memoria anual 2005

List

ANNUAL REPORT 2005

ACTIVE MEMBERS ABN AMRO Bank N.V.

American Express Bank Ltd. S.A.

Banca Nazionale del Lavoro S.A.

Banco Bradesco Argentina S.A.

Banco de la República Oriental del Uruguay

Banco do Brasil S.A.

Banco Itaú Buen Ayre S.A.

Banco Río de la Plata S.A.

BankBoston N.A.

BBVA Banco Francés S.A.

BNP Paribas

Citibank N.A.

Deutsche Bank S.A.

HSBC Bank Argentina S.A.

ING Bank N.V. (Sucursal Argentina)

JP Morgan Chase Bank, National Association (Sucursal Buenos Aires)

The Bank of Tokyo-Mitsubishi, Ltd.

List

ANNUAL REPORT 2005

ASSOCIATED MEMBERS Banco de la Nación Argentina

Banco de Inversión y Comercio Exterior S.A.

Banca di Roma Societá Per Azioni

Banco Bilbao Vizcaya S.A.

Banco de Chile

Banco de Finanzas e Inversiones S.A.

Banco Latinoamericano de Exportaciones

Banco Santander Central Hispano S.A.

Bank LEU AG

Bayerische Hypo-Und Vereinsbank AG

BSI Banca Della Svizzera Italiana

Calyon Argentina S.A.

Commerzbank AG

Coöperatieve Centrale Raiffeisen-Boerenleebank B.A. (Rabobank)

Credit Suisse

Dresdner Bank AG

Dresdner Bank Lateinamerika AG

Natexis Banques Populaires

Sanpaolo IMI S.P.A.

Société Générale

Standard Bank London Limited

Standard Chartered Bank

The Bank of New York

The Bank of Nova Scotia

Union Bancaire Privee CBI-TDB

Wachovia Bank, N.A.

List

ANNUAL REPORT 2005

BOARD OF DIRECTORS President: MARIO VICENS 1st Vicepresident: BANCO RÍO DE LA PLATA S.A. Enrique Cristofani 2nd Vicepresident: CITIBANK N.A. Juan J. Bruchou 3rd Vicepresident: BBVA BANCO FRANCÉS S.A. Jorge Bledel 4th Vicepresident: BANKBOSTON N.A.

Alejandro Ledesma Padilla Secretary: HSBC BANK ARGENTINA S.A. Antonio Losada Pro Secretary: BANCA NAZIONALE DEL LAVORO S.A. Tullio Lanari Treasurer: BANCO ITAÚ BUEN AYRE S.A. Rodolfo Corvi Pro Treasurer: DEUTSCHE BANK S.A. Luis Caputo Members: ING BANK N.V. (Sucursal Argentina)

Fernando Tedín Uriburu JP MORGAN CHASE BANK, National Association (Sucursal Buenos Aires) Carlos Ingham

Alternate Members: BNP PARIBAS Philippe Joannier

AMERICAN EXPRESS BANK Ltd. S.A. José María Zas ABN AMRO BANK N.V. José Oscar Fernández

List

ANNUAL REPORT 2005

THE BANK OF TOKYO-MITSUBISHI, Ltd. Takashi Fukushima

Honorary President: Julio J. Gómez

Audit of Accounts:

Titular BANCO BRADESCO ARGENTINA S.A. Arnaldo Silva

Alternate BANCO DO BRASIL S.A.

Alexandre Ronald De Almeida Cardoso

List

ANNUAL REPORT 2005

SPECIAL COMMITTEES FINANCIAL AFFAIRS AND CAPITAL MARKET

Coordinating Secretaries Carlos D. Marí - BBVA Banco Francés S.A. 1 Gabriel Martino - HSBC Bank Argentina S.A. 2 Alternate Coordinating Secretaries Sergio Lew - Banco Río de la Plata S.A. Jorge Fraga - Citibank N.A. 3 Santiago González Pini - Citibank N.A. 4 LEGAL AFFAIRS

Coordinating Secretary Analía Schnaidman - Banca Nazionale del Lavoro S.A. Alternate Coordinating Secretaries Fabián Montiel - BBVA Banco Francés S.A. Guillermo Cristiani - Banco Río de la Plata S.A. 5 Pablo Antao - Banco Itaú Buen Ayre S.A. 6 BANK AUDITING

Coordinating Secretaries Jesús López García - Banco Río de la Plata S.A. 7 Sergio Ems - BankBoston N.A. 8 Eduardo José Zerega - BBVA Banco Francés S.A. RETAIL BANKING

Coordinating Secretary Pío Rueda - Banco Río de la Plata S.A. Alternate Coordinating Secretary Fabián Turturro - BankBoston N.A. 9 1 Until 09.12.05 2 Until 09.12.05 Alternate Coordinating Secretary 3 Until 09.12.05 4 From 09.12.05 5 Until 04.18.05 6 From 07.19.05 7 Until 10.31.05 8 Until 12.28.05 9 From 06.23.05

List

ANNUAL REPORT 2005

INSURANCE BANKING

Coordinating Secretary José Luis D'Alessio - BankBoston N.A. Alternate Coordinating Secretary Manuel Germán García Nieto - Banca Nazionale del Lavoro S.A. BASILEA II Coordinating Secretaries To be appointed TRUST

Coordinating Secretary Atilio Serenelli - HSBC Bank Argentina S.A. Alternate Coordinating Secretaries Eduardo Rodríguez Sapey - Banco Río de la Plata S.A. Hernán Carassai - HSBC Bank Argentina S.A. TAXATION

Coordinating Secretary Luis Irigoyen - BBVA Banco Francés S.A. Alternate Coordinating Secretaries Carlos del Mauro - Banca Nazionale del Lavoro S.A. Fernando Alesón - Citibank N.A. Marcela B. de Lazzarini - BankBoston N.A. Claudio Di Lello - HSBC Bank Argentina S.A. ACCOUNTING AND REPORTING STANDARDS

Coordinating Secretaries Juan José Pardo - Banca Nazionale del Lavoro S.A. Ana María Zorgno - Banco Itaú Buen Ayre S.A. Alternate Coordinating Secretary Diego Esquenazi - HSBC Bank Argentina S.A. 10

10 From 06.01.05

List

ANNUAL REPORT 2005

TRANSACTIONS

Coordinating Secretaries Hugo Vacca Núñez - BankBoston N.A. 11 Pedro Telwak - Banco Río de la Plata S.A. 12 Alternate Coordinating Secretaries Alicia Echarri - Citibank N.A. 13 Javier Michelesi - BBVA Banco Francés S.A. 14 FOREIGN TRADE TRANSACTIONS

Coordinating Secretary Luis Martínez - HSBC Bank Argentina S.A. Alternate Coordinating Secretaries Hermine Espiñeira - Deutsche Bank S.A. Miguel A. Zarlenga - ABN AMRO Bank N.V. SECURITIES TRANSACTIONS

Coordinating Secretary María Rosa Eiras - BankBoston N.A. PREVENTION OF BANK CRIME AND FRAUD Coordinating Secretaries To be appointed. PREVENTION OF MONEY LAUNDERING

Coordinating Secretary Rubén J. Silvarredonda - Banca Nazionale del Lavoro S.A. Alternate Coordinating Secretary Graciela F. Rosich - BankBoston N.A. SMALL AND MEDIUM SIZED COMPANIES

Coordinating Secretary Hernán Caballero - Banco Río de la Plata S.A. 11 Until 03.10.05 12 From 03.10.05 13 From 03.10.05 14 From 03.10.05

List

ANNUAL REPORT 2005

LABOR RELATIONS

Coordinating Secretary Daniel Agudo - BBVA Banco Francés S.A. Alternate Coordinating Secretary Santiago Batlle - BankBoston N.A. 15 RELATIONS AND COMMUNICATIONS

Coordinating Secretary Oscar Correa - Banco Río de la Plata S.A. Alternate Coordinating Secretary Carlos Martínez - Banca Nazionale del Lavoro S.A. CREDIT RISK

Coordinating Secretary Silvia Tobin - HSBC Bank Argentina S.A. Alternate Coordinating Secretaries Darío Mangano - Banca Nazionale del Lavoro S.A. Jorge Bertoni - BBVA Banco Francés S.A. BANK SECURITY

Coordinating Secretary Daniel Alí - Banco Itaú Buen Ayre S.A. Alternate Coordinating Secretaries Jorge D. Sande - BBVA Banco Francés S.A. Carlos Morán - Banca Nazionale del Lavoro S.A. TECHNOLOGY, ORGANIZATION AND SYSTEMS

Coordinating Secretaries

Claudio Tróccoli - Banco Río de la Plata S.A. 16 Enrique Rubinstein - BankBoston N.A. 17

15 Until 08.08.05 16 Until 05.06.05 17 Until 11.28.05 Alternate Coordinating Secretary

List

ANNUAL REPORT 2005

INSTITUTIONAL REPRESENTATIVES NATIONAL CUSTOMS ADMINISTRATION Customs Consulting Board Luis Martínez - HSBC Bank Argentina S.A. (Incumbent) Salvador Ilaria - Deutsche Bank S.A. (Alternate) ARGENTINE SOYA ASSOCIATION (ACSOJA) Pablo Bullrich - Banco Río de la Plata S.A. ARGENTINE BANK MARKETING ASSOCIATION (AMBA) Mario Vicens - ABA President (Member) CENTRAL BANK OF THE ARGENTINE REPUBLIC Interbank Commission for Means of Payment in the Argentine Republic Technical Committee: Incumbent Members Pedro Telwak - Banco Río de la Plata S.A.

Javier Aníbal Michelesi - BBVA Banco Francés S.A. Alternate Members Alicia Echarri - Citibank N.A. Juan Carlos Aguilera - BankBoston N.A. Commercial Committee: Incumbent Members Horacio Argento - Banco Río de la Plata S.A.

Eduardo Bonifacini - BBVA Banco Francés S.A. Alternate Members Julia Langwagen - BankBoston N.A.

Jorge Barnfather - Citibank N.A. Legal Committee: Incumbent Members Analía Schnaidman - Banca Nazionale del Lavoro S.A. Eduardo Ayerra - BankBoston N.A. Standard Documents Subcommittee: Incumbent Members Pedro Telwak - Banco Río de la Plata S.A. Alternate Members Javier Aníbal Michelesi - BBVA Banco Francés S.A.

Alicia Echarri - Citibank N.A. Transactional Electronic Means of Payment Subcommittee: Incumbent Members Renato Otmarich - Banco Río de la Plata S.A.

Carlos Bestilleiro - BBVA Banco Francés S.A.

List

ANNUAL REPORT 2005

Checks Subcommittee: Incumbent Members Pedro Telwak - Banco Río de la Plata S.A. Alternate Members Javier Aníbal Michelesi - BBVA Banco Francés S.A.

Alicia Echarri - Citibank N.A.

Direct Debit Subcommittee: Incumbent Members Julia Langwagen - BankBoston N.A.

BUENOS AIRES STOCK EXCHANGE Board: Mario Vicens - ABA President STAF COMMITTEE - CENTRAL BANK Claudio Tróccoli - Banco Río de la Plata S.A. SELF-REGULATORY BOARD - BANK PRACTICES CODE María Elena Deligiannis - ABA Technical Manager (Incumbent) Rubén Mattone - ABA Communications and Institutional Relations Manager (Alternate) SOCIAL INCLUSION FAMILY LAW MANAGEMENT, ENFORCEMENT AND CONTROL NATIONAL COUNCIL Mario Vicens - ABA President (Incumbent) Rubén Mattone - ABA Communications and Institutional Relations Manager (Alternate) FELABAN Alternate Governor: Mario Vicens - ABA President (1) ARGENTINE AGROINDUSTRIAL CHAIN FORUM Argentine Bankers Association (ABA) - Member Entity EXPORT.AR FOUNDATION Mario Vicens - ABA President (Member) Small and Medium Sized Companies Board Ramón González Nuñez - BankBoston N.A. Andrea Rupp - ABA Committee’s Coordinator

(1) From November 2004.

List

ANNUAL REPORT 2005

ARGENTINE FEDERAL POLICE FOUNDATION

Board of Directors Mario Vicens - ABA President (Member) OTC MARKET

2nd Vicepresident Ricardo Lospinnato - Banco de la Nación Argentina Treasurer Director Gabriel Martino - HSBC Bank Argentina S.A. Incumbent Directors Carlos Planas - Deutsche Bank S.A.

Esteban Benegas Lynch - JP Morgan Chase Bank N.A. (Sucursal Buenos Aires)

Alternate Directors Luis Castresana - Banco Itaú Buen Ayre S.A. Sergio Lew - Banco Río de la Plata S.A. Alejandro Ledesma - BankBoston N.A.

MERCOSUR

Group of Mercosur Bank Associations María Elena Deligiannis - ABA Technical Manager

Link to Mercosur Work Subgroup N°4 "Financial Affairs" María Elena Deligiannis - ABA Technical Manager

Money Laundering and Terrorism Financing Prevention Commission Rubén Silvarredonda - Banca Nazionale del Lavoro S.A. MINISTRY OF LABOR, EMPLOYMENT AND SOCIAL SECURITY

Vital Minimum Salary Council Mario Vicens - ABA President (Alternate)

Banking Collective Bargaining Agreement Negotiating Commission Incumbent Members Daniel Agudo - BBVA Banco Francés S.A.

Santiago Batlle - BankBoston N.A. Sergio Scattolini - Banco Río de la Plata S.A. Alternate Members Alejandro Ortiz Quintero - HSBC Bank Argentina S.A. Diego Sánchez - Citibank N.A. Horacio Rivas - Banca Nazionale del Lavoro S.A. Legal Advisors Julián Arturo de Diego María Elena Deligiannis

List

ANNUAL REPORT 2005

NATIONAL EXECUTIVE POWER Argentine Trademark Program Mario Vicens - ABA President Rubén Mattone - ABA Communications and Institutional Relations Manager FINANCIAL INFORMATION UNIT Technical Commission for Amendment of Resolution Number 2 Rubén Silvarredonda - Banca Nazionale del Lavoro S.A. ARGENTINE UNION OF SERVICE ENTITIES - UDES Mario Vicens - ABA President (1st Vicepresident)

ANNUAL REPORT 2005

PRESIDENT´S LETTER The official party’s victory in parliamentary elections conducted in October 2005, with the subsequent support to President Kirchner’s administration, constituted the most relevant political event of the year, insofar as it consolidates the political support of the Government to carry out its administration. The other very relevant event was the restructuration of the debt in default which, together with the governmental decision to previously pay-off Argentina’s obligations to the IMF, represents an essential step towards the normalization of the country’s financial position and, at the same time, towards the construction of a sustained and sustainable growth strategy. In this context, the financial system had an adequate framework for consolidating the improvement of its financial and economic position, trend which had already been observed since 2003 onwards and which, as of the good performance registered in 2005, allows to foresee a more promising horizon for the country’s future activity. In fact, in 2005, most Argentine financial system variables showed clearly favorable signs of evolution. Liquidity improved twofold. On the one hand, private sector’s deposits continued growing at a rate of approximately 20-25% per year, while restructuration of the debt in default and fiscal discipline allowed the banks to replace their public bond holdings, mostly involuntary, with new loans granted to the private sector. On the other hand, the system’s solvency also improved with the public debt revaluation and with the reduction of non-performing loans to private sector, simultaneously with the advance payment of rediscounts granted by the Central Bank to banks to cope with the crisis and with the payment and capitalization of foreign debts, whose payment had been previously deferred. In this sense, it is worth mentioning that no international bank has any outstanding debts to the Central Bank, and that they, in turn, have capitalized debts and new funds amounting to $7 billion, which represents approximately 60% of the total system’s gains. In summary, we can positively say that, during 2005, banks in general overcame a chronic loss situation that lasted for several years. In turn, the persistence of this situation will allow protecting and increasing solvency levels recovered both through the capitalization of debts and profits and through new capital injection. However, the most relevant fact that should be highlighted is not equity improvement, even if we take into account its relevance for the financial system’s stability. The first thing detected without further analysis is the expansion of the credit to the private sector, which reached a general annual growth above 30%. All lines of credit have experienced the same phenomenon, except for mortgage loans which, although they are evolving more slowly, they are evolving positively to the extent the gap among home prices and the necessary income to access credit is being gradually reduced, very much affected by unemployment

ANNUAL REPORT 2005

rate increase and labor informality, salary lag and emergency measures (suspension of foreclosure proceedings) provoked by the crisis. This sector’s evolution has been benefited by a very favorable context for those who need to incur debt to produce or consume. The cost of credit has been reduced to levels below those of the convertibility, practically equivalent to inflation and lower than salary evolution, with levels very lower than those registered for the same lines of credit in some neighboring countries. On the other hand, regulatory amendments implemented by the Central Bank during the last years have fostered competence among banks and have improved the access of a specific part of the market to services offered by banks. In this highly competitive framework, the introduction of initiatives prone to protecting consumer rights, as the transparency regime set forth by the Central Bank and the Bank Practices Code, voluntarily implemented by banks recently, have created a very competitive framework for the bank services market which, for sure, will benefit consumers and will help to normalize the relationship of the banks with the users, very much affected by the events that took place in 2001-2002. Although there are still matters to be solved, the financial system shows a very strong basis to continue advancing towards its full normalization in the short and medium term. Economic stability, fiscal discipline and the exercise of a prudent and responsible monetary policy constitute, without a doubt, the necessary framework for the activity to completely recover the leading role it always had in investment financing, production and consumption. Once inflationary pressures recently registered are overcome, and with a macroeconomic framework leading to full consolidation, the attention of the financial system shall be drawn towards accelerating the complete elimination of the effects of the crisis and developing a strategy to expand the capacity to direct savings towards those investments and uses decisively contributing to install a sustained and integral growth pattern for the country.

Mario Vicens

President

ANNUAL REPORT 2005

Index

Page

Chapter 1: Evolution of Argentine Economy.............................................................. 1 Introduction .................................................................................................................................. 1 The Macroeconomic Context..................................................................................................... 1 Balance of Payments .................................................................................................................... 2 Foreign Commerce....................................................................................................................... 3 Public Finance............................................................................................................................... 3 Debt Restructuration ................................................................................................................... 4 Total Repayment of the Debt to the IMF ................................................................................ 5

Chapter 2: Monetary Evolution and Amendments to Central Bank’s Regulations ... 7 Monetary Evolution ..................................................................................................................... 7 Central Bank’s Reserves .............................................................................................................. 8 Deposits and Loans...................................................................................................................... 9 Interest rates................................................................................................................................ 11 Main Regulatory Changes......................................................................................12 Differential minimum capital requirements per area ............................................................ 12 Simplification of Reporting Regimes....................................................................................... 13 Minimum cash requirements reduction and unified position.............................................. 13 Extension of loan capacity in foreign currency for capital assets ....................................... 14 Federal Uniform Compensation .............................................................................................. 14 Credit facilities ............................................................................................................................ 14 Exchange market deregulation measures................................................................................ 15 Fostering of Long-Term Credit – Deferral of Judicial Injunctions .................................... 15 Amendments to the Export Prefinancing Regime ................................................................ 16 Savings accounts for individuals under 21 years old ............................................................. 16 Regulatory Changes for Credit Funds ..................................................................................... 16

Chapter 3: Financial System.......................................................................................18 Introduction ................................................................................................................................ 18 Profitability, Efficiency and Intermediation Margins............................................................ 18 Portfolio quality .......................................................................................................................... 22 Exposure to the Public Sector.................................................................................................. 23 Capitalization............................................................................................................................... 24 Gaps ............................................................................................................................................. 26 Financial System Tax Burden ................................................................................................... 27 Evolution of loans and deposits per group of institutions................................................... 28 Financial system salaries ............................................................................................................ 29

Statistical Appendix: Tables 1 to 43 ...........................................................................31

Appendix ................................................................................................................... 75 Principal Measures of Banking, Exchange and Financing Policies..................................... 75

Chapter I: Evolution of Argentine Economy

ANNUAL REPORT 2005

1

Chapter 1: Evolution of Argentine Economy Introduction During the year 2005, the economy growth that had commenced in 2003 continued. In turn, fiscal and foreign accounts surplus was maintained while unemployment rates reached their minimum levels since 1994. Among the factors contributing to this performance it may be highlighted the permanence of an actually favorable international economic context, the continued fiscal discipline and the restructuration of the public debt in default, the gradual increase of production capacity and the rapid growth of bank credit. On the other hand, inflation increased as a consequence of several factors. In addition to the impact of relative price changes there were other factors, such as salary increase, employment recovery, bank credit increase, etc., which constantly increased goods and services demand in a context of gradual reduction of the idle production capacity. In addition, the constant foreign currency market excess offer was systematically absorbed by the Central Bank to prevent the appreciation of the national currency. In turn, the Central Bank had to actively intervene in the monetary market through the allocation of debt and through the advance repayment of rediscounts granted to banks within the crisis framework, in order to avoid the fact that reserve accumulation could prevent it from meeting its monetary expansion goals. In turn, it is worth mentioning that there were three very significant events during the year related to economic policy. The first is the restructuration of the public debt in default, whose successful closing contributed to eliminate a very important uncertainty factor. The second, in chronological order, was the resignation of the Ministry of Economics and Production, Mr. Roberto Lavagna, who was in charge of economic policy since 2002, without the situation affecting market stability and economic course. Mrs. Felisa Miceli was appointed as Ministry of Economics and Production, who was President of Banco de la Nación Argentina until such time. Last, it is worth mentioning the advance repayment of the debt to the IMF. This decision, although it provoked a marked reduction of Central Bank’s international reserves, did not involve a significant change in the economic performance. The Macroeconomic Context

According to available information, there was a 9.1% increase in the GDP during 2005 in relation to the previous year. The highest contribution was made by service sectors, with an 8.3% increase within an actual crisis recovery framework. Among services, it is worth mentioning the 16.4% increase registered by the financial intermediation sector as a whole. On the other hand, goods producers sectors continued to grow, even though they showed a more heterogeneous evolution, mainly concentrated on construction, manufacturing industry and agriculture and livestock.


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2

In this context, private consumption should be highlighted, which registered a 9.4% increase during the first three quarters of the year, while gross domestic investment registered a 20.9% increase in the same period. With regard to investment, it is worth mentioning that, even though its increase was less than in the previous year, its expansion has been very significant, both quantitatively as qualitatively. In fact, investment in durable production equipment increased 25% with regard to the same period of the previous year, while construction investment increased 18.4%. The growth registered in the industrial activity also deserves to be highlighted. During 2005, according to the Industrial Monthly Estimate (Estimador Mensual Industrial - EMI) released by the National Institute of Statistics and Census (Instituto Nacional de Estadística y Censos - INDEC), there was a 7.7% increase with regard to the previous year, which, although it is less than the 10.7% corresponding to 2004, still represents a significant growth. The use of installed capacity continued to increase during the year, and it reached a 71.1%-mean in 2005, higher than the 69.7% registered in 2004, which represents a 27.6% increase with regard to 2002. It is worth mentioning that, in some industrial sectors, this index has reached levels of approximately 90%. In 2005, with regard to inflation evolution, the consumer price index registered a 12.3% increase, which means a cumulative increase of 74.1% since the end of the convertibility. In turn, the wholesale price index registered a cumulative increase of 10.7% during the past year, which represents 165.4% since the end of 2001. Said increase in the economic activity level was also reflected on the employment level, which increased to 41.1% in the third quarter of the year, thus exceeding the 40.1% registered in the same quarter of the previous year. On the other hand, unemployment was reduced to 11.1% from 13.2% registered a year earlier. Suboccupation also showed an improvement, decreasing to 13% from the 15.2% registered 12 months before. According to official reports, between the second quarter of 2002 and the third quarter of 2005, the formal private sector contributed 72% of the employment level growth (excluding social employment programs), while informal private employment contributed 20%, and the public sector, 8%. This is even more important if we take into account that the Salary Index released by INDEC increased 20% between December 2005 and the same month of the previous year, while the private sector registered an increase of 26%. Balance of Payments In the year 2005, the capital inflow that had started in the previous year was consolidated. In the first three quarters of the year, the capital and financial accounts of the balance of payments showed a 2.1 billion US Dollars surplus, while it is estimated that the non-financial private sector capital net flow exceeds 4 billion US Dollars. In mid-year, the Government imposed some additional controls to the speculative capital inflow, in order to reduce the volatility that this type of investments cause to the evolution


ANNUAL REPORT 2005

3

of the local economy. Through Decree 616/05, it was set forth that any fund inflow to the local market shall only be transferred abroad after 365 days and, additionally, a 30% reserve of the funds shall be created through a non-transferable non-compensated 365-day term deposit, which cannot be used as security or collateral for credit operations of any kind. On the other hand, the current account surplus increased to 3.9 billion US Dollars during the first nine months of the year, which is 40% higher than the same period of the previous year and is higher than the amount registered during all the year 2004. Central Bank’s international reserves increased approximately 6.3 billion US Dollars in the same period. Foreign Commerce The commercial balance of the year 2005 amounted to 11.3 billion US Dollars, which represents a 6.5% reduction with respect to the 12.1 billion US Dollars registered in the previous year. Although exports reached a record level, exceeding 40 billion US Dollars (which represents a 15.8% increase with respect to the previous year), the higher growth of imports (27.8%) reduced the commercial surplus. In the year 2005, all export items increased with respect to the previous year. The agricultural manufactures continue to be the item with the highest rate (33% of the total), followed by industrial manufactures (30%), even though the latter present the highest growth during the year, due both to price increase as to quantity increase. On the imports side, 41% corresponds to capital assets and their pieces and accessories, which also constitute the group that registered the highest growth during the year (+33%), followed by intermediate assets, which represented 36% of the total. Although imports of consumable items increased 27% during the year, they only represent 11% of foreign purchases. The commercial exchange with Mercosur’s country members represented a deficit that amounted to 3.35 billion US Dollars, this being the region with the highest transaction volume, followed by the European Union, the NAFTA and main Asian countries. It should also be highlighted the exchange with Chile, whereby a commercial surplus representing 35% of the total balance of the year 2005 was reached. Public Finance The national public sector registered again an improvement with regard to the income obtained in the previous year. According to the savings-investment-financing scheme, the public sector obtained a primary income of almost 19.7 billion Pesos in the year 2005. The recovery of the tax revenue collection, which increased to 21.3% in the year, played a very important role in obtaining this result. The behavior of the VAT should be highlighted. It increased 19% with regard to the previous year, and the income tax showed a 25.8%


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increase. Both taxes represent a significant share of revenue collection, as they amount to three quarters of the Argentine IRS income (excluding the social security system), and, together with the bank account debit and credit tax (+22.8%), they account for a great part of the revenue collection increase. On the other hand, current expenses increased due to higher transfers to the provinces (23.4%), mainly on account of coparticipated resources. Consumption and operating expenses also increased (23.5%), including those related to salaries, goods and services. Expenditures on account of interest increased almost 80% due to payments arising from debt restructuration.

