in the ranking.
• In March, Mercantil Commercebank won the Greater Miami Chamber of Commerce’s Top
100 Minority Business Award. The Greater Miami Chamber of Commerce pointed out that
these prizes recognize the achievements of South Florida businesses. Of the 100 companies
that classified as finalists, ten of them received prizes in various different categories.
Mercantil Commercebank won in the Employee Workplace Initiatives category.
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RAFAEL BARRIOS
RAFAEL BARRIOS
Trazos triangulares • 1997
Lacquered iron • 250 x 212 x 29 cm
Management
Board of Directors
Directors
Gustavo Antonio Marturet Machado
President
Degree in Civil Engineering from Universidad Central de Venezuela (1962),
President and member of the Board of Directors of Mercantil Servicios
Financieros and Mercantil Banco Universal. Chairman of the Boards of Mercantil
Commercebank Florida Bancorp, Mercantil Commercebank N.A., Mercantil
Merinvest and Fundación Mercantil. Member of the Boards of Directors of
Mercantil Seguros and Mercantil Bank (Schweiz) AG. Member of the Board of
Directors of the Institute of International Finance, Inc.” (IIF). Vice President
Venezuelan American Chamber of Commerce and Industry (VenAmCham).
Member of the Chairman’s Advisory Council of the Council of the Americas.
President of the John Paul II Foundation for Ecclesiastical Education (FESE).
Former President of Mercantil Servicios Financieros and Mercantil Banco
Universal, President of the Venezuelan Banking Association, National Banking
Council, Council of Venezuelan American Entrepreneurs (CEVEU) and the
Colombian Venezuelan Economic Integration Chamber (CAVECOL). Former
member of the Advisory Council of the Central Bank of Venezuela (BCV), member
of the Board of Directors of the Andean Development Corporation (CAF) and of
various associations connected with the financial and production sectors.
Executive President
Degree in Chemical Engineering from Universidad Metropolitana. MBA Babson
College, Massachusetts USA., Massachusetts. Twenty-eight years of service with
the Institution. Member of the Executive Committee of Mercantil Servicios
Financieros, Mercantil C.A. Banco Universal, Mercantil Commercebank Holding,
Mercantil Commercebank Florida BanCorp and Mercantil Commercebank N.A.
Member of the Board of Directors of Mercantil C.A. Banco Universal, Mercantil
Commercebank Holding, Mercantil Commercebank Florida BanCorp, Mercantil
Seguros C.A., Mercantil Merinvest, Casa de Bolsa, C.A., Mercantil Merinvest, C.A.,
Fundación Mercantil, Todo1 Services, Inc., and Educrédito, A.C. President of the
Board of Supervisory Directors of Mercantil Bank Curaçao N.V. and Mercantil
Bank Panama, S.A. Former Executive President of Mercantil C.A. Banco Universal,
President of Interbank C.A., Banco Universal and Mercantil Merinvest, C.A. and
Director of the Venezuelan National Banking Council, the Venezuelan Banking
Association, the Swiss-Venezuelan Chamber of Commerce and Industry and the
Venezuelan Council for Investment Promotion (CONAPRI).
Former Chairman of the Board of
Banco Mercantil, C.A. (Banco Universal)
Degree in Civil Engineering from Cornell University (USA); Doctorate from
Universidad Central de Venezuela (UCV). Member of the Boards of Mercantil
Servicios Financieros, C.A. and Mercantil Banco Universal. Former member of
the Boards of Directors of S.C. Johnson & Son de Venezuela, C.A. IBM de
Venezuela and IBM World Trade, Americas Far East. Former Chairman of the
Board of Directors of Banco Mercantil, C.A. (Banco Universal) and Consorcio
Inversionista Mercantil Cima, C.A. and President and/or Director of a number
of Venezuelan sugar, metalworking, cement, finance, construction, alcoholic
beverage companies and several international corporations. Former President
and Director of several business organizations and national and foreign
organizations and foundations.
Alfredo Travieso Passios
Senior Partner Tinoco, Travieso, Planchart & Núñez,
Attorneys at Law
Graduate and postgraduate degrees in law from Universidad Católica Andrés
Bello (UCAB), postgraduate degree from the University of Michigan, USA.
Senior Partner of Tinoco, Travieso, Planchart & Núñez, Attorneys at Law,
President of Grupo Emboca, C.A. and Tapas Corona, S.A., Board member of
Mercantil Servicios Financieros, C.A. and Mercantil Banco Universal, Mercantil
Commercebank Holding Corporation, Manufactura de Papel MANPA, C.A.,
Corporación Industrial de Energía, C.A., Ars Publicidad C.A., C. Hellmund & Cia.
Toyo Club Valencia, C.A., Envases Venezolanos, C.A. and Desarrollos Judibana,
C.A.; President of the Venezuelan Association of Financial Law (AVDF), member
of the Venezuelan Association of Tax Law (AVDT), the International Bar
Association and the International Academy of Estate & Trust Law.
Luis A. Romero M.
Electrical Engineer
Graduate of Universidad Metropolitana, MBA from Babson College, PMD and
CEP from Harvard University. Member of the Boards of Directors of Mercantil
Servicios Financieros C.A., Mercantil Banco Universal, Mercantil
Commercebank Holding Corporation and Mercantil Commercebank Florida
Bancorp. and Mercantil Commercebank, N.A. Member of the Consultative
Council of the Venezuelan American Business Council (CEVEU). Director of
Sociedad de Amigos del Árbol “SADARBOL.” Director of International
Briquettes Holding (IBH), Director of Caurimare, S.A. and Desarrollos e
Inversiones, S.A. Former Corporate Director of Strategic Planning of Siderúrgica
Venezolana, SIVENSA, S.A.
