"2004 - Year of the Argentine Antarctic"
BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
COMMUNICATION "A" 4172 15/07/2004
TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 427
"National Government Bonds in pesos at variable rate 2013". Treatment regarding minimum capital requirements.
________________________________________________________ We address you to inform you that this Institution has adopted the following resolution:

"1. Replace the first paragraph of point 10.5 of Section 10 of the regulations on "Minimum capital requirements for financial entities" with the following:

"As of January 2004, the coefficient "alfa1" will be applied in order to temporarily reduce the minimum capital requirement for credit risk, with respect to holdings in investment accounts and financing granted to the non-financial national public sector until 5/31/03 (included in terms "Ci" and "Fspn", respectively). This coefficient will also apply to instruments received by financial entities as a result of compensation provided for in Articles 28 and 29 of Decree 905/02, to instruments issued by the Federal Development Trust Fund within the framework of Decree 1579/02, and to "National Government Bonds in pesos at variable rate 2013" that entities receive as compensation referred to in Chapter II of Law 25.796 (Annex II to Decree 117/04), even if the receipt or incorporation of said instruments occurs after the indicated date."

2. Revoke Section 5 of the regulations on "Minimum capital requirements for financial entities" regarding the tables of risk indicators, whose application had been suspended through the resolution disseminated via Communication "A" 3959."

We send you attached the sheets that, in replacement of those previously provided, must be incorporated into the ordered text of the regulations on "Minimum capital requirements for financial entities".

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Ana M. Lemmi José Rutman
Submanager of Standards Issuance. Main Manager of Standards

ANEXO

B.C.R.A.
ORDERED TEXT OF THE REGULATIONS ON
MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES Version: 9a. Communication "A" 4172 Validity:
15/07/2004
-Index
Section 1. Minimum capital.
1.1. Requirement.
1.2. Increase in requirement for custody and/or registry agent functions.
1.3. Integration.
1.4. Non-compliance.
Section 2. Basic minimum capital.
2.1. Requirements.
2.2. Entities operating as of 10/31/95.
2.3. Commercial banks acting as custodians and/or registry agents.
Section 3. Minimum capital for credit risk.
3.1. Requirement.
3.2. Contingent liabilities included.
3.3. Exclusions.
3.4. Calculation of assets.
3.5. Risk weights.
Section 4. Risk weight table.
Section 5. Minimum capital for interest rate risk.
5.1. Requirement.
5.2. Present values.
5.3. Time bands.
5.4. Assets and liabilities included.
5.5. Calculation of included concepts.
5.6. Allocation to time bands.
Section 6. Minimum capital for market risk.
6.1. Requirement.
6.2. Value at risk of the national asset portfolio.
6.3. Value at risk of the foreign asset portfolio.
6.4. Value at risk of foreign currency positions.
6.5. Definitions and values.
6.6. Calculation.
6.7. Responsibilities.
6.8. Sanctions.

B.C.R.A.
ORDERED TEXT OF THE REGULATIONS ON
MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES Version: 7a. Communication "A" 4172 Validity:
15/07/2004
-Index
Section 7. Computable net worth.
7.1. Determination.
7.2. Computable concepts.
7.3. Capital contributions.
Section 8. Bases for observance of the regulations.
8.1. Individual basis.
8.2. Consolidated basis.
Section 9. Transitional provisions.
9.1. Value of "k".
9.2. Allocation in time bands to determine the minimum capital requirement for interest rate risk.
9.3. Acquisitions of Financial Entities.
9.4. Merger of Financial Entities.
9.5. Coefficient "alfa1".
9.6. Coefficient "alfa2".
Correlation table.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 5a. Communication "A" 4172
Validity:
15/07/2004
5.1. Requirement.
It shall be equivalent to the result of the following expression:
VaRR = {Máx {(VAN p rp - VAN p rp’) * σ p

• (VAN
  me r me - VAN me r me’) * σ me
  ; 0} * 100 + |VAN aj rp|* σ aj
  }
  C
  *
  VAN p rp + VAN me r me + Σ (A - P) where
  VaRR: requirement based on risk from interest rate variations.
  VAN p rp: present value of net assets of liabilities for financial intermediation in pesos, discounted at the discount rate rp.
  VAN p rp’
  : present value of net assets of liabilities for financial intermediation in pesos, discounted at the discount rate rp’.
  σ p
  : interest rate risk in pesos as a decimal, to be set by the Central Bank of the Republic of Argentina. Initially it will be equal to 0.10.
  VAN me r me: present value of net assets of liabilities for financial intermediation in foreign currency, discounted at the discount rate r me.
  VAN me r me’
  : present value of net assets of liabilities for financial intermediation in foreign currency, discounted at the discount rate r me’.
  σ me
  : interest rate risk in US dollars as a decimal, to be set by the Central Bank of the Republic of Argentina. Initially it will be equal to 0.03.
  | VAN aj rp |: present value of assets adjustable by the Reference Stabilization Coefficient or the Salary Variation Coefficient, "CER" or "CVS", net of liabilities adjustable by "CER" for financial intermediation in pesos, discounted at the discount rate rp, in absolute value.
  σ aj
  : risk of mismatch between the discount rate rp and the "CER", as a decimal, to be set by the Central Bank of the Republic of Argentina. Initially it will be equal to 0.03. C: net worth at the end of the month to which the assets and liabilities subject to the requirement correspond.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 5a. Communication "A“ 4172
Validity:
15/07/2004
A : assets at the end of said month not included in the calculation of the requirement.
P : liabilities at the end of said month not included in the calculation of the requirement.
The result of the last factor of the expression that allows converting the calculated requirement in terms of present values to comparable book values with integration cannot be negative. In the case of yielding a negative result, it will be replaced by a value equal to 2. The maximum value will be 2 when the result of this ratio is positive. For the purpose of determining the “VAN aj rp”, the Central Bank of the Republic of Argentina will announce the rate at which future cash flows of assets and liabilities adjustable by "CER" and "CVS" will be adjusted, taking into consideration the implicit yields from the auctions of Letters of the Central Bank of the Republic of Argentina in pesos and in pesos adjustable by "CER" or other parameters that are representative. These cash flows must be assigned to time bands based on contractual maturities.
5.2. Present values.
The present values of net assets of liabilities for financial intermediation will be obtained with the following formulas:
VAN p rp = Σi
[FFAN p i
/ (1 + rp/12) mi
]
VAN p rp’ = Σi
[FFAN p i
/ (1 + rp’/12) mi
]
VAN me r me = Σi
[FFAN me i
/ (1 + r me/12) mi
]
VAN me r me’= Σi
[FFAN me i
/ (1 + r me’/12) mi
] where i : subscript indicating the corresponding time band established for the grouping of cash flows.
FFAN p i
: cash flow of net assets of liabilities for financial intermediation in pesos corresponding to time band i.
FFAN me i
: cash flow of net assets of liabilities for financial intermediation in foreign currency corresponding to time band i. mi : midpoint of the time band, expressed in months. rp : average deposit rate in pesos for 30 to 59 days of the month to which the assets and liabilities subject to the requirement correspond, according to the daily survey of the Central Bank of the Republic of Argentina, as a decimal. rp’ : rp plus 0.01.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 5a. Communication "A“ 4172
Validity:
15/07/2004 r me : average deposit rate in dollars for 30 to 59 days of the month to which the assets and liabilities subject to the requirement correspond, according to the daily survey of the Central Bank of the Republic of Argentina, as a decimal. r me’ : r me plus 0.01.
5.3. Time bands.
To discount cash flows and establish present values, relevant income and expense flows will be grouped by time bands defined as follows:
5.3.1. An initial band, called "band zero".
5.3.2. Monthly bands, for the first 24 months.
5.3.3. Annual bands, for the following 27 years.
5.3.4. A final band for flows maturing from the thirtieth year, with a midpoint of 420 months.
5.4. Assets and liabilities included.
5.4.1. Concepts included.
Assets and liabilities from financial intermediation operations, including the following:
5.4.1.1. Liquidity.
5.4.1.2. Securities, including those registered in investment accounts.
5.4.1.3. Loans and securities deposits not subject to minimum capital requirement for market risk.
5.4.1.4. Interest on loans and securities deposits subject to minimum capital requirement for market risk.
5.4.1.5. Active and passive repos, including forward positions, of securities, credit portfolio documents, and other species not subject to minimum capital requirement for market risk.
5.4.1.6. Credits and obligations from forward positions linked to active and passive repos, respectively.
5.4.1.7. Forward purchases and sales not linked to repos and their counterparts,
of securities not subject to minimum capital requirement for market risk.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 5a. Communication "A" 4172
Validity:
15/07/2004
5.4.1.8. Various credits linked to the sale of immobilized assets, including those taken in defense or in payment of credits.
5.4.1.9. Advances and loans to the Deposit Guarantee Fund, linked
to the reduction of contributions established by the Central Bank of the Republic of Argentina.
5.4.2. Exclusions.
5.4.2.1. Assets and derivatives on them subject to minimum capital requirement for
market risk.
5.4.2.2. Foreign currency holdings not subject to minimum capital requirement for market risk.
5.4.2.3. Spot operations to settle securities and foreign currency.
5.4.2.4. Acceptances.
5.4.2.5. Assets exposed to interest rate risk, to the extent that
they are covered by derivative contracts concluded with banks abroad that have an international risk rating of "A" or higher granted by one of the rating agencies admitted by the regulations on "Evaluation of financial entities". The conclusion of such contracts must be reported to the Superintendence of Financial and Currency Entities.
5.4.2.6. Assets that must be deducted to determine the computable net worth.
5.4.2.7. Subordinated debt computed for the integration of the computable net worth.
5.4.2.8. Other concepts suggested by financial entities that the Board of Directors of the Central Bank of the Republic of Argentina establishes upon proposal of the Superintendence of Financial and Currency Entities, always
that this is consistent with the general definition of assets and liabilities computable for the purpose of determining the minimum capital requirement for interest rate risk.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 4a. Communication "A" 4172
Validity:
15/07/2004
5.5. Calculation of included concepts.
The assets and liabilities included from the same month to which those considered for determining the minimum capital requirement for credit risk correspond will be taken into account. Foreign currency assets and liabilities will be converted to US dollars according to the exchange rate of the last business day of the month to which they correspond. Cash flows will include principal, interest, adjustments -by the Reference Stabilization Coefficient or the Salary Variation Coefficient, "CER" or "CVS"- and other accessories. In the case of credits, the principal and interest flow to mature will be taken -considering regarding the latter the suspension of their accrual regarding credits in which this option was chosen- net of the application of risk provisioning percentages for uncollectible risk. In the case of debtors classified as "in normal situation" or "normal compliance" and financing covered with preferred guarantees "A", only 50% of the required amount will be deducted. For these purposes, cash flows from financing to be allocated to each time band will be considered net of risk provisioning for uncollectible risk computable, taking into account the resulting proportion according to the debtor's classification for the month to which the requirement calculation corresponds. Positions in each computable asset, not subject to minimum capital requirement for market risk, will be determined according to the methodology referred to in point 6.5.3 of Section 6.
5.6. Allocation to time bands.
5.6.1. Fixed rate operations.
5.6.1.1. General criterion.
The cash flows of these operations will be allocated to time bands according to their contractual status.
5.6.1.2. Special criteria.
A different treatment from the contractual status will be given to the following concepts:
i) 50% of the average balance of current account deposits and savings accounts for the month to which the calculation of "VaRR" corresponds, excluded from this last concept the accounts "Unemployment Fund for Construction Industry Workers" and "Payment of remuneration".

