Argentina’s Frances Leads Banks Lower on Capital Rules

(Corrects that the regulation is related to capital requirements in headline and third paragraph. Corrects fourth paragraph to show the requirements apply before dividend payments.)

BBVA Banco Frances SA (FRAN), the Argentine unit of Spain’s Banco Bilbao Vizcaya Argentaria, led losses among members of Argentina’s benchmark Merval index after the central bank increased capital requirements.

Frances fell 5.4 percent to 9.6 pesos at 1:05 p.m. in Buenos Aires, the steepest fall in more than two months. The Merval index retreated 1.6 percent.

The new capital requirement “is making the stocks fall as it will cap the amount they can pay in dividends,” Marcelo Olguin, chief economist at SBS Soc. de Bolsa SA, said in a phone interview.

Argentine banks will be required to hold an extra 75 percent of their minimum capital requirements before dividend payments, up from the current 30 percent, the bank said yesterday in an e-mailed statement. The central bank said that the measure, which will be applied gradually starting Feb. 1 through December, seeks to comply with the Basel Committee on Banking Supervision.

“It has the double purpose of giving more security to savers, as well as increasing the system’s resources to expand credit,” the central bank said in the statement.

Banco Frances paid 804 million pesos ($185 million) in dividends last year, SBS said in an e-mailed note today. Banco Macro SA (BMA) followed with 505 million pesos and Grupo Financiero Galicia SA (GGAL) paid 24.8 million pesos.

Banco Macro retreated 2.5 percent to 11.8 pesos, Grupo Galicia dropped 2.9 percent to 3.65 pesos. Banco Hipotecario SA (BHIP) fell 2.8 percent to 1.72 pesos.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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