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DEUTSCHE BANK MÉXICO, S. A. Institución de Banca Múltiple

Financial Statements

December 31, 2008 and 2007

(With Independent Auditors’ Report

Thereon)

Free Translation from Spanish Language Original

Independent Auditors’ Report (Free translation from Spanish language original)

The Board of Directors and Stockholders Deutsche Bank México, S. A., Institución de Banca Múltiple: We have examined the accompanying balance sheets of Deutsche Bank México, S. A., Institución de Banca Múltiple (“the Bank”) as of December 31, 2008 and 2007, and the related statements of income, changes in stockholders’ equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with the accounting criteria for credit institutions in Mexico. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As explained in notes 2 and 3 to the financial statements, the Bank is required to prepare and present its financial statements in accordance with the accounting criteria for credit institutions in Mexico established by the National Banking and Securities Commission (“the Commission”), which in general, conform to Mexican Financial Reporting Standards (MFRS), issued by the Mexican Board for Research and Development of Financial Reporting Standards (Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera A. C., or CINIF). Such accounting criteria includes particular rules which in certain respects depart from such MFRS. During the regular course of its business, the Bank carried out transactions with related parties consisting of brokerage income and administrative services for the years ended December 31, 2008 and 2007, as mentioned in note 12. During 2008, accounting changes required by MFRS were made as disclosed in note 4 to the financial statements.

(Continued)

2 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Deutsche Bank México, S. A., Institución de Banca Múltiple as of December 31, 2008 and 2007 and the results of its operations, the changes in its stockholders’ equity and the changes in its financial position for the years then ended, in conformity with the accounting criteria established by the Commission for credit institutions in Mexico, as described in notes 2 and 3 to the financial statements. KPMG CARDENAS DOSAL, S. C.

SIGNATURE Mauricio Villanueva Cruz February 20, 2009.

DEUTSCHE BANK MEXICO, S. A.Institución de Banca Múltiple

Balance Sheets


(Millions of Mexican pesos - note 4a)

Assets 2008 2007 Liabilities and Stockholders' Equity 2008 2007

Cash and due from banks (note 6) $ 81 855 Funding:Demand deposits $ 40 -

Investment securities: Short term:Trading securities (note 7) 1,630 1,024 From general public - 12

Securities and derivative transactions: 40 12Debit balances on repurchase

agreements (note 8) - 1 Securities and derivative transactions:Debit balances on securities lending Credit balances on repurchase

transactions (note 9) - 718 agreements (note 8) - -Derivative financial instruments Credit balances on securities lending

(note 10) 4,022 1,441 transactions (note 9) - 704Derivative financial instruments

4,022 2,160 (note 10) 4,018 1,535

Other accounts receivable, net (note 11) 1,604 1,152 4,018 2,239

Deferred income tax, net (note 16) 49 69 Other accounts payable:Income tax and employee statutory

Other assets ( note 13) 12 29 profit sharing (note 16) 5 -Sundry creditors and other accounts

payable (note 14) 1,320 1,171

Total liabilities 5,383 3,422

Stockholders' equity (note 17):Paid-in capital:

Capital stock 1,003 1,003

Earned capital:Statutory reserves 109 101Retained earnings 755 676Net income 148 87

1,012 864

Total stockholders' equity 2,015 1,867

Commitments (note 21)

Total assets $ 7,398 5,289 Total liabilities and stocholders' equity $ 7,398 5,289

2008 2007Memorandum accounts (notes 8 and 19):

Assets in trust or under mandate $ 113,268 80,768 Assets in custody or under management 2,486 4,458

Securities deliverable on securities lending transactions $ - 704 Assets to be received in guarantee on securities lending transactions - (718)

$ - (14)

Other memoranda records $ 16 6

Securities receivable under repurchase agreements $ 1,329 3,152 Creditors under agreements to repurchase (1,329) (3,151)

- 1

Debtors under agreements to resell 2,450 -Securities deliverable under resell agreements (2,450) -

$ - -

See accompanying notes to the financial statements.

SIGNATURE SIGNATURE Tito Vidaurri Del Castillo Ma. Guadalupe Morales OrtegaGeneral Director Chief Financial Officer

SIGNATURE SIGNATURE Gustavo Romero Lima Javier Maldonado AlamillaGeneral Accountant Internal Auditor

"These balance sheets were prepared in accordance with the accounting criteria for credit institutions issued by the National Banking and Securities Commission based on Articles 99, 101 and 102 ofthe Credit Institutions Law, which are of a general and mandatory nature and have been applied on a consistent basis, accordingly, they reflect all the transactions carried out by the Institution throughthe dates noted above. Furthermore, these transactions were carried out and valued in accordance with sound banking practices and the applicable legal and administrative provisions".

"These balance sheets were approved by the Board of Directors under the responsibility of the undersigned officers".

"The Bank's historical capital stock as of December 31, 2008 and 2007 amounts to $709 million of Mexican pesos".

"The capitalization index is 65.34% and 64.62% as of December 31, 2008 and 2007, respectively".

www.db.com/mexicowww.cnbv.gob.mx/estadistica


Statements of Income

Years ended December 31, 2008 and 2007

(Millions of Mexican pesos - note 4a.)

2008 2007

Interest income (note 20) $ 350 420 Interest expense (note 20) (181) (234) Monetary position loss, net (note 20) - (113)

Financial margin 169 73

Commissions and fees, net (note 12) 101 103

Brokerage income, net (note 20) 144 186

Total operating income, net 414 362

Administrative and promotional expenses (note 12) (320) (354)

Net operating income 94 8

Other income, net (note 12) 84 165

Income before income tax (IT) and employee statutory profit sharing (ESPS): 178 173

Current IT and ESPS (note 16) (10) (35) Deferred IT (note 16) (20) (51)

Net income $ 148 87




"These statements of income were prepared in accordance with the accounting criteria for credit institutions issued by theNational Banking and Securities Commission based on Articles 99, 101 and 102 of the Credit Institutions Law, which are of ageneral and mandatory nature and have been applied on a consistent basis, accordingly, they reflect all the revenues anddisbursements relating to the transactions carried out by the Institution for the years noted above. Furthermore, thesetransactions were carried out and valued in accordance with sound banking practices and the applicable legal and administrativeprovisions".

"These statements of income were approved by the Board of Directors under the responsibility of the undersigned officers".



Statements of Changes in Stockholders' Equity



TotalCapital Statutory Retained Net stockholders'stock reserves earnings income equity

Balances at December 31, 2006 $ 1,003 100 668 9 1,780

Items related to stockholder decisions:Appropriation of retained earnings - 1 8 (9) -

Items related to the recognition of comprehensiveincome (note 17b.):Net income - - - 87 87

Balances at December 31, 2007 1,003 101 676 87 1,867

Items related to stockholder decisions:Appropriation of retained earnings - 8 79 (87) -

Items related to the recognition of comprehensive income (note 17b.):Net income - - - 148 148

Balances at December 31, 2008 $ 1,003 109 755 148 2,015


"These statements of changes in stockholders' equity were prepared in accordance with the accounting criteria for credit institutions issued by the NationalBanking and Securities Commission based on Articles 99, 101 and 102 of the Credit Institutions Law, which are of a general and mandatory nature and havebeen applied on a consistent basis, accordingly, they reflect all the stockholders' equity account entries relating to the transactions carried out by the Institutionfor the years noted above. Furthermore, these transactions were carried out and valued in accordance with sound banking practices and the applicable legal andadministrative provisions".

"These statements of stockholders' equity were approved by the Board of Directors under the responsibility of the undersigned officers".


SIGNATURE . Tito Vidaurri Del Castillo General Director

SIGNATURE Ma. Guadalupe Morales Ortega Chief Financial Officer

SIGNATURE . Javier Maldonado Alamilla Internal Auditor

SIGNATURE . Gustavo Romero Lima General Accountant


Statements of Changes in Financial Position



2008 2007

Operating activities:Net income $ 148 87 Items included in operations not requiring (providing) cash:

Results on valuation to fair value of derivativetransactions and investment securities (90) 35

Deferred income tax 20 51

Cash provided by operations 78 173

Net (investing in) financing from operating accounts:Derivative transactions and investment securities (599) (198) Other accounts payable 154 (997) Other accounts receivable and other assets (435) 107 Funding 28 12

Cash used in operating activities and decrease in cash and due from banks (774) (903)

Cash and due from banks:At beginning of year 855 1,758

At end of year $ 81 855




"These statements of changes in financial position were prepared in accordance with the accounting criteria for creditinstitutions issued by the National Banking and Securities Commission based on Articles 99, 101 and 102 of theCredit Institutions Law, which are of a general and mandatory nature and have been applied on a consistent basis,accordingly, they reflect all sources and applications of funds relating to the transactions carried out by the Institutionthrough the dates noted above. Furthermore, these transactions were carried out and valued in accordance with soundbanking practices and the applicable legal and administrative provisions".

"These statements of changes in financial position were approved by the Board of Directors under the responsibilityof the undersigned officers".


DEUTSCHE BANK MÉXICO, S. A.

Institución de Banca Múltiple

Notes to Financial Statements


(Millions of Mexican pesos – note 4a.) These financial statements have been translated from the Spanish language original solely for the convenience of foreign/Englishspeaking readers. (1) Description of business and significant transaction-

Description of business- The Mexican Ministry of Finance and Public Credit (SHCP) through resolutions 101-67 from January 21, 2000 and DGBA/AIBM/71/2000 from February 18, 2000, authorized the incorporation and operation of Deutsche Bank México, S. A. (the Bank), as an Affiliate Multiple Banking Institution and according to the Credit Institutions Law, the Bank is authorized to carry out full-service banking activities. The Bank is a 99.99% subsidiary of Deutsche Bank Americas Holding Corporation (the Corporation). Significant transaction- Transfer of employees to the Bank- Until June 2nd, 2008, the Bank did not have employees, all administrative services were provided by DB Servicios México, S. A. de C. V. (DB Servicios), an affiliated company, for a fee; from that date on all employees related to the Bank’s administrative activities were transferred through a employer substitution scheme to the Bank, keeping their effective employee vested benefits and conditions as of the date of the transfer.

