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Fri, Mar 15, 2002 - Page 19 News List

Argentinian bank's staff now faces the people's wrath

By Stephen Brown  /  REUTERS , BUENOS, ARGENTINA

A bank costumer exits a branch of the Banco Rio in Buenos Aires on Wednesday, as police guard the offices.

PHOTO: AFP

Working in a bank used to be the archetypal safe job in Argentina, where a son would follow in his father's footsteps. But with the country in political and economic turmoil, banking has become a risky business.

"It's like living in a war zone," complains a local banker. "We need helmets to protect us from the stuff they throw at us in the streets."

Like Argentina's maligned politicians, who have taken to wearing disguises to avoid detection in public, its bankers are leaving their business suits hanging in the closet, and going to work in casual clothes to avoid recognition.

The Buenos Aires financial district, known as "La City" with its narrow streets, cafes, bars and cigar shops that are reminiscent of New York's Wall Street and the City of London, appears to be on full battle alert.

Metal sheeting covers bank windows and clients enter and leave through holes in the wall guarded by armed police -- an image that sums up Argentina's loss of faith not only in its political leadership, but the basic tenets of banking.

Bankers run a daily gauntlet of angry customers waving banners with the slogans "Give Back our Deposits!" and "Thieves!" Many Argentines swear they will never again trust a bank.

As they change available cash into dollars, they are equally distrustful of the local peso currency that was devalued in January and halved against the dollar after more than a decade of being pegged at a one-to-one rate.

Tempers are short. Unguarded banks are frequently targeted by irate crowds throwing eggs, bricks, Molotov cocktails, hammers and even rolling pins -- actions that led the banking association to take out a newspaper advertisement imploring demonstrators not to harm its employees.

Not surprisingly, bankers' jobs have changed since Latin America's third-largest economy dropped into an economic abyss in December, and a cash freeze was ordered to plug a run on banks that had already seen a quarter of their deposits disappear.

With savings confiscated and cash withdrawals limited to US$1,500 a month, unrest boiled over. Blamed for mismanagement of the economy, President Fernando de la Rua, as well as his immediate successor, Adolfo Rodriguez Saa, were forced to resign amid riots and looting that left 27 people dead.

One European bank's local analyst, working from a five-star hotel in the suburbs and only occasionally venturing into town, says his job description has been radically altered: "Calls come in daily from Europe asking me if there has been a coup. We economists have become sociologists and political scientists."

Global banking giant HSBC's head of Argentine operations, Briton Mike Smith, told reporters he was "managing the business on a crisis-survival basis, trying to stay one step ahead."

With a Tres de Febrero University poll showing that over 70 percent of respondents have no intention of ever again putting their money in a bank, financial institutions are struggling to keep up with the permitted withdrawals, while continuing to deal with wages and payment of bills.

In one fell swoop, the financial system has lost all the safeguards implemented in the 1990s, when an autonomous Central Bank imposed strict reserve requirements to protect depositors from a disaster such as Mexico's 1994-'95 currency devaluation.

There was a massive run on banks during the "tequila crisis" but the money came back eventually to a consolidated sector where all but one of the biggest private banks are now foreign-owned. With the evolution of a modern economy, wages were starting to be paid via banks and homes were bought with checks instead of wads of cash.

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