Wary of banks, Argentine investors turn to markets

By Karina Grazina - Analysis

BUENOS AIRES (Reuters) - Five years ago, thousands of Argentines saw their savings wiped out overnight, and the memory of being burned by the banks means more and more small investors are turning to the markets instead.

During Argentina's economic meltdown of 2001-2002, bank accounts were frozen and dollar savings became devalued pesos, prompting years of protests by savers outside banks.

"In the crisis, the small investor with savings in the bank saw the security they'd been promised exposed to the economy's ups and downs, just as other investments are," said Monica Erpen, director of the Argentine Capital Markets Institute.

Latin America's No. 3 economy has recovered strongly in the last five years, and many Argentines are saving again. Courses for small investors at the Buenos Aires stock exchange are oversubscribed as stocks gain in popularity.

"You just don't know what can happen with the banks," accountant Miriam Lopez, 33, said after taking part in one of the training courses.

"I don't know if it's going to happen again, and this is a way to keep hold of what I've got saved. If you can make a profit, better still," she added.

Some savers bought government bonds during the crisis when the bank freeze prevented them from taking money out of the country.

Once the banking restrictions were lifted, many chose to stay in the debt market, especially when inflation began speeding up and overtaking the interest rate offered by banks for fixed-term deposits.