Altogether, current income increased 20%, while current expenses increased 22%, thus resulting in a primary surplus increase of 13% with regard to the previous year. After the restructuration, the public debt decreased from 109% to 84% of the GDP, while the proportion of debt denominated in national currency increased from 25% before the exchange transaction to 31%. On the other hand, as a result of the restructuration of the debt in default and of the advance payment of IMF credits, the debt maturity schedule improved significantly.

Public Debt Maturity Schedule (In millions of Dollars)

35,000

30,000

25,000

20,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 / 2030Average

Before Restructuration

Note: Excluding capital payments maturing after the years 2030

Post-Restructuration After Payment to IMF

15,000

10,000

5,000

0

Debt Restructuration

During the first quarter of 2005, the Government carried out the restructuration of the debt that was in default since the end of 2001. The amount of the debt eligible to be filed for restructuration amounted to 81.8 billion US Dollars, of which 62.3 billion US Dollars were exchanged, that is, 76.15%. Over this total amount filed for exchange, new bonds were


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issued for a total amount of 35.3 billion US Dollars, including Par, Discount, and Quasi-Par bonds.

Restructured Debt by Currency and Aplicable Law

(In millions of US Dollars)

US Dollars Euros Yens Pesos

Bond New York Law

Argentine Law

United Kingdom

Law

Japanese Law

Argentine Law Total

Par 5,313 1,246 6,391 196 1,854 15,000

Discount 3,088 566 2,879 54 5,345 11,932

Quasi-Par … … … … 8,329 8,329

Total 8,401 1,812 9,270 250 15,528 35,261

On the other hand, the issue of Units Linked to the GDP would reach an approximate notional value of 62.3 billion US Dollars. After this exchange, the greatest part of the public debt is in a regular situation. The part of the debt assumed within the framework of the Paris Club and the claim to creditors that did not accept to participate in the exchange is still pending regularization. Total Repayment of the Debt to the IMF

Through Decree 1601/05, the Government ordered total payment of the debt in favor of the IMF. Such debt had been assumed in favor of the IMF within the framework of the stand-by arrangements approved by the Board of Directors of the IMF in March 2000, January 2003 and September 2003, also including a small remnant amount assumed under the extended facilities arrangement dated March 1992. In order to carry out this transaction, some sections of Act 23,928 were amended through Decree 1599/05, and then ratified by the Congress through Act 26,076. Among the changes, it was determined that Central Bank’s reserves in gold and foreign currency shall be affected to support up to one hundred per cent (100%) of the monetary base. On the other hand, freely available reserves are those that exceed 100% of the monetary base. It was also added that freely available reserves may be applied to payment of obligations undertaken in favor of international financial organizations, provided they have a neutral monetary effect.


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Through Resolution 49/05, the Ministry of Economy and Production asked the Central Bank for total repayment of this debt and instructed the issue of a 10-year Bond in exchange for National Government’s liabilities that constituted Central Bank’s assets arising from the debt in favor of the IMF. Additionally, it was defined that such instrument would be non-transferable and that it would accrue an annual rate equivalent to the rate obtained by the Central Bank for the same period on investments made with international reserves, up to a maximum of annual Libor rate less one percentage point, payable semiannually and amortized totally upon maturity. As reported by the Central Bank, 43% of the payment was made with funds deposited in the IMF and the remaining 57% with deposits made in the Bank for International Settlements (BIS). At the time of payment, the repaid debt amounted to DEG 6,655 billion (approximately 9.5 billion US Dollars). Thus, the country repaid all the debt to the IMF, together with Brazil, which made the same determination practically at the same time.

Chapter II: Monetary Evolution and Amendments to Central Bank’s Regulations

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7

Chapter 2: Monetary Evolution and Amendments to Central Bank’s Regulations Monetary Evolution

In the year 2005, the monetary base registered an increase of 2.23 billion Pesos (+4.3%) between December 31, 2004 and December 31, 2005. The main expansion factor was the foreign private sector as a consequence of Central Bank’s interventions to absorb the foreign currency offer. This effect was partially neutralized by the issue of Central Bank’s bonds (LEBAC and NOBAC), which allowed to absorb approximately 10 billion Pesos. In turn, the repayment of rediscounts granted to financial institutions under the crisis and the Government transactions contributed to reduce the monetary base by 9.6 billion Pesos and by 3.4 billion Pesos, respectively. Last, these transactions as a whole, together with net repos with public bonds amounting to an additional amount of 1.9 billion Pesos, allowed the Central Bank to meet, for the tenth quarter in a row, the goals established in the Monetary Program.

Broad Monetary Based Expansion Factors (In millions of Pesos)

Factors 2004 2005

Private Foreign Sector 23,168 28,227

Domestic Public Sector -6,511 -3,400

Rediscounts -2,184 -9,637

Repos -5,509 -1,893

Central Bank Bonds -3,880 -10,031

Others 1,003 -1,034

Total 6,086 2,233

With regard to LEBAC and NOBAC placing, it is worth mentioning that the balance amounted to 26.2 billion Pesos, which implies a 76% increase throughout the year. Although during 2004 the Central Bank considerably increased the issue of bonds indexed according to CER, the rise of inflation pushed the Central Bank to stop issuing this type of bonds. In place thereof, NOBACs were offered, with variable interest rates tied to BADLAR (interest rates of 30-35 days term deposits amounting to more than one million Pesos or US Dollars), corresponding both to the financial system mean and to private banks, with a 2.5% margin in both cases and for up to 2 year-terms.


ANNUAL REPORT 2005

8

Interest rates applicable to these bonds also reflected the increase established by the Central Bank for repos rates. Throughout the year, successive increases stipulated raised repos rates from 2.5% at the end of 2004 to 5% at the end of 2005 for 7-day term transactions, and 4.5% rates for 1-day term transactions. Central Bank’s Reserves

Throughout the year 2005, the Central Bank purchased net reserves from the Private Sector amounting almost to 9.7 billion US Dollars, within the framework of the foreign exchange policy implemented by the Central Bank and of the international reserves accumulation program.

On the other hand, the net effect of public sector transactions and of payments made to international institutions generated a net reduction of approximately 300 million US Dollars. It is worth mentioning that, although the decision to fully repay the debt to the IMF was made at the end of 2005, the impact on the reserves (9.5 billion US Dollars) was seen at the beginning of January 2006; therefore, its effect is not observed in the period covered by this Annual Report.

The reduction of minimum cash requirements is the counterpart of a reduction of reserves amounting to approximately 1.3 billion US Dollars during the year, while other items registered a net increase of 300 million US Dollars.

The combination of these effects resulted in an increase of Central Bank reserves amounting to 8.4 billion US Dollars during the year 2005. Thus, at the year end, the total balance amounted to 28.1 billion US Dollars, which, after repayment of the debt to the IMF, were reduced to 18.6 billion US Dollars.

Variation of Central Bank´s Reserves (In millions of US Dollars)

Factors 2004 2005

Private Sector with Monetary Effect 7,882 9,677

International Institutions -3,623 -4,540

Other Public Sector Transactions 19 4,311

Minimum Cash Requirement 684 -1,293

Exchange Rate Valuation 207 -427

Others 356 703

Total 5,527 8,431


ANNUAL REPORT 2005

9

Deposits and Loans In the year 2005, the growing trend of private sector loans continued, which trend was already consolidated during 2004. Total private sector loans increased 38% during the year, reaching an aggregate amount of 53.7 billion Pesos. As regards consumer credits, the growth of personal loans and credit card financing should be highlighted, which registered increases amounting to 73% and 71.2% respectively.

Private Sector Loans (In millions of Pesos)

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

With regard to commercial lines of credit, discounts raised 59.3%, while current account overdrafts were almost 40% higher than a year before. On the other hand, pledge loans showed a very significant increase amounting to 41.1% during the year. Simultaneously, during the year 2005, a significant recovery was verified on mortgage loans, which increased in the last quarter of the year. This behavior is not totally reflected on balances due to the fact that several financial trusts were created, which reduce the amount registered in institutions’ balance sheets. However, if we observe the amounts granted per month, we can see the increase of new transactions carried out, which shows the effort made by financial institutions to place longer term financing with available funds.

2003 2004 2005


ANNUAL REPORT 2005

10

Mortgage Loans Interest Rates

Amounts Granted (right axis) Average Rate

10 0

50

100

150

200

250

300

350

400

11

12

13

14

15

16

17

18

19

20

% Millions of Pesos

In addition, foreign currency loans increased 49%, mainly to finance foreign commerce transactions. In turn, total private sector deposits registered a 21.6% increase during the year, duplicating the 11.4% observed in the previous year. Among placements in Pesos, we should mention the 29% increase of current account balances. In addition, deposits in savings accounts increased 19.5%, while time deposits were 20.2% above the amount registered a year earlier. This latter event is particularly relevant if we consider the low interest rates accrued by these deposits. Although these rates have increased during 2005, they are still lower than those observed during the past decade. In order to facilitate raising of longer term funds, the Central Bank extended the minimum term for deposits indexed according to CER up to a minimum 365-day term. This type of deposits, mostly made by institutional investors, such as Pension and Retirement Trust Funds (AFJPs), increased 36.1% during the year. Last, it is worth mentioning that the last CEDROs (issued during the crisis as a consequence of deposits rescheduling) installments matured in September.

2002 2003 2004 2005


ANNUAL REPORT 2005

11

Total Deposits (In billions of Pesos)

Private Sector Public Sector

0

20

40

60

80

100

120

140

Dec. Dec. Dec. March June Sept. Dec.

Interest Rates Interest rates on loans continued their downward trend in 2005, similarly to the trend observed during the last years. According to information available, the highest reductions were those applied to credit card financing, amounting to an annual nominal percentage of 26%, compared to the 29.5% percentage observed at the end of the previous year. The second place belongs to consumer loan rates, which amounted to 25.1%, compared to the 26.7% registered at the end of 2004. The reduction of pledge loans rates, which amounted to 10%, was also significant. It is worth mentioning that mortgage loan rates amounted to 11.4%, thus showing a slight reduction compared to the previous year, and reaching levels below those registered during the past decade.


ANNUAL REPORT 2005

12

Interest Rates for Loans in Pesos (As annual nominal percentages)

Type of loan Dec.

2003 Dec. 2004

Nov. 2005

Difference 2003-2005

Overdrafts ( 1 ) 21.6 13.7 16.6 -5.0

Promissory Notes 11.5 10.7 11.1 -0.3

Mortgage loans 14.2 11.5 11.4 -2.9

Pledge loans 16.0 11.7 10.0 -6.0

Consumer loans 34.2 26.7 25.1 -9.0

Credit cards 34.8 29.5 26.0 -8.9 (1) Includes other advance payments. Source: ABA based on Central Bank’s data.

On the other hand, increases in interest rates, used by the Central Bank as a monetary policy tool, also affected rates paid by the institutions to depositors. Thus, interest rates paid for time deposits in Pesos increased from 3.3% at the end of 2004 to 5.3% in December 2005. Main Regulatory Changes Differential Minimum Capital Requirements per Area In order to promote the creation of new financial institutions in areas with smaller banking coverage, the Central Bank changed minimum cash requirements according to the location of such institutions, their type and operating volume. The intention was to promote the creation of new financial institutions in regional markets. For such purpose, four categories were defined according to the jurisdictions where the institutions are located, with decreasing basic capital requirement levels amounting to 25, 14, 12.5 or 10 million Pesos for banks, and to 10, 8, 6.5 or 5 million Pesos for other institutions, such as financial companies (except for credit funds, to which a separate regime applies), respectively for Categories I, II, III or IV. The classification of the various urban conglomerates and provinces in the different areas (I through IV) corresponds to the differences among these markets according to private sector


ANNUAL REPORT 2005

13

loan and deposit concentration, availability of ATMs and branches per inhabitant, private sector deposits and loans per capita, as an estimate of the degree of competence and development of financial services in each of these areas. Additionally, the royalty that financial institutions that are not banks must pay to the Central Bank for authorization purposes was reduced to 400,000 Pesos (save for credit funds, which are exempt from this royalty), and the royalty applicable to new banks remained unchanged, amounting to 900,000 Pesos. These provisions shall apply to institutions authorized to conduct business as of 07.01.05, including transformation cases, while financial institutions already conducting business on 06.30.05 shall comply with basic capital requirements provided for new institutions in their area, up to a maximum of 15 million Pesos. Simplification of Reporting Regimes The Central Bank continued implementing the simplification of reporting regimes and eliminated the requirement of several data to prevent duplication, unnecessary orders, and it adapted delivery frequencies in order to create a simplified system and to achieve higher reporting efficiency.

Among adopted measures, the daily deposit reporting regime was eliminated, as well as another report on composition of economic groups, authorized accounts, public bonds and institutional information. The filing time of exchange and term holdings was also adjusted, in order that institutions can prepare this information without need to work extra hours or having to create special work teams. Statements of data on foreign currency purchase and sale and payment orders to and from abroad were eliminated. Minimum Cash Requirements Reduction and Unified Position

Throughout the year, the Central Bank provided for in several opportunities progressive reductions of minimum cash requirements for deposits in Pesos. Such requirements were reduced 3 percentage points for sight deposits and between 2 and 4 percentage points for time deposits.

On the other hand, it was determined that, as of 2005, integration of December, January and February be carried out in a unified position due to the higher seasonal currency demand registered at the year end, which reduces liquidity requirements of financial institutions during this period and also the volatility of the interbank market interest rate.


ANNUAL REPORT 2005

14

Extension of Loan Capacity in Foreign Currency for Capital Assets

The Central Bank authorized financial institutions to grant commercial financing for the import of capital assets using resources from foreign currency deposits. According to Decree 905/02, the loan capacity of foreign currency deposits must be applied to foreign commerce financing and related activities. Until this amendment was made, only financing of exports and export-oriented imports of goods was allowed.

The Central Bank established that financial institutions must assess several unfavorable scenarios in the event of significant changes in the exchange rate, taking into account that, with this amendment, loans may be granted to customers not having foreign currency income. This assessment could induce debtors to cover their currency gaps with future exchange transactions. Federal Uniform Compensation

According to the agreement made between the Central Bank and Bankers Associations at the end of 2004, the Uniform Federal Compensation was implemented as of mid-2005. This means that the term for electronic transfers throughout the country was reduced to 24 hours and the check clearing term was unified in 48 hours for all markets.

Likewise, check truncation amount was raised to 5,000 Pesos, which implies that checks below that amount stay with the institution where they are deposited, and only electronic information is sent to the issuing institution in order that it confirms or bounces the check without need to have the original document available. This prevents the physical transportation of 90% of instruments, allowing unifying and reducing the clearing term with the consequent reduction of operating costs.

This system could be instrumented thanks to important technological developments introduced by financial institutions, thus raising security levels to the highest international standards. This system was already being used in the City of Buenos Aires and in Greater Buenos Aires since 1999, thus, this new development implies equal treatment throughout the national territory, speeding up individuals and companies payment chain.

The Central Bank expressed its intention to raise the truncation amount during 2006 to include virtually all checks. Credit Facilities

In order to facilitate access to credit, mainly to small- and medium-sized companies, the Central Bank increased from 200,000 Pesos to 500,000 Pesos the commercial financing amount that financial institutions may elect to classify credits only for compliance with payments, thus simplifying the assessment task. They shall not have to verify that financing are higher than the debtor’s net worth for this loan section.


ANNUAL REPORT 2005

15

On the other hand, classification criteria applicable to debtors with high insolvency risk and uncollectible debts were adjusted in order to adapt them to judicial terms applicable to agreements with creditors, therefore the term required for a debtor who has entered into an agreement with its creditors to be classified as default debtor was increased from 365 to 540 days.

On the other hand, individuals showing a good credit history were authorized to be granted consumer credits of up to 15,000 Pesos without need to give evidence of their income, which will facilitate access to the formal financial system to individuals previously resorting to alternative sources of financing at a higher cost. Exchange Market Deregulation Measures

Among exchange measures adopted we should mention the extension from 30 to 90 days of the settlement term of new financial indebtedness for amounts above 50 million US Dollars. The term applicable to advance repayment of financial debts was also extended from 90 to 360 days, thus facilitating the reduction of foreign indebtedness or its replacement with lower-cost lines of credit, which is observed more regularly since the macroeconomic situation improvement.

In addition, institutions were allowed to purchase credits granted by foreign banks to local companies, and conditions applicable to official credit agencies investments were flexibilized to facilitate their financial support, by means of a minority interest in local companies’ capital for financing of investment projects.

On the other hand, within the framework of the policy to prevent the appreciation of the Peso, the positive threshold on the global foreign currency deposits of financial institutions was suspended (net assets in foreign currency including forwards). Previously, foreign currency deposits could not be above 30% of the institution’s equity or proprietary resources. The additional threshold for short-term deposits, which includes foreign currency liquid assets and liabilities maturing within the next 180 days, was also suspended.

Access to the exchange market for the creation of foreign assets was also limited when there are due and payable foreign debt capital or interest amortizations. Fostering of Long-Term Credit - Deferral of Judicial Injunctions

In order to boost long-term credit, the Central Bank allowed the possibility to extend amortization terms of differences paid on account of judicial orders provided new long-term commercial loans are granted (more than 2 years of mean duration), without reducing the total amount of the rest of the commercial portfolio. These deferrals shall not be above 10% of the computable equity.


ANNUAL REPORT 2005

16

Amendments to the Export Prefinancing Regime

In November, the Central Bank introduced amendments to the above mentioned regime to assure exports financing fluency and to prevent the inadequate use of financing instruments. To such end, records of securities exported during the last 12 months were allowed to be used in lieu of contracts and purchase orders as evidence of indebtedness, without exceeding 25% of the exports during such period, increasing this limit to 50% in the cases where shipping terms are longer than 365 days.

Maximum terms to make shipments were also extended, contemplating financing granted by exporters to small regional producers and the extension of terms for reasons out of the exporter’s control.

On the other hand, a special treatment was implemented for foreign medium- and long-term lines of credit, in order to facilitate the availability of this type of financing. In turn, it was set forth that exporters shall not have any shipment delays with regard to the maximum term set forth, in order that they can continue entering new credits on account of advances and prefinancing.

Advance or prefinancing transactions not repaid with foreign currency collected from shipments shall be deemed financial loans, and the relevant exchange rules shall apply thereto and a one-year term non-compensated deposit shall be made amounting to 30% of the amount of foreign currency collected. Savings Accounts for Individuals under 21 Years Old

In mid 2005, the Central Bank authorized the opening of savings accounts to individuals between 18 and 21 years old, even though they are neither emancipated nor have a job. The only requirement is that they have the prior authorization of their parents or tutors, who shall assume any liability for acts carried out by the minor account holder. This measure authorizes approximately 1.5 million individuals to have direct access to financial services. Regulatory Changes for Credit Funds

In September, the Central Bank changed the rules applicable to cooperative credit funds, in order to flexibilize certain aspects and to create incentives in order that credit unions already providing financial services could take the initiative and create a credit fund and start operating under the supervision of the Central Bank.

Among the main changes, we should mention the increase of the maximum interest that public services credit unions may have in credit funds’ capital, thus admitting the participation of other types of credit unions. On the other hand, in order to facilitate their creation in less densely populated areas and to compensate any capital deficiencies in such


ANNUAL REPORT 2005

17

areas, credit unions have been given the possibility to have a share in credit funds’ capital inversely proportional to the population density.

In order to facilitate the raising of members, the requirement that each member should pay-in the capital amount on the subscription date (save in the case of credit unions) was eliminated. The maximum amount of fixed-term deposits rising was increased from 12,000 Pesos to 20,000 Pesos.

In order to afford the possibility of granting financial support to customers that, due to the nature of their business, cannot comply with a periodical payment schedule, the margin to grant financing in non-periodical installments or financing with total repayment upon maturity was increased. The threshold for loans credited on sight accounts (equivalent to current account overdrafts) was also increased, the prohibition to install ATMs was eliminated, board of directors members’ requirements were flexibilized, and a simplified reporting regime was applied thereto.

Chapter III: Financial System

ANNUAL REPORT 2005

18

Chapter 3: Financial System Introduction The financial system recovery encompassed several stages. The first stage was during the second semester of 2002, when deposits started to recover. Then, in mid 2003, private sector loans started to increase, as a result of the improvement in the general economic situation, of the recovery banks liquidity and of the recovery of credit demand. The sustained growth of private sector loans turned out to be an essential factor in order to reverse the negative financial intermediation margin prevailing during the previous years. The consolidation of this sector’s improvement during 2005 was reflected on returns, which for the first time since the crisis was positive for most institutions. Thus, loans and deposits registered a sustained increase in most banks, the credit portfolio quality improved, exposure to public sector debts and gaps were reduced. In turn, as part of equity recovery, many institutions and, particularly, international banks, increased their capital through debts and profits capitalization and through injection of new funds, which shall allow bank credit to the private sector to continue growing in a framework of gradual but sustained regulatory normalization.

At the end of 2005, only 5 institutions owed debts to the Central Bank under the “matching” schedule for a total amount of 12.04 billion Pesos, while a year earlier this list included 23 financial institutions. In turn, successive capitalizations raised capital integration to 15.5% with regard to risk assets for the entire financial system (taking into account forbearances), and to 18.2% with regard to private institutions. This capitalization level has allowed meeting minimum capital requirements, even though they were increased during 2005 due to the progressive reduction of forbearances (temporary reductions) established in 2002 to facilitate recovery from the crisis.

Even though some situations caused by the crisis have not been completely solved (among which we should highlight the legal status of pesification, the permanence of emergency taxes affecting bank transactions, suspension of mortgage foreclosures, etc.), the year 2005 represented a very significant advance in the normalization process of the activity following the 2001-2002 crisis. Profitability, Efficiency and Intermediation Margins As it was mentioned above, the year 2005 was the first year in which a positive return was registered after the crisis. From the first year quarter, where a virtually cero return was registered, the positive trend of returns was consolidated during the following quarters in such a way that, for the year as a whole, profitability of the entire sector reached 0.9% of assets, a very significant advance with regard to important losses registered in previous years.


ANNUAL REPORT 2005

19

A representative event is the composition of income after improvement. From the first quarter of 2004, the interest margin registered positive returns, evidencing the progressive recovery of financial intermediation as the core business of the banking system. In turn, the contribution of assets adjustable to CER improved as inflation increased in relation to immediately previous periods. Last, the important reduction of uncollectibility charges should be highlighted, as they registered a 22.6% reduction and reached a historical minimum percentage of 0.5% of total assets.

