Venezuela took control of a local bank owned by Allen Stanford, who faces U.S. fraud charges, the finance minister said on Thursday, as the impact of the American case spread through Latin America.
We have taken the decision to take over, Finance Minister Ali Rodriguez said, adding that the government would seek to quickly sell the bank.
In recent days, depositors had worried that the trouble at Stanford International Bank would hurt Stanford Bank Venezuela and had withdrawn cash from the small local bank even though the companies' assets are separate, industry officials and bank customers said.
Industry officials have said the fall of one of the smallest retail banks in Venezuela, which only takes deposits and makes loans in local currency, was unlikely to cause much of a disturbance in the rest of the sector.
Allen Stanford was charged on Tuesday with massive fraud related to the Stanford International Bank as well as to his Houston-based broker-dealer and investment units.
The U.S. Securities and Exchange Commission accused him of fraudulently selling $8 billion in high-yield certificates of deposit in a scheme that stretched around the world.
Venezuela is one of the countries most affected by the scandal, with an estimated $2.5 billion invested by individuals in Stanford's offshore business.
The government of President Hugo Chavez had sought to calm depositors' nerves over the local Stanford retail bank, declaring on Wednesday that the bank was healthy and even saying the government was working to prevent a run on the bank.
But the bank's image was ruined by its ties to its owner and the government stepped in.
Chavez, who blames problems in the global banking system on capitalist greed, said last year he would expropriate any bank that failed rather than bail it out.
The Venezuelan move followed similar action from authorities around the region. Panama regulators have taken over a Stanford affiliate there and a local arm of Stanford Financial Group halted its activities on the stock exchange in Colombia. Ecuador stopped a brokerage linked to the group from operating.
In Venezuela in recent days, hundreds of people lined up at the international group's local offices hoping to recover their money. While lines at the local retail bank were much shorter, enough depositors had sought to withdraw their cash to prompt the government action.
Early on Thursday, there were no lines at one of the retail bank's main branches in Caracas.
Many Venezuelans remember a 1994-1995 crisis that cost the country $11 billion, as half the country's banks fell.
The industry faces a tough year because the OPEC nation's oil income is plummeting, economic growth is slowing and consumer spending is falling.
(Additional reporting by Deisy Buitrago and Jorge Silva, Writing by Saul Hudson, Editing by Brian Ellsworth and Gerald E. McCormick)