Form 6-K
Table of Contents

 

 

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 May, 2008

Commission File Number: 001-12568

 

 

BBVA FRENCH BANK S.A.

(Translation of registrant’s 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

BBVA French Bank S.A.

TABLE OF CONTENTS

 

Item

    
1.    Financial Statements as of March 31, 2008 together with Independent Auditors´ Limited Review Report


Table of Contents

LOGO

FINANCIAL STATEMENTS AS OF

MARCH 31, 2008 TOGETHER

WITH INDEPENDENT

AUDITORS´ LIMITED REVIEW REPORT


Table of Contents
LOGO   - 1 -  

 

BALANCE SHEETS AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

      03-31-2008    12-31-2007

ASSETS:

     

A. CASH AND DUE FROM BANKS:

     

Cash

   746,204    741,016

Due from banks and correspondents

   2,836,287    2,373,827
         

Argentine Central Bank (BCRA)

   2,541,694    2,102,264

Other local

   2,049    778

Foreign

   292,544    270,785
         
   3,582,491    3,114,843
         

B. GOVERNMENT AND PRIVATE SECURITIES:

     

Holdings for trading or financial transactions (Exhibit A)

   20,364    31,288

Holdings available for sale (Exhibit A)

   989,689    1,372,584

Unlisted Government Securities (Exhibit A)

   914,455    903,897

Instruments issued by the Argentine Central Bank (BCRA) (Exhibit A)

   878,059    1,207,473

Investments in listed private securities (Exhibit A)

   10,032    25,725

Less: Allowances (Exhibit J)

   131,417    60,955
         
   2,681,182    3,480,012
         

C. LOANS:

     

To government sector (Exhibits B, C and D)

   1,358,635    1,415,352

To financial sector (Exhibits B, C and D)

   804,803    694,213
         

Interfinancial – (Calls granted)

   83,000    30,500

Other financing to local financial institutions

   666,422    617,829

Interest and listed-price differences accrued and pending collection

   55,381    45,884

To non financial private sector and residents abroad (Exhibits B, C and D)

   8,867,785    8,436,736
         

Overdraft

   1,542,154    1,326,474

Discounted instruments

   1,526,031    1,430,787

Real estate mortgage

   845,357    772,036

Collateral Loans

   41,256    40,988

Consumer

   1,487,916    1,337,179

Credit cards

   858,656    802,647

Other (Note 5 a.)

   2,481,492    2,638,171

Interest and listed-price differences accrued and pending collection

   97,207    102,210

Less: Interest documented together with main obligation

   12,284    13,756

Less: Difference arising from purchase of portfolio

   93    93

Less: Allowances (Exhibit J)

   206,439    195,692
         
   10,824,691    10,350,516
         

D. OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS:

     

Argentine Central Bank (BCRA)

   471,280    463,621

Amounts receivable for spot and forward sales to be settled

   198,785    191,059

Instruments to be received for spot and forward purchases to be settled

   306,225    109,535

Unlisted corporate bonds (Exhibits B, C and D)

   59,389    58,277

Non-deliverable forward transactions balances to be settled

   4,437    6,292

Other receivables not covered by debtor classification regulations

   26,394    24,170

Other receivables covered by debtor classification regulations (Exhibits B, C and D)

   41,918    39,255

Interest accrued and pending collection not covered by debtor classification regulations

   26,425    21,834

Interest accrued and pending collection covered by debtor classification regulations (Exhibits B, C and D)

   5    5

Less: Allowances (Exhibit J)

   2,096    1,821
         
   1,132,762    912,227
         

E. ASSETS SUBJECT TO FINANCIAL LEASING:

     

Assets subject to financial leasing (Exhibits B, C and D)

   327,626    317,053

Less: Allowances (Exhibit J)

   4,642    4,280
         
   322,984    312,773
         

F. INVESTMENTS IN OTHER COMPANIES:

     

In financial institutions (Exhibit E)

   46,261    45,567

Other (Note 5.b.) (Exhibit E)

   452,211    411,909

Less: Allowances (Exhibit J)

   3    3
         
   498,469    457,473
         

G. OTHER RECEIVABLES:

     

Receivables from sale of property assets (Exhibits B, C and D)

   34    52

Other (Note 5.c.)

   297,544    219,025

Tax on minimum presumed income – Tax Credit

   150,506    150,506

Other accrued interest receivable

   —.—    1

Less: Allowances (Exhibit J)

   130,925    77,604
         
   317,159    291,980
         

H. PREMISES AND EQUIPMENT (Exhibit F):

   377,485    368,004
         

I. OTHER ASSETS (Exhibit F):

   27,663    36,392
         

J. INTANGIBLE ASSETS (Exhibit G):

     

Goodwill

   —.—    12,200

Organization and development expenses

   28,532    79,454
         
   28,532    91,654
         

K. SUSPENSE ITEMS:

   10,154    11,261
         

TOTAL ASSETS:

   19,803,572    19,427,135
         


Table of Contents
LOGO   - 2 -  

 

(Contd.)

BALANCE SHEETS AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

-Stated in thousands of pesos-

 

 

     03-31-2008    12-31-2007

LIABILITIES:

     

L. DEPOSITS (Exhibits H and I):

     

Government sector

   70,729    53,899

Financial sector

   180,764    195,890

Non financial private sector and residents abroad

   14,921,566    14,828,160
         

Checking accounts

   3,079,822    2,823,731

Savings deposits

   4,351,693    4,237,696

Time deposits

   6,897,246    7,234,385

Investments accounts

   17,811    13,152

Other

   506,876    436,727

Interest and listed-price differences accrued payable

   68,118    82,469
         
   15,173,059    15,077,949
         

M. OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS:

     

BCRA (Exhibit I)

   1,960    1,833
         

Other

   1,960    1,833

Banks and International Institutions (Exhibit I)

   633,414    555,842

Amounts payable for spot and forward purchases to be settled

   45,593    103,608

Instruments to be delivered for spot and forward sales to be settled

   450,293    206,466

Financing received from Argentine financial institutions (Exhibit I)

   45,283    23,262
         

Interfinancial (calls received)

   29,450    7,500

Other financing from local financial institutions

   15,827    15,755

Interest accrued payable

   6    7

Non-deliverable forward transactions balances to be settled

   1,665    1,002

Other (note 5.d.) (Exhibit I)

   722,769    791,420

Interest and listed-price differences accrued payable (Exhibit I)

   10,921    9,017
         
   1,911,898    1,692,450
         

N. OTHER LIABILITIES:

   373,428    271,956
         

Dividends payable

   164,000    —.—

Other (Note 5.e.)

   209,428    271,956
         

O. ALLOWANCES (Exhibit J):

   360,868    321,277
         

P. SUSPENSE ITEMS:

   6,915    6,666
         

TOTAL LIABILITIES:

   17,826,168    17,370,298
         

STOCKHOLDERS’ EQUITY: (as per the related statements of changes in stockholders´ equity)

   1,977,404    2,056,837
         

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY:

   19,803,572    19,427,135
         


Table of Contents
LOGO   - 3 -  

 

MEMORANDUM ACCOUNTS

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008    12-31-2007

DEBIT ACCOUNTS

     

Contingent

     

–       Credit lines obtained (unused balances)

   141,413    199,679

–       Guarantees received

   3,427,759    3,215,812

–       Contra contingent debit accounts

   565,441    554,832
         
   4,134,613    3,970,323
         

Control

     

–       Receivables classified as irrecoverable

   282,020    280,820

–       Other (Note 5.f.)

   32,558,589    31,980,524

–       Contra control debit accounts

   2,210,532    2,214,130
         
   35,051,141    34,475,474
         

Derivatives (Exhibit O)

     

–       “Notional” amount of non-deliverable forward transactions

   634,183    1,164,392

–       Interest rate SWAP

   335,820    292,000

–       Others

   50,000    50,000

–       Contra debit derivatives accounts

   855,482    1,289,267
         
   1,875,485    2,795,659
         

For trustee activities

     

–       Funds in trust

   3,013    3,897
         
   3,013    3,897
         

TOTAL

   41,064,252    41,245,353
         

CREDIT ACCOUNTS

     

Contingent

     

–       Credit lines granted (unused portion) covered by debtor classification regulations (Exhibits B, C and D)

   85,926    26,185

–       Guarantees provided to the BCRA

   63,530    61,729

–       Other guarantees given covered by debtor classification regulations (Exhibits B, C and D)

   134,001    135,525

–       Other guarantees given non covered by debtor classification regulations

   134,607    134,871

–       Other covered by debtor classification regulations (Exhibits B, C and D)

   147,377    196,522

–       Contra contingent credit accounts

   3,569,172    3,415,491
         
   4,134,613    3,970,323
         

Control

     

–       Items to be credited

   398,917    388,952

–       Other

   1,811,615    1,825,178

–       Contra control credit accounts

   32,840,609    32,261,344
         
   35,051,141    34,475,474
         

Derivatives (Exhibit O)

     

–       “Notional” amount of non-deliverable forward transactions

   855,482    1,289,267

–       Contra debit derivatives accounts

   1,020,003    1,506,392
         
   1,875,485    2,795,659
         

For trustee activities

     

–       Contra credit accounts for trustee activities

   3,013    3,897
         
   3,013    3,897
         

TOTAL

   41,064,252    41,245,353
         

The accompanying notes 1 through 17 and exhibits A through L, N and O are an integral part of these statements.


Table of Contents
LOGO   - 4 -  

 

STATEMENTS OF INCOME FOR THE THREE MONTH PERIODS

ENDED MARCH 31, 2008 AND 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008    03-31-2007

A. FINANCIAL INCOME

     

Interest on cash and due from banks

   4,914    4,739

Interest on loans to the financial sector

   21,297    12,684

Interest on overdraft

   50,141    32,304

Interest on discounted instruments

   38,063    18,400

Interest on real estate mortgage

   22,698    13,182

Interest on collateral loans

   1,406    292

Interest on credit card loans

   21,068    11,635

Interest on other loans

   108,625    65,107

Interest on other receivables from financial transactions

   5,995    5,694

Income from secured loans - Decree 1387/01

   25,442    54,977

Net income from government and private securities

   20,446    108,861

Indexation by benchmark stabilization coefficient (CER)

   64,657    76,064

Gold and foreign currency exchange difference

   31,571    20,033

Other

   40,097    26,179
         
   456,420    450,151
         

B. FINANCIAL EXPENSE

     

Interest on checking accounts

   5,855    6,815

Interest on savings deposits

   2,130    1,529

Interest on time deposits

   151,388    105,384

Interest on interfinancial financing (calls received)

   306    480

Interest on other financing of financial institutions

   39    1,228

Interest on other liabilities from financial transactions

   9,645    6,766

Other interest

   1,632    3,967

Indexation by CER

   4,200    20,211

Contribution to the deposit guarantee fund

   6,632    5,594

Other

   13,866    8,715
         
   195,693    160,689
         

GROSS INTERMEDIATION MARGIN – GAIN

   260,727    289,462
         

C. ALLOWANCES FOR LOAN LOSSES

   19,345    9,379
         

D. SERVICE CHARGE INCOME

     

Related to lending transactions

   45,343    31,805

Related to liability transactions

   93,561    73,499

Other commissions

   13,320    10,704

Other (Note 5.g.)

   48,125    36,619
         
   200,349    152,627
         

E. SERVICE CHARGE EXPENSE

     

Commissions

   33,241    23,093

Other (Note 5.h.)

   11,649    8,051
         
   44,890    31,144
         


Table of Contents
LOGO   - 5 -  

 

(Contd.)

STATEMENTS OF INCOME FOR THE THREE MONTH PERIODS

ENDED MARCH 31, 2008 AND 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008    03-31-2007

F. ADMINISTRATIVE EXPENSES

     

Payroll expenses

   153,958    103,340

Fees to Bank Directors and Statutory Auditors

   87    86

Other professional fees

   6,242    5,817

Advertising and publicity

   16,032    11,019

Taxes

   7,140    5,882

Fixed assets depreciation

   7,903    7,363

Organizational expenses amortization

   1,848    1,156

Other operating expenses

   38,286    31,345

Other

   23,067    17,281
         
   254,563    183,289
         

NET GAIN FROM FINANCIAL TRANSACTIONS

   142,278    218,277
         

G. OTHER INCOME

     

Income from long-term investments

   42,523    21,206

Punitive interests

   346    169

Loans recovered and reversals of allowances

   13,577    315,250

Other (note 5.i.)

   67,597    24,624
         
   124,043    361,249
         

H. OTHER EXPENSE

     

Punitive interests and charges paid to BCRA

   18    6

Charge for uncollectibility of other receivables and other allowances

   99,356    140,128

Amortization of difference arising from judicial resolutions

   67,742    61,375

Depreciation and losses from miscellaneous assets

   115    482

Goodwill amortization

   12,200    1,657

Other (Note 5.j.)

   12,582    307,438
         
   192,013    511,086
         

NET INCOME FOR THE PERIOD

   74,308    68,440
         

The accompanying notes 1 through 17 and exhibits A through L, N and O are an integral part of these statements.


Table of Contents
LOGO   - 6 -  

 

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2008 AND 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

2008

    2007
          Non capitalized
contributions
        Retained
earnings
                      

Movements

   Capital
Stock
   Issuance
premiums
   Adjustments
to
stockholders’
equity (1)
   Legal    Unrealized
valuation
difference (2)
    Unappropriated
earnings
    Total     Total

1. Balance at beginning of fiscal year

   471,361    175,132    312,979    547,381    (42,796 )   592,780     2,056,837     1,954,584

2. Stockholders´ Meeting held on March 28, 2008

                    

- Dividends paid in cash

   —,—    —,—    —,—    —,—    —,—     (164,000 )   (164,000 )   —,—

- Statutory reserve

   —,—    —,—    —,—    47,010    —,—     (47,010 )   —,—     —,—

3. Unrealized valuation difference

   —,—    —,—    —,—    —,—    10,259     —,—     10,259     —,—

4. Net income for the period

   —,—    —,—    —,—    —,—    —,—     74,308     74,308     68,440
                                          

5. Balance at the end of the period

   471,361    175,132    312,979    594,391    (32,537 )   456,078     1,977,404     2,023,024
                                          

 

(1) Adjustments to stockholders´ equity refer to Adjustment to Capital Stock.
(2) Corresponds to the unrealized valuation difference arising from holdings available for sale according to Communication “A” 4702. Includes (32,034) from government securities and (503) from BCRA Notes (note 2.3.b).

The accompanying notes 1 through 17 and exhibits A through L, N and O are an integral part of these statements.


