By TIM JOHNSON
             Herald Staff Writer

             GUAYAQUIL, Ecuador -- The nation's No. 2 bank suddenly shut its doors on
             Monday, plunging President Jamil Mahuad into a new crisis and sending throngs of
             account holders into the streets of this sprawling port in angry protest.

             ``I'll lose everything,'' moaned a distraught Jose Marin, a retired electrician joining
             some 10,000 protesters shouting ``Down with Jamil!'' outside Guayaquil City Hall.

             Banco del Progreso, which has its headquarters in this port, became the eighth of
             Ecuador's 39 banks to shut down or appeal for a federal bailout since mid-1998.
             It is the first to do so since a week-long bank holiday in early March to avoid a run
             on the nation's banks.

             The shutdown inflamed tensions between Guayaquil and Quito, whose leaders
             have been locked in a spat over recent bank failures.

             In a fiery speech from a second-floor balcony at the ornate Guayaquil City Hall,
             Mayor Leon Febres Cordero told masses of angry protesters that the time had
             come ``to lift the fist in struggle'' against the central government.

             ``Guayaquil is on a war footing,'' he shouted, ``and except for those living on Mars
             or Jupiter or Mercury, everyone knows that when Guayaquil lifts itself for war,
             war there will be!''

             Most protesters wore large stickers bearing the blue-and-white flag of the city and
             the slogan: ``Don't Mess Around With Guayaquil.''

             Febres Cordero, a center-right Social Christian who served as president from
             1984 to 1988, was named last month by the Vistazo news weekly as the most
             powerful person in Ecuador -- far more influential even than Mahuad -- and his
             message apparently alarmed the military.

             Army chief Gen. Telmo Sandoval appealed for national unity.

             ``Our leaders must find new ideas to solve the problems of our nation,'' he said,
             adding that the armed forces remain solidly ``on the side of the people . . .
             defending democracy.''

             Ecuador has already injected more than $1 billion to prop up a faltering banking
             system that is weakest in Guayaquil, hub of a shrimp-farming and banana-growing
             region devastated by last year's El Niño rains and floods.

             Banco del Progreso owner Fernando Aspiazu blamed ``malicious rumors'' and
             discriminatory treatment by federal banking authorities in Quito for his decision to
             suspend operations.

             ``Political, financial and economic situations . . . oblige us to shut the doors of our
             institution,'' Aspiazu said in a nationally televised address early in the day. He did
             not say when, or if, the bank would reopen.

             The voluntary shutdown took authorities by surprise in Quito, the highlands capital.
             Interior Minister Vladimiro Alvarez said Banco del Progreso suffered ``a serious
             liquidity problem'' but that the suspension of operations was ``the decision of its
             president.''

             Finance Minister Ana Lucia Armijos said accounts of all depositors ``are fully
             backed by the law on guarantees of deposits.''

             Banco del Progreso has 720,000 clients, and crowds of worried account holders
             gathered outside branches in Quito, Guayaquil and other cities. The story was
             broadcast around the nation by Ecuadorean TV, filling the nation's television
             screens with images of desperate victims of the shutdown, some of them in tears.

             Mahuad, 49, made no immediate remarks. A three-day national taxi and transport
             strike last week seriously shook his grip on power.

             The nation's largest bank, Filanbanco, also based in Guayaquil, was taken over by
             a newly created Deposit Guarantee Agency nearly three months ago.

             Mahuad partially froze the nation's bank deposits March 11, saying the measure
             was needed to protect the financial system. The freeze, which includes all dollar
             savings accounts of more than $500, is to last one year, although business leaders
             affected by a sharp slowdown have called for it to be modified or lifted.

             If the state formally intervenes at Banco del Progreso, the nation's five largest
             banks would all be managed out of Quito, a fact that deeply irks business leaders
             in Guayaquil.

             Aspiazu, the bank owner, is a tycoon with majority ownership of El Telegrafo
             newspaper, the Guayaquil electrical utility and a professional soccer club. In a
             full-page advertisement in his newspaper, Aspiazu promised to use his own wealth
             to guarantee the deposits of his bank's clients. ``We plead with the government to
             proceed correctly and not allow the Bancodel Progreso's clients to become the
             new victims of the systematic campaign to dismantle the coast,'' he wrote.

             Other business leaders joined the outcry against what they described as
             insensitivity in Quito toward the estimated $2.6 billion in destruction inflicted by El
             Nino last year. ``This isn't the consequence of bad management. It is the result of
             economic deterioration in a region hit by something worse than Hurricane Mitch,''
             said Joyce de Ginatta, head of the Guayaquil Chamber of Small Industry and
             Business.

             In the weeks prior to the March 8-12 bank holiday, the fragile $8 billion banking
             sector was hit by a series of rumors, many believed to be spread by competing
             coastal and highland banks.

             ``It's a very vicious war,'' said Walter Spurrier, publisher of an economic
             newsletter. ``The banks that have had problems in Guayaquil say they have been
             the victims of the rumor mill by Quito banks.'' Spurrier noted that ``the two cities
             have very different economic bases,'' but banks in both cities vie for the same large
             clients.
 

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