>--- Original Message --- >From: "sf_adam.rm" <[EMAIL PROTECTED]> >To: [EMAIL PROTECTED] >Date: 1/7/02 9:18:26 PM >
>* Rich Are Hit by Argentina's Crisis * Citigroup Unit Quits Argentine >Bank * Argentine Crisis Hits Spanish Firms * French companies' >exposure to the Argentinian crisis * Xinhua: Argentina Buenos Aires >Stock Exchange closed til Wednesday > >Editor's Note: Just some short articles of note.--Adam > >Monday January 7 10:59 PM ET > >Rich Are Hit by Argentina's Crisis > >By TONY SMITH, AP Business Writer > >BUENOS AIRES, Argentina (AP) - After months of bracing for fallout >from a default and devaluation in Argentina, Latin nations breathed >easier Monday after apparently escaping the brunt of Argentina's >``Tango effect.'' > >In the throes of an agonizing slump for nearly four years and on its >fifth president in two weeks, Argentina on Sunday announced it was >cutting the value of the peso by 29 percent. After a decade of one-to- >one parity, the dollar now buys 1.4 pesos. > >Just days earlier, South America's No. 2 economy formally defaulted >on its massive $141 billion public debt, missing a $28 million >payment on a eurobond for the first time. > >Just as Mexico's 1994 meltdown toppled the emerging markets of >smaller nations like dominos and was labeled the ``Tequila crisis,'' >analysts for months now had been predicting similar fallout from >Argentina's collapse and dubbed it the ``Tango effect.'' > >``Normally it's emerging markets that bear the brunt,'' said Raquel >Fleury, analyst at Tendencias, a consultancy in Sao Paulo, Brazil. >``This time, it's the opposite - it's the banks and corporates of the >rich world that are the first to be hit.'' > >Latin American markets from Brazil to Mexico shrugged off the news >from Argentina, with stocks and currencies remaining stable. In Peru, >the Sol strengthened, as did South Africa's rand. > >``The effect is very, very limited. We have a different situation,'' >said Peru's finance minister, Pedro Pablo Kuczynski. > >In the boardrooms in rich, industrial markets, there was more concern >after some banks and utilities operating in Argentina found >themselves staring at balance sheets that lost millions of dollars >overnight from the devaluation. > >Outlining the devaluation Sunday, Economy Minister Jorge Remes >Lenicov announced telephone, electricity, water and gas bills would >be switched from dollars to pesos at the old, one-to-one rate. > >The first $100,000 of dollar-denominated bank loans - an estimated 25 >percent of bank debt - would also be converted to pesos at parity, he >said. > >That spells trouble for phone companies such as France Telecom, >Telecom Italia and Spain's Telefonica, and other utilities such as >Ontario-based Azurix, British Gas and Italy's Camuzzi. > >Merrill Lynch cut medium-term recommendations Monday on Perez >Companc, an Argentine energy group, MetroGas, owned by British Gas, >and Enron's Transportadora de Gas del Sur on the ``greater >uncertainty and the negative effects'' produced by Remes Lenicov's >plan. > >Banks including U.S. giants Citigroup Inc. and FleetBoston Financial >Corp., Spain's Santander Centro Hispano and Banco Bilbao Vizcaya >Argentaria and Britain's HSBC are also on the frontline. > >Dutch banking and insurance group ING announced Monday it was taking >a provision of $60 million in the fourth quarter to cover its >Argentine exposure, following similar recent steps by Spanish banks. > >Spain, which accounts for about a quarter of all foreign investment >in Argentina - second only to United States' one-third share - is >likely to be hardest hit. > >Spanish-controlled assets equal 20 percent of Argentina's $260 >billion gross domestic product and 3 percent of Spain's. > >Up to 12 percent of Telefonica's global operations are Argentine- >based and it makes 11.5 percent of its earnings here. > >Madrid's stock market index fell another 3.4 percent Monday morning >to 8.177 points after dropping 1.1 percent Friday ahead of the >devaluation. > >As the dust settled Monday, there were signs U.S. companies, whose >interests are spread more evenly throughout the Argentine economy >than Spanish firms', were offloading Argentine assets. > >Mexico's Banamex bank, a unit of Citigroup Inc., said Monday it sold >its majority stake in Argentina's Banco Bansud to local bank, Macro, >for $65 million. > >Banamex spokesman Jose Ortiz Izquierdo said the sale would ``reduce >the risk exposure'' in Argentina. > >Foreign banks here have complained the new measures would cost them >as much as $12 billion, while the government claims their losses >would be more like $5 billion. It is planning to compensate them with >bonds financed by a 20 percent levy on oil exports over the next five >years. But Argentina's oil giant, YPF, is itself owned by Spain's >Repsol. > >The recovery of Argentina's banking system will be crucial to the >country's revival, said John Welch, chief Latin American economist at >Barclays Capital in New York. > >He predicts Argentina's economy will shrink 6 percent this year and >about half the dollar loans and a quarter of peso loans will go bad. > >``We could be talking $16 billion losses all told'' for banks, Welch >said. ``The government will have to create some sort of >recapitalization scheme. The recovery of the banking system is >crucial.'' > > >Monday January 7, 4:09 pm Eastern Time > >Citigroup Unit Quits Argentine Bank > >U.S.