LIMA, PERU, JULY 29 -- The Peruvian government today issued a decree to take control of 10 banks, six finance corporations and 16 insurance companies while congress considers President Alan Garcia's plan to expropriate them.

A three-member team will take over management from each organization's board of directors. The decree sets a 120-day period for congressional action approving the takeovers, but this could be extended. Congress will reconvene next month and is expected to give the matter priority treatment. It also must decide on how and when former shareholders in the expropriated companies will be compensated.

Garcia, speaking at a political rally Tuesday, called the expropriation the "most revolutionary measure ever taken in the history of Peru." He added, "The banks are not going to have privileged {clients} any more."

The decree did not mention the seven foreign banks operating in Peru, and a source close to the president said they would not be expropriated. They will continue their activities, which have been gradually reduced over the past two years as a result of Garcia's antagonistic position on Peru's foreign debt held by commercial banks.

However, two cases are yet to be cleared up. The French bank Credit Lyonais owns 10 percent of the Banco de Lima and has a management contract. The Italian-led Sudameris Banking Group of Paris owns a 19 percent stake in the Banco de Credito, the largest commercial bank in Peru. It is not clear if these interests are affected by the takeover.

The Peruvian government already controls a majority of banking operations. According to official figures, state related banks give 82 percent of credit and hold 70 percent deposits.

Bank executives were not available for comment on the government's move.

{Some business executives deplored Garcia's move while leftists hailed the takeovers, United Press International reported.

{"It looks like they have crossed the Rubicon," a bank analyst in Lima said. "If there's anything else {Garcia} wants to take over, he's just going to do it."

{"This is what is called frightening away investment," said Eduardo Iriarte, vice president of the Confederation of Private Business Owners.

{But legislators from the United Left coalition of socialists and communists applauded the measure, which they said had been demanding for years.}