Activation of differences due to 'dollarization' of judicial deposits

"2007 - Year of Road Safety"
CENTRAL BANK OF THE ARGENTINE REPUBLIC
COMMUNICATION "A" 4708 21/09/2007
TO FINANCIAL ENTITIES:
Ref.: Circular
CONAU 1 - 824
Activation of differences due to "dollarization" of judicial deposits.

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We address you to communicate the modifications introduced in the Plan and Chart of Accounts and in the reporting regimes "Minimum Capital Requirement and Integration", "Net Global Position in Foreign Currency" and "Accounting for Quarterly/Annual Publication", as a consequence of the provisions disseminated through Communication "A" 4686.

In this regard, the following items have been incorporated into the Plan and Chart of Accounts:

• Intangible Assets – Differences due to dollarization of judicial deposits - Deductible for the determination of Computable Patrimonial Responsibility – Origin Value;
• Intangible Assets – Differences due to dollarization of judicial deposits - Deductible for the determination of Computable Patrimonial Responsibility – (Accumulated Amortization);
• Provisions – Differences due to dollarization of judicial deposits – Communication "A" 4686.

Likewise, it is clarified that those entities that opt not to activate total or partial losses, must constitute the Provision with a counterpart in "Financial Income - For operations in gold and foreign currency - Gold and foreign currency exchange difference".

On the other hand, regarding the Reporting Regime on Minimum Capital Requirement and Integration, the following modifications were made:

• The minimum capital requirement for market risk on "pesified" judicial deposits and the provision constituted to record their dollarization (according to point 1 of Communication "A" 4686) will be registered in code 305000/xx.

• The following codes were incorporated in Section 6. Computable Patrimonial Responsibility:
  § Code 22300000 "Capitalization of Liabilities" as a concept deductible from the CPR until approval of the contributions has been notified and to the extent that these have been accounted for. (by Communication "A" 4652) § Code 22400000 Activation due to dollarization of judicial deposits ("Cd").

Regarding the Monthly Accounting Reporting Regime on Net Global Position in Foreign Currency, it is clarified that "pesified" judicial deposits and the provision constituted to record their dollarization (according to point 1 of Communication "A" 4686) will be included in code 20100.

Furthermore, it is recalled that the amount resulting from the activation of losses originating in the constitution of the aforementioned provision must not be computed as it is a concept deductible from the CPR.

Finally, with reference to the Quarterly/Annual Accounting Reporting Regime, the following adjustments were made:

• Notes to the financial statements: it must be clarified in Note "22 - Others" the criterion employed by the entity regarding the treatment disposed of by the entity in reference to the activation, or not, of the differences. Additionally, if applicable, the deferred loss must be quantified.
• Correspondence table: the new items were incorporated.

These modifications will be effective for the information corresponding to September 2007.

We salute you very attentively.
CENTRAL BANK OF THE ARGENTINE REPUBLIC
Ricardo O. Maero
Manager of Reporting Regime
Guillermo R. Corzo
Deputy General Manager of Regulation and Reporting Regime

ANNEX

-1-

UPDATES
210020 210021 340022
MODIFICATIONS
580040
B.C.R.A. UPDATES AND MODIFICATIONS
Annex to
Comm. "A"
4708

210000 Intangible Assets
210003 Goodwill - Updated Origin Value
210006 Goodwill - (Accumulated Amortization)
210012 Organization and Development Expenses - Updated Origin Value 210013 Organization and Development Expenses - Not deductible for the determination of Computable Patrimonial Responsibility - Updated Origin Value 210015 Organization and Development Expenses - (Accumulated Amortization) 210016 Organization and Development Expenses - Not deductible for the determination of Computable Patrimonial Responsibility - (Accumulated Amortization) 210017 Differences due to judicial resolutions - Not deductible for the determination of Computable Patrimonial Responsibility – Origin Value 210018 Differences due to judicial resolutions - Not deductible for the determination of Computable Patrimonial Responsibility – (Accumulated Amortization) 210019 Differences due to judicial resolutions – Not deductible for the determination of Computable Patrimonial Responsibility – Deferred Amortization 210020 Differences due to dollarization of judicial deposits - Deductible for the determination of Computable Patrimonial Responsibility – Origin Value 210021 Differences due to dollarization of judicial deposits - Deductible for the determination of Computable Patrimonial Responsibility – (Accumulated Amortization) B.C.R.A. CHART OF ACCOUNTS Version: 4th COMMUNICATION "A" 4708 Validity:
21/09/2007

340000 Provisions
340003 Severance indemnification
340006 Contingencies with the Central Bank of the Argentine Republic 340009 Unforeseen risks 340012 Other contingencies 340015 Special for regulated rate operations 340018 For eventual commitments 340019 For application of debt refinancing –Decree 730/2001- 340021 Negative Goodwill 340022 Differences due to dollarization of judicial deposits – Communication "A" 4686 B.C.R.A. CHART OF ACCOUNTS Version: 6th COMMUNICATION "A" 4708 Validity:
21/09/2007

