Circular RUNOR 1-209: Financial Entity Rating. New Regime — BCRA — AR

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
__________________________________________________________________ COMUNICACION " A " 2510 13/01/97 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
RUNOR 1 - 209.
Financial Entity Rating. New Regime

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

"1. Establish the financial entity rating regime in accordance with the guidelines contained in the Annex to this communication.

Provide that financial entities must have the required rating(s) according to the following schedule:

Submission of reports
Deposits as of 12.31.96 without subsidiaries with subsidiaries in the exterior in the exterior (') Equal to or greater than $ 100 million 1.4.97 21.4.97 Less than $ 100 million 29.9.97 20.10.97

(') or subject to the consolidated basis supervision regime (Communication "A" 2227) in their capacity as controlling entities.
To this effect, all types of deposits and admitted investment modalities in pesos, foreign currency, and securities shall be considered.

Entities included in point 2.3. of Section 2. of the Annex shall submit, on the corresponding dates, the latest reports issued by admitted international rating agencies, which may not be older than one year.

Establish that the requirement to disseminate the ratings referred to in Section 6. of the Annex to this communication must be complied with as of 1.1.98.

Prior to that date, the results of the ratings and/or the content of the reports may not be disclosed.

Repeal the provisions of the resolution disseminated through Communication "A" 2364."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Alfredo A. Besio
Deputy Manager of Standards for Deputy Manager of Standards for Financial Entities Financial Entities

ANEXO

+----------+---------------------------------------+-------------+ I B.C.R.A. I FINANCIAL ENTITY RATING IAnnex to I ENTIDADES FINANCIERAS ICom. "A" 2510I +----------+---------------------------------------+-------------+ -IndexSection 1. Rating Requirement.
1.1. Required ratings.
1.2. Frequency.
1.3. Validity.
Section 2. Rating Companies. Designation.
2.1. Admitted companies.
2.2. Performance guarantee.
2.3. Other admitted rating agencies.
2.4. Procedure.
Section 3. Rating Reports.
Section 4. Control of rating reports.
Section 5. Non-compliance.
Section 6. Dissemination of ratings.

Section 7. Minimum analysis guidelines.
7.1. Objective.
7.2. Rating system.
7.3. Basic chapters of the rating.
Section 8. Model of sworn statement by entities.
Section 9. Model of sworn statement by rating companies.
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deposit balance less than $ 50,000,000: one rating.
deposit balance equal to or greater than $ 50,000,000: two ratings.

1.2. Frequency.
Ratings will have a quarterly frequency. Rating societies must submit their reports to the Superintendence of Financial and Exchange Entities - unless it concerns the cases provided for in point 2.3. of Section 2.- within 90 calendar days following the close of each calendar quarter or fiscal year. The respective balance sheet must have an external audit report. For entities that have subsidiaries abroad or that, in their capacity as controlling entities, are subject to the consolidated basis supervision regime (Communication "A" 2227), the submission of rating reports must be made within 110 calendar days following the aforementioned dates. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 1 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

Audited Balance Validity as of From To
31.03 30.07 28.10
30.06 29.10 28.01
30.09 29.01 30.04
31.12 1.05 29.07

For entities that have subsidiaries abroad or that, in their capacity as controlling entities, are subject to the consolidated basis supervision regime, the validity is as follows:

Audited Balance Validity as of From To
31.03 19.08 17.11
30.06 18.11 17.02
30.09 18.02 20.05
31.12 21.05 18.08

The validity period may be temporarily extended when the Superintendence of Financial and Exchange Entities considers it pertinent. This circumstance will be communicated by note to the entity and the evaluating company. If the rating is not approved by the Superintendence or if the respective extension is not in effect, the entity is considered un-rated. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 2 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

