Scotiabank files $600M US claim against Argentina

CBC News, Canada

Scotiabank files $600M US claim against Argentina

7 April 2005

TORONTO - Scotiabank has filed a $600 million US compensation claim against Argentina, claiming that "discriminatory" actions taken by Argentine authorities led to the total loss of its investment in its Scotiabank Quilmes subsidiary in 2002.

FROM APRIL 19, 2002: Scotiabank’s Quilmes suspended by Argentine central bank

The bank said it filed a notice of arbitration under the terms of a treaty designed to protect the interests of investors doing business in foreign countries.

"A series of expropriatory and discriminatory actions taken by the Argentine government directly caused the loss of its investment and violated its treaty rights of fair treatment," Scotiabank said in a statement.

The bank said it, and its shareholders, experienced "significant damages."

Among other things, Scotiabank alleges that the Argentine Central Bank prevented Scotiabank Quilmes from paying a note which came due, refused to provide it (but not other banks) with additional liquidity during Argentina’s banking crisis, and further obstructed Scotiabank Quilmes’s attempts to restructure and reopen.

The Argentine Central Bank subsequently pulled Quilmes’s licence to operate. Scotiabank took a $540 million after-tax charge to cover its exposure and loans through its Quilmes subsidiary.

Under terms of the 1991 Protection of Investments Treaty signed by Argentina and Canada, Scotiabank’s claim will be dealt with by a three-person arbitration panel. One panel member will come from the bank, one from the Argentine government, and a third panel member must be agreed to by both sides.

Scotiabank share were off 50 cents at $39.15 on the TSX.


Comment on this article


  • Scotiabank files $600M US claim against Argentina1-October-2006 | Palladin

    Scotiabank claims a USD$600 million compensation for arbitrary and unlawful decisions by Argentina’s Government.

    Scotiabank acquired BWS in Peru (a bank with a notoriously tainted reputation). Presumably it created an escrow account to compensate interests damaged by the arbitrary and high-handed bucaneering banking methods of the previous administrations. Hopefully it will apply the same criteria to compensate people damaged by the arbitrariness and incompetence of its predecessors as the criteria it wants to apply to its claim against the Argentine government. Otherwise it will be a question of the "funnel principle" (LA LEY DEL EMBUDO) which claims that the wide part of the funnel is for ones’s self, and the harrow end for the others:

    If Scotiabank does not see the justice of claiming damages for arbitrary, unethical, contrary to banking principles and practices acts of the prior owner, than it has no moral right to claim reimbursement for same conduct of Argeninian government.

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