FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November, 2005
Commission File Number: 001-12568
BBVA FRENCH BANK S.A.
(Translation of registrants name into English)
Reconquista 199, 1006
Buenos Aires, Argentina
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes No X
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes No X
Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
TABLE OF CONTENTS
Item |
||
1. | Financial Statements as of September 30, 2005 together with Independent Accountants Limited Review Report |
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 TOGETHER WITH INDEPENDENT ACCOUNTANTS LIMITED REVIEW REPORT |
BALANCE SHEETS AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
09-30-2005 |
12-31-2004 | |||
ASSETS |
||||
CASH AND DUE FROM BANKS |
||||
Cash |
446,802 | 414,492 | ||
Due from banks and correspondents |
1,627,271 | 1,208,591 | ||
2,074,073 | 1,623,083 | |||
GOVERNMENT AND PRIVATE SECURITIES |
||||
Holdings in investment accounts (Exhibit A) |
644,871 | 729,084 | ||
Holdings for trading or financial transactions (Exhibit A) |
8,916 | 10,297 | ||
Unlisted Government Securities (Exhibit A) |
87,767 | 492,272 | ||
Instruments issued by the Argentine Central Bank (BCRA) (Exhibit A) |
942,204 | 740,747 | ||
Investments in listed private securities (Exhibit A) |
4,043 | 291 | ||
Less: Allowances (Exhibit J) |
| 55,325 | ||
1,687,801 | 1,917,366 | |||
LOANS |
||||
To government sector (Exhibits B, C and D) |
4,599,448 | 6,084,704 | ||
To financial sector (Exhibits B, C and D) |
153,885 | 60,732 | ||
To non financial private sector and residents abroad (Exhibits B, C and D) |
3,336,443 | 2,290,968 | ||
Overdraft |
588,449 | 271,841 | ||
Discounted instruments |
465,023 | 251,332 | ||
Real estate mortgage |
384,324 | 400,585 | ||
Collateral Loans |
9,119 | 6,967 | ||
Consumer |
222,401 | 137,396 | ||
Credit cards |
422,703 | 354,451 | ||
Other |
1,339,579 | 957,127 | ||
Interest and listed-price differences accrued and pending collection |
31,525 | 23,787 | ||
Less: unused collections |
124,755 | 111,594 | ||
Less: Interest documented together with main obligation |
1,925 | 924 | ||
Less: Difference arising from purchase of portfolio |
86 | 88 | ||
Less: Allowances (Exhibit J) |
114,589 | 118,796 | ||
7,975,101 | 8,317,520 | |||
OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS |
||||
BCRA |
293,255 | 325,593 | ||
Amounts receivable for spot and forward sales pending settlement |
140,942 | 380,778 | ||
Instruments to be received for spot and forward purchases pending settlement |
150,926 | 18,486 | ||
Unlisted corporate bonds (Exhibits B, C and D) |
79,121 | 99,691 | ||
Non-deliverable forward transactions balances pending settlement |
50 | | ||
Other receivables not covered by debtor classification regulations |
139,101 | 18,043 | ||
Other receivables covered by debtor classification regulations (Exhibits B, C and D) |
16,879 | 12,841 | ||
Interest accrued and pending collection not covered by debtor classification regulations |
112,604 | 90,764 | ||
Interest accrued and pending collection covered by debtor classification regulations (Exhibits B, C and D) |
2,465 | 2,121 | ||
Less: Allowances (Exhibit J) |
10,953 | 12,757 | ||
924,390 | 935,560 | |||
ASSETS SUBJECT TO FINANCIAL LEASING |
||||
Assets subject to financial leasing (Exhibits B, C and D) |
104,243 | 57,413 | ||
Less: Allowances (Exhibit J) |
1,565 | 1,162 | ||
102,678 | 56,251 | |||
INVESTMENTS IN OTHER COMPANIES |
||||
In financial institutions (Exhibit E) |
51,095 | 46,750 | ||
Other (Note 5) (Exhibit E) |
288,708 | 270,648 | ||
Less: Allowances (Exhibit J) |
11,470 | 11,711 | ||
328,333 | 305,687 | |||
OTHER RECEIVABLES |
||||
Receivables from sale of property assets (Exhibits B, C and D) |
2,449 | 2,999 | ||
Other (Note 5) |
355,727 | 214,702 | ||
Tax on minimum presumed income Tax Credit |
113,331 | 92,631 | ||
Interest accrued and pending collection on receivables from sale of property assets (Exhibits B, C, and D) |
73 | 56 | ||
Other accrued interest receivable |
1 | 2 | ||
Less: Allowances (Exhibit J) |
279,100 | 153,423 | ||
192,481 | 156,967 | |||
PREMISES AND EQUIPMENT (Exhibit F) |
347,594 | 351,041 | ||
OTHER ASSETS (Exhibit F) |
62,652 | 95,277 | ||
INTANGIBLE ASSETS (Exhibit G) |
||||
Goodwill |
27,116 | 32,088 | ||
Organization and development expenses |
634,856 | 769,119 | ||
661,972 | 801,207 | |||
SUSPENSE ITEMS |
948 | 1,210 | ||
TOTAL ASSETS |
14,358,023 | 14,561,169 | ||
(Contd.)
BALANCE SHEETS AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
09-30-2005 |
12-31-2004 | |||
LIABILITIES |
||||
DEPOSITS (Exhibits H and I) |
||||
Government sector |
155,868 | 198,593 | ||
Financial sector |
26,298 | 22,879 | ||
Non financial private sector and residents abroad |
10,649,815 | 8,973,015 | ||
Checking accounts |
1,960,839 | 1,655,905 | ||
Savings deposits |
2,814,519 | 2,369,164 | ||
Time deposits |
5,066,036 | 4,167,741 | ||
Investments accounts |
213,274 | 159,193 | ||
Other |
493,477 | 383,432 | ||
Interest and listed-price differences accrued payable |
101,670 | 237,580 | ||
10,831,981 | 9,194,487 | |||
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS |
||||
BCRA (Exhibit I) |
97,293 | 1,764,058 | ||
Other |
97,293 | 1,764,058 | ||
Banks and International Institutions (Exhibit I) |
228,347 | 251,005 | ||
Non-subordinated corporate bonds (Exhibit I) |
294,900 | 321,181 | ||
Amounts payable for spot and forward purchases pending settlement |
151,757 | 16,159 | ||
Instruments to be delivered for spot and forward sales pending settlement |
146,099 | 423,051 | ||
Financing received from Argentine financial institutions (Exhibit I) |
95,691 | 2,900 | ||
Non-deliverable forward transactions balances pending settlement |
61 | , | ||
Other (Exhibit I) |
310,024 | 338,785 | ||
Interest and listed-price differences accrued payable (Exhibit I) |
9,481 | 122,049 | ||
1,333,653 | 3,239,188 | |||
OTHER LIABILITIES |
||||
Other (Note 5) |
122,637 | 97,769 | ||
122,637 | 97,769 | |||
ALLOWANCES (Exhibit J) |
277,993 | 232,808 | ||
SUBORDINATED CORPORATE BONDS |
, | 60,307 | ||
SUSPENSE ITEMS |
2,749 | 33,786 | ||
TOTAL LIABILITIES |
12,569,013 | 12,858,345 | ||
STOCKHOLDERS EQUITY (as per the related statements of changes in stockholders equity) |
1,789,010 | 1,702,824 | ||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
14,358,023 | 14,561,169 | ||
MEMORANDUM ACCOUNTS
09-30-2005 |
12-31-2004 | |||||
DEBIT ACCOUNTS |
||||||
Contingent |
||||||
|
Guarantees received | 4,612,870 | 5,218,789 | |||
|
Contra contingent debit accounts | 535,016 | 2,990,328 | |||
5,147,886 | 8,209,117 | |||||
Control |
||||||
|
Receivables classified as irrecoverable | 398,801 | 436,965 | |||
|
Other (Note 5) | 34,481,936 | 29,050,239 | |||
|
Contra control debit accounts | 194,895 | 207,304 | |||
35,075,632 | 29,694,508 | |||||
Derivatives |
||||||
|
Contra debit derivatives accounts | 70,016 | 19,361 | |||
|
Notional amount of non-deliverable forward transactions | 43,632 | 28,173 | |||
113,648 | 47,534 | |||||
For trustee activities |
||||||
|
Funds in trust | 12,879 | 10,758 | |||
12,879 | 10,758 | |||||
TOTAL | 40,350,045 | 37,961,917 | ||||
CREDIT ACCOUNTS |
||||||
Contingent |
||||||
|
Credit lines granted (unused portion) covered by debtor classification regulations (Exhibits B, C and D) | 3,427 | 272,854 | |||
|
Guarantees provided to the BCRA | 72,828 | 2,387,972 | |||
|
Other guarantees given covered by debtor classification regulations (Exhibits B, C and D) | 372,679 | 219,798 | |||
|
Other guarantees given non covered by debtor classification regulations | 62 | , | |||
|
Other covered by debtor classification regulations (Exhibits B, C and D) | 86,020 | 109,704 | |||
|
Contra contingent credit accounts | 4,612,870 | 5,218,789 | |||
5,147,886 | 8,209,117 | |||||
Control | ||||||
|
Items to be credited | 175,045 | 173,837 | |||
|
Other | 19,850 | 33,467 | |||
|
Contra control credit accounts | 34,880,737 | 29,487,204 | |||
35,075,632 | 29,694,508 | |||||
Derivatives | ||||||
|
Notional amount of non-deliverable forward transactions | 70,016 | 19,361 | |||
|
Contra debit derivatives accounts | 43,632 | 28,173 | |||
113,648 | 47,534 | |||||
For trustee activities | ||||||
|
Contra credit accounts for trustee activities | 12,879 | 10,758 | |||
12,879 | 10,758 | |||||
TOTAL | 40,350,045 | 37,961,917 | ||||
The accompanying notes 1 through 17 and exhibits A through L and N are an integral part of these statements.
STATEMENTS OF INCOME FOR THE NINE MONTH PERIODS
ENDED SEPTEMBER 30, 2005 AND 2004
(Translation of financial statements originally issued in Spanish See Note 17)
- Stated in thousands of pesos -
09-30-2005 |
09-30-2004 | |||
FINANCIAL INCOME |
||||
Interest on cash and due from banks |
17,781 | 8,242 | ||
Interest on loans to the financial sector |
5,792 | 648 | ||
Interest on overdraft |
26,865 | 18,198 | ||
Interest on discounted instruments |
14,358 | 7,552 | ||
Interest on real estate mortgage |
31,078 | 33,985 | ||
Interest on collateral loans |
727 | 202 | ||
Interest on credit card loans |
15,393 | 11,433 | ||
Interest on other loans |
89,912 | 59,784 | ||
Interest on other receivables from financial transactions |
6,587 | 4,957 | ||
Income from secured loans - Decree 1387/01 |
164,694 | 148,278 | ||
Net income from government and private securities |
40,852 | 37,911 | ||
Indexation by benchmark stabilization coefficient (CER) |
530,573 | 293,069 | ||
Indexation by salary variation coefficient (CVS) |
| 37,699 | ||
Other |
83,474 | 58,401 | ||
1,028,086 | 720,359 | |||
FINANCIAL EXPENSE |
||||
Interest on checking accounts |
14,835 | 14,649 | ||
Interest on savings deposits |
2,630 | 2,931 | ||
Interest on time deposits |
115,179 | 78,211 | ||
Interest on financing to the financial sector |
626 | 1,085 | ||
Interest on other liabilities from financial transactions |
19,679 | 16,847 | ||
Other interest |
56,968 | 72,805 | ||
Indexation by CER |
258,735 | 132,495 | ||
Other |
22,534 | 36,438 | ||
491,186 | 355,461 | |||
GROSS INTERMEDIATION MARGIN GAIN |
536,900 | 364,898 | ||
ALLOWANCES FOR LOAN LOSSES |
90,153 | 29,960 | ||
SERVICE CHARGE INCOME |
||||
Related to lending transactions |
52,352 | 49,222 | ||
Related to liability transactions |
143,155 | 114,833 | ||
Other commissions |
25,540 | 23,229 | ||
Other (Note 5) |
78,296 | 48,710 | ||
299,343 | 235,994 | |||
SERVICE CHARGE EXPENSE |
||||
Commissions |
33,756 | 23,763 | ||
Other (Note 5) |
14,220 | 11,341 | ||
47,976 | 35,104 | |||
(Contd.)
STATEMENTS OF INCOME FOR THE NINE MONTH PERIODS
ENDED SEPTEMBER 30, 2005 AND 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
09-30-2005 |
09-30-2004 |
||||
ADMINISTRATIVE EXPENSES |
|||||
Payroll expenses |
221,683 | 166,232 | |||
Fees to Bank Directors and Statutory Auditors |
171 | 171 | |||
Other professional fees |
15,504 | 15,425 | |||
Advertising and publicity |
25,296 | 18,155 | |||
Taxes |
10,979 | 10,835 | |||
Other operating expenses (Note 5) |
101,465 | 111,303 | |||
Other |
26,848 | 23,452 | |||
401,946 | 345,573 | ||||
NET GAIN FROM FINANCIAL TRANSACTIONS |
296,168 | 190,255 | |||
OTHER INCOME |
|||||
Income from long-term investments |
23,533 | 35,388 | |||
Punitive interests |
196 | 212 | |||
Loans recovered and reversals of allowances |
55,029 | 393,605 | |||
Other (Note 5) |
141,413 | 10,305 | |||
220,171 | 439,510 | ||||
OTHER EXPENSE |
|||||
Punitive interests and charges paid to BCRA |
47 | 93 | |||
Charge for uncollectibility of other receivables and other allowances |
217,534 | 360,317 | |||
Amortization of difference arising from judicial resolutions |
164,229 | 150,170 | |||
Other |
48,343 | 35,985 | |||
430,153 | 546,565 | ||||
NET GAIN BEFORE INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME |
86,186 | 83,200 | |||
INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME |
| 124,025 | |||
NET INCOME/(LOSS) FOR THE PERIOD |
86,186 | (40,825 | ) | ||
The accompanying notes 1 through 17 and exhibits A through L and N are an integral part of these statements.
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
(Translation of financial statements originally issued in Spanish See Note 17)
- Stated in thousands of pesos
2005 |
2004 |
||||||||||||||||||||||||
Non capitalized contributions |
Retained earnings |
||||||||||||||||||||||||
Movements |
Capital Stock |
Issuance premiums |
Adjustments to stockholders equity (1) |
Legal |
Other |
Unrealized valuation difference (2) |
Retained earnings/(losses) |
Total |
Total |
||||||||||||||||
1. |
Balance at beginning of fiscal year | 471,361 | 1,195,390 | 769,904 | 428,698 | 1,802 | 230,282 | (1,478,985 | ) | 1,618,452 | 1,750,397 | ||||||||||||||
2. |
Adjustment to earnings of prior years (Notes 2.3.k), 2.3.ñ) and 15.1.4) | , | | | | | | 84,372 | 84,372 | (146,135 | ) | ||||||||||||||
3. |
Subtotal | 471,361 | 1,195,390 | 769,904 | 428,698 | 1,802 | 230,282 | (1,394,613 | ) | 1,702,824 | 1,604,262 | ||||||||||||||
4. |
Cumulative losses absorption approved by Stockholders Meeting held on April 28, 2005 (Communication A 4294 as supplemented of the BCRA) | (1,020,258 | ) | (456,925 | ) | | (1,802 | ) | | 1,478,985 | | ||||||||||||||
5. |
Absorption approved by BCRA Resolution N° 52/04 (Note 1.3) | | | | | | | | | (200,000 | ) | ||||||||||||||
6. |
Net income/(loss) for the period | | | | | | | 86,186 | 86,186 | (40,825 | ) | ||||||||||||||
7. |
Balance at the end of the period | 471,361 | 175,132 | 312,979 | 428,698 | | 230,282 | 170,558 | 1,789,010 | 1,363,437 | |||||||||||||||
BALANCE AT THE END OF THE PERIOD
(1) | Adjustments to stockholders equity refer to Adjustment to Capital Stock |
(2) | Including 6,059 related to the participation on the Unrealized valuation difference booked by Rombo Cía.Financiera S.A. |
The accompanying notes 1 through 17 and exhibits A through L and N are an integral part of these statements.
STATEMENTS OF CASH FLOWS FOR THE NINE MONTH PERIODS
ENDED SEPTEMBER 30, 2005 AND 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
09-30-2005 |
09-30-2004 |
|||||
CHANGES IN CASH |
||||||
Cash and due from banks at beginning of fiscal year |
1,623,083 | 1,389,828 | ||||
Increase in cash and due from banks |
450,990 | 322,909 | ||||
Cash and due from banks at end of the period |
2,074,073 | 1,712,737 | ||||
REASONS FOR CHANGES IN CASH |
||||||
Financial income collected |
1,152,973 | 417,042 | ||||
Service charge income collected |
299,305 | 235,784 | ||||
Less: |
||||||
Financial expenses paid |
688,906 | 369,508 | ||||
Service charge expenses paid |
47,976 | 35,104 | ||||
Operating expenses paid |
367,224 | 287,188 | ||||
FUNDS PROVIDED BY / (USED IN) ORDINARY OPERATIONS |
348,172 | (38,974 | ) | |||
OTHER SOURCES OF FUNDS |
||||||
Net increase in deposits (*) |
1,772,486 | 1,031,063 | ||||
Net increase in other liabilities from financial transactions (*) |
, | 24,628 | ||||
Net decrease in government and private securities (**) |
270,417 | 300,165 | ||||
Net decrease in loans (*) |
12,648 | , | ||||
Net decrease in other receivables from financial transactions (**) |
, | 81,764 | ||||
Other sources of funds (**) |
91,794 | 64,285 | ||||
TOTAL OF SOURCES OF FUNDS |
2,147,345 | 1,501,905 | ||||
USE OF FUNDS |
||||||
Net increase in loans (**) |
| 617,618 | ||||
Net increase in other receivables from financial transactions (**) |
22,309 | | ||||
Net increase in other assets (**) |
179,216 | 182,750 | ||||
Net decrease in other liabilities from financial transactions (*) |
1,713,708 | | ||||
Net decrease in other liabilities (*) |
108,079 | 317,588 | ||||
Other uses of funds (*) |
21,215 | 22,066 | ||||
TOTAL USES OF FUNDS |
2,044,527 | 1,140,022 | ||||
INCREASE IN FUNDS |
450,990 | 322,909 | ||||
(*) Variations originated in financing activities. |
(70,516 | ) | 716,037 | |||
(**) Variations originated in investment activities. |
173,334 | (354,154 | ) |
The accompanying notes 1 through 17 and exhibits A through L and N are an integral part of these statements.
- 1 - | ||||
NOTES TO THE FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005, PRESENTED IN
COMPARATIVE FORM WITH THE BALANCE SHEET AS OF DECEMBER 31, 2004, AND
THE STATEMENTS OF INCOME, CHANGES IN STOCKHOLDERS EQUITY AND CASH
FLOWS AS OF SEPTEMBER 30, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
(Stated in thousands of pesos)
1 | CORPORATE SITUATION AND BANKS ACTIVITIES |
1.1 | Corporate situation |
BBVA Banco Francés S.A. (BF) has its main place of business in Buenos Aires and operates a 229-branch network and 35 offices of its affiliate Credilogros Compañía Financiera S.A.
As from December, 1996, BF is part of Banco Bilbao Vizcaya Argentaria S.A. (BBVA) global strategy, which controls the bank, direct and indirectly, with 75.97% corporate stock as of September 30, 2005. BBVA provides technology and support in new products and has upheld BF in the Argentine financial system crisis.
Part of BFs corporate stock is publicly traded and has been registered with the Buenos Aires Stock Exchange, New York Stock Exchange and Madrid Stock Exchange.
1.2 | Capital increase of fiscal year 2004 |
At the Regular and Special Meetings held on April 22, 2004, the stockholders approved the Banks capital increase in the amount of up to 385,000 face value for the subscription of common, book-entry shares, entitled to one vote per share.
The public offering of 103.232.874 ordinary shares of $1,00 par value each, entitled to one vote per share and with equal rights than the remaining shares of the Bank, was authorized by Resolution N. 14.917 of the National Securities Commission (CNV) on October 4, 2004. The stock-market listing of the referred shares has been authorized by the Buenos Aires Stock Exchange on October 7, 2004.
On November 19, 2004, an aggregate of 103,232,874 new shares were issued for a paid-in amount of pesos 364,412,045.22, which resulted in an additional paid-in capital of pesos 261,179,171.12.
