Ecuador threatens to sue banks for overcharging

QUITO, May 5 (Reuters) - Ecuadorean President Rafael Correa threatened on Saturday to sue private banks that overcharge clients with high interest rates and fees, saying they had a week to start complying.

The widely popular Correa, a leftist former economy minister who blames market-driven policies of past administrations for failing to reduce poverty in Ecuador, has rebuked banks for lending practices he says are abusive.

"I tell them to lower their interest rates and commissions ... If not, the government will sue them," Correa said in his weekly radio address, adding that banks cannot charge clients more than the 14 percent conventional interest rate.

"I give these banks and businesses that are breaking the law a week to start complying."

Correa has said he wants to regulate the banking sector, where profits have risen this year but deposits have fallen.

The chief of the country's banking regulator warned Correa earlier this week he would veto government measures he thought might harm the sector.

Ecuadoreans are highly sensitive to government policy toward banks after millions lost their savings in 1999 when a state-ordered shutdown froze their deposits to stave off a financial meltdown caused by low oil prices.