Venezuela's firebrand leader Hugo Chavez seized three banks and ordered two other financial institutions closed Monday, as the country reeled from a currency devaluation he hopes will improving cratering state finances. "In order to guarantee a healthy national banking and financial system, the board has decided to intervene (with regard to) the following firms: InverUnion Banco Comercial; Banco Del Sol; and Mi Casa," banking regulator Sudeban said in a statement.

The closures come despite warnings that now regular business seizures could further spook foreign investors and undermine Chavez's efforts to put state revenues on a solid footing. The nationalisation of eight small- and medium-sized institutions last year prompted fears of a run on the country's banks, as investors moved to withdraw funds. It also sparked a dip in Venezuelan bonds and the country's currency in free trading.

The banking regulator defended Monday's move as a boost to the sector's stability, claiming the three seized banks were facing "serious administrative and managerial problems that resulted in insufficient liquidity to cover their short-term obligations."

The government currently controls around 25 percent of the banking sector, largely due to the purchase of the Banco de Venezuela from the Spain's Santander group in 2009.

Copyright Agence France-Presse, 2010