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 4a. Communication "A" 4172
Validity:
15/07/2004
In these cases, the computable amounts may be allocated, up to the occurrence, in absolute value, of the positive cash flow of the respective net assets of each period, before considering this allocation, in the time band indicated for each case as follows:
a) Entities with rating 1 or 2 assigned by the Superintendence of Financial and Currency Entities: that chosen by each entity. b) Entities with rating 3 assigned by the Superintendence of Financial and Currency Entities: that chosen by each entity, without exceeding the time band corresponding to the third year. ii) 100% of contingent credit lines taken at fixed or variable rate based on an external origin indicator, irrevocable and of unrestricted use upon simple request without prior notice, assigned by banks abroad that have an international risk rating "A" or higher granted by one of the rating agencies admitted by the regulations on "Evaluation of financial entities", which with respect to the local entity are not the parent company or the controlling or controlled entity or their branches, or by local banks that have rating 1 or 2 assigned by the Superintendence of Financial and Currency Entities. The available margin will be allocated in the initial band ("band zero"). On the other hand, the cancellation of the use of these lines, will be allocated to time bands according to the following criteria:
a) Entities with rating 1 or 2 assigned by the Superintendence of Financial and Currency Entities, at the option of each entity, within the contractual conditions agreed. b) Remaining entities, at the option of each entity, within the contractual conditions agreed, without exceeding the time band corresponding to the third year. iii) 100% of contingent credit lines granted to other financial entities, at fixed or variable rate based on an indicator of external origin, irrevocable and of unrestricted use upon simple request without prior notice. The granted margin will be allocated in the initial band ("band zero"), while the cancellation of the use of these lines will be allocated taking into account the contractual conditions agreed. Entities that do not have an assigned rating by the Superintendence of Financial and Currency Entities will consider for the purposes foreseen in the preceding sections i) and ii) the result of the special evaluation, for this purpose communicated by the Superintendence of Financial and Currency Entities, observing the allocation criteria corresponding to entities with an assigned rating of equivalent level.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 4a. Communication "A" 4172
Validity:
15/07/2004
5.6.2. Variable rate operations based on external indicator.
Variable rate operations based on an external origin indicator (for example, LIBOR) will be given the same treatment as those contracted at fixed rate.
5.6.3. Variable rate operations based on local indicator.
5.6.3.1. Liabilities.
i) In the case of variable rate liabilities referring to an indicator of local origin (for example surveys of passive rates), not adjustable by "CER", only cash flows that extend until the period in which, according to contract forecasts, the first interest rate adjustment is to be made will be taken into account, adding in that period the remaining amounts to mature from that moment. ii) Rediscounts and advances under the terms of paragraphs b), c) and f) of Article 17 of its Organic Charter, adjustable by "CER" as referred to in the resolution disseminated via Communication "A" 3941, will be allocated in their entirety to the time band corresponding to the first month. Other liabilities adjustable by the "CER" will also receive this treatment, when the residual term is up to one year. iii) Liabilities adjustable by "CER" not included in the previous paragraph ii) will be allocated according to the procedure provided in the fourth paragraph of section a), section iii) of point 5.6.3.2.
5.6.3.2. Assets.
i) The treatment established for variable rate liabilities based on a local indicator will be given to financing, including those instrumented through public securities, to the non-financial national, provincial and municipal public sector, provided that in the latter two cases they have the guarantee of the allocation of resources from the federal or provincial tax sharing or others whose distribution adjusts to regimes similar to Law 23.548 and complementary and with the pertinent intervention of the Ministry of Economy and Production of the Nation and the Central Bank of the Republic of Argentina. Similarly, financing that has the guarantee of royalties from hydrocarbons, energy or similar will be treated. ii) Financing to the non-financial public sector and holdings in investment accounts adjustable by "CER" will be allocated in their totality to the time band corresponding to the first month.

