UPDATE 3-Trump's Venezuela envoy vows sanctions on banks backing Maduro

(Adds meeting with Russian ambassador, Senate TPS letter)

WASHINGTON, March 7 (Reuters) - U.S. President Donald Trump's special representative for Venezuela pledged on Thursday that Washington would "expand the net" of sanctions on the South American nation, including more on banks supporting President Nicolas Maduro's government.

"There will be more sanctions on financial institutions that are carrying out the orders of the Maduro regime," the envoy, Elliott Abrams, told a U.S. Senate subcommittee hearing.

The United States and more than 50 other countries have recognized opposition leader Juan Guaido as oil-rich Venezuela's interim president and increased pressure on Maduro, a socialist, to step down.

Washington this week revoked the visas of senior Venezuelan officials and said on Wednesday it had identified efforts by Maduro to work with foreign banks to move and hide money.

Abrams, a neoconservative who has long advocated an activist U.S. role in the world, said he had asked European banks to take steps to shield individual Venezuelans' assets from Maduro's government. He did not name the banks.

Some lawmakers pressed Abrams about granting temporary protected status (TPS) for more than 70,000 Venezuelans in the United States.

More than 3 million people are believed to have fled Venezuela amid a deep economic crisis marked by shortages of food and medicine and hyperinflation.

Senator Marco Rubio, Republican chairman of the Foreign Relations Committee's Western Hemisphere subcommittee, which held the hearing, warned that millions of Venezuelan refugees could threaten regional stability.

"REGIONAL CATASTROPHE"

"This has the potential to be a regional catastrophe of epic proportions," Rubio, who has worked closely with Trump on the administration's Venezuela policy, told the hearing.

Maduro, who took over as president in 2013 and was re-elected last year in a vote widely viewed as fraudulent, blames the crisis on a U.S.-backed sabotage campaign. His opponents say his socialist policies have caused the meltdown.

Democratic Senator Bob Menendez, who wrote legislation calling for TPS, said: "The Venezuelan diaspora is fantastic, they're incredible. All the more reason to give them TPS."

Later on Thursday, 24 senators - including Menendez and Rubio, but none of Trump's other fellow Republicans - sent a letter asking the president to designate Venezuelans for TPS protection.

Trump, who has repeatedly drawn a hard line on immigration, has sought to limit the program, seeking for example to end TPS status granted to immigrants from Honduras, Haiti and other countries struck by war and natural disasters.

Abrams said TPS was under consideration and he would discuss it with Secretary of State Mike Pompeo.

Abrams accused Russia and Cuba of shielding Maduro, who Abrams said was protected by "thousands and thousands" of Cuban military and intelligence officials while Moscow has supplied tens of millions of dollars to the government.

Abrams confirmed media reports that he had held at least two rounds of secret talks with Maduro's foreign minister, Jorge Arreaza. He said he had met with Russia's ambassador to Washington, Anatoly Antonov, but not yet with officials from China, which also has backed Maduro.

Mark Green, administrator of the U.S. Agency for International Development, said Venezuela's economy had contracted by 50 percent and estimates were it could contract by another third this year.

"When you have inflation by some estimates 2 million percent, nobody has the ability to buy anything anyway, so there will be profound despair and hopelessness," Green told the hearing.

Abrams said the World Bank and the International Monetary Fund had plans involving "billions of dollars" of funding to rebuild Venezuela after Maduro was no longer in charge. (Reporting by Patricia Zengerle and Lesley Wroughton; editing by Paul Simao and Leslie Adler)