Chapter
Item
Currency/Residence
Other Attributes
Imputation
Asset
Intangibles
Differences due to dollarization of judicial deposits – Deductible for the determination of Computable Patrimonial Responsibility – Origin Value Code 210020 Includes the balances that the entity has decided to activate, in accordance with the methodology disseminated by Communication "A" 4686. In no case, the balance of this account may exceed the amount resulting from the application of the exchange rate in effect on the date of its original constitution. Version: 1st COMMUNICATION "A" 4708 Validity:
21/09/2007

Chapter
Item
Currency/Residence
Other Attributes
Imputation
Asset
Intangibles
Differences due to dollarization of judicial deposits – Deductible for the determination of Computable Patrimonial Responsibility – (Accumulated Amortization) Code 210021 Includes the accumulated amortization of the balances activated in item 210020. Amortizations must be carried out in equal, monthly, and consecutive installments, which cannot extend beyond June 2009, which will be accounted for with a counterpart in "Miscellaneous Losses – Amortization of differences due to judicial resolutions". In cases where the balances activated are adjusted as a consequence of variations in the exchange rate, the accumulated amortizations will be recalculated with a counterpart in "Miscellaneous Losses – Amortization of differences due to judicial resolutions". Version: 1st COMMUNICATION "A" 4708 Validity:
21/09/2007

Chapter
Item
Currency/Residence
Other Attributes
Imputation
Liability
Provisions
Differences due to dollarization of judicial deposits – Communication "A" 4686 Code 340022 Includes the provisions constituted by the entity to cover the difference existing between the equivalent value in pesos of considering the judicial deposits in the original currency of the deposit and the accounting value of those deposits constituted in foreign currency. This account will be registered with a counterpart in "Financial Income - For operations in gold and foreign currency - Gold and foreign currency exchange difference", and/or in "Intangible Assets – Differences due to dollarization of judicial deposits - Deductible for the determination of Computable Patrimonial Responsibility – Origin Value", in case the treatment admitted by Communication "A" 4686 is applied in a total or partial manner. The balance of this account will be derecognized to the extent that there are pronouncements by the judges in charge of the cases corresponding to the deposits on their constitution in foreign currency. At the end of each period, the balance of this account will be valued according to the closing quote, and the difference between the new values in pesos and the balances registered up to that moment will be imputed in "Financial Income – For operations in gold and foreign currency – Gold and foreign currency exchange difference", and/or in "Intangible Assets – Differences due to dollarization of judicial deposits - Deductible for the determination of Computable Patrimonial Responsibility – Origin Value" as appropriate. Version: 1st COMMUNICATION "A" 4708 Validity:
21/09/2007

Chapter
Item
Currency/Residence
Other Attributes
Imputation
Results
Miscellaneous Losses
Amortization of Differences due to judicial resolutions Code 580040 Includes charges for amortization of differences resulting from payments made in compliance with judicial resolutions accrued monthly in accordance with the provisions included in the respective accounts. Version: 2nd COMMUNICATION "A" 4708 Validity:
21/09/2007

MONTHLY ACCOUNTING REPORTING REGIME
B.C.R.A. 4. MINIMUM CAPITAL REQUIREMENT AND INTEGRATION (R.I.-C.M.)
Section 6. Computable Patrimonial Responsibility
6.1.12. Code 22000000
Comprises the value – net of derecognitions – of the negative goodwill registered in acquisitions of participations for a cost lower than its proportional book value. This item will be computed only in the consolidated information of the acquirer or in the individual information of the combined entity (in case of merger between acquirer and acquiree). This concept must be considered (with a negative sign) within the term "Cd".
6.1.13. Code 22100000
Comprises the balance in favor due to the application of the minimum presumptive income tax - net of provisions for devaluation risk - that exceeds 10% of the sum of the items comprising the basic net worth of the pertinent period or of the computable patrimonial responsibility corresponding to the previous month, whichever is lower. For the determination of said limit, the following will be taken into account:
22100000 = Max [IGMP - Min(10% 20100000; 10% RPCn-1) ; 0] This item will be deducted from Basic Net Worth, for the purpose of determining Computable Patrimonial Responsibility (70200000) and for the calculation of the limits of Complementary Net Worth and Subordinated Obligations (20700000) and Instruments representing Subordinated Debt (24100000) with respect to said Basic Net Worth.
6.1.14. Code 22300000
Contributions registered accounting-wise as such whose capitalization has not yet been authorized by the SEFyC will be reported. (Concept "Cd")
6.1.15. Code 22400000
The activation registered accounting-wise for the losses originating in the constitution of the provision for the difference existing between the equivalent value in pesos of considering the judicial deposits in the original currency of the deposit, and the accounting value of those deposits constituted in foreign currency that, on 5.1.02, were reached by the provisions of Law 25.561 and Decree 214/02, for the purpose of their inclusion among the deductible concepts ("Cd"). This amount will be considered according to its accounting valuation and net of its accumulated amortization.
6.1.16. Code 25100000
The computable amount of the Reserve Fund that has been applied to the payment of financial services before 31.12.12 will be reported.
6.1.17. Code 25200000
The remaining amount of the Reserve Fund will be reported, which in the case of having been issued in foreign currency will be converted by the exchange rate in effect on the last business day of each month. Version: 6th COMMUNICATION "A" 4708 Validity:
21/09/2007

