Argentine Court Refrains Citibank Custody Exit

An Argentine court has refrained Citibank to take any further steps in exiting the sub-custody business for certain sovereign bonds.

In March, Citi announced it would shut down its custody business in Argentina due to a long-standing legal battle between the Argentinean government and a group of New-York based hedge funds fighting for payment on defaulted debt.

In a statement issued on Tuesday, the Argentine economy ministry said the court ordered Citibank Argentina to refrain from: “making decisions that involve abandoning the custody of exchanged Argentine bonds.”

The court said that the bank is governed by law to process payments of Argentine sovereign debt, and raised the prospect of further disciplinary action if Citi seeks to continue exiting its local custodian unit.

Since announcing its exit in March, Citibank Argentina has also been sued by the government for arranging a deal with the U.S. hedge funds to process two one-off payments in March and June.