UPDATE: Venezuela's Chavez Again Threatens BBVA Unit Takeover

Venezuelan President Hugo Chavez on Wednesday threatened to nationalize BBVA Banco Provincial, the local unit of Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC), if the company delays allocating funds to complete housing projects.

During a televised conference from the Miraflores presidential palace, Chavez said he was speaking over the phone with one of the bank's executives to confront him after hearing complaints from conference attendees seeking mortgages who alleged Banco Provincial was delaying payments.

"If Banco Provincial refuses to honor the constitution, refuses to honor a presidential decree put into law, then I'm going to nationalize Banco Provincial," Chavez said.

"I don't have any problem with it. I will pay whatever the bank costs," he added.

A spokeswoman Banco Provincial's press office in Caracas declined to comment.

Chavez, who said he was speaking by cell phone with bank president Pedro Rodriguez, said the executive denied wrongdoing and offered to investigate the matter.

The socialist leader, who has made housing for the country's poor among his top priorities, made similar comments toward Banco Provincial and other banks in December, saying he would take over any that didn't ensure homes and apartments they finance are occupied immediately.

Housing projects have become highly politicized in Venezuela after heavy flooding in late November and early December displaced more than 130,000 people around the country.

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

The bank was in the spotlight last month when a former vice president to Chavez, Jose Vicente Rangel, said on a television show that sources had told him that Banco Provincial was up for sale at a price tag of about $2 billion. Bank executives quickly denied the claim.

Late last year, the then-overwhelmingly Chavez-supporting National Assembly passed a financial-sector reform bill that reclassified banks as public institutions, allowing them to be easily taken over by the government.

Venezuela's banking system went through a mini-crisis in 2009, when Chavez took over a handful of small banks, nationalizing or liquidating them, and jailing several bank executives. The state now holds nearly a quarter of the country's banking sector.

-By Kejal Vyas, Dow Jones Newswires; 58-414-249-6821; kejal.vyas@dowjones.com

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