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This is what it looks like when Argentina tries to embarrass your entire company in front of the world

cristina fernandez
cristina fernandez

(Reuters)Argentine President Cristina Fernandez.

It's come down to a raid.

After suspending Citibank's access to Argentine capital markets and sacking the bank's CEO in the country, Argentine authorities will perform an "integral inspection" on the banks headquarters, according to the country's central bank head, Alejandro Vanoli.

"We want to know, without a doubt, given the fact that it's now headless, that the bank still has the legal infrastructure to guarantee that there are no problems with clients and employees," Vanoli told Argentine paper Tiempo Argentina.

Citibank Argentina CEO Gabriel Ribisich, who has led the bank since 2013, was fired last week because he "ignored" local laws.

Yes, that's vague, so here's what happened:

Argentina wanted Citibank's custody business to pay out creditors in violation of an order from the US judge presiding over the country's decade-old lawsuit with a group of hedge funds known collectively as NML.

Judge Thomas Griesa's basic order, which pushed Argentina into default this summer, was that Argentina cannot pay some creditors who bought Argentine sovereign debt dating to 2001 and not others.

Argentina tried to get around that order by putting the bonds in question under its own jurisdiction — essentially waving a magic wand and making Judge Griesa's authority disappear.

Unfortunately international law doesn't quote work that way exactly, and since Citi didn't want to violate the law, it came to an agreement with the Court and NML so that it could take its custody business out of Argentina altogether.

To Argentina this means as follows (from Tiempo Argentina):

Valoni, in tune with the rest of the government, headed by the Minister of the Economy, Axel [Kicillof], is convinced that Citi did not play fairly and established a tacit agreement (which was ultimately very convenient) with the New York Judge Thomas Griesa and NML in order to make a joke out of Argentine law.

So this is about pride, people.

And of course, the over $1.3 billion NML has said Argentina has owed it for over a decade.

citi argentina
citi argentina

(REUTERS/Enrique Marcarian)Window washers work above a logo of Citibank in downtown Buenos Aires March 17, 2015.Argentina, to review, refuses to pay NML because, unlike 93% of bondholders, NML has refused to take a haircut on any of the Argentine debt it purchased in a fire sale after the country defaulted back in 2001. This business with Citi is just one moving part in a gigantic, confusing mess.

"Citibank did not have to consult (Thomas) Griesa and should've acted in accordance with Argentine law," Vanoli said in an interview. "The response from the financial system is out of line. Of course, it's expected because it's the attitude they've always had, it's always defended corporations.

"They're accustomed to the Superintendents of Banks and the Central Bank [Argentine regulators] always being passive but it's not that way anymore because now mechanisms of control and regulation exist to avoid abuses ... "

Argentina said at first that Citi would in no way be able to take its business out of the country. But that's tough to stop. Argentina can make Citi's exit "a very difficult, long and drawn-out process," David Fernandez, a public finance lawyer at Buchanan, Ingersoll & Rooney told Business Insider. "But if somebody doesn't want to do the business, eventually they're going to find their way out of it."

The key there is "long and drawn out." The way Argentina sounds right now, it's ready for battle.

"There is a double standard with Argentina," said Vanoli in an interview this weekend. "When regulatory entities in the United States and Europe impose multimillion dollar finds on financial firms that violate the law, no one says anything. Meanwhile over here when the same thing happens they start talking about how we're "Chavez-ising' the economy."

Yes, that was a reference to late Venezuelan leader Hugo Chavez.

And yes, Vanoli was comparing sacking a private company's CEO and raiding its offices to levying a fine.

So that's where we're at, people.

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