COUNTRY PROFILE
Total land area:................ 1,056,640 sq. miles
Official language:.............. Spanish
Administrative divisions:.... 23 provinces and one federal district
Legal system:................... Mixture of US and Western European
legal systems; has not
accepted compulsory ICJ jurisdiction.
Executive branch:............. President, vice president. Cabinet
appointed by president.
Legislative branch:............ Bicameral National Congress (Senate,
Chamber of Deputies).
Judicial branch:................. Supreme Court with nine judges
appointed by president and
approved by Senate.
ECONOMIC PROFILE
Currency: Peso ($)
GDP: US$231 billion (1997)
Real GDP growth (at market prices):7.8 (1997p)
GDP (average annual growth rate): 3.1 (1988-1997)
GDP per capita (1990 US$): 6,476.4 (1997)
Consumer price index (average annual growth rate):0.5% (1997)
Public sector fiscal balance (% of current GDP): -1.4 (1997)
Money supply (M1) (% of current GDP): 6.0 (1997)
Interest rate (average nominal rate offered on 30-day time deposits):
7.8 (1997p)
Current account balance: -US$6.5 billion (1997)
Trade balance: -US$1.5 billion (1997)
Main exports: Meat, wheat, corn, oilseed, manufactures.
Main imports: Machinery and equipment, chemicals, metals, fuels and
lubricants,
agricultural products.
Nominal exchange rate (Pesos/US$): 1.0 (1-1998)
Real effective exchange rate (Index 1980=100): 57.7 (1995)
BANKING SYSTEM
Total number of banks in the system: 129
Types of banks: Public banks-18, of which three are national (one mortgage
and two
commercial), 12 provincial (one investment and 11 commercial), and
three commercial municipal; and private banks-111, of which seven are
commercial (50 local and 37 foreign), one foreign investment, 15 financial
companies (12 local and three foreign), and eight local credit entities.
Total amount of assets: US$161 billion
Total amount of deposits: US$79.2 billion
Total amount of capital or net worth: US$16.6 billion
BANKING INSTITUTIONS
I. Banking Supervision
1. The principal supervisory
body of the Argentine banking system is the
Superintendencia de Entidades Financieras y Cambiarias.
2. This organization
is not autonomous. It reports directly to the Central Bank
(Banco Central de la República Argentina).
3. The supervisor
reports directly to the minister of the economy.
4. The supervisory
body examines monthly reports. The supervisory authority
examines banks annually.
5. An examination
system assigns ratings from one through five, with one being
the best rating.
6. The CAMEL system
is used in examining banks.
II. Consolidated Supervision
1. All financial institutions
in Argentina must conduct consolidated supervision.
2. Prior consent is
required from both Argentina and the host country to open a branch
office in a foreign country.
3. Prior consent is
also required from the home country to open a banking entity in
Argentina.
4. The Argentine Central
Bank is required to respond to all information requirements
of offshore supervisory authorities. Argentine financial institutions are
not permitted
to have a presence in countries from which the Argentine supervision authority
cannot legally request information.
III. Interest Rates
1. Interest
rates on loans are determined by the market.
2. Interest
rates on deposits are determined by the market.
IV. Deposit Insurance
1. Seguro de
Depósitos Sociedad Anónima (SEDESA) insures deposits.
Shareholders include the government and a trust company formed by all of
the country¹s financial institutions.
2. Insurance is limited
per depositor to US$10,000 for deposits with a term of
less than 90 days and US$20,000 for deposits with a term of more than 90
days.
V. Trade Finance
1. Trade finance,
or assistance to importers and exporters, is not defined in Argentine
laws and regulations. Working capital and pre-export finance are not considered
trade finance; they are treated as regular loans provided at the bank's
own risk.
2. The supervisory
entity, for the purpose of maintaining records of each bank's
operations, has instituted a domestic risk register. Argentina has adopted
the
SICOF guidelines, a regional registration of all committed and future trade
finance
operations. The maximum level of risk a bank may assume is 35% of its equity.
