Venezuela shuts down three more banks

The Venezuelan government has closed down two small banks and a savings and loans company due to liquidity problems, a banking regulator said.

The government closed InverUnion Banco Comercial, Banco de Sol and Mi Casa savings and loans, the banking regulator Sudeban said in a statement.

“The intervention is necessary and cannot be postponed,” banking regulator said in a statement.

Since November, the government of President Hugo Chavez has closed eight banks and some brokerages because of liquidity issues among other problems. A number of banking executives have been arrested.

The government currently controls around 25 percent of the banking sector, largely due to the purchase of the Banco de Venezuela from Spain’s Santander group in 2009.

Venezuela’s National Assembly on December 15 passed a banking reform law giving the state more power to regulate the sector, a move that coincided with Chavez’s drive to revamp national finances, with an eye on legislative elections next year, observers said.

In total, the closures represent about 10 percent of deposits in the South American country, which has a financial system dominated by a handful of large banks. The government has merged some of the failed banks with a larger state-owned entity.