- 20,000

- 15,000

- 10,000

- 5,000

0

5,000

Year2001

Year2002

Year2003

Year2004

Year2005

- 1,200

- 1,000

- 800

800

- 600

600

- 400

400

- 200

200

0

I2004

II2004

III2004

IV2004

I2005

II2005

III2005

IV2005

Interest Adjustments to CER / CVS Others

- 4

- 2

0

2001 2002 2003 2004 2005

2

4

6

8

10

12

0

100

200

300

400

500

600

700

I2004

II2004

III2004

IV2004

I2005

II2005

III2005

IV2005

Return (In millions of Pesos)

Returns (In millions of Pesos)

Intermediation Margin (As % of assets)

Interest Margin (In millions of Pesos)


ANNUAL REPORT 2005

20

0

500

1,000

1,500

2,000

2,500

3,000

I2004

II2004

III2004

IV2004

I2005

II2005

III2005

IV2005 In millions of Pesos As % of Assets (right axis)

0

2,000

4,000

6,000

8,000

10,000

12,000 6.0

5.0

4.0

3.0

2.0

1.0

0.02001 2002 2003 2004 2005

On a different side of returns, improvements were also observed in net income from services, which increased to 2.3% of assets from the 2.0% registered during the previous year as a result from the increase in the economic activity. On the other hand, administrative expenses increased compared to previous years. During 2005, they represented 4.3% of the total assets, compared to their 4.0% incidence registered during the previous year. In nominal terms, total administrative expenses increased 18.1% during 2005, mainly due to higher personnel expenses due to increases and bonuses granted during the year and due to the higher number of employees hired during that period.

Mill ions of Pesos As % of Assets (right axis )

0

2,000

4,000

6,000

8,000

10,000

12,000 6.0

5.0

4.0

3.0

2.0

1.0

0.02001 2002 2003 2004 2005

In millions of Pesos As % of Assets (right axis)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0.0

0.5

1.0

1.5

2.0

2.5

2001 2002 2003 2004 2005

Net Income from Services

Intermediation MarginMillions of Pesos

Uncollectibility Charges

Administrative Expenses

Millions of Pesos

Millions of Pesos Millions of Pesos % of Assets% of Assets

% of Assets


ANNUAL REPORT 2005

21

Profitability ratios described above also show the effects of the crisis. On the one side, amortization of differences paid on account of judicial injunctions (amparos) continue affecting institutions’ final income. In such respect, it is worth mentioning that during 2005, 19,100 cases were registered for which more than 1.1 billion Pesos were paid, producing an exchange difference amounting to approximately 350 million Pesos. With these figures, total judicial injunctions paid from the crisis amounts to 322,500 cases for which more than 22.4 billion Pesos have been paid, which implies an exchange difference of 9.6 billion Pesos with respect the pesified value of deposits at $1.40 per US Dollar plus the relevant adjustment to CER. Therefore, the average amount paid is 70,000 Pesos per case, equivalent to 21,000 US Dollars. Most of these exchange differences (approximately 9.5 billion Pesos) is being amortized according to Central Bank’s rules in 60 monthly consecutive installments from the time the difference is recorded, therefore, the net value accounted for on the asset at the end of 2005 is approximately 4.9 billion Pesos.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,0006,545

5,906

4,870

Millions of Pesos

December2003

December2004

December2005 Exchange Difference Deposits + CER

0

5,000

10,000

15,000

20,000

25,000

2002

6,426

7,177

8,264

10,413 12,052

9,244

12,841

9,600

2003 2004 2005

On the other hand, the valuation adjustment of public sector assets owned by institutions has also generated losses, thus reducing the final profitability. We must remember that most public sector assets that are part of institutions’ assets are accounted for at their technical value, which is higher than the market value. According to regulations currently in force, this valuation difference is progressively eliminated until it matches the market value. In this sense, the recovery of the public bonds quotation value contributed positively to reduce these valuation differences, and the restructuration of the public debt played an essential role.

Excluding both effects, the total return on assets (ROA) amounts to 2% for the entire year 2005.

Net Amounts Accounted of DifferencesPaid under Judicial Injunctions

(In millions of Pesos)

Cumulative Amounts Paid under Judicial Injunctions

(In millions of Pesos)


ANNUAL REPORT 2005

22

Portfolio Quality A major improvement in the private sector loans portfolio of financial institutions was registered during the last year. The total financial system’s non-performing loans amounted to 5.2%, much less than the 10.7% registered at the end of the previous year. This result was very much affected by the improvement of financing to the private sector, which non-performing rate was reduced to 7.6%, from the 18.6% registered a year earlier.

0

14.0 16.019.1

38.6

33.5

18.6

7.65

10

15

20

25

30

35

40

Dec.1999

Dec.2000

Dec.2001

Dec.2002

Dec.2003

Dec.2004

Dec.2005

On the one hand, this was due to the higher volume of loans granted during the period. On the other hand, recovery of non-performing loans also contributed to the improvement of this ratio, which was very much affected by the growth of the economic activity level. As regards private sector financing, the non-performing commercial loans was reduced during 2005 from 22.8% to 9.3%. The non-performing rate of the portfolio intended for family consumption (including home equity financing) decreased from 11% to 4.8% during the same period. It is worth mentioning that the non-performing rate registered by private banks continues to be lower than the one registered by public institutions. Private banks non-performing loans rate was 6.3%, while public banks rate is almost the double thereof, amounting to 11.2% of total private sector financing.

Non-performing Loans / Total Financingto the Private Sector

(As a %)


ANNUAL REPORT 2005

23

Comercial Consumer and Mortgage

0

5

10

15

20

25

30

35

40

45

Dec.1999

Dec.2000

Dec.2001

Dec.2002

Dec.2003

Dec.2004

Dec.2005

Exposure to the Public Sector During last year, the financial system exposure to the public sector was reduced to 43.4%, compared to 47.7% of total assets registered in December of the previous year. On the one hand, several institutions reduced their public bond holdings and securitized a part of their secured loans portfolio. This process was led by international banks that, as a group, show the lowest public sector exposure rates at the end of the period. On the other hand, outstanding compensations were paid, part of which were collected in cash as they were bonds with due and payable coupons.

It is worth mentioning that most of the public sector exposure accounts for compensations for losses caused by the asymmetric pesification or the restructuration of public debt holdings of the financial system during the crisis. Approximately 25% of the exposure accounts for BOGAR, which are secured bonds from the provincial debt exchange, while national secured loans (including the adjustment to CER) received in exchange for the national public debt at the end of 2001 and pesified at $1.40 plus the adjustment to CER represent 21% of the total amount. In turn, bonds received as compensation for asymmetric pesification which, at the end of 2005, represented 12.1% of the total amount, have been reduced almost 50% during the past year.

Non-performing Loans(As a %)


ANNUAL REPORT 2005

24

LEBAC/NOBAC Compensation Bonds + Loans

0

5

10

15

20

25

30

35

40

45

50

Dec.2000

Dec.2001

Dec.2002

Dec.2003

Dec.2004

Dec.2005

On the other hand, holdings of Central Bank’s debt (LEBAC and NOBAC) amounts to 21.6%, while the counterpart of repos transactions amounts to an additional 6.6%.

According to the current regulations, as of January 1, 2006, public sector assets in the portfolio of financial institutions shall not be higher than 40% of the total assets. This requirement does not include holdings of bonds issued by the Central Bank (LEBAC and NOBAC) both from banks’ portfolio as from counterpart of repos transactions.

At December 31 of the past year, if the financial system is considered as a whole, public sector exposure amounted to 31.2% of total assets, notwithstanding the fact that some institutions were still above the 40%-threshold set forth in applicable regulations. Capitalization The increase of capital registered by institutions since the crisis amounts to more than 12.1 billion Pesos. These decisions are intended to set off losses caused by the 2001-2002 crisis and align available capital to requirements set forth by new regulations in force, in many cases requiring more capital than in the past.

Public Sector Exposure(As a % of assets)


ANNUAL REPORT 2005

25

Local PrivateBanks25 %

PublicBanks4 %

Non-banking FinancialInstitutions

3 %

InternationalBanks68 %

International BanksLocal Private BanksPublic Banks

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2002 2003 2004 2005


International banks have capitalized debts and provided new funds amounting to 7.4 billion Pesos since the onset of the crisis, which represents 61% of the total. During the past year,

Financial Institutions Capitalization in 2005Share

Financial Institutions Capitalization in the Period 2002-2005 (Per year – In millions of Pesos)


ANNUAL REPORT 2005

26

capitalizations carried out by international banks concentrated 68% of total contributions to the financial system, which should be understood as a ratification of their trust in the future.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Public Banks Local PrivateBanks

InternationalBanks


Gaps During 2005, gradual reduction of bank financial gaps continued as part of the business normalization process. In the first place, said reduction of public sector assets holding allowed a reduction of assets adjustable to CER.

On the other hand, during this year, financial institutions substantially reduced their indebtedness to the Central Bank. Under the “matching” schedule, important amounts were repaid during the year, in addition to the installments set forth in the schedule. In the event of international banks, the schedule allowed to repay all the debts due to the Central Bank on this account.

After payment of installments and after repayments made at the beginning of February 2006, only four institutions remained, which still had debts amounting to 9.9 billion Pesos.

Financial Institutions Capitalization in the Period 2002-2005 (Per Type of Institution – In millions of Pesos)


ANNUAL REPORT 2005

27

December 2002December 2003December 2004

0

20

- 20

40

- 40

60

- 60

- 48.1

- 32.4

- 26.1

- 12.2

47.3

33.729.1

26.7

11.5 11.5 10.8 7.9

Pesos Pesos + CER or CVS Foreign Currency

December 2005

Likewise, during this year, financial institutions increased their holdings of adjustable LEBACs and NOBACs. During the second semester of the year last CEDROs installments were due, also subject to CER. At the same time, financial institutions increased their debts adjustable to deposits.

As a net result of all these changes, the currency gap registered in institutions’ balance sheets was slightly reduced compared to the levels registered during the previous year. However, the reduction of adjustable long-term assets, as the public debt, is a very positive perspective of additional reduction of this gap. Financial System Tax Burden A great variety of taxes apply to the financial system, including direct and indirect charges that affect the cost of banking services, mainly the cost of bank credit and non-financial or transaction services.

GapsBillions of Pesos


ANNUAL REPORT 2005

28

During 2005, a 20.4% increase was registered in the amount paid on account of several taxes by the financial system as a whole. This charge represents 0.75% of total assets, higher than the 0.68% observed in the previous year.

Gross Income Tax

Income Tax

Contribution to SEDESA

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

2001 2002 2003 2004 2005

Administrative Taxes This total includes the amount paid on account of Gross Income Tax, Income Tax, the contribution to SEDESA, and taxes included in administrative expenses, such as real estate taxes of branches and office buildings.

In 2005, the most representative tax was the income tax, which amounted to 37.4% of the financial system tax burden, which registered a 122% increase compared to the previous year. Secondly, there it is the amount paid on account of gross income tax, which represents 30% of the tax burden, followed by other taxes representing almost 20%. Evolution of Loans and Deposits per Group of Institutions According to information included in financial institutions’ balance sheets, total loans to the private sectors increased 14.8 billion Pesos during 2005. 39% of this amount accounts for the behavior of international banks, while local private banks represented 36% of the increase, and public banks, 22%. With these figures, international banks continue to be the most representative group as regards loans to the private sector, with 36.5% of the market, followed by local private

Tax Burden(As a % of the asset)


ANNUAL REPORT 2005

29

banks, with 32.4%, and public banks, with 28.8%. The remaining 2.4% corresponds to non-banking financial institutions, such as financial companies and credit funds.

PublicBanks29 %

Local PrivateBanks32 %


2 %

InternationalBanks37 %

Several lines of credit account for the growth registered during the past year. On the one hand, commercial loans were driven both by discounts of promissory notes as by current account overdrafts, while the growth of consumer loans was essentially based on personal loans and, to a lesser extent, on credit card financing. On the other hand, in relation to real estate secured financing, the growth registered in pledge loans should be highlighted, and 2005 is the first year where an increase is observed in mortgage loans balance, as a consequence of the fact that loans granted by the system as a whole have, for the first time, been higher than old credits repayment and than amounts sent to financial trusts. As regards liabilities, private sector deposits accounted for 87% of total deposits growth, which turned out to be 21% during the year. It is worth mentioning that 67% of private sector deposits at the end of 2005 was deposited in private banks, continuing the trend observed from the second semester of 2003, when the preference for public banks shown by depositors immediately after the crisis was reversed. Financial System Salaries According to data obtained from the Integrated Pension and Retirement System provided by AFIP, the mean gross compensation of the financial intermediation sector during 2005 was 100% higher than the average of the economy, and it more than doubles the mean of service sectors and is 82% higher than compensations paid by goods production sectors.

Private Sector LoansDecember 2005


ANNUAL REPORT 2005

30

If we take into account salary evolution taking as basis the 1994-1998 mean, we can observe that there was a 53.1% increase in financial intermediation sector’s gross compensations, a similar ratio than the economy total sector mean, regardless of the particular effects of the economic crisis on the financial system. It is worth mentioning that, during the post crisis period, financial system salary increases were the result of increases granted by the institutions themselves, of measures provided for by the National Government, and of two agreements entered into with the banking union. By way of example, we can point out that the salary paid by private banks to an administrative clerk registered a 94% increase during the 2001-2005 period, the salary paid to the cashiers increased 75% and the salary paid to a branch business officer increased 68%. On the other hand, the financial intermediation business as a whole increased 13% the number of positions during the last two years.

Financial Inte rmediationGood SectorsService Sector s

500

1,000

1,500

2,000

2,500

3,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Total

Mean Gross Compensations Accrued (including SAC)(In Pesos)

Statistical Appendix

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31

TABLE 1: Deposits in Domestic Currency Montlhy average of daily balances (in millions of Pesos)

Period Current Accounts

Savings Accounts

Time Deposits (1)

Total

1991 December 3,129 1,980 2,955 8,064 1992 December 4,909 2,758 5,998 13,665 1993 December 6,214 4,653 8,903 19,770 1994 December 6,993 5,242 9,622 21,858 1995 December 7,011 4,688 7,343 19,042 1996 December 10,514 5,936 8,756 25,207 1997 December 12,178 7,601 12,057 31,836 1998 December 12,648 8,206 13,577 34,432 1999 December 12,580 8,347 12,791 33,719 2000 December 11,951 7,924 12,024 31,900 2001 December 8,309 4,499 5,872 18,681 2002 December 23,305 9,144 33,435 65,885 2003 December 30,825 14,554 38,472 83,851 2004 January 32,141 15,569 39,049 86,759 February 33,007 16,843 38,753 88,604 March 31,802 17,389 37,482 86,673 April 33,378 18,314 37,400 89,093 May 34,964 18,433 37,603 90,999 June 36,525 19,115 38,419 94,059 July 37,282 20,003 38,697 95,981 August 35,930 21,244 39,560 96,734 September 35,543 21,610 40,816 97,969 October 36,453 21,175 41,949 99,577 November 37,064 21,454 43,062 101,580 December 38,630 21,616 42,179 102,425 2005 January 38,762 22,173 43,825 104,760 February 37,863 22,003 45,713 105,579 March 37,988 22,431 46,497 106,916 April 38,577 22,185 47,439 108,201 May 40,055 22,642 47,862 110,559 June 40,304 23,995 48,800 113,099 July 40,435 25,618 48,472 114,525 August 40,563 25,731 49,393 115,686 September 40,628 25,233 50,728 116,589 October 41,947 25,785 50,204 117,936 November 43,620 25,785 50,380 119,785 December 47,386 25,965 49,253 122,604

(1) Starting on March 2002, it includes rescheduled deposits. Source: ABA based on "Statistical Bulletin", "Daily Information on Deposits, Credit and Cash in Domestic Currency" and "Main Financial System Liabilities", Central Bank.


ANNUAL REPORT 2005

32

TABLE 2: Deposits in Foreign Currency Monthly average of daily balances (in millions of Dollars)


Demand Deposits

Savings Accounts

Time Deposits

Deposits on Behalf of

Central Bank

Total

1985 December … 40 … … 553 593 1986 December … 11 … … 820 831 1987 December … 12 … … 994 1,006 1988 December … 16 … … 1,487 1,503 1989 December … 42 … 1,063 538 1,644 1990 December … 597 … 2,069 177 2,843 1991 December … 782 1,137 4,641 145 6,705 1992 December … 839 1,866 8,037 … 10,742 1993 December 292 392 3,698 13,711 … 18,093 1994 December 351 482 4,032 18,122 … 22,986 1995 December 441 493 3,445 18,321 … 22,699 1996 December 472 1,092 4,529 22,273 … 28,366 1997 December 646 1,528 5,330 29,666 … 37,169 1998 December 684 2,119 5,304 34,435 … 42,542 1999 December 829 1,695 6,146 38,475 … 47,145 2000 December 781 1,162 5,602 44,155 … 51,700 2001 December 2,442 2,385 9,772 33,116 … 47,715 2002 December 26 327 83 427 … 863 2003 December 52 349 457 1,041 … 1,899

2004 January 51 381 522 1,208 … 2,162 February 44 372 526 1,165 … 2,107 March 44 397 577 1,117 … 2,135 April 47 394 720 1,247 … 2,407 May 50 438 1,006 1,364 … 2,858 June 43 429 1,431 1,443 … 3,348 July 32 430 1,746 1,464 … 3,674 August 28 420 1,854 1,485 … 3,787 September 27 419 1,852 1,519 … 3,818 October 29 432 1,796 1,576 … 3,833 November 26 427 1,817 1,619 … 3,889 December 25 417 1,848 1,646 … 3,936

2005 January 26 484 2,161 2,000 … 4,670 February 20 467 2,093 1,808 … 4,388 March 22 481 1,948 1,844 … 4,296 April 22 478 1,471 1,856 … 3,826 May 21 496 1,785 1,921 … 4,224 June 21 471 1,405 2,022 … 3,920 July 16 446 1,376 2,089 … 3,926 August 17 482 1,386 2,149 … 4,034 September 15 484 1,395 2,185 … 4,079 October 14 478 1,391 2,176 … 4,058 November 11 458 1,424 2,179 … 4,072 December 10 455 1,455 2,236 … 4,157

Source: ABA based on "Statistical Bulletin", "Daily Information on Deposits, Credits and Cash in Foreign Currency" and "Main Liabilities of Financial System", Central Bank.


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33

TABLE 3: Judicial Injunctions

Period Number of

Lawsuits

Principal (1)

Update According to

CER

Exchange Rate

Difference

Total Amount

Paid

Average Amount per

Lawsuit

In Millions of Pesos In Thousands

of Pesos

2004 January 1,204 31 14 32 77 64 February 3,363 66 30 66 162 48 March 4,675 138 64 115 317 68 April 4,160 109 50 97 257 62 May 4,319 101 47 99 247 57 June 4,787 105 50 112 267 56 July 3,405 77 37 77 191 56 August 3,362 82 41 75 199 59 September 3,658 114 58 89 260 71 October 3,432 105 54 84 243 71 November 2,458 67 35 54 155 63 December 3,507 107 57 80 243 69 2005 January 381 12 6 10 27 72 February 1,643 43 24 29 96 58 March 1,981 73 42 50 165 83 April 1,862 47 27 34 109 58 May 1,889 50 30 34 114 60 June 2,137 48 29 36 113 53 July 1,204 33 20 22 74 62 August 1,550 43 27 39 109 70 September 1,741 35 23 24 82 47 October 1,417 30 20 25 74 52 November 1,381 28 19 17 64 46 December 1,913 48 33 36 117 61 Year 2002 173,932 5,805 1,372 6,426 13,603 78 Year 2003 87,161 2,262 973 1,838 5,074 58 Year 2004 42,330 1,102 538 980 2,620 62 Year 2005 19,099 489 300 355 1,144 60

Total 322,522 9,658 3,183 9,600 22,441 70

(1) Pesified at $1.40 per US Dollar. Source: ABA based on Central Bank's data.


ANNUAL REPORT 2005

34

TABLE 4: Monetary Aggregates (in millions of Pesos of December 2005)

Period M1 M2 M1 + Foreign

Currency Demand Deposits

M2 + Total Deposits in

Foreign Currency

1994 December 37,639 69,822 38,471 92,808 1995 December 35,908 60,908 36,841 83,607 1996 December 44,504 74,654 46,069 103,020 1997 December 51,791 92,326 53,965 129,495 1998 December 55,103 101,674 57,906 144,216 1999 December 54,259 99,453 56,782 146,597 2000 December 50,284 92,457 52,227 144,157 2001 December 36,668 59,463 41,496 107,178 2002 December 47,493 99,722 48,724 102,734 2003 December 67,114 130,382 68,301 136,004 2004 January 69,328 134,469 70,579 140,731 February 69,872 135,691 71,092 141,870 March 68,321 132,946 69,598 139,133 April 69,701 134,782 70,950 141,602 May 71,500 136,345 72,925 144,692 June 73,667 139,940 75,066 149,854 July 75,540 142,694 76,907 153,548 August 73,097 141,724 74,446 153,143 September 72,243 142,391 73,582 153,839 October 72,905 143,492 74,274 154,876 November 74,439 147,012 75,776 158,501 December 78,441 149,594 79,754 161,292 2005 January 79,426 152,848 80,926 166,611 February 77,163 151,745 78,583 164,540 March 76,377 150,982 77,849 163,548 April 76,563 151,196 78,012 162,297 May 78,732 154,110 80,229 166,323 June 79,675 157,055 81,095 168,357 July 80,915 158,794 82,239 170,059 August 80,896 159,202 82,338 170,853 September 80,173 158,161 81,628 170,038 October 81,555 158,838 83,013 170,869 November 83,513 160,478 84,906 172,560 December 88,640 163,858 90,042 176,385

Note: Monetary aggregates include public sector´s deposits. Source: ABA based on “Statistical Bulletin”, “Daily Information on Deposits, Loans and Cash in Domestic and Foreign Currency” and “Main Financial System Liabilities”, Central Bank and INDEC.


ANNUAL REPORT 2005

35

TABLE 5: Monetary Aggregates Annual averages (as a percentage of the GDP)

Period M1 M2 M1 + Foreign Currency Demand Deposits

M2 + Total Deposits in Foreign

Currency

1985 3.7 9.3 3.7 9.4 1986 5.0 13.8 5.0 13.8 1987 3.9 12.3 3.9 12.4 1988 2.6 10.8 2.6 10.8 1989 2.6 8.3 2.9 14.9 1990 2.2 4.2 2.4 5.2 1991 2.9 5.2 3.3 7.8 1992 4.3 7.5 4.7 11.4 1993 5.7 10.7 5.9 16.9 1994 6.4 12.0 6.6 20.2 1995 6.4 11.0 6.7 19.3 1996 7.3 12.5 7.8 22.3 1997 8.0 14.3 8.6 25.4 1998 8.5 15.7 9.2 29.1 1999 8.8 16.4 9.6 32.7 2000 8.3 15.8 8.9 33.2 2001 7.6 13.9 8.5 32.7 2002 10.2 22.6 12.0 27.1 2003 11.9 25.3 12.2 26.3 2004 14.1 27.3 14.4 29.4 2005 14.8 28.8 15.0 31.1

Source: ABA based on data from “Statistical Bulletin”, “Daily Information on Deposits, Loans and Cash in Domestic and Foreign Currency”, “Main Financial System Liabilities” and “Annual Estimates of Global Supply and Demand. Period 1980-1992”, Central Bank and “Economic Report”, Ministry of Economy and Production.


