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Covid-19

Banking and Finance Facing COVID19 – V.1 UPDATED 4/2/2020

Executive Summary
Financial institutions continue to provide the services that they usually offer remotely, including FX transactions.

Financings’ maturity dates during quarantine will be extended to April 1, 2020.

The checks clearing is maintained but the application of fines and the disqualification for those who write bad checks are suspended.

Other measures were also taken to mitigate the impact of the coronavirus pandemic (COVID-19).

1. How does the financial system work during quarantine? Is there any bank service?

In the framework of the mandatory quarantine ordered by the National Executive Branch, the Central Bank of the Argentine Republic (the “Central Bank”) resolved the following:

  1. The financial institutions cannot open their branches for customer service. However, as of April 3, the foregoing is not applicable to customer service rendered to retirees and pensioners.
  2. However, financial institutions must continue to provide the services that are usually offered remotely to their customers (e.g. constitution of term deposits, granting of financing and services related to the payment system).
  3. Likewise, cash deposits can be made at ATMs, self-service terminals, cash-transport companies, deposit mailboxes and large amount deposits made by clients included in subsections 11, 18 and 23 of article 6 of Decree No. 297/2020 of the National Executive Power.[1] Likewise, financial institutions must enable deposit mailboxes and a system for receiving large amounts deposits in all their branches.
  4. Financial institutions must also guarantee the sufficient provision of funds at ATMs and extra-bank withdrawal points.
  5. Also, the following shall remain operative: Electronic Clearing Houses, the Electronic Payment System, ATM and electronic funds transfer networks, the credit and debit card administrators, the acquirers and processors of electronic payment methods, the payment services the providers, as well as their connected providers and all other market infrastructure necessary for the normal provision of the services of financial institutions and payment systems.
  6. The collection of charges and fees is suspended for operations carried out through all ATMs, without limits on the amount or number of withdrawals.

2. What happens to financings maturity dates?

The maturities dates of financing disbursed by financial institutions that fall between March 20 and March 31, 2020 (both inclusive) will be extended until April 1, 2020. The regulation does not specify ii, it includes both commercial portfolio financings to companies and consumer loans to individuals.

Likewise, unpaid balances of financing maturing from April 1 until June 30 can only accrue compensatory interest. Said unpaid balances (excluding credit cards) are incorporated as a new installment in the month following the end of the loans’ term. Financings among the financial sector are not included.

In the case of financing granted by financial institutions under credit cards, the account statements’ payment dates  that occur between April 1 to 12, 2020 can be canceled by customers on April 13 without any surcharge.

3. What happens to mortgage and collateralized loans?

Pursuant to Decree 319/2020, until September 30, it cannot exceed the amount corresponding to the March installment the amount of each future monthly installment of (i) mortgage loans destined to acquire single dwelling and that are occupied with the referred destination by the debtor; and (ii) the collateralized loans updated by the Acquisition Value Unit (in Spanish, Unidad de Valor Adquisitivo – UVA).

The difference -between the sum of money that must be paid pursuant to the loan agreement and the sum of money that must be paid by application of Decree 319/2020- can be paid in at least three (3) monthly, equal, and consecutive installments. The first of them shall expire with the October installment. In no case, it shall be applied compensatory, moratorium or punitive interests, or other penalties.

The debts that could be generated until September 30 due to non-payment, to payments made outside the agreed terms, or to partial payments, can be paid in at least three (3) equal and consecutive monthly installments. The first of them shall expire with the October installment. Compensatory interest can be applied, though it cannot be applied moratorium or punitive interests, or other penalties.

4. What is the status of check clearing?

During the period from March 20 to 25, there was no electronic check clearing.

However, the compensation sessions resumed on March 26.

Likewise, during the days when there was no check clearing, said days are not computed for the expiration of the 30-day period for the presentation of checks. Additionally, and while the suspension remains in effect, the term for the presentation of checks expiring during said period is also extended by thirty (30) additional days.

Similarly, it was established that it is allowed a second presentation of those checks that were rejected due to insufficient available funds in the account, except for those generated electronically or ECHEQ.

On the other hand, it was suspended the obligation of financial institutions to close bank accounts, to apply fines and to dispose of the disqualification established by the Check Law for those who draw checks without available funds or are not authorized to overdraw and when checks do not meet certain requirements. Furthermore, fees due to the rejection of checks shall not be applied.

5. How does the FX market operate?

Financial institutions and exchange house can operate remotely among themselves and with their clients in the FX market.

6. Can stock exchanges and capital markets operate?

Yes, the Central Bank admits the remote operation of the stock exchanges and futures markets authorized by the Argentine Securities Commission (CNV), Caja de Valores S.A. and the capital market agents registered with the CNV.

7. Have measures been taken to mitigate the impact derived from the COVID-19 pandemic?

Yes, the Central Bank adopted a set of rules aimed at mitigating the impact of the economic crisis generated in the productive sector as a consequence of the Coronavirus pandemic (COVID-19).
In this context, financial institutions can offer a special line of credit at an annual nominal interest rate of up to 24% to the following destinations:

a. Micro, Small and Medium Size companies: at least 50% of the amount of these financings must be destined to working capital lines, such as salary payments and deferred check coverage; and
b. Providers of human health services insofar as they provide hospitalization services in the context of the Health Emergency: the funds disbursed have to be used to purchase medical supplies and equipment.

Furthermore, the obligation on financial institutions to require employers, prior to granting financings, a sworn statement that they do not owe any amount regarding deductions and/ or contributions, or that, having accepted a moratorium, are up-to-date in the fulfillment of the obligations assumed thereunder. A qualification is established for this suspension when the loan is aimed to pay deductions and/ or contributions owed.

8. Were the debtor classification parameters modified?

Yes, the Central Bank ordered the temporary flexibility of the parameters with which bank debtors are classified.

The current classification system takes into account, among other variables, the number of days in arrears of each debtor.

However, from March 19, 2020, to September 2020, sixty (60) additional days will be added to the allowed delinquency periods for categories 1, 2 and 3 of debtors.

9. Can financial institutions distribute profits?

No, the Central Bank suspended until June 30, 2020, the possibility of the distribution of profits by financial institutions.

10. How do Central Bank proceedings regarding violations to FX and banking regulations continue?

The Central Bank declared as non-working days those occurred during the period from March 16 to 31 for all Central Bank proceedings regarding violations to FX and banking regulations, without prejudice to the validity of the procedural activities that are carried out in said period where the intervention of the accused party is not necessary.

Likewise, the Central Bank empowered the Superintendency of Financial and Exchange Institutions to decide which cases need to be resolved urgently and to order the corresponding actions.

11. Can fees and charges be collected in connection with ATM’s transactions?

Until June 30, financial institutions cannot collect fees or charges for transactiones (deposits, withdrawals, inquiries, etc.) made through ATMs.

[1] That is, customers who qualify as Supermarkets, Pharmacies, Veterinarians, and Retail stores; public passenger transportation, transportation of goods, oil, fuels and LPG; and Oil and Gas fields, Oil and gas treatment and / or refining plants, transportation and distribution of electrical energy, liquid fuels, oil and gas, gas stations and electric power generators