Gustavo Vollmer Acedo
President of Grupo Palmar
Degree in Economics from Duke University; Postgraduate in Economic
Development, Cambridge University, UK; PED in Business Administration from
IMEDE, Switzerland. Chairman and CEO of Corporación Palmar, C. A., and other
companies in the Palmar Group. Chairman of the Board of Directors of Empresas
PMC. Chairman of the Board of Directors of: Mercantil Servicios Financieros,
Mercantil Banco Universal, Mercantil Commercebank Holding Corporation,
Siderúrgica Venezolana, S.A. (SIVENSA), The Pantaleon Group Inc., Vetra
Energía, S.L., and Director of S.C. Johnson for the Andean Countries. Member of
the Advisory Committee of the Venezuelan Confederation of Industry
(Conindustria). Member of the Development Council of Universidad Católica
Andrés Bello. Former Chairman of the Board and currently member of the
Institute of Advanced Studies in Administration (IESA). Former President,
Founder, and member of the Board of Directors of CEVEU (US-VENEZUELA
Business Council). Former International President of the Young Presidents'
Organization (YPO) and Alianza para una Venezuela sin Drogas.
105
Jonathan Coles W.
Alternate Directors
Professor at IESA
Luis A. Sanabria U.
Graduate of Yale University, with an MBA from Venezuela’s Institute of
Advanced Studies in Administration (IESA). Member of the Boards of
Mercantil Servicios Financieros and Mercantil Banco Universal. Director of
Mercantil Commercebank, N.A. and Mercantil Commercebank Holding
Corp.; General Manager, Executive President and President of the Board of
Directors of Mavesa, S.A.; Former Minister of Agriculture; Director of the
Central Bank of Venezuela (BCV); speaker at national and international
institutions. Publications: “Reforming Agriculture”, in Lessons of the
Venezuelan Experience, Woodrow Wilson International Center for Scholars
and Johns Hopkins University (1995). “Inequality-Reducing Growth in
Agriculture: A Market-Friendly Policy Agenda,” in Beyond Tradeoffs, Market
Reform and Equitable Growth in Latin America, Inter-American Development
Bank (IDB) and the Brookings Institution (1998). J. Coles and C. Machado,
Trayectoria de las políticas agrícolas venezolanas: Aprendizajes y exigencias
para el futuro, in Agronegocios en Venezuela. Ediciones IESA (2002).
Director of Valores and Desarrollos VADESA S.A.
Degree in Law from Universidad Central de Venezuela (UCV). Currently Director
of Valores and Desarrollos VADESA, S.A., Vice President of Inversiones Capriles
and Legal Representative of Cadena Capriles. President of Publicaciones
Capriles, C.A. Member of the Boards of Directors of Mercantil Servicios
Financieros, C.A. and Mercantil Banco Universal. Former Legal Adviser, Legal
Representative and President of Cadena de Publicaciones Capriles publishing
group and the Capriles group of companies. Director of Valinvenca, Inversiones
Finalven, Sociedad Financiera Finalven, Servicios Finalven, Banco República,
Inversiones Diversas, C.A. (INVERDICA) and C.A. La Electricidad de Caracas.
Former Director of C.A. Venezolana Guías (CAVEGUÍAS).
Roberto Vainrub A.
Executive Director of Actibienes and Holding Activalores
PhD in Engineering (UCAB-1999 Summa Cum Laude), Master’s Degree
(Stanford University-1981), Industrial Engineer (UCAB-1978).
Has been a professor at IESA since 1997. Founder of IESA’s Center for
Entrepreneurship and its first coordinator.
Former Vice President and Alternate President of IESA, member of the Board
of Directors of IESA and the IESA Foundation. He is a full tenured professor at
Universidad Católica Andres Bello where he taught at the Engineering School
from 1982 to 2003 – Gold Medal, UCAB. Vainrub started his managerial career
in the Marketing Department of Procter and Gamble. Former partner and
Executive Vice President of the Venezuelan industrial group Frigilux. Was
Director of the Savings and Loan Association Prosperar, E.A.P. (1998 - 2002)
and Tucarro.com (2003-2008). Executive Director of Actibienes and of financial
group Holding Activalores. Member of the Boards of Directors of Mercantil
Servicios Financieros, Mercantil Banco Universal and Mercantil
Commercebank Holding Corp. Director of Farmatodo C.A. and President of its
Audit and Risk Committee.
Vainrub has authored many books and articles and participated in national and
international conferences. Director of Educrédito, member of the advisory
committee of Conciencia Activa. Former president of the National Association
of Manufacturers of Refrigeration Equipment, director of CAFADAE and
member of the Conciliation and Arbitration committee of Union Israelita, the
Venezuelan Jewish community in Caracas.
Miguel A. Capriles L.
President of the Capriles Group of Companies
Degree in Administrative Sciences from Universidad Metropolitana. President
of Cadena Capriles, Director of the Boards of Mercantil Servicios Financieros
and Mercantil Banco Universal. Director of Mercantil Commercebank Holding
Corp.; Chairman of the Board of Directors of Mantex C.A., Director of H. L.
Boulton, S. A.; member of the Board of Directors of the Institute of Advanced
Studies in Administration (IESA); former Director of C.A. La Electricidad de
Caracas and Cerámicas Carabobo, C. A.