ANNUAL REPORT 2005

36

TABLE 6: Monetary Aggregates in Real Terms (1) Monthly average of daily balances (in millions of Pesos of December 2005)

Period Cash Held by Public

Current Accounts

M1 Savings Accounts

Time Deposits

M2

1985 December 10,604 13,664 24,268 8,232 25,733 58,233 1986 December 12,135 12,069 24,204 8,244 36,669 69,117 1987 December 10,132 7,902 18,033 7,152 32,443 57,628 1988 December 8,833 6,184 15,017 5,241 41,087 61,346 1989 December 7,167 7,348 14,515 2,165 16,979 33,659 1990 December 7,782 4,581 12,363 6,468 5,930 24,762 1991 December 12,053 7,989 20,042 5,056 7,546 32,645 1992 December 15,836 11,495 27,331 6,457 14,044 47,833 1993 December 20,713 14,135 34,848 10,585 20,250 65,683 1994 December 22,497 15,142 37,639 11,350 20,833 69,822 1995 December 21,341 14,567 35,908 9,742 15,258 60,908 1996 December 22,928 21,576 44,504 12,181 17,969 74,654 1997 December 26,679 25,112 51,791 15,674 24,861 92,326 1998 December 28,062 27,041 55,103 17,544 29,027 101,674 1999 December 27,363 26,896 54,259 17,846 27,348 99,453 2000 December 25,018 25,266 50,284 16,752 25,421 92,457 2001 December 18,405 18,263 36,668 9,888 12,907 59,463 2002 December 18,906 28,587 47,493 11,217 41,012 99,722 2003 December 30,335 36,779 67,114 17,365 45,903 130,382 2004 January 30,994 38,334 69,328 18,568 46,573 134,469 February 30,796 39,076 69,872 19,940 45,879 135,691 March 30,865 37,456 68,321 20,480 44,145 132,946 April 30,712 38,989 69,701 21,393 43,688 134,782 May 31,039 40,461 71,500 21,331 43,515 136,345 June 31,593 42,073 73,667 22,019 44,255 139,940 July 32,889 42,651 75,540 22,884 44,270 142,694 August 32,544 40,553 73,097 23,978 44,650 141,724 September 32,304 39,939 72,243 24,283 45,865 142,391 October 32,142 40,763 72,905 23,679 46,909 143,492 November 32,747 41,692 74,439 24,133 48,440 147,012 December 35,356 43,085 78,441 24,109 47,044 149,594 2005 January 36,304 43,123 79,426 24,667 48,755 152,848 February 35,461 41,702 77,163 24,234 50,348 151,745 March 35,259 41,117 76,377 24,279 50,327 150,982 April 35,210 41,353 76,563 23,781 50,851 151,196 May 35,909 42,823 78,732 24,207 51,171 154,110 June 36,831 42,843 79,675 25,507 51,874 157,055 July 38,412 42,503 80,915 26,928 50,951 158,794 August 38,615 42,281 80,896 26,821 51,485 159,202 September 38,461 41,712 80,173 25,906 52,081 158,161 October 38,894 42,661 81,555 26,224 51,059 158,838 November 39,435 44,078 83,513 26,055 50,909 160,478 December 41,254 47,386 88,640 25,965 49,253 163,858

(1) Deflated by the combined price index. Source: ABA based on "Statistical Bulletin" and "Daily Information on Deposits, Loans and Cash in Domestic Currency", Central Bank and INDEC.


ANNUAL REPORT 2005

37

TABLE 7: Central Bank’s Monetary and Financial Liabilities Monthly average of daily balances (in millions of Pesos)

Period Currency Financial Institutions Deposits in the Central

Bank

Monetary Liabilities

Net Position of Repos

Financial Liabilities

(1)

Government Deposits in the Central

Bank

1994 December 12,346 3,872 16,218 ... ... ... 1995 December 12,025 716 12,741 1,494 15,010 456 1996 December 13,131 27 13,158 4,961 18,137 1,049 1997 December 15,174 47 15,221 6,315 21,536 478 1998 December 15,520 31 15,551 9,347 24,898 1,620 1999 December 15,048 91 15,139 9,662 24,802 1,827 2000 December 14,205 88 14,293 9,248 23,541 1,016 2001 December 10,173 6,703 16,876 -4,773 12,109 171 2002 December 17,766 10,953 28,719 -233 28,486 79 2003 December 28,717 20,396 49,112 -46 49,066 559 2004 January 29,205 21,646 50,852 -45 50,807 184 February 28,935 22,106 51,041 -44 50,997 372 March 29,265 19,604 48,868 -45 48,823 699 April 29,581 21,337 50,918 -40 50,878 521 May 29,978 23,655 53,632 5 53,637 233 June 30,759 24,933 55,692 535 56,227 309 July 32,167 22,697 54,864 3,604 58,468 335 August 32,112 23,186 55,298 3,928 59,226 187 September 32,023 23,242 55,265 4,703 59,968 336 October 32,121 23,648 55,769 5,513 61,282 324 November 32,442 23,496 55,938 5,748 61,686 366 December 35,838 22,988 58,826 5,491 64,317 486 2005 January 36,364 22,061 58,425 7,227 65,653 293 February 35,779 22,458 58,237 7,105 65,343 499 March 36,253 22,000 58,252 5,211 63,463 521 April 36,597 19,690 56,287 5,353 61,640 1,468 May 37,361 21,180 58,541 5,209 63,750 889 June 38,645 18,992 57,637 5,633 63,270 733 July 40,709 19,163 59,873 4,881 64,753 2,337 August 41,117 18,933 60,050 7,096 67,146 1,528 September 41,502 17,045 58,547 7,400 65,947 1,116 October 42,400 18,312 60,712 4,811 65,523 1,127 November 43,207 18,486 61,693 4,570 66,263 1,563 December 46,008 15,972 61,980 5,422 67,403 1,227

(1) Financial liabilities do not include the stock of LEBAC and NOBAC. Source: ABA based on "Statistical Bulletin" and "Central Bank´s Monetary Liabilities", Central Bank.


ANNUAL REPORT 2005

38

TABLE 8: Central Bank’s Reserves (1) Monthly average of daily balances

Period Liquid Reserves

(2)

Government Securities

(3)

Total Monetary Liabilities

(4)

Financial Liabilities

(5)

In Millions of US Dollars In Millions of Pesos

1996 December 17,503 1,793 19,296 14,059 18,169 1997 December 20,871 1,746 22,618 14,190 20,090 1998 December 24,975 1,683 26,658 15,551 24,898 1999 December 24,910 1,456 26,366 15,139 24,802 2000 December 24,077 1,314 25,391 14,293 23,541 2001 December 14,815 4,534 19,349 16,876 12,103 2002 December 10,265 ... 10,265 28,719 28,486 2003 December 13,820 ... 13,820 49,112 49,066 2004 January 14,484 ... 14,484 50,852 60,928 February 15,009 ... 15,009 51,041 62,116 March 13,507 ... 13,507 48,868 60,467 April 15,255 ... 15,255 50,918 63,093 May 16,252 ... 16,252 53,632 66,464 June 17,240 ... 17,240 55,692 69,478 July 17,922 ... 17,922 54,864 72,023 August 18,062 ... 18,062 55,298 73,009 September 18,200 ... 18,200 55,265 73,717 October 18,388 ... 18,388 55,769 75,124 November 18,720 ... 18,720 55,938 76,082 December 19,310 ... 19,310 58,826 78,817 2005 January 19,841 ... 19,841 58,425 79,294 February 20,526 ... 20,526 58,237 80,633 March 20,741 ... 20,741 58,252 79,719 April 20,618 ... 20,618 56,287 78,693 May 21,602 ... 21,602 58,541 81,843 June 22,559 ... 22,559 57,637 84,847 July 24,015 ... 24,015 59,873 87,693 August 25,080 ... 25,080 60,050 91,242 September 25,581 ... 25,581 58,547 91,338 October 26,047 ... 26,047 60,712 92,264 November 26,501 ... 26,501 61,693 92,966 December 27,262 ... 27,262 61,980 93,534

(1) Market values. (2) Bills, deposits in current accounts, demand and time deposits, gold and ALADI. (3) It includes bonds used as collateral for repos transactions. (4) Currency + Financial institutions deposits in Central Bank. (5) Financial Liabilities net of repos. Source: ABA based on “Reserves and Monetary Base” and “Foreign Currency Assets and Monetary Liabilities”, Central Bank.


ANNUAL REPORT 2005

39

TABLE 9: Central Bank Bills and Notes (LEBAC and NOBAC) As of end of period

Stock Average Rates Weighted Average Term

In Pesos

In Foreign

Currency

In Pesos Indexed to CER

Total In Pesos

In Foreign

Currency


In Pesos

In Foreign

Currency


Period

In millions of Pesos As Annual Percentage In Days

2002 December 3,049 647 … 3,696 42.5 -0.0 ... 103 8 ... 2003 December 8,151 242 1,897 10,291 15.9 -0.0 8.7 220 18 348 2004 January 8,649 225 2,466 11,341 13.9 -0.0 7.6 226 45 385 February 9,194 210 2,567 11,972 13.4 -0.0 7.0 213 18 390 March 9,148 223 3,087 12,459 11.9 ... 6.2 216 76 410 April 9,434 223 3,574 13,231 11.7 -0.0 5.8 207 47 437 May 9,359 223 4,098 13,680 11.7 -0.0 5.4 187 16 419 June 8,425 176 5,329 13,931 11.2 ... 4.6 179 77 362 July 8,002 176 5,985 14,164 11.1 ... 4.1 181 46 408 August 7,313 176 6,307 13,797 11.1 ... 3.8 176 15 400 September 6,969 132 6,970 14,072 10.9 ... 3.4 188 57 389 October 7,146 132 6,996 14,275 9.0 ... 2.7 198 26 395 December 7,698 160 7,050 14,908 7.7 ... 2.4 184 47 385 2005 January 8,101 160 7,342 15,603 7.3 ... 2.3 169 16 396 February 8,132 151 8,010 16,293 7.2 ... 2.1 167 79 407 March 8,450 151 8,637 17,239 6.2 ... 1.9 144 48 401 April 8,958 151 8,731 17,840 6.2 ... 1.8 135 18 385 May 10,944 92 7,984 19,020 6.2 ... 1.8 126 85 421 June 14,337 92 8,665 23,095 6.3 ... 1.7 119 55 399 July 13,335 124 10,562 24,022 6.6 1.0 1.8 118 63 447 August 14,568 89 10,071 24,728 6.7 3.7 1.8 122 273 438 September 17,598 89 9,257 26,943 7.0 3.7 2.0 133 243 444 October 17,696 140 9,227 27,063 7.2 3.9 2.0 134 192 414 November 16,856 140 8,739 25,735 7.7 3.9 2.0 176 162 405 December 17,357 140 8,739 26,236 8.0 3.9 2.0 178 131 374

Note: It includes Central Bank´s Notes (NOBAC). Source: ABA based on Central Bank's data.


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40

TABLE 10: Interest Rates (Annual nominal, as a percentage)

On Deposits On Loans

In Domestic Currency In Foreign Currency Domestic Prime Rate

Savings Accounts

Time Deposits (1)

Savings Accounts

Time Deposits (1)

In Domestic Currency

In Foreign Currency

Period

30

days 30

days 90

days

Interbank Rate

1995 Accumulated 3.7 12.5 2.7 8.4 19.1 14.6 16.0 9.7 1996 Accumulated 3.5 7.6 2.6 6.3 10.9 9.4 10.1 6.3 1997 Accumulated 3.3 7.2 2.5 6.0 9.5 8.0 8.6 6.8 1998 Accumulated 3.0 7.8 2.4 6.5 11.0 9.2 10.1 6.9 1999 Accumulated 2.9 8.5 2.5 6.5 11.4 9.3 10.2 7.1 2000 Accumulated 2.8 8.7 2.7 7.2 11.5 10.0 10.6 8.4 2001 Accumulated 3.2 17.4 3.4 9.9 32.4 18.9 19.8 29.9 2002 Accumulated 6.4 46.9 2.0 3.9 66.6 22.4 26.7 47.7 2003 Accumulated 1.3 10.8 0.9 0.8 20.7 ... ... 3.9 2004 January 0.8 2.9 0.2 0.6 9.9 ... ... 1.4 February 0.7 2.3 0.2 0.6 9.5 ... ... 1.3 March 0.6 2.4 0.2 0.6 7.8 ... ... 1.2 April 0.6 2.2 0.1 0.6 6.6 ... ... 1.2 May 0.7 2.4 0.1 0.6 6.3 ... ... 2.9 June 0.7 2.6 0.1 0.4 6.0 ... ... 2.2 July 0.8 2.6 0.1 0.3 6.0 ... ... 1.9 August 0.8 2.9 0.1 0.3 5.8 ... ... 2.2 September 0.8 3.0 0.1 0.3 5.8 ... ... 2.3 October 0.8 3.3 0.1 0.3 5.9 ... ... 2.3 November 0.8 3.2 0.1 0.3 5.8 ... ... 2.3 December 0.8 3.3 0.1 0.4 5.8 ... ... 2.3 Accumulated 0.7 2.8 0.1 0.4 6.9 ... ... 2.0 2005 January 0.7 2.9 0.1 0.3 5.6 ... ... 2.4 February 0.7 2.8 0.1 0.3 5.4 ... ... 2.2 March 0.7 2.9 0.1 0.4 5.4 ... ... 2.4 April 0.8 3.2 0.1 0.4 5.6 ... ... 2.8 May 0.7 3.8 0.1 0.5 6.1 ... ... 3.3 June 0.8 4.0 0.1 0.4 6.2 ... ... 4.7 July 0.8 4.4 0.1 0.5 6.5 ... ... 5.0 August 0.8 4.2 0.2 0.6 6.4 ... ... 4.3 September 0.7 4.4 0.2 0.6 6.3 ... ... 4.5 October 0.7 4.5 0.2 0.7 6.4 ... ... 4.7 November 0.9 4.6 0.2 0.7 6.7 ... ... 6.5 December 0.9 5.3 0.1 0.7 7.1 ... ... 6.7 Accumulated 0.8 3.9 0.1 0.5 6.2 ... ... 4.1

(1) Corresponds to average term. Source: ABA based on “Survey on Interest Rates on Deposits”, “Domestic Prime Rate” and “Statistical Information on Interest Rates”, Central Bank.


ANNUAL REPORT 2005

41

TABLE 11: Lending Rates in Pesos (Annual nominal, as a percentage)


Overdrafts

Promisory Notes

Mortgage Loans

Pledge Loans

Consumer + Credit

Cards Financing

Consumer Loans

Credit Cards

Financing

1994 Accumulated 40.1 21.1 17.4 26.6 43.3 ... ... 1995 Accumulated 49.7 21.6 16.3 29.3 54.4 ... ... 1996 Accumulated 37.5 14.0 12.9 24.3 48.4 ... ... 1997 Accumulated 31.7 11.6 13.8 20.3 44.9 ... ... 1998 Accumulated 32.4 12.0 15.0 22.2 40.2 ... ... 1999 Accumulated 31.4 11.4 13.8 20.3 33.9 ... ... 2000 Accumulated 33.9 12.8 15.8 23.2 38.0 ... ... 2001 Accumulated 47.8 30.4 16.7 22.6 39.2 ... ... 2002 Accumulated 78.8 45.7 33.2 22.0 63.5 47.3 64.0 2003 Accumulated 43.0 20.2 19.4 18.2 68.6 54.7 69.6

2004 January 21.0 11.6 13.4 16.2 33.9 32.4 34.1 February 19.4 10.8 12.3 14.6 33.4 33.7 33.4 March 16.3 10.2 13.0 14.4 30.9 31.4 30.8 April 15.3 10.2 12.7 13.7 30.4 31.4 30.3 May 15.7 11.0 12.2 13.4 31.7 30.9 31.8 June 15.6 10.6 11.8 13.6 31.1 28.0 31.6 July 15.2 11.6 11.0 12.9 30.5 27.9 31.0 August 15.2 10.7 11.5 13.0 29.9 26.3 30.8 September 14.9 11.9 11.7 13.4 28.9 25.2 29.9 October 14.6 10.3 11.9 11.7 29.5 26.8 30.2 November 14.1 10.3 11.2 11.3 29.0 26.5 29.6 December 13.7 10.7 11.5 11.7 28.9 26.7 29.5

Accumulated 16.9 11.2 12.5 14.0 34.8 32.6 35.4

2005 January 13.8 9.9 11.1 11.0 27.2 26.7 27.4 February 13.9 9.8 11.3 11.3 26.9 26.7 27.0 March 14.1 10.0 11.5 11.0 26.8 26.2 27.0 April 14.3 9.2 11.3 10.4 27.9 26.7 28.3 May 14.4 9.6 11.3 10.0 27.3 26.1 27.7 June 14.5 10.1 11.6 10.1 27.4 26.0 27.8 July 14.0 10.3 11.2 10.0 28.0 26.7 28.4 August 14.3 10.4 11.0 10.2 27.4 25.6 28.1 September 15.1 10.8 11.2 9.9 27.1 25.0 27.9 October 16.5 10.7 11.0 10.3 27.0 25.1 27.6 November 16.8 11.1 11.4 10.0 27.1 24.9 28.0 December 17.0 11.5 11.6 9.9 26.8 24.9 27.4

Accumulated 15.7 10.6 11.7 10.7 30.5 28.7 31.0

It corresponds to weighted averages of loans granted within the month of the report. Source: ABA based on "Statistical Bulletin", Central Bank.


ANNUAL REPORT 2005

42

TABLE 12: Lending Rates in Foreign Currency (Annual nominal, as a percentage)

In Foreign Currency Period

Current Accounts

Overdrafts

Promisory Notes

Mortgage Loans

Pledge Loans

Consumer + Credit

Cards Financing

Consumer Loans

Credit Cards

Financing

1994 Accumulated 20.6 14.1 15.9 18.4 21.5 ... ... 1995 Accumulated 24.0 18.5 17.8 20.4 26.3 ... ... 1996 Accumulated 14.0 12.5 14.7 17.3 24.6 ... ... 1997 Accumulated 14.1 11.3 13.1 16.1 23.8 ... ... 1998 Accumulated 13.6 11.5 12.7 14.8 23.1 ... ... 1999 Accumulated 10.3 11.4 12.5 14.0 22.9 ... ... 2000 Accumulated 9.9 12.9 13.3 16.4 26.5 ... ... 2001 Accumulated 22.1 21.0 12.9 18.0 29.8 ... ... 2002 Accumulated 23.9 13.8 15.4 19.0 35.7 ... 35.7 2003 Accumulated 11.6 8.2 9.3 16.8 32.2 ... 32.2

2004 January 5.2 5.1 6.0 12.9 21.5 ... 21.5 February 6.7 6.5 9.2 12.9 21.6 ... 21.6 March 4.5 5.2 12.0 13.0 21.4 ... 21.4 April 6.9 5.4 17.0 12.9 20.2 ... 20.2 May 5.3 5.1 14.2 12.5 21.9 ... 21.9 June 4.3 5.3 10.3 12.0 21.1 ... 21.1 July 5.8 4.5 7.0 11.3 20.2 ... 20.2 August 3.7 4.9 6.3 10.8 20.7 ... 20.7 September 4.0 4.7 6.4 12.5 19.0 ... 19.0 October 4.4 4.6 7.2 7.1 20.6 ... 20.6 November 4.6 5.0 6.3 6.5 19.6 ... 19.6 December 4.9 4.7 7.4 12.0 19.5 ... 19.5

Accumulated 5.1 5.1 9.4 11.8 22.3 ... 22.3

2005 January 4.3 4.8 7.1 9.2 19.0 ... 19.0 February 4.7 4.3 7.4 13.1 19.1 ... 19.1 March 5.3 5.1 7.0 12.7 19.8 ... 19.8 April 5.5 4.9 7.2 12.6 19.4 ... 19.4 May 4.5 4.9 7.9 11.5 18.9 ... 18.9 June 5.2 4.3 8.0 6.7 19.5 ... 19.5 July 5.2 5.0 9.1 14.0 18.7 ... 18.7 August 5.5 5.0 14.3 14.0 18.5 ... 18.5 September 5.2 5.1 9.8 14.0 18.5 ... 18.5 October 5.7 6.4 11.2 … 18.6 ... 18.6 November 5.0 5.2 10.8 8.4 18.3 ... 18.3 December 5.4 6.1 11.1 8.0 18.4 ... 18.4

Accumulated 5.2 5.1 9.5 11.7 20.3 ... 20.3

It corresponds to weighted averages of loans granted within the month of the report. Source: ABA based on "Statistical Bulletin", Central Bank.


ANNUAL REPORT 2005

43

TABLE 13: Bank Credit (in millions of Pesos)

To Public Sector To Private Sector End of:

In Domestic Currency

In Foreign

Currency

Total In Domestic Currency

In Foreign

Currency

Total

1989 December 233 756 989 605 684 1,288 1990 December 5,291 1,647 6,938 7,238 3,515 10,753 1991 December 6,548 3,736 10,284 13,180 9,573 22,753 1992 December 5,076 5,545 10,621 19,055 15,933 34,988 1993 December 6,541 6,652 13,193 21,766 21,477 43,244 1994 December 5,734 5,898 11,631 23,931 28,282 52,212 1995 December 5,426 10,622 16,048 21,819 29,686 51,506 1996 December 6,289 12,647 18,936 21,980 32,958 54,939 1997 December 6,098 15,075 21,172 24,745 39,489 64,234 1998 December 4,797 18,862 23,659 27,420 44,786 72,206 1999 December 5,481 22,790 28,272 26,659 43,919 70,578 2000 December 3,715 25,063 28,778 25,688 42,221 67,910 2001 December 3,392 26,722 30,114 15,626 40,353 55,979 2002 December 57,744 37,538 95,282 41,175 6,749 47,924 2003 December 67,798 28,425 96,223 34,975 5,483 40,458

2004 January 68,084 28,012 96,096 34,938 5,704 40,642

February 67,907 27,405 95,312 35,280 5,209 40,489 March 70,770 25,159 95,928 36,309 4,380 40,689 April 69,981 25,284 95,266 36,751 4,343 41,093 May 71,150 26,540 97,690 37,216 4,489 41,704 June 73,472 26,693 100,165 37,739 4,874 42,613 July 77,065 26,399 103,464 38,093 5,002 43,094 August 76,259 26,758 103,018 38,535 5,081 43,616 September 75,743 26,288 102,032 39,447 4,952 44,398 October 78,819 26,128 104,947 40,342 5,137 45,479 November 78,489 25,350 103,839 41,429 5,261 46,690 December 78,743 25,639 104,382 41,422 5,549 46,971

2005 January 84,074 24,255 108,329 42,284 5,592 47,876 February 84,036 23,884 107,920 42,363 5,777 48,141 March 83,946 21,316 105,262 42,912 6,204 49,116 April 86,152 21,266 107,418 44,291 6,200 50,491 May 86,887 19,164 106,051 44,985 6,258 51,243 June 88,205 18,342 106,547 45,963 7,159 53,123 July 87,079 17,487 104,566 46,699 7,514 54,214 August 85,506 16,786 102,292 47,678 8,052 55,730 September 86,626 16,197 102,823 49,113 7,669 56,783 October 83,036 16,961 99,997 50,710 7,664 58,374 November 81,441 15,329 96,770 52,356 7,821 60,177 December 85,302 15,349 100,651 54,145 7,911 62,056

Source: ABA based on "Statistical Bulletin", Central Bank.


