Source: Central Bank | | | (1) | | Public sector banks. | | (2) | | FromBased on our consolidated financial statements.
|
| | | | | | | | | | | | | | | | | | | Market Share | | | Market Share | | | | (% share of equity | | | (% share of equity for the | | Equity | | Ps. | | for the Argentine | | | Ps. | | Argentine financial | | (As of December 31, 2009) | | Million | | financial system) | | | 1 BANCO DE LA NACION ARGENTINA (1) | | 8,998 | | | 18.7 | % | | | | | | | | | (As of December 31, 2010) | | | Million | | system) | | 1 BANCO DE LA NACION ARGENTINA(1 ) | | | 11,375 | | | 19.8 | % | 2 BANCO MACRO S.A. (2) | | 3,359 | | | 7.0 | % | | 4,153 | | | 7.2 | % | | | | | | | | 3 BANCO SANTANDER RIO S.A. | | 3,084 | | | 6.4 | % | | 3,862 | | | 6.7 | % | 4 BBVA BANCO FRANCES S.A. | | 2,926 | | | 6.1 | % | | 3,747 | | | 6.5 | % | 5 BANCO HIPOTECARIO S.A. | | 2,778 | | | 5.8 | % | | 2,974 | | | 5.2 | % | 6 BANCO DE GALICIA Y DE BUENOS AIRES S.A. | | 2,127 | | | 4.4 | % | | 7 HSBC BANK ARGENTINA S.A. | | 1,969 | | | 4.1 | % | | 8 BANCO PATAGONIA S.A. | | 1,854 | | | 3.9 | % | | 9 CITIBANK S.A. | | 1,814 | | | 3.8 | % | | 6 HSBC BANK ARGENTINA S.A | | | 2,612 | | | 4.5 | % | 7 BANCO DE GALICIA Y DE BUENOS AIRES S.A. | | | 2,596 | | | 4.5 | % | 8 CITIBANK S.A | | | 2,361 | | | 4.1 | % | 9 BANCO DE LA CIUDAD DE BUENOS AIRES (1) | | | 2,224 | | | 3.9 | % | 10 BANCO DE LA PROVINCIA DE BUENOS AIRES (1) | | 1,651 | | | 3.4 | % | | 2,163 | | | 3.8 | % | OTHERS | | 17,581 | | | 36.5 | % | | 19,516 | | | 33.9 | % | | | | | | | | TOTAL | | 48,141 | | | 100.0 | % | | 57,582 | | | 100.0 | % | | | | | | | |
Source: Central Bank (1) Public sector banks. (2) Based on our consolidated financial statements. | | | | | | | | | | | | | | | Market Share | | | | | | | | (% share of total | | | | | | | | deposits for the | | Total Deposits | | Ps. | | | Argentine financial | | (As of December 31, 2010) | | Million | | | system) | | 1 BANCO DE LA NACION ARGENTINA(1) | | | 110,363 | | | | 29.3 | % | 2 BANCO DE LA PROVINCIA DE BUENOS AIRES (1) | | | 32,362 | | | | 8.6 | % | 3 BANCO SANTANDER RIO S.A. | | | 26,235 | | | | 7.0 | % | 4 BANCO MACRO S.A. (2) | | | 23,407 | | | | 6.2 | % | 5 BBVA BANCO FRANCES S.A. | | | 22,543 | | | | 6.0 | % | 6 BANCO DE GALICIA Y DE BUENOS AIRES S.A. | | | 21,916 | | | | 5.8 | % | 7 HSBC BANK ARGENTINA S.A. | | | 16,100 | | | | 4.3 | % | 8 BANCO DE LA CIUDAD DE BUENOS AIRES(1) | | | 14,460 | | | | 3.8 | % | 9 BANCO CREDICOOP COOPERATIVO LIMITADO | | | 14,449 | | | | 3.8 | % | 10 BANCO PATAGONIA S.A | | | 10,299 | | | | 2.7 | % | OTHERS | | | 84,131 | | | | 22.4. | % | TOTAL | | | 376,264 | | | | 100.0 | % |
Source: Central Bank | | | (1) | | Public sector banks. | | (2) | | Based on our consolidated financial statements. |
29
| | | | | | | | | | | | | | | Market Share | | | | | | | | (% share of total | | | | | | | | net income for | | Net Income | | Ps. | | | the Argentine | | (12 months ended December 31, 2010) | | Million | | | financial system) | | 1 BANCO DE LA NACION ARGENTINA S.A. (1) | | | 2,333 | | | | 19.8 | % | 2 BANCO SANTANDER RIO S.A. | | | 1,601 | | | | 13.6 | % | 3 BBVA BANCO FRANCES S.A | | | 1,198 | | | | 10.2 | % | 4 BANCO MACRO S.A. (2) | | | 1,010 | | | | 8.6 | % | 5 BANCO DE LA CIUDAD DE BUENOS AIRES (1) | | | 639 | | | | 5.4 | % | 6 HSBC BANK ARGENTINA S.A | | | 617 | | | | 5.2 | % | 7 CITIBANK | | | 546 | | | | 4.6 | % | 8 BANCO DE LA PROVINCIA DE BUENOS AIRES (1) | | | 539 | | | | 4.6 | % | 9 BANCO PATAGONIA | | | 481 | | | | 4.1 | % | 10 BANCO DE GALICIA Y DE BUENOS AIRES | | | 469 | | | | 4.0 | % | OTHERS | | | 2,346 | | | | 19.9 | % | TOTAL | | | 11,780 | | | | 100.0 | % |
| | | Source: Central Bank | | (1) | | Public sector banks. | | (2) | | FromBased on our consolidated financial statements.
|
| | | | | | | | | | | | | | | Market Share | | | | | | | | (% share of total | | | | | | | | deposits for the | | Total Deposits | | Ps. | | | Argentine | | (As of December 31, 2009) | | Million | | | financial system) | | 1 BANCO DE LA NACION ARGENTINA (1) | | | 67,121 | | | | 24.6 | % | 2 BANCO DE LA PROVINCIA DE BUENOS AIRES (1) | | | 25,198 | | | | 9.2 | % | 3 BANCO SANTANDER RIO S.A. | | | 19,399 | | | | 7.1 | % | | | | | | | | 4 BANCO MACRO (2) | | | 18,593 | | | | 6.8 | % | | | | | | | | 5 BBVA BANCO FRANCES S.A. | | | 18,374 | | | | 6.7 | % | 6 BANCO DE GALICIA Y DE BUENOS AIRES S.A. | | | 17,083 | | | | 6.3 | % | 7 HSBC BANK ARGENTINA S.A. | | | 11,821 | | | | 4.3 | % | 8 BANCO DE LA CIUDAD DE BUENOS AIRES (1) | | | 11,182 | | | | 4.1 | % | 9 BANCO CREDICOOP COOPERATIVO LIMITADO | | | 10,915 | | | | 4.0 | % | 10 CITIBANK N.A. | | | 9,197 | | | | 3.4 | % | OTHERS | | | 63,676 | | | | 23.4 | % | | | | | | | | TOTAL | | | 272,559 | | | | 100.0 | % | | | | | | | |
Source: Central Bank
| | | (1) | | Public sector banks.
| | (2) | | From our consolidated financial statements.
|
27
| | | | | Net Income | | Ps. | | (12 months ended December 31, 2009) | | Million | | 1 BANCO DE LA NACION ARGENTINA S.A. (1) | | | 1,186 | | 2 BANCO SANTANDER RIO S.A. | | | 1,114 | | | | | | 3 BANCO MACRO S.A. (2)
| | | 752 | | | | | | 4 BBVA BANCO FRANCES S.A. | | | 668 | | 5 CITIBANK N.A. | | | 578 | | 6 BANCO PATAGONIA S.A. | | | 424 | | 7 BANCO DE SAN JUAN S.A. | | | 421 | | 8 NUEVO BANCO DE SANTA FE SOCIEDAD ANONIMA | | | 319 | | 9 HSBC BANK ARGENTINA S.A. | | | 305 | | 10 DEUTSCHE BANK S.A. | | | 262 | | OTHERS | | | 2,074 | | | | | | TOTAL | | | 8,103 | | | | | |
Source: Central Bank
(1) Public sector banks.
(2) From our consolidated financial statements.
As of December 31, 2009,2010, our return annualized on average equity was 24.6%27.1% compared to the 23.3%24.4% for private-sector banks and 19.6%24.3% for the banking system as a whole. There is a large concentration of branches in the City and province of Buenos Aires, area, as shown by the following table. We have the most extensive private-sector branch network in Argentina, and a leading regional presence in eight provinces including Santa Fe, Córdoba, Río Negro, and Tierra del Fuego, in addition to Misiones, Salta, Tucumán and Jujuy, where we are the largest bank in terms of branches. | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | | Banking System | | Banco Macro | | | As of December 31, 2010 | | | | Market Share | | | Banking System | | Banco Macro | | | | (% share of | | | Market Share | | | | total of | | | (% share of | | | | branches in | | | total of | | | | % of | | % of | | each | | | % of | | % of | | branches in | | Province | | Branches | | Total | | Branches | | Total | | province) | | | Branches | | Total | | Branches | | Total | | each province) | | CITY OF BUENOS AIRES | | 774 | | | 19.2 | % | | 24 | | | 5.9 | % | | | 3.1 | % | | 783 | | | 19.3 | % | | 24 | | | 5.9 | % | | | 3.1 | % | BUENOS AIRES (PROVINCE) | | 1,259 | | | 31.2 | % | | 52 | | | 12.7 | % | | | 4.1 | % | | 1,265 | | | 31.1 | % | | 52 | | | 12.9 | % | | | 4.1 | % | CATAMARCA | | 22 | | | 0.5 | % | | 1 | | | 0.2 | % | | | 4.5 | % | | 22 | | | 0.5 | % | | 1 | | | 0.2 | % | | | 4.5 | % | CHACO | | 61 | | | 1.5 | % | | 2 | | | 0.5 | % | | | 3.3 | % | | 60 | | | 1.5 | % | | 1 | | | 0.2 | % | | | 1.7 | % | CHUBUT | | 90 | | | 2.2 | % | | 4 | | | 1.0 | % | | | 4.4 | % | | 92 | | | 2.3 | % | | 5 | | | 1.2 | % | | | 5.4 | % | CORDOBA | | 402 | | | 10.0 | % | | 62 | | | 15.2 | % | | | 15.4 | % | | 404 | | | 9.9 | % | | 61 | | | 15.1 | % | | | 15.1 | % | CORRIENTES | | 60 | | | 1.5 | % | | 3 | | | 0.7 | % | | | 5.0 | % | | 62 | | | 1.5 | % | | 3 | | | 0.7 | % | | | 4.8 | % | ENTRE RIOS | | 119 | | | 2.9 | % | | 6 | | | 1.5 | % | | | 5.0 | % | | 120 | | | 3.0 | % | | 6 | | | 1.5 | % | | | 5.0 | % | FORMOSA | | 18 | | | 0.4 | % | | 0 | | | 0.0 | % | | | 0.0 | % | | 18 | | | 0.4 | % | | 0 | | | 0.0 | % | | | 0.0 | % | JUJUY | | 31 | | | 0.8 | % | | 15 | | | 3.7 | % | | | 48.4 | % | | 31 | | | 0.8 | % | | 15 | | | 3.7 | % | | | 48.4 | % | LA PAMPA | | 103 | | | 2.6 | % | | 2 | | | 0.5 | % | | | 1.9 | % | | 103 | | | 2.5 | % | | 2 | | | 0.5 | % | | | 1.9 | % | LA RIOJA | | 26 | | | 0.6 | % | | 2 | | | 0.5 | % | | | 7.7 | % | | 26 | | | 0.6 | % | | 2 | | | 0.5 | % | | | 7.7 | % | MENDOZA | | 145 | | | 3.6 | % | | 13 | | | 3.2 | % | | | 9.0 | % | | 147 | | | 3.6 | % | | 13 | | | 3.2 | % | | | 8.8 | % | MISIONES | | 64 | | | 1.6 | % | | 35 | | | 8.6 | % | | | 54.7 | % | | 64 | | | 1.6 | % | | 35 | | | 8.7 | % | | | 54.7 | % | NEUQUÉN | | 64 | | | 1.6 | % | | 4 | | | 1.0 | % | | | 6.3 | % | | 67 | | | 1.6 | % | | 4 | | | 1.0 | % | | | 6.0 | % | RIO NEGRO | | 66 | | | 1.6 | % | | 7 | | | 1.7 | % | | | 10.6 | % | | 68 | | | 1.7 | % | | 7 | | | 1.7 | % | | | 10.3 | % | SALTA | | �� | 52 | | | 1.3 | % | | 25 | | | 6.1 | % | | | 48.1 | % | | 52 | | | 1.3 | % | | 25 | | | 6.2 | % | | | 48.1 | % | SAN JUAN | | 35 | | | 0.9 | % | | 1 | | | 0.2 | % | | | 2.9 | % | | 36 | | | 0.9 | % | | 1 | | | 0.2 | % | | | 2.8 | % | SAN LUIS | | 44 | | | 1.1 | % | | 1 | | | 0.2 | % | | | 2.3 | % | | 45 | | | 1.1 | % | | 1 | | | 0.2 | % | | | 2.2 | % | SANTA CRUZ | | 38 | | | 0.9 | % | | 2 | | | 0.5 | % | | | 5.3 | % | | 38 | | | 0.9 | % | | 2 | | | 0.5 | % | | | 5.3 | % | SANTA FE | | 431 | | | 10.7 | % | | 116 | | | 28.4 | % | | | 26.9 | % | | 430 | | | 10.6 | % | | 113 | | | 28.0 | % | | | 26.3 | % | SANTIAGO DEL ESTERO | | 51 | | | 1.3 | % | | 1 | | | 0.2 | % | | | 2.0 | % | | 51 | | | 1.3 | % | | 1 | | | 0.2 | % | | | 2.0 | % | TIERRA DEL FUEGO | | 17 | | | 0.4 | % | | 2 | | | 0.5 | % | | | 11.8 | % | | 17 | | | 0.4 | % | | 2 | | | 0.5 | % | | | 11.8 | % | TUCUMAN | | 63 | | | 1.6 | % | | 28 | | | 6.9 | % | | | 44.4 | % | | 63 | | | 1.6 | % | | 28 | | | 6.9 | % | | | 44.4 | % | | | | | | | | | | | | | | | | | TOTAL | | 4,035 | | | 100.0 | % | | 408 | | | 100.0 | % | | | 10.1 | % | | 4,064 | | | 100.0 | % | | 404 | | | 100.0 | % | | | 9.9 | % | | | | | | | | | | | | | |
2830
Approximately 81% of the branches in the Argentine financial system are located outside the City of Buenos Aires; in our case, approximately 94% of our branches are outside the City of Buenos Aires. The ten largest banks, in terms of branches, account for 59%61% of the total amount of the system. We are second to Banco de la Nación Argentina in terms of market share outside the City of Buenos Aires, with a market share of 12%. The following ranking is based on financial institutions with 50 or more branches and with presence in 15 or more provinces. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Market | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of | | | | | | | Market | | | | | | | | | | | | | | | Market | | | Branches | | | Branches | | | | | | | Share of | | | % of | | | | Number of | | | Total | | | Share of | | | in City of | | | in City of | | | Branches in | | | Branches in | | | Branches in | | | | Provinces | | | Number of | | | Branches in | | | Buenos | | | Buenos | | | the Rest of | | | Rest of | | | the Rest of | | | | Served | | | Branches | | | Argentina | | | Aires | | | Aires | | | Country | | | Country | | | Country | | 1 BANCO MACRO S.A. (2) | | | 23 | | | | 408 | | | | 10 | % | | | 24 | | | | 3 | % | | | 384 | | | | 12 | % | | | 94 | % | | | | | | | | | | | | | | | | | | | | | | | | | | 2 BANCO HIPOTECARIO | | | 24 | | | | 50 | | | | 1 | % | | | 4 | | | | 1 | % | | | 46 | | | | 1 | % | | | 92 | % | | | | | | | | | | | | | | | | | | | | | | | | | | 3 BANCO DE LA NACION ARGENTINA (1) | | | 24 | | | | 624 | | | | 15 | % | | | 63 | | | | 8 | % | | | 561 | | | | 17 | % | | | 90 | % | 4 COMPAÑIA FINANCIERA ARGENTINA S.A. | | | 18 | | | | 59 | | | | 1 | % | | | 8 | | | | 1 | % | | | 51 | | | | 2 | % | | | 86 | % | 5 BANCO CREDICOOP COOPERATIVO LIMITADO | | | 20 | | | | 246 | | | | 6 | % | | | 37 | | | | 5 | % | | | 209 | | | | 6 | % | | | 85 | % | 6 BANCO PATAGONIA S.A. | | | 24 | | | | 137 | | | | 3 | % | | | 37 | | | | 5 | % | | | 100 | | | | 3 | % | | | 73 | % | 7 BANCO SANTANDER RIO S.A. | | | 21 | | | | 261 | | | | 6 | % | | | 80 | | | | 10 | % | | | 181 | | | | 6 | % | | | 69 | % | 8 BANCO DE GALICIA Y BUENOS AIRES S.A. | | | 24 | | | | 237 | | | | 6 | % | | | 77 | | | | 10 | % | | | 160 | | | | 5 | % | | | 68 | % | 9 STANDARD BANK ARGENTINA S.A. | | | 18 | | | | 100 | | | | 2 | % | | | 33 | | | | 4 | % | | | 67 | | | | 2 | % | | | 67 | % | 10 BBVA BANCO FRANCES | | | 24 | | | | 242 | | | | 6 | % | | | 82 | | | | 11 | % | | | 160 | | | | 5 | % | | | 66 | % | OTHER | | | 24 | | | | 1,671 | | | | 41 | % | | | 329 | | | | 43 | % | | | 1,342 | | | | 41 | % | | | 78 | % | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 24 | | | | 4,035 | | | | 100.0 | % | | | 774 | | | | 100.0 | % | | | 3,261 | | | | 100.0 | % | | | 81 | % | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Market | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of | | | | | | | Market | | | | | | | | | | | | | | | Market | | | Branches | | | Branches | | | | | | | Share of | | | % of | | | | Number of | | | Total | | | Share of | | | in City of | | | in City of | | | Branches in | | | Branches in | | | Branches | | | | provinces | | | Number of | | | Branches in | | | Buenos | | | Buenos | | | the Rest of | | | Rest of | | | in the Rest | | | | Served | | | Branches | | | Argentina | | | Aires | | | Aires | | | Country | | | Country | | | of Country | | 1 BANCO MACRO S.A. (2) | | | 23 | | | | 404 | | | | 10 | % | | | 24 | | | | 3 | % | | | 380 | | | | 12 | % | | | 94 | % | 2 BANCO DE LA NACION ARGENTINA (1) | | | 24 | | | | 626 | | | | 15 | % | | | 63 | | | | 8 | % | | | 563 | | | | 17 | % | | | 90 | % | 3 BANCO CREDICOOP COOPERATIVO LIMITADO | | | 19 | | | | 250 | | | | 6 | % | | | 40 | | | | 5 | % | | | 210 | | | | 6 | % | | | 84 | % | 4 BANCO PATAGONIA S.A. | | | 24 | | | | 141 | | | | 3 | % | | | 38 | | | | 5 | % | | | 103 | | | | 3 | % | | | 73 | % | 5 STANDARD BANK ARGENTINA S.A. | | | 18 | | | | 99 | | | | 2 | % | | | 32 | | | | 4 | % | | | 67 | | | | 2 | % | | | 68 | % | 6 BANCO DE GALICIA Y BUENOS AIRES S.A. | | | 24 | | | | 240 | | | | 6 | % | | | 78 | | | | 10 | % | | | 162 | | | | 5 | % | | | 68 | % | 7 BBVA BANCO FRANCES | | | 24 | | | | 242 | | | | 6 | % | | | 82 | | | | 10 | % | | | 160 | | | | 5 | % | | | 66 | % | 8 BANCO SANTANDER RIO S.A. | | | 21 | | | | 285 | | | | 7 | % | | | 97 | | | | 12 | % | | | 188 | | | | 6 | % | | | 66 | % | 9 HSBC | | | 19 | | | | 118 | | | | 3 | % | | | 42 | | | | 5 | % | | | 76 | | | | 2 | % | | | 64 | % | 10 CITIBANK | | | 16 | | | | 65 | | | | 2 | % | | | 27 | | | | 3 | % | | | 38 | | | | 1 | % | | | 58 | % | OTHER | | | 24 | | | | 1,594 | | | | 39 | % | | | 260 | | | | 33 | % | | | 1,334 | | | | 41 | % | | | 78 | % | TOTAL | | | 24 | | | | 4,064 | | | | 100.0 | % | | | 783 | | | | 100.0 | % | | | 3,281 | | | | 100.0 | % | | | 81 | % |
| | | Source: Central Bank | | | (1) | | Public sector banks. | | (2) | | Includes the branches of Banco Macro, and Banco del Tucumán.n and Banco Privado. |
29
Argentine Banking Regulationbanking regulation Overview Founded in 1935, the Central Bank is the principal monetary and financial authority in Argentina. It is responsible for maintaining stability in the value of the domestic currency, establishing and implementing monetary policy and regulating the financial sector. It operates pursuant to its charter and the provisions of the Financial Institutions Law. Under the terms of its charter, the Central Bank must operate independently from the Argentine government. Since 1977, banking activities in Argentina have been regulated primarily by the Financial Institutions Law, which empowers the Central Bank to regulate the financial sector. The Central Bank regulates and supervises the Argentine banking system through the Superintendencia de Entidades Financieras y Cambiarias, or the Superintendency of Financial and Exchange Entities, or the Superintendency. The Superintendency is responsible for enforcing Argentina’s banking laws, establishing accounting and financial reporting requirements for the banking sector, monitoring and regulating the lending practices of financial institutions and establishing rules for participation of financial institutions in the foreign exchange market and the issuance of bonds and other securities, among other functions. These The powers of the Central Bank include the authority to fix minimum capital, liquidity and solvency requirements, approve bank mergers, approve certain capital increases and transfers of stock, grant and revoke banking licenses, and to authorize the establishment of branches of foreign financial institutions in Argentina and the extension of financial assistance to financial institutions in cases of temporary liquidity or solvency problems. The Central Bank also establishes different “technical ratios” that must be observed by financial entities with respect to levels of solvency, liquidity, the maximum credits risksthat may be granted per customer and foreign exchange assets and liability positions. In addition, financial entities need the authorization of the Central Bank for the disposition of their assets, such as opening or changing branches or ATMs, acquiring share interests in other financial or non-financial corporations and establishing liens over their assets, among others. As supervisor of the financial system, the Central Bank requires financial institutions to submit information on a daily, monthly, quarterly, semi-annual and annual basis. These reports, which include balance sheets and income statements, information relating to reserve funds, use of deposits, classifications of portfolio quality (including details on principal debtors and any allowances for loan losses), compliance with capital requirements and any other relevant information, allow the Central Bank to monitor the business practices of financial entities. In order to confirm the accuracy of the information provided, the Central Bank is authorized to carry out inspections. If the Central Bank’s rules are not complied with, various sanctions may be imposed by the Superintendency, depending on the level of infringement. These sanctions range from a notice of non-compliance to the imposition of fines or, evenin extreme cases, the suspension or revocation of the financial entity’s operating license. Additionally, non-compliance with certain rules may result in the compulsory filing of specific adequacy or restructuring plans with the Central Bank. These plans must be approved by the Central Bank in order to permit the financial institution to remain in business. 31
The Central Bank fulfills the function of lender of last resort and is allowed to provide financial assistance to financial institutions with liquidity or solvency problems. Banking regulationsregulation and supervision Central Bank supervision Since September 1994, the Central Bank has supervised the Argentine financial entities on a consolidated basis. Such entities must file periodic consolidated financial statements that reflect the operations of head offices or headquarters as well as those of their branches in Argentina and abroad, and of their significant subsidiaries, whether domestic or foreign. Accordingly, requirements in relation to liquidity and solvency, minimum capital, risk concentration and loan loss provisions, among others, should be calculated on a consolidated basis. Permitted activities and investments The Financial Institutions Law governs any individuals and entities that perform habitual financial intermediation and, as such, are part of the financial system, including commercial banks, investment banks, mortgage banks, financial companies, savings and loan companies for residential purposes and credit unions. Except for commercial banks, which are authorized to conduct all financial activities and services notthat are specifically prohibitedestablished by law or by regulations of the Central Bank, the activities that may be carried out by Argentine financial entities are set forth in the Financial Institutions Law and related Central Bank regulations. Commercial banks are allowed to perform any and all financial activities inasmuch as such activities are not forbidden by law. Some of the activities permitted for commercial banks include the ability to (i) receive deposits from the public in both local and foreign currency; (ii) underwrite, acquire, place or negotiate debt securities, including government securities, in both exchange and over-the-counter markets (subject to prior approval by the over-the-counter market;CNV, if applicable); (iii) makegrant and receive loans; (iv) guarantee customers’ debts; (v); conduct transactions in foreign currency;currency exchange transactions; (vi) issue credit cards; (vii) act, subject to certain conditions, as brokers in real estate transactions; (viii) carry out commercial financing transactions; and (ix) act as registrars of mortgage bonds.bonds and (x) act as fiduciary in financial trusts. In addition, pursuant to the Financial Institutions Law and Central Bank Communication A“A” 3086, commercial banks are authorized to operate commercial, industrial, agricultural and other types of companies that do not provide supplemental services to the banking services (as defined by applicable Central Bank regulations) to the extent that the commercial bank’s interest in such companies does not exceed 12.5% of its voting stock or 12.5% of its capital stock. Nonetheless, if the aforementioned limits were to be exceeded, the bank should (i) request Central Bank’s authorization; or (ii) give notice of such situation to the Central Bank, as the case may be. However, even when commercial banks’ interests do not reach such percentages, they are not allowed to operate such companies if (i) such interest allows them to control a majority of votes at a shareholders’ or board of directors’ meeting, or (ii) the Central Bank does not authorize the acquisition. Under Central Bank regulations, the total amount of the investments of a commercial bank in the capital stock of third parties, including interests in Argentine mutual funds, may not exceed 50% of such bank’s regulatory capital or(Responsabilidad Patrimonial Computable, or RPC.“RPC”). In addition, the total amount of a commercial bank’s investments in the following: (i) unlisted stock, excluding interests in companies that provide services that are supplementary to the finance business and interests in state-owned companies that provide public services, (ii) listed stock and interests in mutual funds that do not give rise to minimum capital requirements on the basis of market risk, and (iii) listed stock that does not have a “largely publicly available market price,” taken as a whole, is limited to 15% of such bank’s RPC. To this effect, a given stock’s market price is considered to be “largely publicly available” when daily quotations of relevantsignificant transactions are available, which quotationsand the sale of such stock held by the bank would not be significantly affected by a disposition ofaffect the Bank’s holdings of such stock.stock’s quotation. 30
Operations and activities that banks are not permitted to perform The Financial Institutions Law prohibits commercial banks from: (a) creating liens on their assets without prior approval from the Central Bank, (b) accepting their own shares as security, (c) conducting transactions with their own directors or managers and with companies or persons related thereto under terms that are more favorable than those regularly offered toin transactions with other customers,clients, and (d) carrying out commercial, industrial, agricultural or industrialother activities without prior approval of the Central Bank, except those considered financially related activities under Central Bank regulations. Notwithstanding the foregoing, banks may own shares in other financial institutions with the prior approval of the Central Bank, and in public services companies, if necessary to obtain those services. LIQUIDITY AND SOLVENCY REQUIREMENTSLiquidity and solvency requirements
Legal reserve According to the Financial Institutions Law and Central Bank regulations, financial institutions are required to maintain a legal reserve of 20% of their yearly income plus or minus prior-year adjustments and minus the accumulated loss for the previous year closing period. This reserve can only be used during periods in which a financial institution has incurred losses and has exhausted all other reserves. Non-liquid assets Since February 2004, non-liquid assets (computed on the basis of their closing balance at the end of each month, and net of those assets that are deducted to compute the regulatory capital, such as equity investments in financial institutions and goodwill) plus the financings granted to a financial institution’s related persons (computed on the basis of the highest balance during each month for each customer) cannot exceed 100% of the Argentine regulatory capital of the financial institution, except for certain particular cases in which it may reach up to 150%. 32
Non-liquid assets consist of miscellaneous receivables, bank property and equipment, miscellaneous assets, assets securing obligations, except for swap, futures and derivative transactions, certain intangible assets and equity investments in unlisted companies or listed shares, if the holding exceeds 2.5% of the issuing company’s equity. Non-compliance with the ratio produces an increase in the minimum capital requirements equal to 100% of the excess on the ratio. Differences arising from the fulfillment of court injunctions (“amparos”) ordering the repayment of deposits in their original foreign currency was not computed for this ratio up to December 31, 2008. Minimum capital requirements The Central Bank requires that financial institutions maintain minimum capital amounts measured as of each month’s closing, which are defined as a ratio of the counterparty risk and interest rate risk of the financial institution’s assets. Such requirement should be compared to the basic requirement, which is explained below, taking into account the one with the highest value. The basic requirement varies depending on the type of institution and the jurisdiction in which the relevant institution is registered, from Ps. 10 million to Ps. 25 million for banks, and from Ps. 5 million to Ps. 10 million for other institutions. In addition, financial institutions must comply with a market risk requirement that is calculated on a daily basis. Financial institutions (together with their branches in Argentina and abroad) must comply with minimum capital requirements both on an individual and a consolidated basis. Basic minimum capital Pursuant to Central Bank Communication “A” 5183, dated February 16, 2011 the Central Bank classifies the minimum capital requirements for financial entities by type and category. The categories were established in accordance with the jurisdiction in which the respective financial entity is located: | | | | | | | Category | | Jurisdiction | | Banks | | Other Entities (*) | I | | City of Buenos Aires. | | Ps.25 million | | Ps.10 million | | | | | | | | II | | Comodoro Rivadavia — Rada Tilli, Rawson — Trelew, Greater Córdoba, Río Cuarto, Greater Buenos Aires(1), Bahía Blanca — Cerri, Mar del Plata — Batán, San Nicolás — Villa Constitución, Greater Mendoza, Neuquén — Plottier, Viedma — Carmen de Patagones — Greater Rosario, Biedma, General San Martín, San Justo, Tercero Arriba, Campana, Chivilcoy, Junín, Necochea, Olavarría, Pergamino, Pilar, Tandil, Tres Arroyos, Zárate, Bariloche, Castellanos, General López, San Martín, Santa Cruz Province and Tierra del Fuego Province | | Ps.14 million | | Ps.8 million | | | | | | | | III | | Cities of Greater Catamarca, Greater Resistencia, Greater Corrientes, Concordia, Jujuy - Palpalá, La Rioja, Posadas, Salta, Greater San Juán, San Luis — El Chorrillo, Santiago del Estero - La Banda, Greater Tucumán — Tafí Viejo, Colón, Federación, Gualeguay, Gualeguaychú, Paraná, Uruguay, General Pedernera, the Province of La Pampa and the remaining towns of the provinces of Buenos Aires(2), Córdoba(3), Chubut, Mendoza, Neuquén, Río Negro and Santa Fé(4) | | Ps.12.5 million | | Ps.6.5 million | | | | | | | | IV | | The rest of Argentina. | | Ps.10 million | | Ps.5 million |
| | | (*) | | Except credit entities. | | (1) | | Excluding the City of Buenos Aires. | | (2) | | Excluding Marcos Paz, Presidente Perón and San Vicente departments. | | (3) | | Excluding Cruz del Eje department. | | (4) | | Excluding Vera department. |
Notwithstanding the foregoing, the basic minimum capital requirement for banks that were operating on June 30, 2005 cannot exceed Ps.15 million. Description of Argentine Tier 1 and Tier 2 Capitalcapital regulations Argentine financial institutions must comply with guidelines similar to those adopted by the Basel Committee on Banking Regulations and Supervisory Practices, as amended in 1995 (the “Basel Rules”). In certain respects, however, Argentine banking regulations require higher ratios than those set forth under the Basel Rules. The Central Bank takes into consideration a financial institution’s regulatory capital (Responsabilidad Patrimonial Computable, or RPC)“RPC”) in order to determine compliance with capital requirements. RPC consists of Tier 1 capital (Basic Net Worth) and Tier 2 capital (Complementary Net Worth) minus certain deducted items. Tier 1 capital consists of (i) capital stock as defined by Argentine Business Companies Law, No. 19,550,(ii) irrevocable contributions on account of future capital increases, (iii) adjustments to shareholders’ equity, disclosed(iv) savings reserves, unappropriated(v) retained earnings, non-realized valuation differences,and (vi) subordinated debt securities thatand their reserve funds, provided they meet certain conditions and requirements and, subsequent to December 31, 2012, reserve funds of up to 10% of the issuance of the related subordinated debt securities.requirements. In the case of consolidation, minority interests are also included. 33