+----------+-----------------------------------------------------+ I I FINANCIAL ENTITY RATING I I B.C.R.A. +-----------------------------------------------------+ I ISection 2. Rating Companies. Designation. I +----------+-----------------------------------------------------+
2.1. Admitted companies.
The rating will be performed by risk rating societies registered in the Registry enabled by the Central Bank that provide the relevant performance guarantee.
To that effect, these societies must submit a request manifesting their interest in performing the ratings of financial entities, demonstrating moreover that they possess the adequate structure to carry out the task, which -among other aspects- implies having analysts trained in sufficient quantity to develop the evaluations in an organizational context consistent with the function. Periodically, said Superintendence will publish the updated list of admitted rating companies to perform this function. Societies may not perform ratings when the incompatibilities mentioned in articles 11 and 12 of Decree 656/92 are present. Without prejudice to this and even if the persons mentioned below abstain from intervening in the evaluation process as provided in item 1. of article 19 of Decree 656/92, evaluating companies may not also rate financial entities that have advisory or audit services through:

any of the directors, managers, or members of the rating council of those evaluating societies,
shareholders who own at least 10% of the capital of the companies and/or decisive action or participation, whatever the character in which it is exercised, in the power of control and/or decision of those evaluating societies, and/or
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companies dedicated to the aforementioned services in which the aforementioned persons have action or participation, whatever the character.

Additionally, quarterly, rating societies must express their acceptance of the provisions of this rating regime.
Automatic exclusion from the Central Bank's Registry is considered a cause if rating companies renounce this function for any reason, when this occurs prior to the termination of a rating contract linked to these provisions.

2.2. Performance guarantee.
Evaluating companies must offer and constitute a performance guarantee based on the number of entities they rate:
Basic amount: $ 50,000.
Additional amount: $ 10,000 for each entity they rate starting from the second.
The guarantee will have permanent character and at least 50% must be integrated in cash. It may be constituted through:

cash deposit in caution at the Central Bank.
deposit of national public securities at Caja de Valores S.A. in an account in the name of the rating society and to the order of the Central Bank, given in pledge in favor of that Institution, which is authorized to issue the pertinent orders to the said Caja to effect the corresponding registrations.
The securities will be valued at the market quotation of the business day immediately preceding the deposit (weighted average of quotations of the Buenos Aires Stock Market or the Electronic Open Market, whichever registers greater trading volume in the pertinent title).
bank guarantee from an entity distinct from those rated by the evaluating company.
caution insurance from an insurance company that is within the list, periodically supplied by the Superintendence of Insurance of the Nation to the Central Bank.
In the event that due to a decrease in the price of the securities offered as guarantee or for any other reason - including the debit of fines or expenses - a reduction in the value of the guarantee exceeding 5% is determined, the difference must be replenished, in any of the alternatives, within a period of 48 business hours. Failure to replenish the aforementioned amounts within the fixed term will determine the automatic exclusion of the company from the Registry enabled by the Central Bank until the difference is effectively made good and without prejudice to the application of the procedure and sanctions provided for in article 41 of Law 21.526.

2.3. Other admitted rating agencies.
The entities mentioned below may opt for an alternative regime to comply with the rating requirement:
i) local branches of foreign financial entities. ii) financial entities that have guarantees or bonds issued by banks abroad that expressly guarantee the timely and proper repayment of deposits contracted. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 3 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

Duff & Phelps
Fitch Investors Service
IBCA Limited
Moody's Investors Service
Standard & Poor's Corporation
Thomson Bank Watch

Additionally, updates must be presented whenever they are performed by the evaluating agencies, within 10 calendar days of receipt by the parent house or the foreign bank, as applicable. The option for this regime may be exercised once per year.

2.4. Procedure.
2.4.1. Rating companies will be designated by a lottery conducted by the Superintendence of Financial and Exchange Entities according to the procedure it establishes, among companies registered in the registry enabled by the Central Bank that during the year prior to the lottery have rated more than five entities.
The distribution will be carried out proportionally, meaning that each company will correspond to an equal number of entities, except for the result of rounding. However, said Superintendence may limit the assignment of entities to the same evaluator to a number lower than that resulting from that distribution, when it is determined that the company does not have sufficient structure to fully fulfill the function, if assigned a larger quantity. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 4 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

+----------+-----------------------------------------------------+ I I FINANCIAL ENTITY RATING I I B.C.R.A. +-----------------------------------------------------+ I ISection 2. Rating Companies. Designation. I +----------+-----------------------------------------------------+ In the event that the incompatibilities referred to in point 2.1. are present, or when the designated evaluator is excluded from the registry, or when the situation mentioned in the previous paragraph occurs, the entity will be assigned to another rating company through a new lottery among the remaining companies and so on. Every two years, a new distribution will be carried out, so that entities are rated by evaluators different from the preceding ones. The cost of the service will be determined by the parties without exceeding the maximum value established by the Superintendence of Financial and Exchange Entities. This procedure is not applicable to entities that have opted for the alternative mechanism provided for in point 2.3.

