Public Sector Assets. Credit Risk Fractionation. Trading Position — BCRA — AR

"2005 - Year of Homage to Antonio Berni"
BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
COMMUNICATION "A" 4455 12/12/2005
TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 447
CONAU 1 - 750
Public Sector Assets. Credit Risk Fractionation. "Trading" Position.

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

"1. Establish that, from 12/1/05, entities that register excesses to the credit risk fractionation limits for financings to the non-financial public sector originated in operations pre-existing to 3/31/03 and/or in subsequent operations expressly admitted, may carry out transactions -buy-sale or intermediation- with national public titles susceptible to observing minimum capital requirement for market risk -that is, with volatility reported by the Central Bank-, within the margin that is fixed, without obligation to decrease the excesses. The admitted margin may not exceed the equivalent to 15% of the computable equity responsibility of the last day of the month prior to the one corresponding. It will be constituted with the allocation, indistinctly, of:
i) the amount of realization of non-financial public sector assets in portfolio computable for the determination of those limits. ii) the attribution to the market value of holdings of national public titles, for which purpose, the quotation in the market of the securities comprised at the close of operations of the day prior to the date of attribution will be taken. iii) the funds received for the amortization services -considering, if applicable, the update by the Reference Stabilization Coefficient ("CER")- corresponding to the public sector assets comprised. Sums received in foreign currency will be converted to pesos according to the reference exchange rate reported by the Central Bank for the day of receipt. The generation of the margin may be effected on any day of the month, simultaneously determining the percentage by which one opts within the admitted cap, based on the sum of the amounts of the concepts indicated. Entities must inform the Superintendence of Financial and Exchange Entities, according to the procedure that is established, the generation and use of the margin. The holdings that correspond to be attributed will be accounted for at market value and the balance that is registered at the close of operations of each day will be compared with the amount that results from applying to the computable equity responsibility of the previous month the percentage of margin constituted, in order to verify compliance with the limit.

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The amounts susceptible of allocation to generate the margin [items i) and ii)] that have not been incorporated in the pertinent information may not be used subsequently. Those corresponding to item iii) may be attributed in any month within the term of 180 days counted from the maturity of the pertinent service. Non-observance of the margin, even when a limit lower than the maximum admitted has been opted for, will have the treatment provided for the non-compliance of the credit risk fractionation relations, without prejudice to the application of the provisions of article 41 of the Financial Entities Law, considering for those purposes the totality of the financing to the non-financial public sector, so that the franchise admitted with general character (point 8. of the resolution disseminated by Communication "A" 3911, text according to point 2 of this communication) will not be applicable. The margin may be used totally or partially without that, in the latter case, it implies its reduction. For the purposes of determining the credit risk fractionation relations and the consequent observation of the admitted excesses, the amount corresponding to the declared margin -used or not- together with the other computable assets, comprised in point 8. of the resolution disseminated by Communication "A" 3911 (text according to point 2. of this communication) will be taken into account.

Replace point 8. of Communication "A" 3911 (modified by point 3. of Communication "A" 4155 and Communication "A" 4343) with the following:

"8. Establish that the excesses to the relations referred to in point 7. of this resolution and 2.2.1. of Annex II to Communication "A" 2140 originated exclusively in the application of the new limits and conditions of computation of financings, will not constitute non-compliance insofar as the excesses:
a) come from operations pre-existing to 3/31/03 b) are determined or increment the configured according to paragraph a), by the receipt of:
i) the compensation bonds or promissory notes according to articles 28 and 29 of Decree 905/02 or, eventually, by the application of other specific provisions, with posteriority to that date, derived from Law 25.561 of Public Emergency and of Reform of the Exchange Regime. ii) the bonds issued in the framework of the Mortgage Refinancing System established by Law 25.798. iii) the bonds issued in the conditions established by Decree 1735/04 for the restructuring of the Argentine debt, in exchange for eligible pre-existing titles to 3/31/03. c) arise from new operations, provided that excesses are previously registered according to paragraphs a) or b), and originate -uniquely and exclusively- in the granting of financings to the non-financial public sector with funds coming from amortization services or partial or total payments of owed capital, considering the effect of the application of the "Reference Stabilization Coefficient" ("CER"), if applicable, or of the modification of the equivalent in pesos if they are operations in foreign currency, without prejudice to the observation of the levy referred to in paragraph c) of point 9. of

