The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Refco ramifications: A crisis with a twist

Latin America is no stranger to banking crises. Every so often a banking system will implode, and depositors will lose all or some of their money.

A number of Latin banks had credit lines to Refco

It has happened again.

This time, though, there’s a twist: the banks losing money weren’t taking the deposits, they were making them. Banks across the world, but especially in Venezuela and central America, had accounts at an unregulated Bermuda-based financial institution called Refco Capital Markets.

“RCM is a nightmare for a big part of the financial intermediaries tier of the Venezuelan banking system,” says a veteran Venezuelan financial industry observer. In return for loans from RCM, those Venezuelan intermediaries placed securities on deposit there; it seems now that they might not get these back. Although these were collateralized loans, often RCM would loan only up to half the value of the collateral, so the banks would still lose 50% of their money. And most of the time the banks didn’t draw down their entire credit line with RCM.


RCM was a wholly owned subsidiary of Refco, the US financial institution that went public with a $585 million IPO last year in August and collapsed two months later.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree