Citigroup Inc and six other international banks have lost US$8.5 billion in Argentina, 60 percent more than what the banks reported in January, an analysis of first-quarter earnings showed.
With US$23.6 billion of Argentine loans on their books at yearend, the banks face more losses in the months ahead from the government's peso devaluation and debt default, analysts and investors said.
The international banks may be forced to meet government demands for more money to shore up the system or abandon investment in South America's second-largest economy.
"There's no way you can walk away from this and then waltz back in years later when things look fine," said Robert Lacoursiere, a Latin American banking analyst with Lehman Brothers Holdings Inc. "Regulators have memories longer than elephants."
Citigroup Chairman Sanford Weill last week put cumulative losses in Argentina for the world's largest financial services company at US$2.2 billion, up from US$475 million on Dec. 31. Spain's two biggest banks lost US$3.2 billion; FleetBoston Financial Corp, US$1.3 billion; HSBC Holdings Plc, US$1.1 billion and JP Morgan Chase & Co, US$411 million.
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