Argentina extends requirement for banks to lend 5 pct of deposits
BUENOS AIRES, June 13 (Reuters) - Argentina will demand that banks grant a new round of low-cost business loans from July through December, totaling about $3.8 billion, the central bank said on Thursday.
The figure represents 5 percent of bank deposits as of May, or 20.09 billion pesos, and banks must charge a 15.2 percent interest rate on the loans - well below private annual inflation estimates that hover near 25 percent.
This lending requirement has been in place since July 2012 as the government tries to bolster credit and sustain investment. Half the loans must go to small and medium-sized businesses.
Growth in Latin America's No. 3 economy has slowed sharply in the last 1-1/2 years due to sluggish global demand, high inflation, and the impact of government import and currency controls on business and consumer confidence.
The central bank said in a statement that banks lent about 34 billion pesos ($6.4 billion) under this initiative in the last year, or about 1.5 percent of gross domestic product.
Many banks have complied with the official lending requirements in part by renegotiating loans with their current clients at lower rates.
Lending levels in Argentina are among the lowest in Latin America. Many smaller companies do not qualify for state-subsidized bank loans because of tough requirements, and both deposits and loans tend to be short-term due to inflation and the country's volatile history.
Argentina's biggest banks include Banco Macro and Banco Galicia, owned by Grupo Financiero Galicia .