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Source: Financial Times
By: Benedict Mander

After years of subsisting on the most basic transactions, Argentina’s banks are gradually returning to normality as lending activity takes off in one of the least developed banking sectors in big emerging markets.

Despite a painful history of financial crises and state intervention, confidence is returning to the sector thanks to President Mauricio Macri’s market-friendly reforms. This is reflected in booming shares of local banks, with the MSCI Argentina Financials index up almost 50 per cent so far this year.

“Argentina was off the map for practically 15 years,” says Marcos Buscaglia, an economist at Alberdi Partners. “It is clear that some very interesting years lie ahead [for banks] as we are coming up from such a low base.”

It is not just traditional saving and lending, with big banks seeing more than 20 per cent year-on-year loan portfolio growth in real terms, but financial activity in general that is poised to take off, from trading and asset management to debt placements and IPOs, says Mr Buscaglia.

In particular, there are high hopes for capital markets reforms that officials hope to push through congress by the end of the year, after midterm legislative elections in October, in which the government is expected to perform well.