Changes in the Banks capital stock during the last 5 fiscal years are as follows:
Total (in thousands) |
||||||||||
Capital Stock as of December 31, 1999: |
209,631 | |||||||||
Date of |
||||||||||
Stockholders Meeting deciding on the issuance |
Registration with the Public Registry of Commerce |
Form of placement |
Amount (in thousands) |
Total (in thousands) |
||||||
08-07-2002 |
02-06-2003 | (1 | ) | 158,497 | 368,128 | (2) | ||||
04-22-2004 |
01-25-2005 | (1 | ) | 103,233 | 471,361 | (2) | ||||
(1) | Through public subscription of shares. |
(2) | The amount of Capital Stock is fully paid in and authorized for public offering by CNV. |
- 2 - | ||||
1.3 | Banco Francés (Cayman) Limited |
Within the framework of the regularization and reorganization plan filed by the Bank with the BCRA, and Resolution No. 52/04 of the Superintendence of Financial and Exchange Institutions, dated March 17, 2004, on March 18, 2004, the Bank sold to BBVA its 100% interest in Banco Francés (Cayman) Limited.
The sale price amounted to US$ 238,462,142, and it was collected through Federal Government secured loans previously purchased by BBVA from Banco Francés (Cayman) Limited. BF has recorded such secured loans in conformity with Communication A 3911 and supplementary regulations. The negative result of the transaction was recorded as follows:
- | 200,000 of the negative result from the transaction was absorbed and charged to the account Unrealized valuation difference under stockholders equity, as authorized by Resolution No. 52/04 of the Superintendence of Financial and Exchange Institutions. |
- | The remaining result, 10,978, was charged to income (loss) for the fiscal year ended December 31, 2004. |
1.4 | Sale of Credilogros Cía. Financiera S.A. |
On March 9, 2005, BF, Inversora Otar S.A. and BBVA sold their aggregate shareholdings in Credilogros Cía Financiera S.A. to Banco de Servicios y Transacciones S.A. and Grupo de Servicios y Transacciones S.A. The amount of the transaction was USD 16,900,000, based on the financial statements as of December 31, 2004. Upon entering into the sale agreement, an advance payment was made for 20% of the price.
The sale agreement as entered into shall be considered duly executed after the approval required from regulatory authorities, still pending as of the date of issuance of these financial statements.
Until the transfer is consummated, Credilogros Cía. Financiera will continue to be managed by BBVA Banco Francés S.A. and the conduct of its business with customers will remain unchanged.
1.5 | Atuel Fideicomisos S.A. and Francés Administradora de Inversiones S.A.: |
On February 3, 2004, the Bank made an irrevocable contribution of capital in its subsidiary Atuel Fideicomisos S.A. for 13,000. This amount was capitalized on that date.
Also, on February 4, 2004, the Bank acquired 5% of the capital stock of Francés Administradora de Inversiones S.A. from Banco Francés (Cayman) Limited amounting to 580, while the remaining 95% was acquired by Atuel Fideicomisos S.A.
1.6 | Responsibility of stockholders |
BBVA Banco Francés S.A. is a corporation established under the laws of the Argentine Republic, and the responsibility of its stockholders is limited to the value of the paid in shares, in accordance with Law No. 19,550. As a result, in compliance with Law No. 25,738, it is hereby informed that neither the foreign capital majority shareholders nor the local or foreign shareholders will respond, in excess of the mentioned paid-in stockholding, for the liabilities arising out of the transactions performed by the financial institution.
- 3 - | ||||
2 | SIGNIFICANT ACCOUNTING POLICIES |
2.1 | Restatement of the financial statements in equivalent purchasing power |
The financial statements have been taken from the Banks books of account in conformity with the standards of the BCRA.
These financial statements recognize the effects of the changes in the purchasing power of the currency through February 28, 2003, following the restatement method established by Argentine Federation of Professional Council in Economic Sciences (FACPCE) Technical Pronouncement No. 6 (modified by Technical Pronouncement No.19), using adjustment rate derived from the internal Wholesale Price Index published by the National Institute of Statistics and Census (I.N.D.E.C.).
Accordingly to the above mentioned method, the accounting figures were restated by the purchasing power changes through August 31, 1995. As from that date, based in the prevailing economic stability conditions and accordingly with CNV General Resolution No. 272 and BCRA Communication A 2365, the accounting figures were not restated through December 31, 2001. In view of CNV General Resolution No. 415 and BCRA Communication A 3702, the method was reinstated effective as from January 1, 2002, considering the previous accounting figures restated as of December 31, 2001.
By Communication A 3921 of the BCRA and General Resolution No. 441/03 of the CNV, in compliance with Decree 664/03 of the Federal Executive, application of the restatement method on financial statements in equivalent purchasing power has been suspended as from March 1, 2003. Accordingly, BBVA Banco Francés S.A. applied the mentioned restatement until February 28, 2003.
2.2 | Comparative information |
As required by Communication A 4265 of the BCRA, the balance sheet and exhibits related to include comparative information with balances as of December 31, 2004, while the statements of income, changes in stockholders equity, and cash flows are compared with balances as of September 30, 2004.
Additionally, the financial statements, notes and exhibits for fiscal year ended December 31, 2004 and for the nine month period ended September 30, 2004 have been modified due to adjustments to prior years income/(loss) (see notes 2.3.k), 2.3.ñ) and 4.2.).
2.3 | Valuation methods |
The main valuation methods used in the preparation of the financial statements have been as follows:
a) | Foreign currency assets and liabilities: |
As of September 30, 2005 and the end of the previous fiscal year, such amounts were converted at the benchmark exchange rate of the BCRA as of the closing date of transactions on the last business day of the period or fiscal year. The exchange differences were charged to income (loss) for the periods ended September 30, 2005 and 2004.
b) | Government and private securities: |
Government securities:
| Holdings in investment accounts: Federal Government Compensation based on the asymmetrical switch into pesos: |
BCRA Communication A 3785, dated October 29, 2002, determined that the Federal Government Bonds (BODEN 2012) received for the compensation mentioned above could be booked at technical value (i.e. face value plus interest and adjustment accrued), limiting dividend distribution in cash to income exceeding the difference between book value and the listing value of such bonds booked in the month in which the year is closed. Additionally, such Communication set forth that the cap derived from rising market price by 20% will not apply for the valuation of the bonds mentioned above for treating valuation differences.
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As of September 30, 2005 and the end of the previous fiscal year, the Bank booked the compensation received, pursuant to the provisions of BCRA Communication A 3785 at face value as of such date, plus interest accrued pursuant to the conditions of their issuance, converted into Argentine pesos under the method described in note 2.3.a). The outstanding compensation (resulting from the redenomination into US dollars of the liabilities with the Financial and Insurance Institutions Assistance Trust Fund detailed in note 12) was valued pursuant to the same criterion and was recorded under Other receivables from financial transactions, in the line Other receivables not covered by debtor classification regulations.
| Bonds received under the Argentine sovereign debt restructuring process: |
Communication A 4270 dated December 29, 2004 provided that the Discount Bonds and GDP-linked Securities may be recorded at the book value of the instruments delivered for exchange less payments received during 2004 and the first half of 2005, without exceeding the nominal cash flow amount until maturity applicable under the terms and conditions of the bonds received.
| As of December 31, 2004, Argentine Republic External Bills in U.S. dollars Survey + 4.95% 2001-2004, and Treasury Bills Series 90 were valued at the lower of book value as of December 31, 2003, or the value obtained after applying to face values at that date the percentage calculated under the present value method in respect of Secured Bonds 2018, in accordance with Communication A 4084 of the BCRA. The difference with technical values was recognized against the balancing account under Loans as established by Communication A 3911. |
| Holdings for trading or financial transactions: they were valued based on current listed prices for each security as of September 30, 2005 and the end of the previous fiscal year. Differences in listed prices were credited/charged to income for each period. |
| Unlisted government securities: these bonds were valued at the lower of present or technical value (including adjustment and accrued interest), as established by Communication A 3911 as amended of the BCRA. |
The present value as of September 30, 2005 was calculated by discounting the cash flows as per the relevant contracts at an annual rate of 3.87%, in accordance with the provisions of the abovementioned Communication for September, 2005.
As the present value determined was lower than the technical value (which agrees with the theoretical value), this difference was recognized against a balancing account under Loans established by Communication A 3911.
In accordance with the abovementioned communication, the theoretical value was calculated based on the book value at February 28, 2003 restated by the Benchmark Stabilization Coefficient (CER) through the end of the period.
Investments in listed private securities:
| Equity and debt instruments: they were valued based on current listed prices as of September 30, 2005 and the end of the previous fiscal year. Differences in listed prices were charged to income for each period. |
c) | Government loans |
Federal Government secured loans Decree No. 1387/2001:
As of September 30, 2005 and the end of the previous fiscal year, these loans were valued at the lower of present or technical value, as established by Communication A 3911 of the BCRA.
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The present value as of September 30, 2005 was calculated by discounting the cash flows as per the relevant contracts at an annual rate of 3.87%, in accordance with the provisions of the abovementioned Communication for September, 2005.
The technical value was calculated in accordance with the swap values established by the Ministry of Economy at November 6, 2001 plus interest accrued through the end of the period, converted into pesos at rate of $ 1.40 per dollar plus CER.
The net effect of differences between the value determined for each loan (the lower of present or technical value) and their theoretical value was charged to the balancing account under Loans established by Communication A 3911.
In accordance with the abovementioned communication, the theoretical value was calculated based on the book value at February 28, 2003, net of the balancing account derived from the swap set forth by Decree 1387/01 and restated by the CER through the end of the period/fiscal year.
Provincial Governments loans and other Government loans
As of September 30, 2005 and the end of the previous fiscal year, these loans were valued at the lower of present or technical value (including adjustment and accrued interest), as established by Communication A 3911 of the BCRA.
The present value as of September 30, 2005 was calculated by discounting the estimated cash flows at an annual rate of 3.87%, in accordance with the provisions of the abovementioned Communication for September, 2005.
As the present value determined was lower than the technical value (which agrees with the theoretical value), this difference was recognized against the balancing account under Loans established by Communication A 3911.
In accordance with the abovementioned Communication, the theoretical value was calculated based on the book value at February 28, 2003 restated by the CER through the end of the period/fiscal year.
d) | Interest accrual: |
Interest has been accrued according to a compound interest formula in the fiscal years in which it was generated, except interest on transactions in foreign currency, those whose maturity does not exceed 92 days, rescheduled certificates of deposit subject to CER (CEDROS), secured bonds (due 2018) and loans to the financial sector, on which interest has been accrued by the straight line method.
e) | Benchmark stabilization coefficient (CER) and the Salary Variation Coefficient (CVS) accrual: |
As of September 30, 2005 and the end of the previous fiscal year, receivables and payables have been adjusted to the CER as follows:
- | Federal government guaranteed loans had been adjusted under Resolution 50/2002 of the Ministry of Economy, which resolved that the CER effective 10 (ten) days prior to the maturity date of the related service will be considered for yield and repayments of the loans. |
- | Loans to private sector and receivables from sale of assets (subject to conversion into pesos): they have been adjusted under Communication A 3507 of the BCRA and supplementary regulations, which resolved that the payments through September 30, 2002, were made under the original terms of each transaction and were booked as prepayments, where as from February 3, 2002, the principal was adjusted to the CER prevailing on September 30, 2005 and the end of the previous fiscal year, deducting the prepayments mentioned above as from the payment date, except those subject to the provisions of Decrees 762/02 and 1242/02, which excluded the application of that coefficient from some mortgage, pledge, personal and other lines of credit. |
- | As of September 30, 2005 and the end of the previous fiscal year, Federal Government Secured Bonds had been adjusted under Resolution 539/2002 of the Ministry of Economy, which resolved that the CER effective 5 (five) days prior to the maturity date of the related service will be considered for yield and repayments of the bonds. |
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- | Deposits and other assets and liabilities (subject to conversion into pesos): The CER prevailing on September 30, 2005 and the end of the previous fiscal year were applied. |
In November 2003, the Bank accrued the C.V.S. (Salary Variation Coefficient) accumulated through that date for accounting purposes and has applied this coefficient on balances until its repeal in May 2004.
f) | Allowance for loan losses and contingent commitments: |
For loans, other receivables from financial transactions, assets subject to financing leasing, receivables from sale of property assets and contingent commitments: this allowance has been calculated based on the Banks estimated loan loss risk in light of debtor compliance and the collaterals supporting the respective transactions, as provided by Communication A 2950 and supplemented of the BCRA.
g) | Instruments to be received and to be delivered for spot and forward transactions pending settlement: |
- | In foreign currency: as of September 30, 2005 and the end of the previous fiscal year, they were valued according to the bench-mark exchange rate of the BCRA for each currency determined on the last business day of each period or fiscal year. |
- | Holdings in investment accounts and for trading transactions: according to the method described in note 2.3.b.). |
h) | Amounts receivable and payable for spot and forward transactions pending settlement: |
They were valued based on the prices agreed upon for each transaction, plus related premiums accrued as of September 30, 2005 and the end of the previous fiscal year.
i) | Unlisted Corporate Bonds: |
They were valued at acquisition cost plus income accrued but not received as of September 30, 2005 and the end of the previous fiscal year.
j) | Assets subject to financing leasing: |
As of September 30, 2005 and as of the end of the previous fiscal year, they have been valued at the present value of unaccrued installments calculated as per the conditions agreed upon in the respective contracts, applying the imputed interest rate thereto.
k) | Investments in other companies: |
- | Investments in controlled financial institutions, supplementary activities and authorized: they were valued based on the following methods: |
| Credilogros Compañía Financiera S.A., Francés Valores Sociedad de Bolsa S.A., Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A., Consolidar Cía. de Seguros de Vida S.A., Consolidar Cía. de Seguros de Retiro S.A., PSA Finance Argentina Compañía Financiera S.A. and Atuel Fideicomisos S.A.: were valued by the equity method at the end of period or fiscal year. |
- | Investments in non controlled financial institutions, supplementary activities and authorized: they were valued according to the following methods: |
| Rombo Cía. Financiera S.A. and other companies (Visa Argentina S.A., Banelco S.A. and Interbanking S.A): were valued by the equity method at the end of period or fiscal year. |
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| Bladex S.A. (included in Other - Foreign): was valued at acquisition cost in foreign currency plus the nominal value of stock dividends received, converted into pesos based on the method described in 2.3.a). |
| Other: valued at acquisition cost, without exceeding their recoverable value. |
- | Other non controlled affiliates: they were valued based on the following methods: |
| Consolidar A.R.T. S.A. and BBVA Consolidar Seguros S.A.: were valued by the equity method at the end of period or fiscal year. |
| Other: were valued at acquisition cost, without exceeding their recoverable value. |
As from the effectiveness date of Law No. 25,063, dividends in cash or in kind received by the Bank from investments in other companies in excess of accumulated taxable income of such companies at the time of distribution thereof shall be subject to a 35% income tax withholding, which shall be a single and final payment.
The Bank recorded an adjustment to earnings of prior years of 219 (loss) due to adjustments of certain investments in other companies (81(loss) as of December 31, 2003). This adjustment affected the items Investments in Other Companies of the balance sheet as of December 31, 2004 by 219 (decrease) and Other Income of the income statement as of September 30, 2004 by 6 (decrease).
l) | Premises and equipment and Other assets: |
They have been valued at acquisition cost plus increases from prior-year appraisal revaluations, restated as explained in note 2.1., less related accumulated depreciation calculated in proportion to the months of estimated useful life of items concerned (see Exhibit F).
m) | Intangible assets: |
They have been valued at acquisition cost restated as explained in note 2.1, less related accumulated depreciation calculated in proportion to the months of estimated useful life of the items concerned (see useful life assigned in Exhibit G).
n) | Employee termination pay: |
The Bank expenses employee termination pay as disbursed.
ñ) | Other liabilities |
They include the debit balances non arising out of transactions relating to the supply and demand of financial resources, plus the adjustments and interest payable accrued as of September 30, 2005 and December 31, 2004.
The Bank recorded an adjustment to earnings of prior years for 8,040 (loss) to reflect expenses of software maintenance and transport of values corresponding to the previous fiscal year and recorded in the current period. This adjustment affected the item Other Liabilities from the balance sheet as of December 31, 2004 in 8,040 (increase) and the item Administrative Expenses - Other Operating Expenses of the statement of income as of September 30, 2004 in 2,956 (increase).
o) | Allowance for other contingencies: |
It includes the estimated amounts to meet contingencies of probable occurrence that, if occurred, would give rise to a loss for the Bank.
p) | Stockholders equity accounts: |
They are restated as explained in note 2.1, except for the Capital Stock and Non capitalized contributions accounts which have been kept at original value. The adjustment resulting from the restatement is included in the Adjustment to Stockholders Equity Adjustment to Capital Stock account.
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q) | Use of estimates: |
The preparation of the financial statements in accordance with the standards set forth by the BCRA require the Banks Board of Directors to use assumptions and estimates that affect certain assets such as allowances for loan losses and certain liabilities such as provisions for other contingencies as well as the income/loss generated during the periods being reported. Final income/loss may differ from such estimates.
r) | Statement of Income Accounts: |
- | As of September 30, 2005 and 2004, accounts accruing monetary transactions (financial income (expense), service charge income (expense), provision for loan losses, administrative expenses, etc.) were computed on the basis of their monthly accrual at historical rates. |
- | Accounts reflecting the effect on income resulting from the sale, write-off, or use of non-monetary assets were computed based on the value of such assets, as mentioned in note 2.1. |
- | Income from investments in subsidiaries was computed based on such companies income adjusted as explained in note 2.1. |
s) | Earning per share: |
As of September 30, 2005 and 2004 the Bank calculates the earning per share on the basis of 471,361,306 and 368,128,432 ordinary shares, respectively, of $ 1 par value each. The net income for nine month periods ended on those dates is as follows:
2005 |
2004 |
||||||
Net income (loss) for the period |
86,186 | (40,825 | ) | ||||
Earning (loss) per share for the period |
$ | 0.18 | $ | (0.11 | ) |
3 | DIFFERENCES BETWEEN BCRA ACCOUNTING STANDARDS AND ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN BUENOS AIRES CITY - ARGENTINA |
By Resolution CD No. 93/05 the Professional Council in Economic Sciences of Buenos Aires City (C.P.C.E.C.A.B.A.) adopted, with certain explanations, Technical Pronouncements Nos. 16, 17, 18, 19, 20 and 21 of the F.A.C.P.C.E. incorporating certain changes to the professional accounting valuation and disclosure standards. Furthermore, by General Resolution No. 459/04, the National Securities Commission (C.N.V.) adopted, with certain amendments, those Technical Pronouncements based on the resolutions of the C.P.C.E.C.A.B.A., which will be mandatory applicable as from the years commenced on January 1, 2003, except for Technical Pronouncement No. 21, effective on April 1, 2004, with early application permitted.
The Bank has prepared these financial statements applying the regulations of the BCRA, which do not contemplate the some of the new valuation criteria incorporated to the accounting principles generally accepted in Buenos Aires City.
The main differences between the regulations of the BCRA and the accounting principles generally accepted in Buenos Aires City are detailed below.
I. | Restatement of the financial statements to recognize the changes in the purchasing power of the currency |
These financial statements recognize the effects of changes in the purchasing power of the currency through February 28, 2003 following the restatement method established by Technical Pronouncement No. 6 of the F.A.C.P.C.E. (amended by TP No. 19). In accordance with Decree No. 664/2003 of the
- 9 - | ||||
National Executive Branch, Communication A 3921 of the BCRA and Resolution No. 441 of the C.N.V., the application of that method was discontinued by the Bank and, therefore, it did not recognize the effects of changes in the purchasing power of the currency arising after March 1, 2003.
In addition, CD 190/2003 issued by the C.P.C.E.C.A.B.A. established the discontinuance of the restatement into homogenous currency as from October 1, 2003 on the understanding that the country shows a stable monetary context. The change in the Wholesale Prices Index between March 1, 2003 and September 30, 2003 was 2.14% (negative). Had the accounting information been restated in accordance with professional accounting standards, the effect on the results for each period and total stockholders equity would not have been significant considering the financial statements as a whole.