2.4.2. Quarterly, according to the model attached in Section 8., the entity must explicitly state that such societies are not affected by the incompatibilities established in items a) and e) of article 17 of Decree 656/92, to the extent known by the entity, and that regarding itself, no incompatibilities or restrictions referred to in articles 11, 12, 17, 18, and 19 of the cited decree and point 2.1. - fourth paragraph - are present regarding the intervening rating societies.
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date of the rating council meeting.
members participating, indicating who participated or not and the existence or non-existence of discrepancies regarding the result and/or content of the report.
specific ratings for short-term deposits and the corresponding rating for long-term deposits, according to the minimum guidelines for rating contained in Section 7.
summary of the evaluation results of the fundamental elements considered for the examination - as provided in points 7.3.1. to 7.3.3. of Section 7.-, in which the weighting factors of each of the elements determining the rating will be described, the criteria justifying the weighting levels assigned to them, and the rating level corresponding to each element taking into account a scale of 1 to 11, where 1 is the best rating and 11 the worst.
In the event that the required information is not supplied, the note will be 12.
signature of the responsible person or persons of the rating society.

Once the first rating report is submitted, the rating company that produced it must formulate the periodic updates that must be made during the validity period of the contract. This requirement must also be fulfilled in the event that, subsequently, another rating company is designated, until completing the required period. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 1 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

+----------+-----------------------------------------------------+ I I FINANCIAL ENTITY RATING I I B.C.R.A. +-----------------------------------------------------+ I ISection 3. Rating Reports. I +----------+-----------------------------------------------------+ With each report, the rating society must attach a sworn statement - according to the model added in Section 9.- signed by its president or legal representative, in which it explicitly states that said society and the persons performing the different functions indicated in Decree 656/92 do not present the incompatibilities mentioned in articles 11 and 12 of the decree and that they comply with what is provided in articles 17, 18, and 19 of that device and point 2.1. - fourth paragraph-, particularly regarding the rating of deposits and debts of the financial entity, regarding which they issue the report. With the same periodicity, each of the physical persons included must formulate their respective sworn statement on the aforementioned aspects, which will be preserved by the rating society. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 2 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

----------+-----------------------------------------------------+ I I FINANCIAL ENTITY RATING I I B.C.R.A. +-----------------------------------------------------+ I ISection 4. Control of rating reports I +----------+-----------------------------------------------------+ The Superintendence of Financial and Exchange Entities will analyze the produced reports to verify compliance with the minimum analysis guidelines for the rating of financial entities contained in Section 7., within 30 calendar days of their receipt. Rejection of the report will be a cause if the rating assigned to each item or chapter referred to in Section 7. is not consistent with the situation of the entity, with what is stated in the report, or with the final rating. +--------------+----------------------+------------+-------------+ I Version: 1st. I Communication I Validity I Page 1 I "A" 2510 I 13.1.97 I I +--------------+----------------------+------------+-------------+

5.2. The non-compliance by rating companies with the provisions contained in this regime, or when, in the opinion of the Superintendence of Financial and Exchange Entities, the responsibilities assigned in this regulation are not fulfilled, shall determine the application to the rating companies and/or their members of the following procedure:

Failure to submit reports and/or submission out of time and/or without meeting the established formalities.
They must pay $500 to compensate for expenses regarding claims and processing. This amount shall be debited directly from the guarantee established within 72 business hours of the claim or rejection being communicated.
Rejection of rating reports.
From the second rejection of a rating report (of a specific period) for a financial entity due to not meeting the established formalities, $1,000 must be paid as compensation for administrative expenses for claims and second review. This amount shall be debited directly from the guarantee established within 72 business hours of the rejection being communicated.
Warning.
Among other cases, a warning shall be issued to the evaluating company when a rating report is rejected for the first time for not meeting the established requirements.

