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Argentina’s Banks Cut Trading Desk Jobs After Market Plunge

Ignacio Olivera Doll

(Bloomberg) -- Banks are shrinking the size of their trading desks in Argentina after a rout sparked by the Aug. 11 primary election resulted in the return of currency controls and capital flight to the battered local market.

Banco Itau Argentina SA, BNP Paribas SA, Banco BBVA Argentina SA and HSBC Bank Argentina SA are among banks that cut their trading desks or relocated their traders, according to people with direct knowledge of the matter. The reason was the market drop after opposition leader Alberto Fernandez trounced president Mauricio Macri in August primaries with a wider margin than was expected.

The concerns around a return to protectionist policies under a Peronist opposition were cemented on Oct. 27 when Fernandez beat incumbent Macri in the first round. He’ll take office on Dec. 10. The benchmark S&P Merval almost halved in dollar terms, while bond spreads tripled to 22.92 percentage points since the primaries.

Representatives for Itau and BBVA declined to comment. BNP did not immediately reply to a comment request. A spokeswoman at HSBC Argentina confirmed the relocation of one of its traders and added that the position was replaced locally.

Banco Itau arranged the exit of the head of its trading desk, Sebastian Azumendi, formerly of UBS and Mizuho, who had returned to his home country of Argentina in 2017 as the market boomed. BNP Paribas let go traders Marcos Rodriguez Alcobendas. HSBC Argentina relocated FX trader Sebastian Rzezak to New York, a spokeswoman confirmed, and replaced him with Tomas Devito, formerly of Banco Patagonia.

Read More: Stock and Bond Trading Decimated in Once Red-Hot Argentina

BBVA’s Cesar Coppola, who had been hired from HSBC in Oct. 2018, left the bank in mid-October. Shortly after he started a new role as head of investments at Binaria Compania de Seguros, the insurance company owned by health services company Grupo OSDE.

”My decision was unrelated to the current market situation-- I was offered a great opportunity to return to the buy-side through a local group,” Coppola said. “In the medium term, I believe there will be more opportunities in the buy-side in Argentina than in the sell-side.”

The moves come as Argentina’s political risk leads foreign institutional investors to shy away from local assets. Banks started by cutting senior roles amid concerns on their budgets for the year ahead and that a Fernandez government may put limits on layoffs.

Among the biggest blows to the sector were delays on the payment of local notes and FX controls, which limit banks’ ability to trade futures.

“The futures market was lost, as the instrument ceased to be used as a hedge and volume fell by 65%,” said Pablo Castagna, head of wealth management of local broker Balanz Capital.

Since Argentina’s currency crisis began in April 2018, jobs in the financial system shrank by 2.4%, or 2,500 jobs, according to central bank data.

(Updates with comments from Cesar Coppola in seventh paragraph.)

To contact the reporter on this story: Ignacio Olivera Doll in Buenos Aires at ioliveradoll@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Carolina Millan

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