CO Programmatic FSAL I

closed

The objective of the loan is to complete the clean up of the banking system as a result of the 1999-2001 crisis, and to strengthen the government's capacity to manage and mitigate weaknesses in the financial system. A key aspect of the proposed program is the design of a multi pronged effort to first dispose of the financial system's residual loan assets by developing more agile and modern financial instruments and fiduciary arrangements to package, and sell loan assets. The project also aims to strengthen and diversify the participation of the housing mortgage market including improved access to finance for the micro sector, as well as strengthening non bank financial services, and securities institutions in the financial system. The securitization industry will be further developed to support bank asset sales, to provide more liquidity to the mortgage industry, and to help develop the capital markets. A reform of the entire securities legislation will be conducted as part of the program's second phase, to promote a more agile development of the local capital market. This will involve reforming corporate governance and disclosure standards as well as proper criteria for securities industry participants.