Moontown

Ali Rodriguez said the banks were undergoing a “closed-door” inspection for “rehabilitation” days after a similar move led to the nationalization of four other banks.

Ali Rodriguez. AFP PHOTO

The latest government shutdown affects Central Banco Universal, Banco Real and Baninvest, the largest regional investment bank in eastern Tachira state. They are privately-owned banks with a limited list of clients and account for 1.8 percent of total deposits, according to banking regulators.

Leftist President Hugo Chavez has nationalized private banks in his bid to remake the economy. Two closures on Thursday prompted Venezuela’s currency and bonds to plunge in open trading, as former clients lined up outside several banks.

“What we have before us is not a national banking crisis,” Rodriguez said, trying to allay fears of a banking freeze.

“Despite the deep financial crisis hitting everybody and affecting the most developed economies in the world, the (Venezuelan banking) system has been showing great strength.”

After the Confederado and Bolivar banks were closed on Thursday, Chavez told a meeting of economic ministers that “once they have been rehabilitated,” the firms would become part of Venezuela’s public financial system.

Earlier this week, Chavez dissolved two other private banks — Banco Canarias and BanPro — after a series of nationalizations in other sectors.

Since taking office in 2007, Chavez has moved to control firms in the electricity production, cement, steel, oil services and banking industries.

More than 70 percent of the Venezuelan banking sector is privately owned, but the state has become the main financial actor, controlling 25 percent of the industry since May, when it nationalized Banco de Venezuela, the country’s third-largest bank that previously fell under the ownership of Spanish group Santander.

Amid a slowing Venezuelan economy, Chavez has indicated he may target more private banks, which he accused of having forsaken their lending “mission” to specialize in “financial speculation.”

According to US-based financial services firm JP Morgan, gross domestic product will shrink 2.5 percent this year, as foreign investment and the current account balance also worsen.

Hours before the latest closures, Chavez urged for calm and said that three people allegedly involved in banking irregularities had been arrested.

The Public Ministry has issued 10 arrest warrants and 19 travel bans so far against executives of the first four shuttered firms, said Attorney General Luisa Ortega Diaz.