-3- this resolution and, eventually -according to the analysis that is made- of what is provided in its paragraphs a) and b).
To this effect, the amounts that are applied to the primary subscription of debt titles of the National Government with an anticipation of up to 180 calendar days with respect to the maturity date of the amortization services or of partial or total payments of public sector obligations are comprised, provided that they are corresponded with the sums to be received. For this, in the case of obligations with "CER" (Reference Stabilization Coefficient) clause, the last index of the "CER" made known without exceeding that of the day that must be used according to the conditions fixed for those obligations will be taken into account, for purposes of determining the value of the amortization to mature. In the case of amortizations to mature of obligations in foreign currency and for purposes of their eventual application to the subscription of titles in pesos, those will be converted in function of the reference exchange rate for United States dollars that the Central Bank reports corresponding to the day prior to the date of formulation of the subscription offer. The subsequent application of the funds coming from the amortization services and payments of owed capital may be effected within the 180 calendar days following the maturity date, for purposes of considering it comprised in the provisions of the first paragraph of this paragraph, including the primary subscription and acquisitions in the secondary market of titles and other financings. If they are services paid in foreign currency that are applied to operations in pesos, they will be converted at the exchange rate mentioned in the preceding paragraph of the day prior to the date of operation. With respect to the amortization services of the compensation bonds referred to in articles 28 and 29 of Decree Nº905/02, whose crediting is pending or has been effected after the maturity, on account of the process of verification of the amount to compensate in the framework of that legal device, the term referred to in the preceding paragraph may be counted from the date of effective collection. d) correspond to the buy-sale or intermediation operations of national public titles susceptible of being attributed to the margin admitted for this purpose of up to 15% of the computable equity responsibility of the immediate previous month and provided that excesses are previously registered according to the previous paragraphs. Nevertheless, financings may not be agreed in the cases where the relation of the operations comprised with respect to the RPC determined on 3/31/03 is exceeded, on account of decreases in this last parameter, until such time as that relation is re-established, computing for this purpose the effect of the "CER" and of the variation of the exchange rate. Taking into account the date of entry into force of the new limits for the assistance to the non-financial public sector, entities must consider -for purposes of determining the relations on 3/31/03- the operations comprised according
to the established definitions, computing the amounts -with respect to the nominal values or effectively disbursed-that result from the application of the "Reference Stabilization Coefficient" and by the variations in the exchange rate, in the case of operations in foreign currency."

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Substitute point 12. of the resolution disseminated through Communication "A" 3911, with the following:

"12. Establish, with effect from 1/1/06, that the monthly assistance to the national, provincial and municipal non-financial public sector for any concept, computed in average, with exception of operations with the Central Bank, may not exceed 40% of the total of the asset of the last day of the previous month. In order to determine the amount of the financings comprised, with respect to the national public titles susceptible to observing minimum capital requirement for market risk -that is, with volatility reported by the Central Bank- the guidelines contemplated in the second paragraph -after item iv)- of the point incorporated below in the following of point 3. of Annex II to Communication "A" 2140 - "Limits of operations with the non-financial public sector"- (text according to point 2. of Communication "A" 4230) will be observed."

