Political Risk Latin America Blog @PolRiskLatam

The banks: Chávez’s next target?

Posted in News and Articles, Political Risk by politicalrisklatam on November 12, 2010

by Benedict Mander for Financial Times – Beyond Brics, November 12th, 2010.

It was Thursday evening, and Hugo Chávez had almost let the whole week go by without nationalising – or threatening to nationalise – a single company (with the exception of five small milk transporting companies and a gasworks). Admittedly, that’s because he was in Cuba for most of the week paying homage to that other great fan of nationalisation, Fidel Castro.

Having built up such an impressive pace in recent weeks, once back in Venezuela Chávez had to make up for lost time. He turned his attention to the banks, and said (not for the first time) that they would be taken over if they refused to finance government housing projects. That’s a prickly issue with Venezuela’s housing shortage having become even more acute in the last decade.

Banks are already required by law to allocate almost 10 per cent of their lending to mortgages and housing projects. On Thursday the national assembly went even further. It passed the first draft of a bill defining banking as a “public service”. This means that it will become easier for the government to take over banks – in theory, at least, although legal technicalities have not prevented Chávez from expropriating companies when it has suited him in the past. (continue reading… )

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