Banks Thwarting Stickups in Argentina by Offering Customers Free Accounts

Carolina Piparo, an eight-months pregnant Argentine state worker, was shot by robbers who stole the $20,000 she had just withdrawn from a bank to buy a house. Her baby died because of the wounds.

The July 20 attack in the city of La Plata spurred the central bank to introduce regulations that take effect this week to encourage Argentines to use the financial system instead of paying cash for real estate, cars and other big-ticket items. Banks must now offer free accounts and, from Nov. 1, charge no more than 5 pesos ($1.27) on transfers of up to 50,000 pesos.

“This requirement is going to help us protect our clients,” said Juan Carlos Nougues, president of Banco Supervielle SA. While he was meeting with a Bloomberg reporter in his downtown Buenos Aires office on Sept. 28, Nougues was informed that a branch in the capital’s suburbs had just been robbed. “We have to encourage people to be aware of all the tools available” in the financial system to reduce crime, he said.

Robberies of people leaving banks, known as “salideras,” rose to 4,998 in the first half of this year, 24 percent more than the 4,012 that took place in the whole of 2009, according to the office of Francisco De Narvaez, a congressman for the Peronismo Federal party that opposes President Cristina Fernandez de Kirchner’s Victory Front alliance.

Armed robberies in the country of 42 million totaled 398,361 in 2008, according to the Justice Ministry, which doesn’t offer comparative data for earlier years.

‘Crime Map’

De Narvaez’s office maintains an online “Crime Map” that enables citizens to report robberies, suspected drug sales and rape.

The new measures may not be enough to convince Argentines to drop their mistrust of banks and overcome their reluctance to make personal finance information available to tax authorities, said Federico Rey-Marino, a bank analyst at Raymond James in Buenos Aires.

“Argentines are notoriously adverse to bank transactions,” Rey-Marino said in a Sept. 22 phone interview. “About 80 percent of all savings are in dollars in Argentina, some in local banks, some in foreign banks and a lot ‘under the mattress.’”

About 39 percent of adults in Argentina use banks, compared with 45 percent in Brazil and 90 percent in European countries, said Federico Juan, an analyst at Banca & Riesgo, a Buenos Aires research company. Bank lending in relation to the size of the economy is 14 percent in Argentina compared with more than 50 percent in neighboring Brazil, Juan said.

Bank Deposits

Bank deposits in Argentina are equivalent to 23 percent of gross domestic product compared with 40 percent in Brazil, Juan said.

Argentines have a “cultural” mistrust of banks thanks to a history of losing bank savings, said Emilio Lanza, general manager of the Banco de la Ciudad de Buenos Aires.

In late 1989, the government of President Carlos Menem forced savers to exchange certificates of deposit for 10-year bonds. Twelve years later, then-Economy Minister Domingo Cavallo restricted withdrawals from accounts to avoid a run on banks as the nation defaulted on a record $95 billion of debt.

In January 2002, with Cavallo’s restrictions still in force, President Eduardo Duhalde’s government forced banks to convert dollar-denominated deposits into pesos at a rate of 1.4 pesos per dollar. Within six months the U.S. currency traded as high as 3.86 pesos.

‘Fresh’ Memories

“The memories are still fresh,” said Nestor Walenten, president of the Buenos Aires-based Argentine Real Estate Chamber, who estimates 99 percent of home purchases are paid for in cash.

Taxes are another deterrent to using the financial system, said Banco Supervielle’s Nougues, who is also president of Banco Regional de Cuyo SA. Both banks are owned by closely held Grupo Supervielle. Banco Supervielle is Argentina’s 16th bank in terms of deposits and Banco Regional de Cuyo 35th, according to central bank data.

Most electronic transfers and check payments are subject to a financial transactions tax of 0.6 percent for both payer and payee. In addition, an underground economy that facilitates evasion of taxes on income and personal wealth leads to large amounts of capital being kept away from the financial system and out of sight of revenue officials, said Nougues.

The surge in salideras and the availability of free accounts and debit cards has led to some increase in applications to open accounts, said Banco de la Ciudad’s Lanza.

Prevent Robberies

“We believe free accounts will increase the use of banks in Argentina,” and help prevent robberies outside banks, Lanza said in an Oct. 13 telephone interview.

The bank, which is owned by the city of Buenos Aires, started offering charge-free accounts Sept. 15, before the central bank resolution took effect. In the first few days, requests for new accounts rose 50 percent, though the rate has since dropped off, Lanza said.

Diego Muniz, a spokesman for the Association of Private Argentine Banks, didn’t return two requests for comment left by Bloomberg News. Ruben Mattone, a spokesman for the Argentine Banks Association, declined to comment.

In addition to requiring free accounts, the attack on Piparo, 34, and the death of her unborn child, who would have been named Isidro, prompted Congress to enact rules to reduce crime inside and outside banks. Banks must set up screens that give more privacy to cashiers and customers, install equipment that blocks mobile phones and are now legally responsible for robberies committed outside branches with the connivance of employees.

“We must ask ourselves why we’ve gotten used to taking care of ourselves where there are people who should be dedicated to taking care of us,” Piparo’s brother, Matias, told reporters on Aug. 5. “If we don’t change anything, Isidro’s death will have been in vain.”

To contact the reporters on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net; Rodrigo Orihuela in Buenos Aires at rorihuela@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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