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Last Updated: Friday, 2 September 2005, 11:04 GMT 12:04 UK
Venezuela 'targets private banks'
Hugo Chavez
President Chavez has called for 'Socialism of the 21st Century'
The Venezuelan government is reported to be planning to insist that all private banks appoint two state representatives to their board.

Such a move is likely to be part of the country's forthcoming new banking law, according to the UK's Financial Times.

A continuation of left-wing President Hugo Chavez's aim to create "socialism of the 21st Century", a number of foreign banks would be affected.

Among them are Spanish institutions Banco Santander and BBVA.

Both own Venezuelan banks - Banco de Venezuela and Banco Provincial respectively.

The government has a revolutionary project and by necessity that has to go through controlling the flow of credit
Venezuelan bank analyst Francisco Faraco

Other large banks in the country that are likely to be hit include Banco Mercantil and Banesco.

'Political determinations'

The reported move to put government representatives on the boards of private banks comes as businesses across Venezuela are being asked to ensure 20% worker representation in their board rooms.

Analysts say that the government's chosen bank appointees would be there to ensure loans and other money flows are more determined by left-leaning political considerations rather than pure financial gain factors.

"The government has a revolutionary project and by necessity that has to go through controlling the flow of credit," Venezuelan banking expert Francisco Faraco told the FT.

Venezuela is the world's fifth largest oil exporter, and a key ally of Fidel Castro's Cuba.

Last month US Defence Secretary Donald Rumsfeld accused both Venezuela and Cuba of fomenting unrest in Bolivia.




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