A group of leading banks took the initiative to call delinquent clients – with non-payments of at least 90 days -, with the aim of initiate a renegotiation of the conditions of the original credits, which users cannot now pay.
The decision of some entities comes amid a new jump in the irregularity of credits granted in recent months.
The movement still seems incipient, and the bankers have been managing it with total discretion and a low profile.
In general – from what he could find out iProfessional– it’s about lines of credit for consumption, which have an extension of less than 36 months.
It happens that shortly after taking it out, clients had problems making the payment on time. Whether due to a drop in income levels; or directly in the face of job loss.
Banks negotiate with clients who owe credit installments
“We are all working to get through the moment. It will take time to return to reasonable levels of delinquencies. And stability of interest rates will be needed to achieve a certain normalization of activity,” commented the director of a leading foreign bank to iProfessional.
A colleague of his, but from a public bank, had a similar reasoning. “It seems that The Central Bank, finally, is defining a more predictable monetary policy (which, until now, and since the departure of the LeFis, did not exist). With more liquidity in pesos, and with improvements in activity, credit will return alone and calm. But it will take a few months for normalization. Believe”, he reasoned.
Specifically, renegotiation between banks and clients is based on the “good will” on their part to reach an agreement.
The banks consulted said that the idea is to reach a fee that clients can pay. It may include lengthening of terms and, in some cases, also a reduction in financial costs.
Delinquency among companies and families is record
The data that sets off the most urgent alarms is the behavior of credit to families, whose default rose to 11.2% in Februaryaccording to the advance given by the consulting firm 1816.
This increase is not an isolated fact: represents the sixteenth consecutive month of increase, consolidating the highest value recorded since 2004.
Delinquency is not a management problem of a few banks, but an indisputable macroeconomic phenomenon that affects 28 of the 30 main financial entities in the country, explained the specialized consulting firm.
The situation becomes critical in the loans of non-financial entities, where delinquencies climbed to 29.9% during February, rising more than two points compared to January.
Behind this suffocating financial panorama There are interest rates for personal loans that are around 70% of TNA (close to 100% of TEA), levels that remain high due to the default itself and the difficulty of predicting the official rate policy.
Total financial cost levels exceed 250% annually, and even more, depending on the bank.
In short, the Argentine household is caught in a pinch between deteriorating real income and a financing cost that presents unprecedented ratios for the last decade.
Why banks don’t lower interest rates on loans
According to the sources consulted by iProfessionalthe main reasons why these rates remain high, despite the fact that the BCRA was making monetary policy more flexible, are the following:
- High late payment: There is a direct link between the level of rates and the risk of default. This high default puts upward pressure on the cost of financing to compensate for the risk assumed by banks.
- Uncertainty in monetary policy: Although the Government has managed to maintain the overnight reference rate (BCRA REPO) at around 20%, loan rates have not followed that trend due to how difficult it is to predict the official rate policy under the current monetary scheme.
- Rate decoupling: The ratio between the personal loan rate and the reference rate is at levels practically unprecedented for the last 10 years. This means that the cost for the final consumer is not falling at the same rate as the rates that the Central Bank pays to financial entities.
Deputy presents project to alleviate late payment
A bill presented by deputy Roberto Santiago, from the Unión por la Patria bloc, promotes the creation of an extraordinary debt regularization regime aimed at individuals with payment difficulties.
The initiative, named “Debt relief and debt restructuring of Argentine families”, establishes mechanisms for partial forgiveness, refinancing and state assistance for debts linked to consumption, with the aim of covering situations registered until December 31, 2025.
The proposal reaches people who are classified in categories 2, 3, 4 and 5 of the Central Bank of Debtors. Those that present different levels of risk or non-compliance with their credit obligations. The universe includes debts contracted with financial entities, payment service providers, non-financial credit providers and financing platforms between individuals.
