* First draft passed, second reading may come next week
* Chavez has already increased control of banking sector
* Analyst says bill ups costs but not "strait jacket"
By Frank Jack Daniel
CARACAS, Nov 11 Venezuelan lawmakers on
Thursday passed the first draft of a bill that would make it
easier for President Hugo Chavez to nationalize banks and
require them to give five percent of profits to social groups.
In recent weeks Chavez has accelerated his push to build a
socialist state in OPEC member Venezuela but few think he will
nationalize banking outright. He has increased the state's
share of the industry over the last two years.
Lawmakers from Chavez's Socialist Party said the proposed
rules aimed to bring the banking sector in line with the
government's development plans and protect consumers by
tightening already tough rules.
"The sprit of our law is to protect the users, not the
bankers, as used to happen," said Ricardo Sanguino, who heads
the National Assembly's finance commission.
The law could be passed as soon as next week, although no
date was immediately set for the second reading.
The bill simplifies the procedure for taking over or
closing failing banks, allowing the president to personally
order such a move. It also appears to declare them "public
utility," a status often used prior to nationalizations.
State-owned banks currently make up about a third of
Venezuela's banking system, which analysts generally say is
financially sound. During nearly 12 years in office Chavez has
increased government control in many areas of the economy,
including oil, electricity and telecommunications.
Since winning a reduced parliamentary majority in elections
in September, Chavez has pushed ahead with new takeovers and is
hurrying a number of laws before the new parliament is formed
In 2009, Venezuela bought one of the country's largest
banks, Banco Venezuela, from Spain's Santander (SAN.MC) and has
taken over a number of smaller failing banks over the last 12
If the bill is passed, banks will have to divert 5 percent
of their profits to grassroots social groups called community
councils that are Chavez wants to have increased decision
making and financial power. Banks may seek to offset the five
percent rule by dropping other funding for charities.
The bill suggests fines for infractions of up to five
percent of a bank's share capital and long prison sentences for
Venezuelan banking analyst Cesar Aristimuno said the new
rules were not crippling, as long as the economy recovered next
year after two years in recession.
"Despite everything the banks are operating with a margin
of profits, even after two years of economic contraction,"
Aristimuno said. "This is not a strait-jacket in which the
banks cannot prosper."
Aristimuno said he did not believe Chavez would totally
nationalize banking but said the government could seek to
increase the public sector's share to 50 percent of the