Substitute item d) of point 1. of the Annex to Communication "A" 4381, with the following:

"d) "Guaranteed Bonds" issued by the Fiduciary Fund for Provincial Development received in the framework of Decree 1579/02, Resolution 539/02 of the former Ministry of Economy and complementary norms, and according to Decree 977/05. The use of this valuation method in replacement of the market value will be optional -which may be effected separately for each series of those bonds- and may not be employed for incorporations not linked with the provisions cited previously. The choice may be modified subsequently by the "market value" criterion which, once used, must comprise the entire portfolio of each series comprised in the choice and will have the character of a definitive option. The attributions to the margin for buy-sale or intermediation operations admitted in the case of registering excesses in the limits of credit risk fractionation by the financing to the non-financial public sector (point 8. of Communication "A" 3911, text according to point 2. of this communication) or partial sales of portfolio with any purpose do not oblige to modify that specific valuation method for the remaining holding without prejudice to accounting for the gain or loss that is pertinent according to the result of the attribution or operation."

Substitute, with effect from 12/1/05, the last paragraph of item vi) of point 1. of the Annex to Communication "A" 4381, with the following:

"In the case that the entity opts for the registration of these instruments at market value, that option -which must comprise the entire portfolio of these titles- will have definitive character.
The attributions to the margin for buy-sale or intermediation operations admitted in the case of registering excesses in the limits of credit risk fractionation by the financing to the non-financial public sector (point 8. of Communication "A" 3911, text according to point 2. of this communication) or the partial sales of portfolio with any purpose do not oblige to modify that specific valuation method for the remaining holding, without prejudice to accounting for the gain or loss that is pertinent according to the result of the attribution or operation."

We clarify to you that the titles attributable to the margin of buy-sale or intermediation referred to in point 1. of this communication, which must be accounted for at market value, are not comprised among the concepts reached by the coefficient "alpha1" applicable in the determination of minimum capitals for credit risk (point 9.5. of Section 9. of the norms on "Minimum capitals of financial entities") and, according to the general character regulation, upon registering volatility they are comprised in the provisions that determine requirement for market risk. We send you attached the updated text of the regime of Valuation of Guaranteed Loans issued by the National Government and other debt instruments of the non-financial public sector. We salute you very attentively. BANCO CENTRAL DE LA REPUBLICA ARGENTINA Ana María Lemmi José I. Rutman Submanager of Emission of Norms General Submanager of Norms

ANNEX

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Establish that they must be registered at their present value according to the guidelines that are established in point 2. of this annex or at their "technical value" -amount, updated, if applicable, by the "Reference Stabilization Coefficient" with more the accrued interests according to the contractual conditions-, of both the lesser, the following assets that the entities maintain in portfolio or incorporate in the future:
a) "Guaranteed Loans" issued by the National Government in the framework of Decree 1387/01. b) Public titles that have not been susceptible to observing minimum capital requirement for market risk for not meeting the established requirements for it, usual quotation in the markets for relevant transactions, etc. -except the instruments detailed in item v)-. Also the holdings of new emissions of national public titles are comprised, as long as their volatility is not reported. c) Promissory notes issued by the Fiduciary Fund for Provincial Development in the framework of Decree 1579/02, Resolution 539/02 of the former Ministry of Economy and complementary norms and other loans to the non-financial public sector. d) "Guaranteed Bonds" issued by the Fiduciary Fund for Provincial Development received in the framework of Decree 1579/02, Resolution 539/02 of the former Ministry of Economy and complementary norms, and according to Decree 977/05. The use of this valuation method in replacement of the market value will be optional -which may be effected separately for each series of those bonds- and may not be employed for incorporations not linked with the provisions cited previously. The choice may be modified subsequently by the "market value" criterion which, once used, must comprise the entire portfolio of each series comprised in the choice and will have the character of a definitive option. The attributions to the margin for buy-sale or intermediation operations admitted in the case of registering excesses in the limits of credit risk fractionation by the financing to the non-financial public sector (point 8. of Communication "A" 3911, text according to point 2. of Communication "A" 4455) or partial sales of portfolio with any purpose do not oblige to modify that specific valuation method for the remaining holding without prejudice to accounting for the gain or loss that is pertinent according to the result of the attribution or operation. The promissory notes that financial entities have received or receive in exchange of the compensation bonds according to the option contained in article 28 of Decree 905/02, may be maintained at their "technical value", the application of the present value being optional according to what is established previously. The exercise of that option will have definitive character. The assets delivered in guarantee of advances granted by the Central Bank of the Argentine Republic for the subscription of the bonds provided in articles 10, 11 and 12 of Decree 905/02, ratified by article 71 of Law 25.827, may be excluded from the preceding treatment, at definitive option of the entities -by part or by the total of the advances- on account of the provisions of article 17 of the mentioned decree, in which case they will be registered by the value admitted for purposes of the constitution of the guarantees updated, if applicable to the instrument, by the "Reference Stabilization Coefficient". B.C.R.A. Valuation of Guaranteed
Loans issued by the National Government and other debt instruments of the non-financial public sector. (Updated text according to Communications "A" 3911, 4084, 4114, 4155, 4163, 4180, 4230, 4270, 4351, 4381, 4451, 4455 and "B" 7782, 8131, 8316 and 8435)
Annex to
Com. "A"
4455

