CARACAS -- Venezuela plans to put up 85% of the start-up capital for the ALBA bank, a financial institution tied to a regional trade bloc sponsored by President Hugo Chavez as an alternative to free-trade agreements with the U.S.

The Finance Ministry said in a statement Wednesday that the bank will have $1 billion in start-up capital, which will come from the Venezuelan government and Cuba, one of the founding members of the Bolivarian Alternative for the Americas, or ALBA - which also includes Honduras, Nicaragua, Bolivia and Dominica, with Ecuador as an observer.

Under Chavez, Venezuela has sought to create a series of multilateral financial organizations as an alternative to institutions like the International Monetary Fund or the Inter-American Development Bank.

These entities have struggled to take off. The Bank of the South, a regional development bank inaugurated in December last year is yet to start operations because its members, which include Venezuela, Brazil, Argentina, Ecuador, Paraguay and Bolivia, continue to discuss how much initial financing each country should put up.

Chavez also created a $6 billion bilateral development fund with China and has inked deals for similar schemes with Iran and Russia, two of his closest allies.

-By Darcy Crowe, Dow Jones Newswires; (58) 212 905 6304; darcy.crowe@dowjones.com