Chávez Threatens to Nationalise Banks

Venezuela's president, Hugo Chávez, today opened up possible new fronts in his nationalisation programme by threatening to take over the country's private banks and its biggest steel firm.

The leftist leader nationalised utility firms earlier this year and took control of the last privately run oil operation earlier this week as he stepped up his battle with Washington.

He spoke about a new wave of nationalisation in a speech today, prompting renewed concerns from investors, Reuters reported.

Mr Chávez accused the private banks and steelmaker Ternium-Sidor of unscrupulous practices, but added that they could avoid nationalisation if they changed their businesses to better account for the "national interest".

He wants the private banking sector, which is heavily reliant on state business, to prioritise making domestic loans, and the steel firm to focus on supplying the local market with affordable products.

Speaking about Ternium-Sidor, he said: "If they do not accept right now a change in the process, then they are going to force me to nationalise the company just as I did with [telephone company] CANTV."

Mr Chávez went on: "Private banks have to give priority to financing the industrial sectors of Venezuela at low cost. If banks don't agree with this, it's better that they go, that they turn over the banks to me, that we nationalise them and get all the banks to work for the development of the country and not to speculate and produce huge profits."

The share price of Latin America's largest steelmaking group Ternium SA, which owns Ternium-Sidor, tumbled after the speech to almost a two-month low.

While there has been a global trend of nationalising firms that tap natural resources, Mr Chávez's policies are generally at odds with mainstream Latin American economic policies. The Bush administration is, however, concerned at a new wave of left-wing populism in Latin America.

One Venezuelan banker, who asked not to be named, told Reuters after the speech: "This is madness. The president is not measuring his words nor the effect of his announcements." Earlier this week, three US companies - ConocoPhillips, Chevron and Exxon Mobil, together with BP, Norway's Statoil and France's Total agreed to transfer operational control to state-owned Petroleos de Venezuela.

Mr Chávez also announced that his country was leaving the World Bank and the International Monetary Fund.

He mounted a strong attack on the Washington-based Bank and Fund, accusing them of exploiting small countries. The two organisations were "mechanisms of North American imperialism", he said.