Case Study SummaryProfits at global banking group HSBC fell after setting aside more than $1.1 billion to cover losses resulting from the economic crisis in Argentina. The Argentine crisis represented a devaluation of $1.12 billion, a value slightly higher than what analysts expected. The figures were in line with analysts' expectations and this helped push HSBC shares up 59p to close at 837p. Argentina descended into chaos last year as people protested against draconian policies introduced to try to avoid default on foreign debt and devaluation of the peso. Eventually the pressures became too great and Argentina defaulted on its debts and floated the peso against the dollar. HSBC took a $520 million fee to cover losses arising from the change in the value of the peso and a $600 million general provision for losses in Argentina. Concerns about HSBC's exposure to the crisis in Argentina emerged yesterday when it emerged that its investment banking arm was preparing to lower its profit forecasts for the company. HSBC Group's 2001 results, particularly the economic crisis in Argentina and the government's related devaluation of the peso which forced HSBC to book a charge of $1.12 billion. Argentina has been a huge disappointment for HSBC and has a very talented team and all the elements necessary to succeed in a stabilized economy and have a profitable business. However, the situation in Argentina remains fluid and disturbing. Argentina's monetary collapse in 2001 was devastating to the economy and to a large number of Argentine citizens. Their currency was pegged to the US dollar, at a ratio of 1 to 1, but collapsed to 3 to 1 after the crash. The resulting loan defaults, of course, created a firestorm in the global financial community. The fine print of all this, however, is that, in Argentina, as everywhere else it seems, the rich have gotten richer and the poor have gotten much poorer. Naturally, the bigoted world press, smelling blood, rushed to intervene. At least there has been some, albeit reluctant, admission of guilt by the IMF but, as might be expected, not in favor of the right. Argentina's government got a reprieve from the growing economic crisis last night, as fears that the peso could go into free fall on its first day of trading against the dollar in a decade proved unfounded. After opening at around $2.20, the peso staged a rally in afternoon trading, breaking through $1.