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.