Increased government control not to affect major banks' strategies - analyst

- Wednesday, April 27, 2011

Increased government control not to affect major banks' strategies - analyst

The Argentine government's removal of a 5% cap on voting rights that social security agency ANSES can hold in banks and other companies will likely have no significant effect on some of the country's largest banks, the chief economist at local financial services group Grupo SBS, Marcelo Olguín, told BNamericas.

Earlier this month, President Cristina Fernández announced the removal of a cap on voting rights that ANSES can hold in 42 local companies. The agency's ownership in these firms came as a result of the nationalization of the country's mandatory private pension system in 2008.

ANSES' stakes in banks are minority holdings, which will not have an impact over their management control, and the designation of the new board members is being made through a consensus, Olguín noted.

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On Tuesday (Apr 26), ANSES named the government's deputy economy minister as its second board member on Banco Macro (NYSE: BMA), where it holds a 31% stake, and another one at the country's biggest oil company, YPF.

ANSES could also appoint its first board members at the country's largest locally owned bank, Banco Galicia, and at Banco Patagonia at their respective annual shareholders' meetings on Wednesday.

ANSES controls 20.4% of Banco Galicia's parent company, Grupo Galicia (Nasdaq: GGAL), while federally controlled Brazilian bank Banco do Brasil (BB) owns a 51% stake in Patagonia.

The social security agency also owns 7.5% in BBVA Banco Francés, a unit of Spain's BBVA (NYSE: BBVA), and 4.87% of Banco Hipotecario, in which the government has a non-controlling majority stake.

The cap removal had raised concerns for some market agents such as Moody's and Deutsche Bank (NYSE: DB), pointing to the potential risk of greater government influence on commercial and strategic decisions.

Deutsche Bank said the issue could be of particular concern for the banking sector, as congress is currently debating a bill presented last year that calls for banks to be defined as a public service, puts caps on interest rates and limits market shares to 8%.

SIDERAR A MORE COMPLICATED ISSUE

The case of flat steelmaker Siderar - a unit of Ternium (NYSE: TX), where ANSES has a 26.0% stake - is more complicated than those of the banks. There are notorious differences between ANSES and the company regarding the appointment of board members and the distribution of dividends, Olguín said.

Last week, Luxembourg-based Ternium said it would take legal action against the presidential decree, although according to the new regulations ANSES will not have majority control of the company.

ANSES' stakes exceeds 20% in the case of 15 local firms, which include some of the country's largest companies in the financial, energy, telecommunications and steel sectors.