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Consequently, that valuation criterion is not applicable in the following cases:
i) Titles that the entities have accounted for in investment accounts and kept the corresponding capital requirement.
In the cases of titles that, being eligible, have not been presented for exchange in the framework of the restructuring of the Argentine debt (Decree 1735/04), provisions for devaluation risk must be constituted that reach 100% of the accounting registration value. ii) Compensation bonds received according to what is established in articles 28 and 29 of Decree 905/02 and in Chapter II of Law 25.796 (Annex II to Decree 117/04) that may be maintained at technical value (point 3.6. of Section 3. of the norms on "Holdings of securities in investment accounts"). iii) Titles that must be valued according to their quotation in the market. The instruments comprised in the exchange for restructuring of the Argentine debt that have been the object of offer by the entity, will be registered taking into account the quotation value on 1/31/05 or of incorporation if this is posterior to that date. In the cases that those titles have not been presented for exchange, provisions for devaluation risk must be constituted that reach 100% of the accounting registration value. iv) Letters and other titles issued by the Central Bank of the Argentine Republic. v) External Letters of the Argentine Republic in United States dollars "Encuesta + 4.95% 2001-2004" and "Badlar + 2.98% 2001-2004", "Tax Credit Option Certificates", "Fiscal Credit Certificates", including the coupons issued in the framework of Decree 979/01, and other instruments of the non-financial public sector that are expired and unpaid. All these instruments, from January 2004, will be registered at the accounting value on 12/31/03 or by the amount that is obtained -if this is lesser- by the application to the nominal value corresponding to that date, in its case net of the write-offs or of the proportional part of transformation in tax options that could be exercised subsequently, of the lesser percentage that results by the net present value method with respect to the assets reached by that criterion -currently, items c) and d) of this point-. For purposes of determining the accounting value on 12/31/03 and the nominal value -corresponding to the capital- at that date, the accrued interests since December 2001 will not be included. In the case of titles originally issued in foreign currency that have been converted to pesos, for such purposes the nominal value re-expressed in national currency will be considered, updating both amounts -accounting and nominal- by the "Reference Stabilization Coefficient" if its application was foreseen. In the cases that correspond, for the instruments comprised in the exchange for restructuring of the Argentine debt that have been the object of offer by the entity, the present value criterion will be applied until 3/17/05, inclusive, using the interest rate fixed for March 2005. B.C.R.A. Valuation of Guaranteed Loans issued by the National Government and other debt instruments of the non-financial public sector. (Updated text according to Communications "A" 3911, 4084,
4114, 4155, 4163, 4180, 4230, 4270, 4351, 4381, 4451, 4455 and "B" 7782, 8131, 8316 and 8435)
Annex to
Com. "A"
4455

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For instruments that are eligible but have not been submitted for swap, provisions for devaluation risk amounting to 100% of the accounting registration value must be established.

vi) "Discount Bonds" and the corresponding "PBI-linked Negotiable Securities" issued according to the conditions established in Annexes IV and V, respectively, to Decree 1735/04, which are received within the framework of the Argentine debt restructuring, from the date of acceptance of the offer by the National Government (18.3.05).

