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Mexico probes bank cyberattack; Argentina looks to IMF amid woes

S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.

Hack attack

* A cyberattack at some of Mexico's financial institutions has resulted in large cash withdrawals at several local banks. Banco de México said it identified five financial institutions whose connections to its payment system, known as SPEI, were compromised. The cyberattack is currently under investigation.

* The hackers could have stolen up to around 400 million Mexican pesos from the banks, according to preliminary estimates from the country's financial regulators. Meanwhile, resources of the banks' customers were not affected.

* In light of the hacking incident, the central bank released new risk control mechanisms which will govern financial institutions that have operations in the SPEI.

* A recent survey by PricewaterhouseCoopers Ireland found that cyberattacks have surpassed overregulation as the top concern of bank and capital markets CEOs around the world.

Stemming a crisis

* The International Monetary Fund may offer a high-access, standby financing arrangement to Argentina to aid the country in its financial woes, although the details of which remain under discussion, said IMF spokesman Gerry Rice. The IMF's board is due to meet to finalize a program for the South American nation. Argentine President Mauricio Macri recently sought a credit line from the IMF to avoid a financial crisis as the Argentine peso continued to weaken and the government looks to reduce its fiscal deficit.

* Banco Central de la República Argentina excluded commercial banks from complying with the minimum peso-denominated cash deposits in May to encourage them to buy more of its short-term debt securities, known as LEBACs. Analysts said the move is a good strategy to stem further rise in the dollar.

* Moody's said that record-high interest rates in Argentina, along with the country's myriad structural problems, will drive up funding costs for Argentine borrowers and could derail their access to global markets.

* Meanwhile, MSCI Inc. said its upcoming decision on whether to reclassify Argentina to emerging market status "will be more difficult" given the country's current market slump.

Banks behaving badly

* The Boston Retirement System is suing nine global banks and their subsidiaries for allegedly conspiring to fix Mexican government bond prices between Jan. 1, 2006, and April 18, 2017.

* Brazilian state-owned oil company Petrobras filed a lawsuit against eight banks for allegedly engaging in exchange rate manipulation.

* Peru's Supreme Court has ruled against Scotiabank Perú SAA in an appeal case involving a 482 million soles tax payment from some 20 years ago.

Earnings roundup

* In Brazil, Banco Nacional de Desenvolvimento Econômico e Social posted a 453.4% year-over-year rise in its net income for the first quarter of 2018, mainly due to a reversal in provision for loan losses. Banco Inter SA and Banco do Estado do Rio Grande do Sul SA also grew their net income in the period by 77.8% and 89.8%, respectively.

* Elsewhere in the region, Banco Macro SA's first-quarter profit improved about 76%, Bancolombia SA's posted a 14.29% slump, Grupo Aval Acciones y Valores SA's ticked up 1.8% and Banco de Bogotá SA's rose 9.2%.

Featured this week on S&P Global Market Intelligence

* Cost-cutting drives higher Q1 profit among Brazil's bank majors

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

* Ratings Roundup: A summary of various ratings actions on Latin American financial institutions and economies.