(2) Authorization and bases of presentation-

On February 20, 2009, the officers who provide administrative services and hold the following positions authorized the issuance of the accompanying financial statements and related notes thereto: Tito Vidaurri Del Castillo General Director Ma. Guadalupe Morales Ortega Chief Financial Officer Gustavo Romero Lima General Accountant Javier Maldonado Alamilla Internal Auditor The stockholders and the National Banking and Securities Commission (“the Commission”) are empowered to modify the financial statements after issuance. The accompanying 2008 financial statements will be submitted to the next Stockholders’ Meeting for approval.

(Continued)

2



The Bank’s financial statements are prepared based on the applicable banking legislation and in conformity with the accounting criteria for credit institutions in Mexico in effect as of the date of the financial statements established by the Commission who is responsible for the inspection and supervision of financial institutions and for reviewing their financial and other information that credit institutions normally file for its consideration. Such accounting criteria which in general, conform to Mexican Financial Reporting Standards (MFRS), issued by the Mexican Board for Research and Development of Financial Reporting Standards (Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera, A. C. or CINIF). Such accounting criteria includes particular rules for recording, valuating, presentation and disclosure which in certain respects depart from such standards. See outline 3b, 3d, 3r and 3s. The accounting criteria states that the supplementary use of other accounting principles is the process stated in MFRS A-8, and only for those cases not contemplated in International Financial Reporting Standards issued and approved by the International Accounting Standards Board (IASB); the Bank may be able to use other accounting principles and standards, applying them in the following order: accounting principles generally accepted in the United States of America (US GAAP); or in cases not covered by these principles and standards, any other formal and recognized accounting standards that do not contravene the general criteria of the Commission. For purposes of disclosure in the notes to the financial statements, when reference is made to pesos or “$”, it refers to millions of Mexican pesos, and dollars or “USD” refers to dollars of the United States of America.

(3) Summary of significant accounting policies-

The preparation of financial statements requires management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the estimate of fair value valuation adjustments through the use of prices provided by an independent third party (a price vendor) or any other valuation technique of securities, derivatives transactions, as well as deferred income tax assets, recoverability of receivables and assets and liabilities from employee benefits. Actual results could differ from those estimates and assumptions. The Bank’s financial statements recognize the assets and liabilities arising from the purchase and sale of foreign currencies, investments in securities, lending securities and repurchase agreements, as well as derivative financial instruments on the trade date regardless of the settlement date.

(Continued)

3



The 2007 balance sheet and statement of income include certain reclassifications to conform them to the classifications used in 2008. Significant accounting policies applied in the preparation of the accompanying financial statements are as follows: (a) Recognition of the effects of inflation-

The accompanying financial statements include the recognition of the effects of inflation on the financial information through December 31, 2007, (see note 4) based on the Investment Unit (UDI) value determined by Banco de México (Central Bank). Cumulative inflation percentage of the three preceding years and the UDIS used in recognizing inflation through such year are as follows: At December 31, UDI Inflation Annual Cumulative 2008 $ 4.184316 6.39% 15.03% 2007 3.932983 3.80% 8.12% 2006 3.788954 4.16% 4.16% ====== ===== =====

(b) Cash and due from banks- This caption comprises cash, bank balances, 24 and 48-hour foreign-currency purchase-sale transactions and deposits with Central Bank, which include monetary regulatory deposits that the Bank is required to maintain according to the Central Bank’s legislation, for the purpose of regulating liquidity in the money market. Such deposits have no maturity and bear interest at the average rate for bank deposits; as well as the margin account related to future contract transactions in a recognized derivatives market. According to Bulletin C-10 of MFRS, this margin account would be presented in the financial statement caption “Securities and derivatives transactions”. The receivables associated with 24 and 48 hour foreign currency sales are recorded in “Other accounts receivable” and “Cash and due from banks”, while the obligations arising from foreign currency purchases are recorded as “Restricted funds in cash and due from banks” and “Sundry creditors and other accounts payable”.

(Continued)

4



(c) Investment securities- Investment securities consist of government securities classified depending on management’s investment intentions into: Trading– Trading securities are bought and held principally to be sold in the near term. Debt securities are initially recorded at cost and subsequently marked to market using information provided by an independent price vendor. When a fair and representative market value cannot be determined, fair values of financial instruments with similar characteristics or prices calculated based on formal widely-accepted valuation techniques are used. Valuation effects are recognized in the statement of income. Securities acquired for settlement on a subsequent date, up to a maximum of 4 business days following the purchase transaction agreement date shall be deemed restricted securities, while securities sold shall be accounted for as an outflow of investment securities. The counterparty should be a clearing account, credit or debit account, as applicable.

(d) Securities under repurchase agreements-

Securities under repurchase agreements (repos) are stated at market value using information provided by an independent price vendor, and the obligations or rights from the commitments to repurchase or resell the securities are stated at the net present value at maturity. The balance sheet presents the sum of debit or credit balances after individually offsetting the restated values of the securities receivable or deliverable and the repurchase or resale commitment of each repurchase agreement. Transactions where the Bank acts as repurchaser and repurchasee with the same entity are not offset. The presentation of repurchase agreements differs from that of MFRS, which present the balances separately and requires offsetting similar transactions with the same counterparty. Interest income and premiums from these transactions are reported in the statement of income under “Interest income”, “Interest expense”, and the valuation effects are recognized in the “Brokerage income, net”.

(Continued)

5



In accordance with current Central Bank’s legislation, it is mandatory that in repurchase agreement transactions with a maturity of more than three days, the parties contractually agree to guarantee such transactions when the fluctuations in the value of the securities under the repurchase agreement cause an increase in the net exposure that exceeds the maximum value agreed upon by the parties. The guarantee granted (without transfer of property) is recorded in the securities portfolio as trading instruments, restricted or pledged as security, and if they correspond to cash deposits, as restricted cash balances. The guarantees received that do not represent a transfer of property are recorded in memorandum accounts as assets held in custody or under management. The guarantees are valued in accordance with the current dispositions for valuing investment securities, cash and equivalents and assets in custody or under management, respectively. Repurchase agreements that establish the impossibility of trading “repo” securities are recorded as collateralized loans. Premiums are recognized in income as they accrue, on a straight-line basis, throughout the term of the transaction.

(e) Securities lending transactions- Securities lending transactions comprise the transfer of title to securities from the lender to the borrower who, in turn, undertakes to return to the former, securities of the same issuer and characteristics after the term of the loan has expired plus a premium. The Bank carries out securities loan transactions as borrower. Securities received on loan are included within liabilities, which represents the obligation to settle or return the securities to the lender. Securities granted are recognized as securities receivable in guarantee within the assets caption. The Bank pays a premium for each loan, which is due upon expiration or renewal. Securities received on loan and granted as security are carried at fair value, based on the prices provided by the price vendor.

(f) Derivative financial instruments- Transactions with derivate financial instruments are for trading purposes and accounted for as follows: Future and Forward contracts – The net change in market value of the future price of the contract is presented in the balance sheet with a corresponding debit or credit to the statement of income.

(Continued)

6



Swaps Rights or obligations established in the contract arising from the exchange of cash flows or asset yields (swaps) are recorded as assets or liabilities. The assets and liabilities derived from swaps for trading purposes are marked to market, reporting the net value of the swap on the balance sheet while the related gains or losses are recognized in the statement of income. According to Bulletin C-10 of MFRS, derivative financial instruments are recognized, without considering their purpose, at fair value, which is originally represented by the agreed-upon consideration; transaction-related costs and cash flows received or delivered to mark the instrument to market at the beginning of the transaction, not associated with premiums on options, are amortized during the transaction’s validity period. Fair value changes in trading derivative instruments are recognized in balance sheet and statement of income in “Securities and derivative transactions” and “Brokerage income, net”, respectively. For those derivative financial instruments that include rights and obligations such as futures and forward contracts or swaps, asset and liability positions are offset for each transaction, presenting the net balance in asset or liability as result.

(g) Clearing accounts-

The clearing accounts record investment securities transactions that have reached maturity and are pending settlement or on those with not a same-day value date, as well as currency purchase or sale transactions, for which immediate settlement is not stipulated, or on those with not a same-day value date. Debit and credit balances of the clearing accounts are offset only if those balances have the same counterparty, correspond to the same kind of operations and have the same settlement date.

(h) Other receivables-

Amounts relating to sundry debtors not recovered within 90 days following their initial recording (60 days if the balances are not identified) are reserved and charged to the year's income, regardless of the likelihood of recovery, except for those relative to tax recoverable balances, value added tax paid. This caption also includes debtors on the settlement of transactions (24 and 48-hour foreign currency sale transactions). In the case of accounts receivable from identified debtors with a maturity in excess of 90 days, an allowance should be created to reflect the degree of uncollectibility.

(Continued)

7



(i) Funding-

Comprise time deposits of the general public, including money market funding and demand deposits. Interest is charged to expense on accrual basis.

(j) Employee benefits - Termination benefits for reasons other than restructuring and retirement to which employees are entitled are charged to operations for each year, based on actuarial computations using the projected unit credit method. At December 31, 2008 and for purposes of recognizing benefits upon retirement, the remaining average service life of employees entitled to plan benefits approximates 30.8 years. Actuarial gains or losses are directly recognized in the year's income when accrued.

(k) Income taxes (income tax (IT) and flat rate business tax (IETU))- IT or IETU payable for the year are determined in conformity with the tax provisions in effect. Deferred IT or IETU are accounted for under the asset and liability method. Deferred tax (assets and liabilities) are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and in the case of income taxes, for operating loss. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the enacted.

(l) Inflation adjustment of capital stock, statutory reserves and retained earnings- Until December 31, 2007, this restatement was determined by multiplying stockholder contributions and retained earnings by UDI factors, which measure accumulated inflation from the dates capital stock was contributed, reserves were created or such retained earnings arose through year end 2007, date on which change was effected to a non-inflationary economy in accordance with FRS B-10 "Effects of Inflation". The resulting amounts represented the constant value of stockholders’ equity.