Table of Contents
LOGO   - 7 -  

 

STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW FOR THE

THREE MONTH PERIODS ENDED MARCH 31, 2008 AND 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008     03-31-2007  

CHANGES IN CASH AND CASH EQUIVALENTS

    

Cash and cash equivalents at the beginning of fiscal year

   3,294,811 (1)   2,718,299  

Cash and cash equivalents at the end of the period

   3,767,205 (1)   2,661,452  
            

Net increase / (decrease) in cash and cash equivalents

   472,394     (56,847 )
            

REASONS FOR CHANGES IN CASH AND CASH EQUIVALENTS

    

Operating activities

    

Net collections/ (payments) from:

    

-Government and private securities

   808,352     (1,096,232 )

- Loans

   (57,376 )   931,935  
            

to financial sector

   (85,423 )   (3,182 )

to non-financial public sector

   44,081     344,744  

to non-financial private sector and residents abroad

   (16,034 )   590,373  

- Other receivables from financial transactions

   (4,442 )   (9,078 )

- Assets subject to financial leasing

   (10,211 )   (16,836 )

- Deposits

   (89,040 )   721,824  
            

to financial sector

   (15,142 )   1,421  

to non-financial public sector

   17,250     1,637  

to non-financial private sector and residents abroad

   (91,148 )   718,766  

- Other liabilities from financial transactions

   (64,642 )   (161,603 )
            

Financing from financial or interfinancial sector (calls received)

   21,950     (140,275 )

Others (except liabilities included in Financing Activities)

   (86,592 )   (21,328 )

Collections related to service charge income

   199,258     152,649  

Payments related to service charge expense

   (44,890 )   (31,144 )

Administrative expenses paid

   (308,158 )   (219,328 )

Organizational and development expenses paid

   (5,947 )   (3,848 )

Net collections from punitive interest

   328     163  

Differences from judicial resolutions paid

   (10,253 )   (37,124 )

Collections of dividends from other companies

   14     —,—  

Other collections / (payments) related to other income and expenses

   66,370     (267,302 )
            

Net cash flows provided by / (used in) operating activities

   479,363     (35,924 )
            

Investment activities

    

Net payments from premises and equipment

   (17,384 )   (10,912 )

Net collections from other assets

   8,614     516  

Other payments from investment activities

   (79,061 )   (4,007 )
            

Net cash flows used in investment activities

   (87,831 )   (14,403 )
            

Financing activities

    

Net collections/ (payments) from:

    

- Non-subordinated corporate bonds

   —,—     (248,638 )

- Argentine Central Bank

   126     105  
            

Others

   126     105  

- Banks and international agencies

   77,572     14,688  

- Financing received from local financial institutions

   72     (3,871 )

Other (payments) / collections from financing activities

   (1,822 )   226,457  
            

Net cash flows provided by / (used in) financing activities

   75,948     (11,259 )
            

Financial results and results from holdings of cash and cash equivalents (including interest)

   4,914     4,739  
            

Net increase / (decrease) in cash and cash equivalents

   472,394     (56,847 )
            

 

(1) See note 15” Statement of clash and cash equivalents flow”

The accompanying notes 1 through 17 and exhibits A through L, N and O are an integral part of these statements.


Table of Contents
LOGO   - 8 -  

 

NOTES TO THE FINANCIAL STATEMENTS AS OF MARCH 31, 2008, PRESENTED IN

COMPARATIVE FORM WITH THE BALANCE SHEET AS OF DECEMBER 31, 2007, AND THE

STATEMENTS OF INCOME, CHANGES IN STOCKHOLDERS’ EQUITY AND CASH AND CASH

EQUIVALENTS FLOW AS OF MARCH 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

(Stated in thousands of pesos)

 

1 CORPORATE SITUATION AND BANK’S ACTIVITIES

 

  1.1 Corporate situation

BBVA Banco Francés S.A. (BF) has its main place of business in Buenos Aires, Argentina, and operates a 235-branch network.

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% of the corporate stock as of March 31, 2008.

Part of BF’s 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 stock

Changes in the Bank’s capital stock during the last 5 fiscal years are as follows:

 

Date of

                

Stockholders’ Meeting deciding on the
issuance

  

Registration with the Public Registry
of Commerce

  

Form of
placement

  

Amount

   Total  

Capital Stock as of December 31, 2002:

                 368,128  

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 National Securities Commission (CNV).

 

  1.3 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 stockholders nor the local or foreign stockholders will respond, in excess of the mentioned paid-in stockholding, for the liabilities arising out of the transactions performed by the financial institution.

 

2 SIGNIFICANT ACCOUNTING POLICIES

 

  2.1 Restatement of the financial statements in equivalent purchasing power

The financial statements have been taken from the Bank’s 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 rates derived from the Internal Wholesale Price Index published by the National Institute of Statistics and Census (I.N.D.E.C.).


Table of Contents
LOGO   - 9 -  

 

Accordingly to the above mentioned method, the accounting figures were restated due to 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 as 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

In accordance with BCRA Communication “A” 4265, the Balance Sheet and the Exhibits that so specify include the comparative information as of December 31, 2007, while the Statements of Income, Changes in Stockholders’ Equity and Cash and cash equivalents flow show comparative information as of March 31, 2007.

According to Communication “A” 4667 of the BCRA dated May 14, 2007: i) for fiscal 2007 the Statements of Cash Flows shall be replaced with the Statement of Cash and Cash Equivalents Flow. In this respect, and just for comparison purposes, the Entity presents the Statements of Cash and Cash Equivalents Flow for the three month period ended March 31, 2007 (stand-alone and consolidated) to substitute for the Statements of Cash Flows in due time filed with the BCRA and ii) certain accounts in the Statement of Income must be broken down in further detail. This requirement has entailed that certain balances corresponding to the financial statements as of March 31, 2007 had to be modified.

 

  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 March 31, 2008 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 period or fiscal year.

 

  b) Government and private securities:

Government securities:

 

   

Holdings for trading or financial transactions and instruments issued by the BCRA (except Holdings available for sale): they were valued based on current listed prices for each security as of March 31, 2008 and the end of the previous fiscal year. Differences in listed prices were credited/charged to income for the period or fiscal year.

 

   

Holdings available for sale (Government Securities and Instruments issued by the Argentine Central Bank): according to Communication “A” 4702 dated August 30, 2007, the Government Securities and Instruments issued by BCRA, included in the list of volatilities published by the BCRA on a monthly basis, may be classified in the category “Available for sale”.

As of March 31, 2008 and the end of the previous fiscal year, they were valued in accordance with the quotations prevailing for each security as of the close of the period or fiscal year. Differences, if any, between the cost of addition of these holdings and increased by the accrual of the internal rate of return and the value of the quotation were charged to Unrealized valuation difference in the stockholders’ equity. As of March 31, 2008 and the end of the previous fiscal year, the amount recorded was 32.537 (loss) and 42,796 (loss), respectively.

 

   

Unlisted government securities: this includes the Guaranteed Bonds issued by the National Government, maturing in 2020 and received in relation to the restructuring of the Provincial Development Trust Fund’s indebtedness. As of March 31, 2008 and the end of the previous fiscal


Table of Contents
LOGO   - 10 -  

 

 

year 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, less of the estimated allowance to impairment value.

 

   

Unlisted instruments issued by the BCRA: in accordance with the regulations issued by the BCRA, this portfolio now reflects holdings that do not show the volatility reported by the BCRA. As of March 31, 2008 and the end of the previous fiscal year, the value of the holdings in accordance with the most recent quotation informed rose on the basis of the interest accrued as per the internal rate of return.

Investments in listed private securities:

 

   

Equity and debt instruments: they were valued based on current listed prices as of March 31, 2008 and the end of the previous fiscal year. Differences in listed prices were charged to income for the period or fiscal year.

 

  c) Government loans:

Federal Government secured loans – Decree No. 1387/2001:

As of March 31, 2008 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 as amended of the BCRA.

Present values as of March 31, 2008 and the end of the previous fiscal year were calculated by discounting the cash flows as per the relevant contracts at an annual rate of 6.50%, in accordance with the provisions of the abovementioned Communications for March, 2008 and December, 2007.

The technical value was calculated in accordance with the swap values established by the Ministry of Economy at November 6, 2001 converted into pesos at rate of $1.40 per dollar plus CER plus interest accrued through the end of the period or fiscal year.

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 or fiscal year.

 

  d) Interest accrual:

Interest has been accrued according to a compound interest formula in the periods in which it was generated, except interest on transactions in foreign currency, those whose maturity does not exceed 92 days, and adjustable assets and liabilities and loans to financial sector which were apportioned on a linear basis.

 

  e) Benchmark stabilization coefficient (CER):

As of March 31, 2008 and the end of the previous fiscal year, receivables and payables have been adjusted to the CER as follows:

 

  -  

Federal government guaranteed loans have been adjusted under Resolution 50/2002 of the Ministry of Economy, which resolved that the CER business 10 (ten) days prior to the maturity date of the related service will be considered for yield and repayments of the loans.

 

  -  

Federal Government Secured Bonds due in 2020: have been adjusted under Resolution 539/2002 of the Ministry of Economy, which resolved that the CER business 5 (five) days prior to the maturity date of the related service will be considered for yield and repayment of the bonds.

 

  -  

Deposits and other assets and liabilities: have been adjusted considering the CER prevailing as of March 31, 2008 and the end of the previous fiscal year.


Table of Contents
LOGO   - 11 -  

 

  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: the allowances have been calculated based on the Bank’s 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 March 31, 2008 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 the end of the period or fiscal year.

 

  -  

Holdings in investments:

Holdings for purchase-sale or intermediation transactions (Government and private securities) as well as instruments issued by the BCRA: in accordance with the method described in 2.3.b) above.

Holdings available for sale, instruments issued by the BCRA: in accordance with the method described in point 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 March 31, 2008 and the end of the previous fiscal year.

 

  i) Unlisted Corporate Bonds:

They were valued at acquisition cost plus income accrued but not collected as of March 31, 2008 and the end of the previous fiscal year.

 

  j) Assets subject to financing leasing:

As of March 31, 2008 and 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:

 

   

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 the 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., Banelco S.A. and Interbanking S.A.: were valued by applying the equity method at the end of the period or fiscal year.

 

   

Visa Argentina S.A.: was valued by applying the equity method on the basis of the financial statements of the issuer company as of May 31,2007. As of March 31, 2008, the Entity recorded the dividends receivable as a result of the sale of the shares in the framework of the Interest Public Offering of Visa Inc.

 

   

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).


Table of Contents
LOGO   - 12 -  

 

   

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 applying the equity method at the end of the period or fiscal year.

 

   

Other: were valued at acquisition cost, without exceeding their recoverable value.

 

  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).

On March 28, 2008 the goodwill corresponding to Corp Banca, for 12,200, was fully amortized.

This caption included the differences arising from compliance with court-ordered measures arising from cases challenging the current rules and regulations applicable to deposits with the financial system in the framework of the provisions of Law No. 25,561, Decree No. 214/02 and supplementary provisions. The assets mentioned (calculated on the basis of the nominal difference between the exchange rate freely determined in the market and applied to the value of the deposit recorded in the books at that date) was amortized within the 60 monthly installments starting in April 2003 in accordance with Communication “A” 3916 of the Argentine Central Bank.

As of March 31, 2008 these assets have been fully amortized, with the total accumulated amortization as of March 31, 2008 amounting to 1,206,929. As of the end of the previous fiscal year, BF recorded assets amounting to 57,489 (after deduction of accumulated amortization for 1,139,187), in the account Organization and development expenses.

The Bank, however, notifies that such amortization was 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 its decision in re “Massa, Juan Agustín versus National Executive Branch—Decree 1570/ and others following petitions for protection of civil rights under Law No. 16.986” dated December 27, 2006, the Argentine Supreme Court of Justice confirmed by the majority vote of its members the validity of the emergency legislation enacted during 2001, 2002 and subsequent years; i.e., the Supreme Court accepted the re-denomination into Pesos of deposits as well as the calculation methodology for the reimbursement of the bank deposits subject to the emergency regime imposed by the Argentine Government which unconstitutionality was claimed in the case mentioned. This decision by the Supreme Court of Justice establishes a calculation modality different from the modality decreed by the Executive Branch, establishing in this particular case the following criteria: each depositor is entitled to receive from the banking institution a reimbursement of the amount deposited converted into Pesos a the US$1 = AR$1.40 exchange rate, adjusted by CER until the date of effective payment, plus compensatory interest at the annual, non compoundable 4% interest rate accruing as from the establishment of restrictions upon the availability of bank deposits or as from the date of maturity of the deposit if it was subsequent to February 28, 2002 subject to the monetary limit resulting from the decision handed down by the Court of Appeals, in so far as its judgment has not been appealed by the plaintiff. The Supreme Court of Justice has held, both in this judgment and in a more recent judgment, “Kujarchuk versus the Argentine Executive Branch”, that the amounts withdrawn from the bank as a result of decisions handed down by a court or resulting from out-of-court arrangements shall be deemed to be partial payments and that a deduction is to be performed out of the original deposit denominated in foreign currency of the percentage that, when converted into such currency, is represented by such payments converted into US Dollars at the exchange rate quoted in the


Table of Contents
LOGO   - 13 -  

 

floating foreign exchange market prevailing on each date. The payments made are to be consolidated and deducted as above described from the amount settled according to the guidelines of the Massa judgment. Come this instance, costs are borne in equal parts by the plaintiff and defendant and as regards previous instances, they are borne as decided by the Court of Appeals. Additionally, the Court has placed a cap on the amount pending reimbursement equivalent to the limit established by the Court of Appeals, i.e., the value in US Dollars of the original deposit.

As of March 31, 2008 and the end of the previous fiscal year, BF has estimated this contingency and it has raised allowances for the total amount.

The Bank’s Board of Directors expects that the Argentine State remedies the significant damage resulting from compliance with court-ordered measures on petitions for protection of civil rights and actions for relief, particularly due to the impact of differences in compensation or recovery as per the rulings in the abovementioned actions and according to the law in relation to pesification of the underlying deposits. In this regard, the Bank has informed of such financial damages to the relevant authorities, with reservation of rights.

 

  n) Derivative transactions (see note 11):

Interest rate swaps and Forward transactions

 

  1. Interest rate swaps are recorded at the value resulting from the application of fixed and floating interest rate differences to residual notional amounts at the end of the period or fiscal year.

 

  2. Forward transactions payable in Pesos without delivery of the underlying asset are recorded for the amount receivable or payable, as appropriate, arising from the difference between the agreed exchange rate and the exchange rate at the end of the period or fiscal year as applied to stated notional amounts.

 

  o) Employee termination pay:

The Bank expenses employee termination pay as disbursed.

 

  p) 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 March 31, 2008 and the end of the previous fiscal year.

 

  q) 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.

 

  r) 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.

 

  s) Statement of Income Accounts:

 

  -  

As of March 31, 2008 and 2007, 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.


Table of Contents
LOGO   - 14 -  

 

 

  t) Earning per share:

As of March 31, 2008 and 2007, the Bank calculates the earning per share on the basis of 471,361,306 ordinary shares, of $1 par value each. The net income for the fiscal years on those dates is as follows:

 

     03/31/2008    03/31/2007

Net income for the period

   74,308    68,440

Earning per share for the period

   0.16    0.15

 

  u) Use of accounting estimates:

The preparation of the financial statements in accordance with the standards set forth by the BCRA require the Bank’s Board of Directors to use assumptions and estimates that affect certain assets such as allowances for doubtful loan and certain liabilities such as provisions for other contingencies as well as the income/loss generated during the fiscal years being reported. Final income/loss may differ from such estimates.

 

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 to 22 of the F.A.C.P.C.E. incorporating certain changes to the professional accounting valuation and disclosure standards. Furthermore, by General Resolutions No. 485/05 y 487/06, the CNV adopted, with certain amendments, those Technical Pronouncements based on the resolutions of the C.P.C.E.C.A.B.A.

The Bank has prepared these financial statements by applying the regulations of the BCRA, which do not contemplate some of the 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. 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 exchanged national government securities, bonds, treasury bills and/or unsecured loans with the National Government for a face value of US$ 2,227,460 thousands for Secured loans. At March 31, 2008 and the end of the previous fiscal year, those loans are recorded under “Loans – to the Public Sector” amounting to 1,358,626 and 1,415,352, respectively, in accordance with the criterion described in Note 2.3.c).

In accordance with Resolution CD No. 290/01 of the C.P.C.E.C.A.B.A., at March 31, 2008 and the end of the previous fiscal year, these assets should have been valued considering the respective quotation values of the swapped bonds at November 6, 2001, delivered in exchange and the increase sustained as a result of the interest accrued according to the internal rate of return. However, as of March 31, 2008 and the end of the previous fiscal year the book value of these assets is not significantly different from their reasonable realization value.

