2007 - Year of Road Safety

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A“ 4664
11/05/2007

TO FINANCIAL INSTITUTIONS:

Ref.: Circular
CONAU 1 - 807

Distribution of results. Ordered text.

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We address you to send you in annex the ordered text of the rules on “Distribution of results”, which considers the provisions of the resolutions disseminated through Communications “A” 4589 and 4591 and “C” 46841.

Finally, it is recalled that on the page of this Institution www.bcra.gov.ar, accessing “regulations” (“ordered texts”), you will find the modifications made with texts highlighted in special characters (strikethrough and bold).

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Darío C. Stefanelli
Issuance Manager of Rules
José I. Rutman
Deputy General Manager of Rules

ANNEX

B.C.R.A.
ORDERED TEXT OF THE RULES ON
“DISTRIBUTION OF RESULTS”

-Index-

Section 1. General criterion.

1.1. Prior conditions.

Section 2. General procedure.

2.1. Determination of the distributable result.

2.2. Verification of liquidity and solvency.

2.3. Authorization.

Section 3. Specific procedure.

3.1. Conditions for its application. Determination of the distributable result and verification of liquidity and solvency.

Version: 1st. COMMUNICATION “A“ 4664
Effective:
29/10/2006
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Section 1. General criterion.

1.1. Prior conditions.

Financial institutions may distribute results provided that the following situations are not verified as of the month prior to the presentation of the authorization request before the Superintendence of Financial and Exchange Institutions:

1.1.1. they are covered by the provisions of articles 34 “Regularization and restructuring” and 35 bis “Restructuring of the entity in safeguard of credit and bank deposits” of the Law of Financial Institutions,

1.1.2. they register financial assistance for illiquidity from the Central Bank of the Argentine Republic, with the exception of assistance received in accordance with the regime of Decree 739/03 and its regulations (Communication “A” 3941 and complementary), within the framework of article 17 of the Charter of this Institution, and of the operations provided through Communication “A” 4268 and complementary,

1.1.3. they present delays or non-compliances in the information regime established by this Institution, or

1.1.4. they register deficiencies in the integration of minimum capital -individually or consolidated- (without computing for such purposes the effects of the individual exemptions granted by the Superintendence of Financial and Exchange Institutions) or of minimum cash -on average- in pesos or in foreign currency.

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Section 2. General procedure.

2.1. Determination of the distributable result.

Entities not included in any of the situations provided in point 1.1. may distribute results up to the positive amount that arises from deducting, in an off-book manner, from the balances at the close of the annual fiscal year to which they correspond, recorded in the account “Unassigned results” (code 450000), the amounts of the legal and statutory reserves -whose constitution is required- and then those corresponding to the concepts -recorded at the same date- detailed below:

2.1.1. the balances for activation of differences resulting from payments made in compliance with judicial measures originated in causes in which the current regulations applicable to “pesified” deposits are questioned, regardless of whether or not it registers the granting of new long-term loans, referred to in the resolution disseminated by Communication “A” 4439.

2.1.2. the positive difference resulting between the book value and the market quotation value, in the case that the financial institution 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 discounting the cash flows of the mentioned instruments at the interest rates of the month of close of the annual fiscal year to which the holdings included correspond and taking into account the “TM” rate that, for these purposes, this Institution will publish monthly, will be used in its replacement.

Likewise, the criteria indicated above will be applied for the determination of valuation differences in participation certificates (or debt securities) of financial trusts, in the corresponding proportion, when their underlying is constituted by the mentioned instruments not valued at market price.

2.1.3. the valuation adjustments of assets notified by the Superintendence of Financial and Exchange Institutions -accepted or not by the entity-, which are pending registration and/or those indicated by the external audit that have not been recorded accounting.

2.1.4. the individual exemptions -of asset valuation- granted by the Superintendence of Financial and Exchange Institutions, including the adjustments derived from not considering the agreed adequacy plans.

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Effective:
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B.C.R.A. DISTRIBUTION OF RESULTS
Section 2. General procedure.

2.2. Verification of liquidity and solvency.

The amount to be distributed according to the proposal submitted to the Superintendency of Financial and Exchange Entities, which may not exceed that determined in point 2.1., must not compromise the liquidity and solvency of the entity. This requirement shall be considered met when it is verified that there are no integration deficiencies in the minimum capital position - both individual and consolidated - of the closing of the fiscal year to which the undistributed results considered correspond or in the last closed position, according to information available at the date of said submission, of both the one presenting the lesser excess of integration with respect to the requirement, recalculating them, also computing - for that sole purpose - the following effects:

2.2.1. those resulting from the deduction from assets of the concepts mentioned in points 2.1.1. to 2.1.4.

2.2.2. from the application of the coefficients “alpha1” and “alpha2” with a value equal to one on the assets, adjusted in accordance with the preceding paragraph, to recalculate the corresponding requirements.

2.2.3. from the non-consideration of the exemptions granted by the Superintendency of Financial and Exchange Entities that affect the requirement, the integration and/or the minimum capital position.

2.2.4. from the deduction from undistributed results of the amounts corresponding to the following concepts:

2.2.4.1. the amount to be distributed and, where applicable, that destined to constitute the reserve for the purpose of remunerating debt instruments, capable of integrating the computable equity, according to the proposal submitted to the Superintendency of Financial and Exchange Entities,

2.2.4.2. balances in favor from the application of the minimum presumed income tax - net of provisions for risk of impairment - that have not been deducted from basic net equity, in accordance with the provisions on “Minimum capital of financial entities”, and

2.2.4.3. adjustments made according to points 2.1.1. to 2.1.4.

