The Argentine banking sector is overcapitalized at the moment but not for long, as banks need to grow at least threefold in coming years to be profitable in a new banking landscape of lower inflation, Francisco Gismondi, a director at Banco Central de la República Argentina said at a banking conference in Buenos Aires on April 3, according to a report in El Cronista.
"When [the banks] will have to grow, there won't be such a capital surplus. Although they have double what they need currently, they will be short if they triple in size," Gismondi told the 2017 IIF Argentina Financial Summit.
Argentine banks in general are "very solvent and liquid," the central bank director said, adding that as the system sees growth the regulator's challenges also grow. "In that sense, it is easier to be a regulator today than in the coming financial system," he noted.
Over-regulation on interest rates and commissions in the last decade has damaged bank competitiveness and the central bank is doing everything to change that, Gismondi added.
At the same meeting leaders from the banking sector discussed the need to boost growth and new ways to find profit, for example with more financial inclusion. "We need to reach out to more people and increase bankarization. Today, banks are not even seen as necessary. We are far from the general public," Daniel Llambías, president of ADEBA, Argentina's association of private banks, said.
Overall, participants reportedly noted that technology advances will help the banking sector be more competitive and increase financial inclusion.