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Citibank barred from trading in Argentina

Tuesday, 31 March 2015 2:53 PM [ Last Update: Tuesday, 31 March 2015 2:52 PM ]

SAN RAFAEL, CA - JANUARY 15: A sign stands in front of a Citibank branch office on January 15, 2015 in San Rafael, California. Citigroup Inc reported an 86 percent decline in fourth quarter earnings with net profits of $346 million, or 6 cents per share, compared to $2.60 billion, or 82 cents per share, one year ago. Justin Sullivan/Getty Images/AFP == FOR NEWSPAPERS, INTERNET, TELCOS & TELEVISION USE ONLY ==

Manoel Giffoni
Press TV, Buenos Aires

It was an exemplary sanction that shocked the markets and stunned the traders. Effective March 30th, the Argentine Securities and Exchange Commission suspended Citibank operations at the stock exchange and barred it from trading in the capital market. The decision follows a secret agreement signed between the US bank and a group of highly speculative bondholders usually called "vulture funds" which filed a billion dollar lawsuit against Argentina at a New York court.

The agreement provides that Citibank will collect the foreign debt payments from the Argentine Government and will then transfer the funds to its US branch where the money be seized by the US court.According to experts the sanction not only will have a deep impact in the Citibank financial results but also sends a clear message that the Argentine government will not allow any international banking institution breach the law.

The Minister of Economy reported that the sanction against Citibank will remain in effect until the US bank abides by the law and overturns the illegal deal struck with the US hedge funds. Government officials also said that the move made by Citibank not only represents a breach of sovereignty but also poses a high risk of capital loss to the bondholders.

Experts also say that the deal signed by Citibank results in a scam for the international bondholders as any payment sent from Argentina will be blocked and withheld by Citibank New York and won't reach them as legal beneficiaries. Meanwhile, Argentinean authorities affirmed Citibank will now be placed under criminal investigation.

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