2007 – Year of Road Safety

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A” 4652 25/04/2007

TO FINANCIAL ENTITIES:

Ref.: Circular LISOL 1 – 468

"Minimum Capital of Financial Entities". Capital Contributions. Modification.

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

Replace point 7.3 of Section 7 of the rules on “Minimum Capital of Financial Entities” with the following:

7.3. Capital contributions.
For all regulations linked to capital, its composition and increase, including those related to regularisation and remediation plans and without prejudice to the provisions of point 1.1 of Section 1 of Chapter V of Circular CREFI ‑ 2 (text according to Communication “A” 4510) concerning the negotiation of shares or irrevocable contributions for future capital increases, contributions must be made in cash.

Exceptionally, with prior authorization from the Superintendency of Financial and Currency Entities, contributions may be admitted in:

7.3.1. national public securities;

7.3.2. debt instruments of the Central Bank;

7.3.3. deposits and other obligations arising from the financial intermediation of the entity.

In the cases covered by points 7.3.1 and 7.3.2, contributions shall be recorded at their market value. It will be understood that the instruments have market value when they have regular quotation on the country's or abroad's regulated exchanges and markets where they are traded, with relevant transactions such that the eventual liquidation of the holdings could not significantly distort their quotation.

In the cases of point 7.3.3, contributions shall be recorded at their market value – with the scope defined in the previous paragraph – or, when the financial entity conducts a public offering of its shares, at the price set by the competent supervisory authority of the corresponding market. Contributions of this class of instruments will not be admitted when the aforementioned conditions are not met.

When deposits and other obligations arising from the financial intermediation of the financial entity – including subordinated obligations – that do not have authorization to be traded in regulated secondary markets of the country or abroad, the contributions will be admitted at their book value – capital, interest, adjustments, foreign‑exchange quotation differences and, where applicable, issuance discounts – in accordance with the regulations of the Central Bank of the Argentine Republic.

In no case may debt capitalisation imply a limitation or suspension of the preferential right established in article 194 of the Commercial Companies Law, therefore the provisions of article 197 of that law will not apply.

The decision to capitalise the concepts indicated in points 7.3.1 to 7.3.3 by the Assembly (or equivalent authority) shall be “ad referéndum” of its approval by the Superintendency of Financial and Currency Entities or, as appropriate, by the Central Bank of the Argentine Republic – as provided in point 1.1 of Section 1 of Chapter V of Circular CREFI ‑ 2 (text according to Communication “A” 4510) – a circumstance that must be disclosed in a note to the financial statements of the subsequent periods – quarterly or annual, as appropriate – under the terms established by the Superintendency of Financial and Currency Entities.

Until the approval of the contributions has been notified and insofar as they have been accounted for, they will be deducted from the computable patrimonial responsibility of the financial entity. When the accounted contributions arise from the capitalisation of subordinated debt or debt‑representative instruments that may be considered – wholly or partially – as part of the computable patrimonial responsibility, the treatment applicable to assets that have remained recorded as liabilities shall be maintained.

Incorporate in Section 7 of the rules on “Minimum Capital of Financial Entities” the following point:

7.4. Procedure.
The request for authorization of capital contributions with the instruments referred to in points 7.3.1 to 7.3.3 must be accompanied by a copy of the Assembly (or equivalent authority) minutes certified by a public notary in which that decision appears and which, to adopt it, the Assembly had at its disposal the special external auditor report that is established for the cases where the contribution includes the debt instruments indicated in the following paragraph.

When the capital contributions referred to in point 7.3.3 are involved, the debt instruments must be recorded in the last annual or quarterly balance, as appropriate, immediately prior to the date of convening the relevant Assembly. That financial statement must have the external auditor’s intervention foreseen for each case according to the applicable standards and must have been previously submitted to this Institution and be accompanied by a special report of that auditor, prepared in the terms specifically established in the Minimum Standards on External Audits issued by the Superintendency of Financial and Currency Entities.

We enclose annexed pages that, in replacement of those previously provided, correspond to replace in the ordered text of the rules on “Minimum Capital of Financial Entities”.

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Also, it is recalled that on this Institution’s website www.bcra.gov.ar, accessing “normativa” (“ordered texts”), the modifications made will be found with texts highlighted in special characters (strikethrough and bold).

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Darío C. Stefanelli José I. Rutman
Head of Emission of Standards Deputy General of Standards

ANNEX

B.C.R.A.