-Owned Banamex Sells Majority Stake in Argentina's Banco Bansud > >MEXICO CITY (AP) -- Mexico's Banamex bank, a unit of U.S.-based >Citigroup Inc., said Monday it has sold its majority stake in >Argentina's Banco Bansud -- the first move by a large foreign firm to >exit Argentina following the country's financial collapse. > >The terms of the sale, to Argentina's Banco Macro S.A., weren't >divulged. But a statement from the Buenos Aires Stock Exchange listed >the value of the transaction at $65 million. > >Jose Ortiz Izquierdo, a spokesman for Banamex in Mexico City, said >the sale was carried out ``to reduce the (bank's) risk exposure'' in >Argentina, where the government has defaulted on public debt, >devalued the currency and limited bank withdrawals. > >Ortiz Izquierdo said he had no immediate information on whether the >sale price represented a significant lowering of the value of assets, >or whether Banamex would report a loss on its Argentina holdings for >the year. > >Banamex had held 59.58 percent of Bansud's capital and 76.17 percent >of its voting rights. > >Banamex first bought a piece of Bansud in March 1992, and raised its >stake in November 1998 -- just as Argentina was entering what turned >out to be a three-year recession. > >Citigroup purchased Banamex in early 2001 for $12.5 billion. > >Banks, many of them foreign-owned, are particularly vulnerable to >Argentina's financial problems because they hold both government and >private debt in the country. > >In a plan announced Sunday, Argentina's new government said the first >$100,000 of dollar-based mortgages, personal loans and small-business >loans will be converted into pesos at the old one-to-one rate. > >Outstanding debt will remain in dollars. Banks will be compensated >for any losses by hard-currency government bonds financed through a >new tax on oil exports over the next five years. > > >Argentine Crisis Hits Spanish Firms > >By JEROME SOCOLOVSKY, Associated Press Writer > >MADRID, Spain (AP) - Enterprises forming the backbone of Spain's >economy began tallying up billions of dollars in losses Monday after >Argentina devalued its currency nearly 30 percent. > >Analysts expect the move to trigger losses of $3 billion for banks, >energy and telecommunications firms, hotels, an airline and other >companies that have pumped more than $30 billion into Argentina's >economy the past decade. > >Spain accounts for about a quarter of all foreign investment in >Argentina - second only to the United States, which holds a one-third >share. Spanish-controlled assets equal 20 percent of Argentina's >gross domestic product. > >The Madrid stock market index, IBEX-35, fell another 3.4 percent >Monday to 8,177 points after losing 1.1 percent Friday in >anticipation of the weekend devaluation. The devaluation ended the >Argentine peso's long-standing parity to the dollar and set an >exchange ratio of 1.4 to 1. > >Spanish Finance Minister Rodrigo Rato warned the Argentine government >against thinking it could solve economic problems without consulting >international investors. He called for a ``consensus with creditors'' >to uphold confidence in the Argentine economy. > >While stock prices took a dive across the board in major European >markets in response to the devaluation, blue chips on the Madrid >exchange with exposure to Argentina suffered the most. > >Telecommunications giant Telefonica and banks Santander Central >Hispano and Banco Bilbao Vizcaya Argentaria fell about 4 percent >after being hit with selloffs on the expectation that their profits >would be cut by up to 5 percent. > >Oil producer Repsol-YPF, which pumps 732,000 barrels a day from >Argentine fields, saw its shares drop nearly 8 percent in early >trading. > >Reports said Argentine President Eduardo Duhalde planned to levy a >tax on petroleum exports of up to 25 percent. > >Spanish companies said executives were awaiting more details about >the impact of the devaluation ahead of meetings with Argentine >officials expected later this week. > >The financial newspaper, Expansion, reported that Repsol-YPF and >Telefonica held talks with utilities Endesa and Gas Natural over >joint legal action to challenge the scrapping of dollar references >for rates charged by their Argentine subsidiaries. > >Another Spanish newspaper said the devaluation was unfair to Spain, >which has lobbied for International Monetary Fund (news - web sites)- >backed loans to Argentina and helped build the nation's private >sector infrastructure in the 1990s following decades of political and >economic instability. > >``It's paradoxical and it's grave that Spain should be the target of >the adjustment when it is one of the few countries that showed with >words and deeds