 

  b) Effects caused by court measures related to deposits (constitutional protection actions)

As of December 31, 2007 and March 31, 2007, the Bank recorded assets amounting to 57,489 and 286,488 (whose original value had been 1,196,676 and 1,163,966) under “Intangible Assets – Organization and Development Non Deductible Expenses” account corresponding to differences resulting from compliance with the court measures generated by the payment 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


Table of Contents
LOGO   - 15 -  

 

“A” 3916 of the BCRA. In accordance with professional accounting standards currently in force in Buenos Aires City, the amount detailed above should have been covered by an allowance up to the concurrence of the balance that represents the best possible estimate of the amounts to be recovered, an amount that could not be objectively determined as of that date.

 

  c) 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 professional accounting standards currently in force in Buenos Aires City, 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 108,700, 55,500 and 64,000 as of March 31, 2008, December 31 and March 31, 2007, respectively, should be recovered.

In addition, the Bank has tax loss carryforwards estimated to be applied against taxable income for the current fiscal year.

 

  d) Derivative financial instruments

As explained in Notes 2.3.n.1) and 11, as of March 31, 2008 and the end of the previous fiscal year, the Entity recorded the effects of interest rate swap agreements as established by the BCRA. Should the Entity have applied the professional accounting standards currently applicable, the stockholders’ equity would have decreased in 385 and 7,433, respectively.

II. Aspects related to the presentation of information

 

  a) Holdings available for sale

As disclosed in note 2.3.b), the Entity charged to the account “Unrealized valuation difference” in stockholders’ equity a loss of 32.537 and a loss of 42,796, as of March 31, 2008 and the end of the previous fiscal year, respectively, which reflects the difference between the cost of addition of these holdings and increased by the accrual of the internal rate of return and the value as quoted of Government securities and instruments issued by the BCRA, classified as Holdings available for sale. The professional accounting standards in force in the City of Buenos Aires do not endorse this accounting treatment. Therefore, as of March 31, 2008 and the end of the previous fiscal year, these amounts should have been charged to the income/loss for the period or fiscal year.

 

4 TAX MATTERS

 

  4.1. Income tax

The Bank determined the charge for income tax by applying the effective 35% rate to taxable income estimated for each period or fiscal year considering the effect of temporary differences between accounting and taxable income. The Bank considered as temporary differences those that have a definitive reversal date in subsequent years. As of March 31, 2008 and the end of the previous fiscal year, the Bank has estimated that there shall be no charge for income tax as the Bank is in a position to absorb the tax loss carryforwards from previous fiscal years.

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 Bank’s 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.


Table of Contents
LOGO   - 16 -  

 

As of March 31, 2008 and the end of the previous fiscal year, the Bank records under Other Receivables (in the Tax Advance account) a taxable deferred asset amounting 108,700 and 55,500, respectively. Such amounts are made up as follows:

 

     03-31-2008     12-31-2007  

Deferred tax assets

   1,045,300     981,455  

Deferred tax liabilities

   (936,600 )   (925,955 )
            

Net deferred assets

   108,700     55,500  

Allowance

   (108,700 )   (55,500 )

 

  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 Bank’s 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.

On February 11, 2005, the Argentine Central Bank issued Communication “A” 4295 whereby it enabled, under certain rules, the accounting record of credits on Tax on Minimum Presumed Income.

Consequently, as of March 31, 2008 the Bank recorded the above asset in an amount of 195,260 (150,506 in the line Tax on minimum presumed income – Tax Credit and 44,754 in the line Others – Tax Advance, under Other Receivables). As of December 31, 2007 the Bank recorded the above asset in an amount of 186,761 (150,506 in the line Tax on minimum presumed income – Tax Credit and 36,255 in the line Others – Tax Advance, under Other Receivables).

 

  4.3. Other tax issues

 

  a) The Argentine Public Revenue Administration (AFIP) inspected open tax periods and the Bank received ex officio assessments, which were appealed before the Argentine Administrative Tax Court. Such Court, 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. On March 8, 2006 the Court of Appeals ratified the ruling, which caused the Bank to file an ordinary appeal with the National Supreme Court, which was conceded on February 1, 2007.

The Argentine Administrative Tax Court has 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 to the AFIP the appeal to Argentine Public Revenue Administration. On October 3, 2006, the Argentine Administrative Tax Court confirmed the decision, and accordingly the AFIP filed a new appeal against this ruling with the Argentine Supreme Court, which conceded this appeal on March 8, 2007.

The Management and tax and legal counsel estimate that the Bank made a reasonable interpretation of effective regulations regarding the observed periods.


Table of Contents
LOGO   - 17 -  

 

  b) On October 24, 2007, the Bank was notified by the Tax Bureau of the City of Buenos Aires of the commencement of a sua sponte tax assessment on a certain basis and partial in nature of the taxable income as regards turnover tax for the fiscal years 2002 and 2003.

On November 14, 2007, the Bank had filed its defenses to the notice mentioned.

The Bank’s management as well as its legal and tax advisors estimate that the Bank has reasonably interpreted currently applicable rules and regulations as regards the periods covered by the notice.

The Management and tax and legal counsel estimate that the Bank made a reasonable interpretation of effective regulations regarding the observed periods.

The Bank’s Management does not expect an adverse financial impact in these respects.

 

5 BREAKDOWN OF MAIN ITEMS AND ACCOUNTS

The breakdown of the items included under Other accounts which exceed 20% of the total amount of each item is as follows:

 

     03-31-2008    12-31-2007

a)      LOANS

     

Loans granted to pre-finance and finance exports

   1,462,643    1,497,988

Fixed-rate financial loans

   813,055    904,117

Other

   205,794    236,066
         

Total

   2,481,492    2,638,171
         

b)     INVESTMENTS IN OTHER COMPANIES

     

In other non-controlled companies- unlisted

   34,212    30,586

In controlled companies -supplementary activities

   383,209    370,588

In non-controlled companies-supplementary activities

   34,747    10,692

Other- unlisted

   43    43
         

Total

   452,211    411,909
         

c)      OTHER RECEIVABLES

     

Prepayments

   51,256    45,609

Guarantee deposits

   22,120    25,299

Miscellaneous receivables

   65,784    46,017

Tax prepayments (1)

   155,888    93,647

Other

   2,496    8,453
         

Total

   297,544    219,025
         

 

(1)    As of March 31, 2008 and the end of the previous fiscal year, it includes the deferred tax asset for 108,700 and 55,500 respectively (see note 4.1).


Table of Contents
LOGO   - 18 -  

 

 

     03-31-2008    12-31-2007

d)     OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS

     

Correspondents – our account

   33,589    146,540

Collections and other operations for the account of third parties

   52,287    25,925

Other withholdings and collections at source

   96,521    104,874

Accounts payable for consumption

   153,691    140,105

Money orders payable

   235,301    244,410

Loans received from Argentine Technological Fund (FONTAR)

   19,666    20,623

Loans received from Interamerican Development Bank (BID)

   53,788    57,738

Pending Banelco debit transactions

   21,801    11,220

Other

   56,125    39,985
         

Total

   722,769    791,420
         

e)      OTHER LIABILITIES

     

Accrued salaries and payroll taxes

   101,978    165,324

Accrued taxes

   37,290    36,093

Miscellaneous payables

   68,961    65,795

Other

   1,199    4,744
         

Total

   209,428    271,956
         

f)      MEMORANDUM ACCOUNTS – DEBIT – CONTROL

     

Items in safekeeping

   9,061,963    9,335,405

Collections items

   643,036    579,318

Checks drawn on the Bank pending clearing

   278,231    223,112

Checks not yet credited

   756,356    786,562

Securities representative of investments in escrow on behalf of the Pension Fund Manager

   21,770,372    20,993,983

Other

   48,631    62,144
         

Total

   32,558,589    31,980,524
         
     03-31-2008    03-31-2007

g)      SERVICE CHARGE INCOME

     

Rental of safe-deposit boxes

   5,150    3,952

Commissions for capital market transactions

   2,770    1,388

Commissions for salary payment

   1,496    1,704

Commissions for trust management

   416    314

Commissions for hiring of insurances

   16,206    12,314

Commissions for transportations of values

   2,113    2,122

Commissions for loans and guarantees

   8,984    6,062

Other

   10,990    8,763
         

Total

   48,125    36,619
         


Table of Contents
LOGO   - 19 -  

 

     

03-31-2008

   03-31-2007

h)     SERVICE CHARGE EXPENSE

     

Turn-over tax

   8,512    5,650

Other

   3,137    2,401
         

Total

   11,649    8,051
         

i)       OTHER INCOME

     

Deferred income tax (1)

   53,200    20,000

Other

   14,397    4,624
         

Total

   67,597    24,624
         

 

(1)    Offset with a charge for the same amount in “Charge for uncollectibility of other receivables and other allowances” account, under Other expense item.

j)      OTHER EXPENSE

     

Deferred income tax

   —,—    293,000

Tax on bank transfers

   10,390    7,512

Other

   2,192    6,926
         

Total

   12,582    307,438
         

 

6 RESTRICTIONS ON ASSETS

As of March 31, 2008, there are Bank assets, which are restricted as follows:

 

  a) The Government and Private Securities account includes 62,250 in Guaranteed Bonds maturing in 2018, allocated to the guarantee required to act as custodian of investment securities related to pension funds.

 

  b) The Bank appropriated loan funds of its active portfolio in an amount of 1,267 to secure debts with the Argentine Central Bank.

 

  c) The Bank appropriated BCRA Notes (Badlar), due 01/21/2009 in an amount of 126,444 to secure loans arranged under the Credit Global Program given by the Banco Interamericano de Desarrollo (B.I.D.).


Table of Contents
LOGO   - 20 -  

 

7 TRANSACTIONS WITH SUBSIDIARIES AND PARENT COMPANIES (ART. 33 OF LAW No. 19,550)

The balances as of March 31, 2008 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

   2008    2007    2008    2007    2008    2007

BBVA S.A.

   23,003    5,858    109,696    4,809    21,628    30,438

Francés Valores Sociedad de Bolsa S.A.

   17,334    926    2,233    1,931    —,—    5,654

Consolidar A.R.T. S.A.

   59    51    36,127    87,275    498,587    389,552

Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A.

   21    8    6,844    10,352    55,788    13,823

Consolidar Cía. de Seguros de Retiro S.A.

   147    120    39,478    44,540    605,769    530,989

Consolidar Cía. de Seguros de Vida S.A.

   1    23    14,811    7,210    262,592    257,616

Atuel Fideicomisos S.A.

   —,—    —,—    4,137    4,362    152    113

BBVA Consolidar Seguros S.A.

   3    33    6,574    10,225    45,545    56,971

PSA Finance Argentina Cía Financiera S.A.

   230,016    179,992    7,184    1,076    —,—    —,—

Rombo Cía. Financiera S.A.

   137,726    150,408    2,653    846    77,000    82,000

Francés Administradora de Inversiones S.A.

   139    100    463    104    20,865    20,968

Consolidar Comercializadora S.A.

   —,—    —,—    3,728    3,346    1,340    1,018

Inversora Otar S.A.

   —,—    —,—    15,711    347    346,723    375,513

 

(1) Includes Items in safekeeping, Credit lines granted (unused portion) covered by debtor classification regulations and Guaranties given covered by debtor classification regulations.

 

8 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 BCRA’s 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 13.0623% 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.

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 BCRA’s 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.

 

9 TRUST ACTIVITIES

 

  9.1. Financial Trusts

On January 5, 2001, the BCRA’s Board of Directors issued Resolution No. 19/01, providing for the exclusion of Mercobank S.A.’s 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 March 31, 2008 and the end of the previous fiscal year, total estimated corpus assets of Diagonal Trust amount to 3,013 and 3,897, respectively, considering its recoverable. Said amounts are recorded in memorandum debit accounts “For trustee activities – Funds received in trust”.


Table of Contents
LOGO   - 21 -  

 

  9.2. Non Financial Trusts

BF acts as trustee in 45 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 creditors (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 647,478 and 588,425 as of March 31, 2008 and the end of the previous fiscal year, respectively, consist of cash, creditors’ rights, real estate and shares.

 

10 CORPORATE BONDS

On July 15, 2003, an Extraordinary Stockholders’ 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.

On April 26, 2007, the Ordinary Stockholders’ Meeting delegated to the Board of Directors the authority to make certain amendments to the existing Negotiable Obligations Global Program such as: i) updating the Program so that it is governed by international terms and conditions, ii) existence of an international trustee in respect of one or more series representing the interests of investors, iii) drafting and execution of documentation in the English language and under foreign laws, including global and final securities, and payment agency, registrar, trust and underwriting agreements, as may be necessary, as well as the preparation of information documents for purposes of placement in international markets, including offering circulars and financial statements prepared in a foreign language.

As provided in the Negotiable Obligations Law and BCRA regulations, the proceeds would be applied to: (i) extension of mortgage loans for the purchase and renovation of housing and personal loans in Argentina; (ii) extension of corporate loans in Argentina for purposes of payment of working capital, investment in physical assets located in Argentina or refinancing of liabilities; and (iii) capital contributions in the Bank’s subsidiaries or related companies.

The Ordinary and Extraordinary Stockholders’ Meeting held on March 28, 2008 decided to extend (i) for the term of 5 years the life of the Negotiable Obligations Global Program approved by the Extraordinary Stockholders’ Meeting held on July 15, 2003 and by Resolution No. 14967 of the CNV issued on November 29, 2004 in accordance with the changes introduced by the Ordinary and Extraordinary Stockholders’ Meeting held on April 26, 2007 and (ii) for the term of 2 years the delegation to the Board of Directors and the authority to sub-delegate the delegated powers in accordance with the applicable regulations approved by Ordinary and Extraordinary Stockholders’ Meeting held on April 26, 2007.

 

11 DERIVATIVE FINANCIAL INSTRUMENTS

 

  I. Transactions as of March 31, 2008:

 

  a) Interest rate swaps for 227,000 (Fixed Rate versus Badlar), maturing within a period not exceeding 3 years and 68,820, with final maturity in August, 2019, for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts and interest rate swaps for 40,000 (Badlar versus Fixed Rate) maturing within a period not exceeding 3 years, for which the Bank pays a fixed amount and receives a variable amount based on the changes in the Badlar rate.


Table of Contents
LOGO   - 22 -  

 

In addition, the Entity agreed on a variable interest rate swap for 50,000 (CER versus Badlar) with final maturity in a period not exceeding 2 years, for which the Bank pays a variable amount in accordance with changes in the Badlar rate and receives a variable amount based on changes in the CER plus a 50-basis point spread calculated on the stated notional amounts.

For purposes of estimating the market value, the variable future amounts (both Badlar and CER) not yet overdue are discounted. Swaps have been valued as the difference between the current value of future receivable amounts and the current value of future payable amounts.

These transactions have been valued in accordance with the mechanism described in note 2.3.n.1.) generating an income as of the end of the period for 701.

The estimated market value of said instruments amounts to 45 (Liabilities). For market value estimation purposes, the variable and fixed as yet not matured future flows are discounted, with the swap value being the difference between the current value of the future flows receivable and the current value of the future flows payable.

As of the end of the fiscal year, the above transactions were recorded under “Memorandum debit accounts – From derivatives – Interest rate swaps” for 335,820 and “Memorandum accounts—Debit accounts – From derivatives– Others” for 50,000.

 

  b) Non-deliverable forward purchase and sale transactions in foreign currency payable in Pesos, maturing within a period not exceeding 1 year, for 634,183 and 855,482, which are recorded under “Memorandum Accounts—Debit accounts—Derivatives—Notional amount of non-deliverable forward transactions”, and “Memorandum accounts—Credit accounts—Derivatives—Notional amount of non-deliverable forward transactions”, respectively.

These transactions have been valued in accordance with the mechanism described in note 2.3.n.2.), generating loss as of the end of the period for 1,360.