II. | Valuation criteria |
a) | National Government Secured loans |
During the year ended on December 31, 2001, as a consequence of the provisions of Decree No.1387/01, on November 6, 2001, the Bank and its subsidiaries exchanged national government securities, bonds, treasury bills and/or unsecured loans with the National Government for a face value of US$ 3,291,795 thousands for Secured loans. At September 30, 2005 and the end of the previous fiscal year, those loans are recorded under Loans to the Public Sector amounting to 4,353,700 and 6,181,489 (consolidated amounts), respectively, in accordance with the criterion described in Note 2.3.c). The recoverable values of these assets as of September 30, 2005 exceed their book values.
b) | Government Securities and Other Credit Assistance to the Public Sector |
As of September 30, 2005 and the end of the previous fiscal year, the Bank and its subsidiaries keeps other assets with the Public Sector, valued in accordance with the criterion described in notes 2.3.b), 2.3.c) and 2.3.g). In accordance with accounting principles generally accepted in Buenos Aires City, these assets are to be valued at current value.
The following is a detail of the book values of these assets as of September 30, 2005 and the end of the previous fiscal year as well as their estimated fair values for the holdings stated in the column as of September 30, 2005:
Item |
09.30.2005 |
12.31.2004 |
09.30.2005 |
|||||||
Market value |
Estimated fair value |
|||||||||
Secured Bond 2018 |
87,767 | 451,121 | 92 | % | ||||||
Provincial Development Trust Fund Corporate Bonds |
794,415 | 742,930 | 84 | % | ||||||
Federal Government Bonds in US dollar Libor 2012 |
78,414 | 78,384 | 92 | % | ||||||
Compensation pending receipt from the Federal Government |
121,653 | | 92 | % | ||||||
Argentine Republic External Bills (1) |
| 541,145 | | |||||||
Treasury Bills Series 90 (1) |
| 54,230 | | |||||||
Discount Bonds in US dollar |
205,941 | | 91 | % | (2 | ) | ||||
Discount Bonds in pesos |
360,516 | | 108 | % | (2 | ) |
(1) | Net of allowances. Restructured bonds as mentioned in Note 15. |
(2) | Correspond to parity value. |
The net balance sheet effect resulting from considering the above mentioned fair values would imply a decrease in shareholders equity in approximately 339,000 and 518,000 as of September 30, 2005 and December 31, 2004, respectively.
c) | Effects caused by court measures related to deposits (constitutional protection actions) |
As mentioned in Note 15.1.3., as of September 30, 2005 and the end of the previous fiscal year, the Bank recorded assets amounting to 610,596 and 739,289, respectively, under Intangible Assets Organization and Development Non Deductible Expenses account corresponding to differences
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resulting from compliance with the court measures generated by the repayment of deposits in the financial system within the framework of Law No. 25.561, Decree No. 214/02 and complementary regulations, as established by Communication A 3916 of the BCRA. In accordance with current professional accounting standards, those amounts should be recognized based on the best possible estimate of amounts receivable, considering the circumstances mentioned in that note.
d) | Tax effects |
As already indicated in note 4.1., the Bank has received various communications from the BCRA pursuant to which that BCRA indicates that the capitalization of items arising from the application of the deferred tax method is not allowed. In accordance with current professional accounting standards, a deferred tax asset should be recognized to the extent the reversal of temporary differences generates a future decrease in the tax effectively determined. As a result, the allowances set up by the Bank in this respect, for 253,000 y 118,000 as of September 30, 2005 and the end of the previous fiscal year, respectively, should be recovered.
III. | Disclosure aspects |
Unrealized valuation difference
As it is mentioned on note 1.3., during last fiscal year, the Bank has absorbed 200,000 of the negative results appeared from the sale operation of the subsidiary of Banco Francés (Cayman) Limited and charged to the account unrealized valuation difference of the stockholders equity, according to what was authorized in the Resolution N° 52/04 of the Superintendent of Financial and Exchange Institutions.
According to accounting principles generally accepted in Buenos Aires City, such amount should have been charged to income (loss) for the fiscal year finished on December 31, 2004, while the remaining balance of the mentioned account should be recorded into unappropriated earnings account of the stockholders equity.
4 | TAX MATTERS |
4.1. | Income tax |
The Bank determined the charge for income tax applying the effective 35% rate to taxable income estimated for each period or fiscal year considering the effect of temporary differences between book and taxable income. The Bank considered as temporary differences those that have a definitive reversal date in subsequent years. As of September 30, 2005 and the end of the previous fiscal year, the Bank has estimated the existence of a net operating loss in the income tax.
On June 19, 2003, the Bank received a note from the BCRA indicating that the capitalization of items arising from the application of the deferred tax method is not allowed.
On June 26, 2003, the Banks Board of Directors, based on the opinion of its legal counsel, have responded the above mentioned note, indicating that in their opinion the rules of the BCRA do not prohibit the application of the deferred tax method generated by the recognition of temporary differences between the accounting and tax result. Subsequently, Resolution 118/03 of the Superintendent of Financial and Exchange Institutions received on October 7, 2003 confirmed the terms of the note dated June 19, 2003. Consequently, as from that date the Bank has set up an allowance for the net balance between the deferred tax assets and liabilities.
As of September 30, 2005 and the end of the previous fiscal year, the Bank records under Other Receivables (in the Tax Advance account) a taxable deferred asset amounting 253,000 and 118,000, respectively. Such amounts are made up as follows:
2005 |
2004 |
|||||
Deferred tax assets |
629,000 | 530,852 | ||||
Deferred tax liabilities |
(376,000 | ) | (412,852 | ) | ||
Net deferred assets |
253,000 | 118,000 | ||||
Allowance |
(253,000 | ) | (118,000 | ) |
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4.2. | Tax on minimum presumed income |
Tax on minimum presumed income (TOMPI) was established by Law No. 25,063 in the year ended December 31, 1998, for a ten-year term. This tax is supplementary to income tax: while the latter is levied on the taxable income for the year, TOMPI is a minimum levy determined by applying the current 1% rate on the potential income of certain productive assets. Therefore, the Banks tax obligation for each year will coincide with the highest of these taxes. The above Law provides that institutions governed by Financial Institutions Law must consider as a tax base 20% of their taxable assets, after deducting non-computable ones. However, if TOMPI exceeds income tax in a given year, the excess thereof may be computed as a payment on account of any income tax in excess of TOMPI that may occur in any of the following ten years.
In every year that net operating losses are offset, the tax benefit (the benefit of the effective rate on the net operating loss used) will be realized to the extent that income tax (net of the offsetting) equals or exceeds tax on minimum presumed income, but will reduced by any excess of the latter over former.
Up to December 31, 2003, the Bank recorded under Other Receivables - Tax Advance account, a credit for the TOMPI, as long as this tax exceeded income tax.
On March 8, 2004, the BCRA requested the reversal of the amounts recorded as assets for TOMPI for the years 2001/2002 with charge to income or prior years adjustments, as appropriate, based on a regulatory interpretation of the BCRA.
In addition, on February 11, 2005, the BCRA issued Communication A 4295 whereby it allowed, under certain guidelines, to record TOMPI credit balances.
Therefore, on September 30, 2005, the Entity recorded this asset for 113,331 and included an adjustment to earnings of prior years for a total amount of 92,631 (gain) and 4,990 (loss) as of December 31, 2003. In the balance sheet as of December 31, 2004, presented for comparative purposes, such adjustment affected the item Other receivables by 92,631 (increase) and in the statement of income as of September 30, 2004, presented for comparative purposes, such adjustment affected the items Income Tax and Tax on Minimum Presumed Income and Other Income by 20,250 (decrease) and 590 (increase), respectively.
4.3. | Other tax issues |
The AFIP (Argentine Public Revenue Administration) inspected open tax periods and the Bank received ex officio assessments, which were appealed before the Argentine Administrative Tax Court. Such agency, to the issuance date of these financial statements, issued and opinion on the ex officio assessment made in 1992 and 1993, partially admitting the claim of tax authorities. On June 18, 2002 the Bank decided to appeal the ruling of 1992 with the Court of Appeals, where it is being treated at present.
Furthermore, on July 18, 2003 a remedy for the review and appeal against the 1993 judgment was filed, and is currently pending.
The Argentine Administrative Tax Court has also issued an opinion in respect of the appeals filed against the ex officio assessments concerning the tax on minimum presumed income for year 1999 and the income tax for years 1994, 1995 and 1998, fully upholding the claims filed and reversing the appealed resolutions. However, on April 8, 2005 the Argentine Administrative Tax Court conceded the appeal to Argentine Public Revenue Administration.
The Board of Directors and tax and legal counsel estimate that the Bank made a reasonable interpretation of effective regulations regarding the observed periods.
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5 | BREAKDOWN OF MAIN ITEMS AND ACCOUNTS |
As of September 30, 2005 and the end of the previous fiscal year, the breakdown of the items included under Other accounts which exceed 20% of the total amount of each item is as follows:
09-30-2005 |
12-31-2004 | |||||
| INVESTMENTS IN OTHER COMPANIES | |||||
In other non-controlled companies- unlisted | 23,721 | 22,283 | ||||
In controlled-supplementary activities | 245,281 | 229,154 | ||||
In non-controlled-supplementary activities | 8,191 | 7,454 | ||||
Other- unlisted | 11,515 | 11,757 | ||||
Total | 288,708 | 270,648 | ||||
| OTHER RECEIVABLES | |||||
Prepayments | 29,931 | 8,859 | ||||
Guarantee deposits | 19,630 | 18,841 | ||||
Miscellaneous receivables | 49,943 | 64,573 | ||||
Tax prepayments (1) | 254,082 | 121,370 | ||||
Other | 2,141 | 1,059 | ||||
Total | 355,727 | 214,702 | ||||
(1) As of September 30, 2005 and the end of the previous fiscal year, it includes the deferred tax asset for 253,000 and 118,000 respectively (see note 4.1).
| ||||||
|
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS | |||||
Correspondents our account | 17,951 | 25,889 | ||||
Collections and other operations for the account of third parties | 51,573 | 62,301 | ||||
Other withholdings and collections at source | 31,248 | 31,870 | ||||
Accounts payable for consumption | 63,750 | 97,252 | ||||
Money orders payable | 115,574 | 95,172 | ||||
Other | 29,928 | 26,301 | ||||
Total | 310,024 | 338,785 | ||||
|
OTHER LIABILITIES | |||||
Accrued salaries and payroll taxes | 47,824 | 44,180 | ||||
Accrued taxes | 24,561 | 21,107 | ||||
Miscellaneous payables | 49,011 | 30,016 | ||||
Other | 1,241 | 2,466 | ||||
Total | 122,637 | 97,769 | ||||
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09-30-2005 |
12-31-2004 | |||||
| MEMORANDUM ACCOUNTS DEBIT CONTROL | |||||
Items in safekeeping |
33,833,349 | 28,470,212 | ||||
Collections items |
483,064 | 461,424 | ||||
Checks drawn on the Bank pending clearing |
148,861 | 105,565 | ||||
Other |
16,662 | 13,038 | ||||
Total |
34,481,936 | 29,050,239 | ||||
09-30-2005 |
09-30-2004 | |||||
| SERVICE CHARGE INCOME | |||||
Rental of safe-deposit boxes |
8,367 | 6,737 | ||||
Commissions for capital market transactions |
11,681 | 8,081 | ||||
Commissions for salary payment |
2,890 | 2,100 | ||||
Commissions for trust management |
2,361 | 3,067 | ||||
Commissions for hiring of insurances |
16,808 | 9,991 | ||||
Commissions for transportations of values |
6,238 | 2,908 | ||||
Commissions for loans and guarantees |
7,782 | 3,610 | ||||
Other |
22,169 | 12,216 | ||||
Total |
78,296 | 48,710 | ||||
| SERVICE CHARGE EXPENSE | |||||
Turn-over tax |
12,730 | 11,026 | ||||
Other |
1,490 | 315 | ||||
Total |
14,220 | 11,341 | ||||
| ADMINISTRATIVE EXPENSES - OTHER OPERATING EXPENSES | |||||
Rent |
25,268 | 25,833 | ||||
Depreciations of bank premises and equipment |
18,587 | 23,587 | ||||
Amortizations of organization and development expenses |
12,491 | 18,377 | ||||
Electric power and communications |
11,459 | 11,217 | ||||
Maintenance, conservation and repair expenses |
16,360 | 15,272 | ||||
Security services |
11,009 | 9,867 | ||||
Other |
6,291 | 7,150 | ||||
Total |
101,465 | 111,303 | ||||
| OTHER INCOME | |||||
Deferred income tax (1) |
135,000 | | ||||
Other |
6,413 | 10,305 | ||||
Total |
141,413 | 10,305 | ||||
(1) Offset with a charge for the same amount in Charge for uncollectibility of other receivables and other allowances account, under Other expense item. |
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6 | RESTRICTIONS ON ASSETS |
As of September 30, 2005, there are Bank assets, which are restricted as follows:
a) | The Government and Private Securities account includes 78,414 in Federal Government bonds in US dollars LIBOR 2012 which have been frozen until final confirmation by the BCRA of the compensation amount. |
b) | The Government and Private Securities account includes 71,312 in secured bonds due 2018 allocated to the guarantee required to act as custodian of investment securities related to pension funds. |
c) | Out of the Banks active loan portfolio, 1,165 are allocated to the guarantee securing payables to the BCRA. |
7 | CONTINGENTS |
EXPORT TAX REBATES
In January 1993, former Banco de Crédito Argentino (ex BCA) found out that a group of companies presumably related among them had used fake documentation to collect export tax rebates, under current legislation through certain of its branches.
Immediately upon becoming aware of such events, the ex-BCA reported this situation to the Federal Police Banking Division pressing criminal charges before the Federal Criminal Court No. 2, Clerks Office No. 5 of the City of Buenos Aires.
The BCRA has made certain observations to the procedure followed by the ex-BCA in paying tax rebates. The ex-BCA has based its reply to the BCRA on the fact that the aforesaid payments had been made complying strictly with current regulations for the aforesaid transactions.
On October 14, 1994, the General Director for Legal Affairs of the Ministry of Economy and Public Works and Utilities (MEOSP) ordered the ex-BCA to reimburse the amount which may be applicable to tax rebate payments which, in his opinion, were considered inapplicable.
On October 26, 1994, the ex-BCA filed a notice with the MEOSP by which it fully and emphatically rejected the aforesaid order for containing untrue, erroneous and legally unfounded representations since the ex-BCA acted in strict compliance with current regulations when carrying out each and every transaction related to the payment of export tax rebates.
On December 17, 1996, the ex-BCA was notified of the lawsuit filed by the Federal State in the action styled MEOSP, Federal State vs. BCA in regard of Request for Opinion, at the Federal Administrative Court of Original Jurisdiction, Clerks Office No. 1 of the City of Buenos Aires.
The lawsuit has been filed in November 1995 even when it was first notified by the Federal State on the aforesaid date.
In February, 1997, the ex-BCA put forth a defense to stop the progress of the lawsuit filed by the Federal Government suspending the term until the complaint is answered. In that filing the Banks Legal Counsel alleged that the ex-BCA acted in compliance with the standards in force, and after a background analysis, it became abundantly clear that it was the responsibility of the government agencies that had not met the express control standards under their exclusive charge.
The abovementioned exception was dismissed on December 1997 by the judge hearing the case, therefore, in February 1998, the Bank decided to file an appeal with the Court of Appeals.
The Court of Appeals ruled in favor of the banks appeal, that is to say, it upheld the banks defense based on a legal defect and its request that the Banco de la Nación Argentina, the Customs Service and the BCRA be summoned as parties to the suit. Both such requests were rejected by the court of original jurisdiction and have now deserved a favorable ruling from the appellate court.
- 15 - | ||||
At present, the proceedings are awaiting that the Federal State will amend the vices of its action, hence once this has been complied with, notifications will be resumed. Irrespective of the above, it has been agreed to suspend the legal proceedings with a view to a possible out-of-court transactions formulated by sellers, since this out-of-court settlement was dropped by sellers, the abovementioned legal proceedings were resumed. Despite the suspension of terms, the parties agreed to a pre-trial stage for the production of evidence. The court has ordered the Federal Government to resolve the defects in the claim. The National Government has just reduced its claim significantly.
In any event, the eventual contingency resulting from such situation will be assumed by the sellers of the ex-BCA under the terms of the shares sales contracts.
8 | TRANSACTIONS WITH SUBSIDIARIES AND PARENT COMPANIES (ART. 33 OF LAW No. 19,550) |
The balances as of September 30, 2005 and the end of the previous fiscal year, for transactions performed with subsidiaries and parents companies are as follows:
Balance Sheet |
Memorandum Accounts (1) | |||||||||||
Assets |
Liabilities |
|||||||||||
Company |
2005 |
2004 |
2005 |
2004 |
2005 |
2004 | ||||||
BBVA S.A. |
40,954 | | 56,271 | 85,350 | 19,975 | | ||||||
Francés Valores Sociedad de Bolsa S.A. |
29,091 | | 32,563 | 643 | 1,659 | 1,123 | ||||||
Consolidar A.R.T. S.A. |
29 | 30 | 41,534 | 20,217 | 226,126 | 197,703 | ||||||
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. |
27 | 65 | 34,017 | 15,572 | 201,388 | 183,604 | ||||||
Consolidar Cía. De Seguros de Retiro S.A. |
32 | 33 | 146,668 | 186,984 | 299,390 | 1,083,791 | ||||||
Consolidar Cía. De Seguros de Vida S.A. |
7 | 5 | 15,522 | 16,485 | 375,955 | 316,656 | ||||||
Credilogros Compañía Financiera S.A. |
19,371 | 10,395 | 463 | 7,273 | 318 | 318 | ||||||
Atuel Fideicomisos S.A. |
| | 4,303 | 3,087 | 49 | 46 | ||||||
BBVA Consolidar Seguros S.A. |
2 | 4 | 3,533 | 3,879 | 41,634 | 34,506 | ||||||
Consolidar Comercializadora S.A. |
| | 2,241 | 1,583 | 2,248 | 2,403 | ||||||
PSA Finance Argentina Cía Financiera S.A. |
28,215 | 6,468 | 108 | 1,087 | | | ||||||
Rombo Cía. Financiera S.A. |
54,943 | 22,934 | 694 | 293 | | | ||||||
Francés Administradora de Inversiones S.A. |
114 | 77 | 2,265 | 9,223 | 2,359 | 4,838 | ||||||
Inversora Otar S.A. |
| | 906 | 95 | 338,947 | 326,004 |
(1) | Includes Items in safekeeping, Credit lines granted (unused portion) covered by debtor classification regulations and Guaranties given covered by debtor classification regulations. |
9 | BANK DEPOSITS GUARANTEE INSURANCE SYSTEM |
The Bank is included in the Deposit Guarantee System established by Law 24,485, Regulatory Decrees No. 540/95, No. 1,292/96 and 1,127/98 and Communication A 2337 and BCRAs complementary regulations.
Such law provided for the creation of the Company Seguros de Depósitos Sociedad Anónima (SEDESA) for purposes of managing the Deposit Guarantee Fund (DGF), whose shareholders, in accordance with the changes introduced by Decree No. 1,292/96, shall be the BCRA with one share as a minimum and the trustees of the trust created by the financial institutions in the proportion to be determined for each by the BCRA according to their contributions to the DGF.
That Company was incorporated in August 1995 and the Bank has a 13.7597% interest in its capital stock.
The Deposit Guarantee System, which is limited, compulsory and onerous, has been created for purposes of covering the bank deposit risks subsidiarily and complementarily to the deposit protection and privilege system established by the Financial Institutions Law.
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The guarantee shall cover the repayment of principal disbursed plus interest accrued through the date of revoking of the authorization to operate or through the date of suspension of the institution through application of section 49 of the BCRAs Charter provided that the latter had been adopted earlier than the former without exceeding the amount of pesos thirty thousand. Regarding operations in the name of two or more people, the guarantee shall be prorated between the holders. In no event shall the total guarantee per person exceed the abovementioned amount, whatever the number of accounts and/or deposits.
10 | TRUST ACTIVITIES |
10.1. Financial Trusts
On January 5, 2001, the BCRAs Board of Directors issued Resolution No. 19/01, providing for the exclusion of Mercobank S.A.s (a bank organized under Argentine legislation) senior liabilities under the terms of Section 35 bis of the Financial Institutions Law, the authorization to transfer the excluded assets to BF as trustee of the Diagonal Trust, and the authorization to transfer the excluded liabilities to beneficiary banks. Also, on the mentioned date, the agreement to set up the Diagonal Trust was subscribed by Mercobank S.A. as settle and BF as trustee in relation to the exclusion of assets as provided in the resolution abovementioned. BF entrusted Atuel Fideicomisos S.A. the management of collections and the realization of the corpus assets. As of September 30, 2005, total estimated corpus assets of Diagonal Trust and Inmobal Nutrer Trust amount to 8,365 and 4,514 respectively, and they are recorded in memorandum debit accounts For trustee activities Funds received in trust.