(Continued)

8



(m) Monetary position gains and losses- Until December 31, 2007, the Bank recognized in income the effect (gain or loss) in the purchasing power of its monetary position, which was determined by multiplying the difference between monetary assets and liabilities at the beginning of each month by inflation through year end 2007, date on which change was effected to a non-inflationary economy in accordance with MFRS B-10 "Effects of Inflation". The aggregate of these results represented the monetary gain or loss for the year arose from inflation, which was reported in results of operations for the year. The gain or loss from interest-bearing monetary assets and liabilities was included in the statement of income as part of the “Financial margin”, while the gain or loss from all other monetary items was presented in “Other income, net”.

(n) Revenue recognition-

The interests on investments in fixed-income securities are recognized in results of operations on accrual basis. The premiums earned on repurchase agreement transactions are recognized in results of operations on accrual basis. Trust fees collected in advance are recorded as deferred revenues and applied to income as earned. Where these fees reflect 90 days of aging, earned revenues is suspended. While the accrual of revenues is suspended and revenues are not collected, the Bank maintains control in “Other memoranda records” within memoranda accounts. If collected, they are recognized directly in income when collected.

(o) Foreign currency transactions- The accounting records are maintained in pesos, which for financial statement presentation purposes, in the case of currencies other than the dollar are translated from the respective currency into dollars, as established by the Commission, and the dollar equivalence with Mexican currency is translated at the exchange rate determined by the Central Bank. Foreign exchange gains and losses are recognized in results of operations when incurred.

(p) Contributions to the Bank Savings Protection Institute (IPAB)- Among other provisions, the Bank Savings Protection Law establishes the creation of the IPAB, as a system to protect the guaranteed savings of the public and regulate the financial support granted to banking institutions in order to comply with this objective.

(Continued)

9



Pursuant to such Law, the IPAB guarantees the bank deposits of savers up to 400 thousand UDIS. The Bank recognizes in results of operations the mandatory contributions to the IPAB.

(q) Contingencies- Liabilities for loss contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. When a reasonable estimation cannot be made, qualitative disclosure is provided in the notes to the financial statements. Contingent income, earnings or assets are not recognized until their realization is virtually assured.

(r) Statement of income- The Bank presents its statement of income as required by the accounting criteria for credit institutions in Mexico. Since 2007, MFRS adopted the presentation of the statement of income, classifying revenues, costs and expenses as either ordinary or non-ordinary. Also, employee statutory profit sharing (ESPS) should be included in "Other expenses".

(s) Statement of changes in financial position- The Bank presents its statement of changes in financial position as required by the accounting criteria for credit institutions in Mexico. Since 2008, MFRS adopted the presentation of the statement of cash flows, replacing the statement of changes in financial position.

(4) Accounting changes-

The Commission has adopted the supplemental use of MFRS issued by the CINIF, mentioned below, effective for years beginning on January 1, 2008. Early application is not permitted.

(a) MFRS B-10 “Effects of inflation" - MFRS B-10 supersedes Bulletin B-10

"Recognition of the effects of inflation on the financial information" and its five amendment documents, as well as the related circulars and Interpretation of Financial Reporting Standards (IFRS) 2. The principal considerations established by this FRS are mentioned on the next page.

(Continued)

10



(i) Recognition of the effects of inflation – An entity operates in a) an inflationary economic environment when cumulative inflation over the immediately preceding 3-year period is equal to or greater than 26%; and b) non-inflationary economic environment, when inflation over the aforementioned period is less than 26%. For case a), the comprehensive recognition of the effects of inflation is required, (similarly to Bulletin B-10 being superseded). For case b), the effects of inflation are not recognized; however, at the effective date of this FRS and when an entity ceases to operate in an inflationary economic environment, the restatement effects determined through the last period in which the entity operated in an inflationary economic environment (in this case 2008), must be kept and shall be reclassified on the same date and using the same procedure as that of the corresponding assets, liabilities and stockholders' equity. Should the entity once more operate in an inflationary economic environment, the cumulative effects of inflation not recognized in the periods where the environment was deemed as non-inflationary should be recognized retrospectively.

(ii) Monetary Position Gains or Losses (included in Deficit/Excess in Equity Restatement) will be reclassified to retained earnings on the effective date of this MFRS.

The 2007 financial statements are presented expressed in constant Mexican pesos at December 31, 2007, date on which the comprehensive method for recognizing the effects of inflation was last used.

(c) MFRS D-4 “Taxes on income”- MFRS D-4 supersedes Bulletin D-4 "Accounting for income and asset taxes and employee statutory profit sharing" and Circulars 53 and 54. The principal considerations established by this MFRS are:

(i) The balance of the cumulative IT effects resulting from the initial adoption of

Bulletin D-4 in 2000 is reclassified to retained earnings on January 1, 2008, unless identified with any item pending to realize.

(iii) The accounting treatment of ESPS (current and deferred) is transferred to MFRS D-3.

The coming into force of this MFRS did not have any effects on the Bank's financial information.

(Continued)

11



(5) Foreign currency exposure and exchange rates-

(a) Foreign currency exposure-

Central Bank regulations require that banks maintain balanced positions in foreign currencies within certain limits. The short or long position permitted by the Central Bank is equivalent to a maximum of 15% of the basic capital of the Bank (21.8 and 25.7 millions of dollars as of December 31, 2008 and 2007, respectively). As of December 31, 2008 and 2007, the Bank maintained a position in foreign currencies within the limits mentioned, which is analyzed as follows (in millions of dollars):

2008 2007 Assets 1,057 1,024 Liabilities (1,049) (1,022)

Long position, net 8 2 ===== =====

(b) Exchange rates-

The exchange rate of the peso into the dollar at December 31, 2008 and 2007, was $13.8325 and $10.9157 pesos, respectively.

(6) Cash and due from banks- At December 31, 2008 and 2007, cash and due from banks are analyzed as follows: 2008 2007 Deposits in domestic and foreign banks $ 29 12 Restricted funds:

Deposit in Central Bank 52 328 Foreign currency purchases to be settled

within 24 and 48 hours 2,512 1,709 Margin account for derivative contracts - 16

Foreign currency sales to be settled within 24 and 48 hours (2,512) (1,210)

$ 81 855 ==== ====

(Continued)

12



At December 31, 2008 and 2007, the deposits in Central Bank correspond to deposits without term for the liquidity of the financial markets; such deposits have no maturity and bear interest at the average rate for bank funding. As explained in note 3(b), the liability corresponding to foreign currency purchases is recorded in “Sundry creditors and other accounts payable” and the asset corresponding to foreign currency sales is recorded in “Other accounts receivable”. Balances in foreign currency including in “Cash and due from banks”, at December 31, 2008 and 2007, are as follows: 2008 2007 Million Mexican Million Mexican USD Peso USD Peso Foreign banks 2 $ 24 1 $ 11 Foreign currency purchases to be settled

within 24 and 48 hours 182 2,512 157 1,709 Foreign currency sales to be settled

within 24 and 48 hours (182) (2,512) (111) (1,210) === ==== === ====

(7) Investment securities- At December 31, 2008 and 2007, short-term investment securities are classified as trading purposes since management intention is to trade them in the short term, and are analyzed as follows:

2008 2007 Unrestricted

Government securities $ 1,630 1,342 Sale government securities back value

(see notes 11 and 14) - (787) $ 1,630 555

Restricted Purchase government securities back value

(see notes 11 and 14) - 469 $ 1,630 1,024 ==== ====

(Continued)

13



At December 31, 2008 and 2007, the term of government securities ranges between 12 days and 15 years, bearing average annual rates of 7.75% and 7.84%, respectively. Interest income, results of valuation to fair value and earnings from trading securities recognized in results of operations at December 31, 2008 and 2007 are described in note 20. The Bank did not transfer securities among categories during years ended December 31, 2008 and 2007. Risk management policies, as well as risk management evaluation about the risks that the Bank is exposed to are described in note 18. At December 31, 2008 and 2007, there are not debt securities other than government securities from the same issuer that represent more than 5% of the net capital of the Bank.

(8) Securities repurchase agreements- At December 31, 2008 and 2007, the Bank had entered into securities repurchase agreements, which have average weighted term of 3 days with average annual rates of 7.99% and 7.80% respectively, and are analyzed as follows: December 31, 2008 Assets Liabilities Securities receivable $ 1,329 - Accounts receivable on repurchase

agreements - (1,329) 1,329 (1,329) Offsetting reclassification (nota 3d.) (1,329) 1,329 $ - - ==== ==== Securities to deliver $ - (2,450) Accounts receivable on agreements to

resell. 2,450 - 2,450 (2,450) Offsetting reclassification (nota 3d.) (2,450) 2,450 $ - - ==== ====

(Continued)

14



December 31, 2007 Assets Liabilities Securities receivable $ 3,152 - Accounts receivable on repurchase agreements - (3,151) 3,152 (3,151)

Offsetting reclassification (note 3d.) (3,151) 3,151 $ 1 - ==== ====

On December 31, 2008 and 2007, the securities receivable and deliverable are analyzed as follows: Securities receivable 2008 2007 Government securities:

Bonds $ 796 260 Cetes 531 2,891 Accrued interest and valuation adjustment 2 1

$ 1,329 3,152 ==== ==== At December 31, 2008, the securities deliverable are analyzed as follows: Securities receivable 2008 Government securities:

Bonds $ 1,996 Cetes 450 Accrued interest and valuation adjustment 4

$ 2,450 ==== Interest income and premiums colleted from securities repurchase agreements recognized in the statement of income for the years ended December 31, 2008 and 2007 are described in note 20.

