November 13, 2007 / 10:03 PM / 10 years ago

Amid flap, Venezuela's Chavez warns on Spanish banks

CARACAS (Reuters) - Venezuelan President Hugo Chavez said on Tuesday things “will not go well” for Spanish banks if Madrid heightens tensions in a diplomatic flap over the country’s king telling him to shut up.

King Juan Carlos asked Chavez “why don’t you shut up” at a summit in Chile over the weekend after Chavez interrupted a speech by Prime Minister Jose Luis Rodriguez Zapatero.

The leftist who had used the meeting to rail against conservative ex-Prime Minister Jose Maria Aznar, has said the rebuke is reminiscent of Spanish colonial rule in Latin America.

“Spanish investment in Venezuela is not indispensable for us, Banco Bilbao Vizcaya, Banco Santander ... we don’t need them,” Chavez said at a news conference.

“So if the government of Spain or the state of Spain ... starts to generate a conflict, things are not going to go well.”

Chavez earlier this year threatened to nationalize banks amid a wave of state takeovers, although most analysts have said he is more likely to boost regulations over the sector.

The self-described socialist leader who calls capitalism an evil has had diplomatic spats with countries from Britain to Mexico, but they have rarely harmed bilateral trade ties or directly affected foreign businesses.

The No. 1 target for Chavez’s invective is the United States, but Venezuela remains a major U.S. oil supplier.

Spanish businesses have invested $2.4 billion in Venezuela since Chavez took office in 1999, according to Spain’s Business and Commerce Council.

Grupo Santander has some $700 million in investment in Venezuela, while Banco Bilbao Vizcaya Argentaria SA has $670 million invested, according to figures provided by the companies.

BBVA and Santander also respectively own Banco Provincial SA and Banco de Venezuela, two of the largest banks in the OPEC nation’s financial system.

Reporting by Enrique Andres Pretel; editing by Andre Grenon

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