My paper will discusses about the link between both crisis in Greece and Argentina, what we have learnt since this crisis and what are the common mistakes committed by both. Economic environment
“Eleven years after the financial crisis of 2001, which led to the largest default in history (75 billion Euros), Argentina has reimbursed, the August 3, the last holders of securities issued during the freezing of assets, called "corralito" ("small enclosure").
The final explosion occurs when the Minister of Economy Domingo Cavallo announced on 1 December 2001, before the flight of capital and the liquidity crisis, the implementation of corralito, limiting bank withdrawals to 250 pesos a week …show more content…
Subsequently, Argentina is experiencing the "twin crises" a currency crisis with a banking crisis. Banks operating in Argentina are in a precarious situation, compounded by the abandonment of the convertibility plan Duhalde by the Government in January 2002 and especially the asymmetric “pesification” loans and bank deposits.
However, at this time, foreign banks are heavily involved in Argentina as they have 50% of the assets and deposits of the entire banking system in Argentina. Are they ready to assume the role of lender of last resort for their Argentine’s settlements or do they prefer to leave the country?
This case study aims to demonstrate how foreign banks have anticipated, managed and overcome the crisis systems from the strategy and mode of engagement they had chosen to enter the Argentine market. The involvement of foreign banks in Argentina can be broken down in two ways. On the one hand, it takes the form of a territorial presence on the market of retail banking and, secondly, it makes more deterritorialized through activities on capital markets by banks investment.
The strategies adopted by foreign banks
It is important to highlight the diversity of strategies foreign banks have taken to the crisis of 2001-2002. At the height of the crisis, some banks have decided to leave Argentina, while others