(Continued)

15



(9) Securities lending transactions-

Until November 2008, the Bank participated as “market maker” in securities lending transactions, acting as borrower with the Central Bank. Such transactions are negotiated with maturities on the business day following that of the loan and should be guaranteed by Bonds or Cetes (Federal Treasury Certificates) at 102% of the requested value. The Central Bank returns the pledged bonds or Cetes received upon the maturity of the securities loans. At December 31, 2008, there are not outstanding securities lending transactions. As of December 31, 2007, the amounts from securities received from securities lending transactions with maturity on January 2nd, 2008 and the amount of pledged securities delivered are analyzed as follows:

2007 Securities receivable Securities as security deliverable Term Assets Liabilities

Government securities: Cetes 1 day $ 646 634 Bonds 1 day 72 70

$ 718 704 === ===

(10) Transactions with derivative financial instruments-

In the year 2000, the Bank first offered derivative instrument products to its customers, seeking to achieve the following objectives:

• Increase the number of products offered to its local clients, which Deutsche Bank AG already offers on a global scale.

• Contribute to its consolidation as a significant player in the local market.

• Consolidate its market share. • Actively participate in the process for the development of derivatives in Mexico. • Optimize stockholders' return on their investment. The financial instruments the Bank is authorized to offer and uses for meeting its derivative-related objectives include those mentioned on the next page.

(Continued)

16



Interest rate swaps, currency swaps, interest rate futures, interest rate and foreign exchange forwards, European foreign currency, interest rate options and swaps and credit and capital market derivatives. Instruments used At December 31, 2008 and 2007, instruments used were as follows: Interest rate swaps • Description: Nominal interest rates in pesos and foreign currencies (single currency),

fixed/floating and floating/floating, over-the-counter transactions, no minimum or maximum amount contract, full payment at inception / maturity, weekly / monthly / bimonthly / semiannual / annual coupons.

• Risk factors: Of the currency involved: forward rates for mark to market and structure

of nominal rates (zero coupon) for discounting at present value. Actual rate swaps • Description: UDI / pesos / foreign currency, over-the-counter transaction, no minimum

or maximum amount contract, full payment at inception / maturity, weekly / monthly / bimonthly / semiannual / annual coupons.

• Risk factors: Currencies involved and UDI = forward rates for mark to market and

structure of nominal rates (zero coupon) for discounting at present value. Exchange rates of the currencies involved and of the UDI to the peso.

Cross currency swaps (CC swaps) • Description: Nominal interest rates in differentiated currencies, over-the-counter

transaction, no minimum or maximum amount contract, full payment at inception / maturity, weekly / monthly / bimonthly / semiannual / annual coupons.

• Risk factors: Currencies involved = forward rates for mark to market and structure of

nominal rates (zero coupon) for discounting at present value. Exchange rates of the currencies involved to the peso.

Interest rate futures – 28 day TIIE

• Description: TIIE rate, 28-day periods, payments at maturity of periods between the market and agreed-upon rates.

• Risk factors: Nominal interest rate in pesos.

(Continued)

17



Interest rate futures –91day Cetes • Description: Cetes rate, 91-day periods, payments at maturity of periods between the

market and agreed-upon rates. • Risk factors: Nominal interest rate in pesos. Interest rate futures –10Y Bonds • Description: 10Y bond rate, 6-month periods, payments at maturity of periods between

the market and agreed-upon rates. • Risk factors: Nominal interest rate in pesos. FX Forwards • Description: Foreign currency/pesos, over-the-counter transaction, up to 48 hr. term, no

minimum or maximum amount contract, full payment at maturity. • Risk factors: Nominal interest rate in pesos and foreign currency, exchange rate pesos /

foreign currency. At December 31, 2008 and 2007, derivative financial instruments for trading purposes are analyzed as follows: 2008 Notional amounts (millions) Fair To be delivered To be received Average value USD MXP UDI USD MXP UDI maturities Assets Liabilities Foreign exchange

forwards 132 - - 132 - - 2009 $ 87 21 Swaps: IRS 160 90,931 - 160 90,931 - 2014 900 1,099 Foreign

exchange 838 9,498 148 824 9,683 148 2014 3,035 2,898 === ===== === === ===== === 3,935 3,997 $ 4,022 4,018 ==== ====

(Continued)

18



2007 Notional amounts (millions) Fair To be delivered To be received Average value USD MXP UDI USD MXP UDI maturities Assets Liabilities Futures - 13,700 - - 13,700 - 2008 $ - - Foreign

exchange forwards 30 - - 85 - - 2008 25 17

Swaps: IRS 1,470 76,788 - 1,470 76,788 - 2014 1,109 1,184

Foreign exchange 675 7,543 52 675 7,543 52 2014 307 334

=== ===== === === ===== === 1,416 1,518 $ 1,441 1,535 ==== ==== The notional amounts of contracts represent the derivative volume outstanding and do not represent the gain or loss associated with the market risk or credit risk of such instruments. Notional amounts represent the amount at which a rate or price is applied in determining the cash flow amount to be exchanged. Following is the unaudited information relating to the derivative financial instruments the Bank operates. Eligible counterparties For a counterparty to be deemed eligible for entering into master agreements to carry out financial transactions known as derivatives, such counterparty should comply with the minimum legal requirements to adhere to (i) customer identification and knowledge policies; (ii) General Provisions applicable to derivative products; and (iii) regulations issued by the Central Bank for such products; additionally, it should have knowledge and understanding of the product as well as of the risks inherent therein and comply with credit policies and standards.

(Continued)

19



Policies for the designation of calculation or valuation agents The Bank seeks the highest standards in policies for the valuation of derivatives, either that the Bank or any of its affiliates acts as calculation agent. Contractually, rules are established for the designation of calculation agents in case the counterparties are credit institutions, brokerage firms or any of such counterparties is noncompliant or affected as defined in the respective contract. Valuation methods and techniques, relevant reference variables and assumptions applied The valuation methods and techniques, the reference variables and the assumptions used in valuing the derivative financial instruments used for valuing the Bank's instruments are as follows:

Instrument Valuation method Reference variables Assumptions used

Futures Market value; end of Mexder session

28-day TIIE, 91-day CETES, IPC, M10 bonus

None

FX forwards Fair value

Exchange rate MXN/foreign currency (forward and spot), nominal interest rates in MXN and foreign currencies, term to maturity, nominal value.

Forward exchange rate (determined using PIP input **), spot exchange rate (PIP), nominal interest rates in MXN (PIP), nominal interest rates in foreign currencies (PIP), term to maturity (by transaction), nominal amount (by transaction).

Swaps - - Rates Fair value

Forward rates, UDI number of swap flows, coupon period days, rate receivable, rate deliverable, surtax of flows deliverable, discount rate, term to maturity, long term, short term.

Forward rates (PIP), UDI (PIP), number of swap flows (by transaction), coupon period days (by transaction), rate receivable (by transaction), rate deliverable (by transaction), surtax of flows receivable (by transaction), surtax of flows deliverable (by transaction), discount rate (PIP), term to maturity (by transaction), long term (by transaction), short term (by transaction).

Swaps - - Foreign exchange

Fair value

Number of swap flows, days for payment of interest, swap currency amount 1, swap currency amount 2, rate agreed in currency 1, rate agreed in currency 2, discount rate at term of maturity, exchange rate of MXN vs. currency 1, exchange rate of MXN vs. currency 2, surtax flows receivable, surtax flows deliverable, UDI.

Number of swap flows (by transaction), days for payment of interest (by transaction), swap currency amount 1 (by transaction), swap currency amount 2 (by transaction), rate agreed in currency 1 (by transaction), rate agreed in currency 2 (by transaction), discount rate at term of maturity (PIP), term to maturity (by transaction), exchange rate of MXN vs. currency 1 (PIP), exchange rate of MXN vs. currency 2 (PIP), surtax flows receivable (by transaction), surtax flows deliverable (by transaction), UDI (PIP)

** PIP = Proveedor Integral de Precios. (Continued)

20



Description of policies and periodicity of valuation Valuation policies concerning derivative financial instruments adhere to the reasonableness principles that govern the Bank's standpoint regarding the taking of risks. Within this context, derivative financial instruments are valued on a daily basis for timely monitoring purposes. The Bank has set limits for the taking of risks as regard derivatives. Should such limits be exceeded, this situation is timely reported for purposes of taking the necessary steps in order to reduce risks. Derivative financial instruments are valued and monitored daily. Their potential impact on cash flows arises primarily from early maturity. Such effect is reflected in the statement of income. Generic description of valuation techniques and risk measurement The valuation technique used for financial instruments is the Fair Value technique. Positions are valued using the input provided by the price provider (PIP) at market value. The Bank directly makes such valuation. In valuing the derivative instruments, the Bank uses both the Institutional Risk Management System (SIAR) and the "Risk Engine" application. This latter application is a corporate auxiliary tool for product valuation using the "DB Analytics" corporate platform. Main contractual conditions or terms The Bank and its customers negotiate and enter into master agreements as well as supplements and, as applicable, global guarantee agreements in carrying out financial transactions known as derivatives, in line with the regulations in effect for protection against legal risks. Such agreements foresee, as a minimum: (a) the conditions for carrying out the transactions; (b) the characteristics and requirements for the confirmation of such transactions; (c) compliance and settlement issues as well as the procedure for calculating the amounts payable and the designation of a calculation agent; (d) the form, terms and conditions of the guarantee, as applicable; (e) the form and terms for the offsetting and withholding of payments; (f) the grounds for termination of the contractual relationship and the transactions; (g) the form and terms for the calculation and date of payment of the early settlement amount; (h) the form and terms for collecting default interest; (i) authorization to use information, etc. As for the guarantor agreement, the parties determine the eligible assets to be used, the exposure amounts or limits for the granting of guarantees ("guarantee thresholds"), minimum transfer amounts and the type of guarantee (pledge, trust or stock guarantee).

