Business

Wednesday June 3, 2009

Chavez threatens private banks with sanctions


CARACAS: President Hugo Chavez on Tuesday threatened to sanction private banks that fail to collaborate with his government's regulations as it moves toward a socialist economy.

Chavez says that banks are designed to intervene in the financial system and provide credit to people buying houses or producing food, rather than generating massive earnings for their owners.

"If private Venezuelan banks don't follow the path, comply with the constitution and the laws, they'll have to be sanctioned," Chavez said.

"The only way this government and this socialist project will accept private banks is if they fulfill their duty to intermediate, and join the government to promote economic development."

Chavez's government has stepped up its role in the banking sector since it reached an agreement with Spain's Santander to purchase its local unit, Banco de Venezuela, last month.

Once it formally assumes control of the bank on July 3, the government will become the nation's top financial player.

"We will have more economic power," Chavez said of the nationalization on Tuesday.

This is not the first time Chavez has threatened to go after banks that fail to meet state regulations.

In January 2008, he threatened to "seize" private banks that neglected laws requiring them to set aside nearly a third of all loans for agriculture, mortgages and small businesses at favorable rates.

He has threatened to nationalize commercial banks before, but has not followed through on most of those threats. - AP


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