Banks to rescue

Press, 17 November 1982, Page 45

Banks to rescue

NZPA New York A working group of 11 international banks has provisionally agreed on a proposal for a SUSIIOO million bridging credit for Argentina. banking sources said. The group, expanded from 10 by the addition of Royal Bank of Canada, may meet Argentine officials later this week for further discussions, after holding talks here last week, they said. The president of the Argentine Central Bank, Julio Gonzalez Del Solar, told Reuters that agreement had been reached on a proposal which he would put to his government. The banking sources confirmed that a proposal had been made and said it covered basic terms and conditions for credit, which is to run parallel with a loan Argentina is seeking from

the International Monetary Fund. They declined to disclose the terms of the bank loan but said that interest rates were not a matter of serious dispute. Gonzalez Del Solar had said “the market will set the interest rates." The sources said the informal working group which has been holding talks with Argentina does not formally constitute either a steering committee or the potential lead managership of the bridging loan. In addition to Royal Bank of Canada, it comprises Bank of America, Chase Manhattan Bank, Citibank, Manufacturers Hanover Trust, Morgan Guaranty Trust, Bank of Tokyo, Credit Lyonnais, Credit Suisse, Dresdner Bank, and Lloyds Bank International. Some sources said one or two banks have still to ratify the proposal, as well as the Argentina Government.

The sources said a settlement between Argentina and British banks on overdue payments would be a factor in the final agreement on the bridging loan. Argentina has reached provisional agreement with major British banks on payments due to Britain between April and September, while financial relations between the two countries were interrupted because of the Falkland Islands conflict. Such payments total some ?440 million. The formulation of a proposal for the bridging loan indicates that progress has been made with British banks, and no problems on the British, question are expected, the sources said. Also in question is the number of banks who will participate in the bridging credit. The sources here agreed with Argentine estimates that a total of about 50 would be involved, but could not give a more precise figure. Banks have agreed that the loan should not run longer than the I.M.F. programme,' which is expected to be for 15 months up to March, 1984, banking sources said. Argentina’s military government has pledged to hand over power to an elected, government by that date.