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After the Venezuelan government announced an audit of three private banks “behind closed doors”,  Hugo Chávez announced that he would merge the three institutions to create a new State bank called Bicentenario.

This, reported AFP, brings the total number of organizations audited by the executive branch in the past two weeks, as a result of alleged irregularities in their accounts, to seven. After the nationalization of Banco de Venezuela, which concluded this year, the State will control 25 percent of the banking sector, making it the most powerful player in the financial system.

The most recently affected institutions were Central Banco Universal, Banco Real and Baninvest, which together account for 1.8 percent of total deposits in the Venezuelan banking system, the Banks Superintendency (Sudeban) stated to AFP. “It comprises an audit behind closed doors to rehabilitate these banks,” explained Finance Minister Alí Rodríguez Araque.

The decision against the three banks, reported AP, was announced four days after the government decided to close the Canarias, Confederado, Bolívar and ProVivivenda (BanPro) banks after a ten-day audit process. The four banks taken over account for 5.5 percent of total system deposits.

According to Reuters reports, Rodríguez Araque denied that Venezuela was going through a banking crisis and attempted to calm fears over the health of the financial system. “The national banking system is not in a state of crisis,” assured Rodríguez Araque, who also underscored the “solidity and stability” of the sector.

Despite the minister’s statements, reported AP, the moves made by the executive branch against these banks caused unease in the local financial sector and there were massive cash withdrawals at some institutions. Some institutions were even forced to resort to loans between banks to alleviate liquidity problems.

Chávez, reported Europa Press, warned that he is prepared to take over all of the private institutions in the country if he is “forced” to. “We have set our sights on another group of banks. Believe me when I say that if I am forced to take over all Venezuelan private banks then I will,” he stated.

“The oligarchy is looking to make a run on the banks and thinks that will cause Chávez to fall. What’s going to fall is the private banking system, not Chávez,” assured the president according to BBC.