Tier 2 capital consists of (i) liabilities (including debt securitiessecurities) contractually subordinated to all other liabilities not computable as Tier 1 capital, with an average initial maturity of at least five years and issued under certain conditions and requirements, plus (ii) amounts of reserve funds applied to the payment of interest on subordinated debt securities before December 31, 2012 and as from such date also those amounts which have not been used, provided they exceed certain limits, plus or minus (iii) with respect to results at prior fiscal years, 100% of net earnings or losses recorded through the most recent audited quarterly financial statements in the event the yearly financials are not audited, plus or minus (iv) 100% of net earnings or losses for the current year as of the date of the most recent audited quarterly financial statement, plus or minus (v) 50% of profits or 100% of losses, from the most recent audited quarterly or annual financial statements, minus (vi) 100% of losses not shown in the financial statements, arising from quantification of any facts and circumstances reported by the auditor and plus (vii) 50% of loan loss provisions on the loan portfolio classified as “normal”“in normal situation” or “normal performance.”“performing”. Items to be deducted include, among others: (a) demand deposits maintained with foreign financial institutions that are not rated as “investment grade,”grade”; (b) negotiable instrumentssecurities not held by the relevant financial institutions, except where the Central Bank (CRYL), Caja de Valores S.A., Clearstream, Euroclear, Depository Trust Company or Deutsche Bank, New York, are in charge of their registration or custody,custody; (c) securities issued by foreign governments whose risk rating is lower than that assigned to Argentine government securities,securities; (d) subordinated debt instruments issued by other financial institutions acquired prior to September 30, 2006; (e) equity interests in other Argentine or foreign financial institutions,institutions; (f) equity interests relating to the application of tax deferrals until February 19, 1999, or after such date provided they relate to irrevocable capital contributions made until such date, as from the month following expiration of the legal term of unavailability or loss of the tax benefits, as set forth in applicable regulations; (g) shareholders; (h) real property added to the assets of the financial entity and with respect to which the title deed is not duly recorded with the pertinent Argentine real property registry, except where such assets shall have been acquired in a court-ordered auction sale, (h) goodwill,sale; (i) goodwill; (j) organization and development costs,costs; (k) items pending allocation, debtor balances and (j)others; (l) certain assets, as required by the Superintendency resulting from differences between accounting registrations and the real value of the assets; (m) any deficiency relating to the minimum loan loss provisions required by the SuperintendencySuperintendency; (n) equity interests in companies that have (i) financial assistance through leasing or factoring agreements or (ii) transitory equity acquisitions in other companies in order to further their development to the extent the ultimate purpose is selling such interest after development is accomplished; (o) excess in the granting of Financial Institutions.asset-backed guaranties, according to Central Bank’s regulations; and (p) the highest balance of that month’s financial assistance, when certain conditions are met. Requirements for subordinated debt to be computed as Tier 1 Capital In general, debt securities can account for up to 25%20% of a financial institution’s Tier 1 capital. This percentage decreases over timecapital up to December 31, 2012 and to 15% byfrom January 2013. In order for debt securities to be computed as Tier 1 capital, the issuance must previously be approved by: (i) the shareholders;shareholders, (ii) the Superintendency of Financial Institutions;and, (iii) the CNV and (iv) a stock exchange in order for the debt securities to be admitted for listing.or over-the-counter market (whether local or foreign). In addition, debt securities must have certain characteristics. Tier 1 capital must have a maturity of at least thirty years, and they may permit optional redemption by the issuer only if:if, (i) at least five years have elapsed since issuance, (ii) prior authorization of the Superintendency of Financial Institutions has been obtained, and (iii) funds used for redemption are raised through the issuance of capital stock or other Tier 1 capital debt securities.capital. 31
Interest on Tier 1 capital debt securities may only accrue and be payable to the extent the interest does not exceed available distributable amounts based on the prior year’s audited financial statements. Accordingly, interest payments are non-cumulative such that if an interest payment is not made in full as a result of such limitation, the unpaid interest shall not accrue or be due and payable at any time. The available distributable amounts under Tier 1 capital debt instruments for an Argentine financial institution isare determined by calculating the amount of its unappropriated retained earnings minus (i) required legal and statutory reserves; (ii) asset valuation adjustments as determined and notified by the Superintendency, of Financial Institutions, whether or not agreed to by such financial institution, and the asset valuation adjustments indicated by its external auditor, in each case to the extent not recorded in its respective financial statements; and (iii) any amounts resulting from allowances permitted by the Superintendency, of Financial Institutions, including adjustments arising from the failure to put into effect an agreed upon compliance plan. In order to make interest payments under Tier 1 capital debt instruments, the shareholders of the financial institution must, at their annual ordinary meeting that considers the allocation of the results available for distribution, approve the creation of a special reserve for such payments. TheAccrued interest shall not exceed the amount of thesuch reserve, may contemplate additional payments as a result ofexcept for changes in exchange rates (for instruments issued in foreign currencies) or variable rates (in the case of instruments with floating rates). The creation of the reserve and any adjustments to the reserve amount must be approved by the Superintendency of Financial Institutions.Superintendency. Ordinary shareholders’ meetings to consider the allocation of results available for distribution must be held within four months of the end of each fiscal year. No prior approval from the Superintendency is required in order to make interest payments under Tier 1 capital debt instruments to the extent that the reserve fund has been properly created and the Superintendency has approved such reserve according to the preceding paragraph. Non-payment of principal or interest under Tier 1 capital debt instruments shall not be considered under applicable Central Bank Rules as a cause for forfeiture of banking license if: (i) all of the other non-subordinated obligations are paid when due; (ii) no cash dividends are distributed to shareholders; and (iii) no fees are paid to directors and members of the supervisory committee, except for certain cases. Only one interest rate step-up is permitted during the life of the securities and it may occur only after ten years have elapsed since issuance.issuance Tier 1 capital debt securities may not be accelerated, nor have cross accelerationcross-acceleration provisions, except upon bankruptcy. 34
In the event of bankruptcy, Tier 1 capital debt securities rank before capital stock but after all senior debt and Tier 2 capital obligations (all Tier 1 capital debt securities rankpari passu amongstamong themselves). Tier 1 subordinated instruments cannot be secured or guaranteed by the issuer or subsidiaries affecting the above described ranking of priority rights in payments. If at any time Tier 1 capital debt securities exceed the established percentage computable as Tier 1 capital, or if it is established that unpaid interest thereon will be cumulative, or when their residual maturity is less than ten years, then thereafter they will be computed as Tier 2 capital. Argentine financial institutions cannot acquire Tier 1 capital debt securities issued by other Argentine financial institutions, nor can they purchase for subsequent resale their own Tier 1 capital debt securities. In accordance with current Central Bank regulations, financial institutions would not be permitted to pay interest or make other payments on Tier 1 capital debt securities in the event that, as provided in Communications “A” 4589 and “A” 45915072 of the Central Bank or any successor regulations thereto, (a) they are subject to a liquidation procedure or the mandatory transfer of their assets by the Central Bank in accordance with Sections 34 or 35bisof the Financial Institutions Law or successors thereto; (b) they are receiving financial assistance from the Central Bank (except liquidity assistance under the pesification rules pursuant to Decree No. 739/2003); (c) they are not in compliance with or have failed to comply on a timely basis with our reporting obligations to the Central Bank; or (d)(c) they are not in compliance with minimum capital requirements (both on an individual and consolidated basis) or with minimum cash reserves (on average). Requirements for subordinated debt to be computed as Tier 2 Capital Debt securities issued by a financial institution and its corresponding reserves computed as Tier 2 capital can account for up to 50% of such financial institution’s Tier 1 capital. Five years before the maturity date of Tier 2 capital debt securities, the amount to be computed as Tier 2 capital must be reduced by 20% of the outstanding principal amount (nominal issued amount minus the paid amortizations) per year. Notwithstanding the requirements described above, the amount to be computed as Tier 2 capital for each of those years cannot be higher than the amount equal to applying such percentage to the outstanding amount at the end of each such year. In order for debt securities to be computed as Tier 2 capital, the issuance of Tier 2 capital debt securities must be approved by: (i) the shareholders, (ii) the Superintendency, and when applicable, (iii) the CNV and (iv) a stock exchange, if the debt securities are to be admitted for listing. Central Bank regulations require Tier 2 capital debt securities to have an average life of no less than 5 years. If the securities allow optional redemption by the issuer, such redemption is only effective (i) with the prior authorization of the Superintendency, and (ii) if the RPC, after redemption, is equal or higher than the minimum capital required by the Central Bank. Interest payments under Tier 2 capital debt securities can be cumulative, and the interest coupon may be linked to the income of the financial entity. Tier 2 capital debt securities cannot be accelerated, nor have cross-acceleration provisions, except upon the bankruptcy of the issuer. In the event of bankruptcy, Tier 2 capital debt securities rank senior to capital stock and Tier 1 capital debt securities, but junior to all senior debt. In addition, distributions among holders of subordinated securities will be done pro rata based upon their acknowledged claims. Non-payment of principal or interest under Tier 2 capital debt securities shall not be considered under applicable Central Bank Rules as a cause for forfeiture of the banking license if (i) within one year from the original due date of such unpaid obligations, the bank and the noteholders agree on the manner in which payments of the amounts due in respect of the debt securities shall be made; (ii) all of the other non-subordinated obligations are paid when due; (iii) no cash dividends are distributed to the shareholders; (iv) no fees are paid to directors and members of the supervisory committee, except for those cases in which they carry out executive tasks; and (v) in case they have interest coupons related to the bank’s results, the bank does not have distributable results, calculated in accordance with the general procedure set forth by the applicable Central Bank regulations. Non-compliance by the bank with these requirements shall not result in any Central Bank liability. Argentine financial institutions cannot acquire Tier 2 capital debt securities issued by other Argentine financial institutions, nor can they purchase for subsequent resale their own Tier 2 capital debt securities. Other Tier 1 capital debt securities may be computed as Tier 2 capital even if those securities do not comply with all the requirements set forth in the requirements for Tier 2 capital described above: (i) if they allow unpaid interest to be cumulative, (ii) if their residual maturity is less than ten years, or (iii) if outstanding Tier 1 capital debt securities exceed the established percentage computable as Tier 1 capital, in which case the excess amount of such debt securities should be computed as Tier 2. 35
Counterparty risk The capital requirement for counterparty risk is defined as: Cer = k* [a* Ais + c* Fsp + r* (Vrf + Vrani)] + INC + IPIP. The required capital to assets-at-risk ratio is 10% (“a”) for fixed assets (Ais)(“Ais”) and 8% (“r”) for loans (“Vrf”), other claims from financial intermediation and other financings.financing (“Vrani”). The same ratio (“c”) is applied to claims on the public sectorpublic-sector loans (Fsp)(“Fsp”). The “INC” variable refers to incremental minimum capital requirements originated in excesses in other technical ratios (fixed assets, credit risk diversification and rating and limitations on transactions with related clients). The variable IP“IP” refers to the incremental originated in the general limit extension of the negative foreign currency net global position. Each type of asset is weighted according to the level of risk assumed to be associated with it. In broad terms, the weights assigned to the different types of assets are: | | | | | Type of Asset | | Weighting | | Cash and cash equivalents | | | 0-20 | % | Government Bonds | | | | | With market risk capital requirements and Central Bank monetary control instruments including those registered as “available of sale” and “investment accounts” | | | 0 | % | Other domestic bonds (without Central Government collateral) | | | 100 | % | OECD Central Government bonds—rated AA or higher | | | 20 | % | Loans | | | | | To the non-financial private sector
| | | | | With preferred collateral under the form of: | | | | | Cash, timeterm deposit certificates issued by the creditor institutionentity and given as security | | | 0 | % | A guarantee by Reciprocal Guarantee Companies authorized by the Central Bank, export credit insurance, documentary credits | | | 50 | % | Mortgages | | | 50%-100 | % | Pledges | | | 50%-100 | % | To the non-financial public sector | | | 100 | % | To the financial sector | | | | | Public financial entitiesinstitutions with the collection of federal taxes as collateral | | | 50 | % | To foreign financial institutions or to financial institutions backed by them (rated AA or higher or investment grade)higher) | | | 0%-20 | % | Other credits from financial intermediation | | | 0%-100 | % | Assets subject to financial leasing | | | 50%-100 | % | Other assets | | | 0%-100 | % | Guarantees and contingent liabilities | | | 0%-100 | % |
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Minimum capital requirements also depend on the CAMELBIG ratingsrating (1 strongest, 5 weakest) assigned by the Superintendence,Superintendency, which also determines the “k” value. This rating system complies with international standards and provides a broad definition of the performance, risks and perspectives of financial entities. Financial entities have to adjust their capital requirements according to the following “k” factors: | | | | | CAMELBIG Rating | | K Factor | | 1 | | | 0.97 | | 2 | | | 1.00 | | 3 | | | 1.05 | | 4 | | | 1.10 | | 5 | | | 1.15 | |
Excluded items include: (a) securities granted for the benefit of the Central Bank for direct obligations; (b) deductible assets pursuant to RPC regulations; and (c) finance and securities granted by branches or local subsidiaries of foreign financial entities by order and on account of their headquarters or foreign branches or the foreign controlling entity, to the extent (i) the foreign entity has an investment grade rating, (ii) the foreign entity is subject to regulations that entail consolidated fiscalization, (iii) in case of finance operations, they shall be repaid by the local branch or subsidiary exclusively with funds received from the aforementioned foreign intermediaries and (iv), in case of guarantees granted locally, they are in turn guaranteed by their headquarters or foreign branches or the foreign controlling entity and foreclosure on such guaranty may be carried out immediately and at the sole requirement of the local entity. Interest rate risk In addition to counterpart and market risk requirements, financialFinancial entities must also comply with minimum capital requirements regarding interest rate risk. These minimum capital requirements capture the risk arising from the different sensitivity of assets and liabilities adversely affected by adverse or unexpected changes in interest rates (“duration” approach)duration approach”). This effect is immediately evident in the case of secondary markets,market, as a change in the interest rate leads to a change in the price of such assets, and therefore in the entity’s balance sheet. This regulation coversgoverns all the assets and liabilities derived from financial intermediation not subject to the minimum capital requirements covering market risk (including securities held inat investment accounts).
Minimum capital requirements measure the value at risk (“VaR”) or maximum potential loss due to interest rate risk rate increases, considering a 3 month3-month horizon and with a confidence level of 99%. 36
WhenIn case of transactions with fixed interest rates, when calculating the requirements, the cash flows of the financial entity’s transactions are assigned to different time bands taking into account their maturity. Financial entities with 1-3 CAMELBIG ratings may treat 50% of sight deposits as long-term maturities (in the case of financial entities with a 1 or 2 CAMELBIG rating, the entity may choose the assigned maturity, whereas in the case of financial entities with a 3 CAMELBIG rating, the assigned maturity cannot exceed 3 years). All entities may assign to the “zero” time band (i) 100% of the contingent credit lines with a fixed or variable interest rate based on a foreign indicator and usable at the entity’s mere requirement (without need for prior notice), irrevocably granted by foreign banks with an international “A” credit rating and that do not control, or are controlled by, the local entity, or by local banks with a 1 or 2 CAMELBIG rating; and (ii) 100% of the contingent credit lines irrevocably granted to other financial entities, whether at a fixed or variable rate based on a foreign indicator, and usable at the entity’s mere requirement (without need for prior notice). ContractsTransactions with variable interest rates based onrelated to a foreign index are treated as if they had fixed interest rates. The risk arising from liability contractsliabilities with variable rates based onrelated to a domestic index areis considered up to the first rate adjustment date. Financings to the non-financial public sector are treated in the same way as liabilities with variable rates related to a domestic index, provided that any such financings adjusted by CER shall be assigned to the time band relating to the first month. The remaining assets shall be assigned on an individual basis or grouped by kind of financing (i.e., mortgage loans, loans secured with a pledge, personal loans, etc.), as determined by each entity.
Market risk Minimum capital requirements for market risks are added to previously measuredprevious requirements. Minimum capital requirements are computed as a function of the market risk of financial entities’ portfolios, measured as their VaR. The regulation covers onlyincludes those assets usually traded on a regular basis in open markets and excludes those assets inheld at investment accounts, (the latterwhich must meet counterpartcounterparty and interest rate risk minimum capital requirements).requirements. There are five categories of assets. Domestic assets are divided into equity and public bonds/Central Bank’s debt instruments, the latter being classified intoin two areascategories according to whether their modified duration is less than or more than 2.5.2.5 years. Foreign equity and foreign bonds make up another two categories that are classified according to their duration as well, the latter also comprising two areas,separate categories, defined as for domestic assets. The fifth category is comprised of foreign exchange positions, differentiated according to currency involved. The overallOverall capital requirementrequirements in relation to market risk isare the sum of the five amounts of capital necessary to cover the risks arising from each category. Minimum capital requirements measure the market risk by calculating the VaR with a confidence level of 99%.
Market risk minimum capital requirements must be met daily. Information must be reported to the Central Bank on a monthly basis. As from May 2003, the U.S. dollar has been included as a foreign currency risk factor for the calculation of the market risk requirement, considering all assets and liabilities in that currency. 33
Bonds held in portfolio by banks that were originally subject to market risk requirements, which at present do not quote regularly, are not subject to these requirements. As long as the Central Bank does not publish the corresponding volatility, they must be treated as assets without quotation.
Temporary regulations 1. Minimum capital requirements for counterpart risk have been temporarily reduced (via “Alpha1“Alpha coefficient”) for non-financial public sector financing granted before May 31, 2003. Minimum capital requirements for interest rate risk have also been temporarily diminishedreduced (via “Alpha2 coefficient”). The reduction coefficients to be applied converge to the unit according to an established schedule. These allowances have been introduced in order to reduce the impact on minimum capital requirements of those components that;that: (i) showed the biggest growth as a consequence of the 2002 crisis and (ii) are not present in international standards.
| | | | | | | | | | | | | | | | | | | Alpha1 (applied | | Alpha2 (applied | | | | | | | | | to public sector | | to interest | | | | | | | Period | | financing) | | rate risk) | | | Alpha1 (applied to public sector financing) | | Alpha2 (applied to interest rate risk) | | January/December 2004 | | 0.05 | | 0.20 | | | 0.05 | | 0.20 | | January/December 2005 | | 0.15 | | 0.40 | | | 0.15 | | 0.40 | | January/December 2006 | | 0.30 | | 0.70 | | | 0.30 | | 0.70 | | January/December 2007 | | 0.50 | | 1.00 | | | 0.50 | | 1.00 | | January/December 2008 | | 0.75 | | 1.00 | | | 0.75 | | 1.00 | | As from January 2009 | | 1.00 | | 1.00 | | | 1.00 | | 1.00 | |
2. The capitalization derived from the difference between the equivalent in pesos as if the judicial deposits were recorded in their original currency and the book value of those deposits in foreign currency that on January 5, 2002 were affected by Law No. 25,561 and Decree 214/02, will bewas a deductible item for the computing of the Regulatory Capital, until June 2009.
Consequences of a failure to meet minimum capital requirements In the event of non-compliance with capital requirements by an existing financial institution, Central Bank Communication “A” 3171 provides the following: (i) non-compliance reported by the institutions : the institution must meet the required capital no later than in the second month after non-compliance was incurred or submit a restructuring plan within 30 calendar days following the last day of the month in which such non-compliance occurred; and(i) | | non-compliance reported by the institutions: the institution must meet the required capital no later than in the second month after non-compliance was incurred or submit a restructuring plan within 30 calendar days following the last day of the month in which such non-compliance occurred. |
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(ii) non-compliance detected by the Superintendency: the institution must file its defense within 30 calendar days after being served notice by the Superintendency. If no defense is filed, or if the defense is disallowed, the non-compliance will be deemed to be final, and the procedure described in item (i) will apply.
| | In addition, non-compliance with minimum capital requirements will entail a number of consequences for the financial institution, including prohibition from opening branches in Argentina or in other countries, establishing representative offices abroad, or owning equity in foreign financial institutions, as well as a prohibition from paying cash dividends. Also, the Superintendency may appoint a delegate, who shall have the powers set forth by the Financial Institutions Law. |
(ii) | | non-compliance detected by the Superintendency: the institution must file its defense within 30 calendar days after being served notice by the Superintendency. If no defense is filed, or if the defense is disallowed, the non-compliance will be deemed to be final, and the procedure described in item (i) will apply. |
Requirements applicable to dividend distribution The Central Bank has imposed restrictions on the payment of dividends, substantially limiting the ability of financial institutions to distribute such dividends without its prior consent. By means of Communication “A” 5072, the Central Bank amended and restated its regulations regarding dividend distribution by financial institutions. According to such regulation, the Superintendency will review the ability of a bank to distribute dividends upon the bank’s request for its approval. The request must be filed within 30 business days prior to the shareholders’ meeting that will approve the institution’s annual financial statements. The Superintendency will authorize the distribution of dividends when none of the following circumstances are verified during the month preceding the request: (i) | | the financial institution is subject to a liquidation procedure or the mandatory transfer of assets by the Central Bank in accordance with section 34 or 35bisof the Financial Institutions Law; |
(ii) | | the institution is receiving financial assistance from the Central Bank; |
(iii) | | the institution is not in compliance or has failed to comply on a timely basis with its reporting obligations to the Central Bank; or |
(iv) | | the institution is not in compliance with minimum capital requirements (both on an individual and consolidated basis and excluding any individual franchise granted by the Superintendency) and with minimum cash reserves (on average), whether in pesos, foreign currency or securities issued by the public sector. |
Any distribution of dividends will be authorized only to the extent the financial institution including prohibition from opening branchescomplies with the minimum capital and minimum cash requirements calculated considering the proposed distribution and any applicable adjustment established by the regulations in Argentina or in other countries, establishing representative offices abroad, or owning equity in foreign financial institutions, as well as a prohibition from paying cash dividends.force. Operational Riskrisk The regulation on operational risk (OR)(“OR”) recognizes the management of OR as a comprehensive practice, separated from that of other risks given its importance. OR is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The definition includes legal risk but excludes strategic and reputational risk. Financial entitiesinstitutions must establish a system for the management of OR that includes policies, processes, procedures and the structure for their adequate management. Seven OR event types are defined, according to internationally accepted criteria: | • | | internal fraud, | | | • | | external fraud, | | | • | | employment practices and workplace safety, | | | • | | clients, products and business practices, | | | • | | damage to physical assets, | | | • | | business disruption and system failures, and | | | • | | execution, delivery and process management. |
internal fraud; employment practices and workplace safety; clients, products and business practices; damage to physical assets; business disruption and system failures, and execution, delivery and process management. A solid system for risk management must have a clear assignment of responsibilities inwithin the organization of financial entities. Thus, the regulation describes the roles of each level of the organization for the management of OR (such as the OR (Boardroles of the Board of Directors, and senior management — or similar- and the business units of the Bank)financial institution). 38
An “OR unit” is required, adjusted to the Bank’sfinancial institutions’ size and sophistication and the nature and complexity of its products and processes, and the extent of the transaction. For small institutions, this unit may even consist of a single person. This unit may functionally respond to the senior management (or similar) or a functional level with risk management decision capacity that reports to that senior management. An effective risk management will contribute to prevent future losses derived from operational events. Consequently, financial entities must manage the inherent OR in their products, activities, processes and systems. The OR management process comprises: | a) | | Identification and assessment: the identification process should consider both internal and external factors that could adversely affect the development of the processes and projections done according to the business strategies defined by the Bank.a) Identification and assessment: the identification process should consider both internal and external factors that could adversely affect the development of the processes and projections done according to the business strategies defined by the financial institution. Financial entities should use internal data, establishing a process to register frequency, severity, categories and other relevant aspects of the OR loss events. This should be complemented with other tools, such as self-risk assessments, risk mapping and key risk indicators. |
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| b) | | b) Monitoring: an effective monitoring process is required, for quickly detecting and correcting deficiencies in the policies, processes and procedures for managing OR. In addition to monitoring operational loss events, banks should identify forward-looking indicators that enable them to act upon these risks appropriately. |
| c) | | c) Control and mitigation: financial entities must have an appropriate control system for ensuring compliance with a documented set of internal policies, which involves periodic reviews (at least annually) of control strategies and risk mitigation, and should adjust them if necessary. |
The schedule for the complete implementation of the OR management system ended on December 2009.
The Central Bank has not established minimum capital requirements for operational risk yet. However, there is a proposed schedule for its implementation.
