Court halts Milei's transformation of Banco Nación into limited company

A judge in Argentina has suspended the implementation of a decree from President Javier Milei seeking to transform the state-owned Banco Nación, the country’s biggest bank, into a limited company.

The AFP news agency reported Tuesday that the decree issued by Milei the previous Thursday had been halted by a federal judge in La Plata.

The decree, which intended to change the status of Banco Nación to "modernise" its structure, will "improve its competitiveness in financial markets while optimising the assignment of funds," Milei argued.

But a federal judge in the Buenos Aires provincial capital ruled Tuesday that "a law of Congress is needed to declare such transformation," considering that the decree might constitute a "prior step" towards a possible privatisation of the bank.

This injunction falls within a case before the La Plata Federal Appeals Court since last year, in which a bank clerks union questioned whether a resolution by the bank’s board of directors to advance towards its privatisation was constitutional. The judge affirmed that it was up to the appeals court to decide this issue. 

Banco de la Nación Argentina is a public institution founded in 1891, initially to absorb an economic and financial crisis. It progressively became the country’s main commercial bank in terms of assets, loans and deposits alike, giving priority to small and medium-sized companies (PyMEs), farming, regional economies and households, besides being extended nationwide throughout the world’s eighth-largest country.

The bank had been removed from a list of privatisations within a sweeping mega-reform law sent by the government and approved by Congress last year, including economic and labour reforms while authorising the privatisation of a dozen public companies.

It was this exception to the so-called "Ley de Bases" which led Federal Judge Alejo Ramos Padilla, the author of the injunction, to consider that the decree transforming the bank "was excessive" because while the government measure does not privatise the bank, "it might imply a prior step to its possible privatisation."

The judge also asked the government to present their arguments against his ruling within five days. 

Since approval of the “Ley de Bases” reform package, the privatisation of the state companies Trenes Argentinos Cargas freight rail lines, Corredores Viales highway concessionaires and YCRT (Yacimientos Carboníferos Río Turbio) Patagonian coal mines have all been decreed.

"Nothing which should not be state-owned will remain in the hands of the state," presidential spokesman Manuel Adorni said last weekend with regard to YCRT.

– TIMES/AFP