ORDERED TEXT OF THE RULES ON MINIMUM CAPITAL OF FINANCIAL ENTITIES

Index
- Section 7. Computable patrimonial responsibility.
  - 7.1. Determination.
  - 7.2. Computable concepts.
  - 7.3. Capital contributions.
  - 7.4. Procedure.
- Section 8. Observation bases of the rules.
  - 8.1. Individual basis.
  - 8.2. Consolidated basis.
- Section 9. Transitional provisions.
  - 9.1. Value of “k”.
  - 9.2. Allocation in the temporal bands to determine the minimum capital requirement by interest‑rate risk.
  - 9.3. Acquisitions of Financial Entities.
  - 9.4. Merger of Financial Entities.
  - 9.5. Coefficient “alpha1”.
  - 9.6. Coefficient “alpha2”.
  - 9.7. Entities operating on 30.6.05.
- Correlation table.

Version: 10a. COMMUNICATION “A” 4652
Effective: 25/04/2007

ii) Transient acquisition of stakes in companies to facilitate their development, with the purpose of later selling the holdings. Granting those companies financing and advice in planning and management. The computation will be net of provisions for devaluation risk.

7.2.4.16. Shares or stakes in the capital of companies received as payment of 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”. This deduction will be made for the amount that exceeds the maximum holding limit admitted.

7.3. Capital contributions.
(Repeated text identical to point 7.3 above – see section 1 for full wording.)

B.C.R.A. MINIMUM CAPITAL OF FINANCIAL ENTITIES

Section 7. Computable patrimonial responsibility.

Version: 5a. COMMUNICATION “A” 4652
Effective: 25/04/2007

When deposits and other obligations arising from the financial intermediation of the financial entity – including subordinated obligations – that do not have authorization to be traded in regulated secondary markets of the country or abroad, the contributions will be admitted at their book value – capital, interest, adjustments, foreign‑exchange quotation differences and, where applicable, issuance discounts – in accordance with the regulations of the Central Bank of the Argentine Republic.

In no case may debt capitalisation imply a limitation or suspension of the preferential right established in article 194 of the Commercial Companies Law, therefore the provisions of article 197 of that law will not apply.

The decision to capitalise the concepts indicated in points 7.3.1 to 7.3.3 by the Assembly (or equivalent authority) shall be “ad referéndum” of its approval by the Superintendency of Financial and Currency Entities or, as appropriate, by the Central Bank of the Argentine Republic – as provided in point 1.1 of Section 1 of Chapter V of Circular CREFI ‑ 2 (text according to Communication “A” 4510) – a circumstance that must be disclosed in a note to the financial statements of the subsequent periods – quarterly or annual, as appropriate – under the terms established by the Superintendency of Financial and Currency Entities.

Until the approval of the contributions has been notified and insofar as they have been accounted for, they will be deducted from the computable patrimonial responsibility of the financial entity. When the accounted contributions arise from the capitalisation of subordinated debt or debt‑representative instruments that may be considered – wholly or partially – as part of the computable patrimonial responsibility, the treatment applicable to assets that have remained recorded as liabilities shall be maintained.

7.4. Procedure.
(The same wording as point 7.4 above – see section 2 for full wording.)

B.C.R.A. MINIMUM CAPITAL OF FINANCIAL ENTITIES

Section 7. Computable patrimonial responsibility.

Version: 1a. COMMUNICATION “A” 4652
Effective: 25/04/2007

Correlation Table (Ordered Text – Original Norm)

Section	Point	Paragraph	Comm.	Observations
7.2.4.5	“A” 414	LISOL‑1	VI 3.2	According to Comm. “A” 4172 and “A” 4539
	“A” 1215			Specifications of the items of participations in financial entities not deductible for determining computable patrimonial responsibility. According to Comm. “A” 4172
7.2.4.6	“A” 414	LISOL‑1	VI 3.2	According to Comm. “A” 4172 and “A” 4539
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. According to Comm. “A” 4172
7.2.4.10	“A” 2545			According to Comm. “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
7.3	“A” 414	LISOL‑1	VI 3.4	According to Comm. “A” 1858, “A” 4172, “A” 4631 and “A” 4652
7.4	“A” 4652		2
8.1	“A” 2227	único	5.2.1. último	According to Comm. “A” 2649 and “A” 4172
8.2	1º “A” 2227	único	5.1.1. y 5.1.7.	According to Comm. “A” 2649 and “A” 4172
	“A” 2227	único	5.2.2.	According to Comm. “A” 4172
8.2	último “A” 2461	único	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. y 4.		According to Comm. “A” 4172 and “A” 4270
9.6	“A” 3986	3. y 4.		According to Comm. “A” 4172
9.7	“A” 4238	2.		According to Comm. “A” 4368