This applies to operations done under the frame of special treatments on
reciprocal
credits and reciprocal payments. Additionally, after January 4, 1999, banking
institutions should have a dollar-denominated deposit to guarantee 100%
of the
principle independent of the type of payment instrument that is going to
be used.
For documentary credits and letters of credit (draft or acceptances), the
guarantee
should be established at the moment of the issuing of the document without
bill of
lading or other documents describing the terms and conditions. Guarantees
should
be in place before the registration of the risk. For letters of credit,
documentary
credits and endorsed drafts, the banking institution should establish the
guarantee
in securities or other instruments issued by public national entities in
dollar
denominations. For the finance of pre-export, banks can assign the proceeds
and
rights of the payments originated by the foreign banking correspondent.
This type
of guarantee is not interest bearing and should be pledged until the debt
or financing
is cancelled. Securities or other documents must be registered with the
corresponding
pledge in the Registro de Prenda sobre Títulos Valores at Caja de
Valores, S.A.
These guarantees should cover 125% of the principal. These securities and
other
types of investments should be marked to market on a daily basis
as per the price
established by the Mesa de Operaciones de Cambio y de Mercado Abierto.
The mark-to-market value can range from a minimum of 110% of the principal
to a maximum of 140%.When the latter occurs, the banking institution can
ask
for the return of the surplus up to a value of 125%.
VI. Capital Adequacy
1. US$15 million is
required to open a banking institution and US$10 million is
required to open a wholesale commercial bank.
2. A bank must maintain
US$9 million as well as the minimum capital required
to maintain a proper level of liquidity and solvency (LISOL). Capital should
cover 11.5% of total risk-weighted assets and 12.5% of fixed assets. In
general,
however, banking legislation establishes that the minimum capital required
to
operate a banking institution is determined by weighing the risk of the
assets
and assessing the pricing risk (market prices) on total assets.
3. Banking institutions
are classified in categories from one to five according to the
ratios mentioned in point two, which are determined by the Superintendencia.
These ratios are adjusted by a coefficient that varies from .97% to 1.125%.
VII. Asset Quality
1. Loans are classified
according to the following categories:
Commercial
Consumer
With Collateral Without
and mortgage
Collateral
Normal
Normal
1%
1%
Potential risk
Inadequate performance
3%
5%
With Problems
Substandard
12%
25%
High Insolvency
Risk Doubtful
25%
50%
Loss
Loss
50%
100%
Technical
Failure Technical Failure
100%
100%
2. Reserve requirements
on bank assets are applied only to classified assets.
3. The legal lending
limit is 15% with collateral and 10% without collateral. A single
client cannot be loaned more than 25% of the loan portfolio. Loans can
go up to
300% of the client¹s equity; this limit is measured by adding the
obligation to the
total banking system.
4. The investment
portfolio is categorized.
5. The following system
is used to categorize the investment portfolio:
a) Hold-to-maturity: to maintain the investment minimum per year. The accounting
valuation corresponds to the purchase price adjusted by the investment
rate
of return.
b) Available-for-sale: to keep the investment for a minimum of three months.
6. The valuation of
the portfolio corresponds to the market value of the investment.
Revaluation or devaluation affects the net worth of the bank. The trade
portfolio
is marked to market monthly and directly affects the profit and loss statement.
VIII Liabilities
1. Minimum reserve
requirements are as follows:
Demand deposits 60% or more on account with the Central Bank
Foreign Currency Up to 40% immovable on account in New York.
Others Up to 5% of reserves in liquid securities in specific countries
The formula for calculation of reserves is the percentage of total deposits.
There are three types of equity reserves:
Legal reserve from 5% of capital to 20%
Statutory reserve defined by each entity¹s statute
Voluntary reserve defined by the entity
2. Deposits can be
accepted in local or foreign currency.
Reserve requirements are as follows:
Categories of Deposits
Current
Up to 89 days
20%
90-179 days
15%
180- 365 days
10%
More than 365 days
0%
3. There is no limit
on the amount of deposits a banking institution may accept.
4. There is no concentration
limit for deposits. The formula for calculating the
level of liquidity is the percentage of total deposits per category.