Regulatory Requirements for Banks in Argentina

The following article outlines the key regulatory requirements for banks operating in Argentina.

Risk Management

Comprehensive Risk Management Process

Banks in Argentina are required to have a comprehensive risk management process, overseen by the board and senior management, to identify, evaluate, follow up, control, and mitigate significant risks. This process must be adequate for the entity’s size, economic importance, nature, and complexity of operations.

Internal and External Audit

• Internal Audits: Regulated by the Regulation on Minimum Requirements of Internal Audits.
• External Audits: Governed by the Regulation on Minimum Requirements of External Audits.

Management Structure

The management structure of banks in Argentina is regulated by the Regulation on Authorities of Financial Entities. This regulation applies to:

Members of the Board (Directors or Equivalent Authorities)

• Must submit background information to the Central Bank for assessment
• The Central Bank has 30 calendar days to decide whether to accept the designation

Legal Duties of Directors and Senior Executives

• Responsible for ensuring liquidity and solvency of the financial institution
• Monitor risk profile, avoid conflicts of interest, commit time and dedication necessary to fulfill responsibilities
• Promote training and development of executives
• Establish performance standards compatible with entity’s objectives and strategies

Executive Compensation

• May be freely determined by each financial entity
• Directors’ compensation cannot exceed limits established by law (25% of profits of the entity)

Change of Control and Transfers of Banking Business

• Mergers and portfolio sales require prior authorization from the Central Bank.
• Transfer of shares or irrevocable capital contributions that alters structure of shareholders’ groups must be agreed upon ‘ad referendum’ with approval of the Central Bank
• Certain information about the transaction must be filed.