The determination of minimum capital requirements for operational risk complies with Basel II Accord and it enables entities to calculate the aforementioned requirements by applying basic or standardized approaches to calculation. The schedule for the complete implementation of the OR management system ended on December 2009. The Central Bank has not established minimum capital requirements for operational risk yet. Minimum cash reserve requirements The minimum cash reserve requirement requires that a financial institution keep a portion of its deposits or obligations readily available and not allocated to lending transactions. Minimum cash requirements are applicable to demand and time deposits and other liabilities arising from financial intermediation denominated in pesos, and foreign currency, (includingor government and private securities),corporate securities, and any unused balances of advances in checking accounts under formal agreements not containing any clauses that permit the Bankbank to unilaterallydiscretionally and at its sole discretionunilaterally revoke the possibility of using such balances. Minimum cash reserve obligations exclude amounts owed (i) to the Central Bank, (ii) to domestic financial institutions, (iii) to foreign banks (including their head offices, entities controlling domestic institutions and their branches) pursuant to facilities financing, in connection with foreign trade transactions,financing facilities, (iv) cash purchases pending settlement and forward purchases, (v) cash sales pending settlement and forward sales (whether or not related to repurchase agreements), (vi) overseas correspondent banking operations and (vii) demand obligations for money orders and transfers from abroad pending settlement, and for overseas correspondent banking operations.to the extent they do not exceed a 72 business hour term as from their deposit. The liabilities subject to these requirements are computed on the basis of the effective principal amount of the transactions, excluding interest accrued, past due, or to become due on the aforementioned liabilities, provided they were not credited to the account of, or made available to, third parties, and, in case of time deposits with a CER-adjustment provision,where available, the amount accruing upon the adjustment rate known as CER(CER) is applied. The basis on which the minimum cash reserve requirement is applied oncalculated is the monthly average of the daily balances of the aforementioned liabilities at the end of each day during each calendar month, except for the period ranging from December of a year to February of the next, period in which it shall be applied on a quarterly average. Such requirement shall be complied with on a separate basis for each currency in which the liabilities are denominated. 39
The table below shows the percentage rates that should be applied to determine the required minimum cash reserve requirement: | | | | | | | | | | | | | | | | | | | Rate (%) | | | Rate | | Rate (%) | | | | Rate (%) | | (Foreign | | | (%) | | (foreign | | Item | | (pesos) | | Currency) | | | (pesos) | | currency) | | 1-Checking account deposits | | 19 | | — | | | 19 | | — | | 2-Savings account deposits | | 19 | | 20 | | | 3-Legal custody accounts, special accounts for savings clubs, “Unemployment Fund for Construction Industry Workers”, “Salary payment,” special checking accounts for legal entities and social security savings accounts | | 19 | | 20 | | | 2-Savings account, basic account, and free universal account | | | 19 | | 20 | | 3-Legal custody accounts, special accounts for savings clubs, “Unemployment Fund for Construction Industry Workers” (Fondo de Desempleo para los trabajadores de la Industria de la Construcción) and “Salary payment,” special checking accounts for legal entities and social security savings accounts | | | 19 | | 20 | | 4-Other demand deposits and liabilities, pension and social security benefits credited by ANSES (Government Social Security Agency) pending collection and immobilized reserve funds for liabilities covered by these regulations | | 19 | | 20 | | | 19 | | 20 | | 5-Unused balances of advances in checking accounts under executed overdraft agreements | | 19 | | — | | | 19 | | — | | 6-Deposits in checking accounts of non-bank financial institutions, computed for purposes of meeting their required minimum cash reserve | | 100 | | 100 | | | 100 | | — | | 7-Time deposits, liabilities under acceptances, repurchase agreements (including responsibilities for sale or transfer of credits to agents different from financial institutions), stock-exchange repos (cautions and stock exchange passive repos), constant term investments, with an option for early termination or for renewal for a specified term and variable income, and other fixed-term liabilities, except rescheduled deposits included in the following items 11 and 12 and 13 and 15 of this table: | | | 7-Time deposits, liabilities under acceptances, repurchase agreements (including responsibilities for sale or transfer of credits to agents different from financial institutions), stock-exchange repos (cautions and stock exchange passive repos), constant-term investments, with an option for early termination or for renewal for a specified term and variable income, and other fixed-term liabilities, except rescheduled deposits included in the following items 11, 12, 13 and 15 of this table: | | | (i) Up to 29 days | | 14 | | 20 | | | 14 | | 20 | | (ii) From 30 days to 59 days | | 11 | | 15 | | | 11 | | 15 | | (iii) From 60 days to 89 days | | 7 | | 10 | | | 7 | | 10 | | (iv) From 90 days to 179 days | | 2 | | 5 | | | 2 | | 5 | | (v) From 180 days to 365 days | | — | | 2 | | | (v) From 180 days to 365 | | | — | | 2 | | (vi) More than 365 days | | — | | — | | | — | | — | | 8-Liabilities due to foreign facilities (not executed by means of time deposits or debt securities) | | — | | — | | | 8-Liabilities owed due to foreign facilities (not executed by means of time deposits or debt securities) | | | — | | — | | 9-Securities (including Negotiable Obligations) | | | a- Debt issued from 01/01/02, including restructured liabilities | | — | | — | | | (i) Up to 29 days | | 14 | | 20 | | | 14 | | 20 | | (ii) From 30 days to 59 days | | 11 | | 15 | | | 11 | | 15 | | (iii) From 60 days to 89 days | | 7 | | 10 | | | 7 | | 10 | | (iv) From 90 days to 179 days | | 2 | | 5 | | | 2 | | 5 | | (v) From 180 days to 365 days | | — | | 2 | | | — | | 2 | | (vi) More than 365 days | | — | | — | | | — | | — | | b- Others | | — | | — | | | — | | — | | 10-Liabilities owing to the Trust Fund for Assistance to Financial and Insurance Institutions | | — | | — | | | — | | 11-Demand and time deposits made upon a court order with funds arising from cases pending before the court, and the related immobilized balances | | 10 | | 10 | | | 10 | | 10 | | 12-Deposits that constitute assets of a mutual fund | | 19 | | 20 | | | 12- Deposits as assets of a mutual fund | | | 19 | | 20 | | 13-Special deposits related to inflows of funds. Decree 616/2005 | | — | | 100 | | | — | | 100 | | 14-Deposits and other liabilities in pesos (excluding the “Unemployment Fund for Construction Industry Workers”) which return is higher than the 15% of BADLAR rates average, corresponding to the preceding month | | 100 | | — | | | 15-Time deposits in nominative, non-transferable peso-denominated certificates, belonging to public sector holders, with the right to demand early withdrawal in less than 30 days from its setting up | | 16 | | — | | | 14-Deposits and other liabilities in pesos (excluding the “Unemployment Fund for Construction Industry Workers” (Fondo de Desempleo para los trabajadores de la Industria de la Construcción)) which return is higher than 15% of BADLAR rates average, corresponding to the preceding month | | | 100 | | — | | 15-Time deposits in nominative, non-transferable peso-denominated certificates, belonging to public sector holders, with the right to demand early withdrawal in less than 30 days from its setting up. | | | 16 | | — | |
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In addition to the above mentionedabovementioned requirements, the following requirements must be observed: 100% reserve for any defect in the application of resources in foreign currency for theany given month in respectshall be applied for an amount equal to which the calculation of the minimum cash requirement is made. See “Information onof the Bank—The Argentine Banking System— Foreign Currency Lending Capacity”.corresponding currency for such month. The minimum cash requirementreserve must be set up in the same currency to which the requirement applies, and eligible items include the following: | | | (i) | | Cash in(in treasury, cash in custody at other financial institutions and cash in transit and value carriers.carriers). |
| (ii) | | Accounts maintained by financial institutions with the Central Bank in pesos. |
| (iii) | | Accounts of minimum cash maintained by financial institutions with the Central Bank in U.S. dollars, or other foreign currency. |
| (iv) | | Special guarantee accounts for the benefit of electronic clearing houses and to cover settlement of credit card and ATM transactions. |
| (v) | | Checking accounts maintained by non-bank financial institutions with commercial banks for the purpose of meeting the minimum reserve requirement. |
| (vi) | | Special guarantee accounts maintained with the Central Bank for transactions involving “cheque cancelatorio” (a check similar to a cashier’s check that may be purchased from a bank to pay a third party). social security payments by the ANSES. |
| (vii) | | Special accounts maintained withMinimum cash sub-account 60, authorized in the Registration and Settlement Central Bank opened by the ANSES (Argentine Social Security Administration). | | (viii) | | Special accounts maintained by financial institutions with the for Public Debt and Financial Trusts — CRYL (“Central Bank inde Registro y Liquidación de Pasivos Públicos y Fideicomisos Financieros — CRYL”) for public securities and securities issued by the Central Bank.Bank, at their market value. |
These eligible items are subject to review by the Central Bank and may be changed in the future. The Central Bank makes interest payments on reserve requirements up to the legal cash requirement level established for term transactions. Reserves in excess of that requirement will not be remunerated. Compliance on public bonds and time deposits must be done with holdings marked to market and of the same type, only in terms of monthly status. Holdings must be deposited on special accounts at the Central Bank. Compliance with the minimum cash reserve requirement will be measured on the basis of the monthly average of the daily balances of eligible items maintained during the month to which the minimum cash reserve refers by dividing the aggregate of such balances by the total number of days in the relevant period. The aggregate balances of the eligible items referred to from items (ii) to (vii)(vi) above, maintained as of each daily closing, may not, on any one day during the month, be less than 50% of the total required cash reserve, excluding the requirement for incremental deposits, determined for the next preceding month, recalculated on the basis of the requirements and items in force in the month to which the cash reserves relate. Notwithstanding the foregoing, according to Central Bank Communication “A” 5152, as amended and supplemented by Communication “A” 5179 and Communication “A” 5182, this requirement is reduced to the 30% of the total required cash reserve from December 6, 2010 to April 30, 2011. As of the date of this report, the aforementioned term has not been renewed or updated. 40
The daily minimum required is 70% when a deficit occurs in the previous month. Any deficiencies in meeting the required minimum cash reserve and the daily minimum reserve in foreign currency are subject to a penalty equal to twice the private bank’s BADLAR rate for deposits in pesos (published during the last business day of the period) for deficiencies in Argentine currency and to twice private bank’sbanks’ BADLAR rate for deposits in U.S. dollars or twice the 30 day30-day US dollar LIBO rate for the last business day of the month (whichever is higher) for. Any deficiencies in foreign currency.meeting the required minimum cash reserve and the daily minimum reserve in Argentine pesos are subject to a penalty equal to twice the private banks’ BADLAR rate for deposits in Argentine pesos for the last business day of the month. Internal liquidity policies of financial institutions The regulations designed to limit liquidity risk provide that financial institutions should adopt management and control policies that ensure the maintenance of reasonable liquidity levels to efficiently manage their deposits and other financial commitments. Such policies should establish procedures for evaluating the liquidity of the institutions in the framework of prevailing market conditions to allow them to revise projections, take steps to eliminate liquidity constraints and obtain sufficient funds, at market terms, to maintain a reasonable level of assets over the long term. Such policies should also address (i) the concentration of assets and liabilities in specific customers, (ii) the overall economic and market situation, likely trends and the impact on credit availability, and (iii) the ability to obtain funds by selling government debt securities and/or assets. 36
Credit risk regulation The regulations on credit risk prescribe standards in order to reduce such risk without significantly eroding average profitability. There are three types of ratios that limit a lender’s risk exposure, namely: risk concentration limits, limits on transactions with customers on the basis of the institution’s capital and credit limits on the basis of the customer’s net worth. Risk concentration:concentration: means the aggregate amount of relevant transactions executed with companies, individuals or groups of companies—whether affiliated or not—where such transactions, measured for each one of such customers, are at any time equal to or higher than 10% of the institution’s RPC on the last day of the month prior to the relevant month. Total operations may not exceed, at any time: • three times the institution’s RPC for the previous month, without considering the operations involving local financial institutions (domestic or foreign headquarters or branches); or • five times the institution’s RPC for the previous month if operations involving local financial institutions are considered. considered; or• ten times the institution’s RPC, in the case of second tier financial institutions (i.e., financial institutions that only lend to other financial institutions and do not receive deposits from the general public), considering the loans to other domestic financial institutions. Diversification of risk:risk: limitations are established for operations with clients, which may not exceed certain percentages applied on top of the institution’s RPC for the previous month. These percentages vary in function depending upon the type of client, the type of operation and the collateral involved. The regulation sets forth a number of transactions that are excluded from the credit risk diversification rules. Degree of risk:risk: In the case of credit limits based on the customers’ net worth, as a general rule the financial assistance cannot exceed 100% of the customer’s net worth, although thisworth. The basic margin may be increased toby an additional 200%, provided itsuch additional margin does not exceed 2.5% of the financial institution’s RPC and the increase is approved by the Board of Directors of the relevant financial institution. Limits for affiliated individuals Central Bank regulations regarding risk management determine certain limits to the transactions that financial institutions may carry out with parties related to them (whether individuals or corporate entities). A person is “related” to a financial institution based on different criteria including whether the financial institution directly or indirectly controls, is controlled by, or is under common control with, such person; whether this person has a participation on the financial institution; whether the financial institution or the person that controls the financial institution and such person have or may have common directors to the extent such common directors represent a majority of the board in either the person or the financial institutions; or, exceptionally, whenever the Central Bank board of directors determines — pursuant to Superintendency proposal — that a person maintains a relationship with the financial entity (or its controlling person) that may result in monetary damages for the financial institution. Control by one person of another is defined under such regulations as: | (i) | | holding or controlling, directly or indirectly, 25% or more of the total voting stock of the other person; |
| (ii) | | having held 50% or more of the total voting stock of the other person at the time of the last election of directors or managers; |
| (iii) | | holding, directly or indirectly, any other kind of participation in the other person (even if it represents a participating interest below the above mentioned percentages) so as to be able to prevail in the institution’s decision making; or |
| (iv) | | when the Central Bank board of directors — pursuant to a proposal from the Superintendency — determines that a person is exercising a controlling influence over the financial institution. |
The transactions taken into account for the purpose of this title include, among others, capital stock holdings, loans and securities issued by a local financial institution or its foreign branches or any foreign financial institution controlled by the local financial institution. 41
The limits for transactions with affiliated individuals depend on the financial institution’s RPC and its CAMELBIG rating: A. In case of local financial institutions with a 1 to 3 CAMELBIG rating: (i) General: | (a) | | Guaranteed operations: 10% of the RPC. |
| (b) | | Non-guaranteed operations: 5% of the RPC. |
(ii) Related financial institutions which transactions are subject to consolidation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Additional | | Lender rating | | Borrower rating | | | General | | | Tranche I (*) | | | Tranche II (**) | | | Tranche III (***) | | 1, 2 or 3 | | | 1 | | | | 100 | % | | | 25 | % | | | 25 | % | | | — | | | | | 2 | | | | 20 | % | | | 25 | % | | | 25 | % | | | 55 | % | | | | 3 | | | | 10 | % | | | 20 | % | | | 20 | % | | | — | | | | | 4 or 5 | | | | 10 | % | | | — | | | | — | | | | — | | 4 or 5 | | | 1 to 5 | | | | 0 | % | | | — | | | | — | | | | — | | | | | (iii) Related companies that provide complementary services: | | | | | | | | Controlling financial | | | | | | | Additional | | Complementary services | | entity | | | General | | | Tranche I (***) | | | Tranche II | | | Tranche III | | Stock exchange agent, financial assistance based on leasing and factoring, temporal adquisition of shares | | | 1 | | | | 100 | % | | | — | | | | — | | | | — | | | | | 2 | | | | 10 | % | | | 90 | % | | | — | | | | — | | | | | 3 | | | | 10 | % | | | — | | | | — | | | | — | | | | | 4 o 5 | | | | 0 | % | | | — | | | | — | | | | — | | | | | | | Controlling financial | | | | | | | Additional | | Complementary services | | entity | | | General | | | Tranche I (*) | | | Tranche II (**) | | | Tranche III (***) | | Credit and debit card issuers or similar services | | | 1 | | | | 100 | % | | | 25 | % | | | 25 | % | | | — | | | | | 2 | | | | 20 | % | | | 25 | % | | | 25 | % | | | 55 | % | | | | 3 | | | | 10 | % | | | 20 | % | | | 20 | % | | | — | | | | | 4 o 5 | | | | 0 | % | | | — | | | | — | | | | — | |
| | | (*) | | Subject to certain conditions. | | (**) | | Only for guaranteed financings that comply with the conditions for Tranche I. | | (***) | | Only for financings with an inicial term up to 180 days. |
(iv) Related foreign banks: | (a) | | rated “investment grade”: 10% of the RPC. |
5% for unsecured transactions 10% for secured transactions The aggregate amount of financial assistance provided to affiliated parties cannot exceed 20% of the institution’s RPC (except those provided to financial entities and complementary services corporations subject to consolidation). B. In case of local financial institutions with a 4 to 5 CAMELBIG rating cannot grant financial assistance to related parties, except in case of financial assistance to (including participation in the share capital of): (a) foreign branches of local financial entities subject to consolidation; (b) foreign bank that controls local financial institutions or their branches in other countries; or (c) companies that provide “complementary services” and that are subject to consolidation. 42
Transactions not subject to the limits described above for all financial institutions include: (i) financial assistance to the foreign bank that controls the financial institution and to its foreign branches, provided under certain conditions are met, and (ii) financial assistance secured by preferred guarantees rated “A”. Additionally, the Superintendency may exceptionally grant especial or additional exclusions to this regime for particular cases. According to Central Bank regulations, financial institutions are not allowed to refinance, extend or renew financial assistance granted to related parties with a credit rating that is not “normal” or whose notes are rated below “BB” by a local rating agency. The following parties must provide a sworn statement as to whether they qualify as “affiliated parties” or whether they have a controlling influence on the financial institution if (a) their debt exceeds the lower of Ps. 1,000,000 or 2.5% of the RPC; or (b) they directly or indirectly hold 5% or more of the voting rights or capital stock of the financial institution. Foreign exchange system During the first quarter of 2002, the Argentine government established certain foreign exchange controls and restrictions. On February 8, 2002, Decree No. 260 was issued, establishing as of February 11, 2002 a Local Foreign Exchange Market (“Mercado Único y Libre de Cambios”) system through which all transactions involving the exchange of foreign currency are to be traded at exchange rates to be freely agreed upon. On such date, the Central Bank issued Communications “A” 3471 and “A” 3473, which stated that the sale and purchase of foreign currency can only be performed with entities authorized by the Central Bank to operate in foreign exchange. Item 4 of Central Bank Communication “A” 3471 stated that the sale of foreign currency in the local exchange market shall in all cases be against peso bills. Since January 2, 2003, there have been further modifications to the restrictions imposed by the Central Bank.See Item 10.D — “Additional Information — Exchange Controls”Information”. Foreign currency lending capacity The Regulations on the allocation of deposits in foreign currencies establish that the lending capacity from foreign currency deposits, including U.S. dollar-denominated deposits to be settled in pesos, must fall under one of the following categories: (a) pre-financing and financing of exports to be made directly or through principals, trustees or other brokers, acting on behalf of the owner of the merchandise; (b) financing for manufacturers, processors or collectors of goods, provided they refer to non-revocable sales agreements with exporters for foreign currency-denominated prices (irrespective of the currency in which such transaction is settled), and they refer to exchangeable foreign-currency denominated goods listed in local or foreign markets, broadly advertised and easily available to the general public; (c) financing for manufacturers of goods to be exported, as final products or as part of other goods, by third-party purchasers, provided that such transactions are secured or collateralized in foreign currency by third-party purchasers; (d) financing of investment projects, working capital or purchase of any kind of goods —including temporary imports of commodities- that increase or are related to the production of goods to be exported; (e) financing for commercial clients or commercial loans considered as consumer loans, with the purpose of importing capital goods, whenever they help to increase goods production for the domestic market; (f) debt securities or financial trust participation certificates whose underlying assets are loans made by the financial entities in the manners set forth in (a) to (d) above; (g) foreign currency debt securities or financial trust participation certificates, publicly listed under an authorization by the CNV, whose underlying assets are securities bought by the fiduciary and guaranteed by reciprocal guarantee companies, in order to finance export transactions; (h) financings for purposes other than those mentioned in (a) to (d) above, included under the IDB credit program (“Préstamos BID N° 119/OC-AR”OC-AR”), not exceeding 10% of the lending capacity; and (i) interfinancinginter-financing loans (any interfinancinginter-financing loans granted with such resources must be identified). 37
The lending capacity shall be determined for each foreign currency raised, such determination being made on the basis of the monthly average of daily balances recorded during each calendar month. Any defect in the application shall give rise to an increase in the minimum cash requirement in the relevant foreign currency. General Exchange Positionexchange position The general exchange position includes all the liquid external assets of the institution, such as gold, currency and foreign currency notes reserves, maintained in Argentina and abroad,sight deposits and investments, regardless of their term, in foreign banks, investments in foreign government securities (OECD members andissued by OECD member governments with a sovereign debt ratedrating not less thanbelow “AA”), certificates of time deposits in foreign institutions (rated not less than “AA”), other liquid investments abroad and correspondents’ debit and credit balances. It also includes purchases and sales of these assets already arranged and pending settlement involving foreign exchange purchases and sales performed with customers within a term not exceeding two business days. It does not include, however, third parties’ foreign assets held in custody,days and correspondent balances for third-party transfers pending settlement,settlement. It does not include, however, foreign currency notes held in custody, term sales and purchases of foreign currency or securities nor direct investments abroad. The GEP ceiling is calculated every month and, therefore, updated the first business day of the month. Pursuant to the relevant reporting system regulations this ceiling is set at 15% of the amount equivalent in U.S. dollars to the computable equity at the end of the month immediately preceding the last month when filing with the Central Bank has already expired. It will be increased by an amount equivalent in U.S. dollars to 5% of the total amount traded by the institution on account of the purchases and sales of foreign currency in the calendar month prior to the immediately preceding month, and by 2% of the total demand and time deposits locally held and payable in foreign bills, excluding deposits held in custody, recorded by the institution at the end of the calendar month prior to the immediately preceding month. If the ceiling does not exceed US$8.0 million, this figure will be considered its floor. 43
Institutions authorized to trade in foreign currency failing to comply with the GEP ceilings or the exchange reporting regulations should refrain from trading in foreign currency until they are in compliance with the above. Although certain exceptions are admitted, institutions authorized to trade in foreign currency require the Central Bank’s prior consent to perform their own purchases when payment is made against delivery of foreign currency or other foreign assets comprising the GEP. Foreign Currency Net Global Positioncurrency net global position All assets and liabilities from financial intermediation in foreign currency and securities in foreign currency (deriving from cash and term transactions) are included in the net global position (for ongoing and completed operations). In addition, forward transactions under master agreements entered into inwithin domestic self-regulated markets paid by settlement of the net amount without delivery of the underlying asset are also included. Deductible assets for determining RPC are excluded from the ratio. Two ratios are considered in the Foreign Currency Net Global Position: • Negative foreign currency net global position (liabilities exceeding assets): as from January 1, 2007 (Communications “A” 4577 and 4598) the limit is 15%, but it can be extended up to 15 p.p. provided the entity records at the same time: a) medium and long-term financingsfinancing in pesos to non-financial private sector (mid and long-term financings are those exceeding 4 years, weighting capital maturity without considering CER) under certain conditions for an amount equivalent to the increase of said limit; and b) an increase in the minimum capital requirement equivalent to the increase of the general limit of the negative foreign currency net global position. • Positive net global position (assets exceeding liabilities): this limit cannot exceed the lesser of: | 1. | | 30% of the Computable Net Worth. |
| 2. | | 1. 30% of the Computable Net Worth.
2. Own liquid funds (which refer to the RPC minus “fixed assets” and loans to related clients). |
By Communication “A” 4350, the Central Bank suspended as of May 1, 2005 the limits for the positive net global position. The excesses of these ratios are subject to a charge equal to the greater of twice the nominal interest rate of the U.S. dollar denominated LEBAC (Central Bank bill) or twice the 30-day U.S. dollar LIBO rate for the last business day of the month. Charges not paid when due are subject to the charge established for excesses, increased by 50%. Fixed assets and other items
The Central Bank determines that the fixed assets and other items maintained by the financial entities must not exceed 100% of the entity’s RPC.
Such fixed assets and other items include the following:
| • | | Shares of local companies | | | • | | Miscellaneous receivables | | | • | | Property and equipment | | | • | | Other assets | | | • | | Organization and development expenses | | | • | | Goodwill | | | • | | Financings granted to related clients. |
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The calculation of such assets will be effected according to the month-end balances, net of depreciations, accumulated amortizations and allowances for loan losses.
Non-compliance with the ratio produces an increase in the minimum capital requirements equal to 100% of the excess on the ratio.
Differences arising from the fulfillment of court injunctions “amparos” ordering the repayment of deposits in their original foreign currency was not computed for this ratio up to December 31st, 2008.
Debt classification and loan loss provisions Credit portfolio The regulations on debt classification are designed to establish clear guidelines for identifying and classifying the quality of assets, as well as evaluating the actual or potential risk of a lender sustaining losses on principal and/or interest, payments, in order to determine, taking into account any loan security, whether the provisions against such contingencies are adequate. Banks must classify their loan portfolios into two different categories: (i) consumer or housing loans and (ii) commercial loans. Consumer and housing loans include housing loans, consumer loans, credit-card financings and other types of installment credits to individuals. All other loans are considered commercial loans. Consumer or housing loans in excess of Ps.750,000 the repayment of which is linked to the client’sits projected cash flows are classified as commercial loans. Central Bank regulations allow financial institutions to apply the consumer and housing loan classification criteria to commercial loans of up to Ps.750,000, given with or without guarantees. If a customer has both kinds of loans (commercial and consumer and housing loans), the consumer andor housing loans will be added to the commercial portfolio to determine under which portfolio they should be classified based on the amount indicated. In these cases, the loans secured by preferred guarantees shall be considered to be at 50% of its face value. Under the current debt classification system, each customer, as well as the customer’s outstanding debts, are included within one of six sub-categories. The debt classification criteria applied to the consumer loan portfolio are primarily based on objective factors related to customers’ performance on their obligations or their legal standing, while the key criterion for classifying the commercial loan portfolio is each borrower’s paying ability based on its future cash flow. 44
Commercial loans classification The principal criterion to evaluate a loan pertaining to the commercial portfolio is its borrower’s ability to repay it, whichwhose ability is mainly measured by such borrower’s projectedfuture cash flow. Pursuant to Central Bank regulations, commercial loans are classified as follows: | | | Classification | | Criteria | In normal situation | | Borrowers for whom there is no doubt as to their ability to comply with their payment obligations. | | | | Subject to special monitoring monitoring/Under observation | | Borrowers that, among other criteria, are up to 90 days past due and, although considered to be able to meet all their financial obligations, are sensitive to changes that could compromise their ability to honor debts withoutabsent timely corrective measures. | | | | Subject to special monitoring Tracking under/ Under negotiation or with refinancing agreement | | Borrowers who are unable to comply with their obligations as agreed with the Bankbank and, therefore, formally state, within 60 calendar days after the maturity date, their intention to refinance such debts, no later than 60 days after being past due.debts. The borrower must enter into a refinancing agreement with the lenderbank within 90 calendar days (if up to two lenders are involved) or 180 calendar days (if more than two lenders are involved) after the date on which the obligations became due.payment default date. If no agreement has been reached within the established deadline, the borrower must be reclassified to the next category according to the indicators established for each level. | | | | Troubled | | Borrowers with difficulties honoring their financial obligations under the loan on a regular basis, which, if uncorrected, may result in losses to the Bank.bank. | | | | With high risk of insolvency | | Borrowers who are highly unlikely to honor their financial obligations under the loan. | | | | Irrecoverable | | Loans classified as irrecoverable at the time they are reviewed (although the possibility might exist that such loans might be collected in the future). The borrower will not meet its financial obligations with the Bank.financial institution. | | | | Irrecoverable according to Central Bank’s rulesRules | | (a) Borrower has defaulted on its payment obligations under a loan for more than 180 calendar days according to the corresponding report provided by the Central Bank, which report includes (1) financial institutions liquidated by the Central Bank, (2) residual entities created as a result of the privatization of public financial institutions, or in the privatization or dissolution process, (3) financial institutions whose licenses have been revoked by the Central Bank and find themselves subject to judicial liquidation or bankruptcy proceedings and (4) trusts in which SEDESASeguro de Depósitos S.A.(SEDESA) is a beneficiary, and/or (b) certain kinds of foreign borrowers (including banks or other financial institutions that are not subject to the supervision of the Central Bank or similar authority of the country in which they are incorporated) that are not classified as “investment grade” by any of the rating agencies approved by the Central Bank. |
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Consumer and housing loans classification The principal criterion applied to loans in the consumer and housing portfolio is the length of its duration.the period for which such loans remain overdue. Under the Central Bank regulations, consumer and housing borrowers are classified as follows: | | | Classification | | Criteria | Performing | | If all payments on loans are current or less than 31 calendar days overdue and, in the case of checking account overdrafts, less than 61 calendar days overdue. | | | | Low Risk | | Loans upon which payment obligations are overdue for a period of more than 31 and up to 90 calendar days. | | | | Medium Risk | | Loans upon which payment obligations are overdue for a period of more than 90 and up to 180 calendar days. | | | | High Risk | | Loans in respect of which a legal action seeking collection has been filed or loans having payment obligations overdue for more than 180 calendar days, and up to one year or if it is subject to judicial or out-of-court bankruptcy proceedings.but less than 365 calendar days. | | | | Irrecoverable | | Loans in which payment obligations are more than one year overdue or the debtor is insolvent or in bankruptcy or liquidation. | | | | Irrecoverable according to Central Bank’s rulesRules | | Same criteria as for commercial loans in the “IrrecoverableIrrecoverable according to Central Bank’s rules” category.Bank Rules. |
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Minimum credit provisions The following minimum credit provisions are required to be made by Argentine banks in relation to the credit portfolio category: | | | | | | | | | | | | | | | | | | | With Preferred | | Without Preferred | | | With Preferred | | Without Preferred | | Category | | Guarantees | | Guarantees | | | Guarantees | | Guarantees | | “In normal situation” and “Performing” | | | 1 | % | | | 1 | % | | | 1 | % | | | 1 | % | “In observation” and “Low risk” | | | 3 | % | | | 5 | % | | “In negotiation or with rollover agreement” | | | 6 | % | | | 12 | % | | “Under observation” and “Low risk” | | | | 3 | % | | | 5 | % | “Under negotiation or refinancing agreement” | | | | 6 | % | | | 12 | % | “Troubled” and “Medium Risk” | | | 12 | % | | | 25 | % | | | 12 | % | | | 25 | % | “With high risk of insolvency” and “High Risk” | | | 25 | % | | | 50 | % | | | 25 | % | | | 50 | % | “Irrecoverable” | | | 50 | % | | | 100 | % | | | 50 | % | | | 100 | % | “Irrecoverable by according to Central Bank’s rule” | | | 100 | % | | | 100 | % | | “Irrecoverable according to Central Bank Rules” | | | | 100 | % | | | 100 | % |
The SuperintendenceSuperintendency may require additional provisioning if it determines that the current level is inadequate. Financial institutions are entitled to record allowances for loan losses in amounts larger than those required by the Central Bank Rules. In such cases and despite the existence of certain exceptions, recording a larger allowance for a commercial loan, to the extent the recorded allowance amount falls into the next credit portfolio category set forth by Central Bank Rules, shall automatically result in the corresponding debtor being recategorized accordingly. Minimum frequency for classification review WeFinancial institutions are required to classify loans at least once a year in accordance with the Central Bank Rules. Nevertheless, a quarterly review is required for credits that amount to 5% or more of our RPC and mid-year review for credits that amount to the lower of: (i) Ps.2Ps.1 million or (ii) the range between 1% and 5% of our RPC. In addition, wefinancial institutions have to review the rating assigned to a debtor when another financial institution reduces the debtor classification in the “Credit Information Database” and grants 10% or more of the debtor’s total financing in the financial system. Only one-level discrepancy is allowed in relation to the information submitted by financial institutions to the “Credit Information Database” and the lower classification awarded by at least two other banks and total lending from such banks account for 40% or more of the total informed; if there is a greater discrepancy, the Bankfinancial institution will be required to reclassify the debtor.
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Allowances for loan losses The allowance for loan losses is maintained in accordance with applicable regulatory requirements of the Central Bank. Increases in the allowance are based on the level of growth of the loan portfolio, as well as on the deterioration of the quality of existing loans, while decreases in the allowance are based on regulations requiring the charge-offwrite-off of non-performing loans classified as “irrecoverable”irrecoverable after a certain period of time and on decisions of the management to chargewrite off non-performing loans evidencing a very low probability of recovery. Priority rights of depositors Under Section 49 of the Financial Institutions Law, in the event of judicial liquidation or bankruptcy of a bank, depositors have a general and absolute priority right to collect their claims over all other creditors, except claims secured by pledges or mortgages and certain employee liens. Additionally, the holders of any type of deposit have a special priority right over all other creditors of the Bank,bank, except certain employee creditors, to be paid out of (i) any funds of the branch that may be in the possession of the Central Bank as Minimum Cash Reserve, (ii) any other funds of the Bankbank existing as of the date on which the Bank’sbank’s license is revoked, or (iii) any proceeds resulting from the mandatory transfer of certain assets of the financial institution to another as determined by the Central Bank pursuant to Section 35 of the Financial Institutions Law, according to the following order of priority: (a) deposits of up to Ps.50,000 per person (including all amounts such person deposited in one financial entity), or its equivalent in foreign currency, (b) all deposits of an amount higher than Ps.50,000, or its equivalent in foreign currency for the amount in excess thereof, and (c) the liabilities originated in commercial lines granted to the Bankfinancial institution and which directly affect international commerce. Mandatory deposit insurance system Law No. 24,485 passed on April 12, 1995, as amended by Law No. 25,089 and DecreeDecrees No. 540, passed on April 12, 1995,538/95 and No. 540/95, created a Deposit Insurance System, or SSGD,“SSGD”, which is mandatory for bank deposits, and delegated the responsibility for organizing and implementing the system to the Central Bank. The SSGD is a supplemental protection to the privilege granted to depositors by means of Section 49 of the Financial Institutions Law, as mentioned above. The SSGD has been implemented through the establishment of a Deposit Guarantee Fund, or FGD,“FGD”, managed by a private-sector corporation calledSeguro de Depósitos Sociedad Anónimaor Deposit, (Deposit Insurance Corporation, or SEDESA. The“SEDESA”). According to Decree No. 1292/96, the shareholders of SEDESA are the federalArgentine government through the Central Bank and a trust set up by the participating financial institutions. These institutions must pay into the FGD a monthly contribution determined by Central Bank regulations. The SSGD is financed through regular and additional contributions made by financial institutions, as provided for in Central Bank Communication “A” 3068,4271, dated January 28, 2000.December 30, 2004. The SSGD covers deposits made by individuals and legal entities in Argentine pesos or foreign currency and maintained in accounts with the participating financial institutions, including checking accounts, savings accounts, and time deposits up to the amount of Ps.30,000.Ps. 120,000, as set forth by Central Bank Communication “A” 5170, dated January 11, 2011. Effective payment on this guarantee will be made within 30 business days after revocation of the license of the financial institution in which the funds are held; such payment is subject to the exercise of the depositor’s priority rights.rights described above. 46
In view of the circumstances affecting the financial system, Decree No. 214/2002 provided that SEDESA may issue registered securities for the purpose of offering them to depositors in payment of the guarantee in the event it should not have sufficient funds available. The SSGD does not cover: (i) deposits maintained by financial institutions in other financial institutions, including certificates of deposit bought in the secondary market, (ii) deposits made by persons directly or indirectly affiliated with the institution, (iii) time deposits of securities, acceptances or guarantees, (iv) any transferable time deposits that have been transferred by endorsement, (v) any deposits benefiting from some incentive (e.g., car raffles) in addition to the agreed upon interest rate, and (vi) any deposits in which the agreed-upon interest rate is higher than the reference interest rates periodically released by the Central Bank for time deposits and demand deposit account balances and available amounts from overdue deposits or closed accounts. Pursuant to Central Bank Communication “A” 4271, every financial institution is required to contribute to the FGD a monthly amount of 0.015% of the monthly average of daily balances of deposits in local and foreign currency, as determined by the Central Bank. Prompt contribution of such amounts is a condition precedent to the continuing operation of the financial institution. The first contribution was made on May 24, 1995. The Central Bank may require financial institutions to advance the payment of up to the equivalent of two years of monthly contributions and debit the past due contributions from funds of the financial institutions deposited with the Central Bank. The Central Bank may require additional contributions by certain institutions, depending on its evaluation of the financial condition of those institutions. When the contributions to the FGD reach the greater of Ps.2.0 billion or 5.0% of the total deposits of the system, the Central Bank may suspend or reduce the monthly contributions, and reinstate them when the contributions subsequently fall below that level. Capital markets Commercial banks are authorized to subscribe for and sell shares and debt securities. At present, there are no statutory limitations as to the amount of securities for which a bank may undertake to subscribe. However, under Central Bank regulations, underwriting of debt securities by a bank would be treated as “financial assistance” and, accordingly, until the securities are sold to third parties, such underwriting would be subject to limitations. In 1990, the Buenos Aires securities market authorized firms organized as brokerage houses, orsociedades de bolsa, to operate as brokers on the BCBA in addition to individual stockbrokers. There are currently no restrictions on ownership of asociedad de bolsaby a commercial bank, and, in fact, most of the principalmain commercial banks operating in Argentina have established their ownsociedad de bolsa.bolsa. All brokers, whether individuals or firms, are required to own at least one share of the Mercado de Valores S.A. (“MERVAL”) to be allowed to operate as brokers on the BCBA. An agreement between the BCBA and representatives of the Mercado“Mercado Abierto Electrónico (“MAE”)Electronico S.A” (MAE) dealers provides that trading in shares and other equity securities will be conducted exclusively on the BCBA and that all debt securities listed on the BCBA may also be traded on the MAE. Trading in Argentine government securities, which are not covered by the agreement, is conducted mainly on the MAE. The agreement does not extend to other Argentine exchanges. Commercial banks may operate as both managers and custodians of Argentinefondos comunes de inversión, or mutual funds; provided, however, that a bank may not act simultaneously as manager and custodian for the same fund. 41
Financial institutions in economic difficulties The Financial Institutions Law provides that any financial institution, including a commercial bank, operating at less than certain required technical ratios and minimum net worth levels, or, in the judgment of the Central Bank adopted by members representing the majority of the board of directors, with impaired solvency or liquidity or in any of the other circumstances listed in Section 44 of the Financial Institutions Law, must (upon request from the Central Bank and in order to avoid the revocation of its license) prepare aplan de regularización y saneamiento, or a restructuring plan. The plan must be submitted to the Central Bank on a specified date, not later than 30 calendar days from the date on which a request to that effect is made by the Central Bank. The Central Bank can appoint aninterventor,or comptroller, to the financial institution and restrict the distribution of dividends. In addition, to help ensure the feasibility of the plan, the Central Bank is empowered to grant a temporary exemption from compliance with technical regulations and/or payment of any fines that may arise from such non-compliance. Upon the institution’s failure to submit, secure regulatory approval of, or comply with, a restructuring plan, the Central Bank will be empowered to revoke the institution’s license to operate as such. DissolutionFurthermore, the Central Bank’s charter authorizes the Central Bank Superintendency to fully or partially suspend, exclusively subject to the approval of the President of the Central Bank, the operations of a financial institution for a term of 30 days if the liquidity or solvency thereof are adversely affected. Such term could be renewed for up to 90 additional days, with the approval of the Central Bank’s board of directors. During such suspension term an automatic stay of claims, enforcement actions and liquidationprecautionary measures is triggered, any commitment increasing the financial institution’s obligations shall be null and void, and debt acceleration and interest accrual shall be suspended.
If per the Central Bank’s criteria a financial institution is undergoing a situation which, under the Financial Institutions Law, would authorize the Central Bank to revoke its license to operate as such, the Central Bank may, before considering such revocation, order a restructuring plan that may consist on among others, the following measures: adoption of list measures to capitalize or increase the capital of the financial institution; revoke the approval granted to the shareholders of the financial institution to hold interests therein; 47
restructure and/or transfer assets and liabilities; grant temporary exemptions to compliance with technical regulations and/or payment of charges and penalties arising from such flawed compliance; or • | | appoint a delegate or auditor (“interventor”) that may prospectively replace the board of directors of the financial institution. |
Revocation of the license to operate as financial institution The Central Bank may revoke the license to operate as a financial institution in case a restructuring plan has failed or is not deemed feasible, or violations of local laws and regulations have been incurred, or solvency or liquidity of the financial institution has been affected, or significant changes have occurred in the institution’s condition since the original authorization was granted, or if any decision by the financial institution’s legal or corporate authorities concerning its dissolution has been adopted, among other circumstances set forth in the Financial Institutions Law. Once the license to operate as a financial institution has been revoked, the financial institution shall be liquidated. Liquidation of financial institutions As provided in the Financial Institutions Law, the Central Bank must be notified of any decision adopted by a financial institution’s legal or corporate authorities concerning its dissolution. The Central Bank, in turn, must then notify suchthe revocation decision to a competent court, which wouldwill then determine who will liquidate the entity: the corporate authorities (extrajudicial liquidation) or an independent liquidator appointed by the court for the purpose.that purpose (judicial liquidation). The court’s decision will be based on whether or not there is sufficient assurance that the corporate authorities are capable of carrying out such liquidation properly. PursuantBankruptcy of financial institutions
According to the Financial Institutions Law, financial institutions are not allowed to file their own bankruptcy petitions. In addition, the Central Bank no longer acts as liquidator of financial institutions. However, if a restructuring plan has failed or isbankruptcy shall not deemed feasible, or violations of local laws and regulations have been incurred, or significant changes have occurred inbe adjudged until the institution’s condition since the original authorization was granted, then the Central Bank may revoke a bank’s license to operate as a financial institution. In this event, the law allows for judicial or extrajudicial liquidation. During the liquidation process and onceinstitution has been revoked. Once the license to operate as a financial institution has been revoked, a court of competent jurisdiction may adjudge the former financial institution in bankruptcy, or a petition in bankruptcy may be filed by the Central Bank or by any creditor of the Bankbank, in this case after a period of 60 calendar days has elapsed since the license was revoked. Once the bankruptcy of a financial institution has been adjudged, provisions of the Bankruptcy Law No. 24,522 and the Financial Institutions Law shall be applicable; provided however that in certain cases, specific provisions of the Financial Institutions Law shall supersede the provisions of the Bankruptcy Law (i.e. priority rights of depositors). Money laundering The concept of money laundering is generally used to denote transactions intended to introduce criminal proceeds into the institutional system and thus to transform profits from illegal activities into assets of a seemingly legitimate origin. On April 13, 2000, the Argentine Congress passed Law No. 25,246 amended by Laws No. 26,087, 26,119 and 26,268 (the “Anti-Money Laundering Law”), which defines money laundering as a type of crime. In addition, the law, which supersedes several sections of the Argentine criminal code established severe penalties for anyone participating in any such criminal activity and created the so-called Financial Information Unit (“FIU”),UIF, establishing an administrative criminal system. Money laundering is defined as a crime under Section 278 of the criminalArgentine penal code, which states that a crime will be committed whenever a person converts, transfers, manages, sells, encumbers, or otherwise uses money, or any other assets, stemming from a crime in which that person has not participated, with the possible result that the original or substituted assets may appear to be of a legitimate origin, provided the value of the assets exceeds Ps.50,000, whether such amount results from one or more transactions. The main purpose of the Anti-Money Laundering Law 25,246 is to prevent money laundering. In line with internationally accepted practice, it does not attribute responsibility for controlling these criminal transactions only to government agencies, but also assigns certain duties to diverse private sector entities such as banks, stockbrokers, brokerage houses and insurance companies. These duties consist basically in information capturinginformation-capturing functions. In addition, Argentine financial institutions are required to report to the FIUUIF any suspicious or unusual transaction, as well as any transaction that looks suspicious or unusual, or lacks economic or legal justification, or is unnecessarily complex, whether performed on isolated occasions or repeatedly. Law 26,268 on “Terrorist Criminal Associations and Financing of Terrorism” promulgated on July 4, 2007, amended Law 25,246 on “Concealment and Laundering of Proceeds of Crime”, and established the duties and powers of the FIU as well as severe penalties for anyone participating in any such criminal activities.
The Central Bank regulation requiresregulations require Argentine banks to take certain minimum precautions to prevent money laundering. Each institution must have an Anti-Money Laundering Committee, formed by a member of the board of directors, the officer responsible for Anti-Money Laundering matters (Oficial de Cumplimiento) and an upper-level officer regarding financial intermediation and/or foreign exchange matters (i.e., with sufficient experience and knowledge on such matters and decision-making responsibilities). Additionally, as mentioned, each financial institution must appoint a senior management officermember of the board of directors as the person responsible for money laundering prevention, in charge of centralizing any information the Central Bank may require on its own initiative or at the request of any competent authority. In addition, this officer, or other personauthority and reporting any suspicious transactions to the general manager, the Board of Directors, or equivalent authority, will be responsible for the implementation, tracking and control of internal procedures to ensure compliance with the regulations in the Bank and its subsidiaries.UIF .
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WeArgentine financial institutions must comply with all applicable moneyanti-money laundering regulations as provided for by the Central Bank and the FIU;UIF; in particular with Resolution N° 2/2002No. 37/2011 of the Financial Information Unit,UIF, dated October 25, 2002, as amended and supplemented by Resolution N° 228/07 dated December 5, 2007,February 8, 2011, which regulates Section 21 paragraphs a)(a) and b)(b) of Law 25,246 that provides for the gathering of information regarding suspicious operations and its report to the authorities.authorities as well as with the anti-money laundering regime set forth by the Central Bank (the most recent restatement of which dates as of December 23, 2010, by means of Communication “A” 5162) and, when acting as placement agents in public offerings of securities, applicable CNV regulations. 42
The Central Bank itself must also comply with anti-money laundering regulations set forth by the UIF, including reporting suspicious or unusual transactions. In particular, the Central Bank must comply with recently enacted Resolution 12/2011, which, among other things, lists a few examples of what constitute “suspicious or unusual transactions”. The listed transactions must be particularly scrutinized by the Central Bank and include, among others, any transaction involving financial institutions, regular transactions involving securities (specially daily purchases and sales of the same amount of securities), capital contributions into financial institutions that have been paid-in in cash (or means other than bank transfers), and capital contributions by companies incorporated or domiciled in jurisdictions that do not allow for information relating to family relations of its shareholders, board members or members of its supervisory committee, Deposits or withdrawals in cash for unusual amounts by entities or individuals that normally use checks or other financial instruments and/or whose declared business does not correspond with the type or amount of the transaction; subsequent cash deposits for small amounts that, in the aggregate, add up to a relevant sum; a single client holding numerous accounts that, in the aggregate, hold relevant sums inconsistent with such client’s declared business; transfers of funds for amounts inconsistent with the client’s business or usual kind of transaction; accounts with several authorized signatories that hold no apparent relation (in particular when domiciled or acting off-shore or in tax havens); clients that unexpectedly cancel loans; frequent cash deposits or withdrawals for relevant amounts without commercial justification.
In addition, CNV rules provide that Argentine intermediaries of any kind, including placement agents in the issuance of securities, may only perform transactions made or ordered by persons incorporated, domiciled or residing in jurisdictions or territories not deemed “tax haven jurisdictions” as set forth in Argentine Decree No. 1,344/98. Also, in case the transaction is made or ordered by persons incorporated, domiciled or residing in jurisdictions or territories not deemed “tax haven jurisdictions”, but that are intermediaries registered with or in a self-regulated market subject to the control of an authority similar to the Argentine CNV, such transaction may only be performed in case the CNV has entered into a memorandum of understanding, cooperation and exchange of information with such foreign regulatory authority. Merger, consolidation and transfer of goodwill Merger, consolidation and transfer of goodwill may be arranged between entities of the same or different type and will be subject to the prior approval of the Central Bank. The new entity must submit a financial-economic structure profile supporting the project in order to obtain authorization from the Central Bank. Financial System Restructuring Unitsystem restructuring unit The Financial System Restructuring Unit was created to oversee the implementation of a strategic approach for those banks benefiting from assistance provided by the Central Bank. This unit is in charge of rescheduling maturities, determining restructuring strategies and action plans, approving transformation plans, and accelerating repayment of the facilities granted by the Central Bank. C. Organizational Structure Subsidiaries We have fivesix subsidiaries: (i) Banco del Tucumán, our acquired retail and commercial banking subsidiary in the province of Tucumán; (ii) Banco Privado, our recently acquired retail banking subsidiary (iii) Macro Bank Limited, our subsidiary in the Bahamas through which we provide primarily private banking services; (iii)(iv) Macro Securities S.A. Sociedad de Bolsa, which is a member of the BCBA, and through which we provide investment research, securities trading and custodial services to our customers; (iv)(v) Sud Inversiones & Análisis S.A., a subsidiary that acts as trustee and provides financial advisory and analysis services; and (v)(vi) Macro Fondos S.G.F.C.I.S.A., an asset management subsidiary. | | | | | | | Banco Macro S.A.’s | | | | direct and indirect equity interest | | | | Percentage of | | Subsidiary | | Percentage of Capital Stock and possible votes | | | | | | | Banco del Tucumán S.A. (1) | | | 89.932 | % | Banco Privado de Inversiones S.A. (1) | | | 99.985 | % | Macro Bank Limited (2)(3) | | | 99.999 | % | | | | | | Macro Securities S.A. Sociedad de Bolsa (1) | | | 99.921 | % | | | | | | Sud Inversiones & Análisis S.A. (1) | | | 98.605 | % | | | | | | Macro Fondos S.G.F.C.I. S.A. (1) | | | 99.936 | % |
| | | (1) | | | (1) | | Country of residence: Argentina | | (2) | | Country of residence: Bahamas | | (3) | | Consolidates with Sud Asesores (ROU) S.A. (100% of capital stock and voting rights) |
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D. Property, plants and equipment Property We own 23,22623,746 square meters of office space at Sarmiento 341-355, 401-447, 731-735 and 731-735,Suipacha 555, in Buenos Aires, Argentina, where the headquarters for our management, accounting, administrative and investor relations personnel are located. As of December 31, 20092010 our branch network consisted of 408404 branches in Argentina, of which 182189 are leased properties. On November 17, 2010 we executed a purchase agreement with the Government of the City of Buenos Aires for the acquisition of the real property located at Av. Eduardo Madero No. 1180, in the City of Buenos Aires, for an aggregate amount of Ps. 110 million. The relevant conveyance deed was executed on February 22, 2011. The Bank intends to build its new corporate offices on that site. Works are expected to begin in 2012, and the estimated completion term is four years. The new corporate tower will be designed taking full advantage of natural light, using materials that do not adversely affect the native forests and with an efficient use of the available energy. It will be built in compliance with the Leed International Sustainability Standards of the “US Green Building Council”. The building will have an area of 35,500 square meters and the Bank estimates that its construction will require an investment of US $80.0 million, plus US $20.0 million in equipment and fixtures. Selected Statistical Information The following information is included for analytical purposes and should be read in conjunction with the Consolidated Financial Statementsconsolidated financial statements as well as item 5-“Operating and Financial Review and Prospects”.. This information has been prepared from our financial records, which are maintained in accordance with the regulations established by the Central Bank and do not reflect adjustments necessary to state the information in accordance with U.S. GAAP. See Note 3532 to the Consolidated Financial Statementsconsolidated financial statements for the three years ended on December 31, 20092010 for a summary of the significant differences between Central Bank Rules and U.S. GAAP. 43
Average balance sheets, interest earned on interest-earning assets and interest paid on interest-bearing liabilities The following tables show average balances, interest amounts and nominal rates for our interest-earning assets and interest-bearing liabilities for the years ended December 31, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | Years Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2007 (1) | | 2008 (1) | | 2009 | | | Years ended December 31, | | | | Interest | | Average | | Interest | | Average | | Interest | | Average | | | 2008 | | 2009 | | 2010 | | | | Average | | Earned/ | | Nominal | | Average | | Earned/ | | Nominal | | Average | | Earned/ | | Nominal | | | Average | | Average | | Average | | | | Balance | | (Paid) | | Rate | | Balance | | (Paid) | | Rate | | Balance | | (Paid) | | Rate | | | Average | | Interest | | Nominal | | Average | | Interest | | Nominal | | Average | | Interest | | Nominal | | | | (in thousands of pesos, except percentages) | | | Balance | | Earned/(Paid) | | Rate | | Balance | | Earned/(Paid) | | Rate | | Balance | | Earned/(Paid) | | Rate | | | | | (in thousands of pesos, except percentages) | | ASSETS | | | Interest-earning assets | | | Government securities (2) | | | Government securities (1) | | | Pesos | | 3,923,881 | | 421,477 | | | 10.74 | % | | 4,346,565 | | 540,302 | | | 12.43 | % | | 5,124,739 | | 785,628 | | | 15.33 | % | | 4,346,565 | | 540,302 | | | 12.43 | % | | 5,124,739 | | 785,628 | | | 15.33 | % | | 5,366,274 | | 853,997 | | 15.91 | % | Dollars | | 181,080 | | 15,598 | | | 8.61 | % | | 215,732 | | | (5,785 | ) | | | (2.68 | %) | | 486,811 | | 420,898 | | | 86.46 | % | | 215,732 | | | (5,785 | ) | | | (2.68 | %) | | 486,811 | | 420,898 | | | 86,46 | % | | 378,908 | | 72,942 | | | 19.25 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 4,104,961 | | 437,075 | | | 10.65 | % | | 4,562,297 | | 534,517 | | | 11.72 | % | | 5,611,550 | | 1,206,526 | | | 21.50 | % | | 4,562,297 | | 534,517 | | | 11.72 | % | | 5,611,550 | | 1,206,526 | | | 21.50 | % | | 5,745,182 | | 926,939 | | | 16.13 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loans | | | Private and financial Sector | | | Pesos | | 6,162,786 | | 1,041,645 | | | 16.90 | % | | 8,552,950 | | 1,786,608 | | | 20.89 | % | | 8,633,930 | | 2,008,428 | | | 23.26 | % | | 8,552,950 | | 1,786,608 | | | 20.89 | % | | 8,633,930 | | 2,008,428 | | | 23.26 | % | | 10,589,164 | | 2,256,182 | | | 21.31 | % | Dollars | | 1,228,829 | | 78,815 | | | 6.41 | % | | 1,821,403 | | 143,916 | | | 7.90 | % | | 2,225,961 | | 189,730 | | | 8.52 | % | | 1,821,403 | | 143,916 | | | 7.90 | % | | 2,225,961 | | 189,730 | | | 8.52 | % | | 2,062,237 | | 113,549 | | | 5.51 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 7,391,615 | | 1,120,460 | | | 15.16 | % | | 10,374,353 | | 1,930,524 | | | 18.61 | % | | 10,859,891 | | 2,198,158 | | | 20.24 | % | | 10,374,353 | | 1,930,524 | | | 18.61 | % | | 10,859,891 | | 2,198,158 | | | 20.24 | % | | 12,651,401 | | 2,369,731 | | | 18.73 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Public Sector | | | Pesos | | 767,970 | | 51,575 | | | 6.72 | % | | 755,364 | | 38,058 | | | 5.04 | % | | 302,441 | | 24,197 | | | 8.00 | % | | 755,364 | | 38,058 | | | 5.04 | % | | 302,441 | | 24,197 | | | 8.00 | % | | 289,576 | | 118,618 | | | 40.96 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 767, 970 | | 51,575 | | | 6.72 | % | | 755,364 | | 38,058 | | | 5.04 | % | | 302,441 | | 24,197 | | | 8.00 | % | | 755,364 | | 38,058 | | | 5.04 | % | | 302,441 | | 24,197 | | | 8.00 | % | | 289,576 | | 118,618 | | | 40.96 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deposits with the Central Bank | | | Pesos | | 1,377,853 | | 10,908 | | | 0.79 | % | | 1,677,710 | | 9,386 | | | 0.56 | % | | — | | — | | | 0.00 | % | | 1,677,710 | | 9,386 | | | 0.56 | % | | — | | — | | — | | — | | — | | — | | Dollars | | 568,821 | | 7,474 | | | 1.31 | % | | 598,344 | | 4,998 | | | 0.84 | % | | — | | — | | | 0.00 | % | | 598,344 | | 4,998 | | | 0.84 | % | | — | | — | | — | | — | | — | | — | | | | | | | | | | | | | | | | | | | | | | | Total | | 1,946,674 | | 18,382 | | | 0.94 | % | | 2,276,054 | | 14,384 | | | 0.63 | % | | — | | — | | | 0.00 | % | | 2,276,054 | | 14,384 | | | 0.63 | % | | — | | — | | — | | — | | — | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other assets | | | Pesos | | 1,289,250 | | 138,041 | | | 10.71 | % | | 1,078,256 | | 174,081 | | | 16.14 | % | | 1,075,212 | | 194,537 | | | 18.09 | % | | 1,078,256 | | 174,081 | | | 16.14 | % | | 1,075,212 | | 194,537 | | | 18.09 | % | | 763,631 | | 82,886 | | | 10.85 | % | Dollars | | 417,109 | | 23,663 | | | 5.67 | % | | 539,237 | | 46,871 | | | 8.69 | % | | 1,118,378 | | 87,515 | | | 7.83 | % | | 539,237 | | 46,871 | | | 8.69 | % | | 1,118,378 | | 87,515 | | | 7.83 | % | | 2,475,530 | | 57,598 | | | 2.33 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 1,706,359 | | 161,704 | | | 9.48 | % | | 1,617,493 | | 220,952 | | | 13.66 | % | | 2,193,590 | | 282,052 | | | 12.86 | % | | 1,617,493 | | 220,952 | | | 13.66 | % | | 2,193,590 | | 282,052 | | | 12.86 | % | | 3,239,161 | | 140,484 | | | 4.34 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total interest-earning assets | | �� | | | Pesos | | 13,521,740 | | 1,663,646 | | | 12.30 | % | | 16,410,845 | | 2,548,435 | | | 15.53 | % | | 15,136,322 | | 3,012,790 | | | 19.90 | % | | Dollars | | 2,395,839 | | 125,550 | | | 5.24 | % | | 3,174,716 | | 190,000 | | | 5.98 | % | | 3,831,150 | | 698,143 | | | 18.22 | % | | | | | | | | | | | | | | | | | | | | | | | Total | | 15,917,579 | | 1,789,196 | | | 11.24 | % | | 19,585,561 | | 2,738,435 | | | 13.98 | % | | 18,967,472 | | 3,710,933 | | | 19.56 | % | | | | | | | | | | | | | | | | | | | | | | | | | Non interest-earning assets | | | Cash and due from banks | | | Pesos | | 404,796 | | — | | 539,344 | | — | | 687,021 | | — | | | Dollars | | 455,163 | | — | | 286,879 | | — | | 513,818 | | — | | | Euros | | 14,590 | | — | | 8,589 | | — | | 11,312 | | — | | | Other | | 2,002 | | — | | 1,405 | | — | | 1,045 | | — | | | | | | | | | | | | Total | | 876,551 | | 836,217 | | 1,213,196 | | — | | | | | | | | | | | | | | | Investments in other companies | | | Pesos | | 14,529 | | — | | 16,911 | | — | | 9,755 | | — | | | Dollars | | 1,552 | | — | | 1,275 | | — | | 1,015 | | — | | | | | | | | | | | | Total | | 16,081 | | — | | 18,186 | | — | | 10,770 | | — | | | | | | | | | | | | | | | Property and equipment and miscellaneous and intangible assets and items pending of allocation | | | Pesos | | 771,073 | | — | | 801,674 | | — | | 763,325 | | — | | | | | | | | | | | | Total | | 771,073 | | — | | 801,674 | | — | | 763,325 | | — | | | | | | | | | | | | | | | Allowance for loan losses | | | Pesos | | | (174,992 | ) | | — | | | (203,344 | ) | | — | | | (367,163 | ) | | — | | | Dollars | | | (27,271 | ) | | — | | | (39,776 | ) | | — | | | (59,278 | ) | | — | | | | | | | | | | | | Total | | | (202,263 | ) | | — | | | (243,120 | ) | | — | | | (426,441 | ) | | — | | | | | | | | | | | | | | |
4450
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Years Ended December 31, | | | Years ended December 31, | | | | 2007 (1) | | 2008 (1) | | 2009 | | | 2008 | | 2009 | | 2010 | | | | Interest | | Average | | Interest | | Average | | Interest | | Average | | | Average | | Average | | Average | | | | Average | | Earned/ | | Nominal | | Average | | Earned/ | | Nominal | | Average | | Earned/ | | Nominal | | | Average | | Interest | | Nominal | | Average | | Interest | | Nominal | | Average | | Interest | | Nominal | | | | Balance | | (Paid) | | Rate | | Balance | | (Paid) | | Rate | | Balance | | (Paid) | | Rate | | | Balance | | Earned/(Paid) | | Rate | | Balance | | Earned/(Paid) | | Rate | | Balance | | Earned/(Paid) | | Rate | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos, except percentages) | | Total interest-earning assets | | | Pesos | | | 16,410,845 | | 2,548,435 | | | 15.53 | % | | 15,136,322 | | 3,012,790 | | | 19.90 | % | | 17,008,645 | | 3,311,683 | | | 19.47 | % | Dollars | | | 3,174,716 | | 190,000 | | | 5.98 | % | | 3,831,150 | | 698,143 | | | 18.22 | % | | 4,916,675 | | 244,089 | | | 4.96 | % | Total | | | 19,585,561 | | 2,738,435 | | | 13.98 | % | | 18,967,472 | | 3,710,933 | | | 19.56 | % | | 21,925,320 | | 3,555,772 | | | 16.22 | % | | | | | | | | | | | | | | | | | | | | | | | | | Non interest-earning assets | | | Cash and due from banks | | | Pesos | | | 539,344 | | 687,021 | | 996,459 | | Dollars | | | 286,879 | | 513,818 | | 617,398 | | Euros | | | 8,589 | | 11,312 | | 25,449 | | Other | | | 1,405 | | 1,045 | | 1,697 | | Total | | | 836,217 | | 1,213,196 | | 1,641,003 | | | | | | | | | | | | | | Investments in other companies | | | Pesos | | | 16,911 | | 9,755 | | 9,295 | | Dollars | | | 1,275 | | 1,015 | | 1,170 | | Total | | | 18,186 | | 10,770 | | 10,465 | | | | | | | | | | | | | | Property and equipment and miscellaneous and intangible assets and items pending of allocation | | | Pesos | | | 801,674 | | 763,325 | | 798,390 | | Total | | | 801,674 | | 763,325 | | 798,390 | | | | | | | | | | | | | | Allowance for loan losses | | | Pesos | | | | (203,344 | ) | | | (367,163 | ) | | | (368,458 | ) | | Dollars | | | | (39,776 | ) | | | (59,278 | ) | | | (60,874 | ) | | Total | | | | (243,120 | ) | | | (426,441 | ) | | | (429,332 | ) | | | | | | | | | | | | | Other assets | | | Pesos | | 271,428 | | — | | 578,682 | | — | | 1,942,877 | | — | | | 578,682 | | 1,942,877 | | 2,440,742 | | Dollars | | 41,280 | | — | | 288,686 | | — | | 1,492,830 | | — | | | 288,686 | | 1,492,830 | | 1,625,358 | | Euros | | 40 | | — | | 66 | | — | | 38 | | — | | | 66 | | 38 | | 66,344 | | | | | | | | | | | Total | | 312,748 | | — | | 867,434 | | — | | 3,435,745 | | — | | | 867,434 | | 3,435,745 | | 4,132,444 | | | | | | | | | | | | | | | | | | | | Total non interest-earning assets | | | Pesos | | 1,286,834 | | — | | 1,733,267 | | — | | 3,035,815 | | — | | | 1,733,267 | | 3,035,815 | | 3,876,428 | | Dollars | | 470,724 | | — | | 537,064 | | — | | 1,948,385 | | — | | | 537,064 | | 1,948,385 | | 2,183,052 | | Euros | | 14,630 | | — | | 8,655 | | — | | 11,350 | | — | | | 8,655 | | 11,350 | | 91,793 | | Other | | 2,002 | | — | | 1,405 | | — | | 1,045 | | — | | | 1,405 | | 1,045 | | 1,697 | | | | | | | | | | | Total | | 1,774,190 | | — | | 2,280,391 | | — | | 4,996,595 | | — | | | 2,280,391 | | 4,996,595 | | 6,152,970 | | | | | | | | | | | | | | | | | | | | TOTAL ASSETS | | | Pesos | | 14,808,574 | | — | | 18,144,112 | | — | | 18,172,137 | | — | | | 18,144,112 | | 18,172,137 | | 20,885,073 | | Dollars | | 2,866,563 | | — | | 3,711,780 | | — | | 5,779,535 | | — | | | 3,711,780 | | 5,779,535 | | 7,099,727 | | Euros | | 14,630 | | — | | 8,655 | | — | | 11,350 | | — | | | 8,655 | | 11,350 | | 91,793 | | Other | | 2,002 | | — | | 1,405 | | — | | 1,045 | | — | | | 1,405 | | 1,045 | | 1,697 | | | | | | | | | | | Total | | 17,691,769 | | — | | 21,865,952 | | — | | 23,964,067 | | — | | | 21,865,952 | | 23,964,067 | | 28,078,290 | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | Interest-bearing liabilities | | | Savings accounts | | | Pesos | | 2,486,927 | | 27,313 | | | 1.10 | % | | 2,822,961 | | 29,508 | | | 1.05 | % | | 2,842,075 | | 31,500 | | | 1.11 | % | | 2,822,961 | | 29,508 | | | 1.05 | % | | 2,842,075 | | 31,500 | | | 1.11 | % | | 2,969,340 | | 22,594 | | | 0.76 | % | Dollars | | 378,907 | | 3,070 | | | 0.81 | % | | 451,892 | | 2,734 | | | 0.61 | % | | 863,593 | | 2,017 | | | 0.23 | % | | 451,892 | | 2,734 | | | 0.61 | % | | 863,593 | | 2,017 | | | 0.23 | % | | 908,486 | | 1,118 | | | 0.12 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 2,865,834 | | 30,383 | | | 1.06 | % | | 3,274,853 | | 32,242 | | | 0.98 | % | | 3,705,668 | | 33,517 | | | 0.90 | % | | 3,274,853 | | 32,242 | | | 0.98 | % | | 3,705,668 | | 33,517 | | | 0.90 | % | | 3,877,826 | | 23,712 | | | 0.61 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Time deposits | | | Pesos | | 4,589,993 | | 421,823 | | | 9.19 | % | | 6,556,086 | | 873,787 | | | 13.33 | % | | 7,446,052 | | 1,079,924 | | | 14.50 | % | | 6,556,086 | | 873,787 | | | 13.33 | % | | 7,446,052 | | 1,079,924 | | | 14.50 | % | | 8,944,481 | | 929,682 | | | 10.39 | % | Dollars | | 1,437,841 | | 47,923 | | | 3.33 | % | | 1,717,511 | | 63,970 | | | 3.72 | % | | 2,648,975 | | 68,260 | | | 2.58 | % | | 1,717,511 | | 63,970 | | | 3.72 | % | | 2,648,975 | | 68,260 | | | 2.58 | % | | 2,646,095 | | 26,803 | | | 1.01 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 6,027,834 | | 469,746 | | | 7.79 | % | | 8,273,597 | | 937,757 | | | 11.33 | % | | 10,095,027 | | 1,148,184 | | | 11.37 | % | | 8,273,597 | | 937,757 | | | 11.33 | % | | 10,095,027 | | 1,148,184 | | | 11.37 | % | | 11,590,576 | | 956,485 | | | 8.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Borrowing from the Central Bank | | | Pesos | | 370,182 | | 37,344 | | | 10.09 | % | | 330,532 | | 33,713 | | | 10.20 | % | | 31,942 | | 1,856 | | | 5,81 | % | | 330,532 | | 33,713 | | | 10.20 | % | | 31,942 | | 1,856 | | | 5,81 | % | | — | | — | | | 0.00 | % | | | | | | | | | | | | | | | | | | | | | | Total | | 370,182 | | 37,344 | | | 10.09 | % | | 330,532 | | 33,713 | | | 10.20 | % | | 31,942 | | 1,856 | | | 5.81 | % | | 330,532 | | 33,713 | | | 10.20 | % | | 31,942 | | 1,856 | | | 5.81 | % | | — | | — | | | 0.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Borrowings from other financial institutions | | | Pesos | | 223,845 | | 20,394 | | | 9.11 | % | | 121,897 | | 11,847 | | | 9.72 | % | | 99,791 | | 9,269 | | | 9.29 | % | | Dollars | | 202,259 | | 13,967 | | | 6.91 | % | | 287,667 | | 19,539 | | | 6.79 | % | | 217,477 | | 17,190 | | | 7.90 | % | | | | | | | | | | | | | | | | | | | | | | | Total | | 426,104 | | 34,361 | | | 8.06 | % | | 409,564 | | 31,386 | | | 7.66 | % | | 317,268 | | 26,459 | | | 8.34 | % | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Bonds | | | Pesos | | 178,101 | | 19,082 | | | 10.71 | % | | 309,263 | | 34,055 | | | 11.01 | % | | 238,250 | | 25,631 | | | 10.76 | % | | Dollars | | 918,054 | | 86,444 | | | 9.42 | % | | 915,000 | | 83,911 | | | 9.17 | % | | 965,017 | | 89,439 | | | 9.27 | % | | | | | | | | | | | | | | | | | | | | | | | Total | | 1,096,155 | | 105,526 | | | 9.63 | % | | 1,224,263 | | 117,966 | | | 9.64 | % | | 1,203,267 | | 115,070 | | | 9.56 | % | | | | | | | | | | | | | | | | | | | | | | | | | | Other liabilities | | | Pesos | | 412,865 | | 21,096 | | | 5.11 | % | | 450,926 | | 29,528 | | | 6.55 | % | | 72,774 | | 2,911 | | | 4.00 | % | | Dollars | | 217,335 | | 2,470 | | | 1.14 | % | | 31,530 | | 3,183 | | | 10.10 | % | | — | | — | | | 0.00 | % | | | | | | | | | | | | | | | | | | | | | | | Total | | 630,200 | | 23,566 | | | 3.74 | % | | 482,456 | | 32,711 | | | 6.78 | % | | 72,774 | | 2,911 | | | 4.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | Total Interest-bearing liabilities | | | Pesos | | 8,261,913 | | 547,052 | | | 6.62 | % | | 10,591,665 | | 1,012,438 | | | 9.56 | % | | 10,730,884 | | 1,151,091 | | | 10.73 | % | | Dollars | | 3,154,396 | | 153,874 | | | 4.88 | % | | 3,403,600 | | 173,337 | | | 5.09 | % | | 4,695,062 | | 176,906 | | | 3.77 | % | | | | | | | | | | | | | | | | | | | | | | | Total | | 11,416,309 | | 700,926 | | | 6.14 | % | | 13,995,265 | | 1,185,775 | | | 8.47 | % | | 15,425,946 | | 1,327,997 | | | 8.61 | % | | | | | | | | | | | | | | | | | | | | | | | | | | Non-interest bearing liabilities and Shareholders’ equity | | | Demand deposits | | | Pesos | | 3,069,049 | | — | | | | 3,665,895 | | — | | 3,930,465 | | — | | | Dollars | | 6,680 | | — | | | | 8,059 | | — | | 17,092 | | — | | | | | | | | | | | | Total | | 3,075,729 | | — | | | | 3,673,954 | | — | | 3,947,557 | | — | | | | | | | | | | | |
4551
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Years Ended December 31, | | | Years ended December 31, | | | | 2007 (1) | | 2008 (1) | | 2009 | | | 2008 | | 2009 | | 2010 | | | | Interest | | Average | | Interest | | Average | | Interest | | Average | | | Average | | Average | | Average | | | | Average | | Earned/ | | Nominal | | Average | | Earned/ | | Nominal | | Average | | Earned/ | | Nominal | | | Average | | Interest | | Nominal | | Average | | Interest | | Nominal | | Average | | Interest | | Nominal | | | | Balance | | (Paid) | | Rate | | Balance | | (Paid) | | Rate | | Balance | | (Paid) | | Rate | | | Balance | | Earned/(Paid) | | Rate | | Balance | | Earned/(Paid) | | Rate | | Balance | | Earned/(Paid) | | Rate | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos, except percentages) | | Borrowings from other financial institutions | | | Pesos | | | 121,897 | | 11,847 | | | 9.72 | % | | 99,791 | | 9,269 | | | 9.29 | % | | 139,226 | | 15,888 | | | 11.41 | % | Dollars | | | 287,667 | | 19,539 | | | 6.79 | % | | 217,477 | | 17,190 | | | 7.90 | % | | 50,060 | | 1,837 | | | 3.67 | % | Total | | | 409,564 | | 31,386 | | | 7.66 | % | | 317,268 | | 26,459 | | | 8.34 | % | | 189,286 | | 17,725 | | | 9.36 | % | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Bonds | | | Pesos | | | 309,263 | | 34,055 | | | 11.01 | % | | 238,250 | | 25,631 | | | 10.76 | % | | 197,392 | | 21,236 | | | 10.76 | % | Dollars | | | 915,000 | | 83,911 | | | 9.17 | % | | 965,017 | | 89,439 | | | 9.27 | % | | 1,003,112 | | 92,843 | | | 9.26 | % | Total | | | 1,224,263 | | 117,966 | | | 9.64 | % | | 1,203,267 | | 115,070 | | | 9.56 | % | | 1,200,504 | | 114,079 | | | 9.50 | % | | | | | | | | | | | | | | | | | | | | | | | | | Other liabilities | | | Pesos | | | 450,926 | | 29,528 | | | 6.55 | % | | 72,774 | | 2,911 | | | 4.00 | % | | — | | — | | | 0.00 | % | Dollars | | | 31,530 | | 3,183 | | | 10.10 | % | | — | | — | | | 0.00 | % | | — | | — | | | 0.00 | % | Total | | | 482,456 | | 32,711 | | | 6.78 | % | | 72,774 | | 2,911 | | | 4.00 | % | | — | | — | | | 0.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | Total Interest-bearing liabilities | | | Pesos | | | 10,591,665 | | 1,012,438 | | | 9.56 | % | | 10,730,884 | | 1,151,091 | | | 10.73 | % | | 12,250,439 | | 989,400 | | | 8.08 | % | Dollars | | | 3,403,600 | | 173,337 | | | 5.09 | % | | 4,695,062 | | 176,906 | | | 3.77 | % | | 4,607,753 | | 122,601 | | | 2.66 | % | Total | | | 13,995,265 | | 1,185,775 | | | 8.47 | % | | 15,425,946 | | 1,327,997 | | | 8.61 | % | | 16,858,192 | | 1,112,001 | | | 6.60 | % | | | | | | | | | | | | | | | | | | | | | | | | | Non-interest bearing liabilities and Shareholders’ equity | | | Demand deposits | | | Pesos | | | 3,665,895 | | 3,930,465 | | 5,606,430 | | Dollars | | | 8,059 | | 17,092 | | 213,440 | | Total | | | 3,673,954 | | 3,947,557 | | 5,819,870 | | | | | | | | | | | | | | Other liabilities | | | Pesos | | 511,872 | | — | | | | 906,424 | | — | | 1,041,313 | | — | | | 906,424 | | 1,041,313 | | 1,113,739 | | Dollars | | 185,904 | | — | | | | 490,452 | | — | | 464,579 | | — | | | 490,452 | | 464,579 | | 452,516 | | Euros | | 6,045 | | — | | 6,916 | | — | | 10,944 | | — | | | 6,916 | | 10,944 | | 76,209 | | Other | | 130 | | — | | 75 | | — | | 61 | | — | | | 75 | | 61 | | 294 | | | | | | | | | | | Total | | 703,951 | | — | | 1,403,867 | | — | | 1,516,897 | | — | | | 1,403,867 | | 1,516,897 | | 1,642,758 | | | | | | | | | | | | | | | | | | | | Minority Interest | | | Pesos | | 34,112 | | — | | 14,294 | | — | | 17,931 | | — | | | 14,294 | | 17,931 | | 24,289 | | | | | | | | | | | Total | | 34,112 | | — | | 14,294 | | — | | 17,931 | | — | | | 14,294 | | 17,931 | | 24,289 | | | | | | | | | | | | | | | | | | | | Shareholders’ equity | | | Pesos | | 2,461,668 | | — | | 2,778,572 | | — | | 3,055,736 | | — | | | 2,778,572 | | 3,055,736 | | 3,733,181 | | | | | | | | | | | Total | | 2,461,668 | | — | | 2,778,572 | | — | | 3,055,736 | | — | | | 2,778,572 | | 3,055,736 | | 3,733,181 | | | | | | | | | | | | | | | | | | | | Total non-interest bearing liabilities and shareholders’ equity | | | | | | Total non—interest bearing liabilities and shareholders’ equity | | | Pesos | | 6,076,701 | | — | | 7,365,185 | | — | | 8,045,445 | | — | | | 7,365,185 | | 8,045,445 | | 10,477,639 | | Dollars | | 192,584 | | — | | 498,511 | | — | | 481,671 | | — | | | 498,511 | | 481,671 | | 665,956 | | Euros | | 6,045 | | — | | 6,916 | | — | | 10,944 | | — | | | 6,916 | | 10,944 | | 76,209 | | Other | | 130 | | — | | 75 | | — | | 61 | | — | | | 75 | | 61 | | 294 | | | | | | | | | | | Total | | 6,275,460 | | — | | 7,870,687 | | — | | 8,538,121 | | — | | | 7,870,687 | | 8,538,121 | | 11,220,098 | | | | | | | | | | | | | | | | | | | | TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | | Pesos | | 14,338,614 | | — | | 17,956,850 | | — | | 18,776,329 | | — | | | 17,956,850 | | 18,776,329 | | 22,728,078 | | Dollars | | 3,346,980 | | — | | 3,902,111 | | — | | 5,176,733 | | — | | | 3,902,111 | | 5,176,733 | | 5,273,709 | | Euros | | 6,045 | | — | | 6,916 | | — | | 10,944 | | — | | | 6,916 | | 10,944 | | 76,209 | | �� | Other | | 130 | | — | | 75 | | — | | 61 | | — | | | 75 | | 61 | | 294 | | | | | | | | | | | | | Total | | 17,691,769 | | — | | 21,865,952 | | — | | 23,964,067 | | — | | | 21,865,952 | | 23,964,067 | | 28,078,290 | | | | | | | | | | | | | | | | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2009.
