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More Financial Upheaval in Argentina

 

By: Laurence Norman
 The Washington Post, May 20, 2002

 

 

Buenos Aires, Argentina A state-owned bank plans to take over three provincial banks that were close to collapse, the latest upheaval to shake Argentina's deeply troubled financial system.

Banco de la Nacion, Argentina's largest bank, will absorb the administration of Banco Bisel, Banco del Suquia and Banco de Entre Rios on Monday, the nation's Central Bank said.

The news came at the end of meetings Sunday between Central Bank authorities and officials from the three banks, which were controlled by France's Credit Agricole.

Credit Agricole had made clear that it will not send any new funds to help rescue the three banks, which need around $61.5 million to stay afloat, the Noticias Argentinas news agency said Sunday. The Central Bank has ruled out giving cheap loans to prop up the three banks.

Central Bank officials said the deal would allow Bersa, in Entre Rios province, to operate normally Monday, while Bisel and Suquia would resume operations Wednesday, the daily newspaper Clarin reported on its Web site.

The takeover was the latest sign of the financial crisis in Argentina, which has been buffeted by a four-year recession, a debt default and a crisis of consumer confidence linked to a banking freeze imposed in December.

The banks' assets declined further after President Eduardo Duhalde decided to convert debts and savings formerly held in dollars into pesos at different rates after January's decision to devalue the peso.

The International Monetary Fund has reportedly estimated Argentine banks could lose $17 billion of the $21 billion in deposits they had at the end of 2001. So far the biggest casualty of the crisis has been Scotiabank Quilmes, Argentina's 11th largest bank.

In April, the Central Bank suspended Scotiabank Quilmes' operations for 30 days or until it restored its operating capital and cash reserves to required levels. That suspension was extended for 60 days earlier this week.


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