(Continued)

21



Policies on margins, collateral and lines of credit The Bank seeks limiting credit risks by negotiating guarantee agreements and establishing risk exposure limits which, if restated, activate the reduction of the position ("recouponing"). For the most part, the agreements entered into with the counterparties already include one of the two aforementioned options. The Bank receives in guarantee dollars and instruments issued by the Mexican Government, with adequate discount percentages. Lines of credit consider the lack or presence of "recouponing"/guarantees and the creditworthiness of the counterparty. Authorization processes and levels required by transaction There is only one authorization process required for the Bank to enter into derivative transactions and applies equally to all derivative products handled, irrespective of the specific type of product in question. The process includes, but is not limited, to the following six basic points: 1. The Front team is responsible for performing derivative transactions with customers

and counterparties who have duly signed bilateral agreements. 2. The Front representative requests from the Derivatives desk the quotation for a

potential transaction with derivative instruments. 3. The Derivatives desk ensures that the Bank is authorized to trade the transaction and

provides a quotation for the customer. 4. The Sales representative makes a quotation for the customer, if the latter accepts the

transaction is entered in the Bank's operating systems. 5. The back office area receives details of the transaction and verifies that the customer

has a line of credit; subsequently, it confirms the transaction details (call back) and confirms the entry in the system.

6. Transactions are reported daily to the Central Bank and confirmation signed by the

customer and/or the counterparty is obtained. As part of the monitoring of transactions and related risks, the Bank has determined operating limits for these products, depending on the previously authorized authorization levels of traders.

(Continued)

22



Internal control procedures for managing exposure to market and liquidity risks in financial instrument positions The Bank has a control in place for managing exposure to market and liquidity risks (in addition to credit and operating risks) of its positions in financial instruments at three different levels: organization, methodology and limits and authorizations. 1. The Bank's organizational structure is designed to ensure that all risk exposures are

detected and recognized by the appropriate levels for their control, avoiding possible conflicts of interest between decisions made by the operating and risk control areas and facilitating the conditions for the follow-up and reduction of non-authorized risks.

2. The Bank's methodology and models for detecting, measuring and reporting risk have

been profusely reviewed, selected amongst best financial industry practices and have been tested and recommended as part of the global operations of Deutsche Bank.

3. The policy of risk exposure limits and of authorizations where these limits are exceeded

requires the direct participation of Deutsche Bank and of the Bank's Board of Directors through the Risk Committee. Thus, strict observance of the preservation of capital as required by the applicable official regulations is ensured, taking advantage, in turn, of the global possibilities of Deutsche Bank.

As part of its functions, the UAIR should detect any excesses over the aforesaid limits and request that an extraordinary meeting be held to inform such situation to the Risk Committee and the most suitable decisions for the Bank may be timely made that include: • Reducing risk positions; • Approving an exception period based on the prevailing market conditions to prevent an

actual impact on the Bank's results of operations, timely informing the Board of Directors.

• Proposing an increase to the un VaR limit if it is anticipated that the market conditions

or the Bank's strategy should adjust to the new conditions of the environment where the organization operates;

Once the measures to be taken are defined, the Risk Committee shall inform such decision to the Board of Directors.

Authorization of the excess over the risk exposure limits may be requested if an exception period or an increase in the VaR limit are approved. Authorization should be subject to discussion during the extraordinary meeting of the Risk Committee that the UAIR requests as part of the excess detection and reporting process.

(Continued)

23



Note 18 describes internal control methodologies and procedures for managing exposure to market and liquidity risks in derivative instrument positions. Year-on-year, the Bank's management engages the services of an independent third party for conducting a review of the market, liquidity and credit risks of derivative financial instrument positions. At December 31, 2008 and 2007, there have been no observations or deficiencies arising from such review. Internal and external liquidity sources As required, the Bank has both internal and external liquidity sources that may be used for attending requirements relating to derivative financial instruments. Thus, the Treasury is capable of resorting to various sources of funding, depending on their cost and liquidity. Sources include the following: i) debt issue; ii) reception of loans from local or foreign bank institutions; iii) reception of loans from its headquarters in New York; iv) repurchase transactions; and v) deposits. Furthermore, the Bank has a contingency plan in case of liquidity requirements. Other figures and indicators The VaR for derivative financial instruments rose 52.7% in 2008 compared with 2007 to finish the year at $10.7 (unaudited). This increase is due primarily to the change in methodology for calculating VaR from Montecarlo Simulation to Historical Simulation, effective as of March 2008. Given that derivatives instruments are used for trading purposes and monitored on a permanent basis, the possible significant changes in the value of the underlying asset or the respective reference variables are detected on time, which permits the taking of necessary action by the Bank, as required, to offset a negative impact on cash flows that may affect the organization's liquidity.

(Continued)

24



Financial instrument positions closed and overdue in the last months of 2008 were as follows:

Description Underlying

asset Overdue positions

Early overdue positions

Closed positions

Future 28-day TIIE, 91day CETE, M10 BONDS

0 0 225

Future IPC 0 0 2

FX forwards Dollars/Mxn 9 0 0

Swaps Rates 21 7 0 Swaps Currency 2 2 0 Total 32 9 227

Margin calls during the year's last quarter are concentrated with commercial banks and were for the amounts and periods shown below:

Date Amount

requested Sep 30, 08 107,282,520Oct 8, 08 331,982,212Oct 31, 08 168,258,492Nov 28, 08 161,711,835Dec 2, 08 139,228,758Dec 5, 08 36,829,919Dec 30, 08 332,969,746Oct 27, 08 17,750,000

There were no contractual defaults during the quarter.

(Continued)

25



Below is a list of derivative financial transactions which fair value exceeded 5% of the total capital value at the quarter's end.

Reference

Type of derivative, security or agreement

Purpose

Notional amount / Nominal value

Fair value Current quarter

Fair value Preceding quarter

1190331MX Currency swap Trading USD 166,130,942 $ (330,642,292) 141,635,010

2615509MX Currency swap Trading USD 166,130,942 508,424,033 12,594,464 1799659MX Currency swap Trading USD 60,000,000 (276,195,065) (10,571,912)1799660MX Currency swap Trading USD 60,000,000 276,195,065 10,571,912 2102528MX Currency swap Trading USD 50,000,000 (153,549,085) (7,652,884)2102529MX Currency swap Trading USD 50,000,000 153,549,085 7,652,884 2131898MX Currency swap Trading USD 50,000,000 (157,303,894) (11,404,506)2131901MX Currency swap Trading USD 50,000,000 157,303,894 11,404,506 2142660MX Currency swap Trading USD 30,000,000 (100,920,717) (12,844,036)2142662MX Currency swap Trading USD 30,000,000 100,920,717 12,844,036 2358166MX Currency swap Trading USD 50,000,000 176,966,164 30,684,159 2358167MX Currency swap Trading USD 50,000,000 (176,966,164) (30,684,159)2387761MX Currency swap Trading USD 105,000,000 372,658,916 65,139,598 2387762MX Currency swap Trading USD 105,000,000 (372,658,916) (65,139,598)720319MX Currency swap Trading USD 212,000,000 (680,687,745) (22,281,619)720321MX Currency swap Trading USD 212,000,000 680,687,745 22,281,619 827424MX Currency swap Trading USD 32,189,959 227,060,105 30,114,900 970709MX Currency swap Trading USD 32,189,959 (227,060,105) (30,114,900)2573003MX Interest rate swap Trading MXN 2,650,000,000 $ (110,775,877) (21,204,940) =========== =========== ==========

Sensibility analysis With the purpose of determining potential losses of derivative financial instruments, the Bank uses the VaR model. Additionally, the PV01 (present value of a basis point) is calculated for quantifying the potential impact on the results of operations as a result of the change equal to one basis point in interest rates. Methodologies used and the results of such analyses are shown in note 18. In measuring the sensibility of potential losses under different scenarios that assume changes in market conditions the Bank calculates the impact of stress scenarios (stress testing) on a monthly basis, which consider parallel displacement of market curves and actual crisis scenarios.

(Continued)

26



The principal risks that may lead to losses in transactions with derivative instruments have been identified are changes both in interest rates and the peso/dollar parity. Of these scenarios, those with the most losses are those mentioned below: Scenario A. Assumes a 12.5% drop in interest rates and a 11.3% exchange rate depreciation. Under this scenario, expected losses at December 31, 2008 from derivative instruments would be $41.5. Scenario B. Assumes a 11.6% drop in interest rates and a 12% exchange rate depreciation. Under this scenario, expected losses at December 31, 2008 from derivative instruments would be $41.3. Scenario C. Assumes a 3.1% rise in interest rates and a 15.7% exchange rate depreciation. Under this scenario, expected losses at December 31, 2008 from derivative instruments would be $30.5. At the time of preparing these notes to the financial statements, the Bank's management is not aware of the existence of significant events associated with derivative financial instruments that may affect the organization's results in future reports.

(11) Other accounts receivable, net-

Other accounts receivable at December 31, 2008 and 2007, are comprised of the following: 2008 2007 Debtors for value date transactions (see

note 7) $ - 787 Debtors for settlement of transactions 2,509 1,209 Offsetting of operations of purchase - sale

of currency transactions (see note 14) (1,351) (1,209) Recoverable taxes 235 160 Other debtors, net 211 205 $ 1,604 1,152 ==== ==== At December 31, 2008 and 2007, “Other debtors, net” include account receivables in converted dollars into pesos for $170 and $177, respectively.

(Continued)

27



(12) Related-party transactions and balances-

Transactions carried out in the years ended December 31, 2008 and 2007 with affiliate and related companies were as follows:

2008 2007 Commissions collected brokerage income,

included in “Other income, net” $ 148 198 Administrative services and rents paid 129 153 Administrative services colleted 6 - === === Balances receivable from (payable to) affiliate and related companies at December 31, 2008 and 2007, are analyzed as follows:

2008 2007

Deutsche Bank AG, London Branch $ 148 181 DB Servicios 8 - Deutsche Securities, S. A. de C. V. (13) - Deutsche Bank AG 1 - === ===

Balances receivable from and payable to related companies are included in the “Other accounts receivable” and “Sundry creditors and other accounts payable” captions, respectively.

In accordance with the IT Law, corporations carrying out transactions with related parties, whether domestic or foreign, are subject to certain limitations and tax requirements as to the determination of prices, since such prices must be equivalent to those that would be used in arm’s-length transactions.

