President Javier Milei issued a decree that turned national public bank Banco Nación into a limited company, a first step toward its privatization. The state, however, will still continue to own 99.9% of its share capital, while the rest will remain at the hands of the Banco Nación foundation.

Milei signed the decree on Wednesday night minutes before departing to the United States at midnight. The statement also includes the signatures of Chief of Staff Guillermo Francos and Economy Minister Luis Caputo.

In late January, Banco Nación had released a communiqué saying it was close to changing its status to a limited company. That text said that in order to continue growing, it needed to “expand its funding, which can be done by opening its capital.” In order to do that, the bank needed to become a limited company and “have the approval of Congress” to sell its capital to private hands, it said.

From day one, Milei has been clear that privatizing Banco Nación was a priority. The bank was included in a list of over 40 state-owned companies he intended to privatize via the state reform bill known as Ley Bases. However, Banco Nación was left out of that list alongside most of other firms given that the move didn’t have the necessary backing from lawmakers.

Until now, Banco Nación was a self-governing entity, meaning that although it was state-owned, it chose its own management and had a different legal set-up that other public ventures.

The norm mentions that turning Banco Nación into a limited company was possible because of Milei’s mega-decree known as “70/2023,” issued days after the president took office. That decree established that all state-owned companies, as well as firms partially owned by the state, would be turned into limited companies. Several public firms have already been transformed into limited companies since then.

The new decree was also possible thanks to the special legislative powers granted to Milei for a year by the Ley Bases, the government’s flagship state reform law. This means that Milei can carry out decisions that would normally have to pass through Congress first, with the goal of reducing the state structure and reaching fiscal balance.

The text of the decree said that being a self-governing entity “limited” Banco Nación’s capacity to compete in in the finance sector. It added that its condition restricted it from gaining access to new sources of funding and capacity to develop more “dynamic and efficient commercial strategies.”

The Asociación Bancaria (Bankers Association) rejected the decision. They published a communiqué saying that Banco Nación is “the largest bank in the country” and has “the best numbers” in terms of profit, clients, deposits, and credits. “Wanting to sell something that works is contradictory, unless the only goal is a spurious business and a new scam.”