 

  II. Transactions as of December 31, 2007:

 

  a) Interest rate swaps for 232,000 (Fixed Rate versus Badlar), maturing within a period not exceeding 3 years, for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts and interest rate swaps for 60,000 (Badlar versus Fixed Rate) maturing within a period not exceeding 3 years, for which the Bank pays a fixed amount and receives a variable amount based on the changes in the Badlar rate.

In addition, the Entity agreed on a variable interest rate swap for 50,000 (CER versus Badlar) with final maturity in a period not exceeding 2 years, for which the Bank pays a variable amount in accordance with changes in the Badlar rate and receives a variable amount based on changes in the CER plus a 50-basis point spread calculated on the stated notional amounts.

These transactions were valued in accordance with the mechanism described in note 2.3.n.1.) generating loss as of the end of the fiscal year for 619.

The estimated market value of said instruments amounted to 7,919 (Liabilities).

As of the end of the fiscal year, the above transactions were recorded under “Memorandum debit accounts – From derivatives – Interest rate swaps” for 292,000 and “Memorandum accounts—Debit accounts – From derivatives– Others” for 50,000.

 

  b) Non-deliverable forward purchase and sale transactions in foreign currency payable in Pesos, maturing within a period not exceeding 1 year, for 1,164,392 and 1,289,267, which are recorded under “Memorandum Accounts—Debit accounts—Derivatives—Notional amount of non-deliverable forward transactions”, and “Memorandum accounts—Credit accounts—Derivatives—Notional amount of non-deliverable forward transactions”, respectively.


Table of Contents
LOGO   - 23 -  

 

These transactions have been valued in accordance with the mechanism described in note 2.3.n.2.), generating income as of the end of the fiscal year for 6,457.

 

12 COMPLIANCE WITH CNV REQUIREMENTS

 

  12.1 Compliance with the requirements to act as agent in the Over-the-counter Market

As of March 31, 2008, the Bank’s Stockholders’ Equity exceeds the minimum requested to act as agent in the over-the-counter market, according to Resolution No. 368/01 and 489/06 of the CNV.

 

  12.2 Investment Funds custodian

As of March 31, 2008 and the end of the previous fiscal year, in its capacity of Investment Funds custodian of “FBA Acciones Globales”, “FBA Total”, “FBA Renta”, “FBA Renta Pesos”, “FBA Europa”, “FBA Renta Dólares”, “FBA Bonos”, “FBA Calificado”, “FBA Ahorro Dólares”, “FBA Renta Fija”, “FBA Ahorro Pesos”, “FBA Renta Corto Plazo”, “FBA Horizonte”, “FBA Internacional”, “FBA EEUU”, “FBA Renta Premium”, “FBA Acciones Latinoamericanas”, “FBA Bonos Argentina” and “FBA Brasil”, “FBA México”, “FBA Commodities”, “FBA Acciones Argentinas” and “FBA Bonos Globales” administrated by Francés Administradora de Inversiones S.A. Fund Manager, the Bank holds certificates of deposits, shares, corporate bonds, government securities, indexes, options, tax—credit certificates, securities issued by the Argentine Central Bank and investments financial trust certificates in safekeeping in the amount of 818,076 and 765,436, respectively, all of which making up the Fund’s portfolio and booked in memorandum accounts “Debit-Control—Other”.

The Investment Funds´ equities are as follows:

 

     EQUITIES

INVESTMENT FUNDS

   03.31.2008    12.31.2007

FBA Acciones Globales

   136,253    136,139

FBA Total

   10,925    10,863

FBA Renta

   12,811    12,645

FBA Renta Pesos

   378,562    298,951

FBA Renta Dólares

   4,167    4,233

FBA Bonos

   8,911    8,832

FBA Calificado

   149,175    213,601

FBA Internacional

   448    497

FBA Ahorro Dólares

   11,905    11,730

FBA Renta Fija

   16,295    16,214

FBA Ahorro Pesos

   208,446    128,507

FBA Renta Premium

   6,648    6,755

FBA Europa

   4,199    4,770

FBA Horizonte

   26,067    27,847

FBA EEUU

   1,248    1,323

FBA Renta Corto Plazo

   506    495

FBA Acciones Latinoamericanas

   42,285    44,268

FBA Bonos Argentina

   10,833    8,069

FBA Brasil

   15,752    2,992

FBA México

   1,033    979

FBA Commodities

   50    50

FBA Acciones Argentinas

   466    485

FBA Bonos Globales

   50    50
         

Total

   1,047,035    940,295
         

 

13 RESTRICTION ON EARNINGS DISTRIBUTIONS

In accordance with Communication “A” 4664, issued on May 11, 2007 and with the text issued by BCRA entitled “Distribution of Income”, for purposes of calculating the earnings subject to distribution, off-balance sheet deductions must be performed from the Unappropriated retained earnings as set forth in point 2.1 of said Communication. In addition, the authorization of the Superintendent of Financial and Exchange Institutions shall be required in order to verify that the procedure established in said resolution for earnings distribution has been properly applied

On March 28, 2008, the Argentine Central Bank, through its Case File No. 6731/08 authorized 164,000 to cash dividends distribution.


Table of Contents
LOGO   - 24 -  

 

The Ordinary and Extraordinary Shareholders’ Meeting held on March 28, 2008 approved the allocation of earnings as follows:

 

   

To Statutory Reserve: 47,010.

 

   

To cash dividends: 164,000

It must be clarified that as of the date of issuance of these financial statements, such dividends have been paid.

 

14 ACCOUNTS REFLECTING COMPLIANCE WITH MINIMUM CASH

The following are the items computed for Compliance with Minimum Cash Requirements according to the regulations of the Argentine Central Bank, with their corresponding balances:

 

COMPUTABLE COMPLIANCE PESOS

  

Cash

   316,881 (*)

Special Guarantee Accounts

   119,757  

BCRA Checking Account

   1,733,341  

Cash in valuables’ transportation

   166,883 (*)

Special social-security related accounts

   191  

Franchises

   176,423  
      

TOTAL

   2,513,476  
      

COMPUTABLE COMPLIANCE IN US DOLLARS (Stated in Pesos)

  

Cash

   152,032 (*)

BCRA Checking Account

   772,226  

Cash in transit

   993 (*)

Cash in valuables’ transportation

   43,828 (*)
      

TOTAL

   969,079  
      

COMPUTABLE COMPLIANCE IN EUROS (Stated in Pesos)

  

Cash

   52,169 (*)

BCRA Checking Account

   32,633  

Cash in transit

   45 (*)

Cash in valuables’ transportation

   12,765 (*)
      

TOTAL

   97,612  
      

 

  (*) Only 67% of these balances are admitted as Compliance.

 

15 STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW

The Statements of Cash and cash equivalents flow as of March 31, 2008 and the end of the previous fiscal year explains the changes in cash and cash equivalents. For such purpose, a detail is supplied of the items that the Entity considers to be cash and cash equivalents:

 

     03/31/2008    12/31/2007

a) Cash and due from banks:

   3,582,491    3,114,843

b) Government securities held for trading or financial transactions:

   20,364    31,288

c) Loans to financial sector, calls granted maturity date less than three months as from the end of the fiscal years:

   164,350    148,680
         

CASH AND CASH EQUIVALENTS

   3,767,205    3,294,811
         


Table of Contents
LOGO   - 25 -  

 

Points b) and c) are considered to be cash equivalents because they are held in order to meet short-term commitments, they are easily convertible in known cash amounts, they are subject to negligible changes in value and their maturity is less than three months as from the period / year – end date.

 

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 to the stand – alone financial statements and note 2 to the consolidated financial statements, 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.


Table of Contents
LOGO   - 26 -  

 

EXHIBIT A

DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

          Holding             

Description

   ID
Caja de
Valores
   Market
Value
   Book
balance

as of
03-31-2008
   Book
balance

as of
12-31-2007
   Position
Without
Options
    Final
Position
 

GOVERNMENT SECURITIES

                

Holdings for trading or financial transactions

                

Local

                

In pesos

                

Bocon PRE8

   2427    4,131    4,131       (1 )   (1 )

Discount Bonds in pesos

   45696    10,859    10,859       7,602     7,602  

Other

      311    311       (8,589 )   (8,589 )
                            

Subtotal in pesos

         15,301    22,939    (988 )   (988 )
                            

In foreign currency

                

Bond Argentina (BONAR VII)

   5435    1,244    1,244       1,244     1,244  

Discount Bonds in dollars

   40291    1,754    1,754       1,754     1,754  

BONAR X

   5436    1,192    1,192       1,192     1,192  

Other

      873    873       743     743  
                            

Subtotal in foreign currency

         5,063    8,349    4,933     4,933  
                            

Subtotal in Holdings for trading or financial Transactions

         20,364    31,288    3,945     3,945  
                            

Holdings available for sale

                

Local

                

In pesos

                

Secured Bonds due 2018

   2405    75,458    75,458       75,458     75,458  

Bocon PRO 12

   2449    171,044    171,044       171,044     171,044  
                            

Subtotal in pesos

         246,502    239,513    246,502     246,502  
                            

Subtotal in Holdings available for sale

         246,502    239,513    246,502     246,502  
                            

Unlisted government securities

                

Local

                

In pesos

                

Secured Bonds due 2020

   2423       914,455       914,455     914,455  
                            

Subtotal in pesos

         914,455    903,897    914,455     914,455  
                            

Subtotal Unlisted government securities

         914,455    903,897    914,455     914,455  
                            


Table of Contents
LOGO   - 27 -  

 

EXHIBIT A

(Contd.)

DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

          Holding          

Description

   ID
Caja de
Valores
   Market
Value
   Book
balance

as of
03-31-2008
   Book
balance

as of
12-31-2007
   Position
Without
Options
   Final
Position

Instruments issued by the BCRA

                 

BCRA Bills

                 

Listed – Own portfolio

                 

Argentine Central Bank Bills due 04-09-08

   45932    73,486    73,486       73,486    73,486

Argentine Central Bank Bills due 06-25-08

   45939    48,868    48,868       48,868    48,868

Argentine Central Bank Bills due 07-10-08

   45944    48,693    48,693       48,693    48,693

Other

      4,773    4,773       10,630    10,630
                         

Subtotal own portfolio

         175,820    36,470    181,677    181,677
                         

Repurchase transactions

                 

Argentine Central Bank Bills due 01-07-09

   45927    119,785    119,785       —,—    —,—
                         

Subtotal repurchase transactions

         119,785    73,922    —,—    —,—
                         

BCRA Notes

                 

Listed – Own portfolio

                 

Argentine Central Bank Bills due 01-20-10

   45851    5,236    5,236       5,236    5,236

Argentine Central Bank Bills (Badlar+2,5%) due 02-10-10

   45853    12,713    12,713       12,713    12,713

Argentine Central Bank Bills due 04-21-10

   45873    10,657    10,657       10,657    10,657

Argentine Central Bank Bills (Badlar) due 03-25-10

   45862    15,949    15,949       15,949    15,949

Argentine Central Bank Bills – (Badlar) due 01-06-10

   45845    14,141    14,141       14,141    14,141

Argentine Central Bank Bills (Badlar) due 12-17-08

   45844    51,480    51,480       51,480    51,480

Other

      9,473    9,473       23,657    23,657
                         

Subtotal own portfolio

         119,649    383,999    133,833    133,833
                         

Unlisted – Own portfolio

                 

Argentine Central Bank Bills (Badlar+2,5%) due 03-11-09

   45861       142,534       142,534    142,534

Argentine Central Bank Bills – (Badlar) due 01-21-09

   45850       320,271       320,271    320,271
                         

Subtotal own portfolio

         462,805    621,614    462,805    462,805
                         

Repurchase transactions

                 
                         

Subtotal repurchase transactions

         —,—    91,468    —,—    —,—
                         

Available for sale

                 

Argentine Central Bank Bills due 05-07-08

   45798    86,573    86,573       86,573    86,573

Argentine Central Bank Bills due 10-15-08

   45831    197,856    197,856       197,856    197,856

Argentine Central Bank Bills (Badlar) due 12-17-08

   45844    222,446    222,446       222,446    222,446

Argentine Central Bank Bills (Badlar) due 07-16-08

   45813    168,592    168,592       168,592    168,592

Argentine Central Bank Bills (Badlar+2,5%) due 02-10-10

   45853    52,468    52,468       52,468    52,468

Other

      15,252    15,252       15,252    15,252
                         

Subtotal available for sale

         743,187    1,133,071    743,187    743,187
                         

Subtotal instruments issued by the BCRA

         1,621,246    2,340,544    1,521,502    1,521,502
                         

TOTAL GOVERNMENT SECURITIES

         2,802,567    3,515,242    2,686,404    2,686,404
                         


Table of Contents
LOGO   - 28 -  

 

EXHIBIT A

(Contd.)

DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

          Holding             

Description

   ID
Caja de
Valores
   Market
value
   Book
Balance

as of
03-31-2008
   Book
Balance

as of
12-31-2007
   Position
without
options
    Final
Position
 

INVESTMENTS IN LISTED PRIVATE SECURITIES

                

Other debt instruments

                

In foreign currency

                

Pecom Corporate Bonds

   40582    14    14       14     14  

Cablevisión Corporate Bonds

   40086    11    11       11     11  

Banco Río Corporate Bonds

   40617    2    2       2     2  

Telefónica de Argentina Corporate Bonds

   40146    102    102       102     102  

Petrobrás Energía Corporate Bonds

   40668    62    62       62     62  
                            

Subtotal in foreign currency

         191    190    191     191  
                            

Subtotal Other debt instruments

         191    190    191     191  
                            

Other Equity instruments

                

In pesos

                

Compañía Financiera Argentina Trust Fund

   34470    6,359    6,359       6,359     6,359  

Secubono Trust Fund

   34519    3,449    3,449       3,449     3,449  

Acindar

   4    33    33       33     33  

Other

         —,—       (2 )   (2 )
                            

Subtotal in pesos

         9,841    25,535    9,839     9,839  
                            

Subtotal Equity instruments

         9,841    25,535    9,839     9,839  
                            

TOTAL INVESTMENTS IN LISTED PRIVATE SECURITIES

         10,032    25,725    10,030     10,030  
                            

TOTAL GOVERNMENT AND PRIVATE SECURITIES

         2,812,599    3,540,967    2,696,434     2,696,434  
                            


Table of Contents
LOGO   - 29 -  

 

EXHIBIT B

CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES

AND GUARANTIES RECEIVED AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008    12-31-2007

COMMERCIAL PORTFOLIO

     

Normal performance

   8,125,971    7,935,850
         

Preferred collaterals and counter guaranty “A”

   120,431    104,485

Preferred collaterals and counter guaranty “B”

   101,673    103,349

Without senior security or counter guaranty

   7,903,867    7,728,016

In potential risk

   21,932    17,733
         

Preferred collaterals and counter guaranty “B”

   2,576    922

Without senior security or counter guaranty

   19,356    16,811

Nonperforming

   4,633    5,321
         

Without senior security or counter guaranty

   4,633    5,321

With high risk of uncollectibility

   25,457    27,025
         

Preferred collaterals and counter guaranty “A”

   946    946

Without senior security or counter guaranty

   24,511    26,079

Uncollectible

   907    518
         

Without senior security or counter guaranty

   907    518
         

Total

   8,178,900    7,986,447
         


Table of Contents
LOGO   - 30 -  

 

EXHIBIT B

(Contd.)    

CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES

AND GUARANTIES RECEIVED AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008    12-31-2007

CONSUMER AND HOUSING PORTFOLIO

     

Normal performance

   3,574,369    3,276,219
         

Preferred collaterals and counter guaranty “A”

   8,455    8,145

Preferred collaterals and counter guaranty “B”

   541,158    511,615

Without senior security or counter guaranty

   3,024,756    2,756,459

Low risk

   33,957    25,063
         

Preferred collaterals and counter guaranty “A”

   —,—    2

Preferred collaterals and counter guaranty “B”

   3,701    4,187

Without senior security or counter guaranty

   30,256    20,874

Medium risk

   17,730    11,917
         

Preferred collaterals and counter guaranty “A”

   —,—    5

Preferred collaterals and counter guaranty “B”

   565    258

Without senior security or counter guaranty

   17,165    11,654

High risk

   18,604    642
         

Preferred collaterals and counter guaranty “B”

   695    27

Without senior security or counter guaranty

   17,909    615

Uncollectible

   2,928    17,997
         

Preferred collaterals and counter guaranty “B”

   973    1,547

Without senior security or counter guaranty

   1,955    16,450

Uncollectible, classified as such under regulatory requirements

   1,011    890
         

Preferred collaterals and counter guaranty “B”

   3    14

Without senior security or counter guaranty

   1,008    876
         

Total

   3,648,599    3,332,728
         

General Total (1)

   11,827,499    11,319,175
         

 

(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.


Table of Contents
LOGO   - 31 -  

 

EXHIBIT C

FINANCING FACILITIES CONCENTRATION

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008     12-31-2007  

Number of clients

   Outstanding
Balance
   % of total
portfolio
    Outstanding
balance
   % of total
portfolio
 

10 largest clients

   2,985,556    25.24 %   2,973,118    26.27 %

50 next largest clients

   2,448,235    20.70 %   2,353,533    20.79 %

100 following clients

   1,040,581    8.80 %   1,028,963    9.09 %

Remaining clients

   5,353,127    45.26 %   4,963,561    43.85 %
                      

Total (1)

   11,827,499    100.00 %   11,319,175    100.00 %
                      

 

(1) See (1) in Exhibit B.


Table of Contents
LOGO   - 32 -  

 

EXHIBIT D

BREAKDOWN BY FINANCING TERMS AS OF MARCH 31, 2008

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

          Term remaining to maturity       

Description

   Past-due
portfolio
   1 month    3 months    6 months    12 months    24 months    More than
24 months
   Total  

Government sector

   —,—    1,890    —,—    —,—    —,—    442,448    914,297    1,358,635  

Financial sector

   —,—    182,104    60,803    129,239    200,468    161,529    70,660    804,803  

Non financial private sector and residents abroad

   15,645    3,778,552    1,470,410    992,206    884,132    812,951    1,710,165    9,664,061  
                                         

TOTAL

   15,645    3,962,546    1,531,213    1,121,445    1,084,600    1,416,928    2,695,122    11,827,499 (1)
                                         

 

(1) See (1) in Exhibit B.


Table of Contents
LOGO   - 33 -  

 

EXHIBIT E

DETAIL OF INVESTMENTS IN OTHER COMPANIES

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(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    03-31-2008    12-31-2007   

Main business

   Period-end    Capital
stock
   Stockholders’
equity
   Net income
for the
period
 
   FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND AUTHORIZED                        
   Controlled                                 
   Local                               thousand of pesos   

33642192049

   Francés Valores Sociedad de Bolsa S.A.    Common    500$    1    12,137    7,638    8,875    Stockholder    03.31.2008    6,390    8,043    295  

30663323926

   Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A.    Common    1$    1    75,842,839    148,885    147,617    Pensions fund manager    03.31.2008    140,739    279,844    (2,034 )

33678564139

   Consolidar Cía. De Seguros de Vida S.A.    Common    1$    1    7,383,921    132,501    123,377    Insurance company    03.31.2008    11,195    205,342    48,911  

30678574097

   Consolidar Cía. de Seguros de Retiro S.A.    Common    1$    1    25,033,832    65,377    58,999    Insurance company    03.31.2008    37,551    98,059    17,824  

30707847367

   PSA Finance Arg. Cía Financiera S.A.    Common    1,000$    1    9,000    13,740    14,008    Financial institution    03.31.2008    18,000    27,481    (537 )

30692274403

   Atuel Fideicomisos S.A.    Common    1$    1    13,099,869    28,808    27,720    Trust Manager    03.31.2008    13,100    28,811    1,088  
                                       
     

Subtotal controlled

         396,949    384,596               
                                       
   Non controlled                                 
   Local                                 

33707124909

   Rombo Cía. Financiera S.A.    Common    1,000$    1    24,000    31,724    30,766    Financial Institution    03.31.2008    60,000    79,309    2,396  

30598910045

   Visa Argentina S.A    Common    0.0001$    1    11,400    25,231    1,712    Services to companies    05.31.2007    6,811    34,234    10,076  
   Other                9,516    8,979               
   Foreign                                 
   Other                797    793               
                                       
      Subtotal noncontrolled          67,268    42,250               
                                       
      Total in financial institutions, supplementary and authorized          464,217    426,846               
                                       
   IN OTHER COMPANIES                                 
   Non controlled                                 
   Local                                 

30685228501

   Consolidar ART S.A.    Common    1$    1    9,710,451    26,939    23,697    Workers compensation    03.31.2008    77,684    216,710    36,361  

30500064230

   BBVA Consolidar Seguros S.A.    Common    1$    1    1,301,847    7,238    6,855    Insurance    03.31.2008    10,651    56,236    8,458  
   Other                35    35               
   Foreign                                 
   Other                43    43               
                                       
      Subtotal non controlled       34,255    30,630               
                                       
      Total in other companies       34,255    30,630               
                                       
      Total investments in other companies       498,472    457,476               
                                       


Table of Contents
LOGO   - 34 -  

 

EXHIBIT F

MOVEMENT OF PREMISES AND EQUIPMENT

AND OTHER ASSETS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2008

AND THE FISCAL YEAR ENDED DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     Net book
value at
beginning of
fiscal year
                  Depreciation for the
period
         

Description

      Additions    Transfers    Decreases    Years of
useful life
   Amount    Net book value at
03-31-2008
   Net book value at
12-31-2007

PREMISES AND EQUIPMENT

                       

Real Estate

   292,898    2,615    —,—    —,—    50    2,727    292,786    292,898

Furniture and Facilities

   24,449    4,949    —,—    —,—    10    1,192    28,206    24,449

Machinery and Equipment

   49,765    9,611    —,—    —,—    5    3,892    55,484    49,765

Automobiles

   892    241    —,—    32    5    92    1,009    892
                                     

Total

   368,004    17,416    —,—    32       7,903    377,485    368,004
                                     

OTHER ASSETS

                       

Works of Art

   983    —,—    —,—    —,—    —,—    —,—    983    983

Leased assets

   15,558    —,—    —,—    8,925    50    34    6,599    15,558

Property taken as security for loans

   4,646    118    —,—    108    50    19    4,637    4,646

Stationery and office supplies

   2,693    1,825    —,—    1,524    —,—    —,—    2,994    2,693

Other

   12,512    —,—    —,—    —,—    50    62    12,450    12,512
                                     

Total

   36,392    1,943    —,—    10,557       115    27,663    36,392
                                     


Table of Contents
LOGO   - 35 -  

 

EXHIBIT G

MOVEMENT OF INTANGIBLE ASSETS FOR THE THREE MONTH PERIOD ENDED

MARCH 31, 2008 AND THE FISCAL YEAR ENDED DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     Net book
value at
beginning of
fiscal year
              Amortization for the
Period
          

Description

      Additions    Decreases     Years of
useful life
   Amount     Net book value at
03-31-2008
   Net book value at
12-31-2007

Goodwill

   12,200    —,—    —,—     10    12,200 (2)   —,—    12,200

Organization and

Development expenses (1)

   21,965    10,528    (2,113 )   1 & 5    1,848     28,532    21,965

Organization and development non-deductible expenses

   57,489    10,253    —,—     5    67,742     —,—    57,489
                                  

Total

   91,654    20,781    (2,113 )      81,790     28,532    91,654
                                  

 

(1) This caption mainly includes costs from information technology projects and leasehold improvements.
(2) Extraordinary depreciations have been applied during the fiscal year.


Table of Contents
LOGO   - 36 -  

 

EXHIBIT H

CONCENTRATION OF DEPOSITS

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     03-31-2008     12-31-2007  

Number of clients

   Outstanding
Balance
   % of total
portfolio
    Outstanding
balance
   % of total
portfolio
 

10 largest clients

   622,990    4.11 %   755,542    5.01 %

50 next largest clients

   1,001,368    6.60 %   1,211,506    8.03 %

100 following clients

   924,491    6.09 %   934,833    6.20 %

Remaining clients

   12,624,210    83.20 %   12,176,068    80.76 %
                      

TOTAL

   15,173,059    100.00 %   15,077,949    100.00 %
                      


Table of Contents
LOGO   - 37 -  

 

EXHIBIT I

BREAKDOWN OF MATURITY TERMS OF DEPOSITS,

OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS AND

SUBORDINATED CORPORATE BONDS

AS OF MARCH 31, 2008

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     Terms remaining to maturity     

Description

   1 month    3 months    6 months    12 months    24 months    More than
24 months
   Total

Deposits

   12,860,198    1,583,600    585,823    138,810    3,918    710    15,173,059
                                  

Other liabilities from financial transactions

                    

BCRA

   1,960    —,—    —,—    —,—    —,—    —,—    1,960

Banks and International Institutions

   113,778    125,159    222,465    169,421    4,478    6,331    641,632

Financing received from Argentine financial institutions

   32,159    15,827    —,—    —,—    —,—    —,—    47,986

Other

   650,776    2,581    6,044    10,854    21,356    31,158    722,769
                                  

Total

   798,673    143,567    228,509    180,275    25,834    37,489    1,414,347
                                  

TOTAL

   13,658,871    1,727,167    814,332    319,085    29,752    38,199    16,587,406
                                  


Table of Contents
LOGO   - 38 -  

 

EXHIBIT J

MOVEMENT OF ALLOWANCES FOR THE THREE MONTH PERIOD ENDED

MARCH 31, 2008 AND THE FISCAL YEAR ENDED DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     Book value at
beginning of fiscal
year
   Increases
(6)
    Decreases    Book value

Description

        Reversals    Applications    03-31-2008    12-31-2007

DEDUCTED FROM ASSETS

                

Government securities

                

– For impairment value

   60,955    70,462 (5)   —,—    —,—    131,417    60,955

Loans

                

– Allowance for doubtful loans

   195,692    19,235 (1)   —,—    8,488    206,439    195,692

Other receivables from financial transactions

                

– Allowance for doubtful receivables

   1,821    275 (1)   —,—    —,—    2,096    1,821

Assets subject to financial leasing

                

– Allowance for doubtful receivables

   4,280    362 (1)   —,—    —,—    4,642    4,280

Investments in other companies

                

– For impairment value (3)

   3    —,—     —,—    —,—    3    3

Other receivables

                

– Allowance for doubtful receivables (2)

   77,604    53,698     82    295    130,925    77,604
                              

Total

   340,355    144,032     82    8,783    475,522    340,355
                              

LIABILITIES-ALLOWANCES

                

– Contingents commitments (1)

   413    —,—     —,—    —,—    413    413

– Other contingencies

   320,864    45,323 (4)   —,—    5,732    360,455    320,864
                              

Total

   321,277    45,323     —,—    5,732    360,868    321,277
                              

 

(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 allowance on deferred tax assets (see note 4.1.) and the possible uncollectibility risks arising out of payments under protection actions on Mutual Funds
(3) Recorded, to recognize the estimated impairment in AIG Latin American Fund’s equity as of March 31, 2008.
(4) Recorded to cover possible contingencies that were not considered in other accounts (court orders corresponding to petitions for protection of civil rights, civil, labor, commercial and other lawsuits) (notes 2.3.m) and 2.3.q)).
(5) Recorded in compliance with the provisions of Communication “A” 4084 and BCRA’s complementary regulations.
(6) Includes exchange differences generated as allowances in foreign currency, booked in the “Financial income—Gold and foreign currency exchange difference” account, as follow:

 

– Loans

   163

– Other receivables from financial transactions

   2

– Other receivables

   27


Table of Contents
LOGO   - 39 -  

 

EXHIBIT K

CAPITAL STRUCTURE AS OF MARCH 31, 2008

(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.)


Table of Contents
LOGO   - 40 -  

 

EXHIBIT L

FOREIGN CURRENCY BALANCES AS OF

MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

Accounts

   03-31-2008    12-31-2007
          Total of the period (per type of currency)     
     Total of
the period
   Euro    US Dollars    Pounds
Sterling
   Yen    Other    Total of
fiscal year

ASSETS

                    

Cash and due from banks

   1,361,105    159,246    1,197,341    1,617    —,—    2,901    1,223,162

Government and private securities

   5,254    —,—    5,254    —,—    —,—    —,—    8,539

Loans

   2,248,911    6,080    2,242,831    —,—    —,—    —,—    2,284,032

Other receivables from financial transactions

   335,396    132,779    202,139    —,—    318    160    107,687

Assets subject to financial leasing

   62    —,—    62    —,—    —,—    —,—    63

Investments in other companies

   840    —,—    840    —,—    —,—    —,—    836

Other receivables

   20,664    1,045    19,619    —,—    —,—    —,—    18,692

Suspense items

   196    14    182    —,—    —,—    —,—    352
                                  

TOTAL

   3,972,428    299,164    3,668,268    1,617    318    3,061    3,643,363
                                  

LIABILITIES

                    

Deposits

   2,540,180    86,774    2,453,406    —,—    —,—    —,—    2,459,570

Other liabilities from financial transactions

   1,274,106    168,289    1,101,721    1,386    170    2,540    1,024,475

Other liabilities

   5,367    836    4,531    —,—    —,—    —,—    5,265

Suspense items

   107    —,—    107    —,—    —,—    —,—    2
                                  

TOTAL

   3,819,760    255,899    3,559,765    1,386    170    2,540    3,489,312
                                  

MEMORANDUM ACCOUNTS

                    

Debit accounts (except contra debit accounts)

                    

Contingent

   323,164    —,—    323,164    —,—    —,—    —,—    345,981

Control

   4,545,581    16,325    4,527,307    —,—    1,013    936    6,758,977
                                  

TOTAL

   4,868,745    16,325    4,850,471    —,—    1,013    936    7,104,958
                                  

Credit accounts (except contra credit accounts)

                    

Contingent

   242,844    —,—    242,844    —,—    —,—    —,—    279,895

Control

   22,325    —,—    22,325    —,—    —,—    —,—    34,048
                                  

TOTAL

   265,169    —,—    265,169    —,—    —,—    —,—    313,943
                                  


Table of Contents
LOGO   - 41 -  

 

EXHIBIT N

ASSISTANCE TO RELATED CLIENTS AND AFFILIATES

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

     Status          

Concept

   Normal    In potential
risk / Low
risk
   Nonperforming /
Medium risk
   With high risk of
uncollectibility / High
risk
   Uncollectible    Classified
uncollectible
as such
under
regulatory
requirements
   Total
         Not yet
matured
   Past-due    Not yet
matured
   Past-due          03-31-2008    12-31-2007

1. Loans

   403,314    —,—    —,—    —,—    —,—    —,—    —,—    —,—    403,314    376,112

- Overdraft

   11,097    —,—    —,—    —,—    —,—    —,—    —,—    —,—    11,097    1,235

Without senior security or counter guaranty

   11,097    —,—    —,—    —,—    —,—    —,—    —,—    —,—    11,097    1,235

- Discounted Instruments

   389    —,—    —,—    —,—    —,—    —,—    —,—    —,—    389    1,182

Without senior security or counter guaranty

   389    —,—    —,—    —,—    —,—    —,—    —,—    —,—    389    1,182

- Real Estate Mortgage and Collateral Loans

   642    —,—    —,—    —,—    —,—    —,—    —,—    —,—    642    650

Other collaterals and counter guaranty “B”

