Friday, March 27, 2015

CNV financial watchdog suspends Citibank from capital market

As long as the suspension stands, Citibank will not be able to operate in the local stock and bonds market, but will be able to continue with its retail activities.

The National Securities Commission (CNV) financial watchdog has suspended Citibank Argentina from the buying and selling of local long-term debt and equity-backed securities.

The “precautionary suspension” was ordered as the CNV considers the bank “did not act according to Argentine banking law” following the agreement signed with so called “vulture funds” in the ongoing case that faces the South American country with NML hedge fund over Argentine debt.

The CNV questioned Citibank’s "unilateral decision to abandon its Argentine custody business" and said the bank generates uncertainty among bondholders with the measure.

It also stressed the agreement signed by Citi worsens the current situation as it forbids a future bank to process interest payments.

In a press release, the CNV explained “there is grave danger and uncertainty in the current situation, as bondholders of Argentine restructured debt must receive interests payments corresponding to the BONAR PAR issued under Argentine Law on March 31st.” Bondholders will now receive payments through the Securities Central Depositary, Caja de Valores SA.

As long as the suspension stands, Citibank will not be able to operate in the local stock and bonds market, but will be able to continue with its retail activities.

Economy Minister Axel Kicillof had strongly questioned the financial entity earlier in the week, saying it “negotiated with vulture funds behind Argentina’s back.”