(13) Other assets-

Trust Certificate On December 28, 2006 the Bank acquired a certificate of trust rights (the Certificate) covering 50% of the surplus of distributions to be made by the irrevocable trust F/00036 (the Trust) to the holders of such Certificate after the Trust has completely paid the Stock-exchange Certificates (CBs) derived from the securitization process of the mortgage loan portfolio originated by Crédito y Casa, S. A. de C. V. SOFOL to the holders of CBs and the amounts owed have been paid to Sociedad Hipotecaria Federal, in accordance with the trust agreement where J.P. Morgan, S. A. acts as Trustee.

(Continued)

28



The Bank paid $16.7 nominal (1.5 million dollars) for the certificate; at December 31, 2008 and 2007, the carrying value of the certificate is $10 and $12.7, respectively; once cumulative payments received from the trust have been discounted. Cumulative payments received from the trust are $3 and $4, respectively.

(14) Sundry creditors and other accounts payable-

Sundry creditors and other accounts payable at December 31, 2008 and 2007 are analyzed as follows:

2008 2007

Creditors for settlements of back value date transactions (see note 7) $ - 470

Creditors for settlement of foreign currency transactions (see note 6) 2,509 1,708

Offsetting of foreign currency transactions (see note 11) (1,351) (1,209)

Value date transactions offsetting 95 141 Other 67 61

$ 1,320 1,171 ==== ====

Changes to the accruals caption are analyzed below:

2008 2007

Balances at beginning of year $ 141 128 Increases charged to income:

Operating expenses 120 112 Other 25 51 Payments and cancellations (191) (150)

Balances at end of year $ 95 141

=== ===

(15) Employee benefits- Through June 2, 2008, the Bank did not have employees and was therefore not subject to labor-related obligations and administrative services it required were provided by DB Servicios, which transferred its employees to the Bank through the employer substitution scheme; therefore, as of such date, the Bank has established a defined benefit pension plan covering substantially all of its employees.

(Continued)

29



The actuarial present value of benefit obligations and the status of the employee benefit plan funds at December 31, 2008, are as follows: Cash flows- Plan contributions and benefits paid during 2008, were as follows: Remuneration upon retirement from seniority premiums, pensions and severance payments 2008 Pensions Termination Total Contributions transferred to the fund $ 3 - 3 Benefits paid - 2 2 == = = The cost, obligations and other elements of the employee benefit plans mentioned in note 3(j), have been determined based on computations prepared by independent actuaries at December 31, 2008. The components of the net periodic cost for the year ended December 31, 2008, are as follows: Benefits 2008 Pensions Termination Total Net periodic cost:

Service cost $ 1 1 2 Interest cost 1 - 1

Net periodic cost $ 2 1 3

= = =

(Continued)

30



The present value of benefit obligations of the plans at December 31, 2008 is as follows: Benefits 2008 Pensions Termination Total Acquired benefit obligation (ABO) $ 6 2 8

== = == Projected benefit obligation

(PBO) $ 12 3 15 Plan assets at fair value (3) - (3) Projected benefit obligation

over plan assets 9 3 12 Unrecognized items:

Transition liability (3) (1) (4) Projected liability, net $ 6 2 8 == = ==

2008 Discount rate 9% Rate of compensation increase 5% * Expected return on plan assets 9% Amortization period of unrecognized items (applicable

to retirement benefits) 30.8 years

* Includes salary race.

(Continued)

31



(16) Income (IT) and asset taxes (AT), Flat Rate Business Tax (IETU) and employee

statutory profit sharing (ESPS) - On October 1, 2007 new laws were published, a number of tax laws were revised, and additionally a presidential decree was issued on November 5, 2007, all of which will come into effect on January 1, 2008. The most important changes are: (i) derogation of the Asset Tax Law and (ii) the introduction of a new tax (Flat Rate Business Tax or IETU) which is based on cash flows and limits certain deductions; additionally, certain tax credits are granted mainly with respect to inventories, salaries taxed for IT purposes and social security contributions, tax losses arising from accelerated deductions, recoverable asset tax, and deductions related to investments in fixed assets, deferred charges and expenses. Accordingly, beginning in 2008, companies will be required to pay the greater of their IETU or IT. If IETU is payable, the payment will be considered final i.e. not subject to recovery in subsequent years. The IETU rate is 16.5% for 2008, 17% for 2009 and 17.5% for 2010 and thereafter. Under the tax law in force through December 31, 2007, companies had to pay the greater of their IT or AT. Both taxes recognized the effects of inflation but in a different way than the accounting criteria from the banking commission. At December 31, 2007, AT was lesser than IT. Because management estimates that the tax payable in future years will be IT, deferred tax effects as of December 31, 2008 and 2007 have been recorded on the IT basis.

(Continued)

32



Following is a condensed reconciliation between the accounting income and taxable income in nominal values for the years ended December 31, 2008 and 2007: 2008 2007 Income before IT $ 178 173 Accounting effects of inflation - 63

Nominal income 178 236

Reconciling items: Tax effects of inflation (68) (53) Exchange effect from assets and liabilities From not derivative transactions (21) 1 Mark-to-market adjustments (90) 39 Taxable income (deductions) on forwards 57 (41) Non-deductible expenses 9 12 Provision for irrecoverable accounts 4 5 Provisions for diverse obligations (38) 21 Other (14) (2)

Taxable profit 17 218 Tax losses from previous years - (94) Taxable income 17 124

Tax rate 28% 28%

Current IT expense $ 5 35

==== ==== ESPS payable in 2008, was determined based on article 123 of the Political Constitution of Mexico and article 127 fraction III of the Federal Labor Law in force, for $5. IT tax rate was 28% in 2008 and 2007. In accordance with Mexican tax law, the tax authorities are entitled to examine transactions carried out during the five years prior to the most recent income tax return filed.

(Continued)

33



The deferred tax asset at December 31, 2008 and 2007, is made up of the following items:

2008 2007

Valuation of investment securities, and derivatives transactions $ 17 29

Miscellaneous provisions 28 38 Allowance for recoverability of

receivables 4 2 $ 49 69 == == Deferred IT recognized in profit

and loss $ 20 51 == ==

(17) Stockholders’ equity-

(a) Structure of capital stock-

The capital stock is represented by 708,832 shares with a par value of one thousand pesos each, of which 708,831 are Series “F” shares and one is a Series “B” share. The Series “F” shares must represent at least 51% of capital stock and may only be acquired by a foreign financial institution or by their affiliate holding company. Series “B” shares may represent up to 49% of the Bank’s capital stock and may be subscribed without restrictions.

As of December 31, 2008 and 2007 paid-in capital stock was comprised as follows: Capital stock Nominal Restated Initial contribution on February 28,

2000 $ 231 332 Capital stock contribution on July 12,

2000 478 671 $ 709 1,003 === ====

(Continued)

34



(b) Comprehensive income-

During the years ended December 31, 2008 and 2007 there are no items which, according to the applicable MFRS, need be reported directly in stockholders' equity; therefore, the comprehensive income is equal to the year's net income presented on the statement of income.

(c) Restrictions on stockholders’ equity-

The Banking Law requires an appropriation of ten percent of net income for the year to statutory reserves, until such reserves reach an amount equal to paid-in capital. As of December 31, 2008 the Bank increased its statutory reserve for $8.

Stockholder contributions, and retained earnings on which income tax has been paid, restated on a tax basis, may be distributed or refunded to stockholders tax-free. Other refunds and distributions in excess of these amounts are subject to IT as provided for in the IT Law.

(d) Capitalization-

The SHCP requires credit institutions to maintain a minimum capitalization percentage over risk assets, which is calculated by applying specific percentages in accordance with the risk assigned. At December 31, 2008 and 2007 the net capital, risk assets and Bank’s capitalization requirement is as follows: Net capital at December 31, 2008 and 2007 amounts to $2,006 and $1,856, respectively. Equivalent Capital risk assets requirement 2008 2007 2008 2007 Risk assets: Market risk: Operations:

Mexican currency at a nominal rate $ 1,403 2,044 112 164

Nominal rate in a foreign currency - 82 - 7

Real rates 1 74 - 6 Foreign currency position 36 45 3 3

Total market risk to the next page. $ 1,440 2,245 115 180

35



Market risk from prior page $ 1,440 2,245 115 180 Credit risk: On derivatives 1,128 294 90 24 On deposits and loans 27 138 2 11 Other 270 214 22 17

Total credit risk 1,425 646 114 52 Operational risk 205 - 16 - Total market, credit and

operational risks $ 3,070 2,891 245 232 ==== ==== === ===

Capitalization indices: 2008 2007 Capital to market and credit risk assets 70.02% 64.62% Capital to total risk assets (including operational risk) 65.34% - Capital to total required capital 8.17 times 8.08 times ======== =======

(18) Risk management (unaudited)-

Risk management refers to the set of objectives, policies, procedures and actions implemented to identify, measure, monitor, limit, control, inform and disclose the various types of risks to which the Bank is exposed.

The Board of Directors of the Bank approved objectives, limits, guidelines and policies on risk exposure, which are reviewed at least once a year. Also, the Board of Directors designated a Risk Committee for the purpose of providing a forum that will allow monitoring compliance with the above mentioned objectives, limits, guidelines and policies.

Objectives Risks must be assumed in moderation, in relation to available capital and where

attractive opportunities for reward exist.

Risks taken should be measured using a common basis. (Continued)

36



Risks must be supervised in accordance with the type of risk, and the different areas involved should be duly informed.

Risks assumed must comply strictly with the limitations contained in Mexican Legislation and corporate standards.

Use of the best risk management practices.

Principles The principles of the policy on risk management for the Bank’s activities are based on:

Excellence and integrity in its transactions. Balancing risk-taking with appropriate controls. The importance of discipline and respect for limits. Diversification so as to avoid unnecessary concentration of risk. Balancing the dependence on models with the use of good judgment. Determination of limits depends on (i) the internal and external economic factors that imply some type of risk (mainly the economic framework, economic expectations, market liquidity and volatility) and (ii) the capacity to absorb losses based on the Bank’s capital. Risk Committee and comprehensive Risk Management Unit The Risk Committee is chaired by an owner member of the Board of Directors and its comprised by General Director, an adviser, the person responsible for the Comprehensive Risk Management Unit (UAIR) and the person responsible for credit; with the participation of the risk and internal audit areas, among others. This Committee meets every third Monday of the month and permit to review and discuss the points presented by the UAIR, such as: 1. Performance of risk factors.

