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Venezuela takes control of bank

PRESIDENT Hugo Chavez's government has assumed control of Venezuela's third-largest bank - making the state the largest player in the nation's banking system.

The purchase of the Spanish-owned Banco de Venezuela gives Chavez's government control over more than one-fifth of bank deposits as he tightens his grip on the economy.

The acquisition will "strengthen the public banking system," which favors sectors including agriculture, energy, housing and tourism, Finance Minister Ali Rodriguez said.

In May, the Venezuelan government and Spain's Grupo Santander agreed on a US$1.05 billion purchase price for the bank, ending months of stalled negotiations.

At the time, Banco de Venezuela had 3.2 million clients, 10 percent of the country's deposits and 6,000 employees.

Combined with other state banks, the government now controls about 21 percent of deposits and 16 percent of loans, 15,000 employees and 651 bank branches.

After swearing in the institution's new board of directors, Rodriguez said negotiations were tense at times but the two sides managed to reach a "friendly agreement."

Santander President Emilio Botin also praised the deal, saying the group had invested some US$455 million in technology, personnel and other areas of Banco de Venezuela since it was privatized 13 years ago.

The deal was sealed on Friday with an initial payment of US$630 million, the rest to be paid in October and December.


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