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Chavez says Venezuela bank system to emerge stronger
December 3, 2009 / 7:30 PM / 8 years ago

Chavez says Venezuela bank system to emerge stronger

* Chavez says he’s “fixing” bank problems

* Bonds fall, bolivar currency weakens in parallel market

CARACAS, Dec 3 (Reuters) - President Hugo Chavez sought to reassure jittery depositors and investors on Thursday over the health of Venezuela’s banks, but markets remained nervous with bonds falling and the bolivar weakening in parallel trading.

“The government is putting out fire ... We are fixing the problem,” he said, saying both the country and the bank system will benefit. “We will all emerge stronger.”

Chavez has twice in the last week threatened to nationalize private banks on grounds they are involved in malpractice or failing to aid the development of Venezuela.

The state closed four small private banks owned by a wealthy businessman and former government ally on Monday. Chavez said authorities were monitoring other banks closely for possible further intervention.

That has caused anxiety in the financial system, with investors dumping Venezuelan bonds, and the bolivar currency sliding on the parallel market. There are fears more banks may be shut, though analysts say the system is broadly healthy.

Venezuela’s benchmark 2027 global bond VENGLB27=RR plunged nearly 6 percent, hitting its lowest intraday level since July 24. The bolivar currency VEFFIX=, officially fixed at 2.15 per dollar, weakened to as low as 6.2 per dollar on the unofficial parallel market, traders said.

Chavez said his enemies among Venezuela’s old-guard wealthy elite were deliberately trying to fan a run on banks.

He made the comments at the start of a cabinet meeting broadcast live on state TV in an apparent effort to calm nerves over the state of Venezuela’s financial system. He said the government was protecting depositors in the four closed banks.

- For Q+A on bank situation, see [ID:nN03472182]

- For market reaction, see [ID:nN03402030]

- For factbox on banks, see [ID:nN02425746]

andrew.cawthorne@thomsonreuters.com; +58 212 277 2700; Reuters Messaging: andrew.cawthorne.reuters.com@reuters.net

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