Without prejudice to the provisions established above, in no case shall the distribution of results be admitted while the entity presents deficiencies in minimum cash on average - in pesos or in foreign currency - corresponding to the last closed position, and/or records financial assistance for illiquidity from the Central Bank of the Argentine Republic, with the exception of assistance received in accordance with the regime of Decree 739/03 and its regulations (Communication “A” 3941 and complementary), within the framework of article 17 of the Charter of this Institution, and of the operations provided for by Communication “A” 4268 and complementary.

Version: 1st COMMUNICATION “A“ 4664
Effective date:
29/10/2006
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B.C.R.A. DISTRIBUTION OF RESULTS
Section 2. General procedure.

2.3. Authorization.

There must be express authorization from the Superintendency of Financial and Exchange Entities, whose intervention shall aim to verify the correct application of the procedure.

The request must be made at least 30 business days in advance of the holding of the shareholders' meeting or equivalent corporate body, which will consider the distribution of results.

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Effective date:
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Section 3. Specific procedure.

3.1. Conditions for its application. Determination of distributable result and verification of liquidity and solvency.

For the purposes of payment of financial services corresponding to issues of debt instruments, referred to in point 7.2.2. of Section 7. of the rules on “Minimum capital of financial entities”, the specific procedure detailed below shall be used:

3.1.1. The issuance of such debt instruments must have the prior approval of the shareholders' meeting or equivalent corporate body, which must rule on the issuance and its conditions. In said issuance conditions and in the offers made, the requirements that condition, in accordance with this regime, the payment of financial services must be specified, referring to the applicable Central Bank provisions in this matter.

In the case of negotiable obligations, the aforementioned requirement shall also be considered met if the Ordinary General Meeting or equivalent corporate body authorizes a program for the issuance of debt instruments in a generic form, delegating to its Board of Directors the determination of the specific terms and conditions, observing the provisions of article 9 of Law No. 23.576. This is without prejudice to the analyses that, on that aspect and others pertaining to each issuance and placement, correspond to the National Securities Commission in matters of legality control, in accordance with the public offering regime of securities, in its capacity as the enforcement authority of Law No. 17.811.

3.1.2. To determine the existence of sufficient balance to proceed with the payment, the general procedure provided in point 2.1. regarding the determination of the capacity to distribute results shall be used, with the following exceptions:

3.1.2.1. the amounts corresponding to the concepts provided in points 2.1.1. and 2.1.2. shall not be deducted from undistributed results, nor shall they be considered for the recalculation of the minimum capital positions - point 2.2.

3.1.2.2. the values of the coefficients “alpha1” and “alpha2” shall be used for the recalculation of the minimum capital positions established in the transitional provisions in force in the matter (points 9.5 and 9.6. of Section 9. of the rules on “Minimum capital of financial entities”).

The Superintendency of Financial and Exchange Entities, without prejudice to the authorization previously granted for the issuance, shall annually verify, on the basis of the corresponding proposed distribution that is formulated, the correct application of the procedure for the calculation of the undistributed results adjusted in accordance with these provisions and of the solvency and liquidity levels required in this case and the constitution of the corresponding reserve for the provision of financial services.

Consequently, issuances of debt instruments that do not satisfy the applicable requirements in the matter or, at the option of the entity, shall be subject to the general procedure provided for in Section 2.

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Effective date:
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B.C.R.A.

ORIGIN OF THE PROVISIONS INCLUDED IN THE CONSOLIDATED TEXT OF THE RULES ON “DISTRIBUTION OF RESULTS”

CONSOLIDATED TEXT			SOURCE RULE					OBSERVATIONS
Sect. Point	Par.	Comm.	Annex	Chap.	Sect.	Point	Par.
1.	1.1.		"A" 4589			1.
	1.1.1.		"A" 4589			1.1.
	1.1.2.		"A" 4589			1.2.		According to Comm. "A" 4591 (point 6.).
	1.1.3.		"A" 4589			1.3.
	1.1.4.		"A" 4589			1.4.
2.	2.1.		"A" 4589			2.		According to Comm. "A" 4591 (point 6.).
	2.1.1.		"A" 4589			2.1.
	2.1.2.	1°	"A" 4589			2.2.	1°
		2°	"A" 4589			2.2.	2°	According to Comm. "A" 4591 (point 7.) and 4664.
		3°	"A" 4589			2.2.	3°
	2.1.3.		"A" 4589			2.3.
	2.1.4.		"A" 4589			2.4.
	2.2.		"A" 4589			3.		According to Com. "A" 4591 (point 8.).
	2.2.1.		"A" 4589			3.1.		According to Com. "A" 4591 (point 8.).
	2.2.2.		"A" 4589			3.2.		According to Com. "A" 4591 (point 8.).
	2.2.3.		"A" 4589			3.3.	iv)	According to Com. "A" 4591 (point 8.).
	2.2.4.		"A" 4589			3.3.		According to Com. "A" 4591 (point 8.).
	2.3.		"A" 4589			4.
3.	3.1.		"A" 4591			1.
	3.1.1.		"A" 4591			1.		Incorporates the interpretative criterion of Com. "C" 46841.
	3.1.2.		"A" 4591			1.