They may be registered at the accounting value of the instruments delivered in swap -accounted for in accordance with current regulations, items i), iii), v), or according to specific treatments granted by the Central Bank- net of amounts attributable registered in regularization accounts and, where applicable, deducting payments received for the realization of the guarantees of the "Brady - Par and Discount" bonds, or at the amount resulting from the sum of the nominal cash flow until maturity derived from the terms and conditions of the bonds received, without including estimates of the future evolution of the Reference Stabilization Coefficient -in the case that the bond was issued in pesos- nor expected yields from the growth of the Gross Domestic Product, whichever is lower. When the aforementioned amount is lower than the sum of the accounting values of the swapped instruments, the difference must be charged to results.

To this effect, in the nominal cash flow to be considered according to the issuance conditions -principal and interest- the update, in the case of titles in pesos, by the Reference Stabilization Coefficient from the date of issuance until 17.3.05, inclusive, will be contemplated.

Such valuation will be reduced by the amount of services received, and accrued interest or updates shall not be computed. The valuation will also be reduced by amounts received from the sale of the corresponding "PBI-linked Negotiable Securities" or, where applicable, from the collection of respective services, if any.

In the event that the entity opts for the registration of these instruments at market value, such option -which must encompass the entire portfolio of these titles- will be definitive. Allocations to the margin for buy-sell or intermediation operations admitted in the case of registering excesses in the limits of credit risk fractionation for financing to the non-financial public sector (point 8 of Communication "A" 3911, text according to point 2 of Communication "A" 4455) or partial portfolio sales for any purpose do not obligate modifying that specific valuation method for the remaining holding, without prejudice to accounting for the gain or loss that is pertinent based on the result of the allocation or operation.

vii) "Quasi-par Titles with maturity in December 2045" and the corresponding "PBI-linked Negotiable Securities" issued according to the conditions established in Annexes IV and V, respectively, to Decree 1735/04 received within the framework of the Argentine debt restructuring.

Until there is usual quotation in the markets, they will be registered at the present value considering the cash flows (interests and amortizations) according to the contractual conditions fixed and a rate that reflects the simple average of the internal rates of return of the "Par Titles" and "Discount Bonds" in pesos, calculated based on the last quotation registered at the close of each month in institutionalized markets of the country.

B.C.R.A.
Valuation of Guaranteed Loans issued by the National Government and other debt instruments of the non-financial public sector.
(Text updated according to Communications "A" 3911, 4084, 4114, 4155, 4163, 4180, 4230, 4270, 4351, 4381, 4451, 4455 and "B" 7782, 8131, 8316 and 8435)
Annex to
Comm. "A"
4455

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The estimates of the future evolution of the Reference Stabilization Coefficient will not be considered, nor, when dealing with "PBI-linked Negotiable Securities", expected yields from the growth of the Gross Domestic Product.

The resulting amount will be compared with the accounting value of the instruments delivered in swap -accounted for in accordance with current regulations, items i), iii), v)-, and the difference that may arise will be charged to results.

From the moment they are traded independently of the corresponding Quasi-par Titles, the "PBI-linked Negotiable Securities" must be registered according to their market quotation.

Establish that for the purposes of determining the present value of the portfolio included in point 1., from the March 2003 balances onwards, the cash flows (amortization and interest) of the aforementioned instruments, according to the contractual conditions fixed in each case -contemplating, where applicable, the accrued amount at the end of each month by the application of the "Reference Stabilization Coefficient"-, will be discounted at the interest rates established in the following schedule:

Period	Annual Nominal Rate
March - December/03	3.00 %
January - June/04	3.25 %
July/04	3.29 %
August/04	3.33 %
September/04	3.37 %
October/04	3.41 %
November/04	3.46 %
December/04	3.50 %
January/05	3.54 %
February/05	3.58 %
March/05	3.62 %
April/05	3.66 %
May/05	3.71 %
June/05	3.75 %
July/05	3.79 %
August/05	3.83 %
September/05	3.87 %
October/05	3.91 %
November/05	3.96 %
December/05	4.00 %
January/06	4.08 %
February/06	4.15 %
March/06	4.23 %