   642    —,—    —,—    —,—    —,—    —,—    —,—    —,—    642    650

- Consumer

   46    —,—    —,—    —,—    —,—    —,—    —,—    —,—    46    124

Without senior security or counter guaranty

   46    —,—    —,—    —,—    —,—    —,—    —,—    —,—    46    124

- Credit Cards

   432    —,—    —,—    —,—    —,—    —,—    —,—    —,—    432    372

Without senior security or counter guaranty

   432    —,—    —,—    —,—    —,—    —,—    —,—    —,—    432    372

- Other

   390,708    —,—    —,—    —,—    —,—    —,—    —,—    —,—    390,708    372,549

Without senior security or counter guaranty

   390,708    —,—    —,—    —,—    —,—    —,—    —,—    —,—    390,708    372,549

2. Other receivables from financial transactions

   24,651    —,—    —,—    —,—    —,—    —,—    —,—    —,—    24,651    6,686

3. Contingent commitments

   34,220    —,—    —,—    —,—    —,—    —,—    —,—    —,—    34,220    47,862

4. Investments in other companies and private securities

   151,969    —,—    —,—    —,—    —,—    —,—    —,—    —,—    151,969    153,110
                                                 

Total

   614,154    —,—    —,—    —,—    —,—    —,—    —,—    —,—    614,154    583,770
                                                 

Total Allowances

   4,060    —,—    —,—    —,—    —,—    —,—    —,—    —,—    4,060    3,775
                                                 


Table of Contents
LOGO   - 42 -  

 

EXHIBIT O

FINANCIAL DERIVATIVES INSTRUMENTS

AS OF MARCH 31, 2008

(Translation of financial statements originally issued in Spanish—See Note 17)

- Stated in thousands of pesos -

 

Type of contract

 

Purpose of
transactions

 

Underlying
asset

 

Type of Settlement

 

Traded at /Counterparty

  Weighted
average term as
originally
agreed

(months)
  Weighted
average
residual
term

(months)
  Weighted
average term
for
difference
settlements

(months)
   Amount

Swaps

  Financial transactions – own account   -   Upon expiration of differences   RESIDENTS IN ARGENTINA- FINANCIAL SECTOR   19   7   2    147,000

Swaps

  Financial transactions – own account   -   Upon expiration of differences   RESIDENTS IN ARGENTINA- NON-FINANCIAL SECTOR   48   44   3    238,820

Futures

  Financial transactions – own account   Foreign currency   Upon expiration of differences   ROFEX   3   2   1    378,036

Futures

  Financial transactions – own account   Foreign currency   Upon expiration of differences   MAE   4   2   1    1,111,629
                  

TOTAL

                 1,875,485
                  


Table of Contents
LOGO   - 43 -  

 

CONSOLIDATED BALANCE SHEETS AS OF

MARCH 31, 2008 AND DECEMBER 31, 2007

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

     03-31-08    12-31-07

ASSETS:

     

A. CASH AND DUE FROM BANKS:

     

Cash

   755,782    750,752

Due from banks and correspondents

   2,870,192    2,418,562
         

Argentine Central Bank (BCRA)

   2,542,451    2,102,642

Other local

   5,873    7,312

Foreign

   321,868    308,608
         
   3,625,974    3,169,314
         

B. GOVERNMENT AND PRIVATE SECURITIES (Note 8.a):

     

Holdings in investment accounts

   788,682    547,714

Holdings for trading or financial transactions

   271,521    170,320

Holdings available for sale

   989,689    1,372,584

Unlisted Government Securities

   914,461    903,903

Instruments issued by the BCRA

   1,416,604    2,005,791

Investments in listed private securities

   232,884    241,943

Less: Allowances

   131,464    61,002
         
   4,482,378    5,181,253
         

C. LOANS:

     

To government sector (Exhibit 1)

   2,337,186    2,367,869

To financial sector (Exhibit 1)

   669,404    541,911
         

Interfinancial – (Calls granted)

   108,000    56,430

Other financing to local financial institutions

   519,176    449,709

Interest and listed-price differences accrued and pending collection

   42,228    35,772

To non financial private sector and residents abroad (Exhibit 1)

   9,170,162    8,679,162
         

Overdraft

   1,542,146    1,326,472

Discounted instruments

   1,526,031    1,430,787

Real estate mortgage

   845,357    772,036

Collateral Loans

   310,591    253,130

Consumer

   1,487,916    1,337,179

Credit cards

   858,656    802,647

Other (Note 8.b)

   2,512,261    2,666,843

Interest and listed-price differences accrued and pending collection

   99,488    103,824

Less: Interest documented together with main obligation

   12,284    13,756

Less: Difference arising from purchase of portfolio

   93    93

Less: Allowances

   210,250    198,728
         
   11,966,409    11,390,121
         

D. OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS:

     

Argentine Central Bank (BCRA)

   471,280    463,621

Amounts receivable for spot and forward sales to be settled

   220,160    206,216

Instruments to be received for spot and forward purchases to be settled

   310,017    110,155

Unlisted corporate bonds (Exhibit 1)

   83,502    81,976

Non-deliverable forward transactions balances to be settled

   4,437    6,292

Other receivables not covered by debtor classification regulations

   26,394    24,170

Other receivables covered by debtor classification regulations (Exhibit 1)

   45,994    43,816

Interest accrued and pending collection not covered by debtor classification regulations

   26,425    21,834

Interest and adjustment accrued and pending collection covered by debtor classification regulations (Exhibit 1)

   5    5

Less: Allowances

   2,189    1,901
         
   1,186,025    956,184
         

E. ASSETS SUBJECT TO FINANCIAL LEASING:

     

Assets subject to financial leasing (Exhibit 1)

   340,451    327,969

Less: Allowances

   4,837    4,447
         
   335,614    323,522
         

F. INVESTMENTS IN OTHER COMPANIES:

     

In financial institutions

   32,521    31,559

Other (Note 8.c)

   74,053    46,430

Less: Allowances

   3    3
         
   106,571    77,986
         

G. OTHER RECEIVABLES:

     

Receivables from sale of property assets (Exhibit 1)

   34    52

Tax on minimum presumed income – Tax Credit

   150,506    150,506

Other (Note 8.d)

   382,443    285,008

Other accrued interest receivable

   —,—    1

Less: Allowances

   130,950    77,604
         
   402,033    357,963
         

H. PREMISES AND EQUIPMENT:

   408,268    399,615
         

I. OTHER ASSETS:

   28,728    38,950
         

J. INTANGIBLE ASSETS:

     

Goodwill

   —,—    12,200

Organization and development expenses

   51,508    104,180
         
   51,508    116,380
         

K. SUSPENSE ITEMS:

   10,154    11,261
         

L. OTHER SUBSIDIARIES´ ASSETS (Note 8.e):

   6,938    450
         

TOTAL ASSETS:

   22,610,600    22,022,999
         


Table of Contents
LOGO   - 44 -  

 

(Contd.)

CONSOLIDATED BALANCE SHEETS AS OF

MARCH 31, 2008 AND DECEMBER 31, 2007

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

     03-31-08    12-31-07

LIABILITIES:

     

M. DEPOSITS:

     

Government sector

   70,729    53,899

Financial sector

   180,764    195,890

Non financial private sector and residents abroad

   14,857,702    14,759,969
         

Checking accounts

   3,019,943    2,771,710

Savings deposits

   4,351,623    4,237,696

Time deposits

   6,894,393    7,219,407

Investments accounts

   17,811    13,152

Other

   505,820    435,566

Interest and listed-price differences accrued payable

   68,112    82,438
         
   15,109,195    15,009,758
         

N. OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS:

     

BCRA

   1,960    1,833
         

Other

   1,960    1,833

Banks and International Institutions

   633,414    555,842

Amounts payable for spot and forward purchases to be settled

   49,412    104,223

Instruments to be delivered for spot and forward sales to be settled

   469,130    206,466

Non-deliverable forward transactions balances to be settled

   1,665    1,002

Financing received from Argentine financial institutions

   142,290    72,672
         

Interfinancial (calls received)

   22,450    10,019

Other financings from local financial institutions

   119,834    62,646

Interest accrued payable

   6    7

Other (Note 8.f)

   730,194    797,227

Interest and listed–price differences accrued payable

   14,316    10,756
         
   2,042,381    1,750,021
         

O. OTHER LIABILITIES:

     

Dividens payable

   164,080    —,—

Fees payable

   168    118

Other (Note 8.g)

   310,245    374,881
         
   474,493    374,999
         

P. ALLOWANCES:

   481,876    441,964
         

Q. SUSPENSE ITEMS:

   6,915    6,671
         

R. OTHER SUBSIDIARIES’ LIABILITIES (Note 8.h):

   2,275,732    2,146,731
         

TOTAL LIABILITIES:

   20,390,592    19,730,144
         

S. MINORITY INTEREST IN SUBSIDIARIES (Note 5):

   242,604    236,018
         

STOCKHOLDERS’ EQUITY:

   1,977,404    2,056,837
         

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY:

   22,610,600    22,022,999
         


Table of Contents
LOGO   - 45 -  

 

MEMORANDUM ACCOUNTS

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

     03-31-08    12-31-07

DEBIT ACCOUNTS

     

Contingent

     

– Credit lines obtained (unused balances)

   141,413    199,679

– Guarantees received

   3,708,953    3,437,694

– Contra contingent debit accounts

   565,441    554,832
         
   4,415,807    4,192,205
         

Control

     

– Receivables classified as irrecoverable

   282,020    280,820

– Other (Note 8.i)

   32,572,641    32,078,895

– Contra control debit accounts

   2,218,371    2,221,724
         
   35,073,032    34,581,439
         

Derivatives

     

– “Notional” amount of non-deliverable forward transactions

   634,183    1,164,392

– Interest rate SWAP

   335,820    292,000

– Other

   50,000    50,000

– Contra debit derivatives accounts

   855,482    1,289,267
         
   1,875,485    2,795,659
         

For trustee activities

     

– Funds in trust

   17,618    18,502
         
   17,618    18,502
         

TOTAL

   41,381,942    41,587,805
         

CREDIT ACCOUNTS

     

Contingent

     

– Credit lines granted (unused portion) covered by debtor classification regulations (Exhibit 1)

   85,926    26,185

– Guarantees provided to the BCRA

   63,530    61,729

– Other guarantees given covered by debtor classification regulations (Exhibit 1)

   134,001    135,525

– Other guaranties given non covered by debtor classification regulations

   134,607    134,871

– Other covered by debtor classification regulations (Exhibit 1)

   147,377    196,522

– Contra contingent credit accounts

   3,850,366    3,637,373
         
   4,415,807    4,192,205
         

Control

     

– Items to be credited

   398,917    388,952

– Other

   1,819,454    1,832,772

– Contra control credit accounts

   32,854,661    32,359,715
         
   35,073,032    34,581,439
         

Derivatives

     

– “Notional” amount of non-deliverable forward transactions

   855,482    1,289,267

– Contra debit derivatives accounts

   1,020,003    1,506,392
         
   1,875,485    2,795,659
         

For trustee activities

     

– Contra credit accounts for trustee activities

   17,618    18,502
         
   17,618    18,502
         

TOTAL

   41,381,942    41,587,805
         

The accompanying notes 1 through to 8 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.


Table of Contents
LOGO   - 46 -  

 

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2008 AND 2007

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

     03-31-08    03-31-07

A. FINANCIAL INCOME

     

Interest on cash and due from banks

   4,914    4,739

Interest on loans to the financial sector

   31,695    38,098

Interest on overdraft

   50,010    32,241

Interest on discounted instruments

   38,063    18,400

Interest on real estate mortgage

   22,698    13,182

Interest on collateral loans

   8,488    2,512

Interest on credit card loans

   21,068    11,635

Interest on other loans

   108,629    65,111

Interest from other receivables from financial transactions

   5,995    5,694

Income from secured loans - Decree 1387/01

   66,664    91,620

Net income from government and private securities

   60,751    135,644

Indexation by CER

   64,671    76,078

Gold and foreign currency exchange difference

   31,805    21,159

Other

   40,558    27,054
         
   556,009    543,167
         

B. FINANCIAL EXPENSE

     

Interest on checking accounts

   5,732    6,746

Interest on savings deposits

   2,097    1,435

Interest on time deposits

   151,214    102,439

Interest on interfinancial financing (calls received)

   306    480

Interest on other financing from financial institutions

   2,066    1,267

Interest on other liabilities from financial transactions

   9,654    6,777

Other interest

   1,632    3,967

Indexation by CER

   4,200    20,211

Contribution to the deposit guarantee fund

   6,632    5,594

Other

   14,229    8,912
         
   197,762    157,828
         

GROSS INTERMEDIATION MARGIN – GAIN

   358,247    385,339
         

C. ALLOWANCES FOR LOAN LOSSES

   20,173    9,626
         

D. SERVICE CHARGE INCOME

     

Related to lending transactions

   52,853    34,705

Related to liability transactions

   93,561    73,499

Other commissions

   107,014    134,275

Other

   48,125    36,619
         
   301,553    279,098
         

E. SERVICE CHARGE EXPENSE

     

Commissions

   37,045    23,307

Other (Note 8.j)

   13,585    9,808
         
   50,630    33,115
         


Table of Contents
LOGO   - 47 -  

 

(Contd.)

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2008 AND 2007

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

     03-31-08     03-31-07  

F. ADMINISTRATIVE EXPENSES

    

Payroll expenses

   189,434     133,672  

Fees to Bank Directors and Statutory Auditors

   126     102  

Other professional fees

   7,534     7,250  

Advertising and publicity

   16,667     11,437  

Taxes

   15,249     13,563  

Fixed assets depreciation

   9,478     8,878  

Organizational expenses amortization

   5,720     5,009  

Other operating expenses

   43,722     35,545  

Other

   30,367     26,267  
            
   318,297     241,723  
            

NET GAIN FROM FINANCIAL TRANSACTIONS

   270,700     379,973  
            

RESULTS OF MINORITY INTEREST IN SUBSIDIARIES

   (6,667 )   (10,798 )
            

G. OTHER INCOME

    

Income from long-term investments

   28,597     2,431  

Punitive interests

   404     187  

Loans recovered and reversals of allowances

   13,607     315,501  

Other (Note 8.k)

   161,247     87,273  
            
   203,855     405,392  
            

H. OTHER EXPENSE

    

Punitive interests and charges paid to BCRA

   18     6  

Charge for uncollectibility of other receivables and other allowances

   100,970     140,272  

Amortization of difference arising from judicial resolutions

   67,742     61,375  

Depreciation and losses from miscellaneous assets

   115     482  

Goodwill amortization

   12,200     1,657  

Other (Note 8.l)

   206,444     486,446  
            
   387,489     690,238  
            

NET GAIN BEFORE INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME

   80,399     84,329  
            

I. INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME

   6,091     15,889  
            

NET INCOME FOR THE PERIOD

   74,308     68,440  
            

The accompanying notes 1 through 8 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.


