Citigroup Inc (NYSE:C) recently opined about its plan to say goodbye to the Argentina’s custodial business. Citigroup, in fact, is planning to do so with immediate effect, after the judgement of the U.S. judge. In the judgement, the Manhattan District Judge Thomas Griesa, did not go otherwise of the ban which blocked Citigroup from giving the interest payments on Argentina bonds worth $2.3 billion.
Citigroup concerned about being stripped off the banking license in Argentina
The decision by the bank is a result of the Judge’s stay on ban. In response, Citigroup, in a letter, said that its decision is also a part of Argentina’s recent threat to the bank. Argentina has warned the bank to strip it off the banking license, while also imposing the sanctions in association with the administrative, civil and criminal issues.
As a result, the bank said that it shall exit the custody business in the country soon.
The plans ahead
In its letter to Judge Thomas Griesa, the bank indicated that it might also sell a part of this business, or put a full stop to the customer relationships.
The bank, in light of the Judge’s decision, said that it was the injured party. Citigroup Inc (NYSE:C) is seeing itself as a prey to the claws of exceptional “international conflict of laws.”
Citigroup’s decision’s effect on bondholders
The decision by the Bank to exit custody business in Argentina will lead to more complications on the part of Argentina’s attempt of making payments to the bondholders. Most of the investors who held these bonds had swapped them for the ones who were not worth the equal amount.
However, a small group of these bondholder holdouts had also rejected these conversions. It is this group that is demanding that they too should be paid the complete amount, if the bondholders of the exchanged bonds are also made complete payments.
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