- The Washington Times - Friday, August 1, 2008

CARACAS, Venezuela | Venezuela’s President Hugo Chavez has added a large Spanish-owned bank to the list of companies to be run by the government in the oil-exporting nation, furthering his plans of building a socialist state.

Mr. Chavez said Thursday he will nationalize Grupo Santander’s Banco de Venezuela, his latest purchase in a two-year oil-funded shopping spree that has already gobbled up oil projects and a telecom firm, along with steel and cement plants.

Mr. Chavez threatened to kick Spanish banks out last year in a diplomatic fight sparked by a row with Spain’s king, but said he had decided to buy Banco de Venezuela after Santander asked for permission to sell it to a local group.

“I said no, I’ll buy it from you - what’s it worth? We’ll pay it,” Mr. Chavez said during a live television broadcast. “We are going to nationalize Banco de Venezuela.”

Santander spokesmen in Madrid and Caracas declined to comment on the news.

Market speculation in June that Santander planned to sell its Venezuelan unit caused Banco de Venezuela shares to jump 25 percent on the Caracas stock exchange, but the deal apparently was blocked by the government.

Nationalizations are popular with Venezuelans used to a strong state financed by oil bonanzas. Mr. Chavez, who lost a referendum on extending his powers last year, believes in state control of key industries but may also have his eye on regional and local elections in November.

“It’s looking like a negative development; I don’t see why the banking sector needs to be under the purview of the public sector,” said Alberto Ramos, a senior economist with Goldman Sachs. “The private sector does a much more efficient job of running that type of business.”

While banks have benefited from Venezuela’s economic growth of more than 8 percent last year on record oil prices, inflation of 23 percent in 2007 complicated lending.

Gianfranco Bertozzi, an analyst with Lehman Brothers in New York, said the fact that Santander was looking to sell made the takeover less alarming for investors.

“The government sees logic in expanding its network of banks in the country, and Santander may benefit as it has a buyer and can exit,” he said. Venezuela already has several state-run banks.

Grupo Santander owns 98.4 percent of Banco de Venezuela, which is the country’s third-largest bank with deposits worth $12.3 billion.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide