Life at argentina!

Graffiti denouncing bankers as thieves and scoundrels still stains walls here, and small groups of angry depositors continue to pound on the front doors of many banks. But more than a year after Argentina froze most bank accounts in a failed attempt to stave off economic collapse, the financial sector is finally showing tentative signs of recovery.

Restrictions on cash withdrawals from some accounts were relaxed late in 2002; now President Eduardo Duhalde's caretaker government is allowing selected banks to give savers access to all the money in their time-deposit accounts. About four-fifths of depositors are choosing to leave their newly liberated savings in the banks.

Interest rates that had soared to unsupportable levels are beginning to fall, and partly as a result, some banks are venturing hesitantly back into the business of offering loans.

Since December 2001, the banking system has been the focal point of the worst economic crisis in Argentina's history. The government then in power was forced out by public protests against the bank freeze, and the new governments that followed in quick succession defaulted on most of Argentina's $141 billion in public debt, scrapped a decade-long policy of fixing the Argentine peso's value at one American dollar, and allowed the peso to float. The currency lost nearly 75 percent of its value.

Banks were especially big losers in the national debacle, suffering substantial financial pain on the one hand while being tarred as villains by the protesters on the other. The government ordered the banks to use a higher exchange rate when converting customers' deposits from dollars to pesos than when converting outstanding loans from dollars to pesos, inflicting losses on the banks estimated at more than $15 billion; the government has reimbursed the banks for only about two-thirds of the losses.

''We still have to absorb some of the impact of those initial months, and some recapitalization has to be done,'' Roberto Lavagna, the economy minister, acknowledged in an interview here. ''After that, the new rules of the game have to be defined clearly so that the sector knows how to act.''

At the moment, banks are still in the dark, awaiting Supreme Court rulings on a series of lawsuits by customers who had deposited dollars before the crisis, demanding repayment in dollars rather than in pesos, as the government has decreed. Because no one can be sure what peso-dollar exchange rate would be used if the suits succeed, most banks remain hesitant to offer new credits.

''We can't do a balance sheet, because we don't have the numbers, and we won't have the numbers until all of the options are spelled out,'' said a senior executive at a leading private bank. ''With a presidential election scheduled for April 27 and a new government supposed to be sworn in a month later, that's not going to happen until the middle of the year, at the earliest.''

But the crisis has also revealed an unexpected resilience in the Argentine banking sector. A handful of foreign banks threw up their hands and walked away from the country soon after the crisis began, including the Bank of Nova Scotia and Crédit Agricole. But despite dire predictions in early 2002, no domestic bank has closed.

Deposits poured out of the banks before the crisis and, to the extent the freeze allowed, in the first few months after as well. But after touching bottom in the middle of 2002, deposits have been rebounding -- over all, they grew 38 percent from July 1 to Jan. 31, and some Argentine-owned banks have reported growth of more than 50 percent.

''That was a gratifying surprise,'' said Fábio Rodríguez, who tracks the banking sector for Fundación Capital, a leading economic policy analysis group here. But Mr. Rodríguez warned: ''The road ahead is enormous. The financial sector today is one-quarter the size it was in 2000, and it is going to take years to recover, so serious was the damage to public confidence.''

One looming issue is the fate of the country's network of government-owned banks. As part of a debt rollover agreement reached with the Argentine government in January, the International Monetary Fund insisted that an international accounting firm scrutinize these banks, including Banco de la Nación and banks owned by provincial and municipal governments.