Argentina has revoked the BNY Mellon’s permission to operate because of what Cabinet Chief Jorge Capitanich said was the U.S.-based bank’s failure to comply with its duties as trustee of some of the country’s bonds.
BNY Mellon has no retail operations in Argentina, so the government’s announcement appeared to be part of a plan to remove it as a trustee and work around the U.S. court ruling that triggered a default on July 30.
The bank declined to comment on the announcement.
A U.S. court order prevented Bank of New York Mellon from distributing $539 million in interest payments on Argentina’s behalf on July 30, triggering the country’s second default in 13 years.
The court order stemmed from a long-running battle between Argentina a group of U.S. investors who have been trying to recover the full value of bonds the country defaulted on in 2001, about $1.5 billion. The government has said it cannot pay those investors without compensating the majority of creditors who accepted lower-valued bonds.
The government sent a bill to Congress last week that would work around the court order by removing BNY Mellon as trustee and replacing it with state-owned Banco de la Nacion, which would not be under the jurisdiction of the U.S. courts.
U.S. District Judge Thomas Griesa, who issued the order requiring Argentina to pay the holdout creditors, has said the government’s plan to evade his order would be illegal.
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