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BUENOS AIRES, March 27 (Reuters) - Argentina's securities regulator said on Friday it was temporarily suspending Citibank Argentina from conducting capital market operations.
The regulator announced it was taking the measure due to what it called Citigroup Inc's deal with litigating hedge funds in the U.S. courts in the country's long-running legal fight over unpaid debt.
Economy Minister Axel Kicillof said on Wednesday the accord, in which a U.S. judge allowed the bank to process two Argentine debt payments in order to facilitate a smooth exit from its custodian business in Argentina, violated local laws.
The leftist government is concerned Citigroup's departure may further hamper the chances of interest payments on debt restructured after its record 2002 default reaching bondholders in the future.
The punitive measure was imposed "on the grounds that there is a situation of grave danger and uncertainty for holders of restructured debt", the regulator said.
Citigroup officials were not immediately available for comment. (Reporting by Richard Lough; Editing by Bernard Orr)