106
Legal Adviser to Corporación Palmar
Law degree from Universidad Católica Andrés Bello (UCAB) and studied at
Georgetown University, Washington. Currently Director of Inversiones
AEFEVE, C.A., C.A. Ron Santa Teresa, Constructora Alvo. Alternate Director of
the Boards of Mercantil Servicios Financieros and Mercantil Banco Universal.
Oscar A. Machado K.
President of Siderurgica Venezolana SIVENSA, S. A.
Degree in Industrial Engineering from Universidad Católica Andrés Bello, 1974.
First Vice President of the Venezuelan Confederation of Industry (Conindustria)
and Vice President of the Latin American Iron and Steel Institute (ILAFA) and of
the Board of Directors of IESA and the IESA Foundation.
Director of Aeropuerto Caracas, S.A.; Board of Directors of the Venezuelan
American Chamber of Commerce (VenAmCham), Venezuela Competitiva,
Instituto Venezolano de Siderurgia (IVES) and the IESA Foundation, Adviser to
the Venezuelan Association of Executives (AVE).
Alternate Director of the Board of Directors of Mercantil Servicios Financieros,
C.A. and Mercantil Banco Universal. Member of the Executive Committee of the
Latin American Iron and Steel Institute (ILAFA).
Ex–President of Venezuela Competitiva, Instituto Venezolano de Siderurgia
(IVES), Venezuelan Association of Executives (AVE) and the Latin American Iron
and Steel Institute (ILAFA).
Eduardo A. Mier y Terán
President of Desarrollos e Inversiones, S.A.
Degree in Civil Engineering from Universidad Católica Andrés Bello, MSc from
Stanford University. Currently Chairman of the Board of Caurimare S.A. and
Desarrollos e Inversiones S.A. Director of Moore de Venezuela,S.A., H.L.Boulton
& Co.,S.A. and Fundación John Boulton. Alternate Director of the Board of
Mercantil Servicios Financieros and Mercantil Banco Universal. Former General
Manager of Inversiones Tacoa, C.A. and President of Educrédito.
Luis Esteban Palacios W.
Founding Partner of law firm Palacios, Ortega y Asociados
PhD in Law from Universidad Central de Venezuela and postgraduate degree
from New York University, MCJ. 1958. Founding partner of Palacios, Ortega y
Asociados; Director of the Venezuelan Scout Foundation; Alternate Director of
Mercantil Banco Universal and Mercantil Servicios Financieros; Vice President
of the Venezuelan Arbitration Committee.
Adviser on corporate law, banking law and capital markets. Has participated in
a number of financing transactions through bank syndicates and project
financing.
Former member of the Foreign Investment Advisory Council of the
Superintendency of Foreign Investments (SIEX); Director of Cantv, Secretary
of the Board of Directors of the Bar Association of the Federal District of
Caracas and President of Montepío de Abogados de Venezuela. Was Professor
of Labor Law at Universidad Central de Venezuela and assistant to the
President of the Central Bank of Venezuela (BCV).
Gustavo Galdo C.
Gustavo Machado Capriles
President of Inversora Parnaso, S.A.
Vice President and Editorial Adviser to Cadena Capriles
Degree in Civil Engineering from Universidad Católica Andrés Bello (UCAB),
MSc in Civil Engineering Management and MSc in Industrial Engineering
Economic Systems Planning and Honorary Alumni of the Department of
Management Science and Engineering of Stanford University, USA. Director of
Fe y Alegría, alternate director of the Boards of Mercantil Servicios Financieros
and Mercantil Banco Universal. In the public sector he was General Sectoral
Director of Public Finance of the Ministry of Finance, Director of Banco
Industrial de Venezuela and member of the Advisory Commission on the
Negotiation of the External Public Debt (1983-1985). President of Inversiones
Finalven, S.A., Sociedad Financiera Finalven, S.A. and Sociedad Financiera
Valinvenca, S.A., in the private sector (1987-1998).
Degree in Economics from Universidad Central de Venezuela (UCV).
Specialized studies in Journalism and Media Management at Universidad de
Navarra, Pamplona, Spain. Specialization courses in International Banking at
Manufacturers Hanover Trust in New York. Has worked in the tourism
construction industry and international trade sectors and held management
positions in the field of Strategic Planning with the Confinanzas Consortium.
Currently Vice President and Editorial Adviser to Cadena Capriles and
Alternate Director of the Boards of Mercantil Servicios Financieros and
Mercantil Banco Universal.
Gonzalo A. Mendoza M.
Chairman of the Board of Negroven C.A.
Director of the International Center for Energy and
Environmental Studies of IESA
Civil Engineer graduated from Universidad Santa María with an MS in Civil
Engineering Management from Stanford University, USA. Chairman and
Director of the Board of NEGROVEN, S.A., Kamequin, C.A., Director of
Tripoliven, C.A. and Valores Químicos (VALQUIMICA), C.A. Alternate Director
of the Board of Directors of Mercantil Servicios Financieros and Mercantil
Banco Universal. Former President of the Venezuelan Association of the
Chemical and Petrochemical Industry (ASOQUIM) and of the Venezuelan
Ecuadorian Chamber of Commerce (CAVENEC).
Economist graduated Cum Laude from Universidad Católica Andrés Bello
(UCAB), with a Master’s in Economics from Yale University and a PhD in Political
Economy from Stanford University. Director of the International Center for
Energy and Environmental Studies of Instituto de Estudios Superiores de
Administración (IESA). Professor of Economics at Universidad Católica Andrés
Bello. From 2008-2009 was a Visiting Professor in Political Economics at
Stanford University and a National Fellow at the Hoover Institution. Has been a
consultant to public and private institutions, including: the World Bank, the InterAmerican Development Bank, the Andean Development Corporation (CAF) and
Harvard University. Director of Siderúrgica Venezolana, S.A. (SIVENSA) and
Alternate Director of Mercantil Servicios Financieros and Mercantil Banco
Universal.
