Bladex: Back to Basics

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 ever....