ANNUAL REPORT 2005

44

TABLE 14: Nominal Bank Credit by Currency (in millions of Pesos)

In Domestic Currency In Foreign Currency End of:

Loans Resources Earned on

Loans

Total Loans Resources Earned on

Loans

Total

Total

1989 December 426 412 838 1,330 109 1,439 2,277 1990 December 5,822 6,707 12,529 4,768 394 5,162 17,691 1991 December 12,179 7,549 19,728 12,548 761 13,309 33,036 1992 December 18,729 5,402 24,131 20,642 835 21,478 45,609 1993 December 23,693 4,614 28,307 27,338 791 28,129 56,436 1994 December 25,824 3,840 29,664 33,202 977 34,179 63,844 1995 December 24,402 2,844 27,246 39,147 1,161 40,308 67,554 1996 December 26,916 1,353 28,269 44,575 1,030 45,605 73,874 1997 December 29,479 1,364 30,843 53,485 1,079 54,564 85,406 1998 December 31,540 677 32,217 62,542 1,106 63,647 95,865 1999 December 31,541 599 32,141 65,574 1,135 66,710 98,850 2000 December 28,848 556 29,404 66,073 1,212 67,285 96,688 2001 December 18,560 459 19,018 65,730 1,344 67,075 86,093 2002 December 84,510 14,409 98,919 44,080 207 44,287 143,206 2003 December 90,727 12,045 102,773 33,804 105 33,908 136,681 2004 January 90,876 12,146 103,022 33,607 110 33,716 136,738 February 90,975 12,213 103,187 32,505 108 32,613 135,801 March 94,302 12,777 107,079 29,447 91 29,538 136,617 April 93,838 12,894 106,732 29,533 93 29,627 136,359 May 95,224 13,141 108,366 30,933 95 31,029 139,394 June 97,951 13,259 111,210 31,463 105 31,567 142,778 July 101,845 13,313 115,158 31,288 113 31,401 146,558 August 101,496 13,299 114,795 31,725 114 31,839 146,634 September 101,896 13,294 115,190 31,130 110 31,240 146,430 October 106,872 12,289 119,161 31,148 117 31,265 150,426 November 107,565 12,352 119,918 30,499 112 30,612 150,529 December 107,961 12,204 120,165 31,093 95 31,188 151,353 2005 January 114,011 12,347 126,358 29,758 88 29,846 156,204 February 113,888 12,510 126,399 29,570 91 29,662 156,060 March 114,330 12,529 126,859 27,438 81 27,519 154,378 April 117,567 12,876 130,443 27,382 84 27,466 157,909 May 118,842 13,030 131,873 25,338 84 25,422 157,295 June 121,432 12,736 134,168 25,415 87 25,502 159,670 July 121,313 12,466 133,778 24,911 91 25,002 158,780 August 121,083 12,101 133,184 24,741 98 24,839 158,022 September 124,042 11,698 135,740 23,772 94 23,867 159,606 October 121,911 11,835 133,746 24,531 94 24,625 158,371 November 122,277 11,519 133,797 23,053 98 23,150 156,947 December 127,902 11,545 139,447 23,169 91 23,260 162,707



ANNUAL REPORT 2005

45

TABLE 15: Bank Credit in Real Terms (1) (in millions of Pesos of December 2005)

In Domestic Currency In Foreign Currency End of:

Loans Resources Earned on

Loans

Total Loans Resources Earned on

Loans

Total

Total

1989 December 21,315 20,579 41,894 66,494 5,463 71,957 113,850 1990 December 25,085 28,897 53,982 20,546 1,698 22,244 76,226 1991 December 31,099 19,275 50,374 32,041 1,943 33,984 84,359 1992 December 43,853 12,649 56,503 48,335 1,956 50,291 106,793 1993 December 53,893 10,496 64,389 62,184 1,798 63,983 128,371 1994 December 55,912 8,314 64,226 71,886 2,115 74,001 138,227 1995 December 50,704 5,909 56,613 81,342 2,413 83,755 140,368 1996 December 55,234 2,777 58,010 91,470 2,115 93,584 151,595 1997 December 60,787 2,813 63,600 110,289 2,225 112,513 176,113 1998 December 67,430 1,448 68,878 133,709 2,364 136,073 204,951 1999 December 67,433 1,282 68,715 140,195 2,427 142,622 211,337 2000 December 60,986 1,175 62,162 139,684 2,561 142,245 204,407 2001 December 40,792 1,008 41,800 144,467 2,955 147,422 189,221 2002 December 103,662 17,675 121,336 54,070 253 54,323 175,659 2003 December 108,252 14,372 122,624 40,333 125 40,458 163,081 2004 January 108,385 14,486 122,871 40,082 131 40,213 163,084 February 107,702 14,458 122,160 38,482 128 38,610 160,770 March 111,066 15,048 126,115 34,681 108 34,789 160,904 April 109,613 15,062 124,675 34,498 109 34,608 159,283 May 110,196 15,208 125,403 35,797 110 35,907 161,310 June 112,831 15,273 128,104 36,242 121 36,363 164,467 July 116,514 15,230 131,744 35,794 129 35,923 167,668 August 114,555 15,010 129,564 35,807 129 35,936 165,500 September 114,500 14,938 129,438 34,981 123 35,104 164,542 October 119,507 13,742 133,250 34,831 131 34,962 168,211 November 120,999 13,895 134,893 34,308 126 34,434 169,328 December 120,412 13,612 134,024 34,679 106 34,785 168,809 2005 January 126,836 13,736 140,572 33,105 98 33,203 173,775 February 125,436 13,779 139,215 32,569 101 32,669 171,884 March 123,748 13,561 137,309 29,698 88 29,786 167,095 April 126,025 13,803 139,828 29,352 90 29,442 169,269 May 127,057 13,931 140,988 27,089 90 27,179 168,167 June 129,082 13,538 142,620 27,016 93 27,109 169,729 July 127,517 13,103 140,620 26,185 96 26,280 166,900 August 126,212 12,613 138,825 25,789 102 25,891 164,716 September 127,351 12,010 139,361 24,407 97 24,503 163,865 October 123,986 12,036 136,022 24,948 96 25,044 161,066 November 123,561 11,640 135,201 23,295 99 23,393 158,595 December 127,902 11,545 139,447 23,169 91 23,260 162,707

(1) Deflated by the combined price index. Source: ABA based on "Statistical Bulletin", Central Bank and INDEC.


ANNUAL REPORT 2005

46

TABLE 16: Number of Institutions

End of: Public Banks

Private Banks

Non-Banking Financial

Institutions

Total Financial System

December 1985 37 161 117 315 December 1986 37 154 105 296 December 1987 36 142 89 267 December 1988 36 139 69 244 December 1989 36 141 59 236 December 1990 36 134 51 221 December 1991 35 134 50 219 December 1992 36 131 44 211 December 1993 34 133 39 206 December 1994 33 135 37 205 December 1995 31 96 30 157 December 1996 24 96 26 146 December 1997 19 95 25 139 December 1998 16 86 23 125 December 1999 16 76 24 116 December 2000 14 75 24 113 December 2001 13 72 22 107 December 2002 16 62 21 99 December 2003 15 60 21 96 December 2004 14 59 18 91 December 2005 13 58 18 89

Source: ABA based on Central Bank's data.


ANNUAL REPORT 2005

47

TABLE 17: Employees

Period Public Banks Private Banks Total

1980 79,714 66,426 146,140 1981 78,973 63,106 142,079 1982 78,346 62,543 140,889 1983 79,409 65,496 144,905 1984 80,710 67,877 148,587 1985 81,200 63,788 144,988 1986 80,380 60,741 141,121 1987 80,581 57,880 138,461 1988 81,680 61,171 142,851 1989 82,666 64,365 147,031 1990 75,710 57,876 133,586 1991 67,706 54,375 122,081 1992 58,984 58,464 117,448 1993 56,169 62,660 118,829 1994 56,127 65,126 121,253 1995 53,483 56,331 109,814 1996 48,434 57,384 105,818 1997 40,696 62,557 103,253 1998 40,041 63,571 103,612 1999 40,042 61,976 102,018 2000 39,986 60,597 100,583 2001 38,302 57,971 96,273 2002 44,289 60,318 104,607 2003 40,903 40,928 81,831 2004 39,499 43,433 82,932 2005 ( 1 ) 38,286 45,574 83,860

(1) It corresponds to September. Source: ABA based on Central Bank's data.


ANNUAL REPORT 2005

48

TABLE 18: Number of Accounts

Period Time Deposits

Savings Accounts

Current Accounts

1989 December 914,703 4,590,900 1,567,078 1990 December 821,084 5,550,187 1,507,362 1991 December 786,613 4,530,047 1,536,493 1992 December 1,064,878 4,191,733 1,755,346 1993 December 1,176,916 4,861,662 1,744,156 1994 December 1,318,297 5,931,610 1,861,979 1995 December 1,304,517 6,059,221 1,703,932 1996 December 1,521,687 6,712,506 1,881,238 1997 December 1,643,408 8,742,034 2,286,945 1998 December 1,848,985 12,084,360 2,908,606 1999 December 1,928,096 13,196,919 3,221,887 2000 December 2,080,318 13,790,783 3,204,233 2001 December 1,593,350 17,764,496 3,260,707 2002 December 1,256,816 11,329,351 2,638,476 2003 December 937,550 10,994,651 1,909,660 2004 December 902,696 12,499,287 2,176,151 2005 March 844,009 13,079,737 2,165,411 June 880,559 13,015,787 2,181,967 September 933,087 13,952,420 2,192,293

Source: ABA based on "Financial System Indicators", "Statistical Bulletin" and "Information on Financial Institutions", Central Bank.


ANNUAL REPORT 2005

49

TABLE 19: Number of Branches (1)

End of: Public Banks

Private Banks


Institutions


December 1987 2,005 2,553 227 4,785 December 1988 2,026 2,597 160 4,783 December 1989 2,039 2,622 107 4,768 December 1990 1,970 2,471 87 4,528 December 1991 1,905 2,345 75 4,325 June 1993 1,776 2,481 60 4,317 December 1994 1,710 2,535 59 4,304 December 1995 1,621 2,397 51 4,069 December 1996 1,455 2,563 45 4,063 December 1997 1,461 2,659 45 4,165 December 1998 1,391 2,946 42 4,379 December 1999 1,358 2,967 56 4,381 December 2000 1,377 2,862 63 4,302 December 2001 1,391 2,809 73 4,273 December 2002 1,733 2,155 58 3,946 December 2003 1,737 2,080 59 3,876 December 2004 1,608 2,161 53 3,822 November 2005 1,560 2,216 100 3,876

(1) Including head offices. Source: ABA based on Central Bank's data.


ANNUAL REPORT 2005

50

TABLE 20: Branches Geographical Distribution (1) As of November 30, 2005

Provinces Public Banks

Private Banks

Total Banking System


Institutions


Capital Federal 163 589 752 21 773 Provinces 1,397 1,627 3,024 79 3,103 Buenos Aires 537 625 1,162 45 1,207 Catamarca 14 6 20 0 20 Córdoba 257 124 381 5 386 Corrientes 40 20 60 1 61 Chaco 44 15 59 2 61 Chubut 48 24 72 0 72 Entre Ríos 26 91 117 1 118 Formosa 5 12 17 0 17 Jujuy 5 22 27 1 28 La Pampa 95 11 106 0 106 La Rioja 12 12 24 0 24 Mendoza 35 92 127 5 132 Misiones 18 40 58 2 60 Neuquén 30 20 50 1 51 Río Negro 20 36 56 0 56 Salta 9 37 46 3 49 San Juan 6 25 31 3 34 San Luis 6 29 35 3 38 Santa Cruz 11 26 37 0 37 Santa Fe 155 265 420 5 425 Santiago del Estero 8 31 39 1 40 Tierra del Fuego 5 10 15 0 15 Tucumán 11 54 65 1 66

Total 1,560 2,216 3,776 100 3,876

(1) Including head offices. Source: ABA based on “Information on Financial Institutions”, Central Bank.


ANNUAL REPORT 2005

51

TABLE 21: ATMs Geographical Distributions As of November 30, 2005

Provinces Public Banks

Private Banks

Total Banking System


Institutions


Capital Federal 340 1,301 1,641 3 1,644 Provinces 1,626 3,158 4,784 20 4,804 Buenos Aires 824 1,426 2,250 3 2,253 Catamarca 34 9 43 0 43 Córdoba 195 214 409 0 409 Corrientes 52 28 80 1 81 Chaco 54 20 74 0 74 Chubut 35 50 85 0 85 Entre Ríos 16 114 130 0 130 Formosa 4 39 43 0 43 Jujuy 4 78 82 1 83 La Pampa 38 12 50 0 50 La Rioja 5 21 26 0 26 Mendoza 46 168 214 0 214 Misiones 17 69 86 0 86 Neuquén 69 44 113 0 113 Río Negro 20 76 96 0 96 Salta 10 82 92 15 107 San Juan 7 67 74 0 74 San Luis 6 45 51 0 51 Santa Cruz 9 49 58 0 58 Santa Fe 143 369 512 0 512 Santiago del Estero 3 50 53 0 53 Tierra del Fuego 25 12 37 0 37 Tucumán 10 116 126 0 126 Total 1,966 4,459 6,425 23 6,448

Source: ABA based on “Information on Financial Institutions”, Central Bank.


ANNUAL REPORT 2005

52

TABLE 22: Assets and Liabilities Structure

December 2002 December 2003 December 2004 November 2005 Item

In Millions of Pesos

% In Millions of Pesos



%

Assets 187,542 100.0 186,873 100.0 212,562 100.0 221,128 100.0

Cash and due from banks 15,914 8.5 25,894 13.9 26,997 12.7 24,822 11.2 Public bonds 31,750 16.9 45,259 24.2 55,769 26.2 61,754 27.9 Loans 72,840 38.8 58,668 31.4 66,117 31.1 77,456 35.0 Non-financial private sector 38,470 20.5 33,398 17.9 41,054 19.3 54,223 24.5 Financial sector 1,985 1.1 1,417 0.8 1,697 0.8 3,033 1.4 Public sector 44,337 23.6 33,228 17.8 30,866 14.5 25,698 11.6 Provisions -11,952 -6.4 -9,374 -5.0 -7,500 -3.5 -5,497 -2.5

Other credits through financial intermediation 40,313 21.5 28,712 15.4 34,711 16.3 28,143 12.7

Fixed assets 6,915 3.7 6,461 3.5 6,259 2.9 6,107 2.8 Others 19,812 10.6 21,879 11.7 22,710 10.7 22,847 10.3

Liabilities 161,451 86.1 164,923 88.3 188,683 88.8 194,446 87.9

Deposits 75,001 40.0 94,635 50.6 116,655 54.9 134,427 60.8 Non-financial private sector 66,215 35.3 77,862 41.7 84,266 39.6 100,130 45.3 Financial sector 289 0.2 677 0.4 670 0.3 668 0.3 Public sector 8,497 4.5 16,097 8.6 31,720 14.9 33,628 15.2

Other obligations through financial intermediation 75,742 40.4 61,691 33.0 64,928 30.5 53,436 24.2

Others 10,709 5.7 8,597 4.6 7,100 3.3 6,584 3.0

Stockholder's Equity 26,091 13.9 21,950 11.7 23,879 11.2 26,682 12.1



ANNUAL REPORT 2005

53

TABLE 23: Terms for Assets and Liabilities As of October 31, 2005 (in millions of Pesos)

Assets Due Portfolio

1 Month

3 Months

6 Months

12 Months

24 Months

More than 24

Months

Total

Public Sector Loans 420 3,771 697 720 1,045 1,786 18,508 26,948 Financial System 129 3,453 419 177 216 186 537 5,117

Non-financial Private Sector and Foreign Residents 9,704 20,890 6,495 6,530 5,796 6,685 18,595 74,694

Liquid Assets ... 24,822 ... ... ... ... ... 24,822 Public Bonds ... 7,310 6,388 9,446 3,993 6,993 27,623 61,754 BOGAR (aprox.) ... 99 198 297 594 1,187 22,362 24,737 BODEN 2012 ... ... ... 1,445 1,445 2,889 4,334 10,112 BODEN 2007 ... ... ... 389 389 778 ... 1,555 Lebac / Nobac - Holdings ... 2,462 6,190 7,315 1,566 2,139 927 20,600 Lebac / Nobac - Repos ... 4,749 ... ... ... ... ... 4,749

Total 10,253 60,245 14,000 16,873 11,050 15,649 65,265 193,334

Liabilities 1

Month 3

Months 6

Months 12

Months 24

Months More than 24

Months

Total

Deposits 83,696 13,324 4,825 4,078 336 28,168 134,427 Demand Deposits 27,444 … … … … 27,444 54,888 Others 56,252 13,324 4,825 4,078 336 724 79,539

Other Financial Intermediation Obligations 11,555 1,551 1,355 1,604 3,452 20,778 40,295

Central Bank 1,174 815 944 748 2,113 12,757 18,550 International Banks and Institutions 70 20 46 58 135 357 686 Unsubordinated Notes 238 184 47 314 446 5,233 6,462

Financing Received by Local Financial Institutions 4,834 370 183 363 283 1,044 7,077

Others 5,239 162 134 121 475 1,387 7,520 Subordinated Notes 14 6 25 44 107 1,178 1,376

Total 95,265 14,881 6,205 5,727 3,895 50,124 176,098



ANNUAL REPORT 2005

54

TABLE 24: Terms for Assets and Liabilities As of October 31, 2005 (as % of liabilities)


1 Month

3 Months

6 Months

12 Months

24 Months

More than24 Months

Total

Public Sector Loans 0.2 2.1 0.4 0.4 0.6 1.0 10.5 15.3 Financial System 0.1 2.0 0.2 0.1 0.1 0.1 0.3 2.9

Non-financial Private Sector and Foreign Residents 5.5 11.9 3.7 3.7 3.3 3.8 10.6 42.4

Liquid Assets ... 14.1 ... ... ... ... ... 14.1 Public Bonds ... 4.2 3.6 5.4 2.3 4.0 15.7 35.1 BOGAR (aprox.) ... 0.1 0.1 0.2 0.3 0.7 12.7 14.0 BODEN 2012 ... ... ... 0.8 0.8 1.6 2.5 5.7 BODEN 2007 ... ... ... 0.2 0.2 0.4 ... 0.9 Lebac / Nobac - Holdings ... 1.4 3.5 4.2 0.9 1.2 0.5 11.7 Lebac / Nobac - Repos ... 2.7 ... ... ... ... ... 2.7

Total 5.8 34.2 8.0 9.6 6.3 8.9 37.1 109.8

Liabilities 1

Month3

Months6

Months12

Months 24

Months More than24 Months

Total

Deposits 47.5 7.6 2.7 2.3 0.2 16.0 76.3 Demand Deposits 15.6 ... ... ... ... 15.6 31.2 Others 31.9 7.6 2.7 2.3 0.2 0.4 45.2

Other Financial Intermediation Obligations ... 0.9 0.8 0.9 2.0 11.8 22.9

Central Bank 0.7 0.5 0.5 0.4 1.2 7.2 10.5 International Banks and Institutions ... 0.0 0.0 0.0 0.1 0.2 0.4 Unsubordinated Notes ... 0.1 0.0 0.2 0.3 3.0 3.7

Financing Received by Local Financial Institutions ... 0.2 0.1 0.2 0.2 0.6 4.0

Others 3.0 0.1 0.1 0.1 0.3 0.8 4.3 Subordinated Notes ... 0.0 0.0 0.0 0.1 0.7 0.8

Total 54.1 8.5 3.5 3.3 2.2 28.5 100.0

Assets / Liabilities (%) 29.5 51.2 119.7 123.2 222.2 75.1 60.6



ANNUAL REPORT 2005

55

TABLE 25: Terms for Assets and Liabilities As of October 31, 2005 (Percentage Term Structure)


1 Month

3 Months

6 Months

12 Months

24 Months

More than24 Months

Total

Public Sector Loans 1.6 14.0 2.6 2.7 3.9 6.6 68.7 100.0 Financial System 2.5 67.5 8.2 3.5 4.2 3.6 10.5 100.0

Non-financial Private Sector and Foreign Residents 13.0 28.0 8.7 8.7 7.8 8.9 24.9 100.0

Liquid Assets ... 100.0 ... ... ... ... ... 100.0 Public Bonds ... 11.8 10.3 15.3 6.5 11.3 44.7 100.0 BOGAR (aprox.) ... 0.4 0.8 1.2 2.4 4.8 90.4 100.0 BODEN 2012 ... ... ... 14.3 14.3 28.6 42.9 100.0 BODEN 2007 ... ... ... 25.0 25.0 50.0 ... 100.0 LEBAC / NOBAC - Holdings ... 11.9 30.1 35.5 7.6 10.4 4.5 100.0 LEBAC / NOBAC - Repos ... 100.0 ... ... ... ... ... 100.0

Total 5.3 31.2 7.2 8.7 5.7 8.1 33.8 100.0

Liabilities 1

Month3

Months6

Months12

Months 24

Months More than24 Months

Total

Deposits 62.3 9.9 3.6 3.0 0.2 21.0 100.0 Demand Deposits 50.0 ... ... ... ... 50.0 100.0 Others 70.7 16.8 6.1 5.1 0.4 0.9 100.0

Other Financial Intermediation Obligations

3.8 3.4 4.0 8.6 51.6 100.0

Central Bank 6.3 4.4 5.1 4.0 11.4 68.8 100.0 International Banks and Institutions 2.9 6.8 8.5 19.6 52.0 100.0 Unsubordinated Notes 2.9 0.7 4.9 6.9 81.0 100.0

Financing Received by Local Financial Institutions

5.2 2.6 5.1 4.0 14.7 100.0

Others 69.7 2.2 1.8 1.6 6.3 18.5 100.0 Subordinated Notes 0.4 1.8 3.2 7.8 85.7 100.0

Total 54.1 8.5 3.5 3.3 2.2 28.5 100.0



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56

TABLE 26: Loans and Deposits (in millions of Pesos)

Loans Deposits Period

Public Banks

Private Banks

Non-BankingFinancial

Institutions

Total Financial

System

Public Banks

Private Banks


Institutions

Total Financial

System

1990 December 9,557 4,984 86 14,627 7,462 3,414 60 10,936 1991 December 19,952 11,415 279 31,646 6,793 9,300 223 16,316 1992 December 18,409 21,713 599 40,721 10,547 16,013 451 27,011 1993 December 21,543 25,433 722 47,698 17,324 23,347 490 41,162 1994 December 23,286 32,614 860 56,759 18,562 28,521 588 47,670 1995 December 23,580 31,702 666 55,948 17,730 27,178 324 45,233 1996 December 22,255 38,312 781 61,347 19,789 34,631 371 54,791 1997 December 23,379 45,590 1,022 69,991 24,023 46,169 336 70,527 1998 December 25,153 50,402 1,524 77,080 27,254 50,676 390 78,320 1999 December 22,060 53,732 1,907 77,699 26,946 54,275 352 81,573 2000 December 21,700 52,707 1,745 76,152 28,498 57,679 393 86,570 2001 December 20,388 48,291 1,494 70,173 21,454 44,767 226 66,447 2002 December 28,429 43,958 453 72,840 32,851 41,954 196 75,001 2003 December 17,529 40,647 492 58,668 44,732 49,687 216 94,635 2004 December 19,096 46,155 866 66,117 55,680 60,765 211 116,655 2005 November 24,235 51,810 1,411 77,456 60,341 73,791 295 134,427

Source: ABA based on "Statements of Financial Institutions", "Financial Statements of Financial Institutions" and “Information on Financial Institutions”, Central Bank.


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57

TABLE 27: Loans and Deposits (as a percentage)

Loans Deposits Period

Public Banks

Private Banks


Institutions

Total Financial

System

Public Banks

Private Banks


Institutions

Total Financial

System

1990 December 65.3 34.1 0.6 100.0 68.2 31.2 0.5 100.0 1991 December 63.0 36.1 0.9 100.0 41.6 57.0 1.4 100.0 1992 December 45.2 53.3 1.5 100.0 39.0 59.3 1.7 100.0 1993 December 45.2 53.3 1.5 100.0 42.1 56.7 1.2 100.0 1994 December 41.0 57.5 1.5 100.0 38.9 59.8 1.2 100.0 1995 December 42.1 56.7 1.2 100.0 39.2 60.1 0.7 100.0 1996 December 36.3 62.5 1.3 100.0 36.1 63.2 0.7 100.0 1997 December 33.4 65.1 1.5 100.0 34.1 65.5 0.5 100.0 1998 December 32.6 65.4 2.0 100.0 34.8 64.7 0.5 100.0 1999 December 28.4 69.2 2.5 100.0 33.0 66.5 0.4 100.0 2000 December 28.5 69.2 2.3 100.0 32.9 66.6 0.5 100.0 2001 December 29.1 68.8 2.1 100.0 32.3 67.4 0.3 100.0 2002 December 39.0 60.3 0.6 100.0 43.8 55.9 0.3 100.0 2003 December 29.9 69.3 0.8 100.0 47.3 52.5 0.2 100.0 2004 December 28.9 69.8 1.3 100.0 47.7 52.1 0.2 100.0 2005 November 31.3 66.9 1.8 100.0 44.9 54.9 0.2 100.0

Source: ABA based on "Statements of Financial Institutions", "Financial Statements of Financial Institutions" and “Information on Financial Institutions”, Central Bank.


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58

TABLE 28: Information by Group of Institutions November 2005 (in millions of Pesos)

Group Assets Stockholders´ Equity

Loans to Private

Sector (1)

Deposits of Private

Sector

Public Federal Banks 49,089 6,076 5,541 16,401 Public Provincial and Municipal 40,715 3,210 7,595 17,195 Public Banks 89,804 9,286 13,136 33,597

International Banks 58,026 6,914 18,734 37,893 Local Private 66,225 9,120 14,331 24,613 Cooperatives 5,063 552 1,418 3,733 Private Banks 129,314 16,585 34,482 66,239

Banks Total 219,117 25,872 47,618 99,836

Non-Banking Financial Institutions 2,011 810 1,168 295 Total Financial System 221,128 26,682 48,786 100,130

(1) Net of provisions. Source: ABA based on “Information on Financial Institutions”, Central Bank.


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59

TABLE 29: Information by Group of Institutions November 2005 (as a percentage)

Group Assets Stockholders´ Equity

Loans to Private

Sector (1)

Deposits of Private

Sector

Public Federal Banks 22.2 22.8 11.4 16.4 Public Provincial and Municipal 18.4 12.0 15.6 17.2 Public Banks 40.6 34.8 26.9 33.6

International Banks 26.2 25.9 38.4 37.8 Local Private 29.9 34.2 29.4 24.6 Cooperatives 2.3 2.1 2.9 3.7 Private Banks 58.5 62.2 70.7 66.2

Banks Total 99.1 97.0 97.6 99.7

Non-Banking Financial Institutions 0.9 3.0 2.4 0.3 Total Financial System 100.0 100.0 100.0 100.0

(1) Net of provisions. Source: ABA based on “Information on Financial Institutions”, Central Bank.


