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Assessment of Argentina’s Banking System Against the Basel Framework

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Key Points

The Argentine banking system has undergone an assessment against the Basel framework for risk-based capital requirements. The key points from this assessment are summarized below.

Banking System Overview

• Low Level of Concentration: The Argentine banking system has a relatively low level of concentration compared to other emerging economies.

Funding Strategy

• Domestic Currency Deposits: Banks primarily rely on domestic currency deposits for funding.
• Private Sector Deposits: Private sector deposits are the most significant source, accounting for 59% of total funding.

Credit Allocation

• Corporate Sector: Credit to the corporate sector accounts for 57% of total credit to the private sector.
• Households: Households receive the remaining 43% of total credit.

Risk Exposure

• Limited Foreign Counterparty Exposure: Argentine banks have limited exposure to foreign counterparties and markets, representing only 1.7% of their total assets.

Assessment Methodology

The assessment team used a four-grade scale to evaluate compliance:

• Compliant: Complete and consistent implementation of the Basel framework.
• Largely Compliant: Substantial alignment with the Basel framework, with minor deviations.
• Materially Non-Compliant: Significant differences from the Basel framework that may impact risk-based capital requirements.
• Non-Compliant: Failure to implement key components of the Basel framework.

Bank Coverage

The assessment covered eight banks representing approximately 62% of banking system assets.