When the Argentine economy collapsed in 2001 and the Argentine peso ended it’s 12 years pegged to the dollar, the financial sector took a big hit.

Every single bank reported monumental losses, and Bank Boston recorded losses of around U$D 2 Billion.

At that time the entire system was collapsing, people where rioting the banks, their windows had to be covered with metal planks to protect them.

The assets held in the financial system was shrinking by the day.

Foreign banks, in most cases simply left their local subsidiaries to fend for themselves, uncertain of the outcome of the crisis. Some others simply took the loss and closed their Argentine operations all together.

So…..why are our eyes in the Argentine financial sector now?

Simply put, because we need to be ahead of the curve, and many indicators are showing very interesting signs.

We have been paying close attention to the sector for a little over a year now, and everything shows that we were right.

Most banks reported profits last year, for the first time in years. Deposits are growing at a good pace and credit is showing sings of recovery.

The exposure of banks to the public sector is shrinking, slowly but surely.

All positive signs.

The fact that headquarters of foreign banks are injecting capital again in their Argentine branches. Most private sector banks also saw their capital grow.

Most of the executives in the sector are optimistic, and the talk on the street is that the banking industry in Argentina is getting ready for prime time again.

The economy has been seeing a remarkable come back, catching most international organizations by surprise.

Remarkably this comeback has been possible without extreme measures. It is true that some things should have been different, and there is still a long way to go for the country, but it is also true that Argentina has not seen the kind of switch from one extreme to the other that is so common in Latin America.

The government might be inking agreements to keep inflation low, but that is a long way for the old recipe of simply freezing prices by law.

As long as the general economy keeps the growth, the financial sector will follow, and we’ll see interesting deals.

The most significant of which is the sale of Bank Boston Argentina by Bank of America in around USD 180MM, to a group formed by Standard Bank, of South Africa with a reported 70%, the Werthein Group with 20% and the Sieleky Group with the remaining 10%.

This deal is very interesting, and tells a lot about the expectations for the sector.

The most important aspect is that for the first time in many years an international bank, like the South African Standard Bank, with assets exceeding USD 100B and double headquarters in South Africa and London, is entering the country.

Standard Bank’s specialty are emerging countries, they know what they are getting into, and they find it attractive.

On the other hand it is true that Bank of America is leaving the country, but Bank Boston was an operation inherited from the purchase of Fleet by Bank of America, in turn Fleet got it with the purchase of Bank Boston, so it was clearly not part of the core of Bank of America.

It is not clear that the sale was originated out of poor expectations or because of other reasons not entirely or directly related to the future performance of the operation.

Another tell tale that the sector is poised for growth is the fact that the Werthein group, who for years owned the former Banco Mercantil, and had interests in the financial services industry for years, decided to enter the banking business again.

They proved to know the business, they exited the Banking world at it’s peak, stayed out for years, and now decided it was worth to enter in that market again…..

All this factors are the reasons why our eyes are on the Banking Industry inArgentina, and yours should too.

The opportunities to take advantage of this factors are many, with different risks and horizons. And as always we are keeping our eyes on them.