Bladex: Back to Basics
Aug 30, 2003
An ill-starred diversification plan at Bladex put it in the cross hairs of Argentina's collapse. But today the trade finance bank is recapitalized and focusing on traditional lending.
Bladex, the trade finance bank,
realized it was in trouble in
Argentina well before the country's
default in December 2001. Unlike
institutional investors that had begun
bailing out of Argentina, banks could
not cut and run overnight. Bladex had a
billion dollar in loans and credit lines at
stake, and long-standing client
relationships to think about. Bladex
executives knew that the country and
the bank's clients were in trouble, but
reckoned it could make it through,
managing risk as best it could.
When the government dismantled
Argentina's currency board in January
2002 and allowed the peso to float,
Bladex really began to feel the heat. The
peso quickly lost 75% of its value and
clients of Bladex, which lends in dollars,
faced the impossible task of repaying
their loans with a massively depreciated
currency. "[It was] the perfect financial
storm and combined everything that
could go wrong," says Jaime Rivera,
Bladex's recently appointed chief
executive officer. "Bladex found itself
with over $1 billion [in Argentina] when
the situation exploded." The bank is
only now recovering from its worst year
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