Chavez comments spark nationalisation fears

Caracas: Venezuelan President Hugo Chavez has twice in one week threatened to nationalise some of the nation's banks or even the entire financial system.

While analysts say a widespread takeover is unlikely, Chavez has nationalised many economic sectors in recent years, and his words cannot be taken lightly.

The government closed down four small failing banks last week, and Chavez's comments triggered worries that more could fall. Investors responded by dumping Venezuelan bonds and the bolivar currency.

Key events

Following are some key events in Chavez's 10-year push to build a socialist state in Venezuela, an Opec member that is also South America's top oil exporter.

In 2007, Chavez's government took a majority stake in four oil projects operating in the Orinoco river basin worth an estimated $30 billion (Dh110 billion). US oil majors ExxonMobil Corp and ConocoPhillips quit the country over the move and filed arbitration claims against Venezuela. France's Total and Norway's StatoilHydro received around $1 billion in compensation after reducing their holdings.

BP Plc and Chevron Corp remained as minority partners. This year Chavez seized a major gas injection project belonging to Williams Cos Inc and a range of assets from local service companies.

Chavez this year paid $1 billion for Banco de Venezuela, a division of Spanish banking conglomerate Grupo Santander, to help him channel state resources. He has said he will nationalise banks that "slip up" by breaking the law, are in trouble or fail to meet government lending guidelines.

Solvency

Venezuela is dominated by 10 large banks, including Provincial, owned by Spain's BBVA. Other foreign banks in the country include Citibank. Analysts say Chavez could move against some of the smaller among Venezuela's 45 or so banks if they have solvency or other problems but is unlikely to take on larger ones because of risks to stability and his popularity.

The government paid $2 billion this year for Argentine-led Ternium SA's stake in Venezuela's largest steel mill. Chavez ordered the nationalization of the cement industry last year, affecting Mexico's Cemex, Switzerland's Holcim and France's Lafarge SA. Last week he ordered the takeover of several large iron smelters.

Mining

Chavez has long toyed with the idea of bringing the mining industry more firmly into state hands. Many basic metals companies have always been government-controlled, but the president wants to extend his reach to gold mining. Venezuela has large and mostly undeveloped gold deposits.

In November the mining ministry seized Gold Reserve Inc's Brisas project, which sits on one of Latin America's largest gold veins. Chavez has expressed a wish that Brisas and sister project Las Cristinas be exploited by a government joint venture with Russian companies.

In 2007, the Chavez government nationalised the country's largest telecommunications company, CANTV, buying out US-based Verizon Communications Inc's 28.5 per cent stake for $572 million. Analysts said Verizon received fair compensation for its assets.

In the same year, Venezuela expropriated the assets of US-based AES Corp in Electricidad de Caracas, the country's largest private power producer. The government paid AES $740 million for its 82 per cent stake. Analysts said the deal was fair for AES.

In 2005, Chavez began implementing a 2001 law that lets the state expropriate unproductive farmland or seize farms without proper titles. He has redistributed millions of acres [millions of hectares] deemed as idle in an effort to boost food production and ease rural poverty — taking over some large farms including a British-run ranch.