The ratings on Banco Galicia y Buenos Aires S.A. (Banco Galicia) are based mainly on its heavy exposure to the deteriorating Argentine public sector. This exposure constrains the ratings, despite the institution's position as a leading Argentine private bank and its adequate performance in terms of profitability, liquidity, and capitalization. Once the current difficulties are overcome, Banco Galicia has the ability to profit from the expected growth and development of the Argentine financial market in coming years. Still, in the short-to-medium term, the financial system and the bank in particular, through its holdings of government securities and public-sector lending, remains extremely vulnerable to the Republic of Argentina's creditworthiness. The bank's private-sector loan quality has remained relatively stable during the past
