MercoPress. South Atlantic News Agency

British banks Argentine watch

British newspapers are carrying increasingly concerned reports of Argentina's worsening economic crisis.

One report says that many foreign banks with retail branches in Argentina are considering closing down their operations. But a banking analyst is quoted as saying: "No bank wants to be the first to leave".

One of Britain's biggest banks with interests in Argentina, the Hong Kong and Shanghai Banking Corporation (HSBC), says it is monitoring the situation after the International Monetary Fund decided against agreeing a rescue package.

HSBC has previously hinted it may withdraw from Argentina if economic conditions deteriorate. It refuses to say whether the closure of the banking system by Argentina's central bank will precipitate a withdrawal. HSBC has already made provisions of 1.2 (one point two) billion US dollars (£857 million) against Argentina and could be forced to make more provisions as a result of continued devaluation of the peso.

The Canadian Bank of Nova Scotia has said it is not prepared to carry on bailing out its Argentine subsidiary, Scotiabank Quilmes. A spokesperson said: "We are not going to put any more capital into the bank until the Argentine Government has got its house in order".

Others thought to be considering withdrawal include Italy's Banca Nazionale del Lavoro.

Harold Briley (MP) London