Bank fears grip Venezuela

The president of Banco Federal CA made a television appearance to tell viewers the bank was operating smoothly after depositors lined up at one branch the day before to withdraw funds, The Wall Street Journal reported Friday.

Venezuelan President Hugo Chavez also sought to reassure depositors their money was safe, saying the government was "putting out the fire ... (of) greedy capitalism."

The four banks, two of which were taken over temporarily, are owned by Ricardo Fernandez, a billionaire who has worked closely with the government, but is in jail on various corruption charges.

Large banks in Venezuela have said they are above the fray and operating normally, but concerns that lending is unsafe has shot interbank lending rates to 30 percent and higher, said Russ Dallen, a banking analyst at BBO Financial Services.

"There is a set of banks that are very similar to the ones that have been intervened. People are reacting with their feet and asking questions later," said Royal Bank of Scotland senior economist for Latin America Boris Segura.

Copyright 2009 by United Press International.