NEW YORK Aug 19 Citigroup has told the U.S.
appeals court overseeing the dispute between Argentina and hedge
funds refusing to accept terms of the country's debt
restructuring that its Argentine banking license may be at risk
as a result of the standoff.
That is because under orders from U.S. District Judge Thomas
Griesa, Citibank Argentina is barred from distributing payments
it will receive from Argentina to holders of a class of
restructured bonds that are governed under Argentine law.
Meanwhile, the Argentine government has demanded that the bank
honor its obligations under local law.
Citi expects to receive about $5 million from Argentina
ahead of its next coupon payment deadline of Sept. 30.
Argentina, whose appeal to the U.S. Supreme Court stalled in
June when the high court refused to take the case, has flouted
orders by Griesa that it may not pay creditors who agreed to the
restructuring until it pays the hedge funds the full face value
of the bonds they hold. In June it deposited a $539 million
payment to those bondholders with its trustee, Bank of New York
"It is increasingly apparent that the mandatory payment
injunctions directed to the republic cannot be enforced,"
Citigroup said in a court filing late Monday, adding that the
Citibank injunction could lead to the loss of its banking
license in Argentina and its takeover by the republic.
Argentina accounts for a small part of Citigroup's business.
Its exposure to the country at the end of June from securities
and from loans, including those to businesses and consumers, was
only $2.7 billion compared with $1.9 trillion in total assets
worldwide, according to Citigroup's most recently quarterly
filing with the U.S. Securities and Exchange Commission.
Meanwhile, the New York Post reported on Tuesday that Paul
Singer, head of Elliott Management, one of the main holdout
creditors in the case, intends to widen his hunt for assets
connected to Argentina's leaders.
Last week, Elliott won a ruling from a U.S. magistrate in
Nevada allowing him to push ahead with subpoenas to 123
companies based in the state that have ties to associates of the
family of Argentine President Cristina Fernandez.
The Post, citing an unnamed source "familiar with Singer's
thinking," said he intends to use the ruling to issue subpoenas
to at least two companies controlled by Cristobal Lopez, a
friend of Fernandez's late husband and her predecessor as
president, Nestor Kirchner.
One of the subpoena targets will be Centenary International
, which the Post described as a shell company listed as
a penny stock on the U.S. over-the-counter market.
The paper said that Centenary, while it has no operations
and reported a loss of about $1 million last year, recently
signed a 10-year lease for 4,000 square feet of office space
near New York's Museum of Modern Art at a cost of $34,333 a
A representative for Centenary could not be located.
A spokesman for Elliott was not immediately available for
(Writing by Dan Burns; editing by Andrew Hay)