Venezuela legislates bank compliance on funding government projects

Venezuelan President Hugo Chávez has warned that he would be willing to nationalise any banks that refuse to finance housing construction projects promoted by his government.

Chávez urged the National Assembly, which is controlled by his allies, to approve a measure requiring private banks to provide financing for housing construction.

Let "any bank that doesn't comply with the law... be nationalised," Chávez said in televised remarks.

Banks are currently required by law in Venezuela to provide nearly 10 per cent of their lending programmes to finance home purchases and construction projects.

The National Assembly gave initial approval to a bill Thursday that describes banking as a "public service" and gives the government the authority to declare banks to be of "public utility".

The bill is expected to be up for final approval after a second debate in coming days.

In the past year, the government has seized control of about a dozen banks, citing financial problems and violations of banking rules.

Chávez's government currently controls about 28 per cent of Venezuela's banking sector.

- AP