Venezuela's Chavez nationalizes two more banks

CARACAS: Venezuela's leftist President Hugo Chavez said Thursday he had ordered the nationalization of two more banks shut down by his government to investigate alleged accounting irregularities.

News that the two privately owned banks, Confederado and Bolivar, were the latest targets of Chavez's efforts to remake the economy prompted Venezuela's currency and bonds to plunge in open trading.

"Once they have been rehabilitated the Bolivar and Confederado banks will become part of the public financial system," Chavez told a televised meeting of economic ministers.

Chavez earlier this week dissolved two other private banks -- Banco Canarias and BanPro -- after a series of nationalizations in other sectors.

Since taking office in 2007, Chavez has moved to control firms in the electricity production, cement, steel, oil services and banking industries.

More than 70 percent of the Venezuelan banking sector is privately owned, but the state has become the main financial actor, having nationalized in May Banco de Venezuela, the country's third-largest bank and previously under the ownership of Spanish group Santander.

Chavez has indicated he may target more private banks, which he accused of having forsaken their lending "mission" in order to specialize in "financial speculation."

This comes against the backdrop of a slowing Venezuelan economy.

According to JP Morgan, a US-based financial services firm, gross domestic product will shrink 2.5 percent this year, as foreign investment and the current account balance also worsen.