MercoPress. South Atlantic News Agency

Fearful Argentines taking their dollar savings to Uruguay for shelter

The solidity of the Uruguayan banking system is confirmed by Argentines mistrust of their financial policies.

Safe deposit boxes in Uruguay are overflowing with US dollars from fearful Argentines concerned about the situation in their country and the results of Sunday’s mid term elections, according to banking sources in Montevideo.

These funds do not figure in any banking balance since they are not formally deposited and can’t be computed as “deposits from non residents”. Furthermore the exact sums are not known, no interest is delivered on these funds and on the contrary depositors must pay a fee for the rent of the safe deposit box.

“The Uruguayan banking system is receiving a constant flow of funds which the Argentines are bringing over to Uruguay, although most of the money that makes it formally to the system is triangled to other world markets”, said Gustavo Perez president of the bank employees union.

“There is a flight of capitals from Argentina”, underlined Perez who also confirmed that some banks had to expand their safe deposit boxes supply to meet the demand from Argentine clients. “This is particularly evident in Montevideo, Colonia and Paysandú”, he added.

Neighbouring Argentina highly sensitive to political affairs, has always had Uruguay, its solid banking system and reliable politics, as a first resort refuge. It’s less than 20 minutes to Montevideo by air from Buenos Aires; two hours in a ferry to Colonia and to reach Paysandu, Argentines only have to drive across an international bridge.

According to Argentine banking sources during the first quarter of this year, 3.627 billion US dollars left the country compared to 3.365 in the same period a year ago. In the third quarter of last year it had reached 5 billion and in the last quarter, 4.7 billion USD.

The cost of a safe deposit box in a Montevideo bank can range from 100 to 200 US dollars depending on its physical capacity, plus the annual rent cost.

Non resident deposits in the Uruguayan banking system have increased by 1.1 billion US dollars since December 2007 of which 236 million this year.

“But it’s much more what has been effectively triangled to other banking systems without having spent a single day in Montevideo”, said a local bank manager. Funds from Argentina over the last two years have also been invested in summer properties along the Uruguayan Atlantic coast or in farmland.

Union leader Perez said that in Uruguay, which is also holding primary presidential elections in all parties this Sunday ahead of the general election next October, “fortunately none of this is happening; Uruguayans trust their banking system which is solid and abides by clear, international regulations and recommendations”.