Germán E. Sánchez Myles
Dentist, Director General of Grupo COR Dental
Graduated in Dentistry at Universidad Central de Venezuela with specializations
in Buccal Surgery, Cosmetic Dentistry, Prostheses and Management. Formerly
Assistant in the Surgical Area of the Puerto Ayacucho Central Hospital and of the
Eudoro González Hospital. Director of the Restorative Dental Center 1997-2002.
Currently Director General of Grupo COR Dental and Director of Inversiones
ARISAN C.A., as well as alternate Director of the Boards of Mercantil Servicios
Financieros and Mercantil Banco Universal.
Luis A. Marturet M.
Computer Engineer
Degree in Computer Engineering and Postgraduate in Business Management
from Universidad Simón Bolívar (USB). Furthered his management skills at
Wharton, the University of Pennsylvania Business School and in various
advanced technology programs. Developed and managed the Information
Technology Planning area of C.A. La Electricidad de Caracas. Member of the
Board of Directors of C.A. Ed. Marturet & Co. Scrs., and Alternate Director of
Mercantil Servicios Financieros and Mercantil Banco Universal. Director of an
international mailbox, shipping and messaging franchise and is currently
developing new business in the field of production of audiovisual content for
the media and entertainment industries and storage of structured information
in digital format.
Francisco J. Monaldi M.
Federico Vollmer Acedo
Vice President of Industrias Palmar
BSc in Agribusiness from Middle Tennessee State University, master’s degree in
Agricultural Economics (MPS/Agriculture) from Cornell University. President of
Asesoría AGRIPLUS, C. A., Director of Empresas PMC, member of the Executive
Committee and the Board of Directors of Inversiones AEFEVE, President of
VENAZÚCAR, Director of FUNDACAÑA, Director of Inversiones Porcinas, S.A.,
Director of CAVIDEA. Alternate Director of the Boards of Mercantil Servicios
Financieros and Mercantil Banco Universal.
Claudio Dolman C.
Director of Holding Activalores
Degree in Industrial Engineering from Universidad Católica Andrés Bello.
President and Director of ActiBienes. Director of Holding Activalores. Director
and Vice President of Rattan Group. Alternate Director of the Boards of
Mercantil Servicios Financieros and Mercantil Banco Universal. President and
Director of Promotora Itaca 2000, C.A. Was Director of Seguros PanAmerican.
Director of Corimon and General Manager of Grupo Osiris.
Carlos Zuloaga Travieso
Carlos Hellmund Blohm
Executive President of Empresas Casa Hellmund
Industrial Engineer graduated from Northeastern University, USA, with a
Master’s in Business Administration (MBA/SLOAN Fellowship) from the
London Business School, U.K. Executive President of C. Hellmund & Cía., S.A.,
President of Laboratorios Rapid Fot, C.A., President of OPC Operadora, C.A.;
Director of the Caracas Chamber of Commerce and Service, the VenezuelanJapanese Chamber (CAVEJA) and the Venezuelan Chamber of the Photography
Industry (CAVIFOT); alternate Director of the Boards of Directors of Mercantil
Servicios Financieros and Mercantil Banco Universal and member of the Board
of Trustees of the London Business School; member of the Marketing
Committee of VenAmCham.
Senior Partner Tinoco, Travieso, Planchart & Núñez,
Attorneys at Law
Degree in law from Universidad Católica Andrés Bello (UCAB) and master’s
degree in Commercial Law from American University in Washington, D.C., USA.
Formerly foreign associate for the Department of Foreign Investment of Holland
& Knight LLP in Miami, USA. Alternate Director of the Boards of Directors of
Mercantil Servicios Financieros Director of Janus Capital Inc. and former director
of Transportes Marítimos del Caribe (Crowley Group). Member of the
International Bar Association (IBA) and the American Bar Association (ABA).
107
Nerio Rosales Rengifo
Degree in Economics from Universidad Católica Andrés Bello. Executive
President of Mercantil Banco Universal, Global Manager Commercial and
Personal Banking, member of the Executive Committee of Mercantil Banco
Universal and Mercantil Servicios Financieros. Director of Mercantil Banco
Universal Director of Mercantil Commercebank Holding Corporation Director
of Mercantil Seguros. Director of Mastercard International Latin American
Region. Director of Mercantil Bank Curaçao N.V. and Mercantil Bank (Panama),
S.A. Alternate Director of Mercantil Servicios Financieros.
Armando Leirós R.
Degree in Economics from Universidad Católica Andrés Bello. Has been with
Mercantil for over 30 years. Currently Global Operations and Technology
Manager, member of the Executive Committee of Mercantil Servicios
Financieros and Mercantil Banco Universal, Director of Todo1 Services, Director
of Mercantil Commercebank N.A. and Alternate Director of Mercantil Servicios
Financieros. Has held various positions at Mercantil Servicios Financieros,
including in particular Manager of Corporate Banking, Manager of Corporate
and Institutional Banking, Executive President of Arrendadora Mercantil, C.A.
and Banco de Inversión Mercantil, C.A., Director of Fondo Mercantil and Banco
Hipotecario Mercantil.
