Work Abroad but earn in USD

Sunday, January 15, 2006

Argentina's Unfriendly Banks

Although probably obvious by now to any expat who's already here, I felt I should point out to newcomers that the banking system here in Argentina is pretty terrible. It is an ordeal just to open up an account. And if you don't have a visa and DNI, forget about it. Bank accounts come with outrageous fees and taxes as well. The interest rates paid are well below the inflation rate and forget about accessing any type of credit product -- whether it be a mortgage loan or even a credit card.

To top it all off, the attitude is pretty terrible as well. Banks act as if they're doing you a favor just by letting you have an account with them. In fact, the vast majority of Argentina's banks have a Moody's rating of "E", the lowest possible rating. Banks rated "E" have very weak intrinsic financial strength, financial fundamentals that are seriously deficient, and a highly unstable operating environment. That pretty much sums up the banks here.

The banks should be clubbing each other over the heads trying to secure more depositors, but it seems as if they're doing everything they can to turn away business. It is a very odd situation, especially for an American expat who's used to vigorous competition for his financial business back in the states. You can't walk into a bank in the U.S. without them trying to give you a toaster, a Home Depot gift certificate, or a T-shirt of something or another to get you to open a no-fee checking account with free online banking and bill pay.

Here you'll wait in a queue for 10 minutes just to talk to someone to open your account. Then he'll direct you to another 10 minute queue to make your deposit. You'll also pay for the privilege of giving someone else free use of your money. And when the end of the year rolls around, you'll find out the government taxes you on the balance of your bank account, which causes a mini bank-run around late December each year, as people withdraw their cash from the banking system so they don't get taxed on it. It is truly a screwed up system all-round.

Its no wonder there's no credit in this country. With the rich sending their cash abroad to Miami and Europe and the middle class putting their savings under their mattresses, there's nothing to lend. It seems to me that the government could do a lot to improve the financial situation of the country by first working on improving the banking system.

Meanwhile, expats should expect frustrations. Make sure you have a very good relationship with a bank in your home country. First because you'd be nuts to put your savings here and second because you'll never get a loan here either. You'll have to rely on your homeland for the vast majority of your financial services, which is really too bad for Argentina and expats.

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Blogger Chris said...

You're right on the money, pun intended, about banking in Argentina. It's a no-brainer that banking is where the government should begin if it ever expects to change "nine queens"-like attitudes in the country. Banco Provincia, however, lets North Americans open bank accounts with your passport, proof of Argentine residence (phone bill, rentas, etc) and a CDI (not DNI). You can read about the requirements on their website. But, I agree, the lines are crazy and the "we're doing you a favor holding onto your money" attitude is unbelievable. Try wiring money from one province to another (between Argentine citizens with DNIs, CUILs, and CUIT's). It takes 3 days for the wire to arrive from a bank in Mendoza to one in BA--- three days!!! All because the bank in Mendoza was Banco Nacion and the one in BA was Banco Provincia. Different banks are like different countries. And the fee!!! Clearly you're not to keep anymore money in their banks than what is absolutely necessary to cover your monthly utilities, etc. At least at Banco Provincia, you can pay most of your utilities online. That's another thing: DON'T BE LATE IN PAYING YOUR UTILITIES, or you're asking for a bureacratic nightmare that may never see you're bill updated correctly in your lifetime. At all costs, pay your utilities TIMELY! Well, I'm off to Munich, a nice restaurant in Recoleta where two can dine on a four course meal with Champaigne for $30. There it is in a nutshell as to why we love it here. The good still outweighs the not so good--at least for me.

1/15/2006 11:30:00 PM  
Blogger said...

Absolutely the banks here are HORRIBLE. I keep all cash offshore but it's still essential for paying bills, etc. I'm one of the lucky ones. Believe it or not, I had a peso account, u$s dollar account, a credit card, ATM card all to me within 3 weeks after moving here. That is NOT normal. I was a Premier customer with my bank in the UK and someone high up on the chain basically just told them to do whatever they had to so within 2 weeks I had all of these things.

But for most people it's a nightmare. Just opening an account is almost impossible these days. Turn over rate is high at banks so the person that started out helping you might not be there the next week when you go back. I remember in a one month span in my local branch in Recoleta I had 3 different account executives. It helps if you can open a Premeir or VIP account at the local banks. You need to keep a bit more money in them but many of them have VIP lines so you can always cut in line. I have that and it's awesome.

The banking system is in chaos. The bill situation is another mess all in itself. It's a nightmare. I remember last year I didn't get a phone bill. They never sent it or it got lost in the mail. Then the following month I got a bill and paid it (or my maid did). Then they cut off my phone because I didn't pay the previous month they claimed. It would be common sense to include the unpaid balance on the next month's bill but they don't do that here for some utilities. Very primitive here.

Oh well.....with some things it's like the stone age here....

2/12/2006 02:20:00 AM  
Anonymous Anonymous said...

sounds like an opportunity!...a service minded bank thats treats you right... if you have enouph capital to set up a bank of course.

3/03/2006 10:14:00 AM  
Blogger Pete said...

Since the banking is so bad there, do you really need to open a bank account? Can I keep my money in the States and just use ATM machines? They do have ATMs there, don't they?

9/26/2007 11:23:00 PM  
Anonymous Anonymous said...

If everything is so terrible, complicated, and horrible: Why don't you STAY in the US or Europe? By any chance, do you have any idea how complex is for a foreigner to open an account in the US? I humbly believe that people should be a little bit less arrogant about the country that is hosting them without setting up any immigration barriers. Just a thought. Thank you.

11/24/2009 03:48:00 PM  

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