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Fine and temporary exclusion from the Registry authorized by the Central Bank.

The infringement of what is provided in point 2.1 - fourth paragraph - shall determine the application of the procedure provided for in Article 41 of Law 21.526, in accordance with what is established in its Article 42 "in fine" - according to Law 24.627 -, with the following sanctions:
a) minimum fine of $5,000, and b) exclusion from the list of admitted raters until after 60 days have elapsed from the date on which the situation has been regularized, provided that the summary has concluded.

Fine and exclusion from the Registry authorized by the Central Bank.
The submission of reports in which the rating is not consistent with the evaluation of the guidelines established in point 7.3 shall determine the application of the procedure provided for in Article 41 of Law 21.526, in accordance with what is established in its Article 42 "in fine", with the following sanctions:
a) minimum fine of $10,000, and b) the exclusion of the evaluator from the aforementioned list.

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+----------+-----------------------------------------------------+ I I CALIFICACION DE ENTIDADES FINANCIERAS I I B.C.R.A. +-----------------------------------------------------+ I ISección 6. Difusión de las calificaciones I +----------+-----------------------------------------------------+
6.1. Within 5 calendar days after the Superintendence of Financial and Exchange Entities concludes the verification of the reports, the result of the ratings must be displayed on boards placed in places of customer service, especially those informing interest rates offered on deposits, with prominent characters and specifying their meaning, according to the detail contained in Section 7.

Likewise, such ratings must appear in certificates of fixed-term deposits or other investment modalities and in summaries of current accounts, savings accounts, or fixed-term deposits sent to clients.

Current ratings, with the name of the evaluating company indicated, shall be included in all advertising related to the collection of public resources.

6.2. Entities that, for any reason, do not have the ratings referred to in this regime, must state, in the situations provided for in point 6.1, the legend "ENTITY WITHOUT RATING".

6.3. Evaluating companies may disseminate, in whole or in part, the content and/or results of the reports.

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The objective of these guidelines is that financial entity rating companies analyze a minimum set of characteristics of the entities and clearly express their opinion on each of these particularities as well as on the ability to pay the capital and interest of the debt, in the terms agreed.

To this effect, the rating company must evaluate the entity's payment capacity in the current macroeconomic scenario at the time of evaluation, as well as in those alternative scenarios that the company considers most probable as provided for in point 7.3.3.

Companies must use rating criteria equivalent to those used by international agencies, considering the different aspects that influence it, including those related to the general economic evolution.

These minimum guidelines do not constitute a manual for rating financial entities, since the rating company may give each of the elements mentioned in these guidelines the weight it deems appropriate and may also consider all other additional elements that, in its opinion, are necessary to define the rating.

In its rating, it must analyze each of the chapters and points mentioned below, following the order in which they are presented (to facilitate reading) and adding in each chapter or section the additional factors considered relevant.

The rating must be issued for short-term deposits (payment period less than one year: Si) and long-term deposits (payment period greater than one year: Li). If deemed necessary based on the alternative macroeconomic scenarios the company foresees, it may distinguish between ratings for instruments in national currency and foreign currency.

The short-term rating does not necessarily coincide with the long-term rating, nor does the national currency rating with the foreign currency rating. The following symbols must be used to refer to payment capacity, which will carry the implication mentioned in each case. When distinguishing between national and foreign currency, the letters P and E will be added to each rating, respectively.

If the rating is equal to or lower than S8 or L8, as applicable, the rater must issue an opinion on the magnitude of the possible capital loss to which the creditor would be exposed.

S1, L1: Minimal probability of default of the agreed terms. Excellent payment capacity, even in the most unfavorable economic scenario foreseeable.

S2, L2: Very low probability of default of the agreed terms. Excellent payment capacity. In the most unfavorable economic scenario foreseeable, the risk of default is very low.