10.2. Non Financial Trust
BF acts as trustee in 64 non financial trusts, and in no case being personally liable for the liabilities assumed in the performance of the contract obligations; such liabilities will be satisfied with and up to the full amount of the corpus assets and the proceeds therefrom. The non financial trusts concerned were set up to secure the receivables of several creditors (beneficiaries) and the trustee was entrusted the management, care, preservation and custody of the corpus assets until (i) the requirements to show the noncompliance with the obligations by the debtor (settler) vis-à-vis the beneficiaries are met, moment at which such assets will be sold and the proceeds therefrom will be distributed (net of expenses) among all beneficiaries, the remainder (if any) being delivered to the settler, or (ii) all contract terms and conditions are complied with, in which case all the corpus assets will be returned to the settler or to whom it may indicate. The trust assets represent about $ 5,059 million and consist of cash, creditors rights, real estate and shares.
11 | CORPORATE BONDS |
The Regular Stockholders Meeting of former-Banco Francés del Río de la Plata (former-BFRP) held on September 30, 1994, authorized the creation of a five-year program for issuance and reissuance of corporate bonds, nonconvertible into shares, for an amount of up to US$ 500,000,000.
On October 6, 1997, the Regular and Special Stockholders Meeting ratified for the whole program effective period the delegation to the Board of Directors, approved by the Regular Stockholders Meeting held on September 30, 1994, of the necessary powers to determine all the issuance conditions of the corporate bonds (including collection subordination) to be issued under the companys corporate bonds issuance program for an outstanding amount of up to US$ 500,000,000, authorized by CNVs Certificate No. 87 of December 16, 1994.
On April 27, 1999, the Regular and Special Stockholders Meeting decided to extend the term of the abovementioned program for five years, authorizing the Board of Directors to take the necessary steps for issuance thereof. In addition, it authorized the issuance of corporate bonds convertible into share of commons stock in the amount of up to US$ 200,000,000 either under the Banks program or otherwise, granting the Board of Directors the necessary authority to carry out the issuance, establish the conversion value, determine the terms of the securities and modify the current program.
On April 27, 2000, the Regular and Special Stockholders Meeting approved to increase the outstanding amount under the abovementioned program for up to US$ 1,000,000,000 and delegated on to the Board of Directors the performance of proceedings to obtain approval before CNV and Buenos Aires Stock Exchange (BCBA) and such other stock exchanges as may be chosen to be listed. The increase was authorized by CNVs Certificate No. 268 of July 18, 2000.
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In addition, the abovementioned Stockholders Meeting approved the creation of a program for the issuance of non-subordinated short-term corporate notes to be issued under several classes and series up to a total amount outstanding at any given time of US$ 300,000,000; the term of the program is five years, during which corporate notes nonconvertible into shares and unsecured or guaranteed by third parties may be issued for a term of up to one year in accordance with the conditions stipulated by the Board of Directors.
On July 15, 2003, an Extraordinary Shareholders Meeting approved the setting up of a Program for the issuance and re-issuance of ordinary non-convertible Negotiable Obligations with ordinary guarantee, or such guarantees as may be decided by the Board of Directors, and unsecured Subordinated Negotiable Obligations, convertible or not into shares. During the life of the Program, which will be 5 (five) years, it shall be possible to issue and re-issue any number of series and/or classes of Negotiable Obligations as long as at all times the maximum amount in circulation after adding together all series and/or classes outstanding under the Program pending redemption does not exceed at any time US$ 300,000,000. In addition, the determination of all the conditions of the Program and the Negotiable Obligations to be issued under it, including the power to define the placement and subscription conditions, have been delegated to the Board of Directors.
The following chart reflects corporate bonds in force as of September 30, 2005:
Global program amount |
Date of issuance |
Features |
Face value |
Currency |
Price of issue |
Nominal annual rate |
Payment of interest |
Book balance (in thousands) |
Capital Date |
|||||||||||
USD 1,000,000,000 |
11/26/2003 | Non-subordinated | 101,253,375 | USD | 100 | % | (1) | Semiannual | 301,059 | 10/31/2008 | (2) |
(1) | Libor plus 150 basis points. |
(2) | Principal shall be amortized in 10 semiannually installments with maturity between April 30 and October 31 each year. |
According to the provisions of the Corporate Bond Law and to the rules of the BCRA, the proceeds from the issuance of corporate bonds are allocated to (i) granting mortgage loans to purchase and repair housing and personal loans in Argentina; (ii) granting corporate loans in Argentina earmarked for contributions to working capital; investment in physical assets located in Argentina or refinancing liabilities, or (iii) contributing to working capital, investing in physical assets located in Argentina or refinancing liabilities.
12 | FUNDING OF THE FINANCIAL AND INSURANCE INSTITUTIONS ASSISTANCE TRUST FUND (FFAEFS) |
12.1 | On November 22, 1996, the ex-BCA requested the Board of the FFAEFS for a US$ 60,000,000 loan to finance the purchase of certain assets and liabilities to be excluded from ex - Banco Caseros S.A. Such request was granted and the respective agreement was signed on December 18, 1996. |
By means of such agreement, the Bank undertook to repay the loan seven years after disbursement by the FFAEFS on December 20, 1996. On December 22, 2003, the Bank cancelled such financing, after its conversion into Argentine pesos at the exchange rate of 1 Argentine peso to each US and its adjustment by CER.
12.2 | On December 22, 1997, Corp Banca (CB) executed with the FFAEFS a loan for consumption agreement in the amount of US$ 30,000,000, to be reimbursed in five annual, equal and consecutive installments starting as from the disbursement date. The first one would be paid three years after such date. |
As per this agreement, CB issued subordinate corporate bonds with the authorization for public offering by the CNV and the authorization to trade on the BCBA in the terms and conditions established in the loan for consumption agreement and under Communication A 2264 of the BCRA for the amount equivalent to that effectively loaned under the loan for consumption agreement referred to above. By Resolution No. 12,384 of August 28, 1998, the CNV authorized the issuance of common, subordinate corporate bonds nonconvertible into shares for a face value of US$ 30,000,000 at an annual nominal rate equal to LIBOR plus an annual nominal rate of 4% for the first period and, thereafter, LIBOR plus an annual nominal rate of 3% with a minimum of 8,07% per annum, due December 29, 2004. Such issuance took place on December 18, 1998.
- 18 - | ||||
On December 29, 2004, the Bank cancelled the last installment of this corporate bonds, after its conversion into Argentine pesos at the exchange rate of 1 Argentine peso to each US dollar and its adjustment by CER.
Due to these agreements, the BF may not distribute cash dividends in amounts exceeding 50% of liquid and realized income related to each balance sheet normally prepared.
On January 10, 2003, the Federal Executive published Decree Nº 53/2003 which amended section 1 subsection j) of Decree Nº 410/02, excluding from the conversion into pesos provided for by section 1 of Decree Nº 214/02 the obligation of Public and Private Sector Companies to pay any amount of money in foreign currency owed to the NATIONAL GOVERNMENT as a result of subsidiary or other loans and guarantees originally financed by Multilateral Credit Institutions or arising from liabilities owed by the National Treasury and refinanced with external creditors.
The decision taken by the Managing Committee of the Trust Fund for Reconstruction of Companies at the meeting held on May 28, 2003 stating that only 50% of the aforementioned financing was to be converted into pesos while the difference was to be maintained in its original currency was notified by note dated June 9, 2003.
The Bank has filed a subsidiary appeal for reversal before a higher administrative authority applying for a change in the aforementioned criterion and has reiterated its position on occasion of each interest and principal payment. Upon the appeal for reversal being dismissed, the claims were filed with the hierarchical superior officer on March 16, 2004. On May 17, 2004 the grounds for the appeal before the higher administrative authority were enlarged.
On February 7, 2005, the Bank was notified of Resolution Nº 25 dated January 17, 2005 executed by the Argentine Minister of Economy and Production, which dismisses the Hierarchical Remedy filed.
On May 16, 2005, an administrative action under section 100 (D.R:1759/72, 1991 revision) was filed against Resolution No. 25 issued by the Ministry of Economy and Production, which dismissed the Hierarchical Appeal filed by the Bank. At present, the case is pending determination by the Federal Executive. This notwithstanding, in May 2005 a liability of 23,176 thousand dollars was recorded under Other Liabilities from Financial Transactions, this being the dollar amount owed estimated by the Bank in the filing mentioned above. This effect should be compensated under the terms of the compensation mechanism for financial institutions mentioned in note 15.1.1, and was recorded as such. At any event, the final determination of this issue would not imply additional losses for the Bank.
13 | COMPLIANCE WITH CNV REQUIREMENTS |
13.1 | Compliance with the requirements to act as agent in the over-the-counter market |
As of September 30, 2005, the Banks Stockholders Equity exceeds the minimum requested to act as agent in the over-the-counter market, according to Resolution No. 368/01 of the CNV.
13.2 | Mutual Fund custodian |
As of September 30, 2005, in its capacity of custodian of FBA Acciones Globales, FBA Total, FBA Renta, FBA Renta Pesos, FBA Renta Dólares, FBA Bonos, FBA Calificado, FBA Ahorro Dólares, FBA Ahorro Pesos, FBA Renta Fija, FBA Renta Premium, FBA Renta Corto Plazo FBA Europa, FBA Horizonte, FBA Internacional, FBA EEUU and FBA Futuro, the Bank holds certificates of deposits, shares, corporate bonds, government securities, tax credit certificates and investments financial trust certificates in safekeeping in the amount of 830,212, all of which making up the Funds portfolio and booked in memorandum accounts Debit-Control - Other.
As of December 31, 2004 in its capacity of custodian of FBA Acciones Globales, FBA Total, FBA Renta, FBA Renta Pesos, FBA Renta Dólares, FBA Bonos, FBA Calificado, FBA Ahorro Dólares, FBA Ahorro Pesos, FBA Renta Fija, FBA Renta Premium, FBA Renta Corto Plazo FBA Europa, FBA Horizonte,FBA Internacional, FBA EEUU and FBA
- 19 - | ||||
Futuro, the Bank held certificates of deposits, shares, corporate bonds, tax credit certificates, government securities and warranties in safekeeping in the amount of 423,568, all of which making up the Funds portfolio and booked in memorandum accounts Debit-Control-Other.
14 | RESTRICTION ON EARNINGS DISTRIBUTIONS |
a) | As stated in Note 12, the Bank may not distribute as dividends in cash an amount exceeding 50% of liquid and realized income related to each one of the financial statements regularly prepared. |
b) | Under BCRA Communication A 4152, the distribution of earnings must be previously approved by the BCRA. |
c) | As mentioned in note 2.3.b), BCRA Communication A 3785 allowed booking the Federal Government bonds received in compensation as holdings in investment accounts at technical value, limiting the distribution of dividends in cash to income exceeding the difference between book value and the listing value in effect in the month in which the fiscal year ends. |
15 | ARGENTINE ECONOMIC CONTEXT |
On January 14, 2005, the restructuring process started for a substantial part of Argentinas sovereign debt, in default ever since late 2001 (for an approximate amount of US$ 80 billion). The process included a significant reduction in the principal owed as well as reduction in interest rates and extension of payment terms. For this purpose, the National Government offered three types of bonds in exchange for the defaulted securities, whose characteristics were established pursuant to Decree No. 1735/04. Additionally, the Government has announced that it is not planning to make payments on debt not submitted to the restructuring process. The proposal presented contemplated the issuance of bonds with significant waiting periods both for the amortization of principal and interest. This will allow the Government to schedule maturities stepwise and to have financial relief, as it will thus be able to adequately honor payments of the debt recently restructured and to continue to honor the payments already committed in the framework of the debt restructured during 2002 (primarily the Secured Loans issued by the National Government) as it has been doing so far. The swap period came to an end on February 25, 2005. The level of acceptance received by the exchange offer was significant. On March 18, 2005, the National Government announced the outcome of the exchange, the degree of acceptance of which amounted to 76,15%. And this implies that the Argentine Republic has left the default behind.
In June 2005, the National Government consummated the delivery of the exchanged government securities. U.S. dollar denominated Discount Bonds and peso denominated Discount Bonds were received, and interest amounts were also paid as scheduled.
15.1 Situations arising year 2001 crisis
15.1.1 Asymmetrical conversion into pesos (pesification)
The Bank received several notes from the BCRA in which it observed certain items and recording criteria that gave rise to the compensation being requested. BF answered those letters expressing that it had made a reasonable interpretation of current regulations and requesting the BCRA to review the criteria observed.
Subsequently, Resolutions 24/04 and 179/04 issued by the Superintendent of Financial and Exchange Institutions, partially accepted the defense presented by the Bank. BF filed two Hierarchical Remedy with the Superintendence of Financial and Exchange Institutions, requesting the revocation of the abovementioned resolutions in respect of rejected items.
Through several letters sent to the BCRA, the last one dated October 18, 2004, the Bank has requested the release of BODEN 2012 corresponding to the compensation which is not objected by the above authorities. Additionally, it has filed the informative requirement required by BCRA Communication A 4165, informing of the acceptance of certain adjustments determined by the BCRA to the compensation amount, and rejecting other adjustments, as described below:
Compensation |
Argentine Government Bonds 2012(*) | |||
Original amount reported |
797,300 | USD 606,539 thousand | ||
Amount with accepted adjustments by the Bank |
784,425 | USD 581,612 thousand | ||
Amount with rejected adjustments |
659,179 | USD 489,182 thousand |
(*) | Face value USD 386,000,000 were unblocked during March 2003, and face value USD 77,993,900 during June, 2004. |
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The total effect of the above differences on the compensation amounts to 280,000, approximately. It should be noted that as of December 31, 2004 the Bank has charged off assets subject to objections that were not recognized in connection with the BCRAs request. This does not imply a waiver of the actions mentioned above.
In addition, as mentioned in note 12, in May 2005 the compensation to be received in Boden 2012 for USD 39,078,010 face value was recorded under Other receivables from financial transactions.
15.1.2 Public Sector assistance
As of September 30, 2005 and the end of the previous fiscal year the Bank carried the following receivables from the Non Financial Public Sector:
a) Restructured Government securities and Credit assistance to the public sector:
09.30.05 |
12.31.04 |
|||||||
BBVA Banco Francés |
Consolidated Position |
Consolidated Position |
||||||
Secured Bond 2018 (*) |
87,767 | 108,184 | 451,121 | |||||
CCF (Tax credit certificate) (*) |
. | 6 | 41,151 | |||||
Federal Government secured loans Decree No. 1387/01 (net of discounts) |
3,802,518 | 4,353,700 | 5,798,218 | |||||
Other loans to the Non Financial Public Sector |
2,515 | 2,515 | 3,300 | |||||
Discount Bonds in US dollar |
205,941 | 205,941 | | |||||
Discount Bonds in pesos |
360,516 | 770,784 | | |||||
Total |
4,459,257 | 5,441,130 | 6,293,790 | |||||
Allowances |
| (64,532 | ) | (7,068 | ) | |||
(*) | Net of the balancing account established by Communication A 3911 as supplemented of the BCRA. |
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b) Government securities in portfolio, in process of restructuring:
09.30.05 |
12.31.04 |
||||||
BBVA Banco Francés |
Consolidated position |
Consolidated position |
|||||
Argentine Republic External Bills (**) |
| | 594,593 | ||||
Provincial Development Trust Fund Corporate Bonds (*) |
794,415 | 794,415 | 742,930 | ||||
Federal Government secured loans Decree No. 1387/01 (net of discounts) (**) |
| | 383,271 | ||||
Treasury Bills (**) |
| | 58,169 | ||||
Other |
| | 630 | ||||
Total |
794,415 | 794,415 | 1,779,593 | ||||
Allowances |
| | (128,986 | ) |
(*) | These financing facilities are in the final phase of the restructuring process conducted by the National Government. No substantially adverse effects on the Banks equity forecast in this respect. |
(**) | As mentioned in note 15, the Entity effected the debt exchange and received peso and dollar denominated Discount Bonds. |
15.1.3 Legal actions Constitutional protection actions
The measures adopted by the Federal Executive with respect to the political, economic, financial and foreign exchange emergency triggered a number of legal actions to be filed by individuals and companies, in the form of constitutional protection actions (judicial injunctions resulting in the immediate release of frozen deposits), against the Federal Government, the BCRA and Financial Institutions as the petitioners consider that the Law on Public Emergency and its supplementary provisions are unconstitutional. Based, mainly in the Kiper against Federal Government and Others case, dictated by the Supreme Court, the courts massively started to dictate through constitutional protection actions, the partial reimbursement of bank deposits in US dollars or Argentine pesos at the floating exchange rate.
On March 11, 2002, the Argentine Association of Government-owned and Private Banks and the Argentine Bank Association filed a per saltum appeal with the Argentine Supreme Court under section 195 bis of the Argentine Code of Civil and Commercial Procedure (according to the modification introduced by Law No. 25,561). The appeal was filed for the benefit of government-owned and private banks that are members of such associations and was based on the Argentine institutional and systematic crisis and on the need to comply with effective regulations to achieve an ordered and gradual solution for the restrictions affecting the financial system and guaranteeing a plurality of interest. Such appeal seek communication to all federal courts of cases in which precautionary measures have been enforced or are about to be enforced since the effective date of Decree No. 1570/01 until March 11, 2002, against banks that are members of such associations.
On April 26, 2002, Law No. 25,587 was published in the Official Gazette of the Argentine Republic. This law establishes limitations to those precautionary measures that judges may adopt regarding the deposits affected by the provisions of Law No. 25,561 as supplemented. With some exceptions, the law establishes that: a) the precautionary measures cannot consist in giving the petitioner the deposited funds, and b) those appeals which interfere against them have a suspension effect, that is to say, that they must not be executed until they have been given the final court decision.
On July 24, 2002, the Federal Executive issued Decree No. 1316/02 establishing the temporary suspension for 120 business days of compliance with and enforcement of precautionary measures and final judgments issued in the legal actions referred to in section 1 of Law No. 25,587. Court orders must be recorded in financial institutions in chronological order and informing that measure to the court and the BCRA.
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Suspended resolutions will be complied with after expiration of the term in their chronological order and within 30 business days. In the case of exceptions to the above rules, the measure will be presented to the BCRA that will comply with the court orders on behalf and account of the Bank.
On March 5 2003, the Supreme Court ruled on the action for the protection of constitutional rights brought against the Federal Government by the Province of San Luis, declaring Decree 1570/2001 and sections 2 and 12 of Decree 214/2002 to be unconstitutional, ordering the return of the amounts deposited in either US dollars or the equivalent in pesos at the free market rate of exchange. In its decision, the Supreme Court indicated that in enforcing the ruling account should be taken of the modalities, restrictions and temporary limitations which, without affecting the substance of the right being recognized, would enable the enforcement of the ruling to be made compatible with the general interest, in the context of the severe crisis in which it would be taking place, combining the power to set a reasonable term for compliance and the need to settle the credit while avoiding unnecessary loss and considering the number of creditors in a similar position vis-à-vis financial institutions.
On February 3, 2004, the Argentine Banks Association (ABA) that gathered foreign-capital national banks, as the remaining financial Institutions, has sent to Mr. Economy Minister a compensation application form for the exchange difference that originates the fulfillment of the legal orders related to the action for the protection of constitutional rights filed by the regular depositors of the US dollars deposits, previously to the modification of the convertibility regime. The Institution has granted its conformity to such presentation. At this date Mr. Minister has not issued on the subject.
On July 13, 2004, the Supreme Court rendered its judgment in the case Cabrera, Gerónimo Rafael v. Argentine Executive Branch on action for the protection of constitutional rights (amparo), in which it rejected the claim of a depositor on the grounds that the latter had exercised his rights within the framework of the emergency laws, and collected a portion of his deposit in pesos, without reserving the right to claim the difference in U.S. dollars at the exchange rate prevailing in the open market. Based on the above and on the individuals own acts theory, the Supreme Court rejected the petitioners claim for the exchange difference. This is the second judgment rendered by the Supreme Court in relation to pesification where it considers the substance of the issue, the first one being the judgment rendered in the case between state entities, a Province (San Luis) and a state-owned Bank (Banco Nación). Additionally, in this judgment, one of the votes refers to the fact that the amparo is not the appropriate proceeding to be brought. Costs were assessed against the petitioner. As of the date of these financial statements, the first and second instance courts have applied this judgment in diverse ways.
