By Taos Turner
BUENOS AIRES--Argentine banks will offer at least 15 billion
Argentine pesos ($3.3 billion) in investment-credit lines thanks to
new government rules that force them to do so, the Central Bank of
Argentina said Thursday.
The rules, which compel banks holding at least 1% of the
country's total deposits to lend 5% of their own deposits at
subsidized rates, aim to boost business investment at a time of
weakening economic growth.
Central Bank President Mercedes Marco del Pont said the best way
to create jobs and stimulate the economy is to set bank deposits
aside for this type of lending.
The new rules will affect the Argentine subsidiaries of several
large foreign banks, including Spain's Banco Santander SA (SAN,
SAN.MC) and Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC),
HSBC Holdings PLC (HBC, HSBA.LN, 0005.HK), and Citigroup Inc.
(C).
The interest rate on the loans will be set at Badlar plus four
percentage points. Badlar is the average interest rate on
fixed-term deposits above one million pesos ($221,238). Based on
data from June, that would put the annual rate for the new loans at
around 15%.
That is far below the annual rate of inflation, which most
economists have said likely totals around 25%. In recent years,
banks have been reluctant to lend below this level because of its
inherent risk, and expectations for future inflation that have long
been around 25% or 30%.
At least half of the loans must go to small businesses.
"This is very important as a symbolic gesture," said Nicolas
Dujovne, head of the consultancy Nicolas Dujovne y Asociados.
"Until now it had been taboo to touch the banking sector because of
concern about the consequences of doing so. This puts us in
unchartered waters."
Mr. Dujovne, who spent more than a decade as the chief economist
at Banco Galicia, one of the country's biggest banks, said the
government may now be tempted to further tap the banking
system.
"This won't cut that much into banks' earnings," he said. "The
most important thing is that it sets us on a new path with banks
and the potential expropriation of earnings and discretional use of
bank capital."
Banco Galicia is part of Grupo Financiero Galicia SA (GGAL.BA,
GGAL).
Argentine President Cristina Kirchner outlined the rules late
Wednesday, saying private-sector banks have made a lot of money in
Argentina and it is time for them to do more to spur growth.
"This will put some pressure on the banks' profitability,"
Moody's Investors Service analyst Valeria Azconegui said
Thursday.
Ms. Azconegui said bank lending rose at a quick pace in 2010 and
2011 but the growth rate has been slowing this year.
Write to Taos Turner at taos.turner@dowjones.com