Deposits in Uruguay by Argentines and other non-residents hit a five-year high

RIO DE JANEIRO, BRAZIL – In Montevideo, it is often said that Uruguay’s banks are the “petty cash” of many Argentines. It has always been said, but it is emphasized when uncertainty increases in Argentina.

Some of this seems to have been confirmed at the beginning of 2022. Non-resident deposits in Uruguay increased month by month, although not explosively: after closing at US$3.3 billion in 2021, the stock rose to US$3.4 billion at the end of January, to US$3,45 billion in February, and to US$3.5 billion in March, a maximum since the beginning of 2017.

Public information does not discriminate by depositor nationality, but the annual accounting of the Eastern banking institutions themselves confirms that Argentines are in a large majority. For example, in the subsidiary of Santander, they had almost US$29 million, 78% of the total money of non-resident clients in that bank.

To the almost US$3.5 billion of non-residents -Argentines and other nationalities- deposited in Uruguayan banks, we can add the US$58 million that, as of last March, was held by Patagonia Uruguay, an external financial institution with an office in Punta del Este, which can only operate with clients based outside the country.

After a couple of bad years, this institution began its liquidation process last April so that these accounts would be closed during the process.

From a historical perspective, the current volume of deposits in Uruguay belonging to non-residents in the country is not as high as, for example, there were in 2015 and 2016 (above US$4 billion), or more than US$6 billion at the end of 2001.

Then, after the “corralito” was installed in Argentina, a run on clients of that origin ensued, which reduced the stock to just over US$1 billion in 2002 and 2003.

Currently, non-resident deposits are a relatively minor part of the liabilities of Uruguayan banks, close to 12% of the total for the system as a whole.

Some Brazilians, Chileans, Paraguayans, and even Americans -among other nationalities- also choose the Uruguayan financial market, which is seen as reliable and which until recently offered strict banking secrecy.

This perception is reflected in “Thus Spoke the Moneychanger”, a book by writer Juan E. Gruber, which was revived years ago in a film version: “It happens that for decades Argentines and Brazilians preferred to keep their savings, reserves, and economies in anything other than their own currency and their own banks. Those who do not have sophisticated accounts in ‘serious’ financial centers, like those in the United States and some European countries are usually called, do so by hoarding bank bills” in Uruguay.

With information from El Economista