Venezuela to Nationalize Santander Unit, Chavez Says

Venezuela will nationalize the local unit of Spain's Banco Santander SA, the South American country's third-biggest bank in terms of deposits, to increase state control of the financial services industry.

Chavez said he will pay fair compensation for Banco de Venezuela SA Grupo Universal, which Santander bought from the government in 1996, according to the bank's Web site.

``I want to get it back because it's the bank of Venezuela - - that's its name,'' Chavez said today in comments on state television. ``We'll put it at the service of Venezuela, because the bank was very profitable.''

Chavez has increased state control of the economy during the past two years by tapping surging revenue from oil sales. The government may have to pay as much as $1.9 billion to take control of the bank, said Asdrubal Oliveros, a director at Caracas-based consulting firm Ecoanalitica.

``The government is interested in a big bank to increase their presence in the industry,'' Oliveros said. ``I don't think this is a signal that they are going to nationalize more banks or take over the industry.''

A spokesman for Banco Santander in Spain and a spokeswoman at the bank's Caracas office declined to comment when contacted by telephone.

The bank, founded in 1890, was first nationalized in 1994. Two years later, Banco Santander bought 93.4 percent of the shares for $351.5 million, according to the bank's Web site.