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Argentina Closes Its Doors on Bank of New York Mellon

By: PanAm Post Staff - Aug 27, 2014, 4:45 pm

EspañolThe president of the Central Bank of Argentina (BCRA), Juan Carlos Fábrega, signed a resolution on Monday revoking the charter for Bank of New York Mellon (BNY Mellon) to operate in its country and serve as a paying agent for Argentina’s debt.

The Central Bank of Argentina took this measure while the country continues to battle with holdout creditors over defaulted bonds totaling US1.5 billion.

BNY Mellon, functioning as intermediary between the Argentinean government and its bondholders, withheld an interest payment of $539 million on orders from New York Judge Thomas Griesa. Judge Griesa has ruled that Argentina may not pay its creditors who accepted discounted restructured bonds unless it agrees to pay its holdout creditors as well.

“The superintendent of financial entities and exchanges has revoked authorization for Bank of New York-Mellon (BNY Mellon) to work in Argentina,” announced Jorge Capitanich, chief of the Cabinet of Ministers.

BRCA’s resolution orders to “rescind the authorization given to Mariel Verónica García Sturzenegger and María de la Cruz Solares to act in our country as the principal and stand-in representatives of The Bank of New York-Mellon.”

“The Bank of New York-Mellon did not actively register activities, or have valid operations during the period ending December 2012,” the resolution cited in its justification to prohibit BNY-Mellon’s operation in Argentina. The resolution also indicated that “it is the only [banking entity] that has not financed any residents of the country since January 2013.”

“It remains in evidence that substantial changes took place after the appointment of María de la Cruz Solares as principal representative and Mariel Verónica García Sturznegger as stand-in representative,” the resolution concluded.

The decision does not impact the positions of the paying agent in its New York location. The Argentinian government remains steadfast in its efforts to cancel its obligations with the US entity, which remain subject to Griesa’s prohibition on their payments.

Meanwhile, a group of investment funds, including George Soros’s Quantum Partners, has filed a lawsuit in London against BNY Mellon arguing the bank must free funds corresponding to bonds exchanged in Euros.

Judge Griesa has previously referred to Argentina’s attempts to shift jurisdiction away from the United States as “illegal.”

Sources: Reuters, La Nación.