Home » Business » Debt. For HSBC “the agreement is not the solution, but it provides the basis for seeking it”

Debt. For HSBC “the agreement is not the solution, but it provides the basis for seeking it”


Juan Marotta, president of HSBC Argentina: believes that “a shock plan is needed to prop up the recovery of certain sectors with a high spill-over capacity on others”

To the chairman of HSBC bank, Juan Marotta, the principle of agreement that the country reached with the creditors, although it remains to materialize, marks a “turning point” that leaves the country in a better condition to fight the hangover that the coronavirus pandemic will leave. “It is a step on the right path. A necessary condition to be able to propose a medium-term model, which is no small thing”, interpret.

Marotta repeated, words more, words less, this concept several times in the interview with THE NATION. And he described the agreement as a “key step to restore confidence.” For this virtuous process to be possible, he believes that the Government will have to design a plan that mixes orthodox measures with other very Keynesian ones., aimed at boosting the take-off of productive sectors with high spillage capacity in other sectors. Here’s the talk:

-What do you value the most about the agreement with the creditors?

– The agreement is yes it was key. But what contributed the most was the dialogue that forced the negotiation process, beyond the logical short-circuits. The two parties yielded a lot or a little, depending on how you look at it, but preserving what each one was looking for: exchange value, one and strong relief in burdens, the other. It’s very important.

-Why?

-Because many of these creditors in turn have companies or other investments or interests in the country or are in turn creditors of companies that operate in the country. For the multinationals that operate in the country, not only the agreement but also the dialogue that took place generates an improvement in their business environment.

– Even in this context of an economy immersed in problems?

-Argentina has a brutal distortion in all the internal prices of its economy that will take a while to rearrange them, but without a debt agreement there was no possibility of an outline of an economic plan to attack those problems or a strategy, if you don’t want to call it a plan. Again, the agreement is not a solution, but it provides the basis to seek the path of a solution.

-How do you imagine that path?

-Well, doing some things that we all know needs to be done: public spending has to tend to be reduced and monetary financing to end as the impact of the pandemic fades and the economy starts to resume activity. A kind of postwar plan must be attached to that macro tune …

-Postwar period…

-I am referring to a shock plan to underpin the recovery of certain sectors with high spill capacity on others.

-Which ones, for example?

-Construction, infrastructure, mining, oil. I am referring to sectors that require labor per se, but at the same time support other service sectors and producers of intermediate goods.

-Going to the financial system, does the agreement open the doors to banks to seek financing abroad and regenerate credit to exporters, now that liquidity in foreign currency has fallen due to the withdrawal of deposits?

-The agreement is the basis for me to aspire to present myself in a few months to request a line of credit abroad with good expectations or for them to come and offer it to me. Without the regularization of the debt, this possibility would not take place.

-Would it be possible even with strong exchange restrictions?

-Let’s see. I believe that the BCRA reacted in recent months with more exchange restriction measures given the default that had been going on since the end of April; one thing led to another. But after financial regularization, some of these measures will surely be rethought. It will not happen from one day to the next, but I trust that it will happen and will allow us to resume cross border lines to support projects or exports of companies in the country. There is a lot of liquidity in the world.


Alberto Fernández and Martín Guzmán Source: Archive – Credit: Twitter.com

– Moving on to the “world pesos”, to put it in some way, how does the demand for credit come from?

– There is almost no new credit because today the demand is not there.

-And those designed to attend the emergency?

-Those went very well: we assisted more than 320,000 clients for more than $ 18,000 million in the last three and a half months if we add 0% loans for credit cards, those given at 24% to assist companies in paying salaries or rescheduling previous loan maturities for the duration of the quarantine. They are very high values.

-How has that portfolio been behaving?

-Good, but we must bear in mind that it is something artificial, because we ran the maturity at the end of the loan for those clients who decided not to pay, as the BCRA rule says. So the quality of the portfolio is still good, but we are going to face a point of stress when those loans have to be effectively started to pay. There is going to be a high deterioration, both in the personal and corporate sectors, although this is logical considering that we are facing one of the most violent economic crises that affected the country, the region and the world. That will force us to make a general portfolio revaluation with the emerging panorama, because any balance for 2019 or even for the first quarter 2020 is already anachronistic, it says nothing.

-Taking this situation into account, are banks in a position to leverage a sustained recovery in the economy?

-I think so, repeating a mechanism that the BCRA used to mitigate the very negative effects of the pandemic by redirecting the liquidity of the system towards credit. Today there is room to increase loans because the system remains liquid and with very good levels of capitalization, and also the Ministry of Economy did a great job rebuilding a rate curve in pesos with its loans. But the demand has to appear and drive the economy.

-From what you can see by bank activity, how do you describe the current moment of the economy?

-Getting better. I give you two facts: the weekly consumption of our credit card customers is beginning to reach nominal values ​​similar to the days before the start of the quarantine. And bounced checks, which had risen to 14% of the total presented in April, are now around 3.3%, very close to the previous average, which was 3%.

-And what macro projections do you have for the year?

-From what the surveys say, we are among the most optimistic: our inflation projection for this year is 35% and the drop in GDP is 10%, both below the market averages.

Ahead of the pandemic

-How did you live with the pandemic?

-We were among the advanced, but for being a global bank with a lot of activity in Asia and Europe. That experience, which I learned first-hand when participating in the general board (directory), helped us to apply protocols that we implemented since the end of February, that is, before the measures were applied here.

-And how were they handled in the workplace?

-With regard to the commercial network, we divided the staff into two: one that works 15 days in the branches and another that provides remote support. Then they are exchanged, a moment that we take advantage of to disinfect all the facilities. Afterwards, all the others work remotely except those that attend to critical processes of the bank that need to be carried out or supervised on site.

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