On September 14 , 2004, the CSJN also pronounced in the case entitled CAMPBELL, María Enriqueta Vda. De Tufiño y otro c/ P.E.N. - Banco de Salta S.A. Grupo Macro s/ AMPARO- Medida cautelar, rejecting the claim of a depositor which was filed before the Court of original Jurisdiction and the Court of appeal, declaring the unconstitutionally of the emergency rule questioned regarding the pesification of the deposit funds in foreign currency. Subsequently to this appeal, the bank communicated to the Judge attending the cause with the corresponding documentation, that on April 2002 the plaintiffs have disposed all their deposits to a fixed term, being destined to the acquisition of two real estates and a vehicle, in the terms of the communication A 3481 of the BCRA, which preview this kind of operations. As a consequence, was deducted that the actors agreed and they were submitted to the emergency rule that allow in this way to return, the rescheduled deposits (within the framework of the emergency rule stated by the Federal Government) reason why said the bank-, without prejudice of the appeal, the judgment, in its concept, resulted in an impossible fulfillment and abstract in their effects. Before such arguments and the silence maintain by the other parties regarding this matter, the Court considered that when the depositors dispose all of their funds in the Bank using one of the options granted to such purpose for the BCRA, that the action for the protection of constitutional rights will become abstract and for such reason, declared in officious the pronouncement of the Court over the extraordinary resources stated regarding the precedents mentioned and revoked the judgment appealed that sustain the action of the protection of constitutional rights (amparo), imposing the costs by his order of all the Courts due to the particular circumstances of the lawsuit.
The Supreme Court of Justice, on October 26, 2004, was pronounced in the case entitled BUSTOS, ALBERTO ROQUE Y OTROS c/ P.E.N. Y OTROS s/ AMPARO, revoking the sentence in which mentioned the action on the protection of constitutional rights (amparo), declaring that such action is not adequate for such claim and declares the constitutionality of the rule by which the argentine economy was pesificated due to the economic, financial and exchange emergency situation through which the country is going through, confirmed by Congress Law. The revocation of the sentence of the Original Jurisdiction do not state how the Judge of this jurisdiction will resolve the fulfillment of the Court and for such reason proceed to the refund of the amount already paid due to the legal demands ordered by a Grade Judge.
- 23 - | ||||
As of the date hereof, BBVA Banco Francés S.A. continued to be subject to precautionary measures or execution of judgments rendered by first or second instance courts as well as to decisions that adhered to the Supreme Court rulings as concerns the constitutionality of pesification, the own acts theory, etc. In the defense of its shareholders and clients interests, BBVA Banco Francés S.A. has articulated such judicial defenses as deemed by it to be conducive to the preservation of its equity.
Owing to the equity loss that the fulfillment of the precautionary measures ordered by different courts in constitutional protection actions imply for the financial system and, in particular, for BF, the Bank has let this loss be known to the Ministry Economy and the BCRA expressing a reservation of legal rights.
To date the authorities have not ruled on possible compensation for the financial system in relation to these matters.
Furthermore, by means of Communication A 3916 dated April 3, 2003 the BCRA resolved to allow the capitalization of the differences arising from compliance with court orders in cases challenging regulations in force in accordance with Law 25,561, Decree 214/02 and complementary regulations in relation to deposits within the financial system. This asset (calculated according to the difference in nominal terms between the deposit at the free market exchange rate at the moment of each payment compared to the book vale of 1.40 pesos per dollar plus CER to that date) is being amortized in 60 monthly installments as from April 2003.
As of September 30, 2005 and the end of the previous fiscal year, BF records 610,596 and 739,289 respectively, (after deducting the accumulated amortization for 498,925 and 335,827 as of September 30, 2004 and the end of the previous fiscal year, respectively) in the Intangible Assets item, Organization and Development Expenses account.
The Bank, however, notifies that such amortization is solely calculated to comply with the regulations of the BCRA and that by no means does it imply a waiver to possible compensation or recovery of the exchange difference resulting from compliance with court orders corresponding to petitions for protection of civil rights or other court action derived from the mandatory conversion of bank deposits into pesos.
In the opinion of the Banks Board of Directors and its legal advisors there exists compensation or recovery probabilities for such equity loss. To the issuance date of the present financial statements, it is not possible to anticipate the final resolution of these matters.
15.1.4 Portfolio variation coefficient
In accordance with that established by the current regulations, the Bank applied the CVS (Salary Variation Coefficient) for certain pesified loans.
The Argentine Congress has enacted a Law which contemplates compensation to financial institutions for the loss resulting from the application to certain bank loans of the CVS instead of the CER index. On January 23, 2004, the Argentine Executive, through Decree 117/2004, regulated the abovementioned law, defining the guidelines to be complied with by financial institutions to adhere to the compensation regime. Subsequently, the BCRA, through Communication A 4114 dated March 12, 2004, established the procedure for institutions to adhere to the compensation regime, and the Ministry of Economy and Production, through Resolution 302/04 dated May 3, 2004, clarified the calculation method applicable to the amount to be compensated.
Additionally, on May 6, 2004, the ABA, which groups all foreign-capital national banks, filed with the Ministry of Economy, with copy to the BCRA, a request for compensation of the difference between CER and CVS indexes applicable to credits under Law 25,713, Decree 762/02, since as of this date the provisions of Law 25,796, Decree 117/04 and Resolution No. 302/04 are still casting doubts in respect of their implementation and effective compensation. Such request was rejected by the Ministry of Economy on July 21, 2004.
- 24 - | ||||
On May 18, 2004 the Bank made a filing with the BCRA, also copied to the Ministry of Economy, signifying its adhesion to the compensation system relating to the above mentioned index differences, subject to the calculation deemed by the bank to be consistent with the spirit of the rules in force, which it also included in the referred filing. Such presentation was confirmed through a letter dated October 4, 2004.
Up to December 31, 2003, the Bank had capitalized the nominal difference generated by the application of the CVS index instead of the CER index. On June 30, 2004, and in accordance with the provisions of BCRA Communication A 4114, and Resolution 302/04 of the Ministry of Economy and Production, the Bank wrote off the relevant asset and recorded an adjustment to earnings of prior years for 141,064 (loss). Such registration does not mean in any way to resign to the compensation.
15.1.5 BCRA advances and rediscounts
For the purpose of covering the decrease in deposits, the Bank obtained, during the period March through July 2002, advances from the BCRA, which as June 30, 2005 and the end of the previous fiscal year, amount to (principal, CER and interests) 1,825,091 (of which 29,189 has been anticipated) and 1,855,115, respectively, and are included under Other liabilities from financial transactions BCRA Other. In guarantee of such assistance, the Bank executed a first-degree collateral agreement whereby it encumbered in favor of the BCRA a portion of the Banks credit rights under the Guaranteed Loan Agreement executed on December 7, 2001, pursuant to Federal Executive Decree No. 1387/01 as supplemented and amended.
The Bank adhered with the cancellation procedure of such advances through several presentations to the BCRA and Financial System Restructuring Unit (Unidad de Reestructuración del Sistema Financiero - URSF). Additionally, on June 24, 2004, the U.R.S.F. communicated the Bank the authorization to extend the amortization terms of the mentioned advances. According to that, the Bank will cancel the advances received from the BCRA in 89 monthly installments as from March 2004 and affected in guarantee of such advances national secured loans according to what disposed by the BCRA in the letter dated December 5, 2003.
On September 2, 2005, the Bank cancelled in advance the aggregate balance of rediscounts for liquidity purposes granted by the BCRA, then amounting to 1,827,911. Consequently, the national secured loans pledged as a security for that assistance were released and are available as of the date hereof.
15.1.6 The impact of the crisis - Regularization and Reorganization Plan
Due to the systemic crisis occurred at the end of 2001, the Banks Board of Directors decided to implement a plan to strengthen the Banks stockholders equity and liquidity. Similarly, the BCRA in exercise of its powers requested that the Bank formally submit the above-mentioned plan before that body. The plan was presented on May 31, 2002 with the aim of regularizing and restoring financial health in relation to complying with the technical regulation on minimum cash, which had been affected by the above-mentioned liquidity crisis triggered by the fall of deposits, court rulings on the actions brought by depositors, and by regulatory changes on prudential regulations.
As from July 2002, BF has regularized its liquidity position, fulfilling in this way with the technical regulations required, under this concept, by the BCRA.
By Resolution 354/2003 dated September 4, 2003, the BCRA requested the Banks reformulation of the regularization and reorganization plan to consider issues such as the adoption of measures to increase the Banks adjusted stockholders equity and conforming of technical ratios to those required by Communication A 3959 and complementary regulations related to Minimum Capital Requirements in force as from January 1, 2004. On October 21, 2003, the Bank filed a letter with the BCRA informing some of the alternatives it was analyzing to comply with the Minimum Capital Requirements established by that authority as well as other operating ratios related to the Banks adjusted stockholders equity measured individually. In line with the guidelines of the abovementioned letter, after its joint analysis with the technical divisions of the Bank and the BCRA, on January 21, 2004, the Bank filed a formal reformulation of the regularization and reorganization plan with the control authority, thus complying with the requirements established by the mentioned Resolution.
- 25 - | ||||
On March 18, 2004, the BCRA notified the issuance of Resolution No. 52/04 by the Superintendent of Financial and Exchange Institutions dated March 17, 2004, whereby the reformulation of the regularization and reorganization plan presented by the Bank was deemed to have been fulfilled.
During March 2004, the Bank has carried out the actions covered in the plan, included the sale of the subsidiary Banco Francés (Cayman) Limited to BBVA. Therefore, as from April 2004 the Bank has met the Minimum Capital requirements and other technical ratios established by the BCRA, even without giving effect to the capital increase made in November 2004. As of April 30, 2004, the Banks Minimum Capital position, measured on an individual basis, was as follows:
Capital Requirement |
408,715 | |
Computable Capital |
1,288,065 | |
Excess over Capital Requirement |
879,350 |
In addition, the Shareholders Meeting dated April 22, 2004 ordered a capital increase (see note 1.2) that was fully subscribed and paid in during the month of November 2004.
During June, 2004, as committed in the plan, the repurchase of loans and the sale of Boden 2012 was carried out.
As of September 30, 2005, the Banks Minimum Capital position, measured on an individual basis, was as follows:
Capital Requirement (*) |
783,262 | |
Computable Capital |
1,687,678 | |
Excess over Capital Requirement |
904,416 |
As from March 2004, the actions taken under the regularization and reorganization plan described in the preceding paragraphs allowed the Bank to meet the Minimum Capital requirements and other technical ratios established by the BCRA. As the Bank has carried out all actions committed under the regularization and reorganization plan, on November 23, 2004 it filed an application with the BCRA for it to regard the plan as having been fulfilled.
On February 25, 2005, the Superintendent of Financial and Exchange Institutions gave notice of Resolution No. 46/05 dated February 23, 2005, which regarded the regularization and reorganization plan presented by the Bank as duly fulfilled.
(*) | This requirement includes 206,530 due to breach of the commitment for pro rata sharing of credit risk regulation in connection with balances held in correspondents, which occurred during the effectiveness of the reorganization plan. Such incremental requirement shall be met until January 2006. |
15.1.7 | Future evolution of the economical situation and its effect on the Bank |
In view of the favorable evolution of the economic variables, as a result of the actions taken, the Banks performance has substantially improved, resulting in the upgrading of its fundamental variables.
Since fiscal year 2004, the actions carried out have led to a significant increase in the Banks portfolio of loans to the private sector, while acceptance of deposits has also recorded an important growth.
These increases in volume, combined with an efficient price management policy, have enabled to significantly improve the Banks gross intermediation margin.
The improvement in service charge income related to the new strategy developed and new products launched, as well as the reduction in administrative expenses that resulted from the continued efforts placed on structures, processes and costs, have allowed improving again all efficiency and profitability ratios.
The credit policies applied over recent years have resulted in both the growth of the Banks loan portfolio and the improvement in its asset quality. In addition to the significant growth experienced during this year, as of September 30, 2005 the delinquency rate over total loans reached 1.34%, which compares much favorably to prior periods and the market as well. During 2005, allowances for loan losses were maintained to protect the Bank against such delinquency, reaching a 106.57% ratio as of September 30, 2005.
- 26 - | ||||
Given the favorable performance experienced during the last year and the first semester of 2005, the Banks Board of Directors is optimistic about the development of future operations, in particular if the National Government compensates for the significant mismatch resulting from enforcement of the Constitutional protection actions, and completes the process of compensation to financial institutions.
16 | PUBLICATION OF THE FINANCIAL STATEMENTS |
As provided by Communication A 760, the previous intervention of the BCRA is not required for the publication of these financial statements.
17 | ACCOUNTING PRINCIPLES EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH |
These financial statements are presented on the basis of the accounting standards of the BCRA and, except for the effect of the matter mentioned in Note 3, in accordance with accounting principles generally accepted in Buenos Aires City - Argentina. Certain accounting practices applied by the Bank that conform with the standards of the BCRA and with accounting principles generally accepted in Buenos Aires City may not conform with the generally accepted accounting principles in other countries.
The effects of the differences, if any, between generally accepted accounting principles in Buenos Aires City Argentina and the generally accepted accounting principles in the countries in which the financial statements are to be used have not been quantified. Accordingly, they are not intended to present financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the countries of the users of the financial statements, other than Argentina.
EXHIBIT A
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Description |
Serie |
Identification |
Holding |
Position |
Final |
|||||||||||
Market Value |
Book as of 09-30-2005 |
Book balance as of |
||||||||||||||
GOVERNMENT SECURITIES |
||||||||||||||||
Holdings in investment accounts |
||||||||||||||||
In pesos |
||||||||||||||||
Discount Bonds in pesos |
ARDIVP=RR | 187,777 | 360,516 | 187,777 | 187,777 | |||||||||||
Subtotal in pesos |
360,516 | 56,107 | 187,777 | 187,777 | ||||||||||||
In foreign currency |
||||||||||||||||
Discount Bonds in US dollar |
ARDIVP=RR | 74,843 | 205,941 | 74,843 | 74,843 | |||||||||||
Federal Government Bonds in US dollar Libor 2012 |
72,063 | 78,414 | 72,063 | 72,063 | ||||||||||||
Subtotal in foreign currency |
284,355 | 672,977 | 146,906 | 146,906 | ||||||||||||
Subtotal in Holdings in investment accounts |
644,871 | 729,084 | 334,683 | 334,683 | ||||||||||||
Holdings for trading or financial transactions |
||||||||||||||||
Local |
||||||||||||||||
In pesos |
||||||||||||||||
Federal Government Bonds in pesos 2% 2014 |
3,100 | 3,100 | (1 | ) | (1 | ) | ||||||||||
Consolidation Bonds (PRE8) |
4,185 | 4,185 | 7,305 | 7,305 | ||||||||||||
Others |
345 | 345 | 2,592 | 2,592 | ||||||||||||
Subtotal in pesos |
7,630 | 4,248 | 9,896 | 9,896 | ||||||||||||
In foreign currency |
||||||||||||||||
Federal Government Bonds in US dollar Libor 2012 |
397 | 397 | 1 | 1 | ||||||||||||
Federal Government Bonds in US dollar Libor 2013 |
420 | 420 | | | ||||||||||||
Other |
469 | 469 | 21 | 21 | ||||||||||||
Subtotal in foreign currency |
1,286 | 6,049 | 22 | 22 | ||||||||||||
Subtotal in Holdings for trading or financial Transactions |
8,916 | 10,297 | 9,918 | 9,918 | ||||||||||||
Unlisted government securities |
||||||||||||||||
Local |
||||||||||||||||
In pesos |
||||||||||||||||
Secured Bonds due 2018 (1) |
87,767 | 87,767 | 87,767 | |||||||||||||
Subtotal in pesos |
87,767 | 492,272 | 87,767 | 87,767 | ||||||||||||
Subtotal Unlisted government securities |
87,767 | 492,272 | 87,767 | 87,767 | ||||||||||||
(1) | As of September 30, 2005, the market value was 77,876 |
EXHIBIT A
(Contd.)
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Holding |
||||||||||||||
Description |
Serie |
Identification |
Market value |
Book Balance as of 09-30-2005 |
Book Balance as of 12-31-2004 |
Position without options |
Final Position | |||||||
Instruments issued by the BCRA |
||||||||||||||
BCRA Bills |
||||||||||||||
Listed |
||||||||||||||
Own portfolio |
||||||||||||||
C30N5BCRA |
4,506 | 4,506 | 4,506 | 4,506 | ||||||||||
P05L6BCRA |
4,665 | 4,665 | 4,665 | 4,665 | ||||||||||
P14D5BCRA |
9,818 | 9,818 | 7,854 | 7,854 | ||||||||||
C31E7BCRA |
10,610 | 10,610 | 10,280 | 10,280 | ||||||||||
C12L6BCRA |
25,355 | 25,355 | 25,355 | 25,355 | ||||||||||
C22M6BCRA |
34,935 | 34,935 | 34,591 | 34,591 | ||||||||||
P08M6BCRA |
42,633 | 42,633 | 44,571 | 44,571 | ||||||||||
P16N5BCRA |
58,373 | 58,373 | 58,373 | 58,373 | ||||||||||
P02N5BCRA |
71,143 | 71,143 | 69,153 | 69,153 | ||||||||||
C05L6BCRA |
100,748 | 100,748 | 100,748 | 100,748 | ||||||||||
C08F6BCRA |
114,641 | 114,641 | 114,315 | 114,315 | ||||||||||
P09G6BCRA |
160,628 | 160,628 | 160,628 | 160,628 | ||||||||||
P21F7BCRA |
194,637 | 194,637 | 194,637 | 194,637 | ||||||||||
Other |
10,236 | 10,236 | 19,230 | 19,230 | ||||||||||
Subtotal own portfolio |
842,928 | 334,166 | 848,906 | 848,906 | ||||||||||
Repurchase transactions |
||||||||||||||
Subtotal repurchase transactions |
| 398,980 | | | ||||||||||
BCRA Notes |
||||||||||||||
Listed |
||||||||||||||
Own portfolio |
||||||||||||||
CNOBACD06 |
7,325 | 7,325 | 7,325 | 7,325 | ||||||||||
BBPNOBAC07 |
90,636 | 90,636 | 90,636 | 90,636 | ||||||||||
Other |
1,315 | 1,315 | 1,315 | 1,315 | ||||||||||
Subtotal BCRA Notes in pesos |
99,276 | 7,601 | 99,276 | 99,276 | ||||||||||
Subtotal instruments issued by the BCRA |
942,204 | 740,747 | 948,182 | 948,182 | ||||||||||
TOTAL GOVERNMENT SECURITIES |
1,683,758 | 1,972,400 | 1,380,550 | 1,380,550 | ||||||||||
EXHIBIT A
(Contd.)
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Holding |
||||||||||||||||
Description |
Serie |
Identification |
Market value |
Book Balance as of 09-30-2005 |
Book Balance as of 12-31-2004 |
Position without options |
Final Position |
|||||||||
INVESTMENTS IN LISTED PRIVATE SECURITIES |
||||||||||||||||
Other debt instruments |
||||||||||||||||
Local |
||||||||||||||||
In pesos |
||||||||||||||||
Telefónica de Argentina Corporate Bonds |
3,872 | 3,872 | 7,657 | 7,657 | ||||||||||||
Subtotal in pesos |
3,872 | 218 | 7,657 | 7,657 | ||||||||||||
In foreign currency |
||||||||||||||||
Pecom 2009 Corporate Bonds |
12 | 12 | 12 | 12 | ||||||||||||
Metrogas 2003 Corporate Bonds |
26 | 26 | 26 | 26 | ||||||||||||
Others |
5 | 5 | 5 | 5 | ||||||||||||
Subtotal in foreign currency |
43 | 63 | 43 | 43 | ||||||||||||
Foreign |
||||||||||||||||
Other |
10 | 10 | 10 | 10 | ||||||||||||
Subtotal foreign |
10 | 10 | 10 | 10 | ||||||||||||
Subtotal Other debt instruments |
3,925 | 291 | 7,710 | 7,710 | ||||||||||||
Other Equity instruments |
||||||||||||||||
Foreign |
||||||||||||||||
ADR Telefónica de España |
56 | 56 | . | . | ||||||||||||
ADR Telebras |
54 | 54 | . | . | ||||||||||||
Others |
8 | 8 | (3 | ) | (3 | ) | ||||||||||
Subtotal foreign |
118 | . | (3 | ) | (3 | ) | ||||||||||
Subtotal Equity instruments |
118 | . | (3 | ) | (3 | ) | ||||||||||
TOTAL INVESTMENTS IN LISTED PRIVATE SECURITIES |
4,043 | 291 | 7,707 | 7,707 | ||||||||||||
TOTAL GOVERNMENT AND PRIVATE SECURITIES |
1,687,801 | 1,972,691 | 1,388,257 | 1,388,257 | ||||||||||||
EXHIBIT B
CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES
AND GUARANTIES RECEIVED AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish-See Note 17)
-Stated in thousands of pesos-
09-30-2005 |
12-31-2004 | |||
COMMERCIAL PORTFOLIO |
||||
Normal performance |
||||
Preferred collaterals and counter guaranty A |
4,916,108 | 6,241,101 | ||
Other collaterals and counter guaranty B |
29,579 | 22,834 | ||
Without senior security or counter guaranty |
2,433,591 | 1,606,479 | ||
In potential risk |
||||
Other collaterals and counter guaranty B |
6,645 | 8,465 | ||
Without senior security or counter guaranty |
122,291 | 200,830 | ||
Nonperforming |
||||
Without senior security or counter guaranty |
53,614 | 41,167 | ||
With high risk of uncollectibility |
||||
Other collaterals and counter guaranty B |
2,485 | 411 | ||
Without senior security or counter guaranty |
43,027 | 23,796 | ||
Uncollectible |
||||
Other collaterals and counter guaranty B |
| 2,577 | ||
Without senior security or counter guaranty |
1,190 | 21,577 | ||
Total |
7,608,530 | 8,169,237 | ||
EXHIBIT B
(Contd.)
CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES
AND GUARANTIES RECEIVED AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish-See Note 17)
-Stated in thousands of pesos-
09-30-2005 |
12-31-2004 | |||
CONSUMER AND HOUSING PORTFOLIO |
||||
Normal performance |
||||
Preferred collaterals and counter guaranty A |
7,804 | 5,254 | ||
Other collaterals and counter guaranty B |
366,079 | 375,243 | ||
Without senior security or counter guaranty |
751,041 | 635,188 | ||
Inadequate performance |
||||
Preferred collaterals and counter guaranty A |
97 | | ||
Preferred collaterals and counter guaranty B |
3,793 | 3,333 | ||
Without senior security or counter guaranty |
2,907 | 1,975 | ||
Deficient performance |
||||
Other collaterals and counter guaranty B |
1,407 | 3,845 | ||
Without senior security or counter guaranty |
2,267 | 5,896 | ||
Unlikely to be collected |
||||
Other collaterals and counter guaranty B |
1,866 | 1,377 | ||
Without senior security or counter guaranty |
3,676 | 1,970 | ||
Uncollectible |
||||
Other collaterals and counter guaranty B |
4,973 | 7,839 | ||
Without senior security or counter guaranty |
2,587 | 2,612 | ||
Uncollectible, classified as such under regulatory requirements |
||||
Other collaterals and counter guaranty B |
| 51 | ||
Without senior security or counter guaranty |
105 | 61 | ||
Total |
1,148,602 | 1,044,644 | ||
General Total (1) |
8,757,132 | 9,213,881 | ||
(1) | Items included: Loans (before allowances and difference arising from purchase of portfolio); Other receivables from financial transactions: Unlisted corporate bonds, Other receivables covered by debtor classification regulations, Interest accrued and pending collection covered by debtor classification regulations; Assets subject to financial leasing (before allowances); Other receivables: Receivables from sale of goods and interest accrued on receivables from sale of goods; Contingent credit balance memorandum accounts: Credit lines granted (unused portion) covered by debtor classification regulations, Other guarantees given covered by debtor classification regulations and Other covered by debtor classification regulations. |
EXHIBIT C
FINANCING FACILITIES CONCENTRATION
AS OF SEPTEMBER, 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
FINANCING |
||||||||||
09-30-2005 |
12-31-2004 |
|||||||||
Number of clients |
Outstanding balance |
% of total portfolio |
Outstanding balance |
% of total portfolio |
||||||
10 largest clients |
5,491,852 | 62,71 | % | 6,747,436 | 73.23 | % | ||||
50 next largest clients |
1,282,881 | 14,65 | % | 816,190 | 8.86 | % | ||||
100 following clients |
464,664 | 5,31 | % | 313,600 | 3.40 | % | ||||
Remaining clients |
1,517,735 | 17,33 | % | 1,336,655 | 14.51 | % | ||||
Total (1) |
8,757,132 | 100.00 | % | 9,213,881 | 100.00 | % | ||||
(1) | See (1) in Exhibit B. |
EXHIBIT D
BREAKDOWN BY FINANCING TERMS AS OF SEPTEMBER 30, 2005
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Description |
Past-due |
Term remaining to maturity |
Total |
||||||||||||||
1 month |
3 months |
6 months |
12 months |
24 months |
More than 24 months |
||||||||||||
Government sector |
| 8,456 | 421 | 74,691 | 984 | 172,954 | 4,341,942 | 4,599,448 | |||||||||
Financial sector |
| 70,910 | 18,949 | 16,523 | 43,021 | 3,842 | 640 | 153,885 | |||||||||
Non financial private sector and residents abroad |
36,605 | 1,629,276 | 499,782 | 555,016 | 408,881 | 270,090 | 604,149 | 4,003,799 | |||||||||
TOTAL |
36,605 | 1,708,642 | 519,152 | 646,230 | 452,886 | 446,886 | 4,946,731 | 8,757,132 | (1) | ||||||||
(1) | See (1) in Exhibit B. |
EXHIBIT E
DETAIL OF INVESTMENTS IN OTHER COMPANIES
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish See Note 17)
- Stated in thousands of pesos
Information about the issuer |
|||||||||||||||||||||||||
Concept |
Shares |
Amount |
Data from last published financial statements |
||||||||||||||||||||||
Identification |
Description |
Class |
Unit face value |
Votes per share |
Number |
09-30-2005 |
12-31-2004 |
Main business |
Fiscal year/ period- end |
Capital stock |
Stockholders equity |
Net income year/ period |
|||||||||||||
FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND AUTHORIZED |
|||||||||||||||||||||||||
Controlled |
|||||||||||||||||||||||||
Local |
|||||||||||||||||||||||||
33642192049 |
Francés Valores Sociedad de Bolsa S.A. |
Common | 500$ | 1 | 12,137 | 8,837 | 7,640 | Stockholder |
09.30.2005 | 6,071 | 8,839 | 2,196 | |||||||||||||
30663323926 |
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. |
Common | 1$ | 1 | 75,842,839 | 142,281 | 133,233 | Pensions fund manager |
09.30.2005 | 140,739 | 264,928 | 7,758 | |||||||||||||
33678564139 |
Consolidar Cía. de Seguros de Vida S.A. |
Common | 1$ | 1 | 7,383,921 | 51,127 | 48,382 | Insurance company |
09.30.2005 | 11,195 | 79,975 | 692 | |||||||||||||
30678574097 |
Consolidar Cía. de Seguros de Retiro S.A. |
Common | 1$ | 1 | 25,033,832 | 30,957 | 24,403 | Insurance company |
09.30.2005 | 37,551 | 50,559 | 2,931 | |||||||||||||
30704936016 |
Credilogros Compañía Financiera S.A. |
Common | 1$ | 1 | 39,700,000 | 26,243 | 22,774 | Financial institution |
09.30.2005 | 57,100 | 37,742 | 4,990 | |||||||||||||
30707847367 |
PSA Finance Arg. Cía Financiera S.A. |
Common | 1000$ | 1 | 9,000 | 11,700 | 11,045 | Financial institution |
09.30.2005 | 18,000 | 23,399 | 1,306 | |||||||||||||
30692274403 |
Atuel Fideicomisos S.A. |
Common | 1$ | 1 | 13,099,869 | 12,079 | 15,496 | Trust Manager |
09.30.2005 | 13,100 | 12,080 | (3,417 | ) | ||||||||||||
Subtotal controlled | 283,224 | 262,973 | |||||||||||||||||||||||
Noncontrolled |
|||||||||||||||||||||||||
Local |
|||||||||||||||||||||||||
33707124909 |
Rombo Cía. Financiera S.A. |
Common | 1000$ | 1 | 8,000 | 12,419 | 12,183 | Financial Institution |
09.30.2005 | 20,000 | 31,050 | 593 | |||||||||||||
Other |
8,191 | 7,454 | |||||||||||||||||||||||
Foreign |
|||||||||||||||||||||||||
Other |
733 | 748 | |||||||||||||||||||||||
Subtotal noncontrolled | 21,343 | 20,385 | |||||||||||||||||||||||
Total in financial institutions, supplementary and authorized | 304,567 | 283,358 | |||||||||||||||||||||||
IN OTHER COMPANIES |
|||||||||||||||||||||||||
Noncontrolled |
|||||||||||||||||||||||||
Local |
|||||||||||||||||||||||||
30685228501 |
Consolidar ART S.A. |
Common | 1$ | 1 | 9,710,451 | 18,240 | 17,191 | Workers compensation |
09.30.2005 | 77,684 | 145,919 | 5,012 | |||||||||||||
30500064230 |
BBVA Seguros S.A. |
Common | 1$ | 1 | 1,301,847 | 5,308 | 4,905 | Insurance |
09.30.2005 | 10,651 | 43,432 | 1,028 | |||||||||||||
Other |
173 | 187 | |||||||||||||||||||||||
Foreign |
|||||||||||||||||||||||||
17415001 |
A.I.G. Latin American Fund |
11,470 | 11,711 | Investing |
12.31.2001 | 110,496 | 55,039 | (55,457 | ) | ||||||||||||||||
Other |
45 | 46 | |||||||||||||||||||||||
Subtotal noncontrolled | 35,236 | 34,040 | |||||||||||||||||||||||
Total in other companies | 35,236 | 34,040 | |||||||||||||||||||||||
Total investments in other companies | 339,803 | 317,398 | |||||||||||||||||||||||
EXHIBIT F
MOVEMENT OF PREMISES AND EQUIPMENT
AND OTHER ASSETS FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2005 AND THE FISCAL YEAR ENDED DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Description |
Net book value at beginning of fiscal year |
Additions |
Transfers |
Decreases |
Depreciation for the period |
Net book value at 09-30-2005 |
Net book value at 12-31-2004 | ||||||||||
Years of useful life |
Amount |
||||||||||||||||
PREMISES AND EQUIPMENT |
|||||||||||||||||
Real Estate |
310,782 | 2,123 | | | 50 | 7,612 | 305,293 | 310,782 | |||||||||
Furniture and Facilities |
26,814 | 2,770 | 59 | 10 | 10 | 5,138 | 24,495 | 26,814 | |||||||||
Machinery and Equipment |
12,474 | 10,196 | (59 | ) | 145 | 5 | 5,618 | 16,848 | 12,474 | ||||||||
Automobiles |
971 | 232 | | 26 | 5 | 219 | 958 | 971 | |||||||||
Total |
351,041 | 15,321 | | 181 | 18,587 | 347,594 | 351,041 | ||||||||||
OTHER ASSETS |
|||||||||||||||||
Works of Art |
983 | | | | | | 983 | 983 | |||||||||
Leased assets |
8,106 | | 3,446 | 2,076 | 50 | 137 | 9,339 | 8,106 | |||||||||
Assets acquired to secure loans |
13,767 | | (11,719 | )(1) | 1,954 | 50 | 94 | . | 13,767 | ||||||||
Stationery and office supplies |
985 | 2,878 | | 2,019 | | | 1,844 | 985 | |||||||||
Other |
71,436 | 684 | 8,273 | 29,085 | 50 | 822 | 50,486 | 71,436 | |||||||||
Total |
95,277 | 3,562 | | 35,134 | 1,053 | 62,652 | 95,277 | ||||||||||
(1) | Pursuant to Communication A 4254, since June 30, 2005 the assets acquired to secure the loan as of March 31, 2003 were no longer recorded under this item. |
EXHIBIT G
MOVEMENT OF INTANGIBLE ASSETS FOR THE SIX MONTH PERIOD
ENDED SEPTEMBER 30, 2005 AND THE FISCAL YEAR ENDED DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Description |
Net book value at beginning of fiscal year |
Additions |
Decreases |
Amortization for the Period |
Net book value at 09-30-2005 |
Net book value at 12-31-2004 | ||||||||
Years of useful life |
Amount |
|||||||||||||
Goodwill |
32,088 | | 10 | 4,972 | 27,116 | 32,088 | ||||||||
Organization and Development expenses (1) |
29,830 | 6,935 | 14 | 1 & 5 | 12,491 | 24,260 | 29,830 | |||||||
Organization and development non-deductible expenses (2) |
739,289 | 36,745 | 1,209 | 5 | 164,229 | 610,596 | 739,289 | |||||||
Total |
801,207 | 43,680 | 1,223 | 181,692 | 661,972 | 801,207 | ||||||||
(1) | This caption mainly includes costs from information technology projects contracted from independent parties and leasehold improvements. |
(2) | See Note 15.1.3. |
EXHIBIT H
CONCENTRATION OF DEPOSITS
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
09-30-2005 |
12-31-2004 |
|||||||||
Number of clients |
Outstanding Balance |
% of total portfolio |
Outstanding balance |
% of total portfolio |
||||||
10 largest clients |
1,202,299 | 11,10 | % | 1,168,263 | 12.70 | % | ||||
50 next largest clients |
1,358,164 | 12,54 | % | 1,312,765 | 14.28 | % | ||||
100 following clients |
843,929 | 7,79 | % | 431,916 | 4.70 | % | ||||
Remaining clients |
7,427,589 | 68,57 | % | 6,281,543 | 68.32 | % | ||||
TOTAL |
10,831,981 | 100.00 | % | 9,194,487 | 100.00 | % | ||||
EXHIBIT I
BREAKDOWN OF MATURITY TERMS OF DEPOSITS,
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS AND
SUBORDINATED CORPORATE BONDS
AS OF SEPTEMBER 30, 2005
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Terms remaining to maturity |
Total | |||||||||||||
Description |
1 month |
3 months |
6 months |
12 months |
24 months |
More than 24 months |
||||||||
Deposits |
7,797,488 | 1,510,232 | 591,893 | 708,489 | 223,864 | 15 | 10,831,981 | |||||||
Other liabilities from financial transactions |
||||||||||||||
BCRA |
8,293 | | | 12,714 | 12,714 | 63,572 | 97,293 | |||||||
Banks and International Institutions |
1,333 | 27,849 | 78,947 | 65,139 | 22,945 | 35,448 | 231,661 | |||||||
Non-subordinated corporate bonds |
25,838 | | | 19,679 | 59,001 | 196,541 | 301,059 | |||||||
Financing received from Argentine financial institutions |
95,699 | | | | | | 95,699 | |||||||
Other |
310,024 | | | | | | 310,024 | |||||||
Total |
441,187 | 27,849 | 78,947 | 97,532 | 94,660 | 295,561 | 1,035,736 | |||||||
TOTAL |
8,238,675 | 1,538,081 | 670,840 | 806,021 | 318,524 | 295,576 | 11,867,717 | |||||||
EXHIBIT J
MOVEMENT OF ALLOWANCES FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30, 2005 AND THE FISCAL YEAR ENDED DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
Decreases |
Book value | ||||||||||||
Description |
Book value at beginning of fiscal year |
Increases |
Reversals (6) |
Applications |
09-30-2005 |
12-31-2004 | |||||||
DEDUCTED FROM ASSETS |
|||||||||||||
Government securities |
|||||||||||||
For impairment value |
55,325 | 3 | (5) | 1,550 | 53,778 | | 55,325 | ||||||
Loans |
|||||||||||||
Allowance for doubtful loans |
118,796 | 90,032 | (1) | 510 | 93,729 | 114,589 | 118,796 | ||||||
Other receivables from financial transactions |
|||||||||||||
Allowance for doubtful receivables |
12,757 | 121 | (1) | 1,781 | 144 | 10,953 | 12,757 | ||||||
Assets subject to financial leasing |
|||||||||||||
Allowance for doubtful receivables |
1,162 | 403 | (1) | | | 1,565 | 1,162 | ||||||
Investments in other companies |
|||||||||||||
For impairment value (3) |
11,711 | | 241 | | 11,470 | 11,711 | |||||||
Other receivables |
|||||||||||||
Allowance for doubtful receivables (2) |
153,423 | 136,822 | 9,280 | 1,865 | 279,100 | 153,423 | |||||||
Total |
353,174 | 227,381 | 13,362 | 149,516 | 417,677 | 353,174 | |||||||
LIABILITIES-ALLOWANCES |
|||||||||||||
Contingents commitments (1) |
3,914 | 23 | 150 | | 3,787 | 3,914 | |||||||
Other contingencies |
228,894 | 80,286 | (4) | | 34,974 | 274,206 | 228,894 | ||||||
Total |
232,808 | 80,309 | 150 | 34,974 | 277,993 | 232,808 | |||||||
(1) | Recorded in compliance with the provisions of Communication A 3918, as supplemented, of the BCRA, taking into account note 2.3.f). |
(2) | Includes mainly the possible uncollectibility risks arising out of payments under protection actions on Mutual Funds and deferred tax asset (see note 4.1.) |
(3) | Recorded, to recognize the estimated impairment in AIG Latin American Funds equity as of September 30, 2005 and December 31, 2004. |
(4) | Recorded to cover possible contingencies that were not considered in other accounts (civil, labor, commercial and other lawsuits). (note 2.3.o). |
(5) | Recorded in compliance with the provisions of Communication A 4084 of the BCRA. |
(6) | Includes exchange differences generated as allowances in foreign currency, booked in the Financial income - Gold and foreign currency exchange difference account, as follow: |
Government securities |
(1,550 | ) | |
Loans |
(510 | ) | |
Other receivables from financial transactions |
(105 | ) | |
Investments in other companies |
(241 | ) | |
Other receivables |
(278 | ) |
EXHIBIT K
CAPITAL STRUCTURE AS SEPTEMBER 30, 2005
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
SHARES |
CAPITAL STOCK |
|||||||||||||
Class |
Quantity |
Votes per share |
Issued |
Pending issuance or distribution |
Paid in |
|||||||||
Outstanding |
In portfolio |
|||||||||||||
Common | 471,361,306 | 1 | 471,306 | | 55 | (1) | 471,361 | (2) |
(1) | Shares issued and available to stockholders but not as yet withdrawn. |
(2) | Fully registered with the Public Registry of Commerce (See note 1.2.) |
EXHIBIT L
FOREIGN CURRENCY BALANCES AS OF
SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
Accounts |
09-30-2005 |
12-31-2004 | ||||||||||||
Total of period (per type of currency) |
||||||||||||||
Total of Period |
Euro |
US Dollars |
Pounds Sterling |
Yen |
Other |
Total of fiscal year | ||||||||
ASSETS |
||||||||||||||
Cash and due from banks |
830,917 | 31,851 | 796,423 | 940 | 84 | 1,619 | 573,415 | |||||||
Government and private securities |
285,812 | | 285,812 | | | | 679,099 | |||||||
Loans |
762,663 | 4,849 | 757,814 | | | | 518,273 | |||||||
Other receivables from financial transactions |
304,405 | 2,810 | 300,128 | 103 | | 1,364 | 88,982 | |||||||
Assets subject to financial leasing |
78 | | 78 | | | | 86 | |||||||
Investments in other companies |
12,248 | | 12,248 | | | | 12,505 | |||||||
Other receivables |
14,658 | 186 | 14,472 | | | | 28,984 | |||||||
Suspense items |
70 | | 70 | | | | 284 | |||||||
TOTAL |
2,210,851 | 39,696 | 2,167,045 | 1,043 | 84 | 2,983 | 1,901,628 | |||||||
LIABILITIES |
||||||||||||||
Deposits |
1,145,383 | 25,166 | 1,120,217 | | | | 820,780 | |||||||
Other liabilities from financial transactions |
870,523 | 15,701 | 851,789 | 1,010 | 3 | 2,020 | 702,327 | |||||||
Other liabilities |
3,337 | 1,236 | 2,101 | | | | 6,004 | |||||||
Subordinated corporate bonds |
| | | | | | 60,307 | |||||||
Suspense items |
22 | | 22 | | | | 2,793 | |||||||
TOTAL |
2,019,265 | 42,103 | 1,974,129 | 1,010 | 3 | 2,020 | 1,592,211 | |||||||
MEMORANDUM ACCOUNTS |
||||||||||||||
Debit accounts (except contra debit accounts) |
||||||||||||||
Contingent |
65,525 | | 65,525 | | | | | |||||||
Control |
8,503,988 | 6,104 | 8,496,079 | 3 | 1,048 | 754 | 7,760,035 | |||||||
Trustee activities |
4,514 | | 4,514 | | | | | |||||||
TOTAL |
8,574,027 | 6,104 | 8,566,118 | 3 | 1,048 | 754 | 7,760,035 | |||||||
Credit accounts (except contra credit accounts) |
||||||||||||||
Contingent |
231,765 | | 231,765 | | | | 260,269 | |||||||
Control |
| | | | | | 7,301 | |||||||
TOTAL |
231,765 | | 231,765 | | | | 267,570 | |||||||
EXHIBIT N
ASSISTANCE TO RELATED CLIENTS AND AFFILIATES
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos
Status | ||||||||||||||||||||||
Normal |
In potential risk / Inadequate Compliance |
Nonperforming / deficient compliance |
