BUENOS AIRES, Argentina – Citibank said Tuesday it was getting out of the business of making bond payments for Argentina, the latest fallout from a bitter court fight between the South American country and a group of bondholders in the U.S.
In a statement, the bank said it was making plans to transfer Argentina’s debt payments to another entity because of “unprecedented international conflict of laws.” The statement said the bank had notified the New York court overseeing the legal fight, but did not elaborate on its transition plans.
Last week, the bank found itself in a difficult position with few options. First, U.S. District Judge Thomas Griesa ordered Citibank to stop processing payments to bondholders. A day later, Argentina threatened to revoke the bank’s operating license if it refused to process those payments.
The dispute stems from Argentina’s default in 2001 on $100 billion worth of debt. Most bondholders agreed to debt-swap deals in 2005 and 2010 that drastically cut Argentina’s payments. But the group of U.S. hedge funds led by billionaire Paul Singer has demanded full payment, and took their case to court.
In several decisions, Griesa has ruled that the holdouts must be paid roughly $1.5 billion if Argentina pays interest to other bondholders.