Argentina - Provincial Bank Privatization Loan Project and Bank Reform Loan Project
Fox, M. Louise
This implementation completion report covers the Provincial Bank Privatization Loan Project and the Bank Reform Loan Project. The two loans were analyzed together because of their twin nature - identical timing and similar purpose. The outcome of both loans were rated satisfactory. Among the lessons applicable to both loans are: 1) Financial/fiscal crises offer opportunities for structural change in banking. 2) Structural/ownership change in banking requires resources to restructure past losses. 3) Even when sufficient financial resources are available, there will be selection bias in the roster of potential acquirers. It is unclear whether program design features alone can overcome that bias. 4) Funds were disbursed only after the careful review of the individual transactions. 5) Some of the banks created through these transactions may require additional restructuring as market conditions change. Some failures need to be anticipated. 6) A strong borrower commitment is indispensable in such complicated, time-intensive transactions.
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