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Period	Annual Nominal Rate
April/06	4.31 %
May/06	4.39 %
June/06	4.47 %
July/06	4.56 %
August/06	4.64 %
September/06	4.73 %
October/06	4.82 %
November/06	4.91 %
December/06	5.00 %
January/07	5% + 0.04*(TM-5%)
February/07	5% + 0.08*(TM-5%)
March/07	5% + 0.13*(TM-5%)
April/07	5% + 0.17*(TM-5%)
May/07	5% + 0.21*(TM-5%)
June/07	5% + 0.25*(TM-5%)
July/07	5% + 0.29*(TM-5%)
August/07	5% + 0.33*(TM-5%)
September/07	5% + 0.38*(TM-5%)
October/07	5% + 0.42*(TM-5%)
November/07	5% + 0.46*(TM-5%)
December/07	5% + 0.50*(TM-5%)
January/08	5% + 0.58*(TM-5%)
February/08	5% + 0.66*(TM-5%)
March/08	5% + 0.75*(TM-5%)
April/08	5% + 0.83*(TM-5%)
May/08	5% + 0.92*(TM-5%)
From June/08	TM

where:
TM: average market rate -expressed in percentage- that this Institution will report, determined based on the internal rates of return arising from quotations in the market of national public titles of similar average life term ("modified duration"), grouped in tranches (zones) according to that term.

For the purposes of calculating the present value, the number of calendar days from each month-end until the maturity of each amortization and/or interest service will be considered.

The interest rate assigned for each period of the preceding schedule will be the only one that must be used to calculate the present value of the entire cash flow of the assets included, where applicable, in each of the months of the corresponding periods, regardless of the dates on which the pertinent services and/or payments mature.

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In the case of instruments denominated in pesos that do not contemplate update clauses, for the purposes of calculating the present value, the implicit inflation rate used to adjust the flows of assets and liabilities updateable by CER in the determination of the minimum capital requirement for interest rate risk will be added -as a multiplicative factor- to the nominal rates foreseen for each period.

Establish that the sum of the differences between the present value determined for March 2003 -or subsequent periods- for each instrument included, according to the preceding points or the technical value -the lower- and the respective "theoretical values" as defined in point 4. of this annex, will be reflected in an asset regularization account that will be enabled for this effect, to the extent that the final result is positive. If the result is negative, it will be charged to results.

Monthly, the balance yielded by that account will be adjusted based on the amount determined by performing the calculation of the sum of the differences between said concepts until exhausted.

If there is an unapplied remainder, it will be charged to results.

Once said balance is exhausted, the differences -positive or negative- that are subsequently registered by the valuation according to the "present value" criterion will be charged directly to results.

When amortizations of the instruments occur, if there is a balance in the regularization account, it will be adjusted with a counterpart in results for up to the amount obtained by applying the proportion represented by the amortization, calculated on the nominal value, to the difference between the accounting value (present value or technical value, the lower) and the theoretical value of the instrument.

The updates by the Reference Stabilization Coefficient "CER" that, where applicable, are applied to the theoretical values and the accrued interests according to the issuance or contractual conditions of the instruments will be charged to results.

In the cases of asset incorporations subsequent to 28.2.03, without prejudice to the observance of the regulations resulting applicable for them, the registration of the differences originating from the application of the procedure referred to in this point will be made in a specific regularization account, distinct from the one used to reflect the effects of the calculations regarding the holdings at 28.2.03.

Establish that the "theoretical value" of the instruments that will be considered for these purposes will be the result of applying the guidelines detailed below:

a) Holding at 28.2.03:

i) Guaranteed Loans issued within the framework of Decree 1387/01.
The balance registered at 28.2.03 in the accounting -principal- for each instrument net of the asset regularization account according to point 4. of Communication "A" 3366 (accounts 131140 and 131193, respectively), will be considered.

