Argentina just pulled the most 'only in Argentina' thing ever on Citibank Argentina

88m3

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  • APR. 2, 2015, 1:00 PM
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cristina-fernandez-18.jpg
ReutersArgentine President Cristina Fernandez de Kirchner.
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Argentina just pulled a complete and total "Argentina" and sacked the head of Citibank in the country.

The Argentine government said Citibank Argentina CEO Gabriel Ribisich, who has led the bank since 2013, was fired because he "ignored" local laws.

Citi has also been banned from the Argentine securities market.

Those watching the drama that is the Argentine government versus a group of holdout hedge fund creditors may have seen this twist coming. Last month, Citi got in the middle of this truly epic knockdown, drag-out fight, and that was bound to result in some ugliness.

"Argentina still can’t point to a single law that Citibank Argentina has broken," said a source close to the situation. "This has nothing to do with Argentine law or Citi being caught in a conflict of laws. This is just thuggish retaliation against Citi for dropping its appeal and thus ceasing to provide legal assistance to Argentina in Argentina’s ongoing campaign to poke holes in the pari passu injunction — which only shows how determined Argentina is to avoid negotiations of any kind with any percentage of its creditors."

A group of hedge funds led by Elliott Management's Paul Singer (and known as NML) have been suing Argentina for over $1.3 billion in sovereign debt dating back to 2001 — an amount that is 100 cents on the dollar of their investment. Argentina has refused to pay that amount because more than 90% of investors in the same debt agreed to a haircut on their repayment.

That refusal pushed Argentina into default last summer, but since then the country has been trying every trick in the book to force custody banks to defy a US judge's order and pay all the investors but NML.

One trick was to "change" the legal jurisdiction of the bonds to Buenos Aires so an Argentine judge could deal with the matter. However, custody banks don't want to mess with Judge Thomas Griesa, the US judge, so that has not worked for Argentina.

That's where things got messy for Citi. The bank tried to play nice with Argentina and asked Judge Griesa if it could disperse funds to Argentina's investors. Neither Judge Griesa nor NML would allow that.

paul-singer-18.png
WikimediaPaul Singer, CEO of Elliott Management.

“NML and other creditors reached an agreement with Citibank, according to which Citibank agreed not to appeal the court’s determination that the pari passu injunction covers all of Argentina’s exchange bonds," NML said in a statement. "Judge Griesa approved this agreement, which applies only to Citibank and was specifically tailored to address the unique circumstances facing Citi Argentina after Citibank announced it was exiting the custody business in Argentina.”

Those "unique circumstances" included threats of retaliation from the Argentine government. At the time it was not totally clear what retaliation meant, but the word thrown around by sources close to the situation was "draconian."

So Citi pull up stakes and take its custody business out of the country — politicians were talking about revoking the bank's operating license anyway. The bank said that in doing business in Argentina, it faced an “unprecedented international conflict of laws.”

The problem is that Argentina wasn't having that, however. High level politicians said the Citi would in no way get to leave the country.

The creditors, seeing that these threats were getting serious, allowed Citi to pay investors so it could begin the process of taking its custody business out of Buenos Aires (other custody banks were not allowed to pay, and the country remains in default).

"Argentina can make [Citi's exit] a very difficult, long and drawn out process," said David Fernandez, a public finance lawyer at Buchanan, Ingersoll & Rooney told Business Insider. "But if somebody doesn't want to do the business, eventually they're going to find their way out of it."

Sure, but they might get a little bruised in the process.



Read more: http://www.businessinsider.com/argentina-sacks-citi-argentina-ceo-2015-4#ixzz3WBV9ZXzY

When you get that dream job don't let it be in Argentina etc. :heh:


@Domingo Halliburton @ExodusNirvana @Futuristic Eskimo
 
NaiSim

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They should take out a hit on that Singer fukk.
 
Domingo Halliburton

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This is what it looks like when Argentina tries to embarrass your entire company in front of the world

By Linette Lopez20 hours ago
After suspending Citibank's access to Argentine capital markets and sacking the bank's CEO in the country, Argentine authorities will perform an "integral inspection" on the banks headquarters, according to the country's central bank head, Alejandro Vanoli.