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60

TABLE 30: Concentration of Deposits (as a percentage)

End of: Top 5 Top 10 Top 15 Top 20 Others Number of Banks

1988 December 37.11 50.72 ... 65.34 34.66 175 1989 December 35.96 49.76 ... 67.46 32.54 176 1990 December 36.17 49.39 ... 65.63 34.37 170 1991 December 35.63 49.78 ... 67.68 32.32 166 1992 December 34.96 48.62 ... 66.25 33.75 167 1993 December 38.68 51.69 60.56 66.77 33.23 167 1994 December 36.85 50.18 58.73 65.14 34.86 168 1995 December 42.61 58.21 68.13 74.34 25.66 127 1996 December 42.33 58.40 68.76 75.25 24.75 120 1997 December 45.18 61.62 71.43 78.30 21.70 113 1998 December 48.91 70.51 79.54 84.46 15.54 104 1999 December 50.26 71.74 80.37 85.87 14.13 92 2000 December 52.33 73.18 82.77 88.55 11.45 89 2001 December 49.92 73.42 83.66 89.51 10.49 85 2002 December 54.16 77.04 85.31 90.25 9.75 78 2003 December 55.65 75.49 85.17 90.31 9.69 75 2004 December 55.16 73.72 85.02 89.99 10.01 74 2005 November 53.76 72.48 84.02 89.18 10.82 74

Source: ABA based on “Statements of Financial Institutions”, “Financial Statements of Financial Institutions” and “Information on Financial Institutions”, Central Bank.


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61

TABLE 31: Concentration of Assets (as a percentage)

End of: Top 5 Top 10 Top 15 Top 20 Others Number of Banks

1993 December 38.19 51.28 59.73 65.71 34.29 167 1994 December 36.43 50.57 58.83 64.89 35.11 168 1995 December 39.88 55.18 64.00 69.29 30.71 127 1996 December 38.71 55.67 66.37 72.38 27.62 120 1997 December 40.89 57.73 67.64 74.05 25.95 113 1998 December 42.82 64.03 73.56 80.03 19.97 104 1999 December 45.64 68.20 77.44 83.23 16.77 92 2000 December 45.63 69.35 79.00 85.09 14.91 89 2001 December 48.71 70.90 80.97 87.01 12.99 85 2002 December 57.16 77.72 86.10 90.38 9.62 78 2003 December 57.85 76.89 85.12 89.90 10.10 75 2004 December 55.64 73.44 83.75 88.96 11.04 74 2005 November 53.85 71.08 81.71 87.02 12.98 74

Source: ABA based on “Statements of Financial Institutions”, “Financial Statements of Financial Institutions” and “Information on Financial Institutions”, Central Bank.


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TABLE 32: Tranches of Deposits As of November 30, 2005

Tranches Individual Legal Persons Total

From To Number Amount Number Amount Number Amount

In

Millions of Pesos



0 300 9,996,643 574 665,714 1,217 10,662,357 1,790

301 500 816,428 542 231,636 289 1,048,064 831 501 1,000 1,118,047 916 191,357 370 1,309,404 1,286

1,001 2,500 1,384,406 2,481 179,993 1,044 1,564,399 3,525 2,501 5,000 754,377 2,741 74,127 641 828,504 3,382 5,001 10,000 513,929 3,877 56,904 824 570,833 4,701

10,001 25,000 454,824 7,128 64,326 1,495 519,150 8,623 25,001 50,000 193,231 7,003 41,133 1,946 234,364 8,948 50,001 100,000 88,403 5,883 29,015 3,308 117,418 9,191

100,001 250,000 35,932 5,277 24,697 4,797 60,629 10,074 250,001 500,000 6,693 2,264 10,346 4,880 17,039 7,144 500,001 1,000,000 2,201 1,478 6,540 5,426 8,741 6,904

1,000,001 2,500,000 1,101 1,374 4,583 7,642 5,684 9,016 2,500,001 5,000,000 293 953 1,789 6,677 2,082 7,631 5,000,001 10,000,000 196 1,676 1,038 7,141 1,234 8,817

10,000,001 25,000,000 64 2,926 697 9,606 761 12,533 25,000,001 50,000,000 25 1,083 240 8,399 265 9,483 50,000,001 100,000,000 4 1,077 73 6,100 77 7,177

100,000,001 ... ... 48 13,371 48 13,371 Total 15,366,797 49,254 1,584,256 85,173 16,951,053 134,427



ANNUAL REPORT 2005

63

TABLE 33: Loans by Type

December 2001 December 2002 December 2003 December 2004 November 2005 Type of Loan

Millions of Pesos

% Millions of Pesos

% Millions of Pesos

% Millions of Pesos

% Millions of Pesos

%

Public Sector 22,689 32.3 44,337 60.9 33,228 56.6 30,866 46.7 25,698 33.2

Financial Sector 2,617 3.7 1,985 2.7 1,417 2.4 1,697 2.6 3,033 3.9

Private Sector (1) 51,994 74.1 38,470 52.8 33,398 56.9 41,054 62.1 54,223 70.0

Overdraft 6,410 9.1 4,535 6.2 4,427 7.5 5,883 8.9 8,591 11.1

Promissory Notes 11,221 16.0 7,268 10.0 6,150 10.5 8,209 12.4 11,795 15.2

Mortgage Loans 16,037 22.9 11,411 15.7 9,337 15.9 8,844 13.4 8,817 11.4

Pledge Loans 3,666 5.2 1,953 2.7 1,307 2.2 1,688 2.6 2,305 3.0

Consumer Loans 4,530 6.5 2,410 3.3 2,335 4.0 4,081 6.2 6,699 8.6

Others 8,679 12.4 7,856 10.8 7,421 12.6 10,224 15.5 14,232 18.4

Interest accrued 1,451 2.1 3,038 4.2 2,421 4.1 2,125 3.2 1,785 2.3

Provisions -7,128 -10.2 -11,952 -16.4 -9,374 -16.0 -7,500 -11.3 -5,498 -7.1

Total 70,173 100.0 72,840 100.0 58,668 100.0 66,117 100.0 77,456 100.0

(1) It includes loans to foreign residents. Source: ABA based on “Information on Financial Institutions”, Central Bank.


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TABLE 34: Financing by Activity As a percentage

Economic Activity

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Primary Production 9.0 11.1 12.6 12.4 10.8 10.3 9.2 9.1 9.1 8.1 8.9 8.2 5.7 6.6 7.8 10.2

Manufacturing Industry 23.9 20.8 20.6 19.5 18.0 18.5 19.4 18.1 16.5 14.6 11.5 9.3 7.7 8.8 12.6 16.5

Electricity, gas and water 7.4 3.0 1.3 2.5 2.0 2.1 2.1 2.0 2.2 1.8 1.6 1.5 2.2 1.2 1.1 0.9

Construction 5.9 6.4 5.1 4.2 4.2 4.3 4.1 3.5 3.6 3.7 3.5 3.0 2.5 2.2 2.4 2.3

Commerce 6.6 11.4 15.1 17.0 15.7 13.9 12.3 11.6 10.5 9.8 8.7 6.3 4.3 4.5 5.2 6.0

Services 23.3 21.5 20.1 21.5 23.6 25.0 26.8 27.1 26.5 28.0 37.7 42.2 54.6 52.0 46.4 37.3

Individual Employees 21.7 22.6 20.7 18.1 20.2 20.2 21.7 23.9 24.9 28.3 24.8 24.1 16.6 16.4 16.7 19.7 Non-identified 2.2 3.2 4.5 4.8 5.5 5.7 4.5 4.7 6.8 5.7 3.2 5.4 6.4 8.2 7.9 7.1

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0



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TABLE 35: Non-Performing Loans by Activity As a percentage on total financing of each activity

Economic Activity

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Primary Production 27.0 24.4 23.4 22.1 30.5 33.0 24.6 21.7 17.4 23.4 27.2 30.6 50.2 42.1 21.9 8.0

Manufacturing Industry 23.1 17.7 18.4 21.1 23.7 21.4 15.9 14.7 14.6 15.7 20.7 29.0 48.3 41.8 20.0 7.4

Electricity, gas and water 3.3 62.8 7.4 3.3 4.1 1.3 1.8 0.8 1.2 1.3 2.1 2.7 59.1 68.6 56.1 47.0

Construction 13.6 10.7 13.4 16.5 19.7 23.8 15.9 14.0 11.5 12.1 22.3 24.9 58.0 75.2 54.6 34.9

Commerce 19.7 18.1 16.8 18.0 23.9 31.9 25.5 22.8 20.0 22.4 28.1 30.1 49.7 45.1 27.8 10.1

Services 17.8 26.9 16.2 13.1 10.0 10.8 6.9 6.2 4.7 4.7 6.9 10.3 11.6 8.7 5.3 4.5

Individual Employees 2.8 7.6 7.2 9.1 12.5 29.9 22.7 15.0 14.7 15.0 21.8 25.8 37.8 24.5 18.2 11.9 Non-identified 45.9 26.6 15.8 17.5 17.6 21.4 20.5 18.4 11.2 18.3 25.3 30.8 39.5 41.8 24.9 18.5

Total 16.0 19.4 15.5 15.8 18.0 22.7 16.8 13.9 12.1 13.4 16.9 20.1 26.6 23.0 15.0 9.2



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66

TABLE 36: Financing by Tranches As of November 30, 2005

Tranches Individual Legal Persons Individual Legal Persons

From To Number Amount Number Amount Number Amount Number Amount

In

Millions of Pesos


% % % %

0 300 780,670 152.4 20,557 2.7 14.3 0.5 21.0 0.0

301 500 434,739 195.0 2,099 0.9 8.0 0.6 2.1 0.0 501 1,000 833,150 654.4 3,500 2.7 15.3 2.1 3.6 0.0

1,001 2,500 1,299,555 2,191.5 6,257 10.8 23.8 7.2 6.4 0.0 2,501 5,000 870,546 3,155.9 6,401 23.8 16.0 10.4 6.5 0.0 5,001 10,000 614,290 4,343.3 7,504 54.9 11.3 14.3 7.7 0.1

10,001 25,000 402,975 6,191.7 11,608 191.4 7.4 20.3 11.9 0.3 25,001 50,000 140,471 4,886.1 8,985 325.2 2.6 16.0 9.2 0.4 50,001 100,000 58,138 3,911.3 9,040 648.9 1.1 12.8 9.2 0.9

100,001 200,000 17,049 2,289.9 7,999 1,137.6 0.3 7.5 8.2 1.5 200,001 500,000 5,277 1,501.1 6,887 2,154.0 0.1 4.9 7.0 2.8 500,001 1,000,000 740 485.0 2,933 2,072.2 0.0 1.6 3.0 2.7

1,000,001 2,500,000 185 264.2 2,097 3,271.6 0.0 0.9 2.1 4.3 2,500,001 5,000,000 28 92.3 855 2,965.1 0.0 0.3 0.9 3.9 5,000,001 10,000,000 17 125.0 515 3,610.6 0.0 0.4 0.5 4.7

10,000,001 25,000,000 2 35.2 362 5,539.0 0.0 0.1 0.4 7.3 25,000,001 50,000,000 ... ... 164 5,724.7 ... ... 0.2 7.5 50,000,001 100,000,000 ... ... 92 6,470.1 ... ... 0.1 8.5

100,000,001 ... ... 83 42,077.7 ... ... 0.1 55.2

Total 5,457,832 30,474.4 97,938 76,283.9 100.0 100.0 100.0 100.0



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67

TABLE 37: Financing by Tranches and Situation As of November 30, 2005 (as a percentage)

Tranches Performing (1) Non-Performing (2) Non-Collectible (3)

From To Number

of Debtors

Debt Amount

Number of

Debtors

Debt Amount

Number of

Debtors

Debt Amount

0 300 82.8 82.3 2.8 2.7 14.4 15.0

301 500 82.1 82.2 2.5 2.5 15.4 15.3 501 1,000 82.2 82.3 2.7 2.7 15.1 15.0

1,001 2,500 83.6 83.7 2.8 2.9 13.5 13.5 2,501 5,000 83.2 83.2 2.3 2.3 14.4 14.5 5,001 10,000 79.6 79.5 1.7 1.7 18.7 18.9

10,001 25,000 71.9 71.4 1.7 1.8 26.3 26.8 25,001 50,000 68.0 68.1 1.9 1.9 30.1 30.0 50,001 100,000 67.1 66.8 1.6 1.6 31.3 31.6

100,001 200,000 65.7 65.5 1.6 1.6 32.7 32.9 200,001 500,000 67.0 67.7 2.0 2.0 31.0 30.3 500,001 1,000,000 74.0 74.5 3.7 3.7 22.2 21.8

1,000,001 2,500,000 78.2 78.5 4.5 4.6 17.4 16.9 2,500,001 5,000,000 81.1 81.1 5.3 5.6 13.6 13.3 5,000,001 10,000,000 82.5 82.9 5.7 5.5 11.9 11.6

10,000,001 25,000,000 85.1 85.5 6.8 6.7 8.1 7.8 25,000,001 50,000,000 87.0 87.1 5.1 5.2 7.9 7.6 50,000,001 100,000,000 86.6 87.6 3.7 3.1 9.8 9.4

100,000,001 98.5 99.4 1.5 0.6 … …

Total 81.5 84.8 2.5 2.6 15.9 12.6

(1) Include situations 1 and 2. (2) Include situations 3 and 4. (3) Include situations 5 and 6. Source: ABA based on “Information on Financial Institutions”, Central Bank.


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TABLE 38: Concentration of Credit Assistance As of November 30, 2005

Individual Legal Persons Individual Legal Persons

Number Amount Number Amount Number Amount Number Amount

Number of Institutions



% % % %

1 3,991,560 14,871.5 74,547 13,238.4 73.1 48.8 76.1 17.4 2 1,098,031 9,621.6 14,855 9,243.3 20.1 31.6 15.2 12.1 3 279,460 3,951.2 4,655 4,861.7 5.1 13.0 4.8 6.4 4 67,522 1,315.7 1,831 4,805.8 1.2 4.3 1.9 6.3 5 or more 21,259 714.5 2,050 44,134.8 0.4 2.3 2.1 57.9

Total 5,457,832 30,474.4 97,938 76,283.9 100.0 100.0 100.0 100.0



ANNUAL REPORT 2005

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TABLE 39: Income Statement – Financial System (As a percentage of net assets)

1999 2000 2001 2002 2003 2004 2005 Financial margin 5.6 5.7 5.7 6.5 1.1 3.1 4.7

Interest income 4.3 4.0 3.8 -1.7 -0.5 0.9 1.5 CER and CVS return 0.0 0.0 0.0 3.9 1.3 1.0 1.5 Assets return 0.9 1.2 1.2 1.7 1.1 0.4 0.4 Differences in valuation 0.2 0.1 0.2 2.8 -0.5 1.0 1.2 Other financial income 0.2 0.4 0.5 -0.1 -0.3 -0.2 0.1

Net income on services 2.9 2.8 3.0 1.9 1.9 2.0 2.3 Non-collectibility expenses -2.1 -2.4 -2.6 -4.7 -1.1 -0.8 -0.6 Operating expenses -5.9 -5.8 -6.1 -4.4 -4.2 -4.1 -4.6 Tax burdens -0.4 -0.4 -0.5 -0.3 -0.3 -0.3 -0.4 Income tax -0.3 -0.3 -0.2 -0.2 -0.2 -0.1 -0.3 Adjustments on Public Debt valuation (1) 0.0 0.0 0.0 0.0 -0.4 -0.2 -0.2 Judicial Injunctions Amortization 0.0 0.0 0.0 0.0 -0.6 -0.9 -0.9 Miscellaneous 0.5 0.4 0.6 -1.8 0.9 0.8 0.8 Monetary adjustments 0.0 0.0 0.0 -5.8 0.0 0.0 0.0 ROA before income tax 0.6 0.4 0.2 -8.7 -2.7 -0.3 1.2 ROA before monetary adjustments 0.2 0.0 0.0 -3.1 -2.9 -0.5 1.0 ROA 0.2 0.0 0.0 -8.9 -2.9 -0.5 1.0 ROA adjusted (2) 0.2 0.0 0.0 -8.9 -1.9 0.7 2.0

Ratios - % ROE 1.7 0.0 -0.2 -59.2 -22.7 -4.2 7.7 (Financial margin + net income on services) / Operating expenses 142.5 147.4 143.3 189.1 69.3 124.8 153.4 Interest income (CER and CVS adjustments included) / Loans … 13.0 15.2 11.8 13.1 10.3 128.0 Interest expenses (CER and CVS adjustments included) / Deposits … 5.3 7.3 9.2 5.7 1.8 2.4

Note: Interest income and loans correspond to non-financial private sector. (1) Communication "A" 3911. Valuation adjustments according to Communication "A" 4084 are included in '“Assets

Return”. (2) Judicial injunctions amortization and Public Sector revaluation are not included. Source: "Report on Banks", Central Bank.


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TABLE 40: Income Statement – Private Banks (As a percentage of net assets)

1999 2000 2001 2002 2003 2004 2005 Financial margin 6.1 6.2 6.4 7.6 2.3 2.9 4.4

Interest income 4.5 4.1 4.3 -0.2 0.1 1.0 1.7 CER and CVS return 0.0 0.0 0.0 1.1 0.9 0.8 1.0 Assets return 1.1 1.4 1.2 2.5 1.7 0.6 0.5 Differences in valuation 0.3 0.2 0.3 4.4 -0.3 0.8 1.2 Other financial income 0.3 0.5 0.7 -0.1 -0.2 -0.3 0.1

Net income on services 3.1 2.9 3.2 2.0 2.0 2.4 2.7 Non-collectibility expenses -2.2 -2.5 -3.0 -5.0 -1.3 -0.9 -0.6 Operating expenses -6.3 -6.0 -6.4 -4.8 -4.6 -4.6 -5.1 Tax burdens -0.4 -0.4 -0.5 -0.4 -0.3 -0.3 -0.4 Income tax -0.5 -0.4 -0.3 -0.2 -0.3 -0.2 -0.2 Adjustments on Public Debt valuation (1) 0.0 0.0 0.0 0.0 -0.6 0.0 -0.2 Judicial Injunctions Amortization 0.0 0.0 0.0 0.0 -0.7 -1.0 -1.0 Miscellaneous 0.5 0.4 0.7 -3.0 1.0 0.7 0.9 Monetary adjustments 0.0 0.0 0.0 -7.5 0.0 0.0 0.0 ROA before income tax 0.8 0.6 0.5 -11.1 -2.2 -0.8 0.8 ROA before monetary adjustments 0.3 0.1 0.2 -3.8 -2.4 -1.0 0.7 ROA 0.3 0.1 0.2 -11.3 -2.5 -1.0 0.7 ROA adjusted (2) 0.3 0.1 0.2 -11.3 -1.2 0.2 1.8

Ratios - % ROE 2.3 0.8 1.4 -79.0 -19.1 -8.1 5.1 (Financial margin + net income on services) / Operating expenses 146.0 151.9 150.9 199.3 92.6 115.0 140.3 Interest income (CER and CVS adjustments included) / Loans ... 13.9 16.1 24.7 9.0 8.2 11.0 Interest expenses (CER and CVS adjustments included) / Deposits ... 5.7 7.8 21.9 5.8 2.2 3.0

Note: Interest income and loans correspond to non-financial private sector. (1) Communication "A" 3911. Valuation adjustments according to Communication "A" 4084 are included in '“Assets Return”. (2) Judicial injunctions amortization and Public Sector revaluation are not included. Source: "Report on Banks", Central Bank.


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TABLE 41: Non-Performing Loans - Financial System As a percentage

Dec.1999

Dec.2000

Dec.2001

Dec.2002

Dec. 2003

Dec. 2004

Dec.2005

Non-performing loans 11.5 12.9 13.1 18.1 17.7 10.7 5.2

Non-performing - Private Sector 14.0 16.0 19.1 38.6 33.5 18.6 7.6 Commercial loans 11.7 13.7 21.4 43.8 38.9 22.1 Commercial up to $200 thousands 21.5 22.8 17.3 46.3 28.0 27.9

9.3

Consumer and Mortgage 16.6 17.3 17.5 31.4 28.0 11.0 4.8

Provisions / Non-performing loans 59.6 61.1 66.4 73.8 79.2 102.9 124.7

(Non-performing loans - Provisions) / Total financing 4.7 5.0 4.4 4.7 3.7 -0.3 -1.3 (Non-performing loans - Provisions) / Equity 24.7 26.2 21.6 17.2 11.9 -1.0 -4.1

Source: "Report on Banks", Central Bank.


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TABLE 42: Non-Performing Loans - Private Banks As a percentage

Dec.1999

Dec.2000

Dec.2001

Dec.2002

Dec. 2003

Dec. 2004

Dec.2005

Non-performing loans 7.6 8.3 9.9 19.8 15.7 8.9 4.4

Non-performing - Private Sector 8.9 9.8 14.0 37.4 30.4 15.3 6.3 Commercial loans 6.2 7.6 15.2 44.5 39.9 18.8 Commercial up to $200 thousands 11.7 14.6 16.4 46.4 26.8 13.2

7.3

Consumer and Mortgage 12.5 11.9 12.4 26.0 17.2 10.0 4.2 Provisions / Non-performing loans 69.4 67.7 75.7 73.4 79.0 95.7 114.3 (Non-performing loans - Provisions) / Total financing 2.3 2.7 2.4 5.3 3.3 0.4 -0.6 (Non-performing loans - Provisions) / Equity 11.5 13.4 11.4 18.6 11.2 1.3 -2.2

Source: "Report on Banks", Central Bank.


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TABLE 43: Minimum Cash Requirements (as a percentage) Since:

Item December 2004

January 2005

May 2005

June 2005

July 2005

August 2005

December 2005

1. Deposits in current accounts. 18 16 16 16 16 152. Deposits in savings accounts. 2.1. In Pesos. 18 16 16 16 16 15 2.2. In Foreign Currency. 30 30 30 30 30 30 3. Custody loans, special accounts for closed savings groups, "Unemployment fund for construction workers", "Accounts for salaries payments", special current accounts for legal persons and pension savings accounts.

3.1. In Pesos. 18 16 16 16 16 15 3.2. In Foreign Currency. 30 30 30 30 30 30 4. Other demand deposits and obligations, pension payments granted by ANSES outstanding payment and immobilized funds corresponding to obligations comprised in these rules.

4.1. In Pesos. 18 16 16 16 16 15 4.2. In Foreign Currency. 30 30 30 30 30 30

5. Unused overdrafts funds. 18 16 16 16 16 15

6. Demand deposits -whichever the type of deposit-, which, at least, must constitute the amount of mutual funds (as provided for in the National Securities Exchange Commission rules and regulations). 100 100 100 100 0 (1) 0 7. Deposits in current accounts made by non-banking financial institutions computable for compliance of their minimum cash requirements. 100 100 100 100 100 100

8. Time deposits, "acceptance" obligations -including liabilities for credit sale or assignment to persons other than financial institutions-, repos, stockrelated collaterals and repos, constant term investments, with advance settlement option or with renewal term for a fixed term and with variable compensation, and other term obligations, except for deposits comprised in items 12, 15 and 16, according to their remaing term: 8.1. In Pesos: i) Up to 29 days. 18 16 16 16 16 14 ii) From 30 to 59 days. 14 13 13 13 13 11 iii) From 60 to 89 days. 10 9 9 9 9 7 iv) From 90 to 179 days. 5 4 4 4 4 2 v) From 180 to 365 days. 3 2 2 2 2 1 vi) More than 365 days. 0 0 0 0 0 0

Also included in this item are deposits with "CER" clause and deposits comprised in the "Deposit rescheduling regime" -not excluding those included in item 6.5, in whole or in part, if applicable according to the nature of the Court order-:

8.2. In Foreign Currency: i) Up to 29 days. 35 35 35 35 35 35 ii) From 30 to 59 days. 28 28 28 28 28 28 iii) From 60 to 89 days. 20 20 20 20 20 20 iv) From 90 to 179 days. 10 10 10 10 10 10 v) From 180 to 365 days. 6 6 6 6 6 6 vi) More than 365 days. 0 0 0 0 0 0


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TABLE 43: Minimum Cash Requirements (as a percentage)

9. Obligations under foreign lines of credit (except those included in items 8 and 10).

0 0

0 0 0 0

10. Debt securities (including notes). a) Debt issued as of 01.01.02, including debts arising from restructured obligations, according to their remaining term:

10.1. In Pesos: i) Up to 29 days. 18 16 16 16 16 14 ii) From 30 to 59 days. 14 13 13 13 13 11 iii) From 60 to 89 days. 10 9 9 9 9 7 iv) From 90 to 179 days. 5 4 4 4 4 2 v) From 180 to 365 days. 3 2 2 2 2 1 vi) More than 365 days. 0 0 0 0 0 0 10.2. In Foreign Currency: i) Up to 29 days. 35 35 35 35 35 35 ii) From 30 to 59 days. 28 28 28 28 28 28 iii) From 60 to 89 days. 20 20 20 20 20 20 iv) From 90 to 179 days. 10 10 10 10 10 10 v) From 180 to 365 days. 60 6 6 6 6 6 vi) More than 365 days. 0 0 0 0 0 0 b) Others. 0 0 0 0 0 0 11. Obligations towards the Trust Fund For Assistance to Financial Institutions and Insurance Companies. 0 0 0 0 0 0 12. Demand and time deposits made under Court order with funds originating in lawsuits, and their immobilized funds.

