Wary Argentines stash their dollars in safe-deposit boxes

BUENOS AIRES, May 28 (Reuters) - A bank official in Buenos Aires escorts dozens of clients down to the vaults each day, two by two, so they can access their safe-deposit boxes - a commodity increasingly coveted by Argentines who are leery of government currency controls.

Companies, investors and ordinary savers often stash their dollars in these boxes, which went untouched when the government froze and devalued about $40 billion deposited in savings accounts during the country’s 2001-02 financial crisis.

“I come to take dollars out of my safe-deposit box any time I need to. I don’t keep my money in bank accounts, especially not dollars,” said Andrea, a 45-year-old lawyer who was waiting to be escorted to her box at the bank in downtown Buenos Aires.

“I don’t trust the banking system. I don’t trust anything in this country,” she said, declining to give her last name.

President Cristina Fernandez limited foreign currency purchases to stem capital flight after she won re-election in October 2011. A virtual ban on buying dollars is now in effect in Latin America’s No.3 economy after the controls were steadily tightened.

Savers responded by withdrawing about $8 billion from their dollar accounts, or about half of all foreign-currency deposits.

Some put their greenbacks in safe-deposit boxes or safes. But others willing to run the risk of robbery chose to hide their money at home - under their mattresses, below the floorboards and even inside their refrigerators.

Meanwhile, the price of dollars on the black market has shot up. Today, Argentines pay nearly 70 percent more in pesos to buy dollars on the black market than they would if they had access to the official exchange rate.

Although these illegal currency purchases are more common now, Argentina has always had a black market. Its citizens are known for evading taxes and devising creative shortcuts to survive in a country plagued by currency crises and recessions.

Andrea had to wait a month to rent a safe-deposit box at the downtown bank branch, due to high demand. She and many others make frequent trips to the vaults.

“The pace is tremendous, it’s like this all day long, coming and going. It never stops,” the bank escort said.


Fernandez’s center-left government estimates that between $40 billion and $50 billion are stashed in the country - putting Argentina just behind Russia in terms of having the greatest number of physical dollar bills outside the United States.

Argentines also hold roughly $160 billion in assets abroad.

The president has never threatened to curb access to or confiscate dollar deposits. In fact, she tries to show she is on the side of savers, emphasizing the government’s proven commitment to servicing bonds given as compensation to people whose savings were devalued during the 2001-02 crisis.

Worsening economic conditions have people on edge.

After booming during most of the last decade, the economy has slowed, weakened by inflation running near 25 percent a year, softer global demand for Argentine exports, and the impact of currency and trade controls on investment.

The central bank’s international reserves - used to pay government debts - have dropped in the last year.

Even though the contents of safe-deposit boxes are confidential and protected as private property under the constitution, the government had to explicitly refute rumors last week that the safe-deposit boxes could be violated somehow.

“We’re not going to go after the dollars that are in safe-deposit boxes,” Jose Sbatella, head of the state unit to combat money laundering, was quoted by Clarin newspaper as saying.


In Argentina there are about 500,000 safe-deposit boxes for rent in banks - or one for every 81 residents. In neighboring Uruguay, which has traditionally served as a tax haven for Argentine money, there is one box for every 168 residents.

The price to rent a small box in Buenos Aires has risen about 15 percent since late 2012 to a minimum of 2,300 pesos ($437) a year - double what banks in Uruguay tend to charge.

In Brazil, renting a small safe-deposit box costs about $900 a year, but only a few state-run banks provide this service and the boxes are generally used to safeguard documents or jewelry.

Argentines can fit about $200,000 worth of $100 bills in some of the smallest safe-deposit boxes on offer, or up to three times that amount in the biggest boxes, bank officials said.

“There are waiting lists at some banks. In parts of the country where demand is highest, safe-deposit boxes aren’t available,” said Federico Juan, a partner in Banca&Riesgo consulting group, citing wealthy neighborhoods in Buenos Aires.

This month, government officials unveiled a tax amnesty plan to try to lure investors and savers into putting money into the Argentine real estate and energy sectors.

But many people want to keep their cash off the government’s radar, and banks are capitalizing on this demand.

Some financial entities will only rent safe-deposit boxes to people who agree to use their credit cards or buy insurance from them. Other banks are evaluating whether to charge people extra for repeatedly seeking access to the vaults.

“Today, it’s much better business for a bank branch to rent out safe-deposit boxes than it is to provide parking for clients,” the head of a Buenos Aires branch of Banco Santander Rio said on condition of anonymity.

“If I had more boxes, I’d rent them all,” he said. ($1 = 5.2675 Argentine pesos ) (Additional reporting by Malena Castaldi in Montevideo and Esteban Israel in Sao Paulo; Writing by Hilary Burke; editing by Andrew Hay)