Miguel Ángel Capriles Capriles
Vice President of Valores y Desarrollos VADESA S.A.
and Inversiones Capriles C.A
Degree in Administrative Sciences from Universidad Metropolitana, Option
Management (1988) and Option Banking and Finance (1991). Currently Vice
President/Non-executive Director of Valores y Desarrollos VADESA, S.A. and
Vice President/Director of Inversiones Capriles, C.A. Director of Mantex, S.A;
C.A. Últimas Noticias; Grabados Nacionales C.A. and C.A. El Mundo. Alternate
Director of the Boards of Mercantil Servicios Financieros and Mercantil Banco
Universal. Former Finance Manager of Inversiones Capriles, C.A., Director of
C.A. La Electricidad de Caracas and President of Distribuidora Samtronic de
Venezuela, C.A.
Luis Pedro España Navarro
Director of the Economic and Social Research
Institute of UCAB
B.A. in Sociology from Universidad Católica Andrés Bello and a Master’s in
Political Science from Universidad Simón Bolívar. Currently Director of the
Economic and Social Research Institute of UCAB Alternate Director of the
Boards of Mercantil Servicios Financieros and Mercantil Banco Universal.
Member of the Advisory Council of the newspaper El Mundo Economía y
Negocios published by Cadena Capriles. Former banking, insurance and
marketing adviser to low-income sectors for Arthur D. Little and Cantv and
Adviser on Social Programs for institutions such as the United Nations
Development Programme (UNDP); World Bank-Ministry of the Family; UNICEFChildren’s Foundation; governments of Germany and the Netherlands and
national and regional public institutions. Coordinated various publications, such
as Venezuela: Un acuerdo para alcanzar el desarrollo - UCAB, USB, UCV; IESA
(2006) and Detrás de la Pobreza. Diez Años Después (2009), among others.
Philip R. Henríquez S.
Degree in Economics from Universidad Católica Andrés Bello (1986) with an
MBA from Columbia University, New York (1991). Since 2004 has been a
member of the Executive Committee of Mercantil Servicios Financieros,
Mercantil Banco Universal (Venezuela) and Mercantil Commercebank (USA).
Former President of Citibank N.A. and Citigroup Country Officer in Venezuela
(2000-2004); Executive Vice President of Banca Mayorista Global; member of
the Board of Directors of Banco Venezuela – Grupo Santander and President of
Valores Santander Casa de Bolsa (1997-2000), responsible for the Treasury,
Fixed Income, Derivatives, Corporate Finance, Analysis, Capital Market, Trust
Fund and Custody business. Joined Citibank N.A., Venezuela in 1991 in the
Treasury and Derivatives area. Appointed Vice President of Treasury in
Venezuela in 1993. His career began at Banco Exterior where he had managerial
responsibility in the field of corporate banking. Member of the Board of
Directors of the Venezuelan Council for Investment Promotion (CONAPRI) and
the Venezuelan Association of Executives (AVE). Former member of the Boards
of VenAmCham (2001-2004), Venezuelan National Banking Council (20012004), Caracas Stock Exchange (1998-2000) and the Venezuelan National
Gallery of Art (2001-2003), Venezuelan Institute of Financial Executives (IVEF)
(2001-2007) and the Venezuelan Anti-Diabetes Foundation (2000-2008).
Alberto José Sosa Schlageter
Executive Director Corporación Digitel, C.A.
B.A. in International Business from Ohio Wesleyan University and MBA in
International Management from the University of Denver, Colorado.
Executive Director of Corporación Digitel, C.A. President of the Executive
Committee of Corimon, Alternate Director of the Boards of Mercantil Servicios
Financieros and Mercantil Banco Universal. Formerly President of Seguros La
Seguridad and President of Cerámica Carabobo, S.A.C.A. Member of the Boards
of: Terminales Maracaibo, H.L. Boulton, C.A., Central Azucarero Portuguesa,
Valores Vencred, Chocolates El Rey, Fundación Venezuela Sin Limites, Fama de
América. Was a member of the Chamber of Commerce, Caracas Stock Exchange,
National Council of Insurance (Consejo Nacional de Seguros), Inversora
Seguridad, Invercapital, Bancaracas Consorcio Inversionista.
108
Executive Committee
Millar Wilson
Global International Operations Manager
See CV (Board of Directors Section)
Degree in Business and Administrative Studies from Bradford University England
(1973). Has been with Mercantil for 32 years. Wilson began his financial career
with Mercantil Banco Universal in 1977; he moved to the USA in 1982 to open
the Miami office. He was Mercantil Commercebank, N.A.’s Executive President
from 1984 to 2004 and from 2004 to 2008 was Global Chief Risk Officer of the
Mercantil Group. Wilson is currently Global Manager of International Operations
of Mercantil Servicios Financieros. Executive President and Director of Mercantil
Commercebank Florida Bancorp, Inc., Mercantil Commercebank, N.A., Mercantil
Commercebank Investment Services, Inc. and Mercantil Commercebank Trust
Company, N.A., and also Country Manager of Mercantil in the United States.
Chairman of the Board of BMC Bank & Trust Ltd., Mercantil Bank (Panama), S.A.
and e Mercantil Bank Curaçao N.V. Member of the Executive Committees of
Mercantil Servicios Financieros and Mercantil Banco Universal; member of the
Boards of Mercantil Seguros, Fundación Mercantil and Mercantil Internacional
Holding Limited. Graduated from the Harvard Business School Management
Development Program (1992). Former Chairman of the Board of the Greater
Miami and Keys Chapter of the American Red Cross (2001-2002) and was
Director and Treasurer of the Miami Dade College Foundation (1999-2004).
Philip R. Henríquez S.
Fernando Figueredo M.
