BMA Banco Macro SA

By Maria Armental 

New accounting requirements aimed at establishing a common set of standards around the world hit Argentine banks in the middle of a recession and runaway inflation.

Four Argentine financial firms missed filing deadlines for their annual reports during the second quarter and were deemed delinquent by the U.S. Securities and Exchange Commission. The companies, which are required to make U.S. regulatory filings because they issue American depositary receipts, blamed the adoption of the International Financial Reporting Standards for the filing delay.

The firms are Grupo Financiero Galicia SA, whose largest holding is Banco de Galicia; Banco Macro SA; BBVA Banco Francés SA, the Argentine unit of Spain's Banco Bilbao Vizcaya Argentaria SA; and Grupo Supervielle SA, which owns Banco Supervielle.

At issue was a switch to IFRS accounting standards during skyrocketing inflation in Argentina. IFRS rules require companies to monitor inflation and implement special procedures for reporting in the currency of a hyperinflationary economy when the three-year cumulative inflation rate exceeds 100% for several months.

Argentina's economy has been considered hyperinflationary for accounting purposes since July 1, 2018, a determination that required the companies to account for that inflation.

Companies had to change their accounting and reporting practices and train staff to process adjustments for inflation in addition to restating comparative figures in financial reports to reflect the loss of purchasing power of the Argentine peso. All four firms have since filed the required reports.

The application of hyperinflation accounting under IFRS drove Grupo Galicia to a loss of 3.83 billion pesos in 2018 ($89.5 million at the current exchange rate), from a year-earlier profit of 7.28 billion pesos, according to its SEC filing.

Similarly, the BBVA Argentine unit swung to a loss of 1.57 billion pesos in 2018, compared with a profit of 1.86 billion pesos in 2017, it said in a filing.

Separately, BBVA disclosed this month that Argentine authorities are investigating it for alleged violations of anti-money-laundering and terrorist financing regulations. A representative for BBVA had no immediate comment for this article.

Grupo Supervielle reported a loss of 3.06 billion pesos in 2018, compared with a restated loss of 755.3 million pesos in 2017, according to its filing. Under the old accounting standards, it had reported a 2017 profit of 2.44 billion pesos. A representative for Grupo Supervielle said the firm opted to deploy the new standards in full, in line with the Argentine Central Bank's planned adoption.

Meanwhile, Banco Macro reported a net loss of 734.1 million pesos in 2018 under IFRS, compared with a profit of 6.02 billion pesos in 2017.

Representatives for Banco Macro, Grupo Galicia and the SEC didn't respond to requests for comment.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

June 24, 2019 05:44 ET (09:44 GMT)

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