| | (2)(1) | | Includes instruments issued by the Central Bank. The interest earned/paid includes changes due to mark-to-market of those securities. |
52
Changes in interest income and interest expense; volume and rate analysis The following tables allocate, by currency of denomination, changes in our interest income and interest expense between changes in the average volumesegregated for each major category of interest-earning assets and interest-bearing liabilities andinto amounts attributable to changes in their average volume and their respective nominal interest rates for the fiscal year ended December 31, 2007 compared to the fiscal year ended December 31, 2006; for the fiscal year ended December 31, 2008 compared to the fiscal year ended December 31, 2007; and for the fiscal year ended December 31, 2009 compared to the fiscal year ended December 31, 2008.2008; and for the fiscal year ended December 31, 2010 compared to the fiscal year ended December 31, 2009. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 2007/December 2006 | | December 2008/December 2007 | | December 2009/December 2008 | | | | | Increase (Decrease) Due to | | Increase (Decrease) Due to | | Increase (Decrease) Due to | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Changes in | | Changes in | | Changes in | | | December 2008/December 2007 | | December 2009/December 2008 | | December 2010/December 2009 | | | | Net | | Net | | Net | | | Increase (Decrease) Due to Changes in | | Increase (Decrease) Due to Changes in | | Increase (Decrease) Due to Changes in | | | | Volume | | Rate | | Change | | Volume | | Rate | | Change | | Volume | | Rate | | Change | | | Volume | | Rate | | Net Change | | Volume | | Rate | | Net Change | | Volume | | Rate | | Net Change | | | | (in thousands of pesos) | | | (in thousands of pesos) | | ASSETS | | | Interest-earning assets | | | | | | Government securities | | | Pesos | | 160,606 | | | (23,250 | ) | | 137,356 | | 52,542 | | 66,283 | | 118,825 | | 119,295 | | 126,031 | | 245,326 | | | 52,542 | | 66,283 | | 118,825 | | 119,295 | | 126,031 | | 245,326 | | 38,438 | | 29,931 | | 68,369 | | Dollars | | | (4,293 | ) | | 29,862 | | 25,569 | | | (929 | ) | | | (20,454 | ) | | | (21,383 | ) | | 234,376 | | 192,307 | | 426,683 | | | | (929 | ) | | | (20,454 | ) | | | (21,383 | ) | | 234,376 | | 192,307 | | 426,683 | | | (20,772 | ) | | | (327,184 | ) | | | (347,956 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | 156,313 | | 6,612 | | 162,925 | | 51,613 | | 45,829 | | 97,442 | | 353,671 | | 318,338 | | 672,009 | | | 51,613 | | 45,829 | | 97,442 | | 353,671 | | 318,338 | | 672,009 | | 17,666 | | | (297,253 | ) | | | (279,587 | ) | | | | | | | | | | | | | | | | | | | | | | | | | Loans | | | Private and financial sector | | | Pesos | | 399,688 | | 65,714 | | 465,402 | | 499,276 | | 245,687 | | 744,963 | | 18,838 | | 202,982 | | 221,820 | | | 499,276 | | 245,687 | | 744,963 | | 18,838 | | 202,982 | | 221,820 | | 416,592 | | | (168,838 | ) | | 247,754 | | Dollars | | 32,921 | | 6,690 | | 39,611 | | 46,822 | | 18,279 | | 65,101 | | 34,483 | | 11,331 | | 45,814 | | | 46,822 | | 18,279 | | 65,101 | | 34,483 | | 11,331 | | 45,814 | | | (9,015 | ) | | | (67,166 | ) | | | (76,181 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | 432,609 | | 72,404 | | 505,013 | | 546,098 | | 263,966 | | 810,064 | | 53,321 | | 214,313 | | 267,634 | | | 546,098 | | 263,966 | | 810,064 | | 53,321 | | 214,313 | | 267,634 | | 407,577 | | | (236,004 | ) | | 171,573 | | | | | | | | | | | | | | | | | | | | | | | | | | Public sector | | | Pesos | | 4,905 | | | (46,757 | ) | | | (41,852 | ) | | | (635 | ) | | | (12,882 | ) | | | (13,517 | ) | | | (36,236 | ) | | 22,375 | | | (13,861 | ) | | | (635 | ) | | | (12,882 | ) | | | (13,517 | ) | | | (36,236 | ) | | 22,375 | | | (13,861 | ) | | | (5,270 | ) | | | 99,691 | | | 94,421 | | Dollars | | | | | | | | | | | | | | | | | | | | | | | | Total | | 4,905 | | | (46,757 | ) | | | (41,852 | ) | | | (635 | ) | | | (12,882 | ) | | | (13,517 | ) | | | (36,236 | ) | | 22,375 | | | (13,861 | ) | | | (635 | ) | | | (12,882 | ) | | | (13,517 | ) | | | (36,236 | ) | | 22,375 | | | (13,861 | ) | | | (5,270 | ) | | | 99,691 | | | 94,421 | | | | | | | | | | | | | | | | | | | | | | | Deposits with the Central Bank | | | Pesos | | | 1,678 | | | (3,200 | ) | | | (1,522 | ) | | — | | | (9,386 | ) | | | (9,386 | ) | | — | | — | | — | | Dollars | | | 247 | | | (2,723 | ) | | | (2,476 | ) | | — | | | (4,998 | ) | | | (4,998 | ) | | — | | — | | — | | | | | Total | | | 1,925 | | | (5,923 | ) | | | (3,998 | ) | | — | | | (14,384 | ) | | | (14,384 | ) | | — | | — | | — | | | | | Other assets | | | Pesos | | | | (34,064 | ) | | 70,104 | | 36,040 | | | (551 | ) | | 21,007 | | 20,456 | | | (33,820 | ) | | | (77,831 | ) | | | (111,651 | ) | Dollars | | | 10,615 | | 12,593 | | 23,208 | | 45,319 | | | (4,675 | ) | | 40,644 | | 31,577 | | | (61,494 | ) | | | (29,917 | ) | | | | Total | | | | (23,449 | ) | | 82,697 | | 59,248 | | 44,768 | | 16,332 | | 61,100 | | | (2,243 | ) | | | (139,325 | ) | | | (141,568 | ) | | | | Total interest-earning assets | | | Pesos | | | 518,797 | | 365,992 | | 884,789 | | 101,346 | | 363,009 | | 464,355 | | 415,940 | | | (117,047 | ) | | 298,893 | | Dollars | | | 56,755 | | 7,695 | | 64,450 | | 314,178 | | 193,965 | | 508,143 | | 1,790 | | | (455,844 | ) | | | (454,054 | ) | Total | | | 575,552 | | 373,687 | | 949,239 | | 415,524 | | 556,974 | | 972,498 | | 417,730 | | | (572,891 | ) | | | (155,161 | ) | | | | LIABILITIES | | | Interest-bearing liabilities | | | | | | Savings accounts | | | Pesos | | | 3,513 | | | (1,318 | ) | | 2,195 | | 212 | | 1,780 | | 1,992 | | 968 | | | (9,874 | ) | | | (8,906 | ) | Dollars | | | 442 | | | (778 | ) | | | (336 | ) | | 962 | | | (1,679 | ) | | | (717 | ) | | 55 | | | (954 | ) | | | (899 | ) | | | | Total | | | 3,955 | | | (2,096 | ) | | 1,859 | | 1,174 | | 101 | | 1,275 | | 1,023 | | | (10,828 | ) | | | (9,805 | ) | | | | Time deposits | | | Pesos | | | 262,038 | | 189,926 | | 451,964 | | 129,075 | | 77,062 | | 206,137 | | 155,745 | | | (305,987 | ) | | | (150,242 | ) | Dollars | | | 10,417 | | 5,630 | | 16,047 | | 24,002 | | | (19,712 | ) | | 4,290 | | | (29 | ) | | | (41,428 | ) | | | (41,457 | ) | | | | Total | | | 272,455 | | 195,556 | | 468,011 | | 153,077 | | 57,350 | | 210,427 | | 155,716 | | | (347,415 | ) | | | (191,699 | ) | | | | Borrowings from the Central Bank | | | Pesos | | | | (4,044 | ) | | 413 | | | (3,631 | ) | | | (17,350 | ) | | | (14,507 | ) | | | (31,857 | ) | | — | | | (1,856 | ) | | | (1,856 | ) | Dollars | | | — | | — | | — | | — | | — | | — | | | | | Total | | | | (4,044 | ) | | 413 | | | (3,631 | ) | | | (17,350 | ) | | | (14,507 | ) | | | (31,857 | ) | | — | | | (1,856 | ) | | | (1,856 | ) | | | | Borrowings from other financial institutions | | | Pesos | | | | (9,908 | ) | | 1,361 | | | (8,547 | ) | | | (2.053 | ) | | | (525 | ) | | | (2,578 | ) | | 4,500 | | 2,119 | | 6,619 | | Dollars | | | 5,801 | | | (229 | ) | | 5,572 | | | (5,548 | ) | | 3,199 | | | (2,349 | ) | | | (6,144 | ) | | | (9,209 | ) | | | (15,353 | ) | | | | Total | | | | (4,107 | ) | | 1,132 | | | (2,975 | ) | | | (7,601 | ) | | 2,674 | | | (4,927 | ) | | | (1,644 | ) | | | (7,090 | ) | | | (8,734 | ) | | | Corporate Bonds | | | Pesos | | | 14,443 | | 530 | | 14,973 | | | (7,640 | ) | | | (784 | ) | | | (8,424 | ) | | | (4,396 | ) | | 1 | | | (4,395 | ) | Dollars | | | | (280 | ) | | | (2,253 | ) | | | (2,533 | ) | | 4,636 | | 892 | | 5,528 | | 3,526 | | | (122 | ) | | 3,404 | | | | | Total | | | 14,163 | | | (1,723 | ) | | 12,440 | | | (3,004 | ) | | 108 | | | (2,896 | ) | | | (870 | ) | | | (121 | ) | | | (991 | ) | | | | Other liabilities | | | Pesos | | | 2,492 | | 5,940 | | 8,432 | | | (15,126 | ) | | | (11,491 | ) | | | (26,617 | ) | | — | | | (2,911 | ) | | | (2,911 | ) | Dollars | | | | (18,757 | ) | | 19,470 | | 713 | | | (3,183 | ) | | | (3,183 | ) | | — | | — | | — | | | | | Total | | | | (16,265 | ) | | 25,410 | | 9,145 | | | (15,126 | ) | | | (14,674 | ) | | | (29,800 | ) | | — | | | (2,911 | ) | | | (2,911 | ) | | | | Total interest-bearing liabilities | | | Pesos | | | 268,534 | | 196,852 | | 465,386 | | 87,118 | | 51,535 | | 138,653 | | 156,817 | | | (318,508 | ) | | | (161,691 | ) | Dollars | | | | (2,377 | ) | | 21,840 | | 19,463 | | 24,052 | | | (20,483 | ) | | 3,569 | | | (2,592 | ) | | | (51,713 | ) | | | (54,305 | ) | | | | Total | | | 266,157 | | 218,692 | | 484,849 | | 111,170 | | 31,052 | | 142,222 | | 154,225 | | | (370,221 | ) | | | (215,996 | ) |
46
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 2007/December 2006 | | | December 2008/December 2007 | | | December 2009/December 2008 | | | | Increase (Decrease) Due to | | | Increase (Decrease) Due to | | | Increase (Decrease) Due to | | | | Changes in | | | Changes in | | | Changes in | | | | | | | | | | | | Net | | | | | | | | | | | Net | | | | | | | | | | | Net | | | | Volume | | | Rate | | | Change | | | Volume | | | Rate | | | Change | | | Volume | | | Rate | | | Change | | | | (in thousands of pesos) | | Deposits with the Central Bank | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 5,100 | | | | 2,983 | | | | 8,083 | | | | 1,678 | | | | (3,200 | ) | | | (1,522 | ) | | | — | | | | (9,386 | ) | | | (9,386 | ) | Dollars | | | 1,676 | | | | (1,763 | ) | | | (87 | ) | | | 247 | | | | (2,723 | ) | | | (2,476 | ) | | | — | | | | (4,998 | ) | | | (4,998 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 6,776 | | | | 1,220 | | | | 7,996 | | | | 1,925 | | | | (5,923 | ) | | | (3,998 | ) | | | — | | | | (14,384 | ) | | | (14,384 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 25,036 | | | | 17,068 | | | | 42,104 | | | | (34,064 | ) | | | 70,104 | | | | 36,040 | | | | (551 | ) | | | 21,007 | | | | 20,456 | | Dollars | | | (3,504 | ) | | | 6,575 | | | | 3,071 | | | | 10,615 | | | | 12,593 | | | | 23,208 | | | | 45,319 | | | | (4,675 | ) | | | 40,644 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 21,532 | | | | 23,643 | | | | 45,175 | | | | (23,449 | ) | | | 82,697 | | | | 59,248 | | | | 44,768 | | | | 16,332 | | | | 61,100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total interest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 595,335 | | | | 15,758 | | | | 611,093 | | | | 518,797 | | | | 365,992 | | | | 884,789 | | | | 101,346 | | | | 363,009 | | | | 464,335 | | Dollars | | | 26,800 | | | | 41,364 | | | | 68,164 | | | | 56,755 | | | | 7,695 | | | | 64,450 | | | | 314,178 | | | | 193,965 | | | | 508,143 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 622,135 | | | | 57,122 | | | | 679,257 | | | | 575,552 | | | | 373,687 | | | | 949,239 | | | | 415,524 | | | | 556,974 | | | | 972,498 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Savings accounts | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 3,681 | | | | (50 | ) | | | 3,631 | | | | 3,513 | | | | (1,318 | ) | | | 2,195 | | | | 212 | | | | 1,780 | | | | 1,992 | | Dollars | | | 176 | | | | 206 | | | | 382 | | | | 442 | | | | (778 | ) | | | (336 | ) | | | 962 | | | | (1,679 | ) | | | (717 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 3,857 | | | | 156 | | | | 4,013 | | | | 3,955 | | | | (2,096 | ) | | | 1,859 | | | | 1,174 | | | | 101 | | | | 1,275 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Time deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 140,958 | | | | 27,938 | | | | 168,896 | | | | 262,038 | | | | 189,926 | | | | 451,964 | | | | 129,075 | | | | 77,062 | | | | 206,137 | | Dollars | | | 8,254 | | | | 8,502 | | | | 16,756 | | | | 10,417 | | | | 5,630 | | | | 16,047 | | | | 24,002 | | | | (19,712 | ) | | | 4,290 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 149,212 | | | | 36,440 | | | | 185,652 | | | | 272,455 | | | | 195,556 | | | | 468,011 | | | | 153,077 | | | | 57,350 | | | | 210,427 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Borrowings from the Central Bank | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 6,565 | | | | 18,356 | | | | 24,921 | | | | (4,044 | ) | | | 413 | | | | (3,631 | ) | | | (17,350 | ) | | | (14,507 | ) | | | (31,857 | ) | Dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 6,565 | | | | 18,356 | | | | 24,921 | | | | (4,044 | ) | | | 413 | | | | (3,631 | ) | | | (17,350 | ) | | | (14,507 | ) | | | (31,857 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Borrowings from other financial institutions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 11,292 | | | | 792 | | | | 12,084 | | | | (9,908 | ) | | | 1,361 | | | | (8,547 | ) | | | (2.053 | ) | | | (525 | ) | | | (2,578 | ) | Dollars | | | 3,680 | | | | (9,676 | ) | | | (5,996 | ) | | | 5,801 | | | | (229 | ) | | | 5,572 | | | | (5,548 | ) | | | 3,199 | | | | (2,349 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 14,972 | | | | (8,884 | ) | | | 6,088 | | | | (4,107 | ) | | | 1,132 | | | | (2,975 | ) | | | (7,601 | ) | | | 2,674 | | | | (4,927 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Bonds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 18,403 | | | | (336 | ) | | | 18,067 | | | | 14,443 | | | | 530 | | | | 14,973 | | | | (7,640 | ) | | | (784 | ) | | | (8,424 | ) | Dollars | | | 82,785 | | | | 2,047 | | | | 84,832 | | | | (280 | ) | | | (2,253 | ) | | | (2,533 | ) | | | 4,636 | | | | 892 | | | | 5,528 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 101,188 | | | | 1,711 | | | | 102,899 | | | | 14,163 | | | | (1,723 | ) | | | 12,440 | | | | (3,004 | ) | | | 108 | | | | (2,896 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 15,331 | | | | 268 | | | | 15,599 | | | | 2,492 | | | | 5,940 | | | | 8,432 | | | | (15,126 | ) | | | (11,491 | ) | | | (26,617 | ) | Dollars | | | 269 | | | | 3,228 | | | | 3,497 | | | | (18,757 | ) | | | 19,470 | | | | 713 | | | | | | | | (3,183 | ) | | | (3,183 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 15,600 | | | | 3,496 | | | | 19,096 | | | | (16,265 | ) | | | 25,410 | | | | 9,145 | | | | (15,126 | ) | | | (14,674 | ) | | | (29,800 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pesos | | | 196,230 | | | | 46,968 | | | | 243,198 | | | | 268,534 | | | | 196,852 | | | | 465,386 | | | | 87,118 | | | | 51,535 | | | | 138,653 | | Dollars | | | 95,164 | | | | 4,307 | | | | 99,471 | | | | (2,377 | ) | | | 21,840 | | | | 19,463 | | | | 24,052 | | | | (20,483 | ) | | | 3,569 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 291,394 | | | | 51,275 | | | | 342,669 | | | | 266,157 | | | | 218,692 | | | | 484,849 | | | | 111,170 | | | | 31,052 | | | | 142,222 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
4753
Interest-earning assets: net interest margin and spread The following table analyzes, by currency of denomination, our levels of average interest-earning assets and net interest income, and illustrates the comparative margins and spreads for each of the years indicated. | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | Year Ended December 31, | | | | 2007 | | 2008 | | 2009 | | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos, except percentages) | | Average interest-earning assets | | | Pesos | | 13,521,740 | | 16,410,845 | | 15,136,322 | | | 16,410,845 | | 15,136,322 | | 17,008,645 | | Dollars | | 2,395,839 | | 3,174,716 | | 3,831,150 | | | 3,174,716 | | 3,831,150 | | 4,916,675 | | | | | | | | | | | Total | | 15,917,579 | | 19,585,561 | | 18,967,472 | | | 19,585,561 | | 18,967,472 | | 21,925,320 | | | | | | | | | | | Net interest income (1) | | | Pesos | | 1,116,594 | | 1,535,997 | | 1,861,699 | | | 1,535,997 | | 1,861,699 | | 2,322,283 | | Dollars | | | (28,324 | ) | | 16,663 | | 521,237 | | | 16,663 | | 521,237 | | 121,488 | | | | | | | | | | | Total | | 1,088,270 | | 1,552,660 | | 2,382,936 | | | 1,552,660 | | 2,382,936 | | 2,443,771 | | | | | | | | | | | Net interest margin (2) | | | Pesos | | | 8.26 | % | | | 9.36 | % | | | 12.30 | % | | | 9.36 | % | | | 12.30 | % | | | 13.65 | % | Dollars | | | (1.18 | )% | | | 0.52 | % | | | 13.61 | % | | | 0.52 | % | | | 13.61 | % | | | 2.47 | % | Weighted average rate | | | 6.85 | % | | | 7.93 | % | | | 12.56 | % | | | 7.93 | % | | | 12.56 | % | | | 11.15 | % | Yield spread nominal basis (3) | | | Pesos | | | 5.68 | % | | | 5.97 | % | | | 9.18 | % | | | 5.97 | % | | | 9.18 | % | | | 11.39 | % | Dollars | | | 0.42 | % | | | 0.90 | % | | | 14.45 | % | | | 0.90 | % | | | 14.45 | % | | | 2.30 | % | Weighted average rate | | | 5.12 | % | | | 5.51 | % | | | 10.96 | % | | | 5.51 | % | | | 10.96 | % | | | 9.62 | % |
| | | (1) | | Defined as interest earned less interest paid. Trading results from our portfolio of government and private securities and from foreign exchange transactions are included in interest. | | (2) | | Net interest income (including income from government and private securities)securities and from foreign exchange transactions) divided by average interest-earning assets. | | (3) | | Defined as the difference between the average nominal rate on interest-earning assets and the average nominal rate on interest-bearinginterest- bearing liabilities. |
Investment portfolio: government and private securities We own, manage and trade a portfolio of securities issued by the Argentine and other governments and private issuers. The following table analyzes, by currency of denomination, our investments in Argentine and other governments and private securities as of December 31, 2007, 2008, 2009 and 2009.2010. Securities are stated before deduction of allowances. | | | | | | | | | | | | | | | As of December 31, | | | | 2007 | | | 2008 | | | 2009 | | | | (in thousands of pesos) | | Government Securities | | | | | | | | | | | | | In Pesos: | | | | | | | | | | | | | Holdings in Special Investment Accounts | | | | | | | | | | | | | Federal Government bonds at 2% — Maturity 2014 | | | — | | | | 3,582 | | | | 222,169 | | Federal Government bonds at Badlar + 2.75 — Maturity 2014 | | | — | | | | — | | | | 191,384 | | Secured bonds Decree No. 1,579/02 — Maturity 2018 | | | — | | | | 23,769 | | | | 178,979 | | Discount bonds at 5.83% — Maturity 2033 | | | — | | | | 22,201 | | | | 18,207 | | Consolidation bonds. Sixth series — Maturity 2024 | | | — | | | | 4,122 | | | | 5,350 | | Consolidation bonds of social security payable at 2% — Maturity 2010 and 2014 | | | — | | | | 83,847 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | Subtotal Holdings in Special Investment Accounts | | | — | | | | 137,521 | | | | 616,089 | | | | | | | | | | | | | | | | | | | | | | | | | Holdings for Trading or Financial Intermediation | | | | | | | | | | | | | Discount bonds at 5.83% — Maturity 2033 | | | 18,746 | | | | 209,277 | | | | 9,752 | | Consolidation bonds of social security payable at 2% — Maturity 2014 | | | 15,458 | | | | 1,324 | | | | 7,525 | | Federal Government Bonds at 2% — Maturity 2014 | | | 13,840 | | | | — | | | | 6,579 | | Federal Government bonds at Badlar + 2.75% — Maturity 2014 | | | — | | | | — | | | | 1,464 | | Secured bonds Decree 1,579/02 at 2% — Maturity 2018 | | | 38,299 | | | | 652 | | | | 1,433 | | Federal Government bonds at Badlar + 300 Pbs — Maturity 2015 | | | — | | | | — | | | | 1,064 | | Consolidation bonds at 2% — Maturity 2016 | | | 4,663 | | | | 1,523 | | | | 599 | | Others | | | 66,509 | | | | 9,595 | | | | 1,501 | | | | | | | | | | | | | Subtotal Holdings for Trading or Financial Intermediation | | | 157,515 | | | | 222,371 | | | | 29,917 | | | | | | | | | | | |
| | | | | | | | | | | | | | | As of December 31, | | | | 2008 | | | 2009 | | | 2010 | | | | (in thousands of pesos) | | Government Securities | | | | | | | | | | | | | In Pesos: | | | | | | | | | | | | | Holdings in Special Investment Accounts | | | | | | | | | | | | | Federal Government bonds at 2% — Maturity 2014 | | | 3,582 | | | | 222,169 | | | | — | | Federal Government bonds at Badlar + 2.75% — Maturity 2014 | | | — | | | | 191,384 | | | | — | | Secured bonds Decree No. 1,579/02 at 2% — Maturity 2018 | | | 23,769 | | | | 178,979 | | | | — | | Discount bonds at 5.83% — Maturity 2033 | | | 22,201 | | | | 18,207 | | | | — | | Consolidation bonds at 2% — Sixth series — Maturity 2024 | | | 4,122 | | | | 5,350 | | | | — | | Consolidation bonds of social security payables at 2% — Maturity 2010 and 2014 | | | 83,847 | | | | — | | | | — | | | | | | | | | | | | | | | Subtotal Holdings in Special Investment Accounts | | | 137,521 | | | | 616,089 | | | | — | | | | | | | | | | | | | | | Holdings for Trading or Financial Intermediation | | | | | | | | | | | | | Federal Government bonds at Badlar +2.75% —Maturity 2014 | | | — | | | | 1,464 | | | | 200,925 | | Secured bonds Decree. 1,579/02 at 2% Maturity 2018 | | | 652 | | | | 1,433 | | | | 40,988 | | Consolidation bonds of social security payables at 2% — Maturity: 2014 | | | 1,324 | | | | 7,525 | | | | 7,029 | | Discount bonds at 5.83% — Maturity 2033 | | | 5,697 | | | | 9,752 | | | | 6,956 | | Federal Government bonds at 2% — Maturity 2014 | | | — | | | | 6,579 | | | | 3,674 | | Federal Government bonds at 10.50% — Maturity 2012 | | | — | | | | 189 | | | | 1,059 | | Federal Government bonds at Badlar + 3% — Maturity 2015 | | | — | | | | 1,064 | | | | 901 | | Consolidation bonds at 2% — Sixt Series — Maturity 2024 | | | 12 | | | | 382 | | | | 645 | | Par bonds at variable rate — Maturity 2038 | | | 181 | | | | 261 | | | | 519 | |
4854
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | | | 2007 | | 2008 | | 2009 | | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos) | | | (in thousands of pesos) | | Unlisted Government Securities | | | Argentine Government bonds at Badlar + 3.50% — Maturity 2013 | | — | | 51,864 | | 44,541 | | | Federal Government bonds at variable rate — Maturity 2013 | | 11,987 | | 10,385 | | 9,738 | | | Province of Tucuman bonds at 2% — Maturity 2018 | | — | | 2,290 | | 1,984 | | | Consolidation bonds at 2% — Maturity 2010 | | — | | — | | 199 | | | GDP — Related securities — Maturity 2035 | | | 96 | | 325 | | 54 | | Others | | 52 | | — | | 7 | | | 10,827 | | 943 | | 279 | | | | | | | | | | | Subtotal Holdings for Trading or Intermediation | | | 18,789 | | 29,917 | | 263,029 | | | | | Unlisted Government Securities | | | Province of Buenos Aires treasury bills at 168 days — Maturity: 2011 | | | — | | — | | 50,084 | | Province of Buenos Aires treasury bills at 84 days — Maturity 2011 | | | — | | — | | 49,575 | | Federal Government bonds at Badlar + 3.50% —Maturity 2013 | | | 51,864 | | 44,541 | | 46,350 | | Federal Government bonds at variable rate —Maturity 2013 | | | 10,385 | | 9,738 | | 7,523 | | Province of Tucuman bonds at 2% — Maturity: 2018 | | | 2,290 | | 1,984 | | 1,565 | | Others | | | — | | 206 | | 3 | | | | | Subtotal Unlisted Government Securities | | 12,039 | | 64,539 | | 56,469 | | | 64,539 | | 56,469 | | 155,100 | | | | | | | | | | | | | | | Instruments Issued by The Central Bank | | | Instruments Issued by Central Bank | | | Listed Central Bank bills and notes (Lebacs/Nobacs) | | 3,478,246 | | 772,496 | | 264,485 | | | 772,496 | | 264,485 | | 681,949 | | Unlisted Central Bank bills and notes (Lebacs/Nobacs) | | — | | 3,066,415 | | 4,385,936 | | | 2,640,452 | | 4,371,284 | | 3,167,344 | | | | | | | | | | | | | | Subtotal Instruments Issued by Central Bank | | 3,478,246 | | 3,838,911 | | 4,650,421 | | | 3,412,948 | | 4,635,769 | | 3,849,293 | | | | | | | | | | | Securities under repurchase agreement | | | | | | | Unlisted Central Bank bills and notes (Lebacs/Nobacs) | | | 425,963 | | 14,652 | | 148,959 | | Consolidation bonds at 2% — Sixth series — Maturity 2024 | | | — | | — | | 18,518 | | Listed Central Bank bills and notes (Lebacs/Nobacs) | | | — | | — | | 7,514 | | Discount bonds denominated at 5.83% — Maturity 2033 | | | 203,580 | | — | | 4,797 | | Federal Government bonds at Badlar + 2.75% — Maturity 2014 | | | — | | — | | 990 | | GDP — Related Securities — Maturity 2035 | | | — | | — | | 149 | | | | | Subtotal Securities under repurchase agreement | | | 629,543 | | 14,652 | | 180,927 | | | | | | Total Government Securities in pesos | | 3,647,800 | | 4,263,342 | | 5,352,896 | | | 4,263,340 | | 5,352,896 | | 4,448,349 | | | | | | | | | | | | | | In Foreign Currency: | | | Holdings in Special Investment Accounts | | | Argentine Government bonds at 7% — Maturity 2015 | | — | | 49,590 | | 38,881 | | | Federal Government bonds at Libor — Maturity 2012 and 2013 | | 236,110 | | 2,346 | | | Par Bonds at variable rate — Maturity 2038 (governed by Argentine legislation) | | — | | 1,450 | | 1,594 | | | Par bonds at variable rate — Maturity 2038 (governed by New York State legislation) | | — | | 382 | | 461 | | | Argentine Government bonds at 7% — Maturity 2017 | | — | | 23,252 | | — | | | | | | | | | | | | Federal Government bonds at 7% — Maturity 2015 | | | 49,590 | | 38,881 | | — | | Federal Government bonds at Libor — Maturity 2012 | | | 235,546 | | 1,784 | | — | | Federal Government bonds at Libor— Maturity 2013 | | | 564 | | 562 | | — | | Par bonds at variable rate — Maturity 2038 (governed by Argentina legislation) | | | 1,450 | | 1,594 | | — | | Par bonds at variable rate — Maturity 2038 (Governed by New York State legislation) | | | 382 | | 461 | | — | | Federal Government bonds at 7% — Maturity 2017 | | | 23,252 | | — | | — | | | | | Subtotal Holdings in Special Investment Accounts | | — | | 310,784 | | 43,282 | | | 310,784 | | 43,282 | | — | | | | | | | | | | | | | | Holding for Trading or Financial Intermediation | | | Argentine Government bonds at 7% — Maturity 2017 | | 45,954 | | 1,633 | | 1,046,220 | | | Treasury Bills — Maturity: 2011 | | | — | | — | | 198,790 | | Federal Government bonds al Libor — Maturity 2012 | | | 96,415 | | 52,874 | | 42,466 | | Federal Government bonds at 7% — Maturity 2015 | | | 9,627 | | 1,544 | | 1,640 | | Federal government bonds at Libor — Maturity 2013 | | | 2,304 | | 345 | | 1,113 | | Federal Government bonds at 7% — Maturity 2017 | | | 1,633 | | — | | 1,026 | | Treasury Bills — Maturity 2010 | | — | | — | | 379,666 | | | — | | 379,666 | | — | | Federal Government bonds al Libor — Maturity 2012 | | 140,870 | | 96,415 | | 52,874 | | | Argentine Government bonds at 7% — Maturity 2015 | | — | | 9,627 | | 1,544 | | | Others | | 14,060 | | 14,421 | | 850 | | | 12,119 | | 505 | | 64 | | | | | | | | | | | | | | Subtotal Holding for Trading or Financial Intermediation | | 200,884 | | 122,096 | | 1,481,154 | | | | | | | | | | | | Subtotal Holding for Trading or Intermediation | | | 122,098 | | 434,934 | | 245,099 | | | | | Unlisted Government Securities | | | Province of Cordoba debt securities at 12% — Maturity 2017 | | — | | — | | 19,160 | | | Province of Córdoba Debt Securities at 12%— Maturity 2017 | | | — | | 19,160 | | 17,498 | | Province of Tucuman bonds at Libor — Maturity 2015 | | 8,112 | | 5,419 | | 3,820 | | | 5,419 | | 3,820 | | 2,455 | | | | | | | | | | | | | | Subtotal Unlisted Government Securities | | 8,112 | | 5,419 | | 22,980 | | | 5,419 | | 22,980 | | 19,953 | | | | | | | | | | | Securities under repurchase agreement | | | | | | | Federal Government bonds at 7% — Maturity 2013 | | | — | | — | | 2,299,088 | | Federal Government bonds at 7% — Maturity 2017 | | | — | | 1,046,220 | | — | | | | | | Subtotal Securities under repurchase agreement | | | — | | 1,046,220 | | 2,299,088 | | | | | Total Government Securities in foreign currency | | 208,996 | | 438,299 | | 1,547,416 | | | 438,301 | | 1,547,416 | | 2,564,140 | | | | | | | | | | | | | | Total Government Securities | | 3,856,796 | | 4,701,641 | | 6,900,312 | | | 4,701,641 | | 6,900,312 | | 7,012,489 | | | | | | | | | | | | | | Investments in Listed Private Securities | | | In Pesos: | | | Mutual Funds | | 11,617 | | 5,544 | | 31,469 | | | 5,544 | | 31,469 | | 19,886 | | Shares | | 2,971 | | 378 | | — | | | 378 | | — | | — | | Other | | — | | 1 | | 1 | | | In Foreign Currency: | | | Corporate Bonds | | 23,595 | | 63,629 | | 43,047 | | | Mutual Funds | | 19,690 | | 8,133 | | 6,359 | | | Commercial Papers | | 30,402 | | — | | — | | | Shares | | 5,681 | | — | | — | | | | | Total Private Securities | | 93,956 | | 77,685 | | 80,876 | | | | | | | | | | | | | | | Total Government and Private Securities | | 3,950,752 | | 4,779,326 | | 6,981,188 | | | | | | | | | | | | | | | Investments in Unlisted Private Securities | | | In Pesos: | | | Corporate Bonds (2) (3) | | 190 | | 22,390 | | 9,099 | | | Certificates of Participation in Financial Trusts (1) | | 438,331 | | 304,660 | | 343,070 | | | Debt Securities in Financial Trusts | | 77,030 | | 185,381 | | 123,862 | | | | | In Foreign Currency: | | | Corporate Bonds (2) (3) | | 44,067 | | 60,104 | | 71,647 | | | Certificates of Participation in Financial Trusts (1) | | 33,611 | | 33,149 | | 47,094 | | | | | | | | Debt Securities in Financial Trust | | — | | 41,766 | | 82,925 | | | | | | | | | | | | Total Investments in Unlisted Private Securities | | 593,229 | | 647,450 | | 677,697 | | | | | | | | | | | | Total | | 4,543,981 | | 5,426,776 | | 7,658,885 | | | | | | | | | | | | Others | | | 1 | | 1 | | — | |
