Friday, December 4, 2009

Chavez threatens to nationalize Venezuelan banks

Chavez threatens to nationalize Venezuelan banks
Walker Simon Walker Simon
Sun Nov 29, 2009

CARACAS (Reuters) – Venezuelan President Hugo Chavez said on Sunday he could nationalize private banks unless they comply with the law, adding he had "no problem with that because the banks don't want to extend credit to the poor."

In a broadcast from nationalized farmland in central Venezuela, he said: "To all the country's private bankers ... (I'm saying) he who slips up loses; I'll take over the bank, whatever its size."

"You want me to nationalize the banks?" he said during the broadcast of his weekly TV show "Alo Presidente."

"I have no problem with that because the banks don't want to extend credit to the poor, they don't comply, they don't want to comply with the bank's purpose for existence, and that is the law."

Chavez said the purpose of banks was not to enrich a small group of people but "should be to collect funds and savings to help aid the country's development by making loans, extending credits for housing."

In power for a decade, Chavez has nationalized broad swathes of the economy.

His banking nationalization threats on Sunday appeared to be broader in scope than his well-publicized warnings in recent years to nationalize Spanish-owned banks in Venezuela.

He repeatedly threatened to seize Spanish bank subsidiaries in Venezuela unless Spain's king apologized for telling him to "shut up" in November 2007 at a regional summit where Chavez branded a recent ex-Spanish prime minister a fascist.

But the only major private bank, foreign or Venezuelan, to fall into state hands under Chavez's rule was Spain's Banco Santander unit Banco de Venezuela, sold to Venezuela in July for $1.05 billion.

The government's last banking takeover was on November 20, when it seized four small banks, accounting for about 6 percent of Venezuela's deposits.

Finance Minister Ali Rodriguez then said the move stemmed from concerns about credit portfolios, problems explaining the source of funds and failure to comply with some obligations.


Chavez spoke Sunday from the countryside behind a table strewn with a jumble of books, maps and documents, against the background of farmland growing black beans.

Addressing the banking theme, he said unnamed bankers "are not complying, they do not want to comply with the function for which a bank should exist (such as) that is in the law.

"This is occurring right now with a group of private banks, that's a demonstration that those private banking sectors don't want to learn, they don't want to accept that there is a constitution ... and that there are laws."

Venezuela's banking sector is dominated by 10 banks that control 70 percent of the total funds.

Chavez said he ordered the nation's chief prosecutor to investigate why a state bank, Banfoandes, deposited "a giant amount of resources in private banks."

"How is it that state resources, which belong to the people ... end up being placed in private banks?" he asked in his broadcast. "This is counterrevolutionary."

The four banks seized on November 20 were Banco Confederado, Banco Canarias, Banco Provivienda and bolivar Banco.

On Friday, a court acting on prosecutors' request banned travel abroad of 16 executives -- eight from Confederado, six from Provivienda and two from bolivar Banco.

Chavez said if it were up to him, he would have jailed the 16 executives due to flight risk. "They have (their own) light aircraft and private airports and (can) leave."

Chavez also criticized what he termed as excessive spending by state entities in the private medical sector.

"We have made a gift of millions and millions of bolivares this year to the bourgeoisie, which owns the private clinics, the great insurance companies," he said. "Enough already."

He said those funds should go directly to "the people."

(Reporting by Walker Simon, additional reporting by Fabian Cambero, editing by Matthew Lewis)

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