12.1. In Pesos: 10 10 10 8 8 8 12.2. In Foreign Currency: 15 15 15 15 15 15 13. Special accounts in US Dollars intended for deposit of collateral required in fowards and options carried out in self-regulated markets subject to the control of the National Securities and Exchange Commission. 100 100 100 100 100 100 14. Special demand accounts denominated in foreign currency. 100 100 100 100 100 100 15. Deposits -whichever their instrumentation- of mutual funds, (except those included in item 6):

15.1. In Pesos: 25 25 25 25 25 18 15.2. In Foreign Currency: 40 40 40 40 40 40 16. Special deposits linked to foreign capital inflows -Decree 616/05- 100 100 100 100

(1) In force since 8.16.05

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APPENDIX Principal Measures of Banking, Exchange and Financing Policies Communication "A" 4274. CONAU - 1 - 692. (01.05.05). The Central Bank modified the frequency -from a weekly to a monthly basis- for filing the Reporting Regime on Judicial Resolutions.

Communication "B" 8382. (01.05.05). The Central Bank communicated a one-time reporting requirement related to the estimated impact of accounting statements on the application of the Deferred Income Tax Approach to the Income Tax on 12.31.04.

Communication "A" 4275. CONAU - 1 - 693. (01.06.05). The Central Bank modified the maturity date for filing the Business and Projections Plan, and it set forth March 31 of each year, instead of February 28.

Communication "A" 4276. REMON - 1 - 792. (01.09.05). The rule on "Minimum Cash Requirements" was amended, and a two-percent points reduction was set forth for sight deposits in Pesos and for residual term deposits (less than 30 day-term), and a one-percent reduction was set forth for those term deposits having residual terms of 30 days or more. Communication "A" 4282. REMON - 1 - 793. (01.14.05). The Central Bank communicated the operating procedure to carry out debt balance bids for financial assistance for lack of liquidity funded according to the provisions of Chapter II of Decree 739/03, of Decree 1262/03 and of regulatory provisions. Communication "A" 4285. CAMEX - 1 - 505. (01.17.05). The Central Bank made effective a new regulatory regime applicable to subscription and cancellation of derivative transactions, both for the financial and for the non-financial private sector.

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Press Release Number 48,160. (01.17.05). Within the framework of the Uniform Federal Compensation (Compensación Federal Uniforme), the Central Bank reminded that, according to the provisions of Communication "B" 8300 and of Letter of Agreement executed on 11.02.04 between the President of the Central Bank and incumbent members of Bank Associations, as of 01.14.05, the term to make retail electronic transfers in Pesos throughout the country was reduced from 48 to 24 hours.

Communication "B" 8398. (01.31.05). The Central Bank left without effect SISCEN-0010 task: “Public bond holdings”. Thus, the last information that institutions had to submit before the Central Bank was the one dated 12.31.04. Communication "A" 4295. CONAU - 1 - 700. (02.11.05). As of January 2005, the Central Bank made possible the accounting recording of positive balances by way of application of the Minimum Presumed Income Tax (Impuesto a la Ganancia Mínima Presunta - IGMP). Likewise, institutions were able to elect to account for such assets in advance, for the quarter or year ended on 12.31.04. Prior to registration of positive balances, institutions had to file a Special Report from the external auditor about compliance with requirements (tax projection of recoverability of active balances, estimate of future accounting results, estimate of future tax adjustments and history of payments on account of minimum presumed income) set forth by the Central Bank to activate positive balances on account of the Minimum Presumed Income Tax. Communication "A" 4296. LISOL - 1 - 435. (02.11.05). The Central Bank set forth the treatment of positive balances through the application of the Minimum Presumed Income Tax for the purposes of technical relations of "Fixed Assets" and of "Minimum Capital Requirements". Regarding Fixed Assets, they shall be deemed as an included item. Regarding Minimum Capital Requirements, the Central Bank provided for that, in order to determine the basic net worth that is part of the Computable Equity, the amount of the positive balance shall be deducted applying the Minimum Presumed Income Tax exceeding 10% of the total amount of basic net worth items of the relevant period, or 10% of the computable equity corresponding to the previous month, whichever is less.

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Communication "A" 4298. OPASI - 2 - 364. (02.11.05). The Central Bank increased the minimum term for term deposits with Reference Stabilization Ratio (Coeficiente de Estabilización de Referencia - CER) clause from 90 to 270 days. Communication "A" 4301. CREFI - 2 - 43. (02.28.05). The Central Bank admitted the setting up of branches of financial institutions at credit unions and/or associations premises in cities having less than 30,000 inhabitants, provided there are no financial institutions authorized to conduct business within 10 kilometers from such branches. The services shall be rendered by the relevant financial institution's staff.

Likewise, the financial institution shall carry out business exclusively to meet the requirements of the relevant credit union and/or association of which it is member, and of their employees and associates.

Communication "A" 4302. CONAU - 1 - 703. (03.01.05). The Central Bank set forth a one-time reporting requirement related to the Exchange of the Public Debt under Restructuration (Decree 1735/04 and supplementary rules).

Financial institutions which had in their own portfolio species subject to restructuration had to report to this Institution a series of data before 03.10.05. Communication "A" 4308. CAMEX - 1 - 510. (03.04.05). Effective as of 03.07.05, the Central Bank provided for that securities transactions carried out in self-regulated Stock Exchanges and Securities Exchanges shall be paid in Pesos using the various modalities allowed by payment systems; in foreign currency through wire transfer from and to sight accounts held in local financial institutions, and through wire transfer on foreign accounts. Net acquisition of foreign currency at the local exchange market for the purchase of these securities or, as the case may be, the net sale of foreign currency arising from transactions carried out with these securities, in the last three calendar months shall not be higher than 5% of the Computable Equity in US Dollars at the reference exchange rate, considered in the determination of the maximum threshold of the General Exchange Position of the relevant month.

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Communication "A" 4310. LISOL - 1 - 436 and OPRAC - 1 - 581. (03.06.05). The Central Bank approved a series of provisions tending to facilitate access to financial system's credit, mainly to small- and medium-sized companies. First, the amount of assistance to commercial debtors that a financial institution may elect to classify exclusively regarding compliance with payment (days of delay) of debts owed to the institution was raised from $200,000 to $500,000.

Complementarily, the assistance threshold from which financial institutions must verify that financing granted to a debtor does not exceed its net worth was raised from $200,000 to $500,000. On the other hand, the period of default of debtors under agreement with creditors in order that they are rated by financial institutions as uncollectible was extended from 1 year to 1 and a half year (situation 5).

Additionally, the amount for an involuntary petition in bankruptcy as of which financial institutions shall rate the debtor as high-insolvency-risk debtor was raised from 5% to 20% of the debtor’s net worth (situation 4). Communication “A” 4317. RUNOR - 1 - 729. (03.15.05). The Central Bank communicated that the Judicial Written Communications System (Sistema de Oficios Judiciales - SOJ) used by the AFIP to request information, to order or release attachments, or to request the transfer of funds subject to attachment under judicial provisions arising from legal proceedings commenced by the AFIP shall also be used for the release of written communications ordered in legal proceedings commenced by provincial tax authorities.

Likewise, the rule included the guidelines that govern the extension of joint liability of financial institutions not compliant with orders of attachment.

Last, the Central Bank made clear that, although attachments affect funds and securities existing on the date the Communication is served upon the financial institution, and also those funds deposited in the future up to the amount of the attachment, should there be any outstanding balance about which the release of the attachment had not been communicated, it shall also be affected by the order. Communication "A" 4318. CONAU - 1 - 707. (03.16.05). Effective as of 01.01.05, the Central Bank provided for new maturity dates for the following reporting regimes:

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• Paragraph C -Additional information about major debtors- of the Reporting Regime

"Financial System Debtors": It shall be filed semiannually, instead of quarterly. • Chart 13 -Itemized list of related companies or institutions- of the Reporting

Regime for Quarterly/Semiannual/Annual Supervision: It shall be filed annually.

In addition, a series of reports were eliminated, and the last repot filed will be that corresponding to 12.31.04: Paragraph H of Financial System Debtors Reporting Regime and Charts 4 -Itemized list of Public Bonds- and 7 -Itemized list of real property- of the Reporting Regime for Quarterly/Semiannual/Annual Supervision. Communication "A" 4321. CAMEX - 1 - 512. (03.17.05). The settlement term for loans for up to 50 million US Dollars was extended from 30 to 90 days.

Communication "A" 4322. CAMEX - 1 - 513. (03.17.05). Effective as of 03.18.05 included, the Central Bank excluded the prior authorization requirement for purchases made by local financial institutions of credits granted by foreign financial institutions to non-financial private sector’s residents, to the extent they are credits that qualify for the application of foreign currency deposits loanable capacity. Communication "A" 4323. CAMEX - 1 - 514. (03.17.05). Effective as of 03.18.05 included, the Central Bank excluded Official Credit Agencies (Public or semipublic credit institutions oriented to finance foreign commerce) from the prior authorization requirement for foreign currency sales to non-residents. Communication "A" 4325. LISOL - 1 - 437 and OPRAC - 1 - 583. (03.17.05). The Central Bank amended the rules on "Debtors Rating" and "Credit Management", and authorized financial institutions to use statistical methods to assess the granting of consumer loans -personal loans, credit cards, current account overdraw limit, etc. - of up to a $15,000 amount, therefore, it shall not be necessary to show customer’s income. These systems are known as "credit scoring", which support the payment capacity analysis in the assessment of reliable data included in various databases, whether proprietary of the institution or owned by third parties, including information about credit history, financial debts, age, occupation, etc., without requiring the filing of the borrower’s salary receipts or income sworn statements.

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Communication "A" 4329. CONAU - 1 - 711. (04.01.05). The Central Bank extended the term of maturity for filing the General Exchange Position from 8 a.m. to 10 a.m. of the business day following the date subject to reporting. Communication "A" 4330. CONAU - 1 - 712. (04.01.05). The Central Bank issued the new ordered text of the Monthly Accounting Reporting Regime "Term Transactions" and set forth, effective as of 04.01.05, that the maturity date for filing the report shall be at 3 p.m. of the business day following the last day corresponding to the statistical week subject to reporting.

Communication "A" 4331. OPASI - 2 - 365. (04.04.05). The Central Bank increased in 90 days -from 270 to 365- the fund-raising term for deposits adjustable to CER. Communication "A" 4337. OPASI - 2 - 366. (04.14.05). In relation to the disqualified current account holders Hub posted on the Central Bank’s website through the Internet, the Central Bank communicated that the complete basis of disqualified holders in force, ordered according to competent judicial authority, shall be updated daily as news from the Courts are received. Press Release Number 48,232. (04.17.05). In order to extend the array of financial instruments available to the Central Bank to meet its monetary policy goals, the Central Bank announced that, on 04.19.05, Central Bank’s NOBAC denominated in Pesos at a variable interest rate for a two (2) year term, for a nominal value of 60 million Pesos would be offered through a bid. The new bond to be issued shall pay a quarterly coupon comprising a floating component plus a 2.5% annual spread. The floating component shall be determined as the simple arithmetic mean of the interest rate for fixed-term deposits plus one million Pesos -BADLAR general mean- calculated considering rates published by the Central Bank from two business days before the commencement of each coupon until two business days before each coupon maturity date.

To date, the Central Bank has used as sterilization instrument, Bonds and Notes issued by the Central Bank in Pesos and in Pesos adjustable to the Reference Stabilization Ratio (Coeficiente de Estabilización de Referencia - CER) and Bonds in US Dollars.

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Likewise, development of a secondary market for new bonds shall be promoted, which may also be used as underlying assets in repos transactions. Communication "A" 4343. OPRAC - 1 - 584. (05.02.05). Through this rule, the Central Bank made clear that bonds issued under the conditions set forth by Decree 1735/04 received within the framework of the National Public Debt Restructuration in exchange for eligible bonds existing before 03.31.03, shall not amount to any excesses over the “Non-financial public sector’s transaction thresholds” and over thresholds applicable to the “Credit risk fractioning”.

Communication "A" 4344. CAMEX - 1 - 516. (05.03.05). The Central Bank provided for that, as of 05.04.05 included, amounts collected in foreign currency by residents in exchange for the disposition of non-financial assets not produced, such as: sports transfers; patents; trademarks; copyrights; royalties; license rights; concessions; leases and other assignable contracts, shall be paid in and settled at the local exchange market within 30 calendar days as of the date of receipt of the funds in the country or abroad or as of their crediting in foreign accounts.

Communication "A" 4345. CAMEX - 1 - 517. (05.03.05). The Central Bank accepted, as of 05.04.05 included, the use of electronic and digital signatures for exchange transactions, to the extent they comply with any and all applicable requirements and features.

Communication "A" 4346. CONAU - 1 - 719. (05.05.05). Effective as of the reporting corresponding to 05.05.05, the Central Bank suspended the remittance by institutions of the Reporting Regime on Available Funds, Deposits and Other Obligations. Communication "A" 4347. CAMEX - 1 - 518. (05.05.05). The Central Bank extended the investment possibilities of financial institutions within the limits of the General Exchange Position, allowing them to maintain their foreign public bond holdings from OCDE countries and their low-risk fixed-term certificates of deposit, with a minimum risk rating of AA.

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Communication “A” 4349. CAMEX - 1 - 519. (05.12.05). Effective as of 06.13.05 included, the Central Bank provided for that individuals and legal persons residing in the country and not included in the financial sector shall have access to the Single Free Exchange Market for the creation of foreign assets, to the extent that they do not have any due and payable debts unpaid abroad on account of capital and interest of any kind of debts. This provision shall not apply to bills and traveler’s checks purchases for amounts not exceeding the equivalent of 10,000 US Dollars per calendar month.

Communication “A” 4350. LISOL - 1 - 438. (05.12.05). As of 05.01.05, the Central Bank suspended the application of the positive threshold to the foreign currency net global position (30% of computable equity or of own liquid resources, whichever is less), and the additional short-term threshold. Communication “A” 4351. LISOL - 1 - 439 and CONAU - 1 - 721. (05.18.05). The Central Bank set forth that those institutions having notes and other debt instruments of the National Government that, if eligible, have not been filed for exchange within the framework of the restructuration of the Argentine debt, shall constitute provisions for devaluation risk amounting to 100% of the book value. Communication “A” 4352. CREFI - 2 - 44. (05.18.05). The Central Bank included in the Rules regulating the “Setting up of premises intended for the rendering of certain services” the activities of opening and operation of savings accounts and fixed-term deposits (making, renewal and cancellation), provided they are intended exclusively for the beneficiaries of social security benefits collecting their pensions at the relevant premises and at the beneficiaries’ option. Communication “A” 4353. RUNOR - 1 - 734. (05.24.05). Through this rule, the Central Bank made a series of amendments to the ordered text of the rules governing the Prevention of Money Laundering and other Illegal Activities and Terrorism Financing. In such sense, particular importance was given to remedies and measures that the institutions shall apply in order to comply with the policy internationally known as “know your client”.

Likewise, a distinction was drawn between regular clients (those with whom the institution has a permanent relationship) and occasional clients (those conducting one-time transactions

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or occasional transactions, it being understood that this is the case where no sight accounts are held at the institution). Also, a series of identification requirements were defined, which shall be complied with by individuals and/or legal persons. On the other hand, this Communication set forth the obligation to create a “Control and Prevention of Money Laundering Committee”, which shall be in charge of planning, coordinating and taking care of compliance with policies set forth and approved by the Board of Directors or by the highest country authority in charge of branches of foreign financial institutions

Communication “B” 8474. (05.20.05). The Central Bank reversed the authorization granted to the Argentine branch of Lloyds TSB Bank plc to operate as retail commercial bank. Communication “A” 4354. CAMEX - 1 - 520. (05.26.05). The Central Bank regulated the Resolution 292/05 issued by the Ministry of Economy and Production, through which the minimum term of permanence of funds entering the country was extended from 180 to 365 days, amending exchange rules effective as of 05.26.05 included. Communication “A” 4359. CAMEX - 1 - 522. (06.10.05). By virtue of the provisions of Decree 616/05, which makes the treatment of speculative funds harsher, the Central Bank regulated such Decree. Among some of the items included in the Communication, and in relation to the reserve provided by the above mentioned decree, it was set forth that deposits shall be constituted in US Dollars for 30% of the equivalent amount in such currency of the total amount of the operation that gave rise to the constitution of the deposit. In the event of income in foreign currencies other than the US Dollar, the types of repos at the exchange market closing quoted by Banco Nación on the business day immediately before the date of constitution shall be taken into account. On the other hand, it was set forth that events of noncompliance detected by institutions authorized to operate in changes to these measures shall be reported by means of a note addressed to the Central Bank's Non-Financial Institutions Control Management within 5 business days following the acknowledgement of the relevant events, in order to initiate the relevant action.

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Communication "A" 4360. OPASI - 2 - 368 and REMON - 1 - 794. (06.10.05). The Central Bank included in the Ordered Text governing “Term Deposits and Investments” the regulations corresponding to special provisions related to the entry of foreign funds set forth in Decree 616/05. Likewise, it was set forth that the mandatory deposit of 30% of foreign currency entering the country shall have a 100% reserve for the rules governing Minimum Cash Requirements. Communication "A" 4361. CAMEX - 1 - 523. (06.13.05). Effective as of 06.14.05, the Central Bank increased from 90 to 120 days the additional term for the effective settlement of foreign currency from goods and services exports. Communication "A" 4363. CAMEX - 1 - 524. (06.16.05). As of 06.16.05, the Central Bank increased from 10% to 15% of the Computable Equity the maximum threshold of the General Exchange Position. Communication "A" 4364. CONAU - 1 - 723. (06.17.05). The Central Bank left without effect the “Reporting Regime of Preliminary Injunctions relating to Decree 1570/01”. Communication "A" 4365. CONAU - 1 - 724. (06.17.05). The Central Bank amended Annex IV of the Minimum Requirements for Financial Institutions’ External Audits, including the obligation of the external auditor to issue a semiannual special report including its conclusion about the verification of the information to be sent by the institutions to the Central Bank, about people in charge of reversals included and their eventual cancellations, in accordance with the relevant regulations, and of those disqualified to operate current accounts under a judicial order due to nonpayment of penalties, or for other legal reasons. Communication "A" 4366. RUNOR - 1 - 735. (06.17.05). Effective for filings made as of 08.22.05, regardless of the period to which they apply, rules governing "Filing of Information to the Central Bank" were amended.

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In such respect, a new identification method was created, referred to as Single Filing Code (Clave Unica de Presentaciones - CUP), which shall be used both for filing fiber-optic-supported information as for those filed through the Internet. Communication “A” 4368. OPASI - 2 - 369, LISOL - 1 - 440 and CREFI - 2 - 45. (06.17.05). The Central Bank modified minimum capital requirements, drawing a difference between location, class and operating volume of the financial institutions. Credit funds compliant with their specific minimum capital requirements (from $100,000 to 1 million Pesos) were excluded.

In such respect, four categories were defined according to the jurisdictions were the institutions are located (the past minimum capital requirement was 10 million Pesos for wholesale commercial banks and 15 million Pesos for the rest of financial institutions):

Category Banks Rest of institutions (except Credit Funds)

-In millions of Pesos- I 25 10 II 14 8 III 12.5 6.5 IV 10 5

Category Jurisdiction I City of Buenos Aires. II Cities of Bahía Blanca (including General Cerri), Mar del Plata (including

Batán), Neuquén (including Plottier) and Río Cuarto. Greater Buenos Aires, Greater Córdoba, Greater Mendoza and Greater Rosario. Provinces of Chubut and Tierra del Fuego.

III Cities of Corrientes, Salta, Santiago del Estero (including La Banda) and Posadas. Greater Resistencia, Greater San Juan and Greater Tucumán (including Tafí Viejo). Provinces of Catamarca, Entre Ríos, La Pampa, La Rioja, Río Negro, San Luis and Santa Cruz. Rest of the following provinces: Buenos Aires, Córdoba, Mendoza, Neuquén, and Santa Fe.

IV Rest of the country. Likewise, the royalty payable to the Central Bank by financial institutions that are not banks (except for Credit Funds) was reduced to $400,000, and the royalty applicable to new banks remained unchanged at $900,000.

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These provisions were applicable for institutions authorized to operate as of 07.01.05, including transformation cases. Meanwhile, financial institutions operating on 06.30.05 shall comply with the minimum capital requirement provided for new institutions in that area, which shall not be more than 15 million Pesos. On the other hand, the opening of commercial bank classification was modified (these banks were previously divided into retail banks, wholesale banks and second-degree banks). The new rule only provided for the existence of first-degree commercial banks (which may conduct lending, borrowing and service transactions) and second-degree commercial banks (which may conduct lending, borrowing and service transactions set forth for first-degree banks, but shall not be able to receive deposits from holders outside the country’s financial sector, except for foreign banks, and they shall be subject to credit risk fractioning ratios provided for by applicable rules).

Last, it was clarified that institutions compliant with wholesale bank features on the issue date of this Communication shall automatically operate as first-degree commercial banks. Communication "A" 4369. CAMEX - 1 - 525. (06.21.05). The Central Bank modified the rules governing the General Exchange Position. In such respect, it set forth that the minimum threshold shall be increased to 5 million US Dollars if the financial institutions conduct exchange transactions with 15 or more branches. Additionally, and cumulatively, this threshold shall be increased up to a maximum equivalent to 2 million US Dollars for foreign currency holdings in bills not corresponding to US Dollars and/or Euros; to a maximum of 1 million US Dollars for checks drawn against foreign banks purchased from third parties, outstanding crediting in corresponding bank accounts; and up to a maximum equivalent to 3 million US Dollars for the balance of US Dollar or Euro bills transferred to the United States Federal Reserve or to the European Central Bank, pending crediting after 72 hours as of the date of shipment thereof. Communication "A" 4372. CAMEX - 1 - 526. (06.23.05). Effective as of 06.24.05 included, the Central Bank provided for that access to the Single Free Exchange Market to make payments for purchases of consumer and end-user goods shall be prior to the date of dispatch of such goods.

Communication "A" 4375. CAMEX - 1 - 527. (06.28.05). The Central Bank extended from 06.30.05 to 12.31.05 included, the effectiveness of the transactions provided for by Communication “A” 3998, and supplementary communications, whereby non-financial private sector’s individuals and legal persons may have access to the Single Free Exchange Market to make portfolio investments abroad, to

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the extent such investments and any rent obtained thereof are intended for the repurchase and/or cancellation of debt services abroad to 03.31.03 restructured as of 08.15.03, on account of bonds, syndicated financial loans, financial loans to foreign banks, other debts with foreign banks, and other direct debts or debts secured by official credit agencies, and to the extent certain conditions are met.

The term for application of funds acquired under such regime was also extended to 12.31.05. Communication "A" 4377. CAMEX - 1 - 529. (06.29.05). By virtue of Resolution 365/05 of the Ministry of Economy and Production, the Central Bank modified the list of transactions bound to constitute a 30% deposit as published in Decree 616/05 and supplementary rules, and incorporated those transactions excepted thereof. Communication "A" 4378. RUNOR - 1 - 738. (07.05.05). The Central Bank provided for that those financial institutions, which in turn shall appoint an office in charge to receive customers’ claims, shall be in charge of receiving and taking care of filings transferred to or filed with them by the Central Bank and by other national, provincial or local entities regarding customer service. The rule also made clear that institutions shall made visible to the general public at their branches signs announcing the existence of the customer service, indicating the names of persons in charge of claims and data necessary to contact them in person or in writing. The customer service should be available to users as of September 1, 2005. Communication "A" 4380. CONAU - 1 - 729. (07.06.05). The Central Bank withdrew the Reporting Regime “Authorized Accounts”. Communication "A" 4381. CONAU - 1 - 730 and LISOL - 1 - 441. (07.07.05). The valuation criteria to be adopted by financial institutions for “Quasipar Bonds maturing in December 2045” and for the corresponding “Negotiable instruments related to the GDP” issued under the conditions set forth by Decree 1735/04, which were received in the framework of the debt restructuration. In such respect, the Central Bank made clear that, until there is not a market quote, they shall be recorded at their current value considering fund flow (interest and amortization)

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under contractual conditions set forth and at a rate reflecting the simple mean of internal rates of return of “Par Bonds” and of “Discount Bonds” in Pesos, calculated using the last quote registered each month at closing in national institutionalized markets.

Estimates of the future evolution of CER or returns expected due to GDP growth shall not be considered for the valuation of these bonds. Last, it was defined that the resulting amount shall be compared to the book value of instruments delivered in exchange, and the difference that may arise shall be registered as income.

