Bank of America Expands in Argentina

Bank of America, number one among U.S. banks, has doubled the size of its Latin American operations with the purchase last month of the Banco Internacional, Argentina's 13th largest bank. The $150 million deal was one of the biggest takeovers by a U.S. financial institution ever in the region, and with the acquisition of Banco Internacional's 60 branches, Bank of America is now the largest foreign bank operating in Argentina.

Banco Internacional, formerly part of the huge Sasetru financial and food-processing conglomerate which was saved from bankruptcy by the Argentinian government a year ago, is one of more than thirty financial institutions which have collapsed since Finance. Minister Jose Alfredo Martinez de Hoz initiated a series of "free market" economic policies in 1977. The banks have been unable to support their loan portfolios under conditions of rapid inflation, abolished credit, subsidies and import-tariff barriers, and overvalued currency.

Local businesses have also been hart-hit by these programs, which enable foreign firms, which have access to credit and currency abroad, to complete much more effectively and, in many cases, to buy out their Argentinean competitors.

"Martinez de Hoz' program has succeeded in almost entirely eliminating the profitability of Argentinean business," said Laurence Birns, director of the Council on Hemispheric Affairs, a Washington-based research organization on Latin America. "Argentina's GNP growth last year was the second lowest in Latin America, and these bank failures reflect the extent to which financing as well as goods must now come from abroad. The current 'free market' in Argentina is free only for the multinationals."