Argentine banks prepared to weather storm

Argentine banks prepared to weather storm

Loans Corporate & Sovereign Strategy Capital Markets Economy & Policy Structured Finance Argentina

Argentina's banking sector is well positioned to survive the latest financial crisis, at least compared to other industries in the country, LatinFinance has heard.

"In general, the asset quality of the banks is very strong because they have operated in crisis mode for a while," said Robert Stoll, director of Latin American financial institutions at Fitch Ratings. "The banks' loan-to-asset ratio and impaired loan portfolio remain low," he added.

For example, Banco Macro's loan portfolio equals roughly 69% of its total assets, while BBVA Argentina's loans come to 65%. The two banks' impaired loan balance, however, stands below 3%, Stoll said.

"They are sitting on depositor funds, but not making risky or long-term loans," Stoll said, adding that Banco Macro has $6.1bn in deposits.

Fitch had rated Banco Macro and BBVA Argentina on the same level as the sovereign, but last week it downgraded Argentina's ratings by two notches to CCC from B. S&P Global, meanwhile, cut Argentina to B- from B.

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