Global Chief Risk Officer
Graduated in Law from Universidad Católica Andrés Bello; MBA from Columbia
University, New York, and a dual specialization in Finance and Marketing.
Member of the Executive Committee of Mercantil Servicios Financieros,
Mercantil Banco Universal (Venezuela) and Mercantil Commercebank (USA) and
prior to that was Credit and Operational Risk Manager of Corporate and
Investment Banking at Mercantil Servicios Financieros. Prior to joining Mercantil,
was Head of Financial Institutions at Citibank N.A., Venezuela, where he had
responsibility for the transactional client segment and the corporate client
service area. In Banco Venezuela, as a manager in the Oil and Gas sector and in
the Corporate Finance area at Santander Investment.
Gustavo Antonio Marturet Machado
President
Executive President
Nerio Rosales Rengifo
Rosa M. de Costantino
Global Private Banking and Wealth Management Manager
Degree in Economics from Universidad Central de Venezuela. Has been with
the institution for 30 years where she has held several positions in the Finance
and Commercial Banking areas. Manager of Global Private Banking and Wealth
Management and member of the Executive Committee of Mercantil Banco
Universal, Mercantil Commercebank Holding Corporation and Mercantil
Servicios Financieros. Member of the Board of Directors of Mercantil
Commercebank Trust Company, Director and member of the Executive
Committee of Mercantil Commercebank Investment Services with a BrokerDealer license in the USA. Chairwoman of the Boards of Mercantil Sociedad
Administradora de Entidades de Inversión Colectiva and Portafolio Mercantil
de Inversión, Director of Mercantil Seguros, Mercantil Bank Curaçao N.V.,
Mercantil Bank (Panama), S.A. and Mercantil Bank (Schweiz) AG.
Armando Leirós R.
Luis Alberto Fernandes
Global Chief Legal Counsel
Certified Public Accountant with a master’s degree in Business Administration
from Universidad Católica Andrés Bello. Twenty-two years of service with
Mercantil Banco Universal. Global Chief Risk Officer of Mercantil Banco
Universal and Mercantil Servicios Financieros Member of the Executive
Committee of Mercantil Servicios Financieros, Mercantil Banco Universal and
Mercantil Commercebank. Member of the Boards of several subsidiary
companies; chaired the Comptrollers’ Committee of the Venezuelan
Banking Association. Worked for Espiñeira, Sheldon y Asociados
(PriceWaterhouseCoopers) for 7 years.
Graduated in Law from Universidad Católica Andrés Bello, with a Masters in
Corporate and Mercantile Law from London University. Currently Global Chief
Legal Counsel for Mercantil Servicios Financieros and Mercantil Banco
Universal. Formerly Legal Manager for Financial and Corporate Affairs for
Mercantil. Director of Mercantil Seguros and Mercantil Merinvest Casa de
Bolsa. Member of the Advisory Board of Mercantil Bank Curaçao N.V. and
Director of Mercantil Bank (Panama), S.A. Before joining Mercantil he held
various positions at the Central Bank of Venezuela (BCV), including General
Counsel, Alternate General Counsel for Financial Affairs and Legal Adviser on
Monetary and Financial Affairs. Former Adviser to the Financial Emergency
Board. Was Professor of Banking Law and National and International
Regulation, Financial Contracts and Oversight of Financial Services at
postgraduate level at Universidad Católica Andrés Bello (UCAB) and
Universidad Central de Venezuela (UCV). Participated as negotiator and adviser
for Venezuela on financial services within the framework of the World Trade
organization and the Andean Community of Nations. Participant and speaker
at national and international seminars and events. Studies in arbitration and
negotiation.
109
Alberto Benshimol M.
Insurance and New Financial Businesses Manager
Degree in Civil Engineering from Universidad Católica Andrés Bello, MSc from
the University of Illinois. Graduated from the SEP at Stanford University, USA.
Has been with the institution for 16 years. Manager of Insurance and New
Business of Mercantil Servicios Financieros C.A., member of the Executive
Committee of Mercantil Servicios Financieros, C.A., and President of Mercantil
Seguros, C.A. Formerly General Manager of Inversiones Polar, C.A., and Director
of a number of industrial and financial companies.
Luis Calvo Blesa
Global Office of the President Manager
B.A. in Media Studies from Universidad Católica Andrés Bello with 30 years of
service at Mercantil. Manager of the Office of the President of Mercantil Banco
Universal and Mercantil Servicios Financieros, General Manager and member of
the Board of Directors of Fundación Mercantil and General Manager of
Fundación BMA. Member of the Executive Committee of Mercantil Servicios
Financieros, C.A. and member of the Board of Directors of Mercantil Seguros.
Member of the Committee of the Social Alliance of VenAmCham and of
Dividendo Voluntario para la Comunidad. Former Chairman of the Venezuelan
Bankers Association’s Human Resources Committee and member of the Latin
American Human Resources Development Committee of the Latin American
Banking Federation (FELABAN).
110
Subsidiaries
MERCANTIL, C.A. BANCO UNIVERSAL
Avenida Andrés Bello, N° 1
Edificio Mercantil
Caracas 1050, Venezuela
Phone: (58-212) 503.1111
Télex 27002/27003 BMERVC
Apartado Postal 789, Caracas 1010-A
Venezuela.