MINIMUM CAPITAL REQUIREMENTS FOR FINANCIAL ENTITIES B.C.R.A.
Section 5. Minimum capital for interest rate risk.
Version: 4a. Communication "A" 4172
Validity:
15/07/2004 iii) The remaining variable rate assets referring to a local indicator and assets adjustable by "CER" or "CVS", at the option of each entity, will be subject to the following treatment:
a) Individual calculation.
When their residual term is up to one year (except for assets adjustable by "CER" or "CVS"), the same treatment as that provided for variable rate liabilities based on a local indicator (section i) of point 5.6.3.1.) will be applied regarding them. In the case of assets with a longer residual term, 60% of the balance will be allocated to the period to which the first rate review corresponds and the remainder, according to the term and type of amortization, according to the table inserted in section c). If they are assets adjustable by "CER" or "CVS" with a residual term of up to one year, what is provided in the second paragraph of section ii) of point 5.6.3.1. will be applied. When the residual term of the aforementioned assets is greater than one year, 60% of the balance will be allocated to the time band corresponding to the first month and the remainder according to the table inserted in section c). b) Global calculation by line. Financing corresponding to the same credit line (mortgage loans, pledge loans, personal loans, etc.), may be considered globally for each of them and the respective cash flows allocated according to the following criteria:

• 60%: to the time band corresponding to the third month,
  independent of the period in which the first rate review is to be made.
• The remainder: according to the table inserted in section c),
  considering the average residual term of the respective capital.
  When the average residual term of each capital is equal to or less than one year, all of its cash flows will be allocated to the time band corresponding to the sixth month.

MINIMUM CAPITAL OF FINANCIAL ENTITIES

B.C.R.A.

Section 5. Minimum capital for interest‑rate risk.

Version: 4a. Communication “A” 4172
Effective date: 15/07/2004

5.6.4. Allocations to the initial band

The cash flows listed below will be allocated to band zero:

1. 5.6.4.1. Spot assets and liabilities, except in the latter case those subject to the special treatment provided in point 5.6.1.2 – paragraph (i) – or with indefinite maturity.
2. 5.6.4.2. Loans eligible for securitisation or sale, with first‑rank pledge over motor vehicles, mortgage loans originated according to the manual applicable in that matter and other rules established by the Central Bank of the Argentine Republic, at fixed or variable rate.
   • This allocation will only be admitted during the first three months of the financing’s validity, including the month in which the loan is effected, considering, for partially and subsequently disbursed loans, the first disbursement.
3. 5.6.4.3. Overdue balances, including, in the case of periodic payment obligations, both the overdue installments and the flows to become due, when – contractually foreseen – the entity has exercised the option to declare the whole operation as overdue.
4. 5.6.4.4. The available or agreed margin, as appropriate, of contingent credit lines, as provided in sections ii) and iii) of point 5.6.1.2.
5. 5.6.4.5. Current accounts of the entities at the Central Bank of the Argentine Republic.

5.6.5. Allocations to the first‑month band

Margins used and the corresponding required balances for financing instrumented through credit cards will be included in the first band.

5.6.6. Allocations of computable asset positions

5.6.6.1. Positive or buying position

Allocated as holdings to the temporal bands for the cash flows of the asset covered, according to issuance or contractual conditions.

5.6.6.2. Negative or selling position

Allocated to the temporal bands for the cash flows of the asset covered according to issuance or contractual conditions, with a negative sign.

---

Section 6. Minimum capital for market risk.

Version: 6a. Communication “A” 4172
Effective date: 15/07/2004

6.1. Requirement

It will be the sum of the risk values of the portfolios of the assets included:

```
VaRp = VaRAN‑B + VaRAN‑A + VaRAE‑B + VaRAE‑A + VaRME ``` where

• VaRp: risk value of the total portfolio.
• VaRAN‑B: risk value of the portfolio of national assets – bonds.
• VaRAN‑A: risk value of the portfolio of national assets – equities.
• VaRAE‑B: risk value of the portfolio of foreign assets – bonds.
• VaRAE‑A: risk value of the portfolio of foreign assets – equities.
• VaRME: risk value of foreign‑exchange positions.

6.2. Risk value of the portfolio of national assets

6.2.1. Bonds

6.2.1.1. Included positions

1. National public securities, except those registered in investment accounts.
2. Units of mutual funds whose object is such securities.

6.2.1.2. Risk‑value calculation

1. Positions bought and sold in the considered assets will be grouped into four zones according to their average life ("modified duration": md):
   • a) Peso‑denominated bonds with md ≤ 2.5.
   • b) Peso‑denominated bonds with md > 2.5.
   • c) Foreign‑currency bonds with md ≤ 2.5.
   • d) Foreign‑currency bonds with md > 2.5.
2. Risk value of the position in asset i, VaRi:

```
VaRi = Vi * k * σi * Ti ^(1/2) (1)
``` where

• Vi: position in asset i.
• k: factor expressing the considered risk level.
• σi: daily volatility measure of the return of asset i.
• Ti: time required to unwind the position.

3. The risk values of bought and sold positions will be summed separately for each zone, obtaining:

```
VaRj_c = Σ VaRi (for bought positions in zone j) (2) VaRj_v = - Σ VaRi (for sold positions in zone j) (2') ```
4. Additional risk value of options. For bought and sold options on each asset included in the bond portfolio, the gamma and vega risks are calculated as:

```
VaRoi = Rgoi + Rvoi (3) Rgoi = | min(0 ; γj * (dPi)^2 / 2) | (4) Rvoi = | νj * 25 * σi * (252^0.5) | (5) ``` where

• VaRoi: additional risk value of the options portfolio on asset i.
• Rgoi: gamma risk of the options portfolio on asset i.
• Rvoi: vega risk of the options portfolio on asset i.
• γj: gamma coefficient of option j (change in delta for a 1‑peso change in the underlying price).
• νj: vega coefficient of option j (change in option value for a 1 % change in the annual volatility of the underlying).
• dPi = k * σi * Pi * Ti ^(1/2), where Pi is the price of the underlying asset.

Both the gamma and vega coefficients will take into account the number of units of the underlying asset referenced by each option.

The additional risk value for the options portfolio is the sum of the option risk values for each asset:

```
VaRo = Σ VaRoi (6) ```
5. Total risk value of the national‑bond portfolio:

```
VaRAN‑B = min(VaR1_c , VaR1_v) + |VaR1_c - VaR1_v|

• min(VaR2_c , VaR2_v) + |VaR2_c - VaR2_v|
• min(VaR3_c , VaR3_v) + |VaR3_c - VaR3_v|
• min(VaR4_c , VaR4_v) + |VaR4_c - VaR4_v|
• VaRo (7)
  ```

6.2.2. Equities

6.2.2.1. Included positions

1. Shares of Argentine companies that are part of the MERVAL index.
2. Units of mutual funds whose object is such shares.

6.2.2.2. Risk‑value calculation

1. Risk value of the position in asset i, VaRi (same formula as (1) but without the ½ exponent):

```
VaRi = Vi * k * σi * Ti ^(1/2) (8)
```
2. Separate summation of risk values for bought and sold positions:

```
VaRc = Σ VaRi (for bought positions) (9) VaRv = - Σ VaRi (for sold positions) (9') ```
3. Additional risk of options (same expressions (10)‑(12) as for bonds).
4. Total risk value of the national‑equity portfolio:

```
VaRAN‑A = min(VaRc , VaRv) + |VaRc - VaRv| + VaRo (14) ```

6.3. Risk value of the portfolio of foreign assets

6.3.1. Bonds

6.3.1.1. Included positions

1. Public securities of foreign governments and debt securities of foreign companies.
2. Units of mutual funds whose object is such securities.

Positions must be distinguished by the currency of issuance, regardless of the issuer’s residence. For assets expressed in foreign currency, the entity must consider two risks: the asset itself and the foreign‑exchange position, applying the capital requirement to the latter.

All positions are expressed in pesos using the reference exchange rate published by the BCRA for the US dollar, after applying the appropriate pass‑through rate for other currencies.

