MEXICO CITY (AP) – Honduras' eighth largest bank is expected to reopen its doors Wednesday amid depositor fears that its liquidation could contaminate the rest of the country's financial sector.
The government is liquidating Banco Continental following revelations last week that several members of the family that owns it are under indictment in the United States on money laundering charges.
Francisco José Santa Cruz Pacheco, Pacific Credit Rating's manager for Central America, said the uncertainty could cause investors to pull their money out of Honduras' financial sector.
"The regulator must investigate whether the shareholders also hold shares in the system's other financial institutions to determine the possibility of contagion," Santa Cruz said.
The Honduran government has tried to reassure Banco Continental's depositors and employees of the bank and the Rosenthal family's corporate parent Grupo Continental. The country's central bank guarantees deposits up to $9,600.
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Santa Cruz said the smallest account holders will receive a preference as deposits are returned and account holders with balances above the $9,600 threshold could experience problems.
Banco Continental is not the country's biggest bank, but it does hold the accounts of one of Honduras' largest business conglomerates. Grupo Continental, which includes companies ranging from insurance to meatpacking, has some 11,000 employees.
Banco Continental has 210,000 account holders and 1,000 employees, some of whom have been lined up outside the bank's branches since Saturday hoping to get their money.
Jaime Rosenthal, his son Yani Rosenthal and nephew Yankel Rosenthal are each charged with money laundering by federal prosecutors in New York. Yankel Rosenthal was arrested last week in Miami and on Tuesday agreed to be transferred to New York. Jaime Rosenthal served as Honduras' vice-president in the 1980s. Yani Rosenthal was a minister in the administration of ex-President Manuel Zelaya. Yankel had served as the minister of investment promotion in the current administration of Juan Orlando Hernández until he left without explanation in June.
The U.S. Treasury and Justice departments allege the Rosenthals used their vast business holdings, including the bank, to launder money for Central American drug traffickers since at least 2004. Banco Continental was the first foreign bank targeted under the Kingpin Act.
Officials have emphasized that the bank is not being liquidated for lack of funds, though the freezing of its accounts in the United States did cut its access to about $20 million of its funds, leaving it slightly below the threshold of the percentage of its deposits it must hold in cash.
The Rosenthals pledged to inject additional funds to reach that threshold, but the Honduran government declined, fearing those funds could be tainted.
The move by the U.S. Treasury also made it impossible for U.S. companies, including Visa, MasterCard or American Express to do business with Banco Continental. That left the bank's customers unable to withdraw money from ATMs.
Edwin Araque, former president of Honduras' central bank, questioned the government's decision to liquidate the bank.
"There's a risk that the public begins to ask which will be the next bank that could fall," he said. "You can't say that a bank has capital and cancel it this fast."