With high risk of uncollectibility / unlikely to be collected |
Uncollectible |
Classified uncollectible as such under regulatory requirements |
Total | ||||||||||||||||
Concept |
Not yet matured |
Past-due |
Not yet matured |
Past-due |
09-30-2005 |
12-31-2004 | ||||||||||||||||
1. |
Loans |
308,718 | | | | | | | | 308,718 | 63,397 | |||||||||||
- |
Overdraft |
19 | | | | | | | | 19 | 2,170 | |||||||||||
Without senior security or counter guaranty |
19 | | | | | | | | 19 | 2,170 | ||||||||||||
- |
Discounted Instruments |
5,363 | | | | | | | | 5,363 | 3,301 | |||||||||||
Without senior security or counter guaranty |
5,363 | | | | | | | | 5,363 | 3,301 | ||||||||||||
- |
Real Estate Mortgage and Collateral Loans |
385 | | | | | | | | 385 | 245 | |||||||||||
Other collaterals and counter guaranty B |
385 | | | | | | | | 385 | 245 | ||||||||||||
- |
Consumer |
30 | | | | | | | | 30 | 38 | |||||||||||
Without senior security or counter guaranty |
30 | | | | | | | | 30 | 38 | ||||||||||||
- |
Credit Cards |
302 | | | | | | | | 302 | 265 | |||||||||||
Without senior security or counter guaranty |
302 | | | | | | | | 302 | 265 | ||||||||||||
- |
Other |
302,619 | | | | | | | | 302,619 | 57,378 | |||||||||||
Without senior security or counter guaranty |
302,619 | | | | | | | | 302,619 | 57,378 | ||||||||||||
2. |
Other receivables from financial transactions |
7,247 | | | | | | | | 7,247 | 662 | |||||||||||
3. |
Assets subject to financial leasing and other |
49 | | | | | | | | 49 | | |||||||||||
4. |
Contingent commitments |
34,146 | | | | | | | | 34,146 | 21,230 | |||||||||||
5. |
Investments in other companies and private securities |
136,799 | | | | | | | | 136,799 | 133,246 | |||||||||||
Total |
486,959 | | | | | | | | 486,959 | 218,535 | ||||||||||||
Total Allowances |
2,782 | | | | | | | | 2,782 | 441 | ||||||||||||
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
09/30/05 |
12/31/04 | |||
ASSETS |
||||
CASH AND DUE FROM BANKS |
||||
Cash |
451,462 | 421,910 | ||
Due from banks and correspondents |
1,651,406 | 1,244,707 | ||
2,102,868 | 1,666,617 | |||
GOVERNMENT AND PRIVATE SECURITIES (Note 5) |
||||
Holdings in investment accounts |
645,369 | 742,902 | ||
Holdings for trading or financial transactions |
615,400 | 128,788 | ||
Unlisted Government Securities |
87,773 | 492,902 | ||
Instruments issued by the BCRA |
1,239,393 | 999,563 | ||
Investments in listed private securities |
203,441 | 179,212 | ||
Less: Allowances |
2,621 | 66,419 | ||
2,788,755 | 2,476,948 | |||
LOANS |
||||
To government sector (Exhibit 1) |
5,150,630 | 6,927,719 | ||
To financial sector (Exhibit 1) |
230,316 | 169,509 | ||
To non financial private sector and residents abroad (Exhibit 1) |
3,452,979 | 2,374,276 | ||
Overdraft |
588,972 | 272,275 | ||
Discounted instruments |
465,023 | 251,332 | ||
Real estate mortgage |
384,324 | 401,064 | ||
Collateral Loans |
53,283 | 25,943 | ||
Consumer |
276,773 | 182,627 | ||
Credit cards |
433,073 | 364,105 | ||
Other |
1,344,730 | 964,177 | ||
Interest and listed-price differences accrued and pending collection |
33,701 | 25,517 | ||
Less: Unused collections |
124,975 | 111,840 | ||
Less: Interest documented together with main obligation |
1,925 | 924 | ||
Less: Difference arising from purchase of portfolio |
86 | 88 | ||
Less: Allowances |
184,405 | 202,693 | ||
8,649,434 | 9,268,723 | |||
OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS |
||||
BCRA |
293,316 | 325,844 | ||
Amounts receivable for spot and forward sales pending settlement |
144,262 | 380,796 | ||
Instruments to be received for spot and forward purchases pending settlement |
150,926 | 34.192 | ||
Unlisted corporate bonds (Exhibit 1) |
79,121 | 99,691 | ||
Non-deliverable forward transactions balances pending settlement |
50 | | ||
Other receivables not covered by debtor classification regulations |
139,101 | 40,152 | ||
Other receivables covered by debtor classification regulations (Exhibit 1) |
19,130 | 14,445 | ||
Interest accrued and pending collection not covered by debtor classification regulations |
112,604 | 90,764 | ||
Interest accrued and pending collection covered by debtor classification regulations (Exhibit 1) |
2,469 | 2,153 | ||
Less: Allowances |
11,031 | 12,796 | ||
929,948 | 975,241 | |||
ASSETS SUBJECT TO FINANCIAL LEASING |
||||
Assets subject to financial leasing (Exhibit 1) |
108,312 | 59,764 | ||
Less: Allowances |
1,608 | 1,188 | ||
106,704 | 58,576 | |||
INVESTMENTS IN OTHER COMPANIES |
||||
In financial institutions |
13,152 | 12,931 | ||
Other |
47,223 | 46,205 | ||
Less: Allowances |
11,470 | 11,711 | ||
48,905 | 47,425 | |||
OTHER RECEIVABLES |
||||
Receivables from sale of property assets (Exhibit 1) |
2,449 | 2,999 | ||
Tax on minimum presumed income Tax Credit |
113,331 | 92,631 | ||
Other |
403,224 | 245,555 | ||
Interest accrued and pending collection on receivables from sale of property assets (Exhibit 1) |
73 | 56 | ||
Other accrued interest receivable |
6 | 2 | ||
Less: Allowances |
279,508 | 153,825 | ||
239,575 | 187,418 | |||
PREMISES AND EQUIPMENT |
376,683 | 381,389 | ||
OTHER ASSETS |
63,028 | 95,549 | ||
INTANGIBLE ASSETS |
||||
Goodwill |
27,116 | 32,088 | ||
Organization and development expenses |
689,871 | 836,893 | ||
716,987 | 868,981 | |||
SUSPENSE ITEMS |
953 | 1,213 | ||
OTHER SUBSIDIARIES ASSETS (Note 5) |
29,409 | 32,342 | ||
TOTAL ASSETS |
16,053,249 | 16,060,422 | ||
(Contd.)
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
09/30/05 |
12/31/04 | |||
LIABILITIES |
||||
DEPOSITS |
||||
Government sector |
155,868 | 198,593 | ||
Financial sector |
25,835 | 18,568 | ||
Non financial private sector and residents abroad |
10,475,998 | 8,776,619 | ||
Checking accounts |
1,933,739 | 1,620,763 | ||
Savings deposits |
2,829,001 | 2,395,505 | ||
Time deposits |
4,906,932 | 3,983,558 | ||
Investments accounts |
213,274 | 159,193 | ||
Other |
493,835 | 381,795 | ||
Interest and listed-price differences accrued payable |
99,217 | 235,805 | ||
10,657,701 | 8,993,780 | |||
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS |
||||
BCRA |
97,293 | 1,780,275 | ||
Other |
97,293 | 1,780,275 | ||
Banks and International Institutions |
228,347 | 251,005 | ||
Non-subordinated corporate bonds |
294,900 | 321,181 | ||
Amounts payable for spot and forward purchases pending settlement |
151,757 | 31,892 | ||
Instruments to be delivered for spot and forward sales pending settlement |
146,380 | 423,051 | ||
Non-deliverable forward transactions balances pending settlement |
61 | | ||
Financing received from Argentine financial institutions |
96,961 | 3,110 | ||
Other |
311,970 | 341,824 | ||
Interest and listedprice differences accrued payable |
9,483 | 122,049 | ||
1,337,152 | 3,274,387 | |||
OTHER LIABILITIES |
||||
Fees payable |
55 | 95 | ||
Other |
184,351 | 143,952 | ||
184,406 | 144,047 | |||
ALLOWANCES |
330,754 | 265,698 | ||
SUBORDINATED CORPORATE BONDS |
| 60,307 | ||
SUSPENSE ITEMS |
2,750 | 33,788 | ||
OTHER SUBSIDIARIES LIABILITIES (Note 5) |
1,564,672 | 1,413,387 | ||
TOTAL LIABILITIES |
14,077,435 | 14,185,394 | ||
MINORITY INTEREST IN SUBSIDIARIES (Note 3) |
186,804 | 172,204 | ||
STOCKHOLDERS EQUITY |
1,789,010 | 1,702,824 | ||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
16,053,249 | 16,060,422 | ||
MEMORANDUM ACCOUNTS
09/30/05 |
12/31/04 | |||||
DEBIT ACCOUNTS |
||||||
Contingent |
||||||
|
Guarantees received | 4,660,768 | 5,240,258 | |||
|
Contra contingent debit accounts | 535,016 | 2,990,328 | |||
5,195,784 | 8,230,586 | |||||
Control |
||||||
|
Receivables classified as irrecoverable | 431,966 | 469,895 | |||
|
Other | 34,507,640 | 29,063,225 | |||
|
Contra control debit accounts | 194,895 | 207,304 | |||
35,134,501 | 29,740,424 | |||||
Derivatives |
||||||
|
Notional amount of non-deliverable forward transactions | 43,632 | 28,173 | |||
|
Contra debit derivatives accounts | 70,016 | 19,361 | |||
113,648 | 47,534 | |||||
For trustee activities |
||||||
|
Funds in trust | 32,556 | 29,479 | |||
32,556 | 29,479 | |||||
TOTAL |
40,476,489 | 38,048,023 | ||||
CREDIT ACCOUNTS |
||||||
Contingent |
||||||
|
Credit lines granted (unused portion) covered by debtor classification regulations (Exhibit 1) | 3,427 | 272,854 | |||
|
Guarantees provided to the BCRA | 72,828 | 2,387,972 | |||
|
Other guarantees given covered by debtor classification regulations (Exhibit 1) | 372,679 | 219,798 | |||
|
Other covered by debtor classification regulations (Exhibit 1) | 86,020 | 109,704 | |||
|
Other non covered by debtor classification regulations | 62 | | |||
|
Contra contingent credit accounts | 4,660,768 | 5,240,258 | |||
5,195,784 | 8,230,586 | |||||
Control |
||||||
|
Items to be credited | 175,045 | 173,837 | |||
|
Other | 19,850 | 33,467 | |||
|
Contra control credit accounts | 34,939,606 | 29,533,120 | |||
35,134,501 | 29,740,424 | |||||
Derivatives |
||||||
|
Notional amount of non-deliverable forward transactions | 70,016 | 19,361 | |||
|
Contra debit derivatives accounts | 43,632 | 28,173 | |||
113,648 | 47,534 | |||||
For trustee activities |
||||||
|
Contra credit accounts for trustee activities | 32,556 | 29,479 | |||
32,556 | 29,479 | |||||
TOTAL |
40,476,489 | 38,048,023 | ||||
The accompanying notes 1 through to 5 to the consolidated financial statements with subsidiaries and the Exhibit 1 are an integral part of these statements, which in turn are part of the stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
09/30/05 |
09/30/04 | |||
FINANCIAL INCOME |
||||
Interest on cash and due from banks |
17,811 | 8,253 | ||
Interest on loans to the financial sector |
10,085 | 2,806 | ||
Interest on overdraft |
26,795 | 18,168 | ||
Interest on discounted instruments |
14,358 | 7,552 | ||
Interest on real estate mortgage |
31,081 | 34,004 | ||
Interest on collateral loans |
2,472 | 827 | ||
Interest on credit card loans |
17,472 | 13,021 | ||
Interest on other loans |
107,404 | 69,801 | ||
Interest from other receivables from financial transactions |
6,587 | 4,958 | ||
Income from secured loans - Decree 1387/01 |
213,123 | 179,368 | ||
Net income from government and private securities |
159,740 | 125,742 | ||
Indexation by CER |
530,581 | 293,100 | ||
Indexation by CVS |
| 37,699 | ||
Other |
84,603 | 65,630 | ||
1,222,112 | 860,929 | |||
FINANCIAL EXPENSE |
||||
Interest on checking accounts |
14,770 | 14,423 | ||
Interest on savings deposits |
2,623 | 2,905 | ||
Interest on time deposits |
106,310 | 74,841 | ||
Interest on financing to the financial sector |
624 | 968 | ||
Interest from other liabilities from financial transactions |
19,687 | 16,875 | ||
Other interest |
57,180 | 72,805 | ||
Indexation by CER |
259,782 | 132,495 | ||
Other |
25,220 | 39,226 | ||
486,196 | 354,538 | |||
GROSS INTERMEDIATION MARGIN GAIN |
735,916 | 506,391 | ||
ALLOWANCES FOR LOAN LOSSES |
93,833 | 31,602 | ||
SERVICE CHARGE INCOME |
||||
Related to lending transactions |
59,498 | 52,731 | ||
Related to liability transactions |
143,369 | 115,209 | ||
Other commissions |
246,948 | 215,490 | ||
Other |
78,714 | 50,683 | ||
528,529 | 434,113 | |||
SERVICE CHARGE EXPENSE |
||||
Commissions |
33,852 | 24,036 | ||
Other |
18,361 | 17,209 | ||
52,213 | 41,245 | |||
(Contd.)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in Spanish - See Note 17)
- Stated in thousands of pesos -
09/30/05 |
09/30/04 |
|||||
ADMINISTRATIVE EXPENSES |
||||||
Payroll expenses |
307,454 | 248,150 | ||||
Fees to Bank Directors and Statutory Auditors |
239 | 227 | ||||
Other professional fees |
19,326 | 20,074 | ||||
Advertising and publicity |
27,999 | 20,021 | ||||
Taxes |
27,846 | 21,032 | ||||
Other operating expenses |
131,162 | 141,524 | ||||
Other |
54,231 | 45,255 | ||||
568,257 | 496,283 | |||||
NET GAIN FROM FINANCIAL TRANSACTIONS |
550,142 | 371,374 | ||||
RESULTS OF MINORITY INTEREST IN SUBSIDIARIES |
(15,024 | ) | (9,221 | ) | ||
OTHER INCOME |
||||||
Income from long-term investments |
2,469 | 17,809 | ||||
Punitive interests |
2,034 | 1,750 | ||||
Loans recovered and reversals of allowances |
59,581 | 395,448 | ||||
Other |
246,398 | 326,404 | ||||
310,482 | 741,411 | |||||
OTHER EXPENSE |
||||||
Punitive interests and charges paid to BCRA |
47 | 93 | ||||
Charge for uncollectibility of other receivables and other allowances |
219,357 | 360,648 | ||||
Amortization of difference arising from judicial resolutions |
164,229 | 150,170 | ||||
Other |
362,246 | 501,345 | ||||
745,879 | 1,012,256 | |||||
NET GAIN BEFORE INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME |
99,721 | 91,308 | ||||
INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME |
13,535 | 132,133 | ||||
NET INCOME/(LOSS) FOR THE PERIOD |
86,186 | (40,825 | ) | |||
The accompanying notes 1 through 5 to the consolidated financial statements with subsidiaries and the Exhibit 1 are an integral part of these statements, which in turn are part of the stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
(ART. 33 OF LAW No. 19,550)
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
09/30/05 |
09/30/04 |
|||||
CHANGES IN CASH |
||||||
Cash and due from banks at beginning of fiscal year |
1,666,617 | 1,639,154 | ||||
Increase in cash and due from banks |
436,251 | 137,580 | ||||
Cash and due from banks at end of the period |
2,102,868 | 1,776,734 | ||||
REASON OF CHANGES IN CASH |
||||||
Financial income collected |
1,081,094 | 1,023,710 | ||||
Service charge income collected |
527,962 | 433,210 | ||||
Less: |
||||||
Financial expense paid |
689,873 | 369,090 | ||||
Services charge expense paid |
52,213 | 41,224 | ||||
Operating expenses paid |
516,375 | 422,471 | ||||
FUNDS PROVIDED BY ORDINARY OPERATIONS |
350,595 | 624,135 | ||||
OTHER SOURCES OF FUNDS |
||||||
Net increase in deposits (*) |
1,799,591 | 440,956 | ||||
Net increase in other liabilities (*) |
66,427 | | ||||
Net decrease in government and private securities (**) |
234,561 | 1,187,656 | ||||
Net decrease in loans |
45,995 | | ||||
Net decrease in other receivables from financial transactions (**) |
171 | 201,396 | ||||
Other sources of funds (**) |
198,612 | 381,922 | ||||
TOTAL OF SOURCES OF FUNDS |
2,345,357 | 2,211,930 | ||||
USE OF FUNDS |
||||||
Net increase in loans (**) |
| 1,452,930 | ||||
Net increase in other assets (**) |
197,854 | 15,476 | ||||
Net decrease in other liabilities from financial transactions (*) |
1,726,736 | 456,461 | ||||
Net decrease in other liabilities (*) |
| 136,154 | ||||
Other uses of funds (*) |
335,111 | 637,464 | ||||
TOTAL USES OF FUNDS |
2,259,701 | 2,698,485 | ||||
INCREASE IN FUNDS |
436,251 | 137,580 | ||||
(*) Variations originated in financing activities |
(195,829 | ) | (789,123 | ) | ||
(**) Variations originated in investment activities |
281,485 | 302,568 |
The accompanying notes 1 through to 5 to the consolidated financial statements with subsidiaries and the Exhibit 1 are an integral part of these statements, which in turn are part of the stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
WITH SUBSIDIARIES AS OF SEPTEMBER 30, 2005 PRESENTED IN COMPARATIVE
FORM WITH THE BALANCE SHEET AS OF DECEMBER 31, 2004, AND THE
STATEMENTS OF INCOME AND CASH FLOWS AS OF SEPTEMBER 30, 2004
(ART. 33 OF LAW No. 19,550)
(Translation of financial statements originally issued in Spanish - See Note 17)
-Stated in thousands of pesos-
1. | SIGNIFICANT ACCOUNTING POLICIES AND SUBSIDIARIES |
General rule
In accordance with the procedures set forth in BCRAs regulations and Technical Pronouncement No. 21 of the Argentine Federation of Professional Councils in Economic Sciences BBVA Banco Francés S.A. (BF) has consolidatedline by lineits balance sheets as of September 30, 2005 and December 31, 2004, and the statements of income and cash flows for the periods ended September 30, 2005 and 2004, as per the following detail:
a) | With the financial statements of Credilogros Cía. Financiera S.A., Francés Valores Sociedad de Bolsa S.A., Atuel Fideicomisos S.A. and its subsidiary and PSA Finance Argentina Cía Financiera S.A., for the nine-month periods ended September 30, 2005 and 2004. |
b) | With the financial statements of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A., Consolidar Cía. de Seguros de Vida S.A. and its subsidiary, and Consolidar Cía. de Seguros de Retiro S.A. and its subsidiary, for the three month periods ended September 30, 2005 and 2004. |
The results of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A., Consolidar Cía. de Seguros de Vida S.A. and its subsidiary and Consolidar Cía. de Seguros de Retiro S.A. and its subsidiary, have been adjusted for purposes of comparison of the periods of companies consolidating on the basis of a nine-month period ended on September 30, 2005 and 2004.