55
| | | | | | | | | | | | | | | As of December 31, | | | | 2008 | | | 2009 | | | 2010 | | | | (in thousands of pesos) | | In Foreign Currency: | | | | | | | | | | | | | Corporate Bonds | | | 63,629 | | | | 43,047 | | | | — | | Mutual Funds | | | 8,133 | | | | 6,359 | | | | 9,553 | | Shares | | | — | | | | — | | | | 17,588 | | | | | | | | | | | | | | | Subtotal Investments in Listed Private Securities | | | 77,685 | | | | 80,876 | | | | 47,027 | | | | | | | | | | | | | | | Investments in Unlisted Private Securities | | | | | | | | | | | | | In Pesos: | | | | | | | | | | | | | Certificates of Participation in Financial Trusts (1) | | | 304,660 | | | | 343,070 | | | | 247,341 | | Debt Securities in Financial Trusts | | | 185,381 | | | | 123,862 | | | | 148,226 | | Corporate Bonds (2) (3) | | | 22,390 | | | | 9,099 | | | | 6,194 | | In Foreign Currency: | | | | | | | | | | | | | Certificates of Participation in Financial Trusts (1) | | | 33,149 | | | | 47,094 | | | | 104,342 | | Debt Securities in Financial Trust | | | 41,766 | | | | 82,925 | | | | 112,233 | | Corporate Bonds (2) (3) | | | 60,104 | | | | 71,647 | | | | 273,112 | | | | | | | | | | | | | | | Subtotal Investments in Unlisted Private Securities | | | 647,450 | | | | 677,697 | | | | 891,448 | | | | | | | | | | | | | | | Total Government and Private Securities | | | 5,426,776 | | | | 7,658,885 | | | | 7,950,964 | |
| | | (1) | | The Bank booked allowances for impairment in value amounting to 224,193; 223,893Ps.231,184 thousand, Ps.224,193 thousand and 203,797Ps.223,893 thousand as of December 31, 2010, 2009 2008 and 2007,2008, respectively. | | (2) | | The Bank booked allowances for impairment in value amounting to 1,017, 4,637Ps.3,003 thousand, Ps.1,017 thousand and 321Ps.4,637 thousand as of December 31, 2010, 2009 2008 and 2007,2008, respectively. | | (3) | | Includes Repurchased Corporate Bonds byfor Ps. 9,051 thousand and US$ 20,054US $20,054 thousand as of December 31, 2008. |
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Remaining maturity of government and private securities The following table analyzes the remaining maturities of our investment portfolio as of December 31, 20092010 in accordance with issuance terms (before allowances). We assume that those securities in default will expire after the coming ten years. | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | | | | | | After | | | After | | | | | | | | | | | | | | | | | 1 year | | | 5 years | �� | | | | | | | | | | | | Within | | | but within | | | but within | | | After 10 | | | Without | | | | | | | 1 year | | | 5 years | | | 10 years | | | years | | | due date | | | Total | | | | Book value (in thousands of pesos) | | In Pesos: | | | | | | | | | | | | | | | | | | | | | | | | | Holding in Special Investment accounts | | | | | | | | | | | | | | | | | | | | | | | | | Federal Government bonds at 2% — Maturity 2014 | | | — | | | | 222,169 | | | | — | | | | — | | | | — | | | | 222,169 | | Federal Government at Badlar + 2.75% — Maturity 2014 | | | — | | | | 191,384 | | | | — | | | | — | | | | — | | | | 191,384 | | Secured bonds Decree 1,579/02 at 2% — Maturity 2018 | | | 15,847 | | | | 75,973 | | | | 87,159 | | | | — | | | | — | | | | 178,979 | | Discount bonds denominated at 5.83% — Maturity 2033 | | | — | | | | — | | | | — | | | | 18,207 | | | | — | | | | 18,207 | | Consolidation bonds at 2% — Sixth series — Maturity 2024 | | | — | | | | 400 | | | | 2,664 | | | | 2,286 | | | | — | | | | 5,350 | | Holding for Trading or Financial Intermediation | | | | | | | | | | | | | | | | | | | | | | | — | | Discount bonds denominated at 5.83% — Maturity 2033 | | | — | | | | — | | | | — | | | | 9,752 | | | | — | | | | 9,752 | | Consolidation bonds of social security payable at 2% — Maturity 2014 | | | 1,701 | | | | 5,824 | | | | — | | | | — | | | | — | | | | 7,525 | | Federal Government bonds at 2% — Maturity 2014 | | | — | | | | 6,579 | | | | — | | | | — | | | | — | | | | 6,579 | | Federal Government bonds at Badlar +2.75% — Maturity 2014 | | | — | | | | 1,464 | | | | — | | | | — | | | | — | | | | 1,464 | | Secured bonds Decree 1,579/02 at 2% — Maturity 2018 | | | 127 | | | | 608 | | | | 698 | | | | — | | | | — | | | | 1,433 | | Federal government bonds at Badlar + 300Pbs — Maturity 2015 | | | — | | | | 709 | | | | 355 | | | | — | | | | — | | | | 1,064 | | Consolidation bonds at 2% — Maturity 2016 | | | 100 | | | | 399 | | | | 100 | | | | — | | | | — | | | | 599 | | Others | | | 297 | | | | 220 | | | | 191 | | | | 793 | | | | — | | | | 1,501 | | Unlisted Government Securities | | | | | | | | | | | | | | | | | | | | | | | | | Argentine Government bonds at Badlar +3.50 % — Maturity 2013 | | | — | | | | 44,541 | | | | — | | | | — | | | | — | | | | 44,541 | | Federal Government bonds at variable rate — Maturity 2013 | | | 2,434 | | | | 7,304 | | | | — | | | | — | | | | — | | | | 9,738 | | Province of Tucuman bonds at 2% — Maturity 2018 | | | 176 | | | | 842 | | | | 966 | | | | — | | | | — | | | | 1,984 | | Consolidation bonds at 2% — Maturity 2010 | | | 199 | | | | — | | | | — | | | | — | | | | — | | | | 199 | | Others | | | 1 | | | | 5 | | | | 1 | | | | — | | | | — | | | | 7 | | Instruments Issued by the Central Bank(1) | | | | | | | | | | | | | | | | | | | | | | | | | Listed Central Bank External bills and notes (Lebacs/Nobacs) | | | 264,485 | | | | — | | | | — | | | | — | | | | — | | | | 264,485 | | Unlisted Central Bank External bills and notes (Lebacs/Nobacs) | | | 4,371,284 | | | | 14,652 | | | | — | | | | — | | | | — | | | | 4,385,936 | | | | | | | | | | | | | | | | | | | | | Total Government securities in pesos | | | 4,656,651 | | | | 573,073 | | | | 92,134 | | | | 31,038 | | | | — | | | | 5,352,896 | | | | | | | | | | | | | | | | | | | | | | In Foreign Currency: | | | | | | | | | | | | | | | | | | | | | | | | | Holding in Special Investment Accounts | | | | | | | | | | | | | | | | | | | | | | | | | Argentine Government bonds at 7%- Maturity 2015 | | | — | | | | — | | | | 38,881 | | | | — | | | | — | | | | 38,881 | | Federal Government bonds at Libor — Maturity 2012 and 2013 | | | 735 | | | | 1,611 | | | | — | | | | — | | | | — | | | | 2,346 | | Par bonds at variable rate- Maturity 2038 (governed by Argentine legislation) | | | — | | | | — | | | | — | | | | 1,594 | | | | — | | | | 1,594 | | Par bonds at variable rate -Maturity 2038 (governed by New York legislation) | | | — | | | | — | | | | — | | | | 461 | | | | — | | | | 461 | | | Holding for Trading or Financial Intermediation | | | | | | | | | | | | | | | | | | | | | | | | | Argentine Government bonds at 7% — Maturity 2017 | | | — | | | | — | | | | 1,046,220 | | | | — | | | | — | | | | 1,046,220 | | Treasury Bills — Maturity 2010 | | | 379,666 | | | | — | | | | — | | | | — | | | | — | | | | 379,666 | | Federal Government bonds at Libor — Maturity 2012 | | | 17,625 | | | | 35,249 | | | | — | | | | — | | | | — | | | | 52,874 | | Federal Government bonds at 7% — Maturity 2015 | | | — | | | | — | | | | 1,544 | | | | — | | | | — | | | | 1,544 | | Others | | | 86 | | | | 639 | | | | — | | | | 125 | | | | — | | | | 850 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing1 | | | | | | | | After | | | After | | | | | | | | | | | | | | | | | 1 year | | | 5 years | | | | | | | | | | | | | Within | | | but within | | | but within | | | After 10 | | | Without | | | | | | | 1 year | | | 5 years | | | 10 years | | | years | | | due date | | | Total | | | | Book value (in thousands of pesos) | | In Pesos: | | | | | | | | | | | | | | | | | | | | | | | | | Holdings for Trading or Financial Intermediation | | | | | | | | | | | | | | | | | | | | | | | | | Federal Government bonds at Badlar Private+2.75% — Maturity 2014 | | | — | | | | 200,925 | | | | — | | | | — | | | | — | | | | 200,925 | | Secured Bonds Decree 1,579/02 at 2% — Maturity 2018 | | | 4,216 | | | | 21,759 | | | | 15,013 | | | | — | | | | — | | | | 40,988 | | Consolidation bonds at 2%. Sixth Series — Maturity 2024 | | | | | | | 112 | | | | 322 | | | | 211 | | | | — | | | | 645 | | Discount bonds at 5.83% — Maturity 2033 | | | — | | | | — | | | | — | | | | 6,956 | | | | — | | | | 6,956 | | Consolidation bonds of social security payables at 2% — Maturity 2014 | | | 2,054 | | | | 4,975 | | | | — | | | | — | | | | — | | | | 7,029 | | Federal Government bonds at 2% — Maturity 2014 | | | 919 | | | | 2,755 | | | | — | | | | — | | | | — | | | | 3,674 | | Federal Government bonds at 10.50% — Maturity 2012 | | | — | | | | 1,059 | | | | — | | | | — | | | | — | | | | 1,059 | | Federal Government bonds at Badlar +3% — Maturity 2015 | | | — | | | | 901 | | | | — | | | | — | | | | — | | | | 901 | | Par bonds at variable rate — Maturity 2038 | | | — | | | | — | | | | — | | | | 519 | | | | — | | | | 519 | | GDP — Related Securities — Maturity 2035 | | | — | | | | — | | | | — | | | | 54 | | | | — | | | | 54 | | Others | | | 37 | | | | 145 | | | | — | | | | 97 | | | | — | | | | 279 | | | | | | | | | | | | | | | | | | | | | | | | | | | Unlisted Government Securities | | | | | | | | | | | | | | | | | | | | | | | — | | Province of Buenos Aires treasury bills at 168 days — Maturity: 2011 | | | 50,084 | | | | — | | | | — | | | | — | | | | — | | | | 50,084 | | Province of Buenos Aires treasury bills at 84 days — Maturity 2011 | | | 49,575 | | | | — | | | | — | | | | — | | | | — | | | | 49,575 | | Federal Government bonds at Badlar +3.50% — Maturity 2013 | | | — | | | | 46,350 | | | | | | | | | | | | | | | | 46,350 | | Federal Government bonds at variable rate- Maturity 2013 | | | 2,508 | | | | 5,015 | | | | — | | | | — | | | | — | | | | 7,523 | | Province of Tucuman bonds at 2% — Maturity: 2018 | | | 161 | | | | 831 | | | | 573 | | | | — | | | | — | | | | 1,565 | | Others | | | — | | | | — | | | | — | | | | — | | | | 3 | | | | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | Instruments issued by Central Bank (1) | | | | | | | | | | | | | | | | | | | | | | | | | Listed Central Bank bills and notes (Lebacs/Nobacs) | | | 681,949 | | | | — | | | | — | | | | — | | | | — | | | | 681,949 | | Unlisted Central Bank bills and notes (Lebacs/Nobacs) | | | 3,167,344 | | | | — | | | | — | | | | — | | | | — | | | | 3,167,344 | |
5056
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | Maturing1 | | | | After | | After | | | | | | | | | After | | After | | | | | | | | | | 1 year | | 5 years | | | | | | | | | 1 year | | 5 years | | | | | | | | | | Within | | but within | | but within | | After 10 | | Without | | | | | Within | | but within | | but within | | After 10 | | Without | | | | | | 1 year | | 5 years | | 10 years | | years | | due date | | Total | | | 1 year | | 5 years | | 10 years | | years | | due date | | Total | | | | Book value (in thousands of pesos) | | | Book value (in thousands of pesos) | | Securities under repurchase agreement | | | | | | | Unlisted Central Bank bills and notes (Lebacs/Nobacs) | | | 148,959 | | — | | — | | — | | — | | 148,959 | | Consolidation bonds at 2% — Sixth series — Maturity 2024 | | | 18,518 | | — | | — | | — | | — | | 18,518 | | Listed Central Bank bills and notes (Lebacs/Nobacs) | | | 7,514 | | — | | — | | — | | — | | 7,514 | | Discount bonds at 5.83% — Maturity 2033 | | | 4,797 | | — | | — | | — | | — | | 4,797 | | Federal Government bonds at Badlar + 2.75% — Maturity 2014 | | | 990 | | — | | — | | — | | — | | 990 | | GDP — Related Securities — Maturity 2035 | | | 149 | | — | | — | | — | | — | | 149 | | | | | Total Government Securities in pesos | | | 4,139,774 | | 284,827 | | 15,908 | | 7,837 | | 3 | | 4,448,349 | | | | | In Foreign Currency: | | | Holding for Trading or Financial Intermediation | | | Treasury bills- Maturity: 2011 | | | 198,790 | | — | | — | | — | | — | | 198,790 | | Federal Government bonds at Libor — Maturity 2012 | | | 21,233 | | 21,233 | | — | | 42,466 | | Federal Government bonds at 7% — Maturity 2015 | | | — | | 1,640 | | — | | — | | — | | 1,640 | | Federal Government bonds at Libor — Maturity 2013 | | | 371 | | 742 | | — | | — | | — | | 1,113 | | Federal Government bonds at 7% — Maturity 2017 | | | — | | — | | 1,026 | | — | | — | | 1,026 | | Others | | | 10 | | 1 | | 32 | | 21 | | — | | 64 | | | | | Unlisted Government Securities | | | Province of Cordoba debt securities at 12% — Maturity 2017 | | 2,395 | | 9,580 | | 7,185 | | — | | — | | 19,160 | | | Province of Tucuman bonds at Libor — Maturity 2015 | | 637 | | 2,546 | | 637 | | — | | — | | 3,820 | | | Province of Córdoba Debt Securities at 12% — Maturity 2017 | | | 2,500 | | 9,999 | | 4,999 | | — | | — | | 17,498 | | Province of Tucuman at Libor- Maturity 2015 | | | 491 | | 1,964 | | — | | — | | — | | 2,455 | | | | | | | | | | | | | | | | | Securities under repurchase agreement | | | | | | Total Government securities in foreign currency | | 401,144 | | 49,625 | | 1,094,467 | | 2,180 | | — | | 1,547,416 | | | Federal Government bonds at 7% — Maturity 2013 | | | 2,299,088 | | — | | — | | — | | — | | 2,299,088 | | | | | | | | | | | | | | | | | Total Government securities | | 5,057,795 | | 622,698 | | 1,186,601 | | 33,218 | | — | | 6,900,312 | | | | | | | | | | | | | | | | | | Total Government Securities in foreign currency | | | 2,522,483 | | 35,579 | | 6,057 | | 21 | | — | | 2,564,140 | | Total Government Securities | | | 6,662,257 | | 320,406 | | 21,965 | | 7,858 | | 3 | | 7,012,489 | | | | | Private Securities | | | | | | Investments in listed private securities | | | In Pesos: | | | Mutual Funds | | 31,469 | | — | | — | | — | | — | | 31,469 | | | Others | | 1 | | 1 | | | In foreign currency: | | | Corporate bonds | | 34,452 | | 1,240 | | 7,355 | | — | | — | | 43,047 | | | Investment in Listed Private Sector | | | In pesos: | | | Mutual Funds | | 6,359 | | — | | — | | — | | — | | 6,359 | | | 19,732 | | 154 | | — | | — | | 19,886 | | | | | Investments in unlisted private securities | | | In Foreign Currency | | | Mutual Funds | | | 9,553 | | — | | — | | — | | — | | 9,553 | | Shares | | | — | | — | | — | | — | | 17,588 | | 17,588 | | | | | Investments in Unlisted Private Securities | | | In Pesos: | | | Certificates of participation in financial Trusts (2) | | | 4,395 | | 10,008 | | — | | 8,851 | | 224,087 | | 247,341 | | Debt Securities in Financial Trust | | | 66,243 | | 80,671 | | 1,312 | | — | | — | | 148,226 | | Corporate Bonds (3) | | 2,967 | | 5,942 | | — | | — | | 190 | | 9,099 | | | 3,996 | | 2,007 | | — | | — | | 191 | | 6,194 | | Certificates of Participation in Financial Trusts (2) | | 2,243 | | 29,056 | | — | | 10,591 | | 301,180 | | 343,070 | | | Debt Securities in Financial Trusts | | 92,292 | | 20,323 | | 11,247 | | — | | — | | 123,862 | | | In foreign currency: | | | Certificates of participation in financial Trusts (2) | | | — | | 104,342 | | — | | — | | — | | 104,342 | | Debt Securities in Financial Trust | | | 88,596 | | 10,805 | | 12,832 | | — | | — | | 112,233 | | Corporate Bonds (3) | | 45,845 | | 25,802 | | — | | — | | — | | 71,647 | | | 3,348 | | 222,531 | | 47,233 | | — | | — | | 273,112 | | Certificates of Participation in Financial Trusts (2) | | — | | 47,094 | | — | | — | | — | | 47,094 | | | Debt Securities in Financial Trust | | 82,925 | | — | | — | | — | | — | | 82,925 | | | | | | | | | | | | | | | | | | | | | Total Private securities | | 298,553 | | 129,457 | | 18,602 | | 10,591 | | 301,370 | | 758,573 | | | | | | | | | | | | | | | | | | Total Private Securities | | | 195,863 | | 430,518 | | 61,377 | | 8,851 | | 241,866 | | 938,475 | |
| | | (1) | | As of December 31, 2009,2010, “Instruments Issued by the Central Bank” includesincluded Ps. 973,7631,420,605 thousand to fall due in 30 days, Ps. 466,005554,462 thousand to fall due in 60 days, Ps. 1,020,002238,098 thousand to fall due in 90 days, Ps. 2,175,9991,332,692 thousand to fall due fromin 120 to 180 days and Ps. 14,652Ps 303,436 thousand to fall due after 360 days.in 180 days | | (2) | | The Bank booked allowances for impairment in value amounting to 224,193toPs. 231,184 thousand as of December 31, 2009.2010. | | (3) | | The Bank booked allowances for impairment in value amounting to 1,017Ps.3,003 thousand as of December 31, 2009.2010. |
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Loan portfolio The following table analyzes our loan portfolio (without considering leasing agreements) by type as of December 31, 2006, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | | | 2007 | | 2008 | | 2009 | | | 2006 | | 2007 | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos) | | | (in thousands of pesos) | | To the non-financial government sector | | 732,481 | | 744,507 | | 206,484 | | | 774,273 | | 732,481 | | 744,507 | | 206,484 | | 336,430 | | To the financial sector (1) | | 161,702 | | 80,423 | | 90,916 | | | 436,930 | | 161,702 | | 80,423 | | 90,916 | | 155,701 | | To the non-financial private sector and foreign residents | | | | | | | | | Overdrafts (2) | | 1,375,075 | | 1,556,433 | | 1,436,292 | | | 1,029,679 | | 1,375,075 | | 1,556,433 | | 1,436,292 | | 2,032,986 | | Documents (3) | | 1,213,669 | | 1,348,585 | | 1,412,551 | | | 618,739 | | 1,213,669 | | 1,348,585 | | 1,412,551 | | 1,805,226 | | Mortgages loans | | 619,781 | | 738,592 | | 746,762 | | | 426,138 | | 619,781 | | 738,592 | | 746,762 | | 902,734 | | Pledged loans (4) | | 347,989 | | 339,895 | | 262,508 | | | 300,949 | | 347,989 | | 339,895 | | 262,508 | | 347,321 | | Consumer loans (5) | | 3,929,579 | | 4,675,543 | | 4,956,690 | | | 1,928,977 | | 3,929,579 | | 4,675,543 | | 4,956,690 | | 7,355,625 | | Other loans | | 1,718,978 | | 2,071,927 | | 2,271,756 | | | 1,131,315 | | 1,718,978 | | 2,071,927 | | 2,271,756 | | 3,302,223 | | Accrued Interest, adjustments, foreign exchange and quoted price differences receivables | | 153,902 | | 195,026 | | 182,168 | | | | 101,744 | | 153,902 | | 195,026 | | 182,168 | | 216,888 | | Less: Unposted payments | | | (69 | ) | | | (29 | ) | | | (29 | ) | | | (139 | ) | | | (69 | ) | | | (29 | ) | | | (29 | ) | | — | | Less: Unearned discounts | | | (23,248 | ) | | | (32,596 | ) | | | (21,246 | ) | | (12,919 | ) | | | (23,248 | ) | | | (32,596 | ) | | | (21,246 | ) | | | (30,121 | ) | Less: Allowances | | | (220,422 | ) | | | (438,348 | ) | | | (448,045 | ) | | | (208,581 | ) | | | (220,422 | ) | | | (438,348 | ) | | | (448,045 | ) | | | (514,910 | ) | | | | | | | | | | Total Loans | | 10,009,417 | | 11,279,958 | | 11,096,807 | | | 6,527,105 | | 10,009,417 | | 11,279,958 | | 11,096,807 | | 15,910,103 | | | | | | | | | | |
| | | (1) | | Includes loans to financial institutions, interfinancing (granted call) and other financing to Argentine financial institutions.
| | (2) | | Overdrafts includeIncludes overdraft lines of credit resulting from checking accounts.
| | (3) | | Includes the face values of drafts, promissory notes and other bills transferred to us by endorsement for which the assignor is liable, whenever the latter is an Argentine resident within the non- financial private sector. | | (4) | | Includes the principal amounts actually lent of automobile and other collateral granted, for which the obligator is part of the non-financial private sector. | | (5) | | Consumer loans includeIncludes credit card loans and other consumer loans. Overdrafts to individuals are included under “Overdrafts“Overdrafts”.”.
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51
Maturity composition of the loan portfolio The following table analyzes our loan portfolio as of December 31, 20092010 by type and by the time remaining to maturity. Loans are stated before deduction of the allowance for loan losses. We expect most loans to be repaid at maturity in cash or through refinancing at market terms. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | Maturing | | | | After | | | | | After | | | | | | 1 Year but | | | | | 1 Year but | | | | | | Amount as of | | Within | | Within | | After | | | Amount as of | | Within | | Within | | After | | | | December 31, 2009 | | 1 Year | | 5 Years | | 5 Years | | | December 31, 2010 | | 1 Year | | 5 Years | | 5 Years | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos, except percentages) | | To the non-financial government sector | | 206,484 | | 15,285 | | 2,573 | | 188,626 | | | 336,430 | | 42,895 | | 15,671 | | 277,864 | | To the financial sector (1) | | 90,916 | | 90,899 | | 17 | | — | | | 155,701 | | 149,765 | | 5,936 | | — | | | | To the non-financial private sector and foreign residents | | | Overdrafts (2) | | 1,462,536 | | 1,461,702 | | 834 | | — | | | 2,072,052 | | 2,072,043 | | 9 | | — | | Documents (3) | | 1,423,792 | | 1,383,480 | | 39,642 | | 670 | | | 1,802,007 | | 1,783,554 | | 18,216 | | 237 | | Mortgages loans | | 767,438 | | 247,772 | | 334,627 | | 185,039 | | | 923,867 | | 250,962 | | 490,040 | | 182,865 | | Pledged loans (4) | | 273,175 | | 149,878 | | 123,240 | | 57 | | | 357,153 | | 166,424 | | 190,729 | | — | | Consumer loans (5) | | 5,003,389 | | 2,391,137 | | 2,577,479 | | 34,773 | | | 7,418,790 | | 3,418,973 | | 3,764,875 | | 234,942 | | Other loans | | 2,317,122 | | 1,702,442 | | 546,263 | | 68,417 | | | 3,359,013 | | 2,734,426 | | 550,597 | | 73,990 | | | | | | | | | | | | | | | | Total loans | | 11,544,852 | | 7,442,595 | | 3,624,675 | | 477,582 | | | | | | | | | | | | | | | | | Total Loans | | | 16,425,013 | | 10,619,042 | | 5,036,073 | | 769,898 | | Percentage of total loan portfolio | | | 100 | % | | | 64.5 | % | | | 31.4 | % | | | 4.1 | % | | | 100 | % | | | 64 | % | | | 31 | % | | | 5 | % |
| | | (1) | | Includes loans to financial institutions, interfinancing (granted call) and other financing to Argentine financial institutions. | | (2) | | Overdrafts includeIncludes overdrafts lines of credit resulting from checking accounts.
| | (3) | | Includes the face value of drafts, promissory notes and other bills transferred to us by endorsement for which the assignor is liable, whenever the latter is an Argentine resident within the non- financial private sector. | | (4) | | Includes the principal amount actually lent of automobile and other collateral granted, for which the obligor is part of the non- financial private sector. | | (5) | | Consumer loans includeIncludes credit card loans and other consumer loans. Overdrafts to individuals are included under “Overdrafts.”“Overdrafts”.
