UPDATE: Venezuela's Chavez Threatens Banks Amid Housing Woes

Amid a housing shortage in Venezuela, President Hugo Chavez threatened to take control over the local unit of Spanish bank Banco Bilbao Vizcaya Argentaria S.A. (BBVA, BBVA.MC) and other banks if they don't ensure that homes and apartments they finance are occupied immediately.

"Any bank that slips up...I'm going to expropriate it, whether it's [BBVA Banco] Provincial, or [local banks] Banesco or Banco Nacional de Credito," Chavez said Tuesday night.

In many cases, Chavez said banks receive a down payment from new homeowners for a house or apartment, but then delay the move-in process using "legal mumbo jumbo," and requiring more and more paperwork to be filled out.

"If the apartment is ready for move-in, then it must be occupied immediately," Chavez warned.

Officials at BBVA Banco Provincial in Caracas weren't immediately available Wednesday to comment on Chavez's remarks.

The lack of sufficient housing for Venezuela's 28 million people has been a problem in this oil-rich nation for decades, and during Chavez's nearly 12 years in power the problem has become worse, as the population has grown. In Caracas and other large cities, millions of people are forced to live in slums made of shoddily-constructed, ramshackle homes on hillsides.

This year, Venezuela has been dealing with some of the heaviest rains and flooding in the past 40 years, making the housing problem even worse because some 100,000 people have seen their homes destroyed or deemed unlivable.

Chavez has threatened to expropriate banks in the past, saying they must follow government orders to provide more loans to small business owners and increase the number of home loans to poor people in their portfolio.

The president's comments about BBVA Banco Provincial comes just days after a former vice president to Chavez, Jose Vicente Rangel, said that sources have told him BBVA's Venezuela unit is up for sale at a price tag of about $2 billion.

The bank repeatedly denied the claims by Rangel, who is now a journalist and the host of Sunday morning political talk show, where he made the remarks.

"We reiterate our permanent commitment in Venezuela," the BBVA Group said Sunday in a statement on its blog, in response to Rangel's latest claim.

BBVA Banco Provincial has been in Venezuela for 11 years and is among its largest banks in terms of deposits held.

Venezuela's banking system went through a mini-crisis a year ago, when Chavez took over a handful of small banks, nationalizing or liquidating them and jailing several bank executives. The takeovers didn't extend to the big banks, and analysts say the country's overall financial system is relatively healthy.

A Venezuela banking reform bill currently wending its way through the Chavez-controlled legislature would declare that banking activity and banking services are a public service, which some analysts say would make them "expropriatable" companies.

Chavez, who is trying to create socialism in Venezuela, has nationalized more than 200 companies this year from various sectors of the economy. That has caused many companies, including banks, to wonder if they could be next.

-By Dan Molinski, Dow Jones Newswires; 58-414-120-5738; dan.molinski@dowjones.com

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