Argentina’s Macro Tumbles as Government Caps Lending Rates

Banco Macro SA (BMA), Argentina’s largest lender by market share, dropped the most over two days in almost three months as the government capped interest rates on loans.

Banco Macro retreated 1.7 percent to 8.10 pesos at the close in Buenos Aires, extending its two-day decrease to 8.9 percent, the biggest since April 17.

“It’s a bad sign as it’s the first time the central bank uses its new charter that allows it to fix rates,” Juan Jose Vazquez, an analyst at Bull Market Brokers SA, said in a phone interview from Buenos Aires. “There’s a bit of an overreaction because banks are showing strong growth in deposits and the loans won’t represent a big part of their capital base.”

President Cristina Fernandez de Kirchner said in a July 4 speech that she will force the nation’s leading banks including the local units of Citigroup Inc. and HSBC Holdings Plc to lend to companies at a maximum rate of 400 basis points over the badlar, a 30-day deposit rate that provides a benchmark for loans. Badlar averaged 12.1 percent in June, about half the 24 percent annual inflation rate estimated by economists.

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