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Argentine court: Bank depositors must be reimbursed for conversions in 2001 crisis

Argentine court: Bank depositors must be reimbursed for conversions in 2001 crisis

The Supreme Court ordered banks on Wednesday to reimburse depositors in local currency the total value of deposits originally held in U.S. dollars that were frozen during Argentina's 2001 economic meltdown, according to a court statement.
At the same time, the decision upholds the legality of the government's "pesification" decree in 2002, which froze bank deposits and forcibly converted dollar savings into devalued pesos.
The move, which followed Argentina's default on its sovereign debt, was an effort to save the country's financial system from virtual collapse.
Pressed by a crushing financial crisis in 2001, then President Fernando de la Rua imposed the so called "corralito," or little corral, which effectively froze the money of thousands of depositors at several banks.
The measure triggered violent street protests that left at least 20 people dead and forced De la Rua's resignation.
The next president, Eduardo Duhalde, ordered the "pesification," or conversion to devalued pesos of deposits originally made in dollars after a devaluation that brought an end to a decade of stability in which one peso was equivalent to one dollar.
Although the one-to-one conversion was ended in 2003, the pesification was maintained and thousands of depositors filed suits in courts against the banks demanding their deposits be honored in U.S. dollars, as originally made.
Through the years, a few judges ruled in favor of the depositors and some of them actually recovered at least part of their deposits in U.S. dollars.
But Wednesday's ruling settles outstanding complaints by about 50,000 depositors.
The court said in a communique that its ruling "applies only to depositors who filed legal actions and therefore has no effect on those who accepted other alternatives."
"The goal of this ruling is to promote social peace and show that it is possible to reach a consensus of difficult issues that worry our community," it said.
Wednesday's ruling orders banks to compensate depositors at 3.08 pesos to the dollar _ equal to the pesified deposits they would now hold under the original decree. It applies a currency conversion rate of 1.40 pesos per dollar, adjusts for inflation and adds a 4 percent annual interest rate to be applied retroactively since the pesification began.
After five years of solid price increases and a modest strengthening in the peso, the order should be acceptable to most depositors.
When the peso was at 3.8 pesos to the dollar in 2002, Argentines rose up in rage at the 1.40 rate in pesified deposits banks were giving them. Now these are worth around 2.86 times the original dollar balance, meaning the 2001 dollar balances are close to the current exchange rate of 3.07 pesos to the dollar.
Still about 100 depositors seeking payments in dollars angrily protested the ruling in front of the court building, shouting insults at the justices and banging empty pots.
"Swindle continues and legal uncertainty rules," read a sign held by one demonstrator.


Updated : 2021-06-13 21:38 GMT+08:00