New York district judge Thomas Griesa has authorized Citibank to process interest payments on US$2.3 billion of Argentina bonds due on March 31st.
The order also authorizes the bank to process a future payment on June 30th, and compels the financial entity to get out of its custody business in the South American country.
Griesa had blocked payments from Citibank Argentina to bondholders following his sentence in favor of holdout tenants of Argentine debt. The judge ordered so-called “vulture funds” should be paid in full, blocking interest payments on Argentine denominated bonds until that sentence is met.
Ranked one of the world’s leading custodian banks, Citigroup portrayed itself as an innocent third party faced with the untenable choice of ignoring Griesa and being held in contempt of a federal US court, or putting its license in jeopardy, as the Argentine government has threatened to cancel Citibank Argentina’s operating license if it refuses to process payments.
Citibank had said on Tuesday it planned to get out of the business of making bond payments for the country and transfer the responsibility to another entity.
“Our custody business represents approximately 2 percent of Citi Argentina’s incomes and, by its own nature, does not have any relation with the rest of its banking activities. Citi has fulfilled a relevant role in Argentina’s economy for over 100 years and hopes to continue developing that role throughout upcoming decades,” a statement released by Citibank Argentina reads.