| As of December 31, 2004: |
a) | With the financial statements of Credilogros Cía. Financiera S.A., Francés Valores Sociedad de Bolsa S.A., PSA Finance Argentina Cía Financiera S.A. and Atuel Fideicomisos S.A., for the fiscal year ended December 31, 2004. |
b) | With the financial statements of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A., Consolidar Cía. de Seguros de Vida S.A. and its subsidiary, and Consolidar Cía. de Seguros de Retiro S.A. and its subsidiary, for the six-month period ended December 31, 2004. |
Interests in subsidiaries as of September 30, 2005 and the end of the previous year are listed below:
Shares |
Interest percentage in | |||||||||||||
Type |
Quantity |
Total Capital |
Possible Votes | |||||||||||
Companies |
09/30/05 |
12/31/04 |
09/30/05 |
12/31/04 |
09/30/05 |
12/31/04 | ||||||||
Francés Valores Soc. de Bolsa S.A. |
Common | 12,137 | 3,199 | 99.9700 | 99.9700 | 99.9700 | 99.9700 | |||||||
Atuel Fideicomisos S.A. |
Common | 13,099,869 | 13,099,869 | 99.9999 | 99.9999 | 99.9999 | 99.9999 | |||||||
Consolidar A.F.J.P. S.A. |
Common | 75,842,839 | 1,899,600 | 53.8892 | 53.8892 | 53.8892 | 53.8892 | |||||||
Consolidar Cía. De Seguros de Vida S.A. |
Common | 7,383,921 | 197,875 | 65.9600 | 65.9582 | 65.9600 | 65.9582 | |||||||
Consolidar Cía. De Seguros de Retiro S.A. |
Common | 25,033,832 | 200,000 | 66.6666 | 66.6667 | 66.6666 | 66.6667 | |||||||
PSA Finance Argentina Cía Financiera S.A. |
Common | 9.000 | 9.000 | 50.0000 | 50.0000 | 50.0000 | 50.0000 | |||||||
Credilogros Cía. Financiera S.A. |
Common | 39,700,000 | 39,700,000 | 69.5271 | 69.5271 | 69.5271 | 69.5271 |
Assets, liabilities and subsidiaries´ stockholders´ equity balances in accordance with the criteria defined in Note 2 below, as of September 30, 2005 and the end of the previous year and net income balances as of September 30, 2005 and 2004, are listed below:
Assets |
Liabilities |
Stockholders Equity |
Net income/ gain-(loss) |
|||||||||||||||
Companies |
09/30/05 |
12/31/04 |
09/30/05 |
12/31/04 |
09/30/05 |
12/31/04 |
09/30/05 |
09/30/04 |
||||||||||
Francés Valores Soc. de Bolsa S.A. |
10,230 | 7,864 | 1,391 | 219 | 8,839 | 7,645 | 2,196 | 1,395 | ||||||||||
Atuel Fideicomisos S.A. and its subsidiary |
15,280 | 18,794 | 3,200 | 3,294 | 12,080 | 15,500 | (3,417 | ) | 2,075 | |||||||||
Consolidar A.F.J.P. S.A. |
329,840 | 312,003 | 65,818 | 64,771 | 264,022 | 247,232 | 17,696 | 9,080 | ||||||||||
Consolidar Cía. de Seguros de Vida S.A. and its subsidiary |
265,934 | 307,488 | 188,421 | 234,136 | 77,513 | 73,352 | 4,161 | 15,843 | ||||||||||
Consolidar Cía. de Seguros de Retiro S.A. and its subsidiary |
1,458,092 | 1,233,849 | 1,411,659 | 1,197,246 | 46,433 | 36,603 | 9,830 | 2,352 | ||||||||||
PSA Finance Argentina Cía Financiera S.A. |
54,499 | 30,196 | 31,100 | 8,103 | 23,399 | 22,093 | 1,306 | (735 | ) | |||||||||
Credilogros Cía. Financiera S.A. |
83,103 | 105,876 | 45,361 | 73,124 | 37,742 | 32,752 | 4,990 | (1,699 | ) |
2. | VALUATION METHODS |
2.1. | The financial statements of the subsidiaries have been prepared based on similar methods to those applied by BF for preparing its own financial statements, in connection with assets and liabilities valuation, income measurement and restatement procedure as explained in note 2 to the stand-alone financial statements of BF, except for: |
| Consolidar AFJP S.A.: the intangible assets of this subsidiary were amortized in accordance with the standards of the A.F.J.P.s Superintendence. |
| Consolidar A.F.J.P. S.A., Consolidar Cía. de Seguros de Retiro S.A. and Consolidar Cía. de Seguros de Vida S.A.: loans secured by the National GovernmentDecree 1387/01 held by these subsidiaries were valued in accordance with the regulations of the Superintendence of Pension Fund Administrators (A.F.J.P) and the National Superintendence of Insurance. |
Up to the 2003 year-end, as long as the tax on minimum presumed income exceeded income tax (TOMPI), the Subsidiaries recorded under Other ReceivablesTax Advance account, a credit for the TOMPI.
As of December 31, 2004 as Consolidar Cía. de Seguros de Retiro S.A. and Consolidar Cía. de Seguros de Vida S.A. maintained such item during this year, the 4,897 (loss) was adjusted for purposes of consolidation so as to apply an accounting criterion being uniform with that of BF. Credilogros Cía. Financiera S.A. and PSA Finance Argentina Cía. Financiera S.A., recorded an adjustment to earnings of prior years in this respect for an amount of 1,062 (loss) in their financial statements.
On the financial statements as of September 30, 2004 presented for comparative purposes, the mentioned adjustment had an effect on the items Income tax and tax on minimum presumed income of the Statement of Income for 916 (increase) and Results of Minority Interest in Subsidiaries for 314 (increase).
Moreover, the adjustments described in note 2.3.k) affected, in the consolidated balance sheet as of December 31, 2004 presented for comparative purposes, the items Other receivables by 178 (decrease), Investments in other companies by 115 (decrease) and Minority interest in subsidiaries by 74 (increase), and in the consolidated income statement as of September 30, 2004 presented for comparative purposes, the items Service charge expense by 21 (decrease), Other income by 17 (increase) and Results of minority interest in subsidiaries by 10 (increase).
2.2. | Consolidar Cía de Seguros de Retiro S.A.: the Company included the balance from the technical commitments incurred with the insured in the Other Liabilities caption. The abovementioned caption includes 55,080 corresponding to the regularizing account called Unaccrued secured loans valuation difference which, as established by the Superintendence of Insurance, will be settled through subsequent accrual of the regularizing accounts of secured loans. In accordance with current professional accounting standards, such amount should have been recorded as a loss for the year ended December 31, 2003. |
3. | MINORITY INTEREST IN SUBSIDIARIES |
The breakdown of balances in the Minority interest in subsidiaries account is as follows:
09/30/05 |
12/31/04 | |||
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. |
121,741 | 113,999 | ||
Consolidar Cía. de Seguros de Vida S.A. |
26,386 | 24,970 | ||
Consolidar Cía. de Seguros de Retiro S.A. |
15,476 | 12,200 | ||
Credilogros Compañía Financiera S.A. |
11,499 | 9,978 | ||
Francés Valores Sociedad de Bolsa S.A. |
2 | 5 | ||
Atuel Fideicomisos S.A. |
1 | 4 | ||
PSA Finance Argentina Cía Financiera S.A. |
11,699 | 11,048 | ||
186,804 | 172,204 | |||
4. | RESTRICTIONS ON ASSETS |
a) | Francés Valores Sociedad de Bolsa S.A. (stock broking company) holds shares of Mercado de Valores de Buenos Aires S.A, booked in the amount of 4,300. These shares have been pledged in favor of HSBC - La Buenos Aires Cía. Argentina de Seguros S.A. in security of the contract this insurance company executed with Mercado de Valores de Buenos Aires S.A. to cover the latters guaranteeing any noncompliance of stock broking companies with their obligations. |
b) | See note 6 to the stand-alone financial statements of BF. |
5. | BREAKDOWN OF MAIN ITEMS |
Detailed below are the balances of those accounts that show significant variations in relation to the figures that arise from the financial statements of BF:
09/30/05 |
12/31/04 | |||
GOVERNMENT SECURITIES |
||||
Holdings in investment accounts |
||||
Argentine Republic External Bills (VEY4D) |
| 594,593 | ||
Federal Government Bonds (LIBOR 2012) |
78,414 | 78,384 | ||
Treasury bills |
| 58,169 | ||
Discount Bonds in pesos |
360,516 | | ||
Discount Bonds in US dollar |
205,941 | | ||
Others |
498 | 11,756 | ||
Total |
645,369 | 742,902 | ||
09/30/05 |
12/31/04 |
|||||
Holdings for trading or financial transactions | ||||||
Treasury Bills |
| 9,032 | ||||
Middle Term Treasury Bonds (BONTE 2002) |
| 5,165 | ||||
Federal Government Bonds 2008 (BODEN 2008) |
65,921 | 53,792 | ||||
Federal Government Bonds LIBOR 2012 |
26,154 | 29,701 | ||||
Buenos Aires City Bond |
7,241 | | ||||
Federal Government Bonds LIBOR 2014 |
6,199 | | ||||
Discount Bonds in pesos |
410,268 | | ||||
Federal Government Bonds 2007 (BODEN 2007) |
18,589 | | ||||
Cuasipar Bonds in pesos |
7,238 | | ||||
Secured Bonds due in 2018 |
20,417 | | ||||
Federal Government Bocon PRE8 |
48,670 | | ||||
Argentine Republic External Bills |
| 8,057 | ||||
Others |
4,703 | 23,041 | ||||
Total |
615,400 | 128,788 | ||||
Unlisted government securities |
||||||
Secured Bonds due in 2018 |
87,767 | 451,121 | ||||
Tax credit certificates due in 2003/2006 |
6 | 41,151 | ||||
Others |
| 630 | ||||
Total |
87,773 | 492,902 | ||||
Instruments issued by the BCRA |
||||||
BCRA Bills (LEBAC) |
993,868 | 958,979 | ||||
BCRA Notes (NOBAC) |
245,525 | 40,584 | ||||
Total |
1,239,393 | 999,563 | ||||
PRIVATE SECURITIES | ||||||
Investments in listed private securities |
||||||
Acindar S.A. Corporate Bonds |
11,856 | 8,581 | ||||
Edesur S.A. Corporate Bonds |
28,484 | 28,462 | ||||
Telefónica de Argentina S.A. Corporate Bonds |
40,289 | 40,344 | ||||
Tarjeta Naranja Corporate Bonds |
7,166 | | ||||
Tarjeta Naranja Trust |
8,847 | 8,270 | ||||
Tenaris |
5,154 | | ||||
Grupo Financiero Galicia S.A. |
4,337 | 7,108 | ||||
Galtrust 1 Financial Trust |
2,928 | 2,654 | ||||
FBA Renta Pesos |
20,131 | 23,104 | ||||
Petrobras Energía S.A. |
8,677 | 9,043 | ||||
Roble Pesos Class 1 |
8,465 | 2,003 | ||||
Optimun CDB Pesos- Class B |
9,501 | 7,307 | ||||
1784 Inversion Pesos Class A |
5,030 | 3,224 | ||||
Rembrandt Amro Ahorro Pesos |
6,872 | | ||||
Super ahorro pesos- Clase B |
9,529 | | ||||
Others |
26,175 | 39,112 | ||||
Total |
203,441 | 179,212 | ||||
Allowances |
(2,621 | ) | (66,419 | ) | ||
Total |
2,788,755 | 2,476,948 | ||||
09/30/05 |
12/31/04 |
|||||
OTHER SUBSIDIARIES ASSETS |
||||||
Premium receivables from insurance companies |
16,327 | 16,431 | ||||
Complementary Capital Compañia de Seguros |
10,015 | 13,337 | ||||
Others related to insurance business |
3,067 | 2,574 | ||||
Total |
29,409 | 32,342 | ||||
OTHER SUBSIDIARIES´ LIABILITIES |
||||||
Insurance companies, claims in adjustment process |
134,649 | 312,638 | ||||
Fluctuation fund Consolidar Cía de Seguros de Retiro S.A. |
90,707 | 90,470 | ||||
Insurance companies, mathematical reserve |
1,329,232 | 1,235,383 | ||||
Insurance companies, reinsurer´s reserve |
(1,512 | ) | (79,191 | ) | ||
Difference arising from secured loans accrued valuation |
(55,080 | ) | (58,458 | ) | ||
Benefit pending of integration Resolution No. 29.796 |
(2,610 | ) | (114,266 | ) | ||
Others related to insurance business |
69,286 | 26,811 | ||||
Total |
1,564,672 | 1,413,387 | ||||
EXHIBIT 1
CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY
CATEGORIES AND GUARANTIES RECEIVED
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish-See Note 17)
-Stated in thousands of pesos-
09/30/05 |
12/31/04 | |||
COMMERCIAL PORTFOLIO |
||||
Normal performance |
||||
Preferred collaterals and counter guaranty A |
5,421,609 | 7,084,116 | ||
Other collaterals and counter guaranty B |
30,385 | 23,919 | ||
Without senior security or counter guaranty |
2,557,193 | 1,717,505 | ||
In potential risk |
||||
Other collaterals and counter guaranty B |
6,645 | 8,465 | ||
Without senior security or counter guaranty |
122,291 | 200,830 | ||
Nonperforming |
||||
Other collaterals and counter guaranty B |
| 44 | ||
Without senior security or counter guaranty |
53,614 | 41,167 | ||
With high risk of uncollectibility |
||||
Other collaterals and counter guaranty B |
2,485 | 411 | ||
Without senior security or counter guaranty |
43,027 | 23,796 | ||
Uncollectible |
||||
Other collaterals and counter guaranty B |
| 2,577 | ||
Without senior security or counter guaranty |
1,190 | 21,577 | ||
Total |
8,238,439 | 9,124,407 | ||
EXHIBIT 1
(Contd.)
CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY
CATEGORIES AND GUARANTIES RECEIVED
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Translation of financial statements originally issued in Spanish-See Note 17)
-Stated in thousands of pesos-
09/30/05 |
12/31/04 | |||
CONSUMER AND HOUSING PORTFOLIO |
||||
Normal performance |
||||
Preferred collaterals and counter guaranty A |
7,804 | 5,254 | ||
Other collaterals and counter guaranty B |
412,408 | 394,996 | ||
Without senior security or counter guaranty |
815,338 | 692,920 | ||
Inadequate performance |
||||
Other collaterals and counter guaranty A |
97 | | ||
Other collaterals and counter guaranty B |
3,937 | 3,444 | ||
Without senior security or counter guaranty |
5,682 | 4,403 | ||
Deficient performance |
||||
Other collaterals and counter guaranty B |
1,493 | 3,880 | ||
Without senior security or counter guaranty |
4,177 | 7,423 | ||
Unlikely to be collected |
||||
Other collaterals and counter guaranty B |
1,866 | 1,377 | ||
Without senior security or counter guaranty |
6,689 | 3,330 | ||
Uncollectible |
||||
Other collaterals and counter guaranty B |
4,997 | 7,839 | ||
Without senior security or counter guaranty |
4,532 | 3,563 | ||
Uncollectible, classified as such under regulatory requirements |
||||
Other collaterals and counter guaranty B |
| 51 | ||
Without senior security or counter guaranty |
146 | 81 | ||
Total |
1,269,166 | 1,128,561 | ||
General Total (1) |
9,507,605 | 10,252,968 | ||
(1) | Items included: Loans (before allowances and difference arising from purchase of portfolio); Other receivables from financial transactions: Unlisted corporate bonds, Other receivables covered by debtor classification regulations, Interest accrued and pending collection covered by debtor classification regulations; Assets subject to financial leasing (before allowances); Other receivables: Receivables from sale of goods and interest accrued on receivables from sale of goods; Contingent credit balance memorandum accounts: Credit lines granted (unused portion) covered by debtor classification regulations, Other guaranties given covered by debtor classification regulations and Other covered by debtor classification regulations. |
INDEPENDENT ACCOUNTANTS
LIMITED REVIEW REPORT
To the President and Directors of
BBVA BANCO FRANCÉS S.A.
Reconquista 199
Buenos Aires
1. | Identification of the financial statements subject to review |
We have reviewed the accompanying balance sheet of BBVA BANCO FRANCÉS S.A. as of September 30, 2005 and the related statements of income, changes in stockholders equity and cash flows for the nine-month period then ended, with their notes 1 to 16 and supplemental exhibits A through L and N thereto (all expressed in thousands of pesos).
We have also reviewed the consolidated balance sheet of BBVA BANCO FRANCÉS S.A. and subsidiaries (listed in note 1 to the consolidated financial statements) as of September 30, 2005 and the related consolidated statements of income and changes in cash flows for the nine-month period then ended, with their notes 1 to 5 and exhibit 1, presented as supplementary information.
These financial statements are the responsibility of the Banks Board of Directors. Our responsibility is to issue a limited review report on such financial statements, based on our work performed with the scope described in caption 2.
2. | Scope of the review |
We conducted our review in accordance with auditing standards generally accepted in Argentina for limited reviews of interim financial statements, and the Minimum Standards for External Audits for the limited review of quarterly financial statements established by the Argentine Central Bank (BCRA). This review is substantially less in scope than an audit of financial statements conducted in accordance with generally accepted standards, the objective of which is to express an opinion regarding the financial statements taken as a whole. Accordingly, we do not express an opinion on the financial statements mentioned in caption 1.
3. | Prior explanations to our limited review report |
a) | As of September 30, 2005, and as more fully discussed in notes 15.1.3. and 3.II.c) to the accompanying financial statements, as allowed by the standards issued in this respect by the BCRA, the Bank presented net assets for 610,596 thousands of pesos, in account Non-Deductible Organization and Development Expenses under the item Intangible Assets, to reflect the balances arising from the compliance with court rulings ordering the refund of deposits in the financial system, in accordance with the provisions of Law No. 25,561, Decree 214/02 and supplementary regulations. Although the Bank estimates that there are possibilities of compensation or recovery of the losses resulting from this situation, it is not possible to predict the final outcome of this matter at the date of issuance of this report. |
b) | Note 3 to the financial statements describes the differences between the accounting standards established by the BCRA used for the preparation of the financial statements referred to in caption 1 and the accounting principles generally accepted in Buenos Aires City. In addition, other differences with respect to the accounting principles generally accepted in Buenos Aires City are detailed in Note 2 to the consolidated financial statements. |
c) | We have audited the Banks financial statements as of December 31, 2004 (opening balances), whose individual and consolidated balance sheet and their respective supplementary information have been presented comparatively and on which we issued our independent auditors report dated March 4, 2005, to which we refer, including a qualified opinion due to: (i) the uncertainty related to the issue indicated in point a) under this caption and (ii) divergences from the accounting principles generally accepted in Buenos Aires City. |
Additionally, we have reviewed the financial statements for the nine-month period ended September 30, 2004, whose statement of changes in stockholders equity and individual and consolidated statements of income and of cash flows and their respective supplementary information have been presented comparatively and on which we issued our limited review report dated November 11, 2004, to which we refer, which included a disclaimer due to the limitations to the scope of our professional work and to the very significant and pervasive effects on these financial statements of the uncertainties existing at that date related to: (i) the recoverable value of government securities and credit assistance granted to the government sector; (ii) the asset recorded for the expected compensation for payments to depositors made under court orders; and (iii) the compliance of the Regularization and Reorganization Plan submitted by the Bank to the BCRA. In addition, such report disclosed the existence of certain divergences from the accounting principles generally accepted in Buenos Aires City. The uncertainties mentioned in points (i), and (iii) have already been resolved at the date of issuance of this report.
4. | Limited review report |
Based on our limited review performed with the scope indicated in caption 2, which did not include all the procedures necessary to enable us to express an opinion on the financial statements referred to in caption 1, we are in a position to report that:
a) | the financial statements of BBVA BANCO FRANCÉS S.A. both individually and consolidated with its subsidiaries companies as of September 30, 2005, give consideration to all the significant facts and circumstances of which we are aware of; and |
b) | we do not have any observations to mention on the referred financial statements other than those indicated under caption 3. |
As described in note 17 to the stand-alone financial statements, the effects of the differences between the accounting standards of the BCRA (which differ from the accounting principles generally accepted in Buenos Aires City Argentina for the matters mentioned in Note 3 to the financial statements), and the accounting principles generally accepted in the countries in which the accompanying financial statements are to be used have not been quantified. Accordingly, they are not intended to present the financial position in accordance with accounting principles generally accepted in the countries of the users of the financial statements, other than Argentina. This report was prepared in accordance with auditing standards generally accepted in Argentina for limited reviews of interim financial statements and the Minimum Standards for External Audits established by the BCRA. The translation into English of the financial statements described in caption 1 and of this independent accountants´ limited review report has been made solely for the convenience of English-speaking readers.
Buenos Aires, November 4, 2005
DELOITTE & Co. S.R.L. |
CARLOS B. SRULEVICH |
Partner |
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each others acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names Deloitte, Deloitte & Touche, Deloitte Touche Tohmatsu, or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BBVA French Bank S.A. | ||||
Date: November 14, 2005 | By: | /s/ Marcelo G. Canestri | ||
Name: | Marcelo G.Canestri | |||
Title: | Chief Financial Officer |