Argentina
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Cenbank likely to reduce capital requirement for banks in provinces

Bnamericas Published: Friday, June 17, 2005
Argentina's central bank, the BCRA, was planning to announce a series of new norms on Friday that would reduce the minimum capital requirement for banks and other financial institutions when operating in some of the country's provinces, a central bank spokesperson confirmed to BNamericas. According to local press, the current 15mn peso (US$5.2mn) minimum capital to open a bank would be reduced to 5mn pesos in Argentina's poorer provinces. On the other hand, the minimum to operate in the Buenos Aires province would be raised to 25mn pesos. The country is divided into 4 zones, each one of them having specific minimum capital requirements, based on the provinces' total deposits. "The measure is taken to increase banking penetration in a system that has left up to 90% of the population outside of the banking system due to the 2002 financial crisis," Karina Bande, senior consultant at Deloitte Argentina's corporate finance area told BNamericas. Economy Minister Roberto Lavagna reportedly said that there are some 179 towns in Argentina with up to 20,000 inhabitants, that do not have any financial services available. "However, the central bank should also relax other measures to spur loan growth in these provinces, such as credit risk and debtors classification," Bande added.

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