REFILE-Argentina holdouts could seek contempt for Banco Nacion, BCRA

viernes 10 de octubre de 2014 14:39 GYT

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By Davide Scigliuzzo

WASHINGTON, Oct 10 (IFR) - Some of Argentina's holdout creditors are considering asking a US judge to hold local state-owned lender Banco Nacion and the country's central bank in contempt as part of their fight against the sovereign, according to a source familiar with the situation.

The request would be based on the role of the two institutions in helping Argentina circumvent the US jurisdiction in September by depositing a coupon payment due on its restructured bonds at an account opened by the central bank at Nacion Fideicomisos, a subsidiary of Banco Nacion instead of at trustee bank New York Mellon.

Both institutions could fall under the US court's jurisdiction and be subject to monetary fines as Banco Nacion has offices in the US and the Banco Central de la Republica Argentina (BCRA) maintains an account at the Federal Reserve, the source said.

US court judge Thomas Griesa in September held Argentina in contempt for trying to find ways to circumvent a prior order requiring it pay holdout bondholders at the same time it pays creditors who accepted its 2005 and 2010 restructurings.

On Sep 30, Argentina deposited a US$161m bond interest payment at Nacion Fideicomisos defying Griesa's order. The coupon payment is intended to show that Argentina has the ability to continue servicing its international debt despite a default in July that grew out of the legal battle.

But this money may not reach the hands of investors because using Banco Nacion as the conduit for payments violates the 2005 trust indenture which says that trustee has to have a place of business in New York, which the fiduciary does not.

If delivered to an institution that is not formally recognized as trustee, the payments could also be attached by the US courts. (Reporting by Davide Scigliuzzo; Editing by Shankar Ramakrishnan)