Venezuela to nationalise two troubled banks

December 4th, 2009 - 2:36 pm ICT by IANS  

Caracas, Dec 4 (EFE) Venezuelan President Hugo Chavez has announced plans to nationalise two small banks recently shuttered for “irregularities”, saying their doors will definitely reopen “before Dec 24″.
Chavez Thursday said his government has opted to “move Banco Confederado and Banco Bolivar to the public financial system after they are rehabilitated and strengthened”, a process being carried out by an intervention board.

Two other closed banks, Banco Pro Vivienda and Banco Canarias, are being liquidated and their depositors Wednesday began taking steps to recover up to 10,000 bolivars ($4,651) each, the limit covered by deposit insurance.

During a cabinet meeting broadcast by state television, Chavez did not specify the value of the intervened banks, whose assets are currently being analysed by authorities. He said only that those institutions had a combined total of 160,000 customers.

The socialist president reiterated that his government will guarantee the savings of depositors affected by the closure of these four entities, which account for roughly five percent of the nation’s bank deposits.

In May, the Venezuelan leader nationalised Banco de Venezuela, buying that institution from Spain’s Grupo Santander for $1.06 billion as part of a move to strengthen the public financial system. The government has announced that the depositors affected by the recent bank closures will be compensated with Banco de Venezuela funds.

“There will be hegemony of public banking here. We’re going to create an entire public financial system,” the leftist leader said Wednesday, adding that he would not hesitate to “take over the entire private banking (sector)” if irregularities such as failure to meet lending quotas continue.

The president of the National Banking Council, Victor Gil, said Thursday that Venezuelan private banks “are fulfilling their obligations” and therefore “are not afraid” of the government’s warning about a possible nationalisation of the sector.

The Fedecamaras business confederation said Thursday that the country’s financial system “is robust and reliable” and called on the population to remain calm in the face of this “one-off” crisis, referring to the intervened banks.

Chavez’s administration also has taken over companies in the oil, cement, food, telecommunications, steel and power sectors as part of its drive to usher in “socialism of the 21st century”.

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