2. Performance of the positions exposed to risk and their sensitivity analysis.

3. Updating of the methodology and models for measuring and controlling risks.

4. Risk policies with respect to:

Management of risks in excess of the established limits

Analysis of market liquidity and creation of liquidity reserves

Analysis of sensitivity

Analysis of new products

(Continued)

37



5. Performance of asset and liability positions

6. Creation of preventive liquidity reserves

7. Specific analysis of quantifiable and non-quantifiable risks. The Bank has manuals that set forth the guidelines and directives necessary for comprehensive risk management. The UAIR is independent and separate from the business areas. This area is responsible for identifying, measuring, monitoring, limiting and controlling the Bank’s risks through the use of approved risk measurement standards. If the UAIR identifies a problem with regard to the exposure, limits or control of some type of risk, it immediately informs the General Director, the Risk Committee and the area responsible for adopting the necessary measures. The UAIR must be satisfied that the measures taken will solve the problem and minimize the probabilities of a recurrence. Methodologies for identifying and quantifying the following risks: Market:

Market risk represents the potential loss for changes in the risk factors that influence the valuation of asset or liability positions or positions causing contingent liabilities, such as interest rates, exchange rates, price indices and others.

In assessing and following up on all positions subject to market risk the Bank uses the VaR (value at risk) model. This model assesses the potential loss resulting from a change in relevant market factors (for instance: interest rates and exchange rates) that might occur in the same market conditions over a defined time period.

Based on the VaR results obtained, it is possible to evaluate the degree of diversification or concentration in market risk factors such as:

Mexican interest rates (nominal and real) Foreign interest rates Peso/Dollar exchange rate (or the parity with any other currency)

The PV01 (present value of a basis point) is an additional and more timely market risk measure, which makes it a widely used tool in the intra-day risk monitoring process. The PV01 is the difference between the market value + 1 basis point and the market value. The PV01 should be interpreted as the potential impact in the results arising from the movement in interest rates equal to one basis point.

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Additionally, the foreign exchange position is computed for quantifying the risk of movement in the exchange rate. It consists of calculating the present value of current positions in foreign currency in order to measure their sensibility. The impact of stress scenarios (stress testing) is calculated monthly, considering parallel displacement of market curves and actual crisis scenarios. The market risk stress test purports to identify events or forces that may have an impact on the Bank's market risk position. This test may be considered for emphasizing particular risks that might or might not be entered in calculating the VaR. Furthermore, “backtesting” analysis is performed, which consists on making a comparative analysis of estimated exposure to market risk with actual risks, thus explaining the significant variances between operating losses and maximum losses shown by the VaR.

In both cases, if the projected results vary significantly from the observed results, the necessary corrections to the models or methodologies for quantifying the respective risk should be made.

The Bank has defined limits that establish the tome for decreasing or increasing positions without this implying risks greater than those authorized by the Board of Directors.

The Bank has systems that maintain historical archives of market and accounting information as well as printed reports. This enables the UAIR to make comparisons between current risk factors and levels and those observed in the past.

As for securities held to maturity, derivative financial instruments for hedge purposes and other positions subject to market risk, the Bank would: • Analyze, evaluate and follow-up on variances in financial revenues and economic

value resulting from the market risk, using to such end risk models with the capability of measuring the potential loss of such positions associated with changes in foreign exchange rates and interest rates by currency, over a defined time period.

• Seek consistency between valuation models of financial instrument positions,

including derivatives used by the UAIR and those applied by the various business units.

• Compare variances between estimated financial revenues and actual results.

Corrections, as required, should be made where projected and actual results vary significantly.

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• Calculate risk exposure under different scenarios, including extreme scenarios. Exceptions for instrument classification: The Bank may apply the provisions of the preceding paragraph to securities classified as available for sales, provided: • Approval is obtained from the risk committee, the permanence characteristics of

such instruments is justified and evidence is provided to the Vice-chairman of the Commission charged with oversight duties that the instruments will be managed as a structural balance sheet component; and

• Internal controls are in place that ensure instrument management according to the

provisions of the preceding paragraph.

In order that the sole hedge purpose of a derivative financial instrument to be recognized and such instrument is subject to that set forth in the preceding paragraphs, compliance is required with the applicable accounting criteria issued by the Commission. Among other things, it should be proven that there is a significant inverse relationship between the changes in the fair value of the financial instrument for hedge purposes and the value of the hedged asset or liability. This relationship should be supported by adequate statistical evidence; further, follow-up should be provided for the hedge's effectiveness.

Liquidity:

The result from the liquidity risk analysis is an indication on the potential loss on the impossibility or difficulty of renewing or contracting other liabilities in normal conditions for the Bank, due to the early or forced sale of assets at unusual discounts to meet its obligations, or for the fact that a position may not be timely sold, purchased or hedged by establishing an equivalent opposite position. Liquidity risk analyses capture the following aspects:

The measurement and monitoring of the risk from differences in cash flows takes places daily through the MCO (Maximum Cash Outflow) model, considering current positions at the report date. Cash flows are calculated by accumulating and netting in future value the difference between them by day and currency over the next 56 calendar days. Subsequently, daily totals accrue by gap, daily until the first week and all other terms are show on a weekly basis. This monitoring is intended to ensure liquidity of the relevant flows to avoid excessive dependency on overnight liquidity. Also, a daily operating settlement limit is monitored.

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The Bank's Treasury suggests a liquidity risk limit to the Risk Committee which, in turn, relies on the Regional Treasury for its determination and approval. This limit is monitored daily by the Local and Regional Treasuries and the UAIR, which keep the Risk Committee and the General Director informed. The Bank has a procedure for estimating potential losses arising from having to liquidate the securities portfolio in a short time period. The UAIR makes this calculation monthly based on i) the Bank's asset and liabilities; and ii) the differences between market purchase and selling prices. The impact of market liquidity contingency scenarios is also calculated monthly. The use of stress scenarios for liquidity risks take into account risk scenarios where significant changes in market conditions are assumed, that result in losses from Bank's intermediation. Credit:

Risk exposure limits are established through a line approval process, which requires that a credit officer with the required authority approves such line. The officer's authority depends primarily on his/her level of expertise and training. All credit officers have been subject to training. Training consists of making the necessary analyses for approving lines of credit. The Credit Risk Management (CRM) Area or Credit Committee establish lines of credit based on an analysis made on the financial situation of each counterparty, their rating, nature of exposure, degree of documentation and the condition of the relevant market and sector. This is the only area authorized to establish such lines. The rating of each counterparty determines the level of risk exposure and the likelihood of default by the debtors. In monitoring risk exposure, credit systems are used where it is possible to consult positions valued at market and their maximum exposure level. Corporate models for such monitoring are CCE (Current Credit Exposure), which considers the market value of all current aggregated transactions by counterparty and PFE (Potential Future Exposure), which is a guide of what the CCE might be in the future. A list of counterparties with greater risk concentration is submitted to the Risk Committee.

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At least once a year, a review is performed of lines of credit by counterparty; any changes are reflected in the system. Such review is conducted by the Credit area and eventually authorized by the Risk Committee. The Bank has no loan portfolio; however, Bank policies call for a 100% evaluation based on Mexican legislation, should a loan portfolio exist. The risk associated with the loan portfolio is in line with the applicable regulations in Mexico. The Credit area would perform detailed analyses on the financial, overall and business situation of each customer in order to be able to assign two types of rating: 1. The rating applied to obligations denominated in foreign currencies. The top rating is

the one granted to the Mexican government for obligations denominated in foreign currencies.

2. The rating used for obligations denominated in Mexican pesos. The top rating may not

exceed the one granted to the Mexican government for obligations denominated in Mexican pesos.

The credit area directly assigns such rating, which is eventually approved by the Risk Committee and the Board of Directors. The Bank adheres to all the regulations set forth in the General Provisions Applicable to Credit Institutions. The CRM area conducts quarterly reviews of the customers' financial statements for estimating a potential impairment of their financial position. If the financial position of a customer is deemed impaired, such change is reflected on the customer's rating. In spite that the Bank has had no and does not expect to incur a loss in its portfolio due to the high creditworthiness of its customers, it shall create reserves in accordance with the legislation in effect. The Bank compares its estimated credit risk exposures to actual exposure. Corrections, as required, are made where projected and actual results differ significantly.

The Credit Risk Stress Test (stress testing) purports to identify events or forces that may have an impact on the Bank's credit risk exposure. The system used by the Bank for calculating market, liquidity and credit concentration risks may synchronize, at the user's request, the information relating to the operating system's transactions during the day.

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Description of the methodologies employed for managing and controlling operational, technology and legal risks- Operational risk: Potential loss due to failure or deficiencies in the information systems, internal controls or errors in the processing of transactions. Topics related to operational and legal risks and their potential impacts as well as gains/losses due to errors are discussed on a monthly basis. The UAIR classifies them in a historic database within the DB IRS system, including the type of loss and related cost. The Bank has operating manuals that provide for the internal controls to ensure the integrity of transactions, which are primarily based on proper segregation of duties, where any transaction will be reviewed by trained personnel to ascertain the adequate and efficient flow of operations. Besides the manuals, all Bank areas:

Maintain matrices that identify and document processes that describe the activities of

each operating or business area and the related implied operational risks.

Evaluate and inform, at least quarterly, the consequences on the business from the materialization of identified risks. The results are informed to those responsible of the units involved so as to determine the control measures to be applied in mitigating such risks.

The Bank has a plan, which purpose is to use an alternative location in Mexico City in case of contingency. This alternative site is intended for use in case of a catastrophe that prevents access to the premises during a period in excess of 4 hours. The business activities may continue to be carried out at the alternative premises but to a limited extent, until the previously designated individuals from the Business, Risks, Operations, Systems and Controllership areas may return to the Bank’s principal site. Throughout the year, tests are made simulating a contingency scenario. All employees have been assigned with duties to be performed in case of contingency. The contingency manual describes the functions of each and every one of the Bank’s employees.

