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Risk Management Manual of Examination Policies

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Section 17.1 - International Report Pages and Workpapers

Transfer Risks Subject to Classification or Comment
99999

Category

Amount, Description, and Comments

Exposures Warranting Special Comment

Other Transfer Risk Problems

Substandard

Value Impaired

 

Loss

Argentina
October 21, 2002

All Other Exposures (including Bank Credits) 181
Less: Credit Risk Adverse Classification (181)
Net Exposure 0

In December 2001, the Argentine government defaulted on $50 billion of bonds held by foreign creditors and subsequently imposed strict capital controls that have severely limited the ability of private borrowers to service their external liabilities. Private Argentine borrowers have accumulated significant interest and principal arrears to external creditors. Prior to the present interruption of external debt service, the country had been current on payments since completing a Brady-plan restructuring of bank debt in the early 1990s. A Paris Club rescheduling in 1992 accompanied that exercise.

U.S. banks cut their exposures to Argentina sharply in 2002, reflecting both large reductions in business activity and credit lines, and significant write-offs. In June 2002, U.S. banks’ cross-border exposure totaled $6.2 billion, down roughly 44 percent from a year earlier. Locally-funded business fell by over two-thirds, to $3.3 billion.

A severe and extended …

Performing short-term trade credits …

Amount scheduled represents restructured trade exposure with Banco CMF, scheduled as Value Impaired (net of reserve). Amount is not extended for transfer risk as it is subject to a credit risk Doubtful classification.

Note that this write-up is incomplete. Refer to specific guidance for this page in the Report of Examination Instructions Section of the Manual.

DISCLAIMER: This page is provided for illustrative purposes only. It is not intended to correspond with or tie to information in the Bank of Anytown Report of Examination.

 

 

Last Updated 02/02/2005 supervision@fdic.gov