The International Finance Corporation (IFC) has restructured US$310mn in outstanding loans to Argentina’s largest private sector bank Banco Galicia Buenos Aires.
Banco Galicia was among the hardest hit banks by Argentina’s severe economic and financial crisis in late 2001 and 2002, and in early 2002 it defaulted on its foreign-currency liabilities worth some US$1.3bn.
The IFC says the restructured loans include US$65mn in loans from IFC’s account and a US$245mn syndicated loan with a group of 26 international banks.
The restructuring with Banco Galicia “was a long process” and finally IFC opted for a mix of extended maturities and equity in the bank’s parent Grupo Financiero Galicia among the different restructuring options that the bank offered.
Key factors contributing to the decision to restructure Banco Galicia’s debt was the bank’s commercial strengths and a successful streamlining process that has permitted it to adapt to Argentina’s new banking environment.
The IFC claims the operation is part of the general restructuring of Banco Galicia’s outstanding US$1.3bn debt. The restructuring is a critical step in the bank’s plan to improve its competitiveness as it emerges from the difficult environment of the last three years, the IFC says.
“Banco Galicia has maintained a strong franchise and reputation during difficult times in Argentina. By improving its capitalisation and overall financial profile, the restructuring strengthens the competitiveness of one of the country’s leading banks, allowing it to pursue selective growth of its business offerings in an improving economic climate,” Jyrki Koskelo, IFC’s director for global financial markets says.
“The completion of Banco Galicia’s restructuring is an important development for the private sector in Argentina. Revitalising the banking sector is one of the crucial steps necessary for the sustainable recovery of the Argentine economy,” IFC’s director for Latin America, Bernard Pasquier points out.
Banco Galicia is the largest private sector commercial bank in Argentina in terms of assets (US$7.4bn as of February) and third in terms of shareholders’ equity (US$448mn).
In fiscal year 2003, IFC committed US$1.8bn to 54 projects in 16 countries of the Latin America and Caribbean Region. IFC’s financing to Latin America and the Caribbean accounted for almost half of IFC’s global funding to clients in fiscal year 2003. IFC’s mission is to promote sustainable private sector investment in developing countries to boost economic activity and improve living standards.