April 23 (Bloomberg) -- Banco de Galicia y Buenos Aires SA, Argentina's largest non-government bank, received approval from the country's securities regulator for its plans to reschedule payments on some of the $1.6 billion it owes creditors.

The country's regulator approved plans to issue up to $1.4 billion in bonds, after yesterday approving plans to issue as many as 149 million preferred rights, which will be converted into ordinary Class B shares in a year. Galicia's shares surged 7.4 percent.

``The process thus far has been very successful and the bank has this one final step to take,'' said Roberto Drimer, an analyst at consultancy Argentine Research in Buenos Aires. ``There is a very high acceptance rate for the bank's plans.''

Most Argentine banks, including Galicia, haven't posted a profit since the country's default on $95 billion in debt in late 2001 and subsequent currency devaluation. Galicia needs to reschedule payments on its debt as a step toward boosting lending.

Galicia's shares closed up 8.3 percent, erasing earlier declines, to 2.21 pesos ($0.77). It was the biggest increase since an 8.4 percent jump Sept. 10.

High Acceptance

Galicia said in a statement to the Buenos Aires stock exchange earlier today that it is waiting for the country's securities regulator to approve the offer to reschedule debt payments before moving ahead with the restructuring. The regulator gave its approval this afternoon. Banco de Galicia is controlled by Grupo Financiero Galicia SA.

Delays in approving the plans prompted the bank to postpone its rescheduling plans four times. The bank, which postponed its deadline to April 27, said it has received offers to exchange $1.3 billion in eligible debt. Drimer said the bank is aiming for an acceptance level of 95 percent, well above the two-thirds majority required under Argentine law.

By securing a high acceptance rate, Galicia won't need to get court approval for its plans in order to force others to accept the offer, which could delay the process.

``This is very good -- the 97 percent acceptance means they don't even need to go to court,'' said Julian Jacobson, who manages $50 million in emerging market debt, including Galicia bonds, at Fabien Pictet & Partners in London.

Jacobsen said the bank still needs to provide details about the number of existing shareholders who will accept preferred shares and the pricing. ``This information should not be withheld from shareholders, let alone creditors'' he said.

Constanza Gorleri, spokeswoman for Galicia, didn't return telephone calls seeking comment.

To contact the reporter on this story: Andrew J. Barden in Buenos Aires at barden@bloomberg.net

Last Updated: April 23, 2004 16:40 EDT