The Associated Press June 14, 2010, 4:09PM ET

Venezuela takes control of another private bank

Venezuelan President Hugo Chavez's government is taking over management of another private bank after discovering it had serious financial problems, officials said Monday.

The government is temporarily shutting down Banco Federal, the country's eighth-largest bank, due to its "serious financial situation," said Humberto Ortega Diaz, the government's state banking minister.

Accounts in the bank have been frozen to keep executives from moving funds to other businesses, Banking Superintendent Edgar Hernandez told a news conference.

Banco Federal's president, Nelson Mezerhane, told TV channel Globovision that he was surprised by the announcement, and the accusations are "totally false."

Mezerhane is also a minority shareholder of Globovision, the country's last remaining channel that takes a stridently anti-Chavez stance. He called the case an "outrage" and said it was politically motivated to punish Globovision.

As for the bank, Mezerhane predicted: "They're going to destroy it." He said government officials were also raiding his family's beach home.

Venezuelan officials issued an arrest warrant Friday for Globovision's majority shareholder, Guillermo Zuloaga. Prosecutors want him jailed while he awaits trail on charges of usury and conspiracy for keeping 24 new Toyota vehicles stored at a home he owns.

Zuloaga has called those charges bogus and an attempt to intimidate him.

The action against Banco Federal came after Chavez warned Sunday that private banks would be wiped out if his government were to withdraw deposits. He said he isn't planning to order any such withdrawal, but raised the possibility while discussing what he calls an "economic war" pitting the government against Venezuela's economic elite.

Recent nationalizations of banks have given Chavez's government direct control of about one-fourth of the country's banking sector.


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