Table of Contents
LOGO   - 48 -  

 

CONSOLIDATED STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2008 AND 2007

(ART. 33 OF LAW No. 19,550)

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

     03-31-2008     03-31-2007  

CHANGES IN CASH AND CASH EQUIVALENTS

    

Cash and cash equivalents at the beginning of fiscal year

   3,465,634 (1)   2,928,807  

Cash and cash equivalents at the end of the period

   4,039,596 (1)   2,811,173  
            

Net increase / (decrease) in cash and cash equivalents

   573,962     (117,634 )
            

REASONS FOR CHANGES IN CASH AND CASH EQUIVALENTS

    

Operating activities

    

Net collections/ (payments) from:

    

- Government and private securities

   860,828     (1,197,295 )

- Loans

   (100,603 )   951,064  
            

to financial sector

   (104,937 )   (8,232 )

to non-financial public sector

   38,015     342,193  

to non-financial private sector and residents abroad

   (33,681 )   617,103  

- Other receivables from financial transactions

   (5,408 )   (9,371 )

- Assets subject to financial leasing

   (12,092 )   (17,031 )

- Deposits

   (85,117 )   739,775  
            

to financial sector

   (15,142 )   1,421  

to non-financial public sector

   17,250     1,637  

to non-financial private sector and residents abroad

   (87,225 )   736,717  

- Other liabilities from financial transactions

   (59,892 )   (151,267 )
            

Financing from financial or interfinancial sector (calls received)

   12,431     (131,997 )

Others (except liabilities included in Financing Activities)

   (72,323 )   (19,270 )

Collections related to service charge income

   301,512     279,696  

Payments related to service charge expense

   (50,630 )   (33,115 )

Administrative expenses paid

   (375,485 )   (277,915 )

Organizational and development expenses paid

   (5,947 )   (3,848 )

Net collections from punitive interest

   328     163  

Differences from judicial resolutions paid

   (10,253 )   (37,124 )

Collections of dividends from other companies

   14     6,321  

Other payments related to other income and expenses

   (33,761 )   (383,643 )
            

Net cash flows provided by / (used in) operating activities

   423,494     (133,590 )
            

Investment activities

    

Net payments from premises and equipment

   (18,131 )   (13,414 )

Net collections / (payments) from other assets

   10,084     (283 )

Other payments from investment activities

   (108,077 )   (13,413 )
            

Net cash flows used in investment activities

   (116,124 )   (27,110 )
            

Financing activities

    

Net collections/ (payments) from:

    

- Non-subordinated corporate bonds

   —,—     (248,638 )

- ArgentineCentral Bank

   126     105  
            

Others

   126     105  

- Banks and international agencies

   77,572     14,688  

- Financing received from local financial institutions

   57,188     6,881  

Other collections from financing activities

   126,792     265,291  
            

Net cash flows provided by financing activities

   261,678     38,327  
            

Financial results and results from holdings of cash and cash equivalents (including interest)

   4,914     4,739  
            

Net increase / (decrease) in cash and cash equivalents

   573,962     (117,634 )
            

 

(1) See note 7 “Statement of cash and cash equivalents flow”.

The accompanying notes 1 through to 8 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.


Table of Contents
LOGO   - 49 -  

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

WITH SUBSIDIARIES AS OF MARCH 31, 2008, PRESENTED IN COMPARATIVE FORM WITH

THE BALANCE SHEET AS OF DECEMBER 31, 2007, AND THE STATEMENTS OF INCOME

AND CASH AND CASH EQUIVALENTS FLOW

AS OF MARCH 31, 2007

(Translation of financial statements originally issued in Spanish—See Note 17 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

1. SIGNIFICANT ACCOUNTING POLICIES AND SUBSIDIARIES

General rule

In accordance with the procedures set forth in BCRA’s regulations and Technical Pronouncement No. 21 of the Argentine Federation of Professional Councils in Economic Sciences, BBVA Banco Francés S.A. (BF) has consolidated—line by line—its balance sheets as of March 31, 2008 and at the end of previous year and the statements of income and cash and cash equivalents flow for the three month periods ended March 31, 2008 and 2007, as per the following detail:

– As of March 31, 2008:

 

  a) With the financial statements of Francés Valores Sociedad de Bolsa S.A., Atuel Fideicomisos S.A. and its subsidiary and PSA Finance Argentina Cía. Financiera S.A., for the three month periods ended March 31, 2008 and 2007.

 

  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 Consolidar Cía. de Seguros de Retiro S.A., for the nine month periods ended March 31, 2008 and 2007.

– As of December 31, 2007:

 

  a) With the financial statements of Francés Valores Sociedad de Bolsa S.A., Atuel Fideicomisos S.A. and its subsidiary and PSA Finance Argentina Cía. Financiera S.A., for the fiscal years ended December 31, 2007.

 

  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 Consolidar Cía. de Seguros de Retiro S.A., for the six month periods ended December 31, 2007.

The results and cash and cash equivalentes flow of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A., Consolidar Cía. de Seguros de Vida S.A. and Consolidar Cía. de Seguros de Retiro S.A. have been adjusted for purposes of comparison of the fiscal years of companies consolidating on the basis of a three month period ended on March 31, 2008 and 2007.

Interests in subsidiaries as of March 31, 2008 and at the end of the previous fiscal year are listed below:

 

     Shares    Interest percentage in
     Type    Quantity    Total Capital    Possible Votes

Companies

        03/31/08    12/31/07    03/31/08    12/31/07    03/31/08    12/31/07

Francés Valores Soc. de Bolsa S.A.

   Common    12,137    12,137    94.9687    94.9687    94.9687    94.9687

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    75,842,839    53.8892    53.8892    53.8892    53.8892

Consolidar Cía. de Seguros de Vida S.A.

   Common    7,383,921    7,383,921    65.9600    65.9600    65.9600    65.9600

Consolidar Cía. de Seguros de Retiro S.A.

   Common    25,033,832    25,033,832    66.6666    66.6666    66.6666    66.6666

PSA Finance Argentina Cía Financiera S.A.

   Common    9,000    9,000    50.0000    50.0000    50.0000    50.0000


Table of Contents
LOGO   - 50 -  

 

Total assets, liabilities and stockholders´ equity balances in accordance with the criteria defined in Note 2 below, as of March 31, 2008 and the end of the previous fiscal year and net income balances as of March 31, 2008 and 2007, are listed below:

 

     Assets    Liabilities    Stockholders’
Equity
   Net income/
gain-(loss)

Companies

   03/31/08    12/31/07    03/31/08    12/31/07    03/31/08    12/31/07    03/31/08     03/31/07

Francés Valores Soc. de Bolsa S.A.

   14,439    12,922    6,396    3,577    8,043    9,345    295     180

Atuel Fideicomisos S.A. and its subsidiary

   32,873    32,521    4,062    4,798    28,811    27,723    1,088     2,680

Consolidar A.F.J.P. S.A.

   391,914    377,785    115,638    103,863    276,276    273,922    2,354     13,235

Consolidar Cía. de Seguros de Vida S.A.

   321,906    328,901    121,024    135,788    200,882    193,113    7,769     2,696

Consolidar Cía. de Seguros de Retiro S.A.

   2,397,613    2,234,020    2,299,553    2,145,527    98,060    88,493    9,567     9,400

PSA Finance Argentina Cía Financiera S.A.

   348,576    265,327    321,095    237,309    27,481    28,018    (537 )   1,266

 

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 A.F.J.P. 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 Government—Decree 1387/01 held by these subsidiaries amounting to 978,132 and 952,106 as of March 31, 2008 and the end of the previous fiscal year, were valued in accordance with the regulations of the Superintendence of Pension Fund Administrators (A.F.J.P) and the National Superintendence of Insurance.

 

   

Consolidar Cía. de Seguros de Retiro S.A.: the portfolio of Government securities in investment accounts has been booked in accordance with the standards of the National Superintendence of Insurance.

 

   

Consolidar Cía. de Seguros de Retiro S.A. and Consolidar Cía de Seguros de Vida S.A.: a part of its portfolio of instruments issued by the BCRA has been recorded in investment accounts, and they have been valued as per Communication “A” 4698 of the BCRA. The net difference with the market values as of March 31, 2008 and the end of the previous fiscal year amounted to 2,218 (income) and 117 (income), respectively.

 

   

The items included under the captions Subsidiaries’ other assets and Subsidiaries’ other liabilities were valued in accordance with the regulations of the National Superintendence of Insurance.

 

  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 21,105, 22,099 and 24,985 at March 31, 2008, December 31 and March 31, 2007, respectively, corresponding to the regularizing account called “Unaccrued secured loans valuation difference” which, as established by the National Superintendence of Insurance, will be settled through subsequent accrual of the regularizing accounts of secured loans. In accordance with professional accounting standards currently in force in the City of Buenos Aires, such amount should have been recorded as a loss for the year ended December 31, 2003.


Table of Contents
LOGO   - 51 -  

 

3. CONSOLIDAR GROUP

 

  a) Consolidar AFJP manages a pension fund that as of March 31, 2008 and the end of the previous fiscal year amounted to 17,716 million and 17,268 million respectively.

 

  b) Pursuant to Law No. 26,222, enacted on February 27, 2007, the Argentine social security system was amended. Subsequent to that date, supplementary rules were issued for the purpose of regulating the Law. The main amendments in the social security system with an impact on the business of Consolidar A.F.J.P. S.A. include the following:

i) the possibility for the affiliates of choosing until January 15, 2008 to adhere to the pay-as-you-go scheme managed by the Argentine State;

ii) as from April 1, 2007, workers who within 90 days from the commencement of their labor relation have not chosen a social security regime shall be presumed to have chosen the pay-as-you-go system managed by the Argentine State;

iii) men older than 55 and women older than 50, who are currently affiliated to the capitalization system and whose balances in the individually funded account do not exceed 20,000 pesos shall be transferred to the pay-as-you-go system unless they expressly state their intent to remain affiliated to the capitalization system. The transfers made by Consolidar A.F.J.P S.A. during the period amount to approximately 1,080,000 thousand of pesos which stand for an approximate number of 191,000 affiliates.

iv) the restriction of the commission charged by the Pension Fund Managers for managing affiliates’ contributions to 1% of the basis used to calculate such commissions. The commission thus determined applies to the salaries accrued as from April 2007. Until such date, the commission that Consolidar A.F.J.P. S.A. charged was 1.24%.

v) increase the maximum of the basis used to determine the social security contributions and commissions from 4,800 pesos to 6,000 pesos concerning the salaries accrued as from April 1, 2007. It must be noted that on October 4, 2007, Decree No. 1346 of the Argentine Executive Branch raised such maximum to 6,750 pesos for salaries accrued as from September 1, 2007. Afterwards, on February 19, 2008, Decree No. 279/2008 issued by the Argentine Executive Branch increased such maximum to 7,256 pesos for the personal contributions paid by workers in a labor relationship as from March 1, 2008 and to 7,800 pesos for the personal contributions paid by the self-employed as from July 1, 2008;

vi) the establishment starting on January 1, 2008 of a fund of mutual contributions with the resources of the pension fund for purposes of ensuring the full financing of the benefits for temporary disability retirement, supplementary capitals and reconstruction corresponding to the capitalization regime.

vii) to apply a percentage ranging from 5% to 20% of the assets held in the pension funds to investments in production or infrastructure projects for the medium and long terms.

The Board of Directors of Consolidar A.F.J.P. S.A. is currently analyzing the effects of the legal reforms and working on adjusting the Company’s operations in order to adapt to the new legal framework.

Given that this reform has a significant impact on the social security system, it shall entail a substantial change in the business of Consolidar Cía de Seguros de Vida S.A., as starting on January 1, 2008, the issuance of new social-security related life insurance policies shall cease. Management activities related to social-security life insurance policies issued prior to the fiscal year commenced on July 1, 2001 as well as the management activities related to policies corresponding to group life insurance and mandatory life insurance policies shall continue. The above notwithstanding, the Company’s Board of Directors is presently analyzing the current situation and assessing the alternatives to allow the Company to adjust to the new market conditions, thereby laying down the most appropriate framework for the continuity of the Company’s operations and it estimates that the implementation of said plan would not have a material negative impact on the Company’s financial situation as reflected in these financial statements.

 

4. ATUEL FIDEICOMISOS S.A.

Under its line of business, Atuel Fideicomisos S.A. acts in its capacity as a trustee for the following trusts, in no case being personally liable for the liabilities assumed; such liabilities will be satisfied out of the proceeds of the underlying assets of each such trust.


Table of Contents
LOGO   - 52 -  

 

   

Fideicomiso Corp. Banca: it was created by an agreement dated May 13, 1997, executed by Atuel Fideicomisos S.A. as trustee, Corp. Banca S.A. (later BBVA Banco Francés S.A.) as trustor and beneficiary, the Argentine Central Bank and Seguro de los Depósitos S.A. as beneficiaries.

Atuel Fideicomisos also acts as administration and collection manager for Fideicomiso Diagonal, which was created by an agreement dated January 5, 2001, executed by Mercobank S.A as trustor, BBVA Banco Francés S.A. as trustee and BBVA Banco Francés S.A and other financial institutions and Seguro de Depósitos S.A. as beneficiaries (see note 9.1. to the stand-alone financial statements).

 

5. MINORITY INTEREST IN SUBSIDIARIES

The breakdown of balances in the “Minority interest in subsidiaries” account is as follows:

 

     03-31-08    12-31-07

Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A.

   127,391    126,305

Consolidar Cía. de Seguros de Vida S.A.

   68,381    65,736

Consolidar Cía. de Seguros de Retiro S.A.

   32,683    29,494

Francés Valores Sociedad de Bolsa S.A.

   405    470

Atuel Fideicomisos S.A.

   3    3

PSA Finance Argentina Cía Financiera S.A.

   13,741    14,010
         

Total

   242,604    236,018
         

 

6. 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 6,400. These shares have been pledged in favor of “CHUBB 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 latter’s guaranteeing any noncompliance of stock broking companies with their obligations.

 

  b) See note 6 to the stand-alone financial statements of BF.

 

7. STATEMENT OF CASH AND CASH EQUIVALENTS FLOW

The Statements of Cash and cash equivalents flow as of March 31, 2008 and the end of the previous fiscal year explains the changes in cash and cash equivalents. For such purpose, a detail is supplied of the items that the Bank considers to be cash and cash equivalents:

 

     03/31/2008    12/31/2007

a) Cash and due from banks:

   3,625,974    3,169,314

b) Government securities held for trading or financial transactions

   271,522    170,320

c) Loans to financial sector, calls granted maturity date less than three months as from the end of the fiscal years:

   142,100    126,000
         

CASH AND CASH EQUIVALENTS

   4,039,596    3,465,634
         

Points b) and c) are considered to be cash equivalents because they are held in order to meet short-term commitments, they are easily convertible in known cash amounts, they are subject to negligible changes in value and their maturity is less than three months as from the period / year-end date.


Table of Contents
LOGO   - 53 -  

 

8. BREAKDOWN OF MAIN ITEMS

The detail of the main ítems included in financial statements is as follows:

 

     03-31-08    12-31-07

a) GOVERNMENT AND PRIVATE SECURITIES

     

Holdings in investment accounts

     

Federal Government Bonds (LIBOR 2012) - Compensation and Hedging

   15,400    —,—

Discount Bonds in pesos

   335,298    310,956

Federal Government Bonds 2008 (BODEN 2014)

   35,911    34,927

Federal Government Bonds in Pesos 10.5 % due in 2012

   25,737    24,949

BCRA Notes (NOBAC)

   338,267    176,882

Federal Government Bocon PRE9

   32,072    —,—

Federal Government Bonds LIBOR 2013

   5,997    —,—
         

Total

   788,682    547,714
         

Holdings for trading or financial transactions

     

Federal Government Bonds 2008 (BODEN 2008)

   —,—    115

Federal Government Bonds LIBOR 2012

   69,506    29,720

Federal Government Bonds LIBOR 2013

   5,384    3,583

Buenos Aires City Bond

   3,717    3,563

Federal Government Bonds LIBOR 2014

   4,992    484

Discount Bonds in pesos

   61,570    50,615

Discount Bonds in US dollar

   1,754    2,805

Peso-denominated GDP-related securities

   11,536    11,607

Federal Government Bonds in pesos 7% due in 2017

   1,192    1,811

Federal Government Bonds in pesos 7% due in 2013

   1,244    1,248

Cuasipar Bonds in pesos

   5,977    6,365

Secured Bonds due in 2018

   4,928    16,422

Federal Government Bocon PRE8

   9,594    11,520

Federal Government Bocon PRE9

   71,374    6,900

Federal Government Bonds in US dollar 7% due in 2011

   8,790    8,873

Federal Government Bonds in Pesos 10.5 % due in 2012

   —,—    3,105

Other

   9,964    11,584
         

Total

   271,522    170,320
         

Holdings available for sale

     

Secured Bonds due in 2018

   75,458    73,284

Federal Government Bocon PRO 12

   171,044    166,229

BCRA Notes (NOBAC)

   743,187    1,133,071
         

Total

   989,689    1,372,584
         

Unlisted government securities

     

Secured Bonds due in 2020

   914,455    903,897

Tax credit certificates due in 2003/2006

   6    6
         

Total

   914,461    903,903
         


Table of Contents
LOGO   - 54 -  

 

     03-31-08     12-31-07  

Instruments issued by the BCRA

    

BCRA Bills (LEBAC)

   381,248     140,068  

BCRA Notes (NOBAC)

   1,035,356     1,865,723  
            

Total

   1,416,604     2,005,791  
            

Investments in listed private securities

    

Corporate Bonds Edesur S.A.

