Madrid  - The Spanish government said Friday it would not intervene "in any way" with Venezuelan President Hugo Chavez's decision to nationalize the local subsidiary of Spain's Banco Santander bank.

The operation was being carried out through "dialogue and negotiation," Deputy Prime Minister Maria Teresa Fernandez de la Vega said, explaining that the bank and the Venezuelan government were expecting to reach a deal soon.

The Grupo Santander meanwhile confirmed that it was holding talks with the Venezuelan government about the sale of its subsidiary Banco de Venezuela.

Santander had intended to sell the unit to a Venezuelan private investor, when Chavez announced that the government would buy it to "place it in the service of Venezuelans."

The president pledged to pay a fair price for the unit, whose value was estimated at up to 1.9 billion dollars (1.2 billion euros) by Spanish experts.

The Banco de Venezuela is one of the biggest banks in the Latin American country, where it holds 11.8 per cent of outstanding loans and 10.7 per cent of deposits, with nearly 300 offices and 3 million clients nationwide.

Vega said she had been in contact with Santander chairman Emilio Botin, while Foreign Minister Miguel Angel Moratinos had discussed the matter with his Venezuelan counterpart.

Chavez' announcement came less than a week after his visit to Spain, which normalized relations eight months after King Juan Carlos told him to "shut up" at an Ibero-American summit in Chile. (dpa)