UPDATE 2-Venezuela fails to sell Stanford bank unit

 * Gov't mum on whether it will try another auction

 * Venezuelans very exposed to Stanford fraud
 (Adds background on Stanford Bank Venezuela, other details)

 CARACAS, March 20 (Reuters) - Venezuela failed on Friday to
sell in an auction a small local bank previously owned by Allen
Stanford, after seizing it to stop an online run on deposits
related to fraud charges against the Texan billionaire.

 "We declare this void" said Rodolfo Porro, a finance
ministry legal consultant reading from a statement at the
auction issued by the board established to take over the bank
last month.

 Only one offer was presented at Friday's auction, by local
finance firm Italcambio for $56 million, also below the minimum
price established.

 The board did not say if the government would try to auction
the bank again.

 Venezuela seized the bank from Allen Stanford to stem
massive online withdrawals as the impact of a U.S. fraud case
against the Texan billionaire spread through Latin America in
February.

 The government of socialist President Hugo Chavez had said
it would quickly sell Stanford Bank Venezuela, one of the
country's smallest commercial banks, whose $288 million assets
represent just 0.2 percent of the nation's banking system.

 Allen Stanford is charged in the United States with "massive
fraud" related to his offshore unit Stanford International Bank
and his Houston-based broker-dealer and investment units.

 U.S. authorities accused him of selling $8 billion in
certificates of deposit with impossibly high interest rates.

 Venezuelans invested much more money in Stanford
International than in the local unit, with the government
estimating that up to $2.5 billion may have been entrusted by
wealthy and middle-class individuals.

 Many Venezuelans, still smarting from a 1994-95 banking
crisis that cost the country $11 billion, chose to keep savings
offshore.

 Chavez said he will nationalize any bank that fails -- an
idea that unnerves investors who do not trust the government to
manage their money.

 On Thursday, Chavez said he was proceeding with the stalled
purchase of the local unit of Spain's Grupo Santander (SAN.MC),
one of Venezuela's largest banks.
 (Reporting by Fabian Cambero, editing by Matthew Lewis)