Word: argentina
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...another cliffhanger in a long-running drama that has featured more narrow escapes than Raiders of the Lost Ark. Once again, the Latin American debt monster was terrifying bankers. Argentina was threatening to ignore a March 31 deadline for paying $500 million in interest to its creditors around the world...
...that banks would have to classify Argentine loans as "nonperforming" and deduct missing interest payments from profits. Banks faced losing as much as 40% of their first-quarter earnings. But the Argentines balked at paying unless they received easier terms on their $46 billion debt load. Said Bernardo Grinspun, Argentina's Economy Minister: "The problems of the creditor banks are not the problems of this government...
...week, representatives of the banks, the U.S. Treasury Department, the International Monetary Fund, Argentina and other Latin American countries were huddling in an effort to find a way out of the dilemma. At about 11 p.m. on Friday, 25 hours from the Saturday-midnight deadline, the U.S. Treasury announced a $500 million deal; it was the most unusual and complex rescue package put together since the debt crisis began in August 1982. Four Latin American countries provided $300 million to help Argentina meet its payments. The contributors included Mexico ($100 million), Venezuela ($100 million), Colombia ($50 million) and Brazil...
...deal assumed that Argentina would soon receive new credit from the International Monetary Fund. The country will have to satisfy the IMF that it will put in place an economic adjustment program to cut government spending and curb its 400% inflation rate. As soon as Argentina and the IMF sign a preliminary agreement, which may take a month, the U.S. Treasury will give Argentina a short-term $300 million loan; it will be used to repay the four other Latin American countries that took part in the bailout. The IMF'S executive board will then examine the Argentine economic...
...banking community, it was a close call. Argentina's largest private creditors are several New York banks, including Manufacturers Hanover ($1.3 billion on loan), Citicorp ($1.1 billion) and Chase Manhattan ($775 million). According to estimates by the Keefe, Bruyette & Woods investment firm, the missed payments on Argentine loans could have cut Manufacturers Hanover's expected earnings in the first quarter 28%, while Chase would have suffered a 12% decline and Citicorp a 7% dip. Many smaller banks outside New York would also have felt the pinch. Crocker National of San Francisco ($440 million on loan) faced an estimated...