(Adds judge ruling executives should remain in prison in paragraph 8)
By Alexandra Ulmer and Brian Ellsworth
CARACAS, May 4 (Reuters) - The chairman of Venezuela's top bank Banesco on Friday condemned a 90-day state takeover and arrest of 11 executives as locals thronged cash machines and sped up transfers to other institutions.
In the biggest crackdown on the financial sector since late leftist leader Hugo Chavez, the government of his successor President Nicolas Maduro said on Thursday it was targeting Banesco for "attacks" against the OPEC country's rapidly depreciating currency.
Maduro may be seeking to please his socialist constituency ahead of a May 20 presidential election by taking a tough line on businesses, which he says are responsible for hyperinflation and chronic product shortages.
But many Venezuelans now worry the government is seeking to gain control over remittances by Venezuelan emigrees, which generally end up being deposited in banks such as Banesco.
"There are no financial reasons to justify an administrative intervention - not for one day, much less for 90," wrote Banesco Chairman Juan Carlos Escotet in a letter posted on Twitter.
"The key is to understand that the current problem is not caused by Banesco or any other financial institution."
Escotet, who lives in Spain, said he was in Venezuela after flying from Europe overnight in what he said would be a bid to free the 11 executives, who include Chief Executive Oscar Doval.
A Caracas judge on Friday ruled that the executives, accused of money laundering and criminal association, should remain in prison, according to a tweet by the Supreme Court.
Escotet met with employees at the bank's main headquarters and assured them he would remain in Venezuela as long as the state takeover was in place, according to one witness.
In the letter, he urged Venezuelans not to withdraw their money from Banesco, which serves 8 million clients and about a quarter of the Venezuelan market. His plea seemed to be falling on deaf ears.
In a dozen interviews, Banesco clients told Reuters they feared the government was expropriating the bank and that their money would disappear.
"I'm taking cash out now. And I've been transferring to my other account, not at Banesco, just in case," said Wilmer Sanchez, 47, who works as a security supervisor at a clinic, as he stood in a line of a dozen people.
"This is malice. They've been wanting to take over Banesco for a while," he said.
Antonio Morales, head of state bank regulator Sudeban, acknowledged that some Banesco clients had withdrawn funds in response to the announcement, but insisted the bank would continue to function as normal.
The economic crisis prompted nearly a million Venezuelans to emigrate between 2015 and 2017, according to U.N. figures, as rising malnutrition and growing incidence of preventable diseases has left many believing they have no other choice.
That has turned remittances into a crucial lifeline for those who stay behind, given that salaried professionals rarely make more than several dollars per month.
"They keep impoverishing us, and now they're messing with what our children send us from abroad to live," said Mireya Gomez, 71, a homemaker, at a Banesco branch in the southern city of Puerto Ordaz. Gomez has a son in Germany.
Escotet said in his letter that of the 900 accounts that the government had reported as having suspicious activities, most held less than the equivalent of $1,000.
He suggested the move was meant to distract from an upcoming currency overhaul to remove 3 digits from prices and introduce a new set of bills - an effort economists say is unlikely to be completed by June as Maduro has promised.
The takeover of Banesco comes after last month's shock arrests of two Venezuelan executives working for U.S. oil major Chevron Corp
In what they are calling a probe of the entire financial sector, authorities have arrested more than 134 people for alleged "currency crimes" in recent weeks.
Maduro has repeatedly balked at carrying out basic reforms that economists say would allow Venezuela's economy to function again. Most agree that the most important measure is to lift exchange controls, which put state authorities at the center of legal foreign currency operations.
Hyperinflation has turned the country's once-powerful banks into warehouses of useless cash that are worth a total of only $40 million, according to a Reuters analysis of regulatory data. (Additional reporting by Maria Ramirez in Puerto Ordaz; Deisy Buitrago, Vivian Sequera and Corina Pons in Caracas; editing by Andrew Cawthorne and Susan Thomas)