S3, L3: Very low probability of default of the agreed terms. Very good payment capacity. In the most unfavorable economic scenario foreseeable, the risk of default is low.

+----------+-----------------------------------------------------+ I I CALIFICACION DE ENTIDADES FINANCIERAS I I B.C.R.A. +-----------------------------------------------------+ I ISección 7. Pautas mínimas de análisis I +----------+-----------------------------------------------------+ S4, L4: Low probability of default of the agreed terms if the current economic scenario at the time of evaluation is maintained. Payment capacity remains even under more unfavorable economic and financial conditions, but is reduced in the most unfavorable scenario.

S5, L5: Low probability of default of the agreed terms if the current economic scenario at the time of evaluation is maintained. Payment capacity is significantly reduced under more unfavorable economic and financial conditions, being low in the most unfavorable scenario.

S6, L6: Low probability of default of the agreed terms if the current economic scenario at the time of evaluation is maintained. Payment capacity is significantly reduced under more unfavorable economic and financial conditions, being very low in the most unfavorable scenario.

S7, L7: There are factors that may significantly increase the risk of default of the agreed terms, even in the current economic scenario at the time of evaluation. Payment capacity is low under more unfavorable economic and financial conditions, being extremely low in the most unfavorable scenario.

S8, L8: There is a risk of default of the agreed terms, even in the current economic scenario at the time of evaluation. Payment capacity is very low under more unfavorable economic and financial conditions, being null in the most unfavorable scenario.

S9, L9: There is a clear risk of default of the agreed terms in the current economic scenario at the time of evaluation. This is a speculative investment, with low payment capacity, even without more unfavorable economic scenarios.

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S11, L11: In default.

S12, L12: Entities that, having requested the rating, do not supply the required information.

7.3. Basic Chapters of the Rating.

The three fundamental elements to consider for formulating the rating are: entity positioning; entity situation, and sensitivity to alternative scenarios for the Argentine economy.

To this end, the levels and weighting criteria applied regarding each of the qualitative and quantitative elements that influence these three aspects, as well as for the formulation of the final rating, must be described in detail.

Each concept will be assigned a value on a scale of 1 to 11, in which 1 represents the best rating and 11 the worst.

7.3.1. Entity Positioning.

The possible evolution of the Argentine financial system as well as the current and future positioning of the entity within the system as a whole must be analyzed. To this end, among other factors, the following will be considered:

7.3.1.1. Evolution of the national financial system as a whole; perspectives of banking concentration and competition by non-financial national entities and/or financial entities from abroad;

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7.3.1.3. Degree of competitiveness achieved by the entity in the products it offers;

7.3.1.4. Evolution of the different products and markets in which the entity operates; its impact on its competitiveness;

7.3.1.5. Difficulties experienced by the entity in its relationship with the B.C.R.A. during the last five years. Compliance with prudential regulations. Rehabilitation plans; their compliance. Existence of summaries; their possible economic impact. Assistance via clearing accounts for illiquidity.

7.3.2. Entity Situation.

The fundamental qualitative and quantitative aspects that serve to determine the entity's repayment probability will be examined. Among them, the following will be analyzed:

Capitalization
Assets
Administration
Profits
Liquidity

In each case, it is necessary to analyze: the evolution of each variable in the past, its current level, and its probable evolution in the future, and the value of each variable in relation to the average value for financial entities of similar characteristics.

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Factors that may be important to consider the level of backing that an entity provides with its capital to deposits must be analyzed, including among others:

7.3.2.1.1. Ratio between capital and total assets, and between capital and risk assets;

7.3.2.1.2. Quality of capital: its composition; participation of the different components; participation of subordinated debt in the total;

7.3.2.1.3. Ability of current shareholders to increase capital in order to meet potential requirements; in the case of companies listed on capital markets, the recent volatility of the company's stock quotation must be analyzed, in relation to the market average, as well as its history of stock placements, in order to evaluate their ability to resort to such markets to increase their capital;

7.3.2.1.4. Entity's experience with subordinated debt issuances; ability to resort to this instrument to increase capital;

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7.3.2.1.5. Ability to reduce without major losses the level of total assets, maintaining an adequate level of profitability, in order to meet capital requirements without having to increase capital;