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Loans—portfolio classification The following table presents our loan portfolio, before deduction of the allowance for loan losses, using the classification system of the Central Bank in effect at the end of each year:
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | | 2007 | | | % | | | 2008 | | | % | | | 2009 | | | % | | | | (in thousands of pesos, except percentages) | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan Portfolio | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Categories | | | | | | | | | | | | | | | | | | | | | | | | | 1 - In normal situation/ performing | | | 9,927,876 | | | | 97.05 | % | | | 11,292,176 | | | | 96.36 | % | | | 10,963,274 | | | | 94.96 | % | 2 - Subject to special monitoring -in observation- in negotiation or with rollover agreement/ low risk | | | 143,128 | | | | 1.40 | % | | | 117,023 | | | | 1.00 | % | | | 206,477 | | | | 1.79 | % | 3 - Troubled/Medium risk | | | 52,059 | | | | 0.51 | % | | | 86,288 | | | | 0.74 | % | | | 130,649 | | | | 1.13 | % | 4 - With high risk of insolvency/ High risk | | | 62,856 | | | | 0.61 | % | | | 172,950 | | | | 1.48 | % | | | 188,058 | | | | 1.63 | % | 5 - Irrecoverable | | | 36,526 | | | | 0.36 | % | | | 48,434 | | | | 0.41 | % | | | 55,996 | | | | 0.49 | % | 6 - Irrecoverable according to Central Bank’s rules | | | 7,394 | | | | 0.07 | % | | | 1,435 | | | | 0.01 | % | | | 398 | | | | 0.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total loans | | | 10,229,839 | | | | 100.00 | % | | | 11,718,306 | | | | 100.00 | % | | | 11,544,852 | | | | 100.00 | % | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | | | | | | Loan Portfolio | | 2006 | | | 2007 | | | 2008 | | | 2009 | | | 2010 | | | | (in thousands of pesos, except percentages) | | Categories | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 — In normal situation/ Performing | | | 6,550,389 | | | | 97.25 | % | | | 9,927,876 | | | | 97.05 | % | | | 11,292,176 | | | | 96.36 | % | | | 10,963,274 | | | | 94.96 | % | | | 15,946,416 | | | | 97.09 | % | 2 — Subject to special monitoring —in observation- in negotiation or with rollover agreement/ Low risk | | | 50,077 | | | | 0.74 | % | | | 143,128 | | | | 1.40 | % | | | 117,023 | | | | 1.00 | % | | | 206,477 | | | | 1.79 | % | | | 132,797 | | | | 0.81 | % | 3 — Troubled/Medium risk | | | 45,603 | | | | 0.68 | % | | | 52,059 | | | | 0.51 | % | | | 86,288 | | | | 0.74 | % | | | 130,649 | | | | 1.13 | % | | | 73,403 | | | | 0.45 | % | 4 — With high risk of insolvency/ High risk | | | 34,503 | | | | 0.51 | % | | | 62,856 | | | | 0.61 | % | | | 172,950 | | | | 1.48 | % | | | 188,058 | | | | 1.63 | % | | | 161,072 | | | | 0.98 | % | 5 — Irrecoverable | | | 51,086 | | | | 0.76 | % | | | 36,526 | | | | 0.36 | % | | | 48,434 | | | | 0.41 | % | | | 55,996 | | | | 0.49 | % | | | 110,914 | | | | 0.67 | % | 6 — Irrecoverable according to Central Bank’s Rules | | | 4,028 | | | | 0.06 | % | | | 7,394 | | | | 0.07 | % | | | 1,435 | | | | 0.01 | % | | | 398 | | | | 0.00 | % | | | 411 | | | | 0.00 | % | Total Loans | | | 6,735,686 | | | | 100.00 | % | | | 10,229,839 | | | | 100.00 | % | | | 11,718,306 | | | | 100.00 | % | | | 11,544,852 | | | | 100.00 | % | | | 16,425,013 | | | | 100.00 | % |
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For the explanation of each category please see “Argentine Banking Regulation — Debt classification and loan loss provisions”. Non-performing Loans The following table presents our non-performing loan portfolio, before deduction of the allowance for loan losses, using the loan classification criteria of the Central Bank in effect, at the end of each year: | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | Non-performing loans | | 2006 | | | 2007 | | | 2008 | | | 2009 | | | 2010 | | | | (in thousands of pesos) | | | | | | | | | | | | | | | | | | | | | | | With preferred guarantees | | | 44,563 | | | | 27,657 | | | | 31,627 | | | | 42,904 | | | | 43,221 | | Unsecured | | | 90,657 | | | | 131,178 | | | | 277,480 | | | | 332,197 | | | | 302,579 | | Total non-performing loans | | | 135,220 | | | | 158,835 | | | | 309,107 | | | | 375,101 | | | | 345,800 | |
For additional information on non-accrual loans and past due loans please see note 32.4.d) to our audited consolidated financial statement for the year ended December 31, 2010. Analysis of the allowance for loan losses The table below sets forth the activity in the allowance for loan losses for the years ended December 31, 2005, 2006, 2007, 2008, 2009 and 2009:2010: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | Year Ended December 31, | | | | 2005 | | 2006 | | 2007 | | 2008 | | 2009 | | | 2006 | | 2007 | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos) | | Balance at the beginning of the year | | 225,340 | | 247,532 | | 208,581 | | 220,422 | | 438,348 | | | 247,532 | | 208,581 | | 220,422 | | 438,348 | | 448,045 | | Provisions for loan losses | | | 142,045 | (2) | | | 102,538 | (3) | | 93,498 | | 314,532 | | 187,648 | | | | 102,538 | (2) | | 93,498 | | 314,532 | | 187,648 | | | 254,010 | (3) | Charge off (1) | | | (119,853 | ) | | | (141,489 | ) | | | (81,657 | ) | | | (96,606 | ) | | | (177,951 | ) | | | (141,489 | ) | | | (81,657 | ) | | | (96,606 | ) | | | (177,951 | ) | | | (187,145 | ) | Overdrafts | | | (4,777 | ) | | | (31,584 | ) | | | (13,889 | ) | | | (9,314 | ) | | | (32,519 | ) | | | (31,584 | ) | | | (13,889 | ) | | | (9,314 | ) | | | (32,519 | ) | | | (14,857 | ) | Personal loans | | | (1,657 | ) | | | (4,411 | ) | | | (10,929 | ) | | | (47,527 | ) | | | (99,192 | ) | | | (4,411 | ) | | | (10,929 | ) | | | (47,527 | ) | | | (99,192 | ) | | | (98,305 | ) | Credit Cards | | | (993 | ) | | | (2,184 | ) | | | (5,751 | ) | | | (12,134 | ) | | | (16,892 | ) | | | (2,184 | ) | | | (5,751 | ) | | | (12,134 | ) | | | (16,892 | ) | | | (35,756 | ) | Mortgage loans | | | (41,518 | ) | | | (25,825 | ) | | | (8,071 | ) | | | (5,087 | ) | | | (5,096 | ) | | | (25,825 | ) | | | (8,071 | ) | | | (5,087 | ) | | | (5,096 | ) | | | (4,337 | ) | Pledge loans | | | (26,758 | ) | | | (4,323 | ) | | | (674 | ) | | | (2,686 | ) | | | (1,341 | ) | | Pledged loans | | | | (4,323 | ) | | | (674 | ) | | | (2,686 | ) | | | (1,341 | ) | | | (911 | ) | Documents | | | (25,469 | ) | | | (39,974 | ) | | | (6,931 | ) | | | (5,296 | ) | | | (14,171 | ) | | | (39,974 | ) | | | (6,931 | ) | | | (5,296 | ) | | | (14,171 | ) | | | (7,523 | ) | Other | | | (18,681 | ) | | | (33,188 | ) | | | (35,412 | ) | | | (14,562 | ) | | | (8,740 | ) | | | (33,188 | ) | | | (35,412 | ) | | | (14,562 | ) | | | (8,740 | ) | | | (25,456 | ) | Balance at the end of year | | 247,532 | | 208,581 | | 220,422 | | 438,348 | | 448,045 | | | 208,581 | | 220,422 | | 438,348 | | 448,045 | | 514,910 | | | | | | | | | | | | | | | Charge-off/average loans (1) | | | 3.78 | % | | | 2.72 | % | | | 1.18 | % | | | 0.87 | % | | | 1.59 | % | | | 2.72 | % | | | 1.18 | % | | | 0.87 | % | | | 1.59 | % | | | 1.45 | % |
| | | (1) | | | (1) | | Charge-off includes reversals. | | (2) | | Includes Ps. 74,775 thousand for the incorporation of Banco Empresario de Tucumán. | | (3) | | Includes Ps. 13,99313,933 thousand and Ps. 28,443 thousand for the incorporationsincorporation of Banco del Tucumán and Nuevo Banco Bisel respectively. | | (3) | | Includes Ps. 15,066 thousand for the incorporations of Banco Privado. |
Under Central Bank Rules, non-performing loans must be charged-off when their recovery is considered unlikely, within seven months after a such loans were classified as “irrecoverable without preferred guaranties” and fully provisioned. Pursuant to this Rule,the current regulations, we charge-off non-performing loans on the next month following the date on which such circumstances are verified. Such debts are registered in off-balance accounts. Allocation of the allowances for loan losses The following table allocates the allowance for loan losses by each category of loans and sets forth the percentage distribution of the total allowance for each of the years ended December 31, 2006, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | As of December 31, | | | | 2007 | | 2008 | | 2009 | | | 2006 | | 2007 | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos, except percentages) | | Overdrafts | | 25,510 | | | 11.57 | % | | 64,107 | | | 14.62 | % | | 37,242 | | | 8.31 | % | | 24,987 | | | 11.98 | % | | 25,510 | | | 11.57 | % | | 64,107 | | | 14.62 | % | | 37,242 | | | 8.31 | % | | 37,757 | | | 7.33 | % | Documents | | 23,215 | | | 10.53 | % | | 42,003 | | | 9.58 | % | | 32,825 | | | 7.33 | % | | 20,326 | | | 9.75 | % | | 23,215 | | | 10.53 | % | | 42,003 | | | 9.58 | % | | 32,825 | | | 7.33 | % | | 31,403 | | | 6.10 | % | Mortgage loans | | 20,210 | | | 9.17 | % | | 26,378 | | | 6.02 | % | | 24,422 | | | 5.45 | % | | 22,640 | | | 10.86 | % | | 20,210 | | | 9.17 | % | | 26,378 | | | 6.02 | % | | 24,422 | | | 5.45 | % | | 24,016 | | | 4.66 | % | Pledged loans | | 8,608 | | | 3.91 | % | | 9,512 | | | 2.17 | % | | 9,664 | | | 2.16 | % | | 8,433 | | | 4.04 | % | | 8,608 | | | 3.91 | % | | 9,512 | | | 2.17 | % | | 9,664 | | | 2.16 | % | | 10,971 | | | 2.13 | % | Personal loans | | 70,375 | | | 31.93 | % | | 174,398 | | | 39.79 | % | | 195,643 | | | 43.67 | % | | 40,364 | | | 19.35 | % | | 70,375 | | | 31.93 | % | | 174,398 | | | 39.79 | % | | 195,643 | | | 43.67 | % | | 215,530 | | | 41.86 | % | Credit cards | | 17,658 | | | 8.01 | % | | 34,281 | | | 7.82 | % | | 33,915 | | | 7.57 | % | | 12,752 | | | 6.11 | % | | 17,658 | | | 8.01 | % | | 34,281 | | | 7.82 | % | | 33,915 | | | 7.57 | % | | 53,751 | | | 10.44 | % | Other | | 54,846 | | | 24.88 | % | | 87,669 | | | 20.00 | % | | 114,334 | | | 25.52 | % | | | | | | | | | | | | | | | | | Other loans | | | 79,079 | | | 37.91 | % | | 54,846 | | | 24.88 | % | | 87,669 | | | 20.00 | % | | 114,334 | | | 25.52 | % | | 141,482 | | | 27.48 | % | TOTAL | | 220,422 | | | 100 | % | | 438,348 | | | 100 | % | | 448,045 | | | 100 | % | | 208,581 | | | 100.00 | % | | 220,422 | | | 100.00 | % | | 438,348 | | | 100.00 | % | | 448,045 | | | 100.00 | % | | 514,910 | | | 100.00 | % | | | | | | | | | | | | | | | |
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Loans by Economic Activitieseconomic activities The table below analyzes our loan portfolio according to the borrowers’ main economic activity as of December 31,31,2006, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | | | 2006 | | 2007 | | 2008 | | 2009 | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in thousands of pesos, except percentages) | | | | 2007 | | 2008 | | 2009 | | | % of | | % of | | % of | | % of | | % of | | | | Loan | | % of Loan | | Loan | | % of Loan | | Loan | | % of Loan | | | Loan | | Loan | | Loan | | Loan | | Loan | | Loan | | Loan | | Loan | | Loan | | Loan | | | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | | | (in thousands of pesos, except percentages) | | | Retail Loans | | 3,410,359 | | | 33.34 | % | | 4,023,725 | | | 34.34 | % | | 4,403,933 | | | 38.15 | % | | 1,719,736 | | | 25.53 | % | | 3,410,359 | | | 33.34 | % | | 4,023,725 | | | 34.34 | % | | 4,403,933 | | | 38.15 | % | | 6,512,629 | | | 39.65 | % | Agricultural livestock- Forestry- Fishing- Mining- Hunting | | 1,050,102 | | | 10.27 | % | | 1,538,027 | | | 13.12 | % | | 1,910,164 | | | 16.55 | % | | 650,405 | | | 9.66 | % | | 1,050,102 | | | 10.27 | % | | 1,538,027 | | | 13.12 | % | | 1,910,164 | | | 16.55 | % | | 2,286,297 | | | 13.92 | % | | | | Construction | | 411,725 | | | 4.02 | % | | 563,526 | | | 4.81 | % | | 1,112,702 | | | 9.64 | % | | 320,484 | | | 4.76 | % | | 411,725 | | | 4.02 | % | | 563,526 | | | 4.81 | % | | 1,112,702 | | | 9.64 | % | | 1,009,744 | | | 6.15 | % | | | Other services | | 970,585 | | | 9.49 | % | | 852,658 | | | 7.28 | % | | 858,936 | | | 7.44 | % | | 474,325 | | | 7.04 | % | | 970,585 | | | 9.49 | % | | 852,658 | | | 7.28 | % | | 858,936 | | | 7.44 | % | | 1,281,916 | | | 7.80 | % | Retail and consumer products | | 703,063 | | | 6.87 | % | | 831,741 | | | 7.10 | % | | 747,897 | | | 6.48 | % | | 550,359 | | | 8.17 | % | | 703,063 | | | 6.87 | % | | 831,741 | | | 7.10 | % | | 747,897 | | | 6.48 | % | | 1,140,019 | | | 6.94 | % | Foodstuff and beverages | | 700,917 | | | 6.85 | % | | 521,849 | | | 4.45 | % | | 637,814 | | | 5.52 | % | | 537,905 | | | 7.99 | % | | 700,917 | | | 6.85 | % | | 521,849 | | | 4.45 | % | | 637,814 | | | 5.52 | % | | 917,874 | | | 5.59 | % | | | Financial Services | | 408,002 | | | 3.99 | % | | 289,450 | | | 2.47 | % | | 290,331 | | | 2.51 | % | | 593,423 | | | 8.81 | % | | 408,002 | | | 3.99 | % | | 289,450 | | | 2.47 | % | | 290,331 | | | 2.51 | % | | 387,074 | | | 2.36 | % | Governmental services | | 861,852 | | | 8.42 | % | | 886,749 | | | 7.57 | % | | 258,784 | | | 2.24 | % | | 844,814 | | | 12.54 | % | | 861,852 | | | 8.42 | % | | 886,749 | | | 7.57 | % | | 258,784 | | | 2.24 | % | | 418,026 | | | 2.55 | % | | | Real estate, business and leases | | 59,512 | | | 0.58 | % | | 267,604 | | | 2.28 | % | | 236,555 | | | 2.05 | % | | 39,087 | | | 0.58 | % | | 59,512 | | | 0.58 | % | | 267,604 | | | 2.28 | % | | 236,555 | | | 2.05 | % | | 357,865 | | | 2.18 | % | Transportation, storage and communications | | 181,646 | | | 1.78 | % | | 263,999 | | | 2.25 | % | | 190,796 | | | 1.65 | % | | 195,094 | | | 2.90 | % | | 181,646 | | | 1.78 | % | | 263,999 | | | 2.25 | % | | 190,796 | | | 1.65 | % | | 488,356 | | | 2.97 | % | | | | Manufacturing and wholesales | | 166,169 | | | 1.62 | % | | 283,555 | | | 2.42 | % | | 140,620 | | | 1.22 | % | | 147,127 | | | 2.18 | % | | 166,169 | | | 1.62 | % | | 283,555 | | | 2.42 | % | | 140,620 | | | 1.22 | % | | 302,927 | | | 1.84 | % | | | | Chemicals | | 340,450 | | | 3.33 | % | | 608,157 | | | 5.19 | % | | 129,145 | | | 1.12 | % | | 300,429 | | | 4.46 | % | | 340,450 | | | 3.33 | % | | 608,157 | | | 5.19 | % | | 129,145 | | | 1.12 | % | | 455,313 | | | 2.77 | % | Electricity, oil, water | | 74,256 | | | 0.73 | % | | 170,950 | | | 1.46 | % | | 75,095 | | | 0.65 | % | | 31,061 | | | 0.46 | % | | 74,256 | | | 0.73 | % | | 170,950 | | | 1.46 | % | | 75,095 | | | 0.65 | % | | 92,475 | | | 0.56 | % | Hotels and restaurants | | 39,365 | | | 0.38 | % | | 32,325 | | | 0.28 | % | | 29,949 | | | 0.26 | % | | 43,196 | | | 0.64 | % | | 39,365 | | | 0.38 | % | | 32,325 | | | 0.28 | % | | 29,949 | | | 0.26 | % | | 27,866 | | | 0.17 | % | | | | Other | | 851,836 | | | 8.33 | % | | 583,991 | | | 4.98 | % | | 522,131 | | | 4.52 | % | | 288,241 | | | 4.28 | % | | 851,836 | | | 8.33 | % | | 583,991 | | | 4.98 | % | | 522,131 | | | 4.52 | % | | 746,632 | | | 4.55 | % | | | | | | | | | | | | | | | | | | | Total | | 10,229,839 | | | 100.00 | % | | 11,718,306 | | | 100.00 | % | | 11,544,852 | | | 100.00 | % | | | | | | | | | | | | | | | | | Total Loans | | | 6,735,686 | | | 100.00 | % | | 10,229,839 | | | 100.00 | % | | 11,718,306 | | | 100.00 | % | | 11,544,852 | | | 100.00 | % | | 16,425,013 | | | 100.00 | % |
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Deposits The following table sets out the composition of each category of deposits that exceeded 10% of average total deposits in each of the years ended December 31, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | Year ended December 31, | | | | 2007 | | 2008 | | 2009 | | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos) | | | (in thousands of pesos) | | Deposits in Domestic Bank Offices | | | Non-interest-bearing Demand Deposits (1) | | | Average | | | Pesos | | 3,067,834 | | 3,665,382 | | 3,929,402 | | | 3,665,382 | | 3,929,402 | | 5,606,395 | | Dollars | | 6,180 | | 8,044 | | 13,179 | | | 8,044 | | 13,179 | | 205,684 | | | | | Total | | 3,074,014 | | 3,673,426 | | 3,942,581 | | | 3,673,426 | | 3,942,581 | | 5,812,079 | | | | | Saving Accounts | | | Average | | | Pesos | | 2,486,927 | | 2,822,961 | | 2,842,075 | | | 2,822,961 | | 2,842,075 | | 2,969,340 | | Dollars | | 297,472 | | 361,324 | | 542,740 | | | 361,324 | | 542,740 | | 520,772 | | | | | Total | | 2,784,399 | | 3,184,285 | | 3,384,815 | | | 3,184,285 | | 3,384,815 | | 3,490,112 | | | | | Average nominal rate | | | Pesos | | | 1.10 | % | | | 1.05 | % | | | 1.11 | % | | | 1.05 | % | | | 1.11 | % | | | 0.76 | % | Dollars | | | 0.39 | % | | | 0.46 | % | | | 0.34 | % | | | 0.46 | % | | | 0.34 | % | | | 0.17 | % | | | | Total | | | 1.02 | % | | | 0.98 | % | | | 0.99 | % | | | 0.98 | % | | | 0.99 | % | | | 0.67 | % | | | | Time Deposits | | | Average | | | Pesos | | 4,589,993 | | 6,556,086 | | 7,446,052 | | | 6,556,086 | | 7,446,052 | | 8,944,481 | | Dollars | | 1,211,832 | | 1,490,885 | | 2,337,132 | | | 1,490,885 | | 2,337,132 | | 2,343,123 | | | | | Total | | 5,801,825 | | 8,046,971 | | 9,783,184 | | | 8,046,971 | | 9,783,184 | | 11,287,604 | | | | | Average nominal rate | | | Pesos | | | 9.19 | % | | | 13.33 | % | | | 14.50 | % | | Dollars | | | 3.04 | % | | | 3.78 | % | | | 2.75 | % | | | | | Total | | | 7.90 | % | | | 11.56 | % | | | 11.70 | % | | | | | Deposits in Foreign Bank Offices | | | Non-interest-bearing Demand Deposits | | | Average | | | Pesos | | 1,215 | | 513 | | 1,063 | | | Dollars | | 500 | | 15 | | 3,913 | | | | | | Total | | 1,715 | | 528 | | 4,976 | | | | | | Saving Accounts | | | Average | | | Pesos | | — | | — | | — | | | Dollars | | 81,435 | | 90,568 | | 320,853 | | | | | | Total | | 81,435 | | 90,568 | | 320,853 | | | | | | Average nominal rate | | | Dollars | | | 2.36 | % | | | 1.20 | % | | | 0.05 | % | | | | | Total | | | 2.36 | % | | | 1.20 | % | | | 0.05 | % | | | | | Time Deposits | | | Average | | | Dollars | | 226,009 | | 226,626 | | 311,843 | | | | | | Total | | 226,009 | | 226,626 | | 311,843 | | | | | | Average nominal rate | | | Dollars | | | 4.92 | % | | | 3.35 | % | | | 1.28 | % | | | | | Total | | | 4.92 | % | | | 3.35 | % | | | 1.28 | % | |
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| | | | | | | | | | | | | | | Year ended December 31, | | | | 2008 | | | 2009 | | | 2010 | | | | (in thousands of pesos) | | Average nominal rate | | | | | | | | | | | | | Pesos | | | 13.33 | % | | | 14.50 | % | | | 10.39 | % | Dollars | | | 3.78 | % | | | 2.75 | % | | | 1.00 | % | | | | | | | | | | | | | | Total | | | 11.56 | % | | | 11.70 | % | | | 8.44 | % | | | | | | | | | | | | | | Deposits in Foreign Bank Offices | | | | | | | | | | | | | Non-interest-bearing Demand Deposits | | | | | | | | | | | | | Average | | | | | | | | | | | | | Pesos | | | 513 | | | | 1,063 | | | | 35 | | Dollars | | | 15 | | | | 3,913 | | | | 7,756 | | | | | | | | | | | | | | | Total | | | 528 | | | | 4,976 | | | | 7,791 | | | | | | | | | | | | | | | Saving Accounts | | | | | | | | | | | | | Average | | | | | | | | | | | | | Dollars | | | 90,568 | | | | 320,853 | | | | 387,714 | | | | | | | | | | | | | | | Total | | | 90,568 | | | | 320,853 | | | | 387,714 | | | | | | | | | | | | | | | Average nominal rate | | | | | | | | | | | | | Dollars | | | 1.20 | % | | | 0.05 | % | | | 0.06 | % | | | | | | | | | | | | | | Total | | | 1.20 | % | | | 0.05 | % | | | 0.06 | % | | | | | | | | | | | | | | Time Deposits | | | | | | | | | | | | | Average | | | | | | | | | | | | | Dollars | | | 226,626 | | | | 311,843 | | | | 302,972 | | | | | | | | | | | | | | | Total | | | 226,626 | | | | 311,843 | | | | 302,972 | | | | | | | | | | | | | | | Average nominal rate | | | | | | | | | | | | | Dollars | | | 3.35 | % | | | 1.28 | % | | | 1.09 | % | | | | | | | | | | | | | | Total | | | 3.35 | % | | | 1.28 | % | | | 1.09 | % |
| | | (1) | | Non-interest-bearing demand deposits consist of checking accounts. |
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Maturity of deposits at December 31, 20092010 The following table sets forth information regarding the maturity of our deposits at December 31, 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | Maturing | | | | After 3 | | After 6 | | | | | After 3 | | After 6 | | | | | | Within 3 | | but Within | | but Within | | After 12 | | | Within 3 | | but Within | | but Within | | After 12 | | | | Total | | Months | | 6 Months | | 12 Months | | Months | | | Total | | Months | | 6 Months | | 12 Months | | Months | | | | (in thousands of pesos) | | | (in thousands of pesos) | | Checking accounts | | 4,298,209 | | 4,298,209 | | — | | — | | — | | | 5,439,564 | | 5,439,564 | | — | | — | | — | | Savings accounts | | 3,645,994 | | 3,645,994 | | — | | — | | — | | | 4,757,144 | | 4,757,144 | | — | | — | | — | | Time deposits | | 10,107,235 | | 7,980,642 | | 1,233,711 | | 767,864 | | 125,018 | | | 11,732,876 | | 9,843,063 | | 837,657 | | 368,532 | | 683,624 | | Investment accounts | | 54,371 | | 16,279 | | 7,673 | | 29,687 | | 732 | | | 900,780 | | 779,979 | | 57,146 | | 63,610 | | 45 | | Other | | 487,057 | | 475,391 | | 880 | | 4,854 | | 5,932 | | | 577,029 | | 572,475 | | 94 | | 4,460 | | — | | | | | | | | | | | | | | | Total | | 18,592,866 | | 16,416,515 | | 1,242,264 | | 802,405 | | 131,682 | | | | | | | | | | | | | | | | Total Deposits | | | 23,407,393 | | 21,392,225 | | 894,897 | | 436,602 | | 683,669 | |
Maturity of deposits at December 31, 20092010 of outstanding time deposits and investment accounts The following table sets forth information regarding the maturity of our time deposits and investment accounts in denominations of Ps.100,000 or more at December 31, 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | Maturing | | | | After 3 | | After 6 | | | | | After 3 | | After 6 | | | | | | Within 3 | | but Within | | but Within | | After 12 | | | Within 3 | | but Within | | but Within | | After 12 | | | | Total | | Months | | 6 Months | | 12 Months | | Months | | | Total | | Months | | 6 Months | | 12 Months | | Months | | | | (in thousands of pesos) | | | (in thousands of pesos) | | Domestic bank offices | | 6,733,262 | | 4,696,450 | | 1,126,460 | | 784,962 | | 125,390 | | | 8,579,301 | | 6,899,110 | | 758,256 | | 419,114 | | 682,821 | | Foreign bank offices | | 231,536 | | 208,939 | | 20,988 | | 1,609 | | — | | | 276,745 | | 255,537 | | 21,208 | | — | | — | | | | | | | | | | | | | | | Total | | 6,964,798 | | 4,905,389 | | 1,147,448 | | 786,571 | | 125,390 | | | 9,036,046 | | 7,154,647 | | 779,464 | | 419,114 | | 682,821 | | | | | | | | | | | | | | |
Short-term borrowings
Our short-term borrowings totaled approximately thousands of Ps. 647,169, Ps. 734,963 and Ps. 1,048,716 for the years ended December 31, 2007, 2008 and 2009, respectively. The table below shows those amounts at the end of each year.
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | 2007 | | | 2008 | | | 2009 | | | | | | | | Annualized | | | | | | | Annualized | | | | | | | Annualized | | | | Amount | | | Rate | | | Amount | | | Rate | | | Amount | | | Rate | | | | (in thousands of pesos, except percentages) | | Central Bank of the Argentine Republic: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 72,526 | | | | 1.97 | % | | | 78,939 | | | | 1.95 | % | | | 1,363 | | | | 0.00 | % | Average during year (1) | | | 70,068 | | | | 1.97 | % | | | 76,023 | | | | 1.96 | % | | | 1,590 | | | | 0.00 | % | Maximum month-end balance | | | 72,526 | | | | | | | | 78,939 | | | | | | | | 2,168 | | | | | | Banks and international organizations: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 7,279 | | | | 5.58 | % | | | 59,737 | | | | 4.92 | % | | | 227,214 | | | | 7.78 | % | Average during year (1) | | | 125,827 | | | | 6.96 | % | | | 55,054 | | | | 4.38 | % | | | 121,662 | | | | 8.06 | % | Maximum month-end balance | | | 166,178 | | �� | | | | | | 86,762 | | | | | | | | 227,214 | | | | | | Corporate Bonds | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 18,947 | | | | 8.76 | % | | | 16,518 | | | | 9.46 | % | | | 15,719 | | | | 9.24 | % | Average during year (1) | | | 15,343 | | | | 8.97 | % | | | 16,612 | | | | 9.45 | % | | | 14,797 | | | | 9.30 | % | Maximum month-end balance | | | 18,947 | | | | | | | | 17,063 | | | | | | | | 15,897 | | | | | | Financing received from Argentine financial institutions: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 119,038 | | | | 6.75 | % | | | 31,846 | | | | 10.33 | % | | | 149,122 | | | | 9.45 | % | Average during year (1) | | | 68,801 | | | | 6.56 | % | | | 96,294 | | | | 5.47 | % | | | 64,430 | | | | 9.11 | % | Maximum month-end balance | | | 119,038 | | | | | | | | 166,146 | | | | | | | | 149,122 | | | | | | Other | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 412,975 | | | | 0.03 | % | | | 545,183 | | | | 0.02 | % | | | 652,330 | | | | 0.02 | % | Average during year (1) | | | 341,471 | | | | 0.01 | % | | | 524,019 | | | | 0.02 | % | | | 620,873 | | | | 0.02 | % | Maximum month-end balance | | | 412,161 | | | | | | | | 599,063 | | | | | | | | 652,330 | | | | | | Subordinated corporate bonds: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 16,404 | | | | 8.03 | % | | | 2,740 | | | | 4.00 | % | | | 2,968 | | | | 4.00 | % | Average during year (1) | | | 29,651 | | | | 8.25 | % | | | 21,056 | | | | 7.02 | % | | | 9,762 | | | | 4.00 | % | Maximum month-end balance | | | 59,288 | | | | | | | | 36,987 | | | | | | | | 16,854 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Short Term | | | 647,169 | | | | | | | | 734,963 | | | | | | | | 1,048,716 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | Average balances are calculated from quarterly-end balances.
