Intangibility of Deposits (Law 25,466)

On September 25, 2001, Law 25,466 became effective, establishing the “intangibility” of deposits within the national financial market. The term “intangibity” is a literal translation from Spanish which we are including for lack of a better term (we are not very sure what this means in Spanish either). The purpose of this law is to assure the public that regardless of the economic crisis their rights as depositors would be respected, in opposition to certain past experiences.

One of the main past experiences which still remains in the collective memory of Argentine depositors is the denominated Plan Bonex. In January 1990 Argentina was undergoing a hyperinflation and had no access to international credits. This led the Executive Branch to pass the Emergency Decree 36/90 (the “Plan Bonex”) by which all term deposits in national currency were mandatorily exchanged into bonds of the national treasury denominated “Bonex”.

As a consequence of the referred compulsory exchange of deposits, groups of investors filed judicial actions against the National Government, requesting the declaration of unconstitutionality of the presidential decree and the restitution of their savings, claiming that said decree infringed the right to private property expressly contemplated in Art.17 of our National Constitution. The matter was finally resolved by the National Supreme Court of Justice which, in re “Peralta, Luis A. et al. vs. National State, Ministry of Economy – Central Bank” (CSJN, Fallos: 313:1513), settled the dispute stating that in times of economic crisis no one can remain unaffected by the circumstances the country is undergoing “...alleging individual rights, noble rights per se, though not less noble than those [rights] that assure the subsistence of social institutions which are the basis of the former rights.”

In re “Peralta” the Supreme Court also admitted the validity of the emergency decrees of the Executive Branch for financial matters, faculty which is currently recognized under Article 99 of the National Consitution. Likewise the Supreme Court held, with the vote of various of the Ministers that are still in office, that “when for reasons of need [the National Government] sanctions a law that does not deprive the private persons of the legally obtained economic benefits nor denies their property but only limits temporarily the accrual of such benefits or restricts the use that may be made of that property, there is no violation of Article 17 of the National Consitution, but a limitation imposed by the need to mitigate or overcome a situation of crisis. In the Argentine constitutional system, there are no absolute rights and all of them are subject to the laws that rule their exercise.”

The purpose of Law 25,466 was to consolidate the trust of the public and avoid the withdrawal of deposits. The Law 25,466 in its rticles 1 and 2 provides that the National Government will not be allowed able in

Intangibility of the Deposits

Law 25,466

Regime of all the banking deposits whether in pesos or in foreign currencies, fixed term or payable on sight, held by the financial entities authorized by the Central Bank of the Republic of Argentina.

Article 1º: All the banking deposits whether in pesos or in foreign currencies, fixed term and payable on sight, held by the financial entities authorized by the Central Bank of the Republic of Argentina pursuant to the provisions of Law 21,526 as amended, are governed by this law. Said deposits are considered intangible.

Article 2º: The intangibility established in article 1º consists in: the Federal government shall never alter the conditions agreed between the depositor/s and the financial entities, meaning the prohibition of exchanging them for national public debt securities, or any other asset of Federal Government, or the extension of their payment, or the modification of the interest rates agreed, or their currencies, or restructuring the expiration dates, which will occur on the dates agreed by the parties.

Article 3º: The present is a “public order” law, the rights arisen for the depositors and the financial entities included in article 1º hereof will be considered acquired rights and will be protected by article 17 of the National Constitution.

Article 4º: As from the sanction of this law, all the legal or regulatory rules that oppose to it are abrogated with the exemption of the exercise by the Central Bank of the Republic of Argentina of the powers granted by the By-Laws (Carta Orgánica) of said institution, as well as the adoption of the measures stated on the financial entities law 21,526 as amended in defense of the depositors.

The dispositions of this law will be enforceable as from the date of its promulgation.

Article 5º: Notice to the Executive Branch.