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Argentine banks seek noncompete clause in Prisma sale

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Argentine banks seek noncompete clause in Prisma sale

Argentine banks want a noncompete clause included in the sale contract of their jointly owned card business Prisma Medios de Pago SA, El Cronista reported.

The clause would restrict the banks from developing or participating in the acquisition business for four or five years, the report said.

The Argentine government is opposed to including such a restriction on the company's new buyer because it wants banks to participate individually in the credit card business. Although it acknowledged that the operation may include a noncompete clause in case two or more banks want to form a similar business, the goverment does not want to create distortions in the market again.

"If you say that no individual bank for five years can be an acquirer, you almost make it impossible for another acquirer to enter, especially for the Visa flag, and generate a hunting ground," the government said.

Argentina's CNDC commission for the protection of competition has given the owners of Prisma until September 2018 to sell 51% of the company and until 2021 to sell the remaining 49%.

Prisma, which is owned by Visa International and 14 Argentina banks, will be dissolved in order to spur competition in the local financial sector. The company is reportedly valued between $1.00 billion and $1.50 billion.