Argentine banks turn the corner
Reshaping the banking landscape
| Vicens: with 20% of banks' assets invested in public securities, the soverign default weighed heavily |
Argentina's banks suffered a triple whammy from the financial crisis that struck the country nearly four years ago. The first hit – which set in motion the turn of events that led to the eventual devaluation of the peso – came in November 2001.
With doubts emerging that the IMF would continue to prop up the economy and a real concern that the government would fail to repay its debt to its foreign creditors, thousands of Argentines, fearing for the safety of their deposits, rushed to their banks to get their money out.
As Paul Blustein, author of a book on the crisis, And The Money Kept Rolling In (And Out), notes: "A steadily increasing outflow of money from banks surged to full-scale flood stage during the final three days of November, when thousands of depositors queued up to pull $3.6 billion out of their accounts – about 6% of total deposits."
To stem the tide, the government restricted withdrawals to $250 million a week.