[email protected]
www.bancomercantil.com
Call Center:
Phone: 0-500-600 2424/ 0-500-503 2424
(58-212) 600.2424 -(58-212) 503 2424
CORAL GABLES AGENCY
220 Alhambra Circle, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 460.8500
Fax: (1-305) 460.8595
Télex: 681278 BMER UW
[email protected]
CURAÇAO BRANCH
Abraham Mendez Chumaceiro Boulevar 1
Willemstad, Curaçao. Netherlands Antilles
Phone: (5999) 461.8241 / 1706
Fax: (5999) 461.1974
[email protected]
MERCANTIL COMMERCEBANK N.A.
220 Alhambra Circle, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 460.4000
Fax: (1-305) 629.1400
www.mercantilcb.com
MERCANTIL COMMERCEBANK TRUST COMPANY, N.A.
220 Alhambra Circle,11th floor, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 441.5555
Fax: (1-305) 441.5560
www.mercantilctc.com
MERCANTIL COMMERCEBANK
INVESTMENT SERVICES, Inc.
220 Alhambra Circle, Penthouse, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 460.8599
Fax: (1-305) 460.8598
www. mercantilcis.com
MERCANTIL BANK (SCHWEIZ) AG
Talackerstrasse 42
CH-8001 Zurich, Switzerland, P.O. Box 9758
CH-8036 Zurich, Switzerland
Phone: (41 - 433) 444 555 master
Telefax: (41 - 433) 444 550
www.mercantilsuiza.com
MERCANTIL MERINVEST, C.A.
Edificio Mercantil, Piso 24
Phone: (58-212) 503.2700
Fax: (58-212) 503.2757
MERCANTIL SEGUROS, C.A.
Av. Libertador con calle Isaías
“Látigo” Chávez,
Edificio Mercantil Seguros, Chacao.
Phone: (58-212) 276.2000
Fax: (58-212) 276.2001
www.segurosmercantil.com
MERCANTIL INVERSIONES Y VALORES
Edificio Mercantil, Piso 20
Phone: (58-212) 503.3361 / 3644 / 1353
Fax: (58-212) 503.7086
[email protected]
MERCANTIL BANK (PANAMÁ)
Torre de las Américas, Planta Baja
Local No 8-A. Punta Pacífica
P.O. Box 0819-05811 Panamá,
República de Panamá
Phone: (507) 282 7000 Fax: (507) 282 7040
[email protected]
MERCANTIL BANK & TRUST, LIMITED
Harbour Place, 4th floor
103 South Church Street
P.O. Box 1034
Grand Cayman, KY1-1102
Cayman Islands
Phone: (1-345) 949-8455
Fax: (1- 345)949-8499
SAO PAULO
Av. Paulista, N° 1842, 3° andar, CJ. 37
Edf. Cetenco Plaza, Torre Norte-Cep 01310-200
Sao Paulo, SP, Brasil
Phone: (55-11) 3285.4647 - 3284.0206
Fax: (55-11) 3289-5854
[email protected]
NEW YORK
11 East 51st. Street, New York
NY, 10022-5903, U.S.A.
Phone: (1-212) 891.7400
Fax: (1-212) 891.7419
[email protected]
Corporate Contacts
Edificio Mercantil, Caracas 1050, Venezuela
Phone: (58-212) 503.1111
Télex 27002/27003 BMERVC
Venezuela
[email protected]
www.bancomercantil.com
Call Center:
Phone: 0-500-600 2424/ 0-500-503 2424
(58-212) 600.2424 -(58-212) 503 2424
INVESTOR RELATIONS
Caracas
MERCANTIL BANK CURAÇAO N.V.
Abraham Mendez Chumaceiro Boulevar 1
Willemstad, Curaçao. Netherlands Antilles
Phone: (5999) 461.1566 / 1669
Fax: (5999) 461.1974
[email protected]
Av. Andrés Bello, N° 1, Edificio Mercantil
Piso 25, Caracas 1050, Venezuela
Phone: (58-212) 503.1335
Fax: (58-212) 503.1075
[email protected]
New York
Representative Offices
11 East 51 st. Street, New York
NY, 10022-5903, U.S.A.
Phone: (1-212) 891.7405
Fax (1-212) 891.7419
BOGOTÁ
Av. 82, Nº 12-18, Piso 8, Ofc. 805
Edificio Interbolsa. La Cabrera
Bogotá, D.C. Colombia
Phone: (57-1) 635.0035
Fax: (57-1) 623.7701
[email protected]
Office of the Presidency
LIMA
Av. Canaval y Moreyra N° 452
Edificio Standard Chartered, Piso 15
San Isidro, Lima 27, Perú
Phone: (51 1) 442 5100 Anexo 232
Fax: (51 1) 442 5100 Anexo 237
[email protected]
Corporate Comunications
MÉXICO
Eugenio Sue N° 58, Colonia Polanco
Chapultepec, Delegación Miguel Hidalgo
C.P. 11560, México, D.F.
Phone: (52-55) 5282.2300
Fax: (52-55) 5280.9418
[email protected]
111
Phone: (58-212) 503.0782 / 0783
Fax: (58.212) 503.0709
[email protected]
Phone: (58-212) 503.1670
[email protected]
General Production: Corporate Communications Management
Artwork Photography: Mercantil Collection / Walter Otto
Graphic Design: Arte Impreso H.M., C.A.
Printing: La Galaxia • Caracas, Venezuela, March 2010.
A Study in Contrasts
80
VenezuelanArtintheEighties
Ingenuity and self-expression achieve new levels
For decades, the Mercantil Collection has proudly
supported and showcased the rich legacy and evolution of Venezuelan art. The pieces included were
carefully selected -- all express a clear point of view and represent significant transformations for
their period. As a collection, the works express a key period in our history and make visible the
changes that have taken place in our society. It is our hope that understanding these changes and
trends will guide us toward a better future.