Derivative contracts on interest rates are converted into positions in the relevant underlying assets (e.g., interest‑rate swaps are treated as a combination of two bond positions, one bought and one sold, with the corresponding fixed or variable rates and issuers).

6.3.1.2. Risk‑value calculation
The methodology applicable to national‑bond assets is used. The total risk value of the foreign‑bond portfolio is the sum of the risk values for each currency:

```
VaRAE‑B = Σ_j VaRAE‑BMj (15) ``` where VaRAE‑BMj is the risk value of instruments issued in currency j.

6.3.2. Equities

6.3.2.1. Included positions

1. Shares of foreign companies.
2. Units of mutual funds whose object is such shares.
3. Indices of such shares.

Positions must be distinguished by the market of quotation, taking into account the currency in which each instrument trades, regardless of the issuer’s residence. When an asset is quoted in several markets, the quotation and currency of the most representative market (by trading volume) are used.

For assets expressed in foreign currency, the entity must consider the asset risk and the foreign‑exchange risk, applying the capital requirement to the latter.

All positions are expressed in pesos using the reference exchange rate published by the BCRA for the US dollar, after applying the appropriate pass‑through rate for other currencies.

6.3.2.2. Risk‑value calculation
The methodology applicable to national‑equity assets is used. The total risk value of the foreign‑equity portfolio is the sum of the risk values by quotation market:

```
VaRAE‑A = Σ_j VaRAE‑AMj (16) ``` where VaRAE‑AMj is the risk value of instruments quoted in market j.

6.4. Risk value of foreign‑exchange positions

6.4.1. Included positions

Net positions for each foreign currency are determined by considering all assets and liabilities in those currencies, according to the methodology established in point 6.5.3. Gold positions are also included.

Foreign‑currency positions individually below the equivalent of $300,000 at the close of each day may be excluded. This exclusion is not permitted when the total computable foreign‑currency positions exceed $1,500,000 at the close of each day.

6.4.2. Risk‑value calculation

1. Risk value of the position in currency i, VaRi:

```
VaRi = Vi * k * σi * Ti ^(1/2) (17)
``` where Vi is the position in currency i, expressed in pesos using the BCRA’s reference US‑dollar rate and the appropriate pass‑through rate for other currencies.
2. Sum of risk values:

```
VaRME‑F = Σ_i VaRi (18) ```
3. Additional risk of options on each currency (expressions (19)‑(21) analogous to those for bonds/equities).
4. Total foreign‑exchange risk value:

```
VaRME = VaRME‑F + VaRo (23) ```

6.5. Definitions and values

6.5.1. Regular quotation

Assets must have a regular quotation in the markets, arising daily from relevant transactions whose amount is such that the eventual liquidation of the assets cannot significantly distort their market value.

6.5.2. Excluded operations

Swaps and other derivatives on assets not covered by this regulation are excluded from the portfolios used to calculate risk value, provided they are intended to hedge risks of financial intermediation activities, and must be reported to the Superintendency of Financial and Currency Entities in the form and timing established. Assets that must be deducted for the calculation of computable patrimonial responsibility are also excluded.

6.5.3. Position in each asset (Vi)

Opposite positions in the same instrument may be netted. The resulting net position must reflect the entity’s exposure to each asset and is composed of (signs shown in parentheses):

• Spot holding (+)
• Spot purchases to be settled and forward purchases (+)
• Spot sales to be settled and forward sales (-)
• Forward purchases linked to passive passes (+)
• Forward sales linked to active passes (-)
• Purchase of call options (nominal value multiplied by the option’s delta) (+)
• Sale of call options (nominal value multiplied by the absolute delta) (-)
• Purchase of put options (nominal value multiplied by the absolute delta) (-)
• Sale of put options (nominal value multiplied by the delta) (+)

6.5.4. Prices and calculation

The minimum‑capital‑for‑market‑risk requirement is calculated on the basis of positions held at the close of the day’s operations in the local market, using the prices prevailing at that moment. If a quotation for an instrument is unavailable, the last available quotation is used. On days with no market operations, the requirement values from the immediately preceding business day are repeated.

6.5.5. Coefficient “k”

Its value is 2.32.

6.5.6. Daily volatility measure of the return of asset i (σi)

6.5.6.1. National assets
The Central Bank of the Argentine Republic will monthly publish the σi values to be used for the risk‑value calculation of national assets (excluding mutual funds), specifying the zone each belongs to according to its average life. The information will be supplied on the last business day of the month and used for the calculations of the following month’s daily positions. National‑asset holdings whose volatilities are not published by the BCRA (excluding mutual funds) will not generate market‑risk capital requirements and will be treated as “non‑quotable” for the purpose of applying the global maximum limit on credit‑risk fractionation.

