Banco Patagonia sees 40 percent loan growth

BUENOS AIRES (Reuters) - Banco Patagonia, Argentina's No. 8 bank by capitalization, sees lending growth of 40 percent this year, compared with 28 percent growth in the banking system as a whole, a bank official said on Tuesday.

Loan growth is soaring in Argentina as banks returned to profitability in the past two years after the devastating 2001-02 economic and political crisis.

Over the next three years, as the banking system fully recovers and the central bank raises capitalization requirements on banks, there may be some consolidation in the sector, Patagonia Chief Financial Officer Ruben Iparraguirre told the Reuters Latin America Investment Summit in Buenos Aires.

"There will be some level of consolidation in the financial system. From the 70 banks there are today, we understand that there will be a few less in the next four to five years," he said.

Banco Patagonia (BPAT.BA: Quote, Profile, Research, Stock Buzz) went public last year and is listed in Buenos Aires and Sao Paulo.

Private lending in Argentina is roughly 12.5 percent of Gross Domestic Product, still far below the proportion of 22 percent rate in 2000, before the crisis bankrupted many banks. It could rise to 20 percent in the next five years, Iparraguirre said, noting that was a conservative estimate.

Iparraguirre said that Banco Patagonia, which has grown by acquiring other banks such as the Argentine arm of Lloyds, can triple its lending and deposits without needing fresh capital.

"The bank is open to looking at opportunities (to acquire other banks). We understand that some alternatives could come up in the private sector. We'll certainly look at them if they come up and if not, we're on a clear path to organic growth," he said.

Patagonia is negotiating with international lenders possible medium- or long-term credit lines "and we hope to have news by the third quarter," Iparraguirre said. That would allow the bank to develop more business lending.

Argentina's government has repeatedly called on banks to lower rates for business loans -- since the bulk of lending is to consumers -- but Iparraguirre cited barriers such as a lack of long-term deposits, which would make longer-term lending risky.

He said two things might encourage lending: a government plan to subsidize 3 to 5 percentage points of loans to small businesses through a government small business agency, and the central bank's plan to introduce interest rate swaps in the near future that will create a reference rate.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Lucas Bergman, Walter Bianchi and Fiona Ortiz, editing by Leslie Gevirtz, Phil Berlowitz)