7.3.2.1.6. Existence of explicit guarantees on operations in the case of public banking.

7.3.2.2. Assets.

All factors that affect the quality of the bank's assets must be taken into account, including among others:

7.3.2.2.1. Asset composition: immobilized assets, public securities, private securities, loans, bonds, others;

7.3.2.2.2. Concentration by clients and economic groups;

7.3.2.2.3. Sectoral concentration;

7.3.2.2.4. Regional concentration;

7.3.2.2.5. Currency mismatch: currency in which assets are expressed versus the currency in which the cash flow backing them is expressed;

7.3.2.2.6. Guarantees backing risk assets; percentage of the portfolio covered by preferred guarantees; quality and valuation of guarantees;

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7.3.2.2.8. Loans to companies and economic groups linked;

7.3.2.2.9. Operations registered in off-balance sheet accounts, and in particular derivative products; risk introduced;

7.3.2.2.10. Maturity mismatch between active and passive portfolios, at fixed and floating rates: interest rate risk;

7.3.2.2.11. Central Bank risk indicator for loans in national and foreign currency; implicit average rate;

7.3.2.2.12. Quality of assets. Analysis of credit files of the main debtors. Weighted risk of the portfolio, based on the different factors enumerated above;

7.3.2.2.13. Ratio of non-performing portfolio to total portfolio and to calculable net worth; percentage of non-performing portfolio covered by guarantees;

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7.3.2.2.14. Level of provisions; portfolio written off; ratio between provisions and portfolio written off; ratio provisions/profit; ratio provisions established with provisions required by Central Bank regulations;

7.3.2.2.15. Ratio of non-performing portfolio net of provisions/average annual profit of the last exercises; same on net worth;

7.3.2.2.16. Growth rate of risk assets: absolute and relative to the risk portfolio of the financial system as a whole.

7.3.2.3. Administration.

Some aspects capable of informing about the organization and decision-making processes of the entity will be analyzed. Among them:

7.3.2.3.1. Suitability of general management and the governing body; shareholder control: harmony in decisions;

7.3.2.3.2. Decision-making process: loan granting; rating of agreed loans; systems for measuring global portfolio risk. Frequency and characteristics of decision review. Delegation of functions by activity and by branches;

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7.3.2.3.3. Personnel policy: methods of staff incorporation; training system; rating and promotion system; evaluation of current staffing; professional and financial system background of main managers; managerial staff turnover;

7.3.2.3.4. Internal audit: control mechanisms implemented; level of execution of such controls;

7.3.2.3.5. External audit: review of audit reports; control mechanisms implemented and level of execution of such controls; relationship with the Board of Directors and Management;

7.3.2.3.6. Information: information system for decision-making; quality, horizon, and relevance of information used for decision-making;

7.3.2.3.7. Level of risk tolerance in operations assumed by the financial entity, control systems or limits for risk assumed by operations, product, business units, etc.;

7.3.2.3.8. Ability to maintain consolidated control of the financial entity and its subsidiaries;

7.3.2.3.9. Management's ability to understand with precision the risks associated with derivative products;

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 7. Minimum Analysis Guidelines

7.3.2.3.10. Participation of the entity in other financial or non-financial societies; role played by such companies in the strategy and results of the entity;

7.3.2.3.11. Shareholders' participation in other companies; credit assistance policy to affiliated companies; compliance with Central Bank regulations;

7.3.2.3.12. Compliance with Central Bank regulations, especially prudential ones; mechanisms developed for compliance with such regulations.

