Argentina's Economy Minister Axel Kicillof said on Wednesday a deal between Citigroup Inc. and a U.S. judge allowing the banking giant to process two Argentine debt payments violated the South American country's laws.

Kicillof said the securities commission and central bank would examine the deal to determine officially if it was legal.

"Reading the fine print of the deal, what we find is a trap possible aimed at scamming the bondholders," Kicillof told a news conference.

Citigroup, which acts as custodian of some Argentine bonds, has been embroiled in a court battle between the South American country and a group of New York-based hedge funds seeking full payment on their defaulted sovereign bonds.

Argentina has long accused the U.S. judge hearing the case of working hand in hand with the funds, which President Cristina Fernandez and her minister disparage as "vultures".

In the latest twist of this long-running tale, Citi said this weekend a U.S. District Court had announced it would not restrict Citi from meeting its payment-processing obligations relating to dollar-denominated Argentine bond payments under local law due on March 31 and June 30.

The court also said it will not impede the bank from exiting the Argentine custody business, as it has said it wants to do.

Fernandez's government had threatened to cancel Citibank Argentina's operating license if it refused to process payments to other bond holders.

While Citigroup has now secured the possibility of making the next two payments, it is not clear if its deal with U.S. courts could also have legal consequences for its retail banking business.

"From my point of view, the deal they have signed with the vultures clearly violates Argentine laws," Kicillof said.

U.S. District Judge Thomas Griesa in New York ruled that Argentina must settle with the hedge funds seeking full payment on their defaulted sovereign bonds before it continues paying interest to the large majority of investors who accepted significant writedowns on the debt holdings after the country's record default on $100 billion in 2002.