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Mix-Ansicht- Argentina: Bank failures begin - Cosa, 27.05.2002, 10:22
Argentina: Bank failures begin
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<font size="4">Argentina: Bank failures begin</font>
FROM THE ECONOMIST INTELLIGENCE UNIT
The collapse of Argentina's crippled banking industry has begun. Following the suspension of operations at the affiliate of Canada's Bank of Nova Scotia in April, this month the government was forced to take over three entities owned by France's Credit Agricole. The government has yet to come up with a new bank rescue plan after abandoning an earlier proposal to swap frozen deposits for bonds. With other foreign entities saying they will no longer inject cash into their local subsidiaries, more institutions will soon close, merge or be acquired.
Twelve of Argentina's top 20 banks are foreign-owned. They have reported losses of more than US$8.5bn since the government defaulted on its debts late last year and devalued the currency in January. The peso has since plunged in value by more than 70%.
In early May talks with banks broke down over the bond, or"Bonex", plan, which involved converting some Ps40bn (around US$12.5bn) in deposits into three- to 10-year government instruments, after the banks refused to partially back the new securities with their loan portfolios.
Without a solution to the banking crisis and a viable plan to start to release the deposits that have been frozen since December 2001, there is little hope that economic activity can be revived. Argentina is in its fourth year of recession, and GDP is expected to plummet by as much as 14% in 2002.
Speculation about bank failures grew after Bank of Nova Scotia, Canada's fourth-largest bank, said earlier in May that it planned to sell its Argentinian unit, the country's 11th-largest bank. The subsidiary ceased operations in April. Executives with Spain's Banco Santander Central Hispano (BSCH), which owns Banco Rio, and Italy's IntesaBCI, which owns Banco Sudameris, recently also said they will no longer finance their local subsidiaries.
Then, in the first government seizure of a foreign-owned bank since the financial crisis exploded, on May 20th officials took over the three units owned by Credit Agricole -- Banco Bisel, Banco Suquia and Banco Entre Rios. This occurred a day after the French lender stopped funding the units and ceased payments to agricultural exporters such as Cargill (US) and Bunge (Brazil).
Officials deem the banks to be critical to the operation of Argentina's key agricultural export sector and intend to keep them in operation. The three entities, with 6,000 employees and 355 branches, handle the bulk of financing for Argentina's grain and oilseeds industry, which accounted for US$9bn of exports last year, 40% of the country's total. State-owned Banco de la Nacion has assumed management control of the units, but authorities say they hope to sell them back into private hands.
The government will not bail out Scotiabank Quilmes, however, and its parent on May 22nd presented a plan to the Central Bank for liquidating most of the US$1.1bn in assets of the subsidiary, which has 91 branches. The Canadian bank has reported C$707m (US$458m) in losses from Argentina so far. Industry experts say that Scotiabank's proposal, which involves transferring its assets to a trust, could serve as a model for other entities that might want to exit the Argentinian market.
System too large
Given Argentina's severe economic crisis and the huge contraction in bank deposits in recent months, Argentina's banking system, with 104 financial institutions, 4,200 branches and nearly 100,000 employees, is too large. Even the economy minister, Roberto Lavagna, recently said that the system needed to shrink.
That process has now begun and is expected to build momentum soon, complete with massive layoffs. Which banks will survive is an open question as headquarters continue to digest the barrage of bad news coming from Argentina. Several local banks are likely to close their doors, and few foreign banks are apt to recapitalise their local subsidiaries under the current conditions.
Meanwhile, besides coping with the threat of a banking sector collapse, the government in recent days has also been trying to fend off new attacks on the currency -- prompted by rumours that the Central Bank head, Mario Blejer, is about to resign -- and a new wave of social protests. The situation is growing ever more desperate, with President Eduardo Duhalde denying that Mr Blejer will leave, and then threatening to resign himself if Congress does not quickly approve the remaining reforms being demanded by the IMF as conditions for aid. Mr Duhalde is betting that legislators will comply, as there is no viable candidate to replace him. That may be a very risky bet.
Quelle
Kommentar: Sind die Verluste für die ausländischen Banken in Argentinien nur peanuts oder kommt es zum Domino-Effekt? Lassen die ausländischen Banken ihre argentinischen Filialen wie heissen Kartoffeln fallen?
Gruss
Cosa
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