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Monday, January 31, 2011

Argentina Offering Customers Free Accounts

July 20 attack in the city of La Plata spurred the central bank to introduce regulations that take effect this week to encourage Argentines to use the financial system instead of paying cash for real estate, cars and other big-ticket items. Banks must now offer free accounts and, from Nov. 1, charge no more than 5 pesos ($1.27) on transfers of up to 50,000 pesos.

“This requirement is going to help us protect our clients,” said Juan Carlos Nougues, president of Banco Supervielle SA. While he was meeting with a Bloomberg reporter in his downtown Buenos Aires office on Sept. 28, Nougues was informed that a branch in the capital’s suburbs had just been robbed. “We have to encourage people to be aware of all the tools available” in the financial system to reduce crime, he said.

Robberies of people leaving banks, known as “salideras,” rose to 4,998 in the first half of this year, 24 percent more than the 4,012 that took place in the whole of 2009, according to the office of Francisco De Narvaez, a congressman for the Peronismo Federal party that opposes President Cristina Fernandez de Kirchner’s Victory Front alliance.

Armed robberies in the country of 42 million totaled 398,361 in 2008, according to the Justice Ministry, which doesn’t offer comparative data for earlier years.

‘Crime Map’

De Narvaez’s office maintains an online “Crime Map” that enables citizens to report robberies, suspected drug sales and rape.

The new measures may not be enough to convince Argentines to drop their mistrust of banks and overcome their reluctance to make personal finance information available to tax authorities, said Federico Rey-Marino, a bank analyst at Raymond James in Buenos Aires.

“Argentines are notoriously adverse to bank transactions,” Rey-Marino said in a Sept. 22 phone interview. “About 80 percent of all savings are in dollars in Argentina, some in local banks, some in foreign banks and a lot ‘under the mattress.’”

About 39 percent of adults in Argentina use banks, compared with 45 percent in Brazil and 90 percent in European countries, said Federico Juan, an analyst at Banca & Riesgo, a Buenos Aires research company. Bank lending in relation to the size of the economy is 14 percent in Argentina compared with more than 50 percent in neighboring Brazil, Juan said.

Bank Deposits

Bank deposits in Argentina are equivalent to 23 percent of gross domestic product compared with 40 percent in Brazil, Juan said.

Argentines have a “cultural” mistrust of banks thanks to a history of losing bank savings, said Emilio Lanza, general manager of the Banco de la Ciudad de Buenos Aires.

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