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At the end of each month, where applicable, the amount of the theoretical value -net of the proportion of amortizations that would have corresponded- will be updated by the "Reference Stabilization Coefficient" adding the corresponding accrued interests according to the contractual conditions, to establish the respective theoretical value.

As a consequence of the new valuation procedure, in March 2003, the balance registered in that regularization account (code 131193) must be reversed.

ii) Promissory Notes or Bonds (at option) issued by the Fiduciary Fund for Provincial Development within the framework of Decree 1579/02, Resolution 539/02 of the former Ministry of Economy and complementary norms.

The amount at which the respective instruments delivered in swap were registered at 28.2.03 will be initially considered, updated, where applicable, by the "Reference Stabilization Coefficient" at the end of each month, considering the proportion of the amortizations that would have corresponded and adding the corresponding accrued interests according to the issuance conditions.

iii) Others.

Where applicable, it will be updated by the application of the "Reference Stabilization Coefficient", considering eventual amortizations and adding the corresponding accrued interests according to the issuance or contractual conditions.

b) Subsequent incorporations after 28.2.03:

The incorporation value in the asset will be considered, which, where applicable, will be updated by the "Reference Stabilization Coefficient", considering eventual amortizations and adding the corresponding accrued interests according to the issuance or contractual conditions.

Dispose that the debt instruments that financial entities receive within the framework of the Mortgage Refinancing System -Law 25.798-, must be registered at their present value according to the guidelines established in point 2., without exceeding the technical value.

Initially, the difference between the present value and the corresponding nominal value will be charged against the regularization account enabled for these instruments. Subsequently, the valuation differences that arise each month by the application of the present value method will also be charged against the regularization account or, in its absence, once the balance is exhausted, directly to results.

From the moment the bonds received for overdue and unpaid installments have normal and usual quotation -that is, when the Central Bank communicates their volatility for the purposes of determining the minimum capital requirement for market risk- they will be valued according to their market value, and the balance of the regularization account must be derecognized with a counterpart in results, in the proportion they represent with respect to the total nominal value received for that concept -60%, 40% or 100%, depending on whether it is the bond with maturity of 2.5 years, 10 years or both, respectively-.

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6. Establish the following accounting treatment for repo operations that are carried out with public securities registered according to the present value or technical lower value criterion, whose volatility has been reported by the Central Bank of the Argentine Republic for determining the capital requirement for market risk.

Forward purchases will be accounted for in "Other credits for financial intermediation - Forward purchases of public titles for repo operations with holdings valued according to the present value or technical lower value criterion".

The difference between the registration value of the securities affected to the realization of those repo operations and their quotation value, will be reflected until the settlement of the forward purchase in "Other credits for financial intermediation - Forward purchases of public titles for repo operations with holdings valued according to the present value or technical lower value criterion - Valuation Difference".

The reincorporation of the holdings will be effected at the value admitted according to the provisions on valuation of public sector assets, applied for their registration prior to the realization of the repo operation.

This accounting scheme will be applied to the extent that the counterparty is any of the following:

other financial entities of the country.
foreign bank that has an international rating of "A" or higher granted by any of the international rating agencies admitted according to the norms on "Evaluation of financial entities".
Central Bank of the Argentine Republic, provided that the titles have been expressly admitted for the respective operation.

Repo operations carried out with the bonds received in swap as a consequence of the sovereign debt restructuring -Decree 1735/04- valued according to what is provided in the first paragraph of item vi) of point 1. of this annex, will be subject to the accounting treatment described above to the extent that said operations are carried out with the aforementioned authorized counterparties.

Establish that in the case of public titles that are susceptible to observing minimum capital requirement for market risk by meeting the established requirements -usual quotation in the markets for relevant transactions, etc.- to which specific valuation criteria are applied, the criterion employed must be disclosed in the notes to the quarterly and annual financial statements and the difference with respect to their market value valuation must be quantified.

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