The eighties were a decade of broadening racial and
linguistic diversity, both internationally and within the country of Venezuela itself. This environment
in turn produced new social, cultural, economic, and political views that have since set the stage for
the interconnected world we live in today. It was a period in which opposing and even incoherent
ideas found expression and common ground. Through these pieces, we catch a glimpse of a widening
freedom of thought and greater tolerance towards a range of opinions not previously accepted.
Artists during this period were attuned to a growing
global sensibility, and produced a range of works in which diversity and eclecticism is presented as
an alternative approach to more traditional forms of organization. While this movement offered no
real signature, no structure and an acute self-consciousness about the instability of the times, the
artists looked to the past for inspiration while incorporating the contradictions of the present.
It was a decade that made the impossible real, as
evidenced by our collective experience of the computer age, music videos, CDs, and international
TV via satellite dishes. In response, artists used new media to bring back the grandeur of their work,
experimenting freely with figurative art and abstractionism without the restrictions and censure
from an earlier, less opulent time.
The works of this period generally find their place
within two movements of contemporary art: Neo-expressionism and Neo-figurative art. In these
movements, an exciting renaissance of painting, ceramics and sculpture took place. Drawing and
engraving gained recognition as autonomous arts. Photography became increasingly appreciated
as a viable medium of artistic expression. Conceptual art, installations and performance art all
gained momentum and recognition within the art world. And Venezuelan museums and galleries
exhibited it all.
A great number of renowned Venezuelan and
international artists from this prolific period have shaped our collective thoughts today. For this
purpose, the Mercantil Collection presents a selection of the works by these iconic artists: Rafael
Barrios, Antonio Lazo, Ernesto León, Oscar Pellegrino, Jorge Pizzani and Adrián Pujol. The selections
are based on the rich expression of contrasts and depiction of the range of possibilities found in
diversity.
Mercantil Servicios Financieros is pleased to present
these selections from the Mercantil art collection, as part of our continuous endeavor over the past
five years to share the works of the Colección Mercantil in our Annual Reports.
80
VenezuelanArtintheEighties
at the Mercantil Collection
ADRIÁN PUJOL
JORGE PIZZANI
Caracas desde El Estanque
1999
Acrylic on canvas
128 x 206 cm
Overscape
1988
Oil on jute
186 x 240 cm
OSCAR PELLEGRINO
JULIO PACHECO RIVAS
Untitled
Undated
Acrylic on paper
61.6 x 45.5 cm
Ouroboros
1989
Painted and assembled wood
275 x 530 x 169 cm
MARGOT RÖMER
CARLOS SOSA
Emblema vacío # 5
1995
Oil and lithographic ink on canvas
110 x 200 cm
Serie Agenda (Polyptic)
1989
Resins and acrylic on canvas
141 x 70.6 cm each one (7 pieces)
RAFAEL BARRIOS
CARLOS ZERPA
Trifásica levitante
1987
Lacquered iron
177 x 142 x 50 cm
El Dorado
1987
Acrylic on canvas
192 x 133 cm
ADRIÁN PUJOL
ERNESTO LEÓN
El Ávila desde Altamira II
1994
Acrylic on canvas
130 x 176.5 cm
Porrón con plantas
1986
Acrylic paint on wood
122 x 110 cm
ERNESTO LEÓN
JULIO PACHECO RIVAS
Turpial Vegetal
1985
Acrylic and oil on wood (veneer)
110 x 122 x 0.4 cm
Área de protocolos inconfesables
1989
Graphite and crayon on paper
74 x 212 cm
ANTONIO LAZO
JORGE PIZZANI
Desnudo y paisaje
1989
Acrylic and charcoal on canvas
240 x 300 cm
De Goya (from the Acción GAN series)
2005
Acrylic on canvas
170 x 136 cm
ADRIÁN PUJOL
ADRIÁN PUJOL
El Lajao
Undated
Acrylic on canvas
147 x 202 cm
Playa Majagual
1987
Acrylic on canvas
150 x 205 cm
OSCAR PELLEGRINO
RAFAEL BARRIOS
Zona Inca
1989
Paint and mixed media on canvas
160 x 140 x 2.5 cm
Trazos triangulares
1997
Lacquered iron
250 x 212 x 29 cm
MARGOT RÖMER
CARLOS ZERPA
Proyecto para cubrir con una bandera de seda
la Silla de Caracas y Naiguatá
1984
Oil on canvas
80 x 244 cm
Foto de grupo con Picasso el día de su
cumpleaños y algunos amigos (Polyptic)
1987
Acrylic on canvas
246 x 815 cm
ERNESTO LEÓN
JULIO PACHECO RIVAS
Bandera
1986
Enamel and acrylic on wood (veneer)
122 x 109 cm
Ciudad de los símbolos precarios
1989
Acrylic on canvas
280 x 840 cm
ADRIÁN PUJOL
ADRIÁN PUJOL
Playa de Caruao
Undated
Acrylic on linen
112 x 154 cm
Crepúsculo en la bahía de Pampatar
1989
Acrylic on canvas
65 x 155 cm
OSCAR PELLEGRINO
ADRIÁN PUJOL
Seminario
1988
Acrovinylic paint, plaster and cement
on wood
120 x 365 x 2 cm
Calabozo desde las lomitas
1996
Acrylic on canvas
82 x 422.55 cm
ERNESTO LEÓN
Máscaras
1986
Acrylic on wood frame
121 x 110 cm

MSF Informe Anual Ingles 2009 DEF:Maquetación 1

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