Venezuela President: Will Pull Military Deposits From Banesco

sg.biz.yahoo.com Monday January 13, 9:19 PM

CARACAS -(Dow Jones)- Venezuelan President Hugo Chavez said over the weekend that he'd punish striking locally owned bank Banesco (E.BNS) by withdrawing all military funds deposited in the bank.

Military deposits make up about 10% of Banesco's 2.4 trillion bolivars ($1=VEB1,513.25) in deposits, the bank's president, Juan Escotet, said in a televised interview.

Banesco, Venezuela's fourth largest bank, has a market share of about 11.3%, according to the Banking Superintendent.

ADVERTISEMENT Escotet said he hoped to meet with Chavez and work the problem out.

Meanwhile, the Banking Superintendent said it's opening "administrative procedures" against all banks that are ignoring its order to maintain normal operating hours between 8:30 A.M. (1230 GMT) and 3:30 P.M.

Banks have mostly been open just three hours a day in support of a 43-day-old general strike against Chavez's leadership, and many shut completely Thursday and Friday but reopened with the restricted hours Monday.

Other local banks include subsidiaries of Citigroup Inc.'s (C) Citibank and Spanish conglomerates Banco Santander Central Hispano SA (STD) and Banco Bilbao Vizcaya Argentaria SA (BBV).

Opposition leaders are demanding that Chavez agree to call elections in 30 days if he loses a Feb. 2 nonbinding vote on whether he should remain president.

Chavez has thus far maintained the constitution only requires him to accept the results of a possible recall referendum next August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for country's deepening economic crisis with a likely 8% contraction in 2002, amid 17% unemployment, and 31% annualized inflation sparked by a 46% devaluation of the bolivar.

Chavez has said the problems are due to an "economic coup" led by his opponents.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com