MercoPress. South Atlantic News Agency

Griesa yields: allows Citibank to process interest payments of Argentine law bonds

“Griesa issued said he won’t prevent Citibank from fulfilling its obligations to process interest payments of Argentine law bonds,” Citibank Argentina reported

United States Judge Thomas Griesa finally authorized Citibank Argentina to process interest payments of bonds issued under Argentine law, with a payment deadline on March 31 and on June 30, and to exit its custody business in Argentina.

 “Griesa issued an order and said he won’t prevent Citibank from fulfilling its obligations to process interest payments of Argentine Law bonds,” Citibank Argentina said in a press release late last Saturday.

“At the same time, Griesa authorized Citibank to exit its custody business in Argentina, a process that will be done fulfilling all local regulations.”

The bank said its custody business represents two percent of the total income of Citi Argentina and that has “no meaningful connection” with banking business in general. At the same time, the bank said it hopes to continue “fulfilling a relevant role in the Argentine economy on the upcoming decades.”

Citibank said last Tuesday it plans to exit its custody business in Argentina as soon as possible, after a Griesa refused to lift an injunction that blocked the bank from processing interest payments on 2.3bn of Argentina bonds.

President Cristina Fernández warned on Friday that Citibank is obliged to pay bondholders despite Griesa’s ruling forbidding the bank to do so. During a rally, Cristina Fernandez said the Argentine government would protect the rights of bondholders and force the bank’s Argentine subsidiary to make the payments in accordance with local law.

Citibank was in the disjunctive of disobeying Thomas Griesa original decision and thus fall in contempt of court in the United States, or following the federal judge's decision and ignore Argentine law and be exposed to Argentine sanctions including the loss of its banking license.