the solidarity and the help this country needed,'' >the ABC daily said in an editorial. > >Prospects were especially bad for Santander and BBVA, Spain's two >largest banks, which together control about one-fifth of Argentina's >banking system. > >While their loans can now be repaid in devalued pesos, the banks >would be forced to maintain dollar values of savings accounts, >according to Spanish press reports. > >The Merrill Lynch brokerage house recommended that investors sell >shares in BBVA, estimating the crisis would cost the bank $940 >million. Santander is expected to lose $1 billion in earnings. > > >La Tribune: French companies' exposure to the Argentinian crisis > > > >Story Filed: Tuesday, January 08, 2002 9:17 PM EST > >Jan 8, 2002, (La Tribune /FT Information via COMTEX) -- France is the >third largest foreign investor in Argentina after the US and Spain >having put 9.5bn euros into the troubled country between 1994 and >2000. French companies have been reticent about their levels of >exposure in the country, with only the Suez group having officially >announced that it has added a supplementary 35m euros to the original >100m euros it made in provisions for the risks it was exposed to in >emerging markets. French car parts manufacturer Valeo has decided to >close its Argentinian factory down and transfer it to Brazil this >year. > >French hypermarket group Carrefour has been present in Argentina >since 1982, controls 30 per cent of the market and is the second >largest employer in the country. It was making no comment yesterday. >French electricity company EDF owns 90 per cent of Argentinian >counterpart Edenor which supplies 2.26 million customers with >electricity, but it is too early to gauge the impact the crisis will >have on the French group. Meanwhile, French bank Credit Agricole has >69.9 per cent of Argentinian bank Banco Bisel, which is the eight >largest bank in terms of deposits, and BNP Paribas has about 20 >branches in Argentina but is not present in the retail banking market >there. Franco-Belgian banking group Dexia has announced that its >exposure to Argentina is limited to 40m euros, half of which is >already covered by provisions. > >Abstracted from La Tribune > >El Pais: Spanish companies lose Pta10bn on stock market over >Argentinian crisis -- (Las empresas espanolas pierden 10.000 millones >en Bolsa por la crisis argentina) > > > >Story Filed: Tuesday, January 08, 2002 9:17 PM EST > >Jan 8, 2002, (El Pais /FT Information via COMTEX) -- Spanish >companies with interests in Argentina yesterday suffered a sharp drop >on the stock market thanks to the new Argentinian government's >emergency plan. The worst-affected was Spanish-Argentine petro- >chemicals group Repsol YPF, which saw its value drop 7.84 per cent. >Spanish telecommunications giant Telefonica and Spanish banks >Santander Central Hispano (SCH) and Banco Bilbao Vizcaya Argentaria >(BBVA) had 4.44, 4.37 and 3 per cent respectively wiped off their >values. > >These companies, together with Spanish electricity and natural gas >companies Endesa and Gas Natural, lost 10.036bn euros (Pta1,660bn) >yesterday, dragging the Ibex 35 index down 3.38 per cent and the >general index down 2.88 per cent. The companies and Spanish banks >believe it is too early to give any figures regarding the emergency >plan approved by Argentine president Eduardo Duhalde on Sunday. One >Spanish analyst says the measures adopted are extremely negative for >Spanish companies' interests. Abstracted from El Pais > >Copyright 2002: Financial Times Information. All rights reserved > > >*****Story Filed: Monday, January 07, 2002 8:35 PM EST > >BUENOS AIRES, Jan 7, 2002 (Xinhua via COMTEX) -- The Buenos Aires >Stock Exchange, the third largest market in Latin America, Monday >announced the suspension of its transactions until Wednesday, when >the banking and foreign exchange holiday decreed by the government >expires. > >The decision was made on the first working day of the year after an >effective 40 percent devaluation of the Argentine peso late on >Sunday, which put an end to the peso's decade-old one-to-one peg to >the U.S. dollar. > >A communique issued by the Buenos Aires Stock Market MERVAL said that >operations would remain suspended until Wednesday, due to the banking >and foreign exchange holiday ordered by the Argentina Central Bank >for Monday and Tuesday. > >Banking operations were limited on Monday, with no money exchange >activities, but only certain transactions like the payment of >pensions and money withdrawals related to salaries. > >The banking activity has been restricted over the past 20 days due to >Argentina's economic, financial and political crises, which led to >the resignation of President Fernando De la Rua and his successor >Adolfo Rodriguez Saa in the past three weeks. > >Copyright 2002 XINHUA NEWS AGENCY > >Copyright © 2002, Xinhua News Agency, all rights reserved > > > > >To unsubscribe from this group, send an email to: >[EMAIL PROTECTED] > > > >Your use of Yahoo! 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