Guatemala suspends Bancafe operations over Refco

GUATEMALA CITY, Oct 20 (Reuters) - Guatemala has suspended operations in Bancafe, the country's fourth largest bank and owner of $204 million of U.S. Treasury bonds held by bankrupt commodities broker Refco Inc.

Central Bank President Maria Antonieta de Bonilla said on Friday the accounts held at Bancafe would be transferred to other banks.

"The board unanimously resolved to suspend operations in Bancafe due to financial problems derived from the investment of $204 million in the brokerage Refco," de Bonilla said at a press conference.

Bancafe has about $900 million in deposits, a million account holders and assets worth about $1 billion, Guatemala's banking regulatory body says.

Bancafe is a part of financial group Grupo Financiero del Pais and is not connected to a state-run bank with the same name in Colombia.

Eduardo Gonzalez, chief of staff for Guatemalan President Oscar Berger and a pre-candidate for 2007 presidential elections, is one of the bank's major shareholders.

Guatemala's Monetary Board said it decided to intervene in Bancafe "to protect the liquidity and solvency of the national banking system and to secure and strengthen national savings."

"The decision was taken at this moment because holdings in the bank were eroding," Guatemala's banking superintendent, Willy Zapata, said.

The bank has offshore holdings in Barbados valued at around $240 million, but these deposits no longer have the backing of Bancafe and will not be covered by the government's recovery plan, Zapata said.

The Central Bank in Barbados will be responsible for managing those funds, he said.

Bear Stearns analyst Franco Uccelli predicted limited fallout from the intervention.

"We expect the systemic impact of Bancafe's failure to be relatively small, since the bank's troubles were well documented and were not representative of the system's improved financial health," Uccelli said in a research note.

Uccelli said Guatemala's larger banks were financially solid and very liquid.

Christian Rasch, vice-president of Guatemalan coffee growers association Anacafe said Guatemala's coffee sector, once heavily exposed to Bancafe, had now diversified its investments and was not at risk.

Refco filed for Chapter 11 protection from creditors in October 2005, a week after revealing that former Chief Executive Phillip Bennett hid $430 million in debt.

Bennett has pleaded not guilty to fraud charges. Refco creditors have said they are owed up to $16.8 billion.

(Additional reporting by Mica Rosenberg)

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