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Technology risk: The methodology adopted to ensure the prevention of technology-related risks is designed for the specific purpose of identifying, assessing and documenting any risk associated with an information asset. The purposes are described below: Facilitate the identification and documentation of risks associated with information

assets; technical, procedural, operating and regulatory controls required for mitigating identified information security risks and from control weaknesses/gaps that do not meet information safety standards.

Communicate to the owner of the information asset the control profile and risk associated with the asset and obtain approval in that controls and associated risks have been documented and communicated to the Information Risk Manager/Team.

The foregoing must be considered for each system development procedure, so as to include information security processes. In like manner, the process for documenting developments should consider the definition of security requirements, documented using a particular form, access rights according to the security of the application developed and the procedure for the proper functioning of the security management processes. Information systems should consider an analysis of the business “criticality” and the likelihood of specific threats and vulnerabilities that is made through a questionnaire to be reviewed on a regular basis and that allows for the identification and communication of the protection level required in case a contingency arises, as well as the attention to be given to significant processes of applications deemed “critical”. There are firewalls and data encryption for safeguarding the integrity of information in the Bank’s data network. Also, loss of information and software is prevented through information backups. Availability levels and response times are monitored using various tools. Database performance is monitored continually, which prevents the deterioration in response time and functionality of applications. This process takes place by clearing temporary files and the analysis of database behavior, which result in diagnosis reports with recommendations that should be applied for maintaining an outstanding performance of applications. The Bank’s applications allow for the possibility of generating control reports, stored electronically for validating the type of user access to the applications depending on the job to be performed as well as user behavior while using the application.

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Tests are conducted on a regular basis in order to minimize the technology risk to which the Bank may be exposed in case of a contingency that require conducting the daily operations from the alternative site. The latest test of the contingency site systems took place on December 13, 2008 with satisfactory results. Legal Risk: Legal risks are the potential loss resulting from noncompliance with the applicable legal and administrative provisions, the issue of adverse administrative and judicial resolutions and the application of penalties in connection with the Bank’s operations. The Bank has engaged several prestigious and experienced lawyer firms for legal consulting and opinion of services regarding the various legal relationships with customers, counterparties, suppliers and regulatory authorities. Master agreements are used in connection with the Bank’s legal relationship with customers and counterparties; therefore, prior to executing any of these agreements, the Bank knows in advance the type of legal risks to which it will be exposed. Any amendments to the approved wording of the agreements would necessarily require the intervention of the legal area so that the Bank would be in a position to fully know the legal risks inherent in such amendments. Any regulatory provisions issued by the different authorities are distributed internally and, if the topic so warrants, meetings are held for discussing and analyzing the effects of such provisions. It is obligatory that all officers and employees attend courses on (i) Bank conduct policies; (ii) money laundering; (iii) activities with the public and third parties that may compromise the Bank’s or the employee’s reputation, equality and respect in commercial relationships, personal transactions and privileged information. All newly-hired employees receive a copy of the Ethics Code applicable to all employees, which they should read carefully and certify that they are aware of its contents. The regulations Controllership conducts reviews and, as applicable, supervises the internal policies and regulatory provisions. Such review also includes the legal aspects of transactions such as the review of agreements and contracts, as well as of financial products and services the Bank operates. As for legal issues, it may discuss and analyze the impact from the review findings. The Bank must conduct at least one legal audit per year.

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The frequency with which the Bank’s risk exposure is reported on is as follows: Group Frequency

Board of Directors Quarterly Risk Committee Monthly General Director Daily Risk Units Daily The market, liquidity and credit risk monitoring methodologies have been applied to the totality of the institution's intermediation portfolio at the December 31, 2008 closing. At December 31, 2008 and 2007, the VaR (unaudited) in nominal pesos was as follows:

The Bank's Consolidated VaR for the 2008 year end rose 183% compared with the VaR at the 2007 close. This increase is attributable mainly to the change in methodology for calculating the VaR from Montecarlo Simulation to Historical Simulation, effective as of March 2008.

During the period, the consolidated VaR levels remained below the total established limits. The Bank's average VaR during 2008 totaled $10.3 million, which represents a 13% increase from the average VaR of the preceding year. At December 31, 2008, the Market VaR accounts for 0.53% of the Bank's net capital.

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Average Liquidity Risk exposure value. During the period, the liquidity gap of the exposure in Mexican pesos fluctuated between a shortage of $1,248 million pesos (corresponding to 1 week gap) and an excess of $541 million pesos (8 week gap). The liquidity gap of the exposure in US dollars remained as an excess of between $3.4 million dollars (1 week gap) and $0.33 million dollars (8 week gap).

There have not been reported excess in limits established during 2008.

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During 2008, financial revenues totaled $169 million pesos, reflecting a 114% increase from 2007 revenues. As for the Economic Value Added (EVA), the annual result represented 21% of the net result, which indicates that during the year the Bank's profitability exceeded its capital cost, generating value for its stockholders. The EVA generated during the year as a percentage of the net result experienced a decrease of 44 percentage points compared with that of 2007. Operational risk As of January 2008, the Bank first reported the quantification of the operational risk to which the organization is subject on the basis of the basic methodology. At December 31, 2008, the operational risk had a 0.004% risk on the capitalization index. The materialization of operational risks is estimated through the simple arithmetic average of the accounts for penalties and losses the Bank incurred over the past 36 months, given that currently the Bank lacks internal operational risk models.

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(19) Memorandum accounts-

(a) Assets in trust or under mandate-

The Bank trust activity at December 31, 2008 and 2007, recorded in memorandum accounts, is summarized as follows:

2008 2007 Type of trust:

Administrative $ 45,015 27,917 Administrative and guarantee 6,323 3,131 Administrative and dominion

transmission 4,266 3,287 Administrative and investment 130 93 Guarantee 57,484 39,851

Mandates 50 6,489 $ 113,268 80,768 ===== =====

For the years ended December 31, 2008 and 2007 the Bank's revenues by way of trust or mandate transactions were $59 and $49, respectively. At December 31, 2008 and 2007, there are amounts in trust in dollars converted into pesos for $27,021 y $20,626, respectively, and mandates for $50 y $5,013, respectively. At December 31, 2008, the Bank cancelled a mandate which worth was $6,449.

(b) Assets in custody or under management- In this account the Bank records third party securities received in custody, as security or for management purposes. At December 31, 2008 and 2007, this account includes mainly securities under management of DB Servicios, Delowrezham de México, S. de R. L. de C. V., Farezco I, S. de R. L. de C. V. and Farezco II, S. de R. L. de C. V. (related parties) for $2,486 and $4,458, respectively. The Bank did not obtain revenues from securities custody transactions for the years ended December 31, 2008 and 2007.

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(20) Additional information or transactions-

(a) Financial margin-

For the years ended December 31, 2008 and 2007, the financial margin is comprised of the following: Interest revenue: Interest revenue for the years ended December 31, 2008 and 2007 is analyzed as follows (in million nominal pesos):

2008 2007 Cash and due from banks $ 9 4 Investment securities 101 76 Interest and premiums from

repurchase agreements 219 308 Other (including restatement in 2007) 21 32 $ 350 420 === ===

Interest expense:

Interest expense for the years ended December 31, 2008 and 2007, is analyzed as follows (in million nominal pesos):

2008 2007

Due to banks and other financial institutions $ 6 5 Interest and premiums from repurchase agreements 175 220 Other (including restatement in 2007) - 9

$ 181 234 === ===

Monetary position gains and losses: As mentioned in note 4a., with the adoption of NIF B-10 “Effects of inflation”, for the year ended December 31, 2008, monetary position was not calculated.

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For the year ended December 31, 2007, the net monetary position derived from the accounts relative to the financial margin generated a loss of $113, and a gain of $47, arising from accounts not affecting the financial margin and included in "Other income, net" in the statement of income.

(b) Brokerage income, net

For the years ended December 31, 2008 and 2007 the brokerage income, net is comprised of the following: 2008 2007

Valuation to market, net: Investment securities $ 3 (4) Securities repurchase agreements (1) (40) Securities lending - (8) Derivative financial instruments for

trading 29 4 Other (including restatement in 2007) 59 9

$ 90 (39)

Result from purchases and sales: Investment securities (28) 31 Derivative financial instruments for

trading 134 110 Foreign currency exchange (52) 84

54 225 $ 144 186 === ===

(21) Commitments-

The Bank has entered into an indefinite-term lease and service contract with DB Servicios, for the use of its office space, the rent increases based in changes in several economic factors and for provide all types of services related with the support and operation of its corporate purpose. Total payments for services were $129 and $153 in 2008 and 2007, respectively (see note 12), and are included in “Administrative and promotional expenses” in the statement of income.

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(22) Recently issued accounting standards-

On October 14, 2008, a resolution was published in the Official Gazette of the Federation that modifies General Provisions applicable to Credit Institutions, whereby accounting criteria included in Exhibit 33 of the "Accounting criteria for credit institutions" referred to in article 174 of such provisions were superseded as follows: • "B-3 Repurchase transactions" and "B-4 Securities loans" of "Series B Criteria relating to items comprising financial statements"; • C-1 "Recognition and write-off of financial assets " of "Series C. Criteria applicable to specific items"; and • "D-1 Balance sheet", "D-2 Statement of Income" and "D-4 Statement of Changes in Financial Position" of "Series D. Criteria relating to basic financial statements " Such amendments came into force on the same day of their publication and shall be valid during six months, as of such date, where the Bank must prove to the Commission that it has the necessary systems for implementing the aforesaid accounting criteria. Furthermore, such criteria shall be applied on a prospective basis in terms of the provisions of MFRS B-1 "Accounting changes and error corrections" issued by the CINIF; accordingly, it is not required to restate previously recognized repurchase, securities loan and financial asset transfer transactions. Since the Bank's management did not prove to the Commission that it has the necessary systems for implementing the aforementioned criteria, the Bank will begin its application in transactions carried out beginning in 2009.

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