The lack of domestic capital markets will limit Argentine bank prospects

With Argentine banks struggling to adapt to the evaporation of credit demand as recession and very high interest rates have followed the country’s recent currency crisis, investors are trying to reevaluate the sector’s longer-term outlook.

The rapid growth in the Argentine bank stocks in the pre-crisis years – Galicia’s CEO Fabian Kon points to the “crazy” ride of its shares from $50 in September 2017 when it conducted a $550 million follow-on equity transaction to $73 a couple of months later only to fall to $20 after last August’s crisis to a recovery of around $40 today – was largely fuelled by optimism in the structural opportunity.