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Return on equity and assets The following table presents certain selected financial information and ratios for the years indicated. | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | Year Ended December 31, | | | | 2007 | | 2008 | | 2009 | | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos, except percentages) | | | (in thousands of pesos, except percentages) | | Net income | | 495,200 | | 660,050 | | 751,930 | | | 660,050 | | 751,930 | | 1,010,430 | | Average total assets | | 17,691,769 | | 21,865,952 | | 23,964,067 | | | 21,865,952 | | 23,964,067 | | 28,078,290 | | Average shareholders’ equity | | 2,461,668 | | 2,778,572 | | 3,055,736 | | | 2,778,572 | | 3,055,736 | | 3,733,181 | | Shareholders’ equity at the end of the fiscal year | | 2,713,020 | | 2,821,911 | | 3,358,801 | | | 2,821,911 | | 3,358,801 | | 4,152,842 | | Net income as a percentage of: | | | Average total assets | | | 2.80 | % | | | 3.02 | % | | | 3.14 | % | | | 3.02 | % | | | 3.14 | % | | | 3.60 | % | Average shareholders’ equity | | | 20.12 | % | | | 23.76 | % | | | 24.61 | % | | | 23.76 | % | | | 24.61 | % | | | 27.07 | % | Declared cash dividends (2) | | 170,995 | | 149,870 | | 208,070 | | | 149,870 | | 208,070 | | 505,312 | | Dividend payout ratio (1) | | | 34.53 | % | | | 22.71 | % | | | 27.67 | % | | | 22.71 | % | | | 27.67 | % | | | 50.01 | % | Average shareholders’ equity as a percentage of Average Total Assets | | | 13.91 | % | | | 12.71 | % | | | 12.75 | % | | | 12.71 | % | | | 12.75 | % | | | 13.30 | % |
| | | (1) | | Declared cash dividends stated as percentage of net income. | | (2) | | For the fiscal year ended December 31, 2009, the dividends approved by the shareholders’ meeting held on April 6, 2010 have been authorized by the Central Bank on May 28, 2010. For the fiscal year ended December 31, 2008, and 2007, the dividends paid in cash were Ps. 148,335 and 170,995, respectively,Ps.148,335 thousand, based on the number of shares outstanding on such payment dates. |
Short-term borrowings Our short-term borrowings totaled approximately of Ps. 735.0 million, Ps. 1,048.7 million and Ps. 1,193.8 million for the years ended December 31, 2008, 2009 and 2010, respectively. The table below shows the breakdown of those amounts at the end of each year. | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | 2008 | | | 2009 | | | 2010 | | | | | | | | Annualized | | | | | | | Annualized | | | | | | | Annualized | | | | Amount | | | Rate | | | Amount | | | Rate | | | Amount | | | Rate | | | | (in thousands of pesos, except percentages) | | | | | | | | | | | | | | | | | | | | | | | | | | | Central Bank of the Argentine Republic: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 78,939 | | | | 1.95 | % | | | 1,363 | | | | 0.00 | % | | | 1,452 | | | | 0.01 | % | Average during year (1) | | | 76,023 | | | | 1.96 | % | | | 1,590 | | | | 0.00 | % | | | 1,328 | | | | 0.00 | % | Maximum month-end balance | | | 78,939 | | | | | | | | 2,168 | | | | | | | | 1,452 | | | | | | Banks and international organizations: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 59,737 | | | | 4.92 | % | | | 227,214 | | | | 7.78 | % | | | 45,697 | | | | 1.89 | % | Average during year (1) | | | 55,054 | | | | 4.38 | % | | | 121,662 | | | | 8.06 | % | | | 40,378 | | | | 2.17 | % | Maximum month-end balance | | | 86,762 | | | | | | | | 227,214 | | | | | | | | 53,640 | | | | | | Corporate Bonds | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 16,518 | | | | 9.46 | % | | | 15,719 | | | | 9.24 | % | | | 16,393 | | | | 9.22 | % | Average during year (1) | | | 16,612 | | | | 9.45 | % | | | 14,797 | | | | 9.30 | % | | | 14,384 | | | | 9.22 | % | Maximum month-end balance | | | 17,063 | | | | | | | | 15,897 | | | | | | | | 16,393 | | | | | | Financing received from Argentine financial institutions: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 31,846 | | | | 10.33 | % | | | 149,122 | | | | 9.45 | % | | | 34,893 | | | | 9.14 | % | Average during year (1) | | | 96,294 | | | | 5.47 | % | | | 64,430 | | | | 9.11 | % | | | 53,410 | | | | 8.67 | % | Maximum month-end balance | | | 166,146 | | | | | | | | 149,122 | | | | | | | | 66,661 | | | | | | Other | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 545,183 | | | | 0.02 | % | | | 652,330 | | | | 0.02 | % | | | 1,093,308 | | | | 0.01 | % | Average during year (1) | | | 524,019 | | | | 0.02 | % | | | 620,873 | | | | 0.02 | % | | | 743,456 | | | | 0.02 | % | Maximum month-end balance | | | 599,063 | | | | | | | | 652,330 | | | | | | | | 1,093,308 | | | | | | Subordinated corporate bonds: | | | | | | | | | | | | | | | | | | | | | | | | | Total amount outstanding at the end of the reported period | | | 2,740 | | | | 4.00 | % | | | 2,968 | | | | 4.00 | % | | | 2,100 | | | | 4.00 | % | Average during year (1) | | | 21,056 | | | | 7.02 | % | | | 9,762 | | | | 4.00 | % | | | 9,413 | | | | 4.00 | % | Maximum month-end balance | | | 36,987 | | | | | | | | 16,854 | | | | | | | | 16,711 | | | | | | Total Short Term | | | 734,963 | | | | | | | | 1,048,716 | | | | | | | | 1,193,843 | | | | | |
| | | (1) | | Average balances are calculated from quarterly-end balances. |
Interest rate sensitivity The interest rate sensitivity measures the impact on the gross intermediation margin in response to a change in market interest rates. For any given period, the pricing structure is matched when an equal amount of assets and liabilities reprice. Any mismatch of interest-earning assets and interest-bearing liabilities is known as a gap position and is shown in the following tables. A negative gap denotes liability sensitivity and normally means that a decline in interest rates would have a positive effect on net interest income while an increase in interest rates would have a negative effect on interest income. The following table shows the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities based on contractual maturities. Variations in interest rate sensitivity may also arise within the repricing periods presented. 62
Figures are in thousands of pesos, except percentages. | | | | | | | | | | | | | | | | | | | | | | | | | | | Remaining Maturity at December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 0-1 Year | | | 1-5 Years | | | 5-10 Years | | | Over 10 years | | | Without due date | | | (2) | | Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing deposits in other banks | | | 363,041 | | | | — | | | | — | | | | — | | | | — | | | | 363,041 | | | | | | | | | | | | | | | | | | | | | | | | | | | Government Securities | | | 5,057,795 | | | | 622,698 | | | | 1,186,601 | | | | 33,218 | | | | — | | | | 6,900,312 | | | | | | | | | | | | | | | | | | | | | | | | | | | Goods in financial leasing | | | 113,705 | | | | 127,278 | | | | 9,256 | | | | — | | | | — | | | | 250,239 | | | | | | | | | | | | | | | | | | | | | | | | | | | Loans to non-financial government sector (1) | | | 15,285 | | | | 2,573 | | | | 174,551 | | | | 14,075 | | | | — | | | | 206,484 | | | | | | | | | | | | | | | | | | | | | | | | | | | Loans to the private and financial sector (1) | | | 7,427,310 | | | | 3,622,102 | | | | 193,717 | | | | 95,239 | | | | — | | | | 11,338,368 | | | | | | | | | | | | | | | | | | | | | | | | | | | Other assets | | | 260,725 | | | | 129,457 | | | | 18,602 | | | | 10,591 | | | | 301,370 | | | | 720,745 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Interest-Earning Assets | | | 13,237,861 | | | | 4,504,108 | | | | 1,582,727 | | | | 153,123 | | | | 301,370 | | | | 19,779,189 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | Checking | | | 491,376 | | | | — | | | | — | | | | — | | | | — | | | | 491,376 | | | | | | | | | | | | | | | | | | | | | | | | | | | Savings accounts | | | 3,645,994 | | | | — | | | | — | | | | — | | | | — | | | | 3,645,994 | | | | | | | | | | | | | | | | | | | | | | | | | | | Time deposits | | | 9,982,217 | | | | 125,014 | | | | 4 | | | | — | | | | — | | | | 10,107,235 | | | | | | | | | | | | | | | | | | | | | | | | | | | Investment accounts | | | 53,639 | | | | 732 | | | | — | | | | — | | | | — | | | | 54,371 | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Bonds | | | 15,719 | | | | 197,066 | | | | 403,950 | | | | — | | | | — | | | | 616,735 | | | | | | | | | | | | | | | | | | | | | | | | | | | Subordinated corporate bonds | | | 2,968 | | | | — | | | | — | | | | 569,505 | | | | — | | | | 572,473 | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities with Central Bank | | | — | | | | 109 | | | | 108 | | | | 317 | | | | — | | | | 534 | | Liabilities with local financial companies | | | 149,122 | | | | 19,024 | | | | 21,825 | | | | — | | | | — | | | | 189,971 | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities with bank and international Organizations | | | 227,214 | | | | — | | | | — | | | | — | | | | — | | | | 227,214 | | | | | | | | | | | | | | | | | | | | | | | | | | | Other liabilities | | | 79,317 | | | | 5,926 | | | | — | | | | 75,687 | | | | — | | | | 160,930 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Interest-Bearing Liabilities | | | 14,647,566 | | | | 347,871 | | | | 425,887 | | | | 645,509 | | | | — | | | | 16,066,833 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asset (Liability) Gap | | | (1,409,706 | ) | | | 4,156,237 | | | | 1,156,840 | | | | (492,386 | ) | | | 301,370 | | | | 3,712,355 | | | | | | | | | | | | | | | | | | | | | | | | | | | Cumulative Asset/Liability Gap | | | (1,409,706 | ) | | | 2,746,531 | | | | 3,903,371 | | | | 3,410,985 | | | | 3,712,355 | | | | — | | Cumulative sensitivity gap as a percentage of total interest-earning assets | | | (7.13 | )% | | | 13.89 | % | | | 19.73 | % | | | 17.25 | % | | | 18.77 | % | | | | |
56
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remaining Maturity at December 31, 2009 | | | Remaining Maturity at December 31, 2010 | | | | Total | | | Without | | | | | | 0-1 Year | | 1-5 Years | | 5-10 Years | | Over 10 years | | Without due date | | (2) | | | 0-1 Year | | 1-5 Years | | 5-10 Years | | Over 10 years | | due date | | Total | | Interest-earning assets in Pesos: | | | Government securities | | 4,656,651 | | 573,073 | | 92,134 | | 31,038 | | — | | 5,352,896 | | | Goods in financial leasing | | 98,155 | | 79,685 | | 65 | | — | | — | | 177,905 | | | Interest-earning assets: | | | Interest-bearing deposits in other banks | | | 269,155 | | — | | — | | — | | — | | 269,155 | | Government Securities (2) | | | 6,662,257 | | 320,406 | | 21,965 | | 7,858 | | 3 | | 7,012,489 | | Receivables from financial leases | | | 110,305 | | 136,662 | | 6,453 | | — | | — | | 253,420 | | Loans to non-financial government sector (1) | | 15,285 | | 2,573 | | 174,551 | | 14,075 | | — | | 206,484 | | | 42,895 | | 15,671 | | 254,532 | | 23,332 | | — | | 336,430 | | Loans to the private and financial sector (1) | | 5,808,203 | | 3,390,639 | | 162,063 | | 95,239 | | — | | 9,456,144 | | | 10,576,147 | | 5,020,402 | | 403,010 | | 89,024 | | — | | 16,088,583 | | Other assets | | 97,503 | | 55,321 | | 11,247 | | 10,591 | | 301,370 | | 476,032 | | | 166,578 | | 430,364 | | 61,377 | | 8,851 | | 224,278 | | 891,448 | | | | | | | | | | | | | | | | | Total Interest-Earning Assets in Pesos | | 10,675,797 | | 4,101,291 | | 440,060 | | 150,943 | | 301,370 | | 15,669,461 | | | Total Interest-Earning Assets | | | 17,827,337 | | 5,923,505 | | 747,337 | | 129,065 | | 224,281 | | 24,851,525 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing liabilities in Pesos: | | | Interest-bearing liabilities: | | | Checking | | 93,621 | | — | | — | | — | | — | | 93,621 | | | 208,782 | | — | | — | | — | | — | | 208,782 | | Saving accounts | | 3,025,908 | | — | | — | | — | | — | | 3,025,908 | | | Savings accounts | | | 4,757,144 | | — | | — | | — | | — | | 4,757,144 | | Time deposits | | 7,421,653 | | 124,841 | | 4 | | — | | — | | 7,546,498 | | | 11,049,252 | | 683,624 | | — | | — | | — | | 11,732,876 | | Investment accounts | | 36,175 | | 591 | | — | | — | | — | | 36,766 | | | 900,735 | | 45 | | — | | — | | — | | 900,780 | | Corporate bonds | | 1,412 | | 197,066 | | — | | — | | — | | 198,478 | | | Corporate Bonds | | | 16,393 | | 197,066 | | 423,005 | | — | | — | | 636,464 | | Subordinated corporate bonds | | 963 | | — | | — | | — | | — | | 963 | | | 2,100 | | — | | — | | 596,370 | | — | | 598,470 | | Liabilities with Central Bank | | — | | 109 | | 108 | | 317 | | — | | 534 | | | 109 | | — | | 215 | | 210 | | — | | 534 | | Liabilities with local financial institutions | | 149,122 | | 19,024 | | 21,825 | | — | | — | | 189,971 | | | 34,893 | | 24,108 | | 16,636 | | — | | — | | 75,637 | | Liabilities with bank and international Organizations | | | 45,697 | | — | | — | | — | | — | | 45,697 | | Other liabilities | | 79,317 | | 5,926 | | — | | 75,687 | | — | | 160,930 | | | 95,198 | | 3,084 | | — | | 78,714 | | — | | 176,996 | | | | | | | | | | | | | | | | | Total Interest-Bearing Liabilities in Pesos | | 10,808,171 | | 347,557 | | 21,937 | | 76,004 | | — | | 11,253,669 | | | Total Interest-Bearing Liabilities | | | 17,110,303 | | 907,927 | | 439,856 | | 675,294 | | — | | 19,133,380 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asset(Liability) Gap | | | (132,375 | ) | | 3,753,734 | | 418,123 | | 74,939 | | 301,370 | | 4,415,792 | | | Asset (Liability) Gap | | | 717,034 | | 5,015,578 | | 307,481 | | | (546,229 | ) | | 224,281 | | 5,718,145 | | Cumulative Asset/Liability Gap | | | (132,375 | ) | | 3,621,360 | | 4,039,483 | | 4,114,422 | | 4,415,792 | | | 717,034 | | 5,732,612 | | 6,040,093 | | 5,493,864 | | 5,718,145 | | Cumulative sensitivity gap as a percentage of total interest-earning assets | | | (0.84 | )% | | | 23.11 | % | | | 25.78 | % | | | 26.26 | % | | | 28.18 | % | | | | 2.89 | % | | | 23.07 | % | | | 24.30 | % | | | 22.11 | % | | | 23.01 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remaining Maturity at December 31, 2009 | | | Remaining Maturity at December 31, 2010 | | | | Total | | | 0-1 Year | | 1-5 Years | | 5-10 Years | | Over 10 years | | Without due date | | Total | | | | 0-1 Year | | 1-5 Years | | 5-10 Years | | Over 10 years | | Without due date | | (2) | | | Interest-earning assets in foreign currency | | | | | | Interest-bearing deposits in other banks | | 363,041 | | — | | — | | — | | — | | 363,041 | | | | | | Government securities | | 401,144 | | 49,625 | | 1,094,467 | | 2,180 | | — | | 1,547,416 | | | | | | Goods in financial leasing | | 15,550 | | 47,593 | | 9,191 | | — | | — | | 72,334 | | | | | | Interest-earning assets in Pesos: | | | Government securities (2) | | | 4,139,774 | | 284,827 | | 15,908 | | 7,837 | | 3 | | 4,448,349 | | Receivables from financial leases | | | 90,674 | | 102,760 | | 28 | | — | | — | | 193,462 | | Loans to non-financial government sector (1) | | | 42,895 | | 15,671 | | 254,532 | | 23,332 | | — | | 336,430 | | Loans to the private and financial sector (1) | | 1,619,107 | | 231,463 | | 31,654 | | — | | — | | 1,882,224 | | | 8,391,301 | | 4,874,572 | | 373,035 | | 89,024 | | — | | 13,727,932 | | | | | Other assets | | 163,222 | | 74,136 | | 7,355 | | — | | — | | 244,713 | | | 74,634 | | 92,686 | | 1,312 | | 8,851 | | 224,278 | | 401,761 | | Total Interest-Earning Assets in Pesos | | | 12,739,278 | | 5,370,516 | | 644,815 | | 129,044 | | 224,281 | | 19,107,934 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Interest-Earning Assets | | 2,562,064 | | 402,817 | | 1,142,667 | | 2,180 | | — | | 4,109,728 | | | Interest-bearing liabilities in Pesos: | | | Saving accounts | | | 3,906,588 | | — | | — | | — | | 3,906,588 | | Time deposits | | | 8,406,686 | | 683,414 | | — | | — | | — | | 9,090,100 | | Investment accounts | | | 888,416 | | 45 | | — | | — | | — | | 888,461 | | Corporate bonds | | | 1,412 | | 197,066 | | — | | — | | — | | 198,478 | | Subordinated corporate bonds | | | — | | — | | — | | — | | — | | — | | Liabilities with Central Bank | | | 109 | | — | | 215 | | 210 | | — | | 534 | | Liabilities with local financial institutions | | | 34,825 | | 24,108 | | 16,636 | | — | | — | | 75,569 | | Other liabilities | | | 95,198 | | 3,084 | | — | | 78,714 | | — | | 176,996 | | Total Interest-Bearing Liabilities in Pesos | | | 13,333,234 | | 907,717 | | 16,851 | | 78,924 | | — | | 14,336,726 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing liabilities in foreign currency: | | | | | | Checking | | 397,755 | | — | | — | | — | | — | | 397,755 | | | | | | Saving accounts | | 620,086 | | — | | — | | — | | — | | 620,086 | | | | | | Time deposits | | 2,560,564 | | 173 | | — | | — | | — | | 2,560,737 | | | | | | Investment accounts | | 17,464 | | 141 | | — | | — | | — | | 17,605 | | | | | | Corporate bonds | | 14,307 | | — | | 403,950 | | — | | — | | 418,257 | | | | | | Subordinated corporate bonds | | 2,005 | | — | | — | | 569,505 | | — | | 571,510 | | | | | | Liabilities with Central Bank | | — | | — | | — | | — | | — | | — | | | | | | Liabilities with local financial | | — | | — | | — | | — | | — | | — | | | | | | Liabilities with banks and international organizations | | 227,214 | | — | | — | | — | | — | | 227,214 | | | | | | Other liabilities | | — | | — | | — | | — | | — | | — | | | | | | | | | | | | | | | | | | | | | Total Interest-Bearing Liabilities | | 3,839,395 | | 314 | | 403,950 | | 569,505 | | — | | 4,813,164 | | | | | | | | | | | | | | | | | | | | | Asset (Liability) Gap | | | (1,227,331 | ) | | 402,503 | | 738,717 | | | (567,325 | ) | | — | | | (703,436 | ) | | Asset(Liability) Gap | | | | (593,956 | ) | | 4,462,799 | | 627,964 | | 50,120 | | 224,281 | | 4,771,208 | | Cumulative Asset/Liability Gap | | | (1,277,331 | ) | | | (874,828 | ) | | | (136,111 | ) | | | (703,436 | ) | | | (703,436 | ) | | | | (593,956 | ) | | 3,868,843 | | 4,496,807 | | 4,546,927 | | 4,771,208 | | Cumulative sensitivity gap as a percentage of total interest-earning assets | | | (31.08 | )% | | | (21.29 | )% | | | (3.31 | )% | | | (17.12 | )% | | | (17.12 | )% | | | | (3.11 | )% | | | 20.25 | % | | | 23.53 | % | | | 23.80 | % | | | 24.97 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Remaining Maturity at December 31, 2010 | | | | | | | | | | | | | | | | | | | | Without due | | | | | | | 0-1 Year | | | 1-5 Years | | | 5-10 Years | | | Over 10 years | | | date | | | Total | | Interest-earning assets in foreign currency | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing deposits in other banks | | | 269,155 | | | | — | | | | | | | | | | | | | | | | 269,155 | | Government securities (2) | | | 2,522,483 | | | | 35,579 | | | | 6,057 | | | | 21 | | | | — | | | | 2,564,140 | | Receivables from financial leases | | | 19,631 | | | | 33,902 | | | | 6,425 | | | | — | | | | — | | | | 59,958 | | Loans to the private and financial sector (1) | | | 2,184,846 | | | | 145,830 | | | | 29,975 | | | | — | | | | — | | | | 2,360,651 | | Other assets | | | 91,944 | | | | 337,678 | | | | 60,065 | | | | — | | | | — | | | | 489,687 | | Total Interest-Earning Assets | | | 5,088,059 | | | | 552,989 | | | | 102,522 | | | | 21 | | | | — | | | | 5,743,591 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing liabilities in foreign currency: | | | | | | | | | | | | | | | | | | | | | | | | | Checking | | | 208,782 | | | | — | | | | — | | | | — | | | | — | | | | 208,782 | | Saving accounts | | | 850,556 | | | | — | | | | — | | | | — | | | | — | | | | 850,556 | | Time deposits | | | 2,642,566 | | | | 210 | | | | — | | | | — | | | | — | | | | 2,642,776 | | Investment accounts | | | 12,319 | | | | — | | | | — | | | | — | | | | — | | | | 12,319 | | Corporate bonds | | | 14,981 | | | | — | | | | 423,005 | | | | — | | | | — | | | | 437,986 | | Subordinated corporate bonds | | | 2,100 | | | | — | | | | — | | | | 596,370 | | | | — | | | | 598,470 | | Liabilities with local financial | | | 68 | | | | — | | | | — | | | | — | | | | — | | | | 68 | | Liabilities with banks and international organizations | | | 45,697 | | | | — | | | | — | | | | — | | | | — | | | | 45,697 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Interest-Bearing Liabilities | | | 3,777,069 | | | | 210 | | | | 423,005 | | | | 596,370 | | | | — | | | | 4,796,654 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asset (Liability) Gap | | | 1,310,990 | | | | 552,779 | | | | (320,483 | ) | | | (596,349 | ) | | | — | | | | 946,937 | | Cumulative Asset/Liability Gap | | | 1,310,990 | | | | 1,863,769 | | | | 1,543,286 | | | | 946,937 | | | | 946,937 | | | | | | Cumulative sensitivity gap as a percentage of total interest-earning assets | | | 22.83 | % | | | 32.45 | % | | | 26.87 | % | | | 16.49 | % | | | 16.49 | % | | | | |
| | | (1) | | Loan amounts are stated before deducting the allowance for loan losses. Non-accrual loans are included with loans as interest- earning asset. | | (2) | | Includes instruments issued by the Central Bank. |
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| | | Item 4A. | | Unresolved Staff Comments |
None. | | | Item 5. | | Operating and Financial Review and Prospects |
This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Cautionary statement concerning forward-looking statements,”statements”, “Risk factors,”Factors”, and the matters set forth in this annual report in general. The following discussion is based on, and should be read in conjunction with, our consolidated financial statements and related notes contained elsewhere in this annual report, as well as “Selected Financial data”Data” and the other financial information appearing elsewhere in this annual report in general. A. Operating results FINANCIAL PRESENTATION Our audited consolidated financial statements as of and for the three years ended December 31, 2010, 2009 2008 and 2007,2008, included elsewhere in this annual report, have been prepared in accordance with Central Bank Rules. Central Bank Rules differ in certain significant respects from U.S. GAAP. (See note 3532 to our audited consolidated financial statements as of and for the three years ended December 31, 2009)2010). As a result of the economic crisis, Argentina experienced very high rates of inflation in 2002. During that year, inflation, as measured by the wholesale price index, reached approximately 118%. As a result,Under Central Bank Rules, reinstatedour financial statements were adjusted to account for the effects of wholesale-price inflation accounting atin Argentina for the beginning of 2002 untilperiods through February 28, 2003. During 2003 and 2004, inflation levels returned to much lower levels and inflation accounting was discontinued. Therefore, allFor the financial statement data in this annual report for periods priorsubsequent to February 28, 2003, have been restated in constant pesos as of such date by applying the adjustment rate derived from the internal wholesale price index published by INDEC. We do not reportinflation adjustments were no longer applied to our results by accounting segments.financial statements under Central Bank Rules.
COMPARABILITY On August 18, 2009, we merged with Nuevo Banco Bisel. As a result of the merger, the Bank’s financial statements and supplementary information as of December 31, 2009 2008 and 2007,2008, included in this annual report, were restated for comparative purposes. Under Central Bank Rules, the accounting of the merger did not have a significant impact on the consolidated financial statements of the Bank. 58
On September 20, 2010 we acquired Banco Privado. As a result, our results of operations for the year ended December 31, 2010 consolidate the results of Banco Privado from the date of the acquisition.
Given the instability, and regulatory and economic changes that Argentina has experienced since the beginning of the economic crisis in 2001, as well as our mergers and acquisitions, the financial information set forth in this annual report may not be fully indicative of our anticipated results of operations or business prospects after the dates indicated. MACROECONOMIC CONTEXT During 2007 and for the fifth consecutive year, the Argentine economy showed significant dynamism, which was followed by positive results both from a fiscal and a commercial standpoint. During such period GDP had an annual growth of 8.7%, registering one of the biggest growths worldwide. Primary expenses also grew, increasing by 43%, overcoming the increase in total income, which increased by 38%. In this way, the Argentine government achieved a primary surplus of Ps.25,754 million, equivalent to 3.2% of the GDP.
Inflation was kept in line with the inflation registered in 2006, reaching a rate of 8.5% per annum, while at the same time the nominal exchange rate was kept relatively stable during the first semester and showed a slight depreciation in the second semester. All of this took place in an international context characterized by a greater volatility and uncertainty in the financial market, resulting from the U.S. subprime mortgage market crisis, which reversed the flow of funds destined for investment of portfolio towards emerging markets in general, including Argentina.
During the year 2008, Argentina was subject to strong internal and external volatilities that generated a deceleration of the growth registered in the 2003-2007 period. The global financial and economic conditions changed. Developed markets went from a dynamic economic context to sudden credit unavailability in the U.S. and European markets that led the way to an unprecedented economic depression, only comparable to the 1929 world depression. The internationallyinternational adverse economic context and the preexisting problems in Argentina (such as nationalization of pension funds and conflicts due to the proposed export tax regime) resulted in an evident contraction of the economy throughout 2008. Although the year closed with a 7% expansion of the GDP, the last quarter showed a strong deterioration in the level of activity. The Argentine government maintained an expansive fiscal policy, aimed at satisfying domestic demand. Public expenditure grew to Ps.186.6 billion, registering an annual increase of 35%. Still, Argentine economic figures improved significantly with respect to the previous year, reaching a primary surplus of Ps. 30.8 billion, representing 3% of the GDP. The year 2009 was characterized by a slow improvement in the international context, after the strong impact the international financial crisis had on both the financial markets and the real economy worldwide. Two different stages could be identified: in the first half of the year, recession in developed economies in addition to a deteriorated domestic environment due to uncertainty regarding the Government’sgovernment’s capacity to meet its public debt obligations and uncertainty resulting from the legislative elections being moved forward, combined to generate a massive outflow of capital. In the second semester, external and local tensions slowed down. The international arena showed a material recovery of the principal markets in general, and of our main commercial partners in particular. In the local arena, the result of the legislative elections and payment of US$2.2 billion’s worth of Boden 2012 notes in August 2009 encouraged the return of inflows of capital, which was evidenced in the last quarter of 2009. In this scenario, the growth level of Argentina experienced different stages throughout 2009: slow increase in the first quarter, contraction in the second and third quarters and a new increase in the last quarter. Consequently, official records estimated a GDP growth ofgrew only by 0.9% at the year’s end.. 64
In addition, during 2009, Argentina continued with its expansive economic policy. Commercial surplus consolidated, based on import restrictions, while primary fiscal surplus decreased. Primary expenses grew 30% reaching Ps. 243 million,billion, in similar terms as average verified in 2007. Primary surplus (Ps. 17.3 billion) decreased 47% as a consequence of an increase in the expense to resources ratio. On the other hand, interest payments grew by 37%, reaching Ps. 24.5 billion due to the exchange rate impact and an increase in the peso rates adjusting part of the debt. Consequently, and for the first time since 2002, the Argentine government registered a Ps. 7.2 billion financial deficit, representing 0.6% of the GDP. OUR RESPONSE TO THE CONTEXT
The effectDuring the first half of 2010, there was new global financial distress, mainly as a consequence of the crisis presented challenges that we promptly took measures to address and created attractive opportunities that we acted upon. Despite their magnitude, we managed to deal successfully withuncertainties about the turmoil and remained profitable.financial capacity of the Eurozone countries. Within this context, the weakness of the world economy, especially in the US, was a major concern. As a consequence, most developed countries delayed the termination of the incentive policies implemented during previous years. At the beginning we had high liquidity, which we maintained throughoutlocal level, the crisis. That high liquidity, combined with our loyal base of retail deposits, as well as deposits from provincial governments for whom we serve as financial agent, all a result of our response and strategic vision for our business, helped us restore our deposit base faster than the financial system as a whole. We also were ableeconomic activity improved, reaching growth rates similar to resume lending to the private sectorthose recorded before the rest2008 crisis. This significant improvement was due to both internal and external factors, such as the increase of the financial system and to continue gaining market share in loans and deposits after the market stabilization.
We believe that our strengths at the time that a crisis starts and our response measures described below are important elementsprices of our ability to withstand the effects of a crisis and help to position us to benefit significantly fromagricultural products, the recovery of the banking system. Furthermore, our comparatively strong financial condition made it possible for us to become a leading nationwide bank by acquiring Banco Bansud, Nuevo Banco Suquía, Banco Empresario de Tucumán, Banco del Tucumán and Nuevo Banco Bisel.
Commercial and balance sheet strategies
We maintain a strong position with respect to excess capital, the liquidity ratioBrazilian economy and the level of our provisions for loan losses. To counteractstrong world liquidity, coupled with higher harvest volumes, the effects that a run on deposits may have, one of our main priorities is to give depositors confidence that we would be able to absorb lossesrevenues policy in place, the significant increase in public expense and fulfill our obligations to them.
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Our practice of maintaining high liquidity levels throughout the business cycles helps us to withstand the economic crisis by serving two key purposes. First, we have funds availablesuccessful debt swap completed in the face of adverse systemic events. Second, we give our depositors confidence that they would be able to have access to their deposits at any time, even during the depth of a crisis. We also minimize excess cash deposited in the Central Bank, without harming our overall liquidity position. June 2010.
In this way, we maximizeduring 2010 GDP had an annual growth of 9.2%. Primary expenses grew 34%., The Argentine government achieved a primary surplus of Ps. 25 billion, equivalent to 1.7% of the return on our liquidity stock by keeping funds in more profitable assets, such as Central Bank-issued LEBACs/NOBACs and overdrafts to highly rated large corporations. Acquisitions
On March, 2010 we entered intoGDP. Inflation reached a share purchase agreement with the shareholdersrate of Banco Privado de Inversiones, pursuant to which, subject10.9% per annum according to the fulfillment of certain conditions (includingINDEC, while at the approval ofsame time the transaction byargentine peso depreciated 4.7% against the Central Bank), Banco Macro will acquire shares representing 100% of the capital stock and votes of Banco Privado de Inversiones. See “Item 4.A “Information on the Bank — History and development of the Bank”.U.S. dollar.
Cost management
During 2008 and 2009, we maintained our focus on controlling our costs and improving our efficiency. In addition, we have focused on carefully integrating the operations of our acquisitions. To this end, we have centralized, among other things, the treasury operations of all our acquisitions. The efficiency ratio reached 49.2% and 44.8% for the years 2008 and 2009, respectively.
We have had a period of organic growth with a small reductionAlthough there are numerous risks that may result in the number of our employees. See “Item 6. Directors, Senior Management and employees—Employees”. Finally, we implemented centralized purchasing practices to take advantage of our economies of scale.
Credit quality
The following table shows the quality of our loan and lending portfolio and of the financial system lending portfolio before and after the 2008 crisis. In 2008, the credit quality improvement from last years was interrupted by new signals of volatility.
During 2009, the credit quality marginally deteriorated, more as a result of slow dynamics in private lending than as a result of an increase in delinquency.
The credit quality deterioration was deepened throughout the financial system but at the