Chairman Of MBA Banco De Inversiones S.A. (N/A)

Q1: Mr. Reynal - before we discuss some topics concerning MBA, I would like to ask you for a short assessment on the events of the last few weeks, as the political arena witnessed some important changes. A1: Maybe our country needs to go into a deep crisis to take up strength to solve the serious problems for good. In 1982, the sad experience of the Malvinas-Falkland War did away with military intervention; ten years later, hyper-inflation made it necessary to impose convertibility and we got rid of inflation for good. The political crisis that unfolded after the resignation of the country´s Vice President has underscored the need for drastic changes in our political leadership. We expect long-overdue reforms in the way we elect our leaders, the way we finance the political process as well as the ideological confusion within our political parties. Q2: How do you evaluate Mr. Cavallo´s ideas to recover the national economy? A2: After two years of power vacuum and lack of leadership, Cavallo comes back with his usual strength and dynamism. Inevitably, he is bound to make some mistakes, but he knows how to restore confidence in the markets and has the energy to establish fiscal discipline and recover the path to growth. Politicians are worried with Cavallo because they realize that Domingo is today much more than a technician - he understands the power-play within the Government and is clearly behaving as a political leader. Q3: Is he the right man to re-establish the investor´s confidence in Argentina? A3: Definitely yes. I think Cavallo is today the primus inter pares”. He is the best known economist of the emerging markets. World leaders from Europe, the United States and the Far East recognize the truly outstanding character and ability of Cavallo. His challenge is that President De la Rua does not understand as clearly as his predecessor, Menem, did how the world operates, and does not seem to support Cavallo with a full backing of the political coalition in power. Cavallo understands this and will clearly grow into the job in time. Q4: Mr. Reynal, focusing now on MBA which started its operations in 1981. In 1987 you joined forces with Salomon Brothers, but in 1998 this strategic alliance found a sudden end. What happened back in 1998, and how did MBA continue its operations? A4: We have always understood that investment banking is a global business. To service our clients we need a strong partnership or alliance with a major international player. Up to now we have managed to be in the best of both worlds - as part of a global network but remaining an independent local firm. We like to think of the concept global reach with a local touch”. When we repurchased Salomon´s interest in MBA to keep our firm independent, it was always our intention to find another international player. We are very happy that Bank of America decided to develop their investment banking business in Argentina through their alliance with MBA. In addition we have had for many years now the privilege of having the Hon Nicholas Brady, former US Treasury Secretary and his investment firm, Darby Overseas Ltd., as well as the International Finance Corporation as minority shareholders. Q5: What is the nature of the strategic alliance with Bank of America signed in December 2000? A5: Bank of America is the most important fund provider to Latin America and a major force in the region. They wanted to expand their investment banking business right at the time that we at MBA were looking for a new international partner. We have agreed on a strategic alliance to develop all lines of investment banking products on an exclusive basis, by which our clients will get the best of two for the price of one”. This has allowed MBA to come back to international deals that have some Argentine component and add to our local advisory capabilities the strength and muscle of Bank of America abroad. We are very enthusiastic with the prospects of working together. Q6: In the Private Equity fund business you have invested in companies such as San Miguel, Sullair Argentina and Milkaut. How do you foresee the development of this segment of your business? A6: As difficult as it was to acquire companies at a good price a few years ago, we believe there is a very attractive window of opportunity in today´s rock-bottom prices. We are not dogmatic in our approach; this is a very small market so you have to be opportunistic; there are no ten good companies in every sector. Our Patagonia Private Equity Fund is a club fund with Electra Partners from London, the International Finance Corporation and GE Investments. We fortunately still have good firing power for the next 12 months. Q7: What are the most promising sectors of the Argentine economy as for today? A7: When businessmen come and ask this question we know we don´t have a potential investor. I know no serious businessman who will go into a sector he doesn´t know well only because it has good prospects. Having said this, many sectors have already undergone substantial restructuring and consolidation, i.e. banking, oil and gas, telecommunications, supermarkets, etc. We foresee many opportunities in the agribusiness and public utilities sectors, among others. Q8: MBA closed merger and acquisition transactions for a total value of 2,5 billion dollars in the last two years. What are your expectations for this year? A8: Our most difficult competition are those companies that, at their expense, choose to enter M&A transactions on their own, without the help of financial advisors. Our 20 years of track record are a living proof that more and more companies prefer to have professional financial advisory. With the exception of 1998, when the YPF take-over occurred, the Argentine market M&A transactions totaled 5/6 billion dollars per year. We have enjoyed an enviable market share as leaders in this market and plan to continue very active. Q9: MBA has also been very active in financial restructuring of corporate debt. What are the prospects in this sector? A9: After three years of recession it is inevitable that many companies need to restructure their financial debt, add more equity, renegotiate terms with their financial creditors, etc. The prime investment bankers abroad are the major players in this field. Yet in Argentina, MBA is the only advisor in financial restructuring. Here, commercial banks still prefer to believe they can outsmart the other creditors, obtain a guarantee behind the back of their other colleagues, and essentially disrupt the pari-passu golden principle. We believe we can add a lot of value to our clients by assuring transparency, strict pari-passu and orderly processes of negotiations at a fraction of the cost of Chapter 11 Proceedings. In summary, a financial advisor can always add value to a process which, if disrupted, is capable of destroying a lot of value. Of course, this requires an exercise of professionalism and self-restraint which is not abundant among commercial banks.