7.3.2.3.13. Monitoring and observance of memoranda or progress reports of inspections sent by the Superintendence.

7.3.2.4. Profits.

Some factors capable of informing on the evolution of the entity's profits will be examined. Among them:

7.3.2.4.1. Level of profits relative to net equity, irregular portfolio (net of provisions), and total assets;

7.3.2.4.2. Evolution of profits: variability of quarterly profits;

7.3.2.4.3. Composition of profits: from financial intermediation, from services, from other concepts;

7.3.2.4.4. Entity costs: main cost categories.

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 7. Minimum Analysis Guidelines

7.3.2.5. Liquidity.

Some factors capable of informing on the liquidity position of the financial entity will be examined. Among them:

7.3.2.5.1. Availability relative to total deposits: legal requirements, technical requirements, surplus;

7.3.2.5.2. Securities, private and public, quoted in institutional markets, relative to total liabilities;

7.3.2.5.3. Access to credit lines from other financial entities, local and foreign;

7.3.2.5.4. Maturity structure of liabilities; relationship with the previous three concepts;

7.3.2.5.5. Maturity mismatch between assets and liabilities; its impact on liquidity;

7.3.2.5.6. Concentration of deposits by type of depositor and regional level; participation of AFJP in total entity deposits;

7.3.2.5.7. Analysis of alternative scenarios and their impact on liquidity: run on the entity and run on the financial system.

7.3.3. Sensitivity to alternative scenarios for the Argentine economy.

The projection of the entity's cash flow will be carried out in, at least, the context of the current economic scenario at the time of evaluation and two alternative scenarios at the discretion of the evaluating company.

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 7. Minimum Analysis Guidelines

In the three cases, the following must be described in detail:

7.3.3.1. the economic and financial conditions characterizing each scenario, and

7.3.3.2. how the different hypotheses developed for each of those situations impact the analyzed entity, especially on:

7.3.3.2.1. the essential qualitative and quantitative factors determining the quality of its assets and its liquidity position,

7.3.3.2.2. the projected cash flow, and

7.3.3.2.3. its payment capacity.

Additionally, the probabilities of realization, in the judgment of the evaluating company, of each of the alternative scenarios and the justification for the choice of those situations for the formulation of the sensitivity analysis must be indicated.

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 8. Model of Sworn Declaration by Entities

Likewise, we declare under oath that regarding (NAME OF THE RATING COMPANY):

none of the directors, managers, advisors, or members of the rating council of that evaluating society provide advisory or external audit services to the entity.
no shareholder who holds at least 10% of the capital and/or decisive action or participation, regardless of the character with which it is exercised, in the power of control and/or decision of those evaluating societies, provides advisory or external audit services to the entity.
it does not have advisory or external audit services provided by companies in which the aforementioned persons have action or participation, regardless of the character.

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 8. Model of Sworn Declaration by Entities

it is not covered by the incompatibilities of subsections a) and e) of Article 17 of Decree 656/92, to the extent of our knowledge.
We salute you attentively.
Place and date Signatures and clarifications

NOTE: This sworn declaration must be signed by those authorized to legally commit the entity (President, Vice President, or officials with enabling power).

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 9. Model of Sworn Declaration by Rating Societies

Sir Superintendent of Financial and Exchange Entities PRESENT Ref.: Sworn Declaration.
Incompatibilities.
We have the pleasure to address you regarding the financial entity classification regime referred to in Communication "A".
With respect to and by the present, we leave explicit record that we know and accept all provisions emanating from the aforementioned regulation and declare under oath that the incompatibilities mentioned in Articles 11 and 12 of Decree 656/92 are not present, by this society and by the persons who perform the functions indicated in that decree, and that we comply with what is provided in Articles 17, 18, and 19 of the cited decree, having in our possession the pertinent sworn declarations of each of the persons included.

Likewise, we declare under oath that regarding (NAME OF THE ENTITY):

none of the directors, managers, advisors, or members of the rating council of this rating society provide advisory or external audit services to the aforementioned entity.
no shareholder who holds at least 10% of the capital and/or decisive action or participation, regardless of the character with which it is exercised, in the power of control and/or decision of this evaluating company, provides advisory or external audit services to the aforementioned entity.

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CALIFICATION OF FINANCIAL ENTITIES

B.C.R.A. | Section 9. Model of Sworn Declaration by Rating Societies

no company in which the aforementioned persons have action or participation, regardless of the character, provides advisory or external audit services to the aforementioned entity.
We salute you attentively.
Place and date Signatures and clarifications

NOTE: This sworn declaration must be signed by those authorized to legally commit the Society (President, Vice President, or officials with enabling power).

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