• by IPS Correspondents (buenos aires)
• Tuesday, December 27, 1994
• Inter Press Service

BUENOS AIRES, Dic 27 (IPS) - The Argentine government said the local financial system is in good health, and denied rumours that a number of banks are in serious trouble due to the crisis that broke out last week in Mexico.

Finance Secretary Roque Maccarone denied statements by a member of the Extrader Bank's board of directors, who said 10 banks are facing serious problems of lack of liquidity, aggravated by Mexico's recent economic crisis.

The controversy was triggered on Monday when the deficit of the Extrader Bank - which was bailed out by another financial entity - was revealed. The stock market fell an average of 5.4 percent, and interest rates reached 40 percent.

The drop in stock market values, which ceased only on Tuesday, was compared to a recovery in the principal Latin American stock exchanges - including Mexico's, which rose nearly one percent - and was attributed to fear of a possible collapse of the banking sector.

"After the Mexican crisis the large international investment banks closed their faucets and withdrew a lot of money," said Extrader director Juan de Angelis, explaining the bank's trouble.

Maccarone admitted that some investors who see Latin America as a single bloc did withdraw their capital, but he said the banking crisis in Argentina is limited to the Extrader Bank.

The official called de Angelis' statements "irresponsible" and said "the Argentine financial system is in good health."

Central Bank vice-president Pedro Pou also denied that the banking sector is in trouble, claiming the Extrader Bank's crisis can be explained by "not very cautious" investment in public titles that have been depreciating since May.

"The Superintendency of Banks has been consulting each one of those entities and has failed to find a similar problem," said Pou, acting head of the Central Bank while its president is away.

Pou gave little importance to the Extrader situation, saying the bank has 30 million dollars of deposits in a financial system in which 30 billion dollars are managed.

However, he did say he was worried about "the concern generated in other markets because of the temporary situation of a single entity."

On Monday, average stock market values fell 5.4 percent, a fall that totals an accumulated 21 percent so far this year, and nearly 14 percent since the 40 percent devaluation of the Mexican peso.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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