Argentine Bank Stocks Drop on Requirement for Low-Interest Loans

Argentine bank shares slid in Buenos Aires trading after regulators stiffened the requirements for lenders to provide a portion of their loans at interest rates that are well below inflation.

Banco Macro SA, Argentina’s second-largest bank by market capitalization, fell 1.7 percent as of 12:33 p.m. in Buenos Aires, the biggest decline on the benchmark Merval stock index. Grupo Financiero Galicia SA, the third-largest, lost 1.2 percent.

Under rules announced Wednesday, banks must lend at least 7.5 percent of their deposits at a maximum interest rate of 18 percent for at least 36 months to small and medium-sized companies. The regulation, which takes effect for the second half this year, compares with a previous requirement to lend 6.5 percent of deposits at a capped rate of 19 percent.

Argentine officials say the rules aim to promote job creation and stimulate economic growth, in keeping with the principles of social equality. The reality for banks is that they’ll have to lend a bigger portion of their funds at interest rates below the estimated inflation rate of 29 percent.

Bank deposits in the country totaled 928 billion pesos ($102 billion) in May, up 29 percent from a year earlier, while loans outstanding grew 25 percent to 651 billion pesos, according to the latest central bank data.

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