"We want to know, without a doubt, given the fact that it's now headless, that the bank still has the legal infrastructure to guarantee that there are no problems with clients and employees," Vanoli told Argentine paper Tiempo Argentina.

Citibank Argentina CEO Gabriel Ribisich, who has led the bank since 2013, was fired last week because he "ignored" local laws.

Yes, that's vague, so here's what happened:

Argentina wanted Citibank's custody business to pay out creditors in violation of an order from the US judge presiding over the country's decade-old lawsuit with a group of hedge funds known collectively as NML.

Judge Thomas Griesa's basic order, which pushed Argentina into default this summer, was that Argentina cannot pay some creditors who bought Argentine sovereign debt dating to 2001 and not others.

Argentina tried to get around that order by putting the bonds in question under its own jurisdiction — essentially waving a magic wand and making Judge Griesa's authority disappear.

Unfortunately international law doesn't quote work that way exactly, and since Citi didn't want to violate the law, it came to an agreement with the Court and NML so that it could take its custody business out of Argentina altogether.

To Argentina this means as follows (from Tiempo Argentina):

Valoni, in tune with the rest of the government, headed by the Minister of the Economy, Axel [Kicillof], is convinced that Citi did not play fairly and established a tacit agreement (which was ultimately very convenient) with the New York Judge Thomas Griesa and NML in order to make a joke out of Argentine law.

So this is about pride, people.

And of course, the over $1.3 billion NML has said Argentina has owed it for over a decade.


"Citibank did not have to consult (Thomas) Griesa and should've acted in accordance with Argentine law," Vanoli said in an interview. "The response from the financial system is out of line. Of course, it's expected because it's the attitude they've always had, it's always defended corporations.

"They're accustomed to the Superintendents of Banks and the Central Bank [Argentine regulators] always being passive but it's not that way anymore because now mechanisms of control and regulation exist to avoid abuses ... "

Argentina said at first that Citi would in no way be able to take its business out of the country. But that's tough to stop. Argentina can make Citi's exit "a very difficult, long and drawn-out process," David Fernandez, a public finance lawyer at Buchanan, Ingersoll & Rooney told Business Insider. "But if somebody doesn't want to do the business, eventually they're going to find their way out of it."

The key there is "long and drawn out." The way Argentina sounds right now, it's ready for battle.

"There is a double standard with Argentina," said Vanoli in an interview this weekend. "When regulatory entities in the United States and Europe impose multimillion dollar finds on financial firms that violate the law, no one says anything. Meanwhile over here when the same thing happens they start talking about how we're "Chavez-ising' the economy."

Yes, that was a reference to late Venezuelan leader Hugo Chavez.

And yes, Vanoli was comparing sacking a private company's CEO and raiding its offices to levying a fine.

So that's where we're at, people.
 
superunknown23

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A pathetic country in freefall. They always borrow like crazy, then bytch when it's time to pay up.
They've defaulted 3 times in the last 20 years!
The funny thing is how other South American countries don't even bother defending them. They view themselves as the gringos of South America and they're racist as fukk.
Not surprisingly, most of Latin America was rooting for Germany in the World Cup final:mjlol:
 
Poh SIti Dawn

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Can someone elaborate? I understand that Citibank wants to be paid back but Argentina won't, but what was the hedge fund for and why won't they pay them back?
 
Domingo Halliburton

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Monsieur. Fox said:
Can someone elaborate? I understand that Citibank wants to be paid back but Argentina won't, but what was the hedge fund for and why won't they pay them back?
Click to expand...

the hedge fund is referred to as a vulture fund. They bought argentinas debt when they defaulted years ago. A lot of their creditors decided to take haircuts and work something out with argentina, they did not. The hedge fund wants paid in full and international judges and US judges have ruled in their favor that they must be paid back in full. The courts have ruled that this hedge fund must be paid before other creditors. Citibank being the custodian of these funds did not want to violate international law decided not to make payments to other creditors like Argentina wanted and are now trying to get rid of Citi in their country.
 
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