CARACAS: President Hugo Chavez’s socialist government on Friday shut private bank Banorte on grounds it was unable to meet short-term obligations, threatening to undermine confidence in Venezuela’s financial system.
“(Banorte’s) illiquid situation did not allow (it) to cover its short-term obligations,” the banking suprintendency said in a statement. It was the eighth private bank closed by the government since Nov. 30 by the government.
Chavez said he shut seven banks last week to uproot financial corruption and protect depositors. Earlier Friday he told remaining private banks to lend more or face extinction.
The seven banks shut last week accounted for about 8 percent of Venezuela’s total bank deposits. Two will be liquidated and the rest will be merged into a new state bank.
State bank deposit insurance agency Fogade would protect 93 percent of Banorte’s 68,865 depositors, the superintendency said. It said Banorte and other recently shut small banks threatened “the credibility and confidence necessary for the stability of our financial system.”
Banorte officials could not be reached immediately for comment.
Chavez faces 2010 congressional elections as economic problems mount. Venezuela slipped into recession in the third quarter of this year amid the highest inflation in Latin America, running at an annual 12-month rate of 26.2 percent.
The latest bank closures are a growing political issue.
Lines of panicked investors at banks shut last week revived memories of a mid-1990s financial crisis that wiped out half the nation’s banks and cost the state $11 billion.
Chavez says he is an anti-corruption fighter intolerant of government-allied bankers he said breached the law at banks shut last week.