Buenos Aires (AFP) - Argentina said Tuesday it has revoked Bank of New York Mellon's authorization to operate in the country, after the bank froze Buenos Aires's debt repayments under orders from a US judge.
"BoNY's representation in Argentina has been revoked," Argentine cabinet chief Jorge Capitanich told journalists, saying central bank regulators had adopted the measure in a resolution.
The bank has been caught up in the South American country's vitriolic dispute with two US hedge funds whose refusal to accept a write-down on their Argentine bonds has derailed the country's efforts to restructure its debt and forced it into its second default in 13 years.
US District Court Judge Thomas Griesa has ordered BoNY not to transfer Argentina's interest payments on its restructured debt until the country settles the $1.3-billion dispute with the "holdout" hedge funds.
The bank's compliance has infuriated Argentina, which accuses the judge of violating its sovereignty.
The Argentine government action would replace BoNY as the fiduciary agent responsible for transferring debt payments to creditors.
President Cristina Kirchner has sent a bill to Congress that would relocate Argentina's debt servicing from New York to Buenos Aires in order to circumvent the US court ruling.
Argentina is still dealing with the fallout of its 2001 default on $100 billion in debt, the largest in history at the time.
It reached deals with most of its creditors in 2005 and 2010 to restructure its debt and repay them just 70 percent of their bond values.
But the US court ruling in favor of the holdouts has blocked the country from following through on those deals.
It entered a new default after the grace period on a $539-million interest payment expired on July 30.
The payment remains frozen in a BoNY account at the Argentine central bank.
Some of Argentina's creditors have meanwhile sued BoNY for failing to pay them the money they are owed, including US billionaire George Soros.
Argentina is due to make the next payment on its restructured debt on September 30.