Communication "A" 4382. CREFI - 2 - 46. (07.07.05). In relation to the authorization to be obtained by financial institutions to set up branches in the country and abroad, it was set forth that the Central Bank shall not only weigh the characteristics of each project in order to make a decision as to time and convenience of accepting such request, but also shall verify the complete compliance of requirements to be complied with by banks to such effect and shall analyze aspects such as consistency of the project with the business plan filed by the institution in accordance with the Central Bank’s policies prone to a greater bancarization of the population, specially in areas with scarce or insufficient financial services. On the other hand, as it refers to transfer and closing of branches in the country, it was set forth that the transfer of a branch to a lower-category jurisdiction, in relation to the category where it is currently operating, or within the same city or location, may be carried out prior communication sent to the Superintendence of Financial and Exchange Institutions and, for the rest of the cases, the transfer of branches shall be subject to the prior authorization by the Central Bank, which shall take into account the characteristics of each project.

Last, the Central Bank pointed out that institutions that, at the date of publication of this communication have branches pending relocation by virtue of authorizations timely granted by the Central Bank, shall have an available term until 06.30.06 to set up such branches, save they have a longer term expressly stated that, therefore, shall apply.

Communication "A" 4383. RUNOR - 1 - 739. (07.07.05). The Central Bank modified the rules governing "Prevention of Money Laundering and Other Illegal Activities" as regards the Control and Prevention of Money Laundering Committee, which shall be composed by at least two members of the Board of Directors, as applicable, and by the officer in charge of the relevant area. Through this Communication it was provided for that, in the case of exchange entities whose bylaws or corporate charters provide for the creation of the board of directors with a number of members insufficient to comply with the requirement mentioned above, such

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Committee may be created and composed by one member from such body and the officer in charge. Likewise, the effective date applicable to amendments introduced by Communication "A" 4353 to subsection 1.7. "Maintenance of a database" of Section 1 of the rules above mentioned was extended until 08.01.05, and it was set forth that one of the obligations of financial institutions was the maintenance of a database including data both from regular customers as of occasional customers carrying out transactions -considered individually- for amounts equal to or higher than $30,000 or its equivalent in other currencies. Communication "B" 8508. (07.07.05). By virtue of the provisions of section 24 of Decree 1218/04, the Central Bank set forth that the financial institutions should require, as of 07.18.05 and at least for a year, the filing of a certificate of compliance with the National Economic Census 2004-2005 in order to conduct the following transactions: opening of deposit accounts and of any other kind of accounts implying fund raising; granting of credits and their respective renewals; opening of documentary credits; opening of custody accounts; granting of bonds and securities loans and rental of safe boxes.

Communication "A" 4384. RUNOR - 1 - 740. (07.08.05). The Central Bank made clear that whenever in compliance with a Resolution issued by the Ministry of Foreign Affairs, International Trade and Religion, in reference to decisions made by the United Nations Security Council in the war against terrorism, funds and other property pertaining to any individuals or entities sanctioned by the respective institutions should be blocked, financial institutions shall immediately notify the competent Federal Court as to Criminal and Correctional Matters, and made them available thereto, to the extent no different destination has been expressly provided for by the said International Council.

Communication "A" 4388. REMON - 1 - 795. (07.15.05). Effective as of 07.01.05, the Central Bank modified the minimum cash requirement for sight and term deposits made in Pesos under Court order with funds arising from cases at issue, and for their fixed balances. In this sense, the requirement mentioned was reduced in 2 percentage points (from 10% to 8%). As regards the minimum cash requirement for these foreign currency transactions, it remained unchanged at 15%.

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Press Release Number 48,309. (07.19.05). The Central Bank reported that, on 07.22.05, the Uniform Federal Compensation (Compensación Federal Uniforme - CFU) will be operational. This Compensation shall make the electronic compensation available to the entire national territory in a unique 48-hour term. This measure will be applicable for written instruments (checks and money orders) under $5,000.

Likewise, the amount of checks subject to trunking at the depositor institution was raised to $5,000, too, and the system was extended to the entire country. Both measures are part of an improvement program, which was made effective on 11.02.04 through a Letter Agreement signed by the President of the Central Bank and by incumbent members of Bank Associations.

Communication "A" 4390. CAMEX - 1 - 532. (07.19.05). The Central Bank amended subsection 3 of Communication “A” 4349, which set forth that obligations abroad without maturity date shall be deemed due and payable debts as of 180 calendar days following the date of their issue. This remained unchanged, but, regarding this point, it was made clear that, in the case of debts for import of goods, due and unpaid transactions shall not be considered, to the extent the 180-calendary day term as of the date of shipment has not elapsed. Communication "A" 4393. REMON - 1 - 796. (07.25.05). Effective as of June 2005, the Central Bank incorporated to the foreign currency reserve remuneration calculation base special guarantee accounts in favor of electronic clearing houses and for the coverage of ATM transactions settlement. Deposits created under Decree 616/05, related to the entry of funds from abroad, were excluded from such base. Communication "A" 4395. OPRAC - 1 - 585. (07.29.05). The Central Bank left without effect the possibility for financial institutions to apply foreign currency deposits’ borrowing capacity to the acquisition of Central Bank bonds in US Dollars.

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Communication "A" 4399. REMON - 1 - 797. (08.05.05). As of 08.08.05, the Central Bank implemented a new repos modality, under which it shall accept repos transactions at each day business closing, applying LEBACs in Pesos subject to a series of conditions. Communication "A" 4401. RUNOR - 1 - 743. (08.12.05). The effective date of amendments introduced by Communication "A" 4353 to subsection 1.7 "Maintenance of a database" of section 1 of rules governing "Prevention of Money Laundering and Other Illegal Activities" was extended until 10.01.05. This last Communication had amended subsection 1.7. of the above referred rules setting forth that one obligation of financial institutions was the maintenance of a database including information both of regular and occasional customers conducting transactions -considered individually- for amounts equal to or higher than $30,000 -or its equivalent in other currencies. Communication "A" 4402. LISOL - 1 - 442. (08.12.05). The Central Bank extended until 12.31.08 the possibility of not computing preliminary judicial injunctions (amparos) in the Fixed Asset Technical Ratio. Communication "A" 4405. REMON - 1 - 799. (08.16.05). As of 09.01.05, the Central Bank amended the rules governing “Minimum Cash Requirements” and increased the carry forward from 10% to 20%. Communication "A" 4406. REMON - 1 - 800. (08.17.05). Effective as of 08.17.05, the Central Bank left without effect the provision of rules governing “Minimum Cash Requirements” relating to the 100% requirement to be met by sight deposits that, at least, must constitute the assets of unit trusts (according to the Rules of the National Exchange Commission).

Communication "A" 4415. CAMEX - 1 - 535. (09.08.05). The Central Bank provided for a series of requirements governing entry to the local market of advance payments of customers and goods export prefinancing: on the one hand, it was determined that these transactions should have an effective contract or purchase order and,

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on the other hand, a term was set to carry out the shipment intended for new transactions entering as of 09.09.05.

Communication "A" 4416. CONAU - 1 - 738. (09.09.05). The obligation of maintaining a database of “Prevention of Money Laundering and Other Illegal Activities”, which shall contain data of customers conducting repos with financial institutions, was incorporated. Communication "A" 4420. CAMEX - 1 - 536. (09.15.05). As of 09.16.05 included, the Central Bank admitted the application of foreign currency collections on account of exports of goods to the payment of capital and interest of new financial debts for: i) issue of bonds abroad, ii) financial loans from international entities, official credit agencies, multilateral banks and other foreign banks, and iii) foreign currency debts to local financial institutions funded in foreign lines of credit, or in other sources of financing of local institutions where specifically allowed by applicable rules, to the extent a series of requirements are met.

The obligation to constitute a 30% deposit according to Decree 616/05 and supplementary rules shall not apply to foreign financing transactions incorporated to this type of operations. Communication "A" 4421. CREFI - 2 - 47, LISOL - 1 - 443, OPASI - 2 - 370, OPRAC - 1 - 586, REMON - 1 - 801 and RUNOR - 1 - 751. (09.23.05). The Central Bank modified the rules applicable to cooperative credit funds, and flexibilized certain aspects thereof. The main amendments were as follows:

• The interest that public utilities cooperatives may have in credit fund capital was

increased. The criteria setting forth that this interest must be higher than that of the other associates was maintained but, different from the rule previously in force, the participation of other types of cooperatives was admitted.

• The capital interest of cooperatives inversely related to the population was set forth at 10% for more populated areas.

• It was admitted that the interest of public utilities cooperatives in credit funds may reach 50% in the case of cooperatives located in districts or departments having not more than 40,000 inhabitants. In the case of cooperatives having a different purpose (consumption, agricultural, etc.), the interest may be up to 25% of the institution’s equity for this same number of inhabitants.

• To the extent the institution meets the minimum capital requirement, it shall no longer be mandatory that each associate pays in the capital at the time of subscription, except in the case of cooperatives, which must pay in all the subscribed capital.

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• The maximum amount of term deposits was increased from $12,000 to $20,000. • The margin available for credit funds to grant financing with lump sum payment upon

maturity or in non-periodic installments was increased. An increasing threshold scheme was provided for according to the time the credit fund has been active. These thresholds, for the total portfolio of this type of loans, amount to an approximate maximum amount of 30% of the institution’s equity during the first year, up to reaching a maximum amount of 100% in the fourth year.

• With an increasing scheme over time, the threshold for loans credited in sight accounts was increased up to 200% of the institution’s equity in the fourth year.

• The prohibition to install ATMs was repealed. • Experience requirements to be met by the members of the Direction Committee were

flexibilized. • Terms for filing the information required for the granting and assessment of the credit

fund opening project were extended. • The approval of a simplified reporting regime was provided for.

Communication "A" 4424. RUNOR - 1 - 753. (10.06.05). The Central Bank extended until 01.01.06 the effective date of amendments introduced by Communication "A" 4353, as amended, to subsection 1.7 "Maintenance of a database” of section 1 of the rules governing "Prevention of Money Laundering and Other Illegal Activities". This last Communication had amended subsection 1.7. of the above mentioned rules setting forth that financial institutions were bound to maintain a database including information both from regular as from occasional clients carrying out transactions -considered individually- for amounts equal to or higher than $30,000 -or its equivalent in other currencies. Likewise, Communication “A” 4424 amended the manner in which transactions to be included in such database shall be accumulated.

Communication "A" 4425. RUNOR - 1 - 754. (10.06.05). Through this Communication, new control requirements for the Prevention of Terrorism Financing were set forth, among which the obligation to consult the lists of individuals or organizations suspected of being related to terrorist acts, prepared by the European Union, the United States, and Canada should be highlighted.

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Communication "B" 8576. (10.12.05). As of 10.12.05, companies devoted to transportation of monies and securities may withhold Argentine Pesos and US Dollar bills presumably forged presented by customers, giving to such customers the same treatment as that given by Institutions included in the Financial Institutions Act. Communication "A" 4427. CAMEX - 1 - 537. (10.17.05). Effective as of 06.29.05, the Central Bank excepted foreign financing funds created and repaid within a mean life of at least two years from the constitution of the 30% deposit set forth by Decree 616/05 and supplementary rules, including in the calculation of such funds payments on account of capital and interest, made by foundations and civil organizations, to the extent they comply with a series of conditions set forth in the Communication.

Communication "C" 43,457. (11.03.05). According to the provisions of section 1 of Decree 1361/05, the Central Bank reported that 11.04.05 shall be a holiday for financial institutions' branches located in the city of Mar del Plata. Communication "A"4429. RUNOR - 1 - 756. (10.25.05). The Central Bank made clear that officers in charge of receiving customer claims shall not be bound to meet the requirements related to judicial or administrative actions legally provided for, if by virtue of the internal procedure set forth by the institution they should be solved in other areas. Likewise, it was mentioned that, according to internal procedures implemented by financial institutions for claims and questions, other officers in charge may be appointed per branch or per area.

Communication "A" 4433. CAMEX - 1 - 539. (10.28.05). Effective as of 11.01.05, the Central Bank amended Communication “A” 4308, setting forth that foreign currency net purchases or sales at the Single Free Exchange Market carried out by financial institutions as a consequence of transactions with securities carried out in self-regulated Stock Exchanges and Securities Exchanges, during the last three calendar months and during the first three statistical weeks of each month (7, 15, and 23), shall not be higher than 5% of the Computable Equity measured in US Dollars at the reference exchange rate considered to determine the maximum threshold of the General Exchange Position.

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Communication "A" 4438. CONAU - 1 - 745. (11.17.05). The product “Products Package” was included in the Transparency Monthly Accounting Reporting Regime, which was effective as of reporting corresponding to the month of November of 2005. Communication "A" 4439. CONAU - 1 - 746 and LISOL - 1 - 444. (11.17.05). It was set forth that, as of December 2005, the monthly amortization of active amounts according to the provisions of subsections 1 and 2 of Communication “A” 3916 may be deferred for the granting of new long-term loans, in accordance with the procedure set forth in the Communication. Institutions may have access to this benefit only to the extent they grant new loans to non-financial private sector commercial portfolio customers, with a mean term of 2 years upon granting thereof, whichever the purpose and modality of instrumentation, excluding holdings of instruments issued by financial trusts. The mechanism allows deferring the accounting of losses for exchange differences registered on the institutions balance sheets for an amount equivalent to 50% of new commercial loans. It was provided for as a requirement that the institution shall not reduce the total amount of the rest of its commercial portfolio. Only financing actually disbursed shall be considered. In this framework, also portfolio purchases compliant with the minimum two-year term at the time of the purchase transaction may be computed.

Communication "A" 4443. CAMEX - 1 - 541. (11.22.05). Effective as of 11.24.05 included, the Central Bank amended Communication “A” 4415 regarding rules and regulations applicable to export advance payments and prefinancing income, and the most relevant amendments were as follows: • It was introduced the possibility of using, within certain indebtedness thresholds,

records of securities exported during the last twelve months by the exporter as an alternative to the obligation to demonstrate that there are contracts and purchase orders to secure indebtedness.

• If the exporter chooses this alternative, his indebtedness on account of advance payments and prefinancing shall not be higher than 25% of the amount exported during the last twelve months, if the term of shipment is less than 365 days.

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• If the term of shipment is 365 days or more, the indebtedness threshold shall be extended to six months of exports mean during the last twelve months.

• Maximum terms for the shipment of goods whose collection allows repaying financing received by the exporter were extended.

• A new category was created for exports of some regional economy products. The term set forth for these products (365 days) includes financing granting by exporters to local micro-producers throughout the production campaign.

• The extension of terms for causes not ascribable to the exporter was also contemplated, such as: union conflicts, natural disasters, warehouse problems or, in cases such as that of fishing, closed seasons.

• It was provided a special treatment for transactions carried out within the framework of granting of medium- and long-term foreign lines of credit.

• In order that the exporter may continue receiving advance payment and prefinancing financing inflow, it was included the condition that the exporter shall not incur any delays in his shipments regarding the maximum term.

• For new exchange income on account of prefinancing registered as of 03.01.06, it was set forth the requirement that -within the previous 60 calendar days- the exporter must not have made advance payments or prefinancing through any mechanism other than the application of foreign currency corresponding to shipments carried out by the exporter.

• The debt qualification as “commercial transaction” was maintained, even though there are delays in shipments, provided it is paid with foreign currency from export collections.

• The conversion of advance payments or prefinancing transactions not cancelled applying foreign currency obtained from shipments to financial loans was maintained.

• In these cases, exchange rules in force corresponding to financial loans shall apply, including the constitution of the non-interest-bearing one-year term deposit amounting to 30% of foreign currency received.

Communication "A" 4447. CAMEX - 1 - 542. (11.30.05). The Central Bank excepted the constitution of the 30% deposit provided for by Decree 616/05 and supplementary rules to entry of foreign currency corresponding to direct investment contributions in the country and to sales of interests in local companies to direct investors, to the extent there is enough documentation to verify two points: the final capitalization of the capital contribution, and the purchase of the capital share paid with funds arising from the exchange settlement through the relevant contract.

In the event of not having both supporting documents available at the time of the exchange transaction, the said deposit shall be constituted, which may be released 365 days after its constitution or upon filing of recording documents above mentioned.

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Communication "A" 4449. REMON - 1 - 802. (12.02.05). Effective as of 12.01.05, the Central Bank provided for a one-percent decrease of the minimum cash requirement applicable to sight deposits in Pesos, and a two-percent decrease for fixed-term deposits in Pesos.

Likewise, minimum cash requirements corresponding to December, January, and February were unified. Communication "A" 4450. REMON - 1 - 803. (12.02.05). The Central Bank classified reverse repos purchase transactions into spot and term transactions. In the case of spot transactions, guidelines applicable regarding the time of execution remained unchanged, that is, LEBAC debit from the institution's “own portfolio” CRYL account shall be carried out between 5:30 p.m. and 7 p.m. On the other hand, in the case of repos purchase term transactions, the debit shall be carried out as of 1 p.m. and until 3 p.m. Last, the time of closing for crediting of one-day term repos was changed from 12 a.m. to 11 a.m. of the business day following the date of the transaction.

Communication "A"4451. CONAU - 1 - 749 and LISOL - 1 - 445. (12.05.05). For the purposes of the valuation of “Discount Bonds” and of the corresponding “Negotiable instruments tied to the GDP”, the Central Bank set forth that, apart from reducing the amount of services collected (without computing interest or accrued updates), it shall be reduced in amounts collected for the sale of the corresponding “Negotiable instruments tied to the GDP”, or, as the case may be, for the collection of the respective services, if any.

In addition, and in relation to the valuation of Quasipar Bonds and the corresponding “Negotiable instruments tied to the GDP”, it was provided for that, as of the time the “Negotiable instruments tied to the GDP” are negotiated independently, they be registered at the market value.

Communication "A" 4453. OPRAC - 1 - 588 and LISOL - 1 - 446. (12.09.05). The Central Bank accepted that financial institutions apply the loanable capacity of foreign currency deposits to the granting of financing to commercial portfolio customers and to commercial customers receiving the treatment of consumption or home loans, whose purpose is the import of capital goods, increasing the production of goods intended for the domestic market.

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To the effects of the granting of such financing, institutions shall verify that customers have a sufficient payment capacity, which shall be measured taking into account at least two scenarios contemplating significant variations in the exchange rate of various magnitude within a maximum term of one year, higher than the last estimate available arising from the Market Expectations Survey (Relevamiento de Expectativas de Mercado - REM) published by the Central Bank.

Communication "A" 4454. CAMEX - 1 - 543. (12.09.05). As of 01.06.06, the Central Bank shall start operating in the Electronic Open Market’s Compensated Term Transactions (Operaciones Compensadas a Término del Mercado Abierto Electrónico - OCT-MAE) market, bilaterally purchasing and selling to authorized financial institutions underlying assets to be settled without being physically delivered, through the payment in Pesos of a quote difference. This new transaction method shall allow the execution of hedging agreements for up to one-year term, settled for the difference in Pesos, and shall require guarantees granted by financial institutions. Communication "A" 4455. LISOL - 1 - 447 and CONAU - 1 - 750. (12.12.05). The Central Bank set forth that, as of 12.01.05, institutions registering surplus to credit risk fractioning thresholds for non-financial public sector financing arising from transactions existing before 03.31.03 and/or from transactions carried out after such date and expressly admitted, may conduct transactions -purchase and sale or intermediation transactions- with national public bonds susceptible of complying with the minimum capital requirement for market risk, that, is, with the volatility informed by the Central Bank, without being bound to reduce the surplus.

The admitted margin shall not be higher that the equivalent to 15% of the Computable Equity of the last day of the month prior to the relevant month.

Communication "A" 4457. RUNOR - 1 - 764. (12.19.05). The instructions for the preparation of the Database of the Reporting Regime of Money Laundering and Other Illegal Activities (Base de Datos del Régimen Informativo de Prevención de Lavado de Activos y Otras Actividades Delictivas - LAVDIN) that institutions shall maintain available to the Central Bank were issued.

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Communication "C" 43,915. (12.22.05). The Central Bank communicated the holidays to be observed by financial institutions during the year 2006.

Communication "A" 4459. RUNOR - 1 - 766. (12.26.05).

The Central Bank made amendments to the ordered texts on Prevention of Money Laundering and Financing of Terrorism. Among the amendments introduced, it should be highlighted the amendment that sets forth that accounts for crediting of compensation related to the payment of social programs, it shall only be necessary the receipt and analysis of the information provided by employers and by competent national, provincial or local entities, respectively, to the extent the amount of the loans is not higher than $30,000 per month. On the other hand, one of the identification requirements of occasional customers was limited. Previously, occasional customers had to provide their name, Identity Document, and domicile, and a description of their main activity; now, these data shall only be required for transactions higher than $1,000. Likewise, another additional requirement was included in the case of individual or cumulative exchange transactions that, within a given month, are higher than $30,000 (with delivery of cash). From now on, a sworn statement on the legality and origin of the funds with the relevant supporting documents and/or information supporting the stated origin of the funds shall be required. Another change refers to a new requirement included in the subsection “Funds from other institutions”, according to which whenever these funds are from countries qualified as low or zero tax countries, the ordering foreign institution shall be required an express statement of compliance with the verification of the “know your customer” principle. Communication "A" 4460. REMON - 1 - 804. (12.27.05).

The Central Bank modified the time for term purchases for the closing of repos of transactions carried out at REPO rounds. The crediting of Pesos in institution’s accounts shall be carried out at 11 a.m. on the maturity date.

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Communication "A" 4461. CAMEX - 1 - 544. (12.29.05). The Central Bank extended from 12.3.05 to 06.30.06 included the effectiveness of the transactions provided for in Communication “A” 3998 and supplementary communications, also extending up to such date the term for application of funds acquired under such regime, whereby non-financial private sector individuals and legal persons may have access to the Single Free Exchange Market for the constitution of portfolio investments abroad, to the extent these investments and the rents obtained thereof shall be intended for the repurchase and/or payment of debt services abroad until 03.31.03 restructured as of 08.15.03, on account of securities, syndicated financial loans, financial loans with foreign banks, other debts to foreign banks, and other direct debts or debts secured by official credit agencies, to the extent certain conditions are met. Communication "A" 4464. OPASI - 2 - 371. (12.30.05). In relation to the rules governing “Regulations of the current account”, the Central Bank reported that it extended until 2.31.06 the limitation on check endorsements. Communication "A"4465. LISOL - 1 - 448 y OPRAC - 1 - 589. (12.30.05). In relation to the regulatory treatment of guarantees for domestic funds, ordered texts were updated in order to consider as “A” preferred guarantee those surety granted by domestic insurance funds. Likewise, it was made clear that they are subject to the treatment mentioned in the Insurance Fund for the Micro-, Small- and Medium-Sized Company (Micro, Pequeña y Mediana Empresa - FoGaPyME), Act Number 25,300, subject to the compliance with the requirements set forth in the rules governing “Mutual Guarantee Companies (Section 80 of Act Number 24,467)” for those companies recorded in the relevant registry open at the Superintendence of Financial and Exchange Institutions. Communication "A" 4466. RUNOR - 1 - 767. (12.30.05). The Central Bank informed that it approved the recording of the risk rating agency Evaluadora Latinoamericana S.A. Calificadora de Riesgo in the Central Bank’s registry in order to participate in the assessment of assets referred to in rules governing "Investments made with resources from retirement and pension funds. Asset Rating".

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Communication "A" 4467. LISOL - 1 - 449. (12.30.05). The Central Bank amended the Rules Governing Debtors Rating, Credit Rating and Minimum Capital Requirements for Uncollectibility Risk. In this sense, the main amendments were the following: • The possibility that commercial portfolio debtors that, since 06.30.02, have executed

payment agreements resulting from authorized judicial or extrajudicial agreements with creditors, or private arrangements executed jointly with creditor financial institutions, or private arrangements with the financial institution, may be reclassified to a normal situation, provided they have the prior approval from the Board of Directors or equivalent authority, was extended until 06.30.06.

• The possibility that credit assistance implying new fund disbursements higher than 300% of the customer’s RPC, provided it has the prior approval from the Board of Directors or equivalent authority, was extended until 06.30.06.

• The exclusion of Compensatory Bonds or Notes received according to sections 28 and 29 of Decree 905/02, as amended, for the purposes of determining the risk concentration ratio of rules governing Credit Risk Fractioning (which cannot be higher than 10% of the institution’s RPC), was extended until 12.31.08.

• Regarding refinancing of debts agreed upon or to be agreed upon corresponding to commercial portfolio debtors in which capital reductions are carried out, the criteria of reducing the minimum capital requirement for uncollectibility risk to the amount of the debt reduction, rating the debtor in the superior-level category corresponding to the resulting provision, was made permanent, provided the remaining conditions set forth for this category are met.

memoria anual 2005

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