6.5.6.2. Foreign assets
For foreign assets, the entity must calculate volatilities as the standard deviation of the daily return of the assets, using the following methodology:

```
σi = [ (1‑λ) Σ_{j=1}^{74} λ^{j} * (Ri,t‑j – MRi)^2 ]^{0.5} ``` where

• Ri,t‑j = (Pi,t‑j / Pi,t‑j‑1) – 1
• MRi = (1‑λ) Σ_{j=1}^{74} λ^{j} * Ri,t‑j
• λ = 0.94
• j = 1 … 74
• Pi,t‑j = price of asset i at the close of day t‑j.

The obtained volatility (standard deviation) is annualised, if necessary for option‑value calculations, by multiplying σi by the square root of 252.

---

Table: Amortisation Forms and Temporal Bands

Amortisation Form	Residual Term (years)	Total at Maturity	Other Systems	Temporal Band	Month	Year	Month	Year
Until 1	-	-	-	-	-	-	-	-
More than 1 to 2	23	-	13	-	-	-	-	-
More than 2 to 3	-	3	18	-	-	-	-	-
More than 3 to 4	-	4	23	-	-	-	-	-
More than 4 to 5	-	5	-	3	-	-	-	-
More than 5 to 6	-	6	-	3	-	-	-	-
More than 6 to 7	-	6	-	4	-	-	-	-
More than 7 to 8	-	7	-	4	-	-	-	-
More than 8 to 10	-	8	-	5	-	-	-	-
More than 10 to 11	-	9	-	5	-	-	-	-
More than 11 to 12	-	9	-	6	-	-	-	-
More than 12 to 14	-	10	-	6	-	-	-	-
More than 14 to 16	-	11	-	7	-	-	-	-
More than 16 to 18	-	11	-	8	-	-	-	-
More than 18 to 20	-	12	-	8	-	-	-	-
More than 20	-	17	-	13	-	-	-	-

---

End of document.

MINIMUM CAPITAL OF FINANCIAL ENTITIES

B.C.R.A.

Section 6. Minimum capital for market risk.

Version: 6a. COMMUNICATION “A” 4172

Effective date: 15/07/2004

6.5.6.3. Mutual funds.

The calculation of the volatilities of mutual funds composed of the included assets shall be performed by the financial entities based on the value of their units, applying the methodology exposed previously.

6.5.6.4. Volatility.

The Central Bank of the Argentine Republic shall inform monthly the volatility to be used for the calculation of the value‑at‑risk of the position in United States dollars. For other currencies, the entity shall calculate volatilities as the standard deviation of the daily return of the assets, following the methodology developed in point 6.5.6.2.

6.5.6.5. Frequency of calculation and use of volatilities.

For the purpose of calculating and using the resulting values of volatilities of foreign assets and mutual funds –whether domestic or foreign– the frequency followed by the Central Bank of the Argentine Republic for domestic assets shall be observed, i.e., the obtained value shall be considered for the determination of the value‑at‑risk of the portfolios that are recorded daily during the following month.

6.5.7. Time required to unwind an operation.

The minimum value for this factor is 5.
If the positions held by the entity are of large value or constitute less liquid assets, with lower daily transaction volume, the value of Ti will increase. The financial entity shall determine the Ti value it considers appropriate, given the size of its holding and the market liquidity of that asset. Therefore, this factor will not be the same for all assets nor equal among financial entities. The Ti value used for a derivative contract may differ from the Ti value for the position in the relevant underlying asset. If there is no fluid quotation of options and the entity must neutralise its impact through the futures market, the amount to buy or sell to neutralise the position shall be determined on the basis of the delta of the total position in the asset. The delta of the total position shall be calculated as a weighted average by amount (notional value in the case of options) of the individual positions in the asset.

6.5.8. Interest rate (r).

For the calculation of the value‑at‑risk of derivatives on domestic assets, the interest rate for first‑line corporate loans with a 30‑day term (or, failing that, the implicit interest rate that arises from the Central Bank of the Argentine Republic’s Letter auctions for that term or similar) in pesos or in United States dollars, as appropriate, shall be used, corresponding to the fifth business day prior to the calculation or the last auction, according to the information provided by the Central Bank of the Argentine Republic. For derivatives on foreign assets, the interest rate for the one‑year government bond of the national government of the country in whose currency the asset is expressed shall be used.

6.5.9. Valuation of options.

For the calculation of the coefficients linked to options (delta, gamma, vega) the Black‑Scholes option valuation model shall be accepted. In it, the volatility published by the Central Bank of the Argentine Republic shall be used when pertinent. In cases of exotic options, or when the entity possesses an alternative valuation method, its use must be approved by the Superintendency of Financial and Currency Entities.

6.5.10. Derivatives not contemplated.

In cases of derivative contracts not expressly contemplated, the treatment to be employed to determine the value‑at‑risk shall be consulted with the Superintendency of Financial and Currency Entities.

6.6. Computation.

6.6.1. Capital requirement.

Each month, the capital requirement shall be determined on a daily basis considering:

1. the minimum capital requirement (point 1.1 of Section 1) established at the end of the previous month, which shall remain constant throughout the month, and
2. the VaRₚ requirement for the daily positions of the included assets.

6.6.2. Capital integration.

Each month, the capital integration shall be determined on a daily basis considering:

1. the computable patrimonial responsibility of the last day of the previous month, and
   2., off‑balance‑sheet, the daily change in value that occurs in the portfolio of assets included in the market‑risk requirement calculations as a consequence of market price changes, from the last quotation recorded at the close of the immediately preceding month. If incorporations (purchases) of assets occur during the month, only the variation in the value of those assets from their incorporation shall be taken. In case of sales of these assets (position closures), the resulting loss or gain between the sale price and the last price at which the position was valued shall be taken into account.

6.6.3. Daily capital deficiency.

6.6.3.1. Immediate framing.

If a daily integration defect occurs with respect to the market‑risk capital requirement, originated in the computation of the requirement by the sum of the value‑at‑risk of the included assets ("VaRₚ"), the financial entity shall replenish capital and/or reduce its financial asset positions until the established requirement is met, for which it shall have a period of ten business days, counted from the first deficiency.

6.6.3.2. Persistent deficiency.

1. If the defect persists for more than 10 business days, entities shall submit a regularisation and remediation plan within the following 5 business days, with the effects indicated in point 1.4.2.1 of Section 1.
2. When the deficiencies are determined by the Superintendency of Financial and Currency Entities and, insofar as the deficiency remains according to the latest available information, the terms referred to in point 1.4.2.2, sub‑paragraph i) of Section 1 for the presentation of the defence and the Superintendency’s ruling shall be 5 and 10 business days respectively, while for the regularisation of the breach, as provided in point 6.6.3.1., the entity shall observe the 10‑day business‑day period counted from the date on which the integration defect becomes final.
   If that term expires without the breach having been regularised, the provision in sub‑paragraph i) shall apply.

6.7. Responsibilities.

Financial entities that trade buying and/or selling, regardless of amount, options contracts and those that, on any day of a month, record assets (sum of bought and sold positions of the included assets) that together exceed 25 % of the computable patrimonial responsibility recorded on the last day of the second preceding month shall define responsibilities in the management of the risk‑administration policy assumed for the positions subject to the minimum‑capital‑for‑market‑risk requirement. This will entail designating the persons who will be in charge of the correct application of the established calculation methodology and the primary responsibility for adopting the measures necessary to keep the positions covered with the required capital, especially actions to regularise daily integration defects that exceed 3 % of the requirement. They shall also be responsible for supplying information in a timely manner to the Superintendency of Financial and Currency Entities in accordance with the informational regime to be established on the matter. Changes to the list of designated responsible persons, the General Manager and the member of the Board of Directors, Administrative Council or equivalent authority to whom the function is reported, must be communicated to that Superintendency within ten calendar days of occurrence.

6.8. Sanctions.

Actions incurred by the responsible officials as provided in point 6.7 that involve concealment or non‑computation of operations that must be considered for determining the value‑at‑risk of financial assets shall trigger the application to them and to the financial entity of the provisions of article 41 of the Financial Entities Law, taking into account the following guidelines:

6.8.1. Fine of between 1.5 and 3 times the amount of the greatest daily deficiency originated in the computation of the recorded value‑at‑risk during the period of non‑compliance.

The financial entity and the aforementioned persons shall be jointly liable for the imposed fines.

6.8.2. Disqualification of two to five years from performing functions in the financial activity for the responsible persons.

SECTION 7. Computable Patrimonial Responsibility.

Version: 4a. COMMUNICATION “A” 4172
Effective date: 15/07/2004

7.1 Determination.

The computable patrimonial responsibility of financial entities, for the purposes of the regulatory provisions of articles 30 and 32 of the Financial Entities Law and other provisions of the Central Bank of the Argentine Republic that refer to this concept, shall arise from the following expression:

```
RPC = PNb + PNc - Cd
``` where

• RPC: computable patrimonial responsibility.
• PNb: basic net equity.
• PNc: complementary net equity, not exceeding 100 % of PNb.
• Cd: concepts that must be deducted.

7.2 Computable concepts.

7.2.1. Basic net equity.

Includes the following items of net equity:

1. Share capital.
2. Non‑capitalised contributions.
3. Adjustments to equity.
4. Profit reserves.
5. Undistributed results. The positive result of the last closed fiscal year shall be computed once the auditor’s opinion is available.
   Additionally, in consolidation cases, it includes:
6. Third‑party participation.

7.2.2. Complementary net equity.

Comprises the positive or negative result of the algebraic sum of the following concepts:

7.2.2.1. Subordinated obligations to other liabilities, issued under the conditions set out in point 7.2.3. (+).

7.2.2.2. 100 % of the results recorded up to the last quarterly financial statement that has an auditor’s report, corresponding to the last closed fiscal year and for which the auditor has not yet issued its opinion (+ / -).

7.2.2.3. 100 % of the results of the current fiscal year recorded at the close of the last quarterly financial statement, once it has an auditor’s report (+ / -).

7.2.2.4. 50 % of profits or 100 % of losses since the last quarterly or annual financial statement that has a report or auditor’s opinion. These percentages shall be applied over the accumulated net balance calculated at the close of each month, unless the provisions of the two previous paragraphs apply (+ / -).

7.2.2.5. 100 % of losses not reflected in the financial statements, corresponding to the quantification of facts and circumstances reported by the auditor, in accordance with the Minimum Standards for External Audits regarding reports with the results of limited reviews of the financial statements, at the close of each quarter (-).

7.2.2.6. Provisions for credit‑risk loss on the portfolio corresponding to debtors classified as “in normal situation” or “normal compliance” and financings that are covered with preferred “A” guarantees (only 50 % of the minimum required amount) (+).

For the purpose of computing 100 % of the results recorded up to the last quarterly or annual balance, the respective financial statement with the auditor’s report must be presented before the date on which the monthly balance becomes mandatory.

7.2.3. Computable subordinated debt.

The debt securities or other obligations of the entity, contractually subordinated to other liabilities, that may be computed for the purpose of determining the computable patrimonial responsibility, shall meet the following requirements:

7.2.3.1. Issuance conditions.

1. The weighted‑average life at the time of issuance shall not be less than 5 years. This period shall be the result of dividing by 365 the sum of the days between the issuance date and the maturity date of each capital‑amortisation service, multiplied by the proportion that each service represents relative to the total instrument, considered at its nominal value.
2. If the interests provided in the issuance are, at the judgment of the Superintendency of Financial and Currency Entities, markedly higher than those normally established in similar issuances, the “duration” method shall be used to establish the average period of the obligation. This period shall arise from weighting the number of days between the issuance date and the maturity date of each future service of capital and interest, according to the proportion that the economic value of each service represents relative to the economic value of the instrument. For this purpose, the net present value of the future cash flows discounted at its internal rate of return shall be considered.
3. Early redemption of the obligation, if foreseen, may only be exercised at the option of the debtor provided that:
   a) prior authorisation from the Superintendency of Financial and Currency Entities is obtained before exercising the option, and b) the computable patrimonial responsibility after redemption is equal to or greater than the minimum capital requirement.
4. Conversion into shares of the issuer, if foreseen, may be carried out under the terms contractually established, according to one of the following possibilities:
   a) only at the option of the debtor, or b) only at the option of the creditor, or c) at the option of either party, indistinctly.
5. The instrument must not contain clauses that declare the obligation due in case of default on amortisation or interest services of this or other debts or for any other reason, except bankruptcy.
6. The instrument shall provide that, in the event of the entity’s bankruptcy and once all debts to non‑subordinated creditors have been satisfied, its holders shall have priority in the distribution of funds solely and exclusively with respect to shareholders – regardless of share class – with an explicit waiver of any general or special privilege. It shall also be established that such distribution shall be made among all subordinated debts proportionally to the verified liabilities.

7.2.3.2. Computable amount.

From the beginning of each of the last five years of life of each issuance, the computable amount shall be reduced by 20 % of the net nominal value issued, net of amortisations performed. In no case shall the computable amount at the start of each of those periods be greater than the result of applying that percentage cumulatively to the residual obligation at the end of each of those years, according to the capital‑amortisation schedule. The total of this concept may reach up to 50 % of basic net equity. If the placement is made at par, for the determination of the computable patrimonial responsibility the amount actually received shall be taken into account, i.e., deductions for issuance shall be subtracted, and commissions retained by the placing agent shall not be considered.

7.2.3.3. Prior authorisation.

Computation shall be admitted as complementary net equity only with prior authorisation from the Superintendency of Financial and Currency Entities, whose intervention shall aim to verify compliance with the enumerated requirements and, in particular, that the entity meets the minimum capital requirement. If the Superintendency does not expressly issue a decision within 30 calendar days from the entity’s submission date, the authorisation shall be deemed granted.

7.2.3.4. Non‑payment of services.

The mere non‑payment of any of the amortisation or interest services of subordinated debts shall not be considered a cause for revocation of the authorisation to operate as a financial entity, provided that:

1. a method to extinguish the unpaid obligation is determined within the year after maturity,
2. the other non‑subordinated obligations are normally attended to,
3. no cash dividends are distributed to shareholders, and
4. no fees are paid to directors and auditors, except when they perform executive functions.
   Non‑compliance with these requirements shall not entail any liability for the Central Bank of the Argentine Republic, which must be expressly stated in offering prospectuses and the issued instrument.

7.2.3.5. Repurchase.

Financial entities may not purchase for later re‑placement their own subordinated debt issuances that have been or are considered for the determination of the computable patrimonial responsibility.

7.2.3.6. Concept of subordination.

A debt is considered subordinated with respect to other liabilities when, under equal conditions regarding possible privileges or among pari‑passu creditors, the creditor of that debt agrees to grant priority in collection of the claim, in case of debtor bankruptcy, to the other liabilities under equal conditions. In the regulated case, this character implies the situation described in point 7.2.3.1.v) above.

7.2.4. Deductible concepts.

7.2.4.1. Balances in correspondent accounts and other sight placements in banks and other foreign financial institutions that do not have an internationally recognised “investment‑grade” risk rating, as granted by any of the rating agencies admitted by the regulations on “Evaluation of financial entities”.

This deduction shall be made for the highest balance in each bank recorded during the month to which the computable patrimonial responsibility determination corresponds. For this purpose, balances in correspondent accounts and other sight placements that are recorded with respect to:
a) the head office of local branches of foreign banks or their subsidiaries and affiliates in other countries, insofar as they are subject to consolidated supervision, b) foreign banks or other financial institutions subject to consolidated supervision that control local financial entities incorporated as corporations, c) other foreign banks authorised to intervene in reciprocal payment and credit agreement regimes to which the Central Bank of the Argentine Republic has adhered, as well as their branches and subsidiaries, even when they are not included in those agreements, provided that the head office or controlling banking entity is subject to consolidated supervision regimes satisfactory to the Superintendency of Financial and Currency Entities, d) branches and subsidiaries of local financial entities subject to the consolidated supervision regime, e) balances that, on a temporary and circumstantial basis, arise from client operations such as those linked to foreign trade or other types of credit ordered by third parties that do not entail patrimonial responsibility for the entity, shall not be deducted. Regardless of the provisions of this point, financial entities shall open for each of their foreign correspondents a file containing information and other elements that allow identification, rating, credit limits and any other data linked to that relationship.

7.2.4.2. Credit titles (securities, fixed‑term deposit certificates and others) that are not physically in the entity’s possession, unless their registration or custody of registration certificates or dematerialised securities is carried out by:

i) Central Bank of the Argentine Republic, through operations channelled via the Central Registry and Settlement of Public Liabilities and Financial Trusts ("CRYL"). ii) Caja de Valores S.A. iii) Cedel, Euroclear and Depositary Trust Company (DTC). iv) Deutsche Bank, New York. If deductible assets are maintained pursuant to this provision, the entity shall note the existence of such concepts in the notes to the quarterly and annual financial statements, quantifying the amount that cannot be considered for determining the computable patrimonial responsibility.

MINIMUM CAPITAL OF FINANCIAL ENTITIES

B.C.R.A.

Section 7. Computable Patrimonial Responsibility

Version: 3a. Communication “A” 4172
Effective date: 15/07/2004

7.2.4.3. Securities issued by foreign governments whose international risk rating is lower than that assigned to Argentine national public securities, and that do not have markets where they are regularly traded in significant amounts.

The deduction shall be made for the amount of the highest balance recorded during the month to which the determination of computable patrimonial responsibility corresponds.

For this purpose, mandatory investments that must be made by branches or subsidiaries – subject to consolidated supervision – of local financial entities due to requirements imposed by the monetary or supervisory authority of the country where they operate shall not be considered.

7.2.4.4. Debt securities, contractually subordinated to other liabilities, issued by other financial entities.

The deduction shall be made for the amount of the highest balance recorded during the month to which the determination of computable patrimonial responsibility corresponds.

7.2.4.5. Participations in financial entities, net of devaluation‑risk provisions, except when franchises apply that prevent deduction.

7.2.4.6. Participations in foreign financial entities, net of devaluation‑risk provisions.

7.2.4.7. Participations linked to the deferral of tax payments, incorporated up to 19/02/1999, or thereafter when they arise from irrevocable subscription commitments instrumented up to that date, from the month following the legal unavailability or decay deadline—whichever the reason—for tax benefits, according to the pertinent legal and regulatory provisions.

7.2.4.8. Shareholders.

7.2.4.9. Real estate, regardless of the date of its incorporation into the patrimony, destined or not to the entity’s operation, whose accounting registration is not supported by the corresponding deed of transfer duly inscribed in the Real Property Registry, except those acquired through judicial auction.

---

B.C.R.A.

Section 7. Computable Patrimonial Responsibility (continued)

Effective date: 15/07/2004

The deduction shall be equivalent to 100 % of the value of such assets from their incorporation into the patrimony until the month preceding the regularisation of that situation.

The Superintendency of Financial and Exchange Entities may order exclusions in this matter, provided they do not distort the purpose of the deduction.

7.2.4.10. Business key (incorporations registered from 30/05/1997).

7.2.4.11. Organization and development expenses, except for concepts expressly established as non‑deductible, net of accumulated amortisation.

7.2.4.12. Pending allocation items – debtor balances – others.

7.2.4.13. Upon request by the Superintendency of Financial and Exchange Entities and effective on the date indicated in each case, financial entities shall deduct the amounts of the assets covered when the elements made available to the acting inspectors reveal that the accounting registrations carried out by the entities do not accurately reflect the economic and legal reality of the operations, or when actions have been taken to disguise or conceal the true nature or scope of the operations.

The impact on computable patrimonial responsibility resulting from the application of the foregoing shall determine the obligation to verify the classification of the various norms that use the cited responsibility as a basis, from the month in which the request takes effect, and, where applicable, the resulting charges must be entered within 10 business days counted from the date of notification of the request. In the event of entry after the stipulated term, the pertinent default interest shall be paid as arising from the breach of each infringed norm.

7.2.4.14. Differences due to insufficient constitution of minimum provisions for uncollectible‑risk determined by the Superintendency of Financial and Exchange Entities, to the extent they have not been accounted for, effective at the close of the month following the one in which the entity receives the notification referred to in the first paragraph of point 2.7 of Section 2 of the rules on “Minimum Provisions for Uncollectible‑Risk”.

7.2.4.15. Participations in companies whose corporate purpose is the development of any of the following activities:

i) Financial assistance through leasing of durable capital goods and real estate acquired for that purpose (“leasing”) or on credit arising from sales (“factoring”).

---

B.C.R.A.

Section 7. Computable Patrimonial Responsibility (continued)

Version: 3a. Communication “A” 4172
Effective date: 15/07/2004

ii) Temporary acquisition of participations in companies to facilitate their development, with the aim of later selling the holdings. Granting those companies financing and advisory services in planning and management.

The computation shall be made net of devaluation‑risk provisions.

7.2.4.16. Shares or participations in the capital of companies received as payment for credits, whose holding exceeds the maximum periods established for their liquidation in points 9.1.1 and 9.1.2 of Section 9 of the rules on “Credit Grading”.

The deduction shall be made for the amount that exceeds the maximum admissible holding limit.

7.3. Capital Contributions.

For all regulations linked to capital, its integration and increase, including those referring to regularisation and remediation plans, contributions must be made exclusively in cash and/or with national public securities, in pesos or foreign currency.

When national public securities are used, the contribution must be made in securities that have regular quotation in the exchanges and markets where they are traded.

---

B.C.R.A.

Section 8. Bases of Observance of the Rules

Effective date: 15/07/2004

8.1. Individual basis.

Financial entities (including their domestic and foreign subsidiaries) shall observe the minimum‑capital rules on an individual basis.

8.2. Consolidated basis.

Without prejudice to individual compliance, controlling financial entities subject to consolidated supervision shall observe the minimum‑capital rules on a monthly consolidated basis and, additionally and independently, on a quarterly basis.

In the case of minimum capital for market risk, the rules shall be observed on a monthly consolidated basis.

---

B.C.R.A.

Section 9. Transitional Provisions

Version: 5a. Communication “A” 4172
Effective date: 15/07/2004

9.1. Value of “k”.

For the purpose of calculating the minimum‑capital requirement – point 3.1 of Section 3 – the value of “k” shall be 1, applying from June 2004 the scale provided in the cited point to the extent that entities have ratings later than June 2003.

9.2. Allocation in temporal bands to determine the minimum‑capital requirement for interest‑rate risk shall observe the following:

9.2.1. Fixed‑rate operations. Special criteria (point 5.6.1.2 of Section 5).

Until May 2004 inclusive, all entities may use option a) of sub‑items i) and ii), and the provision in the last paragraph of that point shall not apply.

9.2.2. Entities that owe assistance to the Central Bank.

Financial entities that have pending repayments of financing granted by the Central Bank of the Argentine Republic in the form of rediscounts and advances under items b), c) and f) of article 17 of its Organic Charter and that fall within the scope of Chapter II of Decree 739/03 (Communication “A” 3941) shall allocate:

• 9.2.2.1. Debts to external creditors according to the minimum deadlines communicated for accessing the regime (Communication “A” 3940) or higher ones that are agreed.
• 9.2.2.2. Liabilities to the Central Bank according to the maturity structure that results from considering the provisions of Communication “A” 3941 (solely for determining the “VAN aj rp”).

This shall be to the extent that, up to the established deadline, they have manifested adherence to the refinancing mechanism (consequently, for the purpose of applying this procedure and for the information of May 2003, it will not be necessary to have formally expressed adherence).

If the deadline expires without exercising that option, the treatment established in point II of the resolution disseminated by Communication “A” 3941 shall apply to Central Bank assistance, and for external‑creditor debts the prevailing contractual guidelines shall apply, or eventually what is established in point 9.2.3.

The same treatment shall also apply when the entity has formally expressed non‑adherence to the regime before the cited deadline and when its incorporation is not admitted because the requirements are not met.

9.2.3. Entities not covered by point 9.2.2.

In the case that, with respect to foreign‑currency obligations, they have made or will make offers to restructure their terms, the allocations shall be made as follows:

Version: 4a. Communication “A” 4172
Effective date: 15/07/2004

9.2.3.1.

According to the proposed conditions, provided that the acceptance period for the offer is up to 60 days from the dissemination date, which may not be later than 30/11/2003. Once the offer expires, the allocation shall be adjusted to the result obtained. From the date of publication of this resolution, only one offer may be made for each series of obligation issued or contracted.

9.2.3.2.

According to the contractual conditions for non‑expired services and in the zero band for expired ones, if the acceptance period exceeds 60 days or if the offer is made after 30/11/2003. Once the offer expires, the allocation shall be adjusted to the result obtained.

9.3.

(no text provided)

9.4. Acquisitions of financial entities.

For the purpose of determining computable patrimonial responsibility on a consolidated basis, the consolidating entity may add the amount recorded in the specific line under Liabilities Provisions.

9.5. Merger of financial entities.

For the purpose of determining computable patrimonial responsibility, the amount corresponding to the negative business key recorded in the specific line under Liabilities Provisions may be added.

9.6. Coefficient “alfa1”.

From January 2004, the coefficient “alfa1” shall be applied to temporarily reduce the minimum‑capital requirement for credit‑risk concerning holdings in investment accounts and financing granted to the non‑financial national public sector up to 31/05/2003 (included in the terms “Ci” and “Fspn”, respectively). It shall also apply to instruments received by financial entities as compensation provided for by articles 28 and 29 of Decree 905/02, to instruments issued by the Provincial Development Trust Fund under Decree 1579/02, and to the “National Government Bonds in Pesos at Variable Rate 2013” that entities receive as compensation referred to in Chapter II of Law 25.796 (Annex II to Decree 117/04), even if their receipt or incorporation occurs after the indicated date.

Therefore, financing and refinancing – including tacit or express renewals – to the non‑financial national public sector granted after 01/06/2003 are excluded from the application of this coefficient.

The following values for coefficient “alfa1” are established:

Period (alfa1)	Value
Jan/Dec 2004	0.05
Jan/Dec 2005	0.15
Jan/Dec 2006	0.30
Jan/Dec 2007	0.50
Jan/Dec 2008	0.75
From Jan 2009	1

9.7. Coefficient “alfa2”.

From January 2004, a coefficient “alfa2” shall be applied to temporarily reduce the requirement for interest‑rate risk.

The following values for coefficient “alfa2” are established:

Period (alfa2)	Value
Jan/Dec 2004	0.20
Jan/Dec 2005	0.40
Jan/Dec 2006	0.70
From Jan 2007	1

---

MINIMUM CAPITAL OF FINANCIAL ENTITIES

ORDERED TEXT – SOURCE NORM

Section	Point	Paragraph	Comm.	Cap./Annex	Point	Paragraph	Observations
3.2.	“A” 2136 I	According to Comm. “A” 2541, annex, “A” 3133 and “A” 3959.
3.3.	“A” 2136 I	According to Comm. “A” 2541, annex, “A” 3133, “A” 3238 and “A” 3959. Includes interpretative clarification.
3.4.
3.5.
“A” 2136 I	According to Comm. “A” 2541, annex and “A” 4141.
4.1.
4.2.
“A” 2136 I	According to Comm. “A” 3133.
4.3.	a
4.13.	“A” 2136 I	According to Comm. “A” 2541, annex, “A” 3133, “A” 3274, “A” 3959 and “A” 4141.
4.14.	“A” 2136	According to Comm. “A” 2541, “A” 3133, “A” 3238 and “A” 3959. Includes interpretative clarification.
4.15.	“A” 2136	According to Comm. “A” 2541, “A” 3133 and “A” 4141.
4.16.	“A” 3064 3.
5.1.	“A” 2136 I	According to Comm. “A” 2632, “A” 3314 and “A” 3959.
5.2.
5.3.	“A” 2136 I	According to Comm. “A” 2541, annex and “A” 3314.
6.	“A” 2136 I	According to Comm. “A” 2541, annex, “A” 2793, “A” 2872, “A” 3959, “A” 4141 and “A” 4168.
7.1.	a
7.3.	“A” 2136 I	According to Comm. “A” 2541, annex and “A” 3133.
7.4.	“A” 2136	According to Comm. “A” 2541, annex, “A” 3133, “A” 3238, “A” 3959 and “A” 4141.
7.5.	“A” 2136	According to Comm. “A” 2541, annex and “A” 3133.
4.	last “A” 2136 I	According to Comm. “A” 2541, annex and “A” 3307.
5.1.	“A” 2922 I	According to Comm. “A” 3959 and “A” 4172
5.2.	“A” 2922 I	According to Comm. “A” 3959, “A” 4032 and “A” 4172.
5.3.	“A” 2922 I	According to Comm. “A” 4172.
5.4.1.1.	a
5.4.1.8.	“A” 2922 I	Modified by Comm. “B” 6523 and “A” 4172. Includes interpretative clarifications.
5.4.1.9.	“A” 2922 I	Modified by Comm. “B” 6523, “A” 3064 and “A” 4172.
5.4.2.	“A” 2922	According to Comm. “A” 3959 and “A” 4172.
5.
5.5.	“A” 2922 I	Modified by Comm. “B” 6523, “A” 2948, “A” 3959, and “A” 4172.
5
6
“A” 2922 I	Modified by Comm. “B” 6523 and “A” 4172.
6.1.	y
6.2.	“A” 2461 unique I. and II. According to Comm. “A” 4172.
6.3.	y
6.4.	“A” 2461 unique I. and II. According to Comm. “A” 3959 and “A” 4172.
6.5.	“A” 2461 unique I. and II. Modified by Comm. “A” 2736, 2768, 2948, 3959 and 4172. The point 6.5.2 includes interpretative clarification.
6.6.	“A” 2461 unique III. According to Comm. “A” 3161 and “A” 4172.
6.7.	“A” 2461 unique VI. According to Comm. “A” 4172.
6.
6.8.	“A” 2461 unique VII. According to Comm. “A” 4172.
7.1.	“A” 414 LISOL‑1 VI 3.1. 1st	According to Comm. “A” 2279 (modified by Comm. “A” 2453, 2793, 2914, 3039 and 4172).
7.2.2.	“A” 414 LISOL‑1 VI 3.1.2.	According to Comm. “A” 2223. Modified by Comm. “A” 2768, 2948 and 4172.
7.2.3.	1st “A” 414 LISOL‑1 VI 3.1.2.2.	According to Comm. “A” 2264 and 4172. Incorporates interpretative clarification.
7.2.3.1.	a
7.2.3.4.	“A” 414 LISOL‑1 VI 3.1.2.2.	According to Comm. “A” 2264 and 4172. In the second paragraph of point 7.2.3.3. incorporates interpretative clarification.
7.2.3.5.	“A” 2264 2.	According to Comm. “A” 4172.
7.2.3.6.	“A” 414 LISOL‑1 VI 3.1.2.2.	According to Comm. “A” 2264 and 4172.
7.2.4.1.	“A” 2287 3.1. and 3.3.	According to Comm. “A” 2890 and 4172.
“A” 2287 last	According to Comm. “A” 4172.
7.2.4.2.	1st “A” 2497 1.	According to Comm. “A” 3621 and 4172.
last “A” 2263 2.	According to Comm. “A” 4172.
1st and last
7.2.4.3.	“A” 2287 3.2.	According to Comm. “A” 4172.
2nd “A” 2474	Procedure rules on capital‑requirement and integration (point 3.2.7). Modified by Comm. “A” 4172.
7.2.4.4.	“A” 2264 1.	According to Comm. “A” 4172.
7.2.4.5.	“A” 414 LISOL‑1 VI 3.2.	According to Comm. “A” 4172.
“A” 1215	Specifications of non‑deductible participation items in financial entities for determining computable patrimonial responsibility and “A” 4172.
7.2.4.6.	“A” 414 LISOL‑1 VI 3.2.	According to Comm. “A” 4172.
7.2.4.7.	“A” 2863 3.	According to Comm. “A” 4172.
7.2.4.8.	“A” 414 LISOL‑1 VI 3.2.	According to Comm. “A” 4172.
7.2.4.9.	“A” 2730	Incorporates interpretative clarification and “A” 4172.
7.2.4.10.	“A” 2545 “A” 4172.
7.2.4.11.	“A” 414 LISOL‑1 VI 3.2.	Modified by Comm. “A” 986 and “A” 4172.
7.2.4.12.	“A” 414 LISOL‑1 VI 3.2.	According to Comm. “A” 4172.
7.2.4.13.	“A” 2287 4.	According to Comm. “A” 4172.
“A” 2607 1.	According to Comm. “A” 4172.
7.2.4.14.	“A” 2893 1.	According to Comm. “A” 4172.
7.2.4.15.	“A” 3087	According to Comm. “A” 4172.
7.2.4.16.	“A” 3918	According to Comm. “A” 4172.
7.
7.3.	“A” 414 LISOL‑1 VI 3.4.	According to Comm. “A” 1858 and “A” 4172.
8.1.	“A” 2227 unique 5.2.1. last	According to Comm. “A” 2649 and “A” 4172.
8.2.	1st “A” 2227 unique 5.1.1. and 5.1.7.	According to Comm. “A” 2649 and “A” 4172.
	“A” 2227 unique 5.2.2.	According to Comm. “A” 4172.
8.
8.2. last	“A” 2461 unique V.	According to Comm. “A” 4172.
9.1.	“A” 3959	According to Comm. “A” 4172.
9.2.	“A” 3959	According to Comm. “A” 4172.
9.3.	“A” 3985	According to Comm. “A” 4172.
9.4.	“A” 3985	According to Comm. “A” 4172.
9.5.	“A” 3986 2. and 4.	According to Comm. “A” 4172.
9.
9.6.	“A” 3986 3. and 4.	According to Comm. “A” 4172.