   1,534     —,—  

Corporate Bonds Telefónica de Argentina S.A.

   2,279     2,269  

Corporate Bonds Telecom Personal

   5,007     4,994  

Corporate Bonds Camuzzi Gas Pampeana

   10,105     10,096  

Corporate Bonds Grupo Concesionario del Oeste

   10,134     9,985  

Corporate Bonds Tarjeta Cuyana

   6,740     6,459  

Corporate Bonds Banco Macro

   2,626     2,538  

Corporate Bonds Petrobrás Energía S.A.

   4,180     1,429  

Tarjeta Naranja Trust

   12,111     11,820  

Radar Financial Trust

   39,290     36,788  

Tenaris

   2,126     3,160  

Acindar S.A.

   —,—     2,387  

Telecom

   5,415     5,197  

Grupo Financiero Galicia S.A.

   1,560     1,734  

Galtrust 1 Financial Trust

   10,172     10,333  

Garbarino Trust

   —,—     4,349  

Secubono Trust

   3,449     9,153  

Cía. Financiera Argentina Trust

   6,359     12,033  

Petrobras Energía S.A.

   1,787     4,051  

FBA Bonos Argentinos FCI

   4,076     2,019  

FBA Ahorro Pesos FCI

   2,718     1,671  

Fideicomiso de Gas

   24,331     30,629  

1784 Inversión Pesos FCI

   5,353     2,853  

Pionero Pesos FCI

   2,004     10,015  

HF Pesos Clase 1 FCI

   19,600     6,364  

Super Ahorro Pesos FCI

   17,000     —,—  

Rembrandt Amro Pesos FCI

   7,797     11,016  

Other

   25,131     38,601  
            

Total

   232,884     241,943  
            

Allowances

   (131,464 )   (61,002 )
            

Total

   4,482,378     5,181,253  
            

b) LOANS – Other

    

Loans granted to pre-finance and finance exports

   1,462,643     1,497,988  

Fixed-rate financial loans

   813,055     904,117  

Other

   236,563     264,738  
            

Total

   2,512,261     2,666,843  
            


Table of Contents
LOGO   - 55 -  

 

     03-31-08    12-31-07

c) INVESTMENTS IN OTHER COMPANIES – Other

     

In other non-controlled companies- unlisted

   34,212    30,586

In non-controlled companies-supplementary activities

   39,795    15,801

Other – unlisted

   46    43
         

Total

   74,053    46,430
         

d) OTHER RECEIVABLES – Other

     

Prepayments

   52,392    46,200

Guarantee deposits

   22,398    25,551

Miscellaneous receivables

   76,715    60,226

Tax prepayments

   155,888    93,647

Other

   75,050    59,384
         

Total

   382,443    285,008
         

e) OTHER SUBSIDIARIES’ ASSETS

     

Other related to insurance business

   6,938    450
         

Total

   6,938    450
         

f) OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS – Other

     

Correspondents – our account

   33,589    146,540

Collections and other operations for the account of third parties

   52,287    25,925

Other withholdings and collections at source

   96,539    104,883

Accounts payable for consumption

   153,691    140,105

Money orders payable

   235,301    244,410

Loans received from Argentine Technological Fund (FONTAR)

   19,666    20,623

Loans received from Interamerican Development Bank (BID)

   53,788    57,738

Pending Banelco debit transactions

   21,801    11,220

Other

   63,532    45,783
         

Total

   730,194    797,227
         

g) OTHER LIABILITIES – Other

     

Accrued salaries and payroll taxes

   121,840    194,226

Accrued taxes

   84,390    79,813

Miscellaneous payables

   98,450    91,845

Other

   5,565    8,997
         

Total

   310,245    374,881
         


Table of Contents
LOGO   - 56 -  

 

     03-31-08     12-31-07  

h) OTHER SUBSIDIARIES´ LIABILITIES

    

Insurance companies, claims in adjustment process

   71,155     94,013  

Fluctuation fund – Consolidar Cía de Seguros de Retiro S.A.

   144,671     138,480  

Insurance companies, mathematical reserve

   2,028,342     1,896,586  

Insurance companies, reinsurer´s reserve

   9     10  

Difference arising from secured loans accrued valuation Consolidar Cía. De Seguros S.A.

   (21,105 )   (22,099 )

Other related to insurance business

   52,660     39,741  
            

Total

   2,275,732     2,146,731  
            

i) MEMORANDUM ACCOUNTS – DEBIT – CONTROL – Other

    

Items in safekeeping

   9,075,977     9,433,738  

Collections items

   643,036     579,318  

Checks drawn on the Bank pending clearing

   278,231     223,112  

Checks not yet credited

   756,356     786,562  

Securities representative of investment in escrow on behalf of the Pension Fund Manager

   21,770,372     20,993,983  

Other

   48,669     62,182  
            

Total

   32,572,641     32,078,895  
            
     03-31-08     03-31-07  

j) SERVICE CHARGE EXPENSE – Other

    

Turn-over tax

   10,419     7,323  

Other

   3,166     2,485  
            

Total

   13,585     9,808  
            

k) OTHER INCOME – Other

    

Premiums – Insurance companies

   93,604     59,787  

Deferred income tax (1)

   53,200     20,000  

Others

   14,443     7,486  
            

Total

   161,247     87,273  
            

 

(1) Offset by a charge for the same amount in the line Charge for uncollectibility of other receivables and other allowances under the caption Other expense item.


Table of Contents
LOGO   - 57 -  

 

     03-31-08    03-31-07  

l) OTHER EXPENSE – Other

     

Insurance companies, mathematical reserve

   106,199    84,234  

Life Annuities – Consolidar Cía. De Seguros de Retiro S.A.

   35,390    28,360  

Tax on bank credits and debits

   9,308    7,512  

Deferred tax expenses

   —,—    293,000  

Insurance premiums for disability and death

   37,186    5,525  

Claims paid – Insurance companies

   2,257    53,259  

Other

   16,104    14,556  
           

Total

   206,444    486,446 (2)
           

 

(2) See note 2.2, second paragraph to the stand-alone financial statements of BF.


Table of Contents
LOGO   - 58 -  

 

EXHIBIT 1

CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY

CATEGORIES AND GUARANTIES RECEIVED

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish-See Note 17)

-Stated in thousands of pesos-

 

     03-31-08    12-31-07

COMMERCIAL PORTFOLIO

     

Normal performance

   9,002,827    8,767,828
         

Preferred collaterals and counter guaranty “A”

   120,431    104,485

Other collaterals and counter guaranty “B”

   107,432    107,263

Without senior security or counter guaranty

   8,774,964    8,556,080

In potential risk

   21,932    17,733
         

Other collaterals and counter guaranty “B”

   2,576    922

Without senior security or counter guaranty

   19,356    16,811

Nonperforming

   4,633    5,321
         

Without senior security or counter guaranty

   4,633    5,321

With high risk of uncollectibility

   25,457    27,025
         

Preferred collaterals and counter guaranty “A”

   946    946

Without senior security or counter guaranty

   24,511    26,079

Uncollectible

   907    518
         

Without senior security or counter guaranty

   907    518
         

Total

   9,055,756    8,818,425
         


Table of Contents
LOGO   - 59 -  

 

EXHIBIT 1

(Contd.)   

CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY

CATEGORIES AND GUARANTIES RECEIVED

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Translation of financial statements originally issued in Spanish-See Note 17)

-Stated in thousands of pesos-

 

     03-31-08    12-31-07

CONSUMER AND HOUSING PORTFOLIO

     

Normal performance

   3,878,036    3,522,504
         

Preferred collaterals and counter guaranty “A”

   8,455    8,145

Other collaterals and counter guaranty “B”

   810,773    726,341

Without senior security or counter guaranty

   3,058,808    2,788,018

Low risk

   37,992    27,277
         

Preferred collaterals and counter guaranty “A”

   —.—    2

Other collaterals and counter guaranty “B”

   7,508    6,181

Without senior security or counter guaranty

   30,484    21,094

Medium risk

   18,675    12,256
         

Preferred collaterals and counter guaranty “A”

   —.—    5

Other collaterals and counter guaranty “B”

   1,450    568

Without senior security or counter guaranty

   17,225    11,683

High risk

   18,840    1,006
         

Other collaterals and counter guaranty “B”

   904    353

Without senior security or counter guaranty

   17,936    653

Uncollectible

   3,223    18,263
         

Other collaterals and counter guaranty “B”

   1,220    1,777

Without senior security or counter guaranty

   2,003    16,486

Uncollectible, classified as such under regulatory requirements

   1,520    1,261
         

Other collaterals and counter guaranty “B”

   479    251

Without senior security or counter guaranty

   1,041    1,010
         

Total

   3,958,286    3,582,567
         

General Total (1)

   13,014,042    12,400,992
         

 

(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.


Table of Contents

INDEPENDENT AUDITORS’ LIMITED REVIEW REPORT

To the President and the Board of Directors of

BBVA BANCO FRANCÉS S.A.

Reconquista 199

City of Buenos Aires

 

1. Identification of the financial statements subject to our review

We have reviewed:

 

  a) the accompanying financial statements of BBVA BANCO FRANCÉS S.A. (“BBVA BANCO FRANCÉS S.A.” or the “Bank”), which comprise the balance sheet as of March 31, 2008 and the statement of income, statement of changes in stockholders´ equity and cash and cash equivalents flow for the three-month period then ended, with their notes 1 to 16 (notes 2 and 4 describe a summary of significant accounting policies), and supplemental Exhibits “A” through “L”, “N” and “O”; and

 

  b) the consolidated financial statements of BBVA BANCO FRANCÉS S.A. and its subsidiaries (listed in note 1 to the consolidated financial statements), which comprise the consolidated balance sheet as of March 31, 2008 and the consolidated statement of income and the consolidated cash and cash equivalents flow for the three-month period then ended, with their notes 1 to 8 and the supplemental Exhibit 1.

The balance sheet (both the stand-alone and the consolidated balance sheets) and certain related supplemental information referred to above are presented for comparative purposes with the balance sheet and supplemental information for the year ended December 31, 2007.

The statements of income, of changes in stockholders’ equity and cash and cash equivalents flow referred to above (the stand-alone and the consolidated statements) and the related supplemental information are presented for comparative purposes with the statements and supplemental information for the three-month period ended March 31, 2007, after certain adaptations arising from the regulations of the Argentine Central Bank (“B.C.R.A.”), explained in note 2.2 second paragraph to the stand-alone financial statements.

The Bank´s Board of Directors and Management are responsible for the preparation and fair presentation of such financial statements in conformity with accounting principles generally accepted in the Argentine Republic, and those established by the B.C.R.A. This responsibility includes (i) designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to errors or omissions or to irregularities; (ii) selecting and applying appropriate accounting policies, and (iii) making accounting estimates that are reasonable in the circumstances. Our responsibility is to issue a limited review report on such financial statements, based on our limited review performed in accordance with the scope described in caption 2 of this report.


Table of Contents
2. Scope of our review

Our review was limited to the application of the procedures established by the auditing standards generally accepted in Argentina as adopted by the Professional Council in Economic Sciences of Buenos Aires for the limited reviews of financial statements corresponding to interim periods, and the “Minimum Standards applicable for External Audits” established by the B.C.R.A. for limited reviews to quarterly financial statements. These standards determine a scope which is substantially less than the application of all the auditing procedures necessary to be able to issue an audit opinion on financial statements taken as a whole. Accordingly, we do not express an opinion on the financial position of the Bank as of March 31, 2008, on the results of its operations, the changes in its stockholders’ equity and its cash and cash equivalents flow for the three-month period then ended.

 

3. Explanatory paragraph

The stand-alone and the consolidated financial statements referred to in paragraphs a) and b) of caption 1 of this report have been prepared by the Bank in accordance with the accounting standards established by the B.C.R.A., which differ from the professional accounting standards currently in force in the City of Buenos Aires concerning the matters indicated in note 3 to the stand-alone financial statements and in note 2 to the consolidated financial statements.

 

4. Limited review report

Based on our limited review procedures performed with the scope indicated in caption 2 of this report, which did not include all the auditing procedures necessary to enable us to express an opinion on the financial statements taken as a whole, we are in position to report that:

 

  a) the financial statements of BBVA BANCO FRANCÉS S.A. both individually and consolidated with its subsidiaries companies mentioned in paragraphs a) and b) of caption 1 of this report, give consideration to all the significant facts and circumstances of which we are aware of, and

 

  b) we have no observations to present on the referred financial statements, other than those indicated under caption 3.

In relation to the figures for the year ended December 31, 2007 and those for the three-month period ended March 31, 2007, which are presented for comparative purposes as indicated in caption 1 of this report which we have checked with those of the corresponding financial statements,

 

  a) our Independent Auditors´ Report on the financial statements for the year ended December 31, 2007 was issued on February 12, 2008 and was qualified due to certain departures from professional accounting standards currently in force in the City of Buenos Aires, described in note 3 to the stand-alone financial statements and in note 2 to the consolidated financial statements.

 

  b) we have performed a limited review the financial statements for the three-month period ended March 31, 2007 on we have issued our limited review report on May 10, 2007, which we refer to, including an observation originated in certain departures from professional accounting principles generally accepted in Buenos Aires City, described in note 3 to the stand-alone financial statements and in note 2 to the consolidated financial statements. As explained in note 2.2. second paragraph to the stand-alone financial statements, certain adaptations were introduced to said financial statements, as required by B.C.R.A.’s regulations and exclusively to be presented for comparison purposes with those for the current fiscal year. Our auditors´ limited review report issued on May 10, 2007 would not have been modified by the above mentioned adaptations.


Table of Contents
5. English translation of statutory financial statements

This report and the financial statements referred to in caption 1 have been translated into English for the convenience of English-speaking readers. As further explained in note 17 to the accompanying stand-alone financial statements, the financial statements (both the stand-alone and the consolidated financial statements) are the English translation of those originally prepared by the Bank in Spanish and presented in accordance with the accounting standards of B.C.R.A. and the professional accounting standards in force in Argentina. The effects of the differences between the accounting standards of B.C.R.A. and the professional accounting standards in force in Argentina, and the accounting principles generally accepted in the countries in which the financial statements are to be used have not been quantified. Accordingly, the accompanying financial statements are not intended to present the financial position, results of operations, stockholders’ equity or cash and cash equivalents flow in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.

City of Buenos Aires, May 8, 2008.

 

PABLO F. TONINA

Partner

Contador Público

(Universidad Católica de Buenos Aires)

C.P.C.E.C.A.B.A. - T° 160 - F° 164

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its Member Firms.


Table of Contents

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: May 16, 2008   By:  

/s/ Martín E. Zarich

  Name:   Martín E. Zarich
  Title:   Chief Financial Officer