BUENOS AIRES Aug 26 Argentina said on Tuesday
it had stripped Bank of New York Mellon's authorization
to operate in the South American country, its latest move
against the financial institution which obeyed a U.S. court
ruling that tipped it into default.
Argentina's Congress is due on Wednesday to discuss a law
that would replace BONY as intermediary for payments on foreign
law bonds with the state-controlled bank Banco Nacion, as part
of a new debt restructuring plan.
BONY in June obeyed a U.S. court ruling to block a $539
million interest payment on debt that was restructured following
Argentina's record 2002 debt default, paving the way for the
country's second default in 12 years in July.
The court had ruled Argentina could not pay holders of
restructured bonds unless it also paid so-called "holdout" U.S.
investment funds, which refused its 2005 and 2010 bond swaps in
the wake of the 2002 default on about $100 billion of debt.
The central bank "has revoked BNY's authorization for
representation in Argentina," Cabinet Chief Jorge Capitanich
said in his daily briefing. The authorization applied
specifically to two BONY officials.
The central bank said it took the measure because the U.S.
bank failed to fulfill technical requirements to operate in the
A central bank source said on condition of anonymity that
revoking BONY's authorization would not prevent it from
transferring the frozen $539 million on to bondholders if it
decided to fulfill the payment.
BONY can appeal the measure and put forward new officials
for authorization to operate in the country, but the central
bank could refuse to accept them, the source added.
(Reporting by Jorge Otaola and Sarah Marsh; Editing by Richard
Lough and Tom Brown)