MONTHLY ACCOUNTING REPORTING REGIME
B.C.R.A. 4. MINIMUM CAPITAL REQUIREMENT AND INTEGRATION (R.I.-C.M.)
Section 6. Computable Patrimonial Responsibility
6.2. Information Model
Table 6.2.1.
Code Concept
20100000 Basic Net Worth
20110000 BNW (Net Worth Items)
20120000 BNW (Instruments representing subordinated debt) 22100000 Tax on Minimum Presumptive Income deductible from BNW 21900000 50% of minimum provisions on normal portfolio and preferred collateralized "A" 20300000 100% of the results of the last quarterly balance sheet, corresponding to the last closed fiscal year without auditor's opinion. 20400000 100% of the results of the current fiscal year, registered at the close of the last quarterly balance sheet with auditor's report. 20500000 50% of positive results and the entirety of losses registered in each month since the last quarterly or annual balance sheet that has an auditor's report or opinion. 20600000 100% of unaccounted losses. 20700000 Obligations by debt securities of the entity, contractually subordinated to other liabilities 24100000 Instruments representing Subordinated Debt that integrate CNW 24200000 Creditor or debtor balances registered for Unrealized Valuation Difference of holdings of national public securities and Letters and Notes issued by the B.C.R.A. available for sale (+ / -). 22000000 Negative Goodwill (Concept "Cd" - with negative sign -) 20800000 Securities, certificates of time deposits, other credit titles, etc. (concept "Cd"). 20900000 Holdings of Instruments representing debt and debt securities, contractually subordinated to other liabilities, issued by other financial entities that have been acquired until 30/09/06 (concept "Cd"). 21000000 Correspondence accounts and other demand placements (concept "Cd") 21100000 Securities issued by governments of foreign countries (concept "Cd") 21200000 Other deductible accounts "Cd" 21500000 Real estate for own use and various unregistered (concept "Cd") 21600000 Goodwill – incorporations registered from 30/05/97 – (concept "Cd") 21800000 Defect in constitution of minimum provisions (concept "Cd") 22300000 Capitalization of liabilities (concept "Cd") 22400000 Activation due to dollarization of judicial deposits (concept "Cd") OTHER INFORMATION 25100000 Reserve Fund applied to payment of financial services 25200000 Reserve Fund – remaining balance Version: 7th COMMUNICATION "A" 4708 Validity:
21/09/2007

Entity Name
MOVEMENT OF PROVISIONS
AS .../.../...
QUARTERLY/ANNUAL ACCOUNTING REPORTING REGIME (R.I. – P.) B.C.R.A.
ANNEX J
Version: 4th COMMUNICATION "A" 4708 Validity: 21/09/2007 Page 1 Decreases in homogeneous currency DETAIL Balances at the beginning of the fiscal year reexpressed Increases in homogeneous currency Derecognitions Applications Monetary result generated by provisions Balance at the end of the period 2 Balance at the end of the period 1 REGULARIZERS OF THE ASSET

• Public and private securities - For devaluation
• Loans - For uncollectibility and devaluation risk
• Other Credits for financial intermediation - For
  uncollectibility and devaluation risk
• Assets given in financial lease - For uncollectibility and devaluation risk
• Participations in other companies - For devaluation
  -Diverse Credits – For uncollectibility risk
  TOTAL
  OF THE LIABILITY
• Severance indemnifications
• Contingencies with the B.C.R.A.
• Eventual commitments
• Unforeseen risks
• Negative Goodwill
• Other contingencies
• Differences due to dollarization of judicial deposits
  TOTAL

B QUARTERLY/ANNUAL ACCOUNTING REPORTING REGIME (R.I. – P.) B.C.R.A.
Correspondence table between the items of the Statements of Financial Position and Results and Off-Balance Sheet Accounts with the codes of the Trial Balance Debtors for sale of goods 171121 171123 171124 175121 175123 175124 176121 176123 176124 Shareholders 171103 172103 Tax on minimum presumptive income - Tax credit 171119 171303 171106 171109 171112 171115 171117 171126 171127 171131 171133 171136 171137 171139 171140 171141 171142 171143 172106 172126 172136 172139 172140 172141 172142 172143 175112 175126 175136 175139 175140 175141 175142 175143 Others 176126 176136 176139 176140 176141 176142 176143 Interest and adjustments accrued to be collected for Debtors for sale of goods 171202 171250 175202 176202 Other interest and adjustments accrued to be collected 171201 171251 172201 175201 176201 Diverse Credits Provisions 171301 171302 172301 175301 175302 176301 176302 Fixed Assets 180000 Diverse Assets 190000 Goodwill 210003 210006 210012 210013 210015 210016 210017 210018 210019 210020 Intangible Assets Organization and Development Expenses 210021 Pending Imputation Items 230000 Version: 8th COMMUNICATION "A" 4708 Validity: 21/09/2007 Page 5