Circular CONAU 1-790: Distribution of Results. General Procedure to Authorize Financial Entities' Requests

"2006 - Year of Tribute to Dr. Ramón CARRILLO" BANCO CENTRAL DE LA REPÚBLICA ARGENTINA COMMUNICATION "A" 4589 29/10/2006 TO FINANCIAL ENTITIES:
Ref.: Circular
CONAU 1 - 790
Distribution of results. Dissemination of the general procedure to authorize requests submitted by financial entities.

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We address you to inform you that this Institution has adopted the following resolution:

"- Establish that financial entities may distribute results provided that:

1. The following situations are not verified in the month prior to the submission of the authorization request to the Superintendence of Financial and Currency Entities, according to the procedure established by:

1.1. They are covered by the provisions of Articles 34 "Regularization and Sanitation" and 35 bis "Restructuring of the entity in protection of credit and bank deposits" of the Financial Entities Law,

1.2. They register financial assistance from the Central Bank of the Argentine Republic, with the exception of assistance received for illiquidity under the regime of Decree 739/03 and its regulations (Communication "A" 3941 and complementary), within the framework of Article 17 of the Organic Charter of this Institution,

1.3. They present delays or non-compliance with the information regime established by this Institution, or

1.4. They register deficiencies in the integration of minimum capital - individually or consolidated - (without counting towards this purpose the effects of individual franchises granted by the Superintendence of Financial and Currency Entities) or of minimum cash - on average - in pesos or foreign currency.

2. Entities not included in any of the situations foreseen in the preceding point may distribute results up to the positive amount resulting from deducting, off-balance sheet, from the "Unassigned Results" account (code 450000) the amounts of legal and statutory reserves - whose constitution is mandatory - and then those corresponding to the concepts detailed below:

2.1. balances for the activation of differences resulting from payments made in compliance with judicial measures originating from cases questioning the current applicable regulation for "pesified" deposits, regardless of whether or not new long-term loans are granted, as referred to in the resolution disseminated by Communication "A" 4439.

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2.2. the positive difference resulting between the book value and the market quotation value, in the case where the financial entity registers public securities not valued at market prices.
For public debt instruments that do not have a quotation value, the lower amount resulting from comparing the technical value and the present value by discounting the cash flows of the aforementioned instruments at the interest rates of the month prior to the distribution of results, taking into account the "TM one-year" rate, which this Institution will publish monthly for these purposes, will be used instead. Likewise, the criteria indicated above will apply to the determination of valuation differences in participation certificates (or debt securities) of financial trusts, in the proportion that corresponds, when their underlying asset consists of the aforementioned instruments not valued at market price.

2.3. asset valuation adjustments notified by the Superintendence of Financial and Currency Entities - accepted or not by the entity - that are pending registration and/or those indicated by the external audit that have not been registered accounting-wise.

2.4. individual franchises - for asset valuation - granted by the Superintendence of Financial and Currency Entities, including adjustments derived from not considering agreed adaptation plans.

3. The amount to be distributed, which may not exceed that determined in the preceding point, must not compromise the liquidity and solvency of the entity. This requirement will be considered met when the absence of integration defects in the minimum capital positions, cleaned up as of the month prior to the calculation - individually and consolidated - is verified, for which, for this sole purpose, the following adjustments will be made:

3.1. the deduction from assets of the amounts corresponding to the concepts mentioned in points 2.1. to 2.4.

3.2. the application of the "alpha1" and "alpha2" coefficients with a value equal to one on the cleaned-up asset according to the previous subsection to recalculate the corresponding requirements.

3.3. the deduction of unassigned results from the amounts corresponding to the following concepts:

i) the amount to be distributed and, if applicable, the amount allocated to establish general reserves or provisions established for this purpose,

ii) favorable balances from the application of the minimum presumptive income tax - net of provisions for devaluation risk - that have not been deducted from basic net equity, as established in the regulations on "Minimum Capital of Financial Entities",

iii) adjustments made according to points 2.1. to 2.4., and

iv) franchises granted by the Superintendence of Financial and Currency Entities that affect - in any way - the minimum capital position.

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Without prejudice to the above, in no case will the distribution of results be admitted while the entity presents deficiencies in minimum cash on average - in pesos or foreign currency - corresponding to the last closed position, and/or registers financial assistance from the Central Bank of the Argentine Republic, with the exception of assistance received for illiquidity within the framework of Article 17 of the Organic Charter, with adjustment to the regime of Decree 739/03 and its regulations (Communication "A" 3941 and complementary).

4. Explicit authorization from the Superintendence of Financial and Currency Entities must be obtained, whose intervention will be to verify the correct application of the procedure.
   The request must be made, at minimum, 30 business days in advance of the holding of the shareholders' meeting or equivalent corporate body, which will consider the distribution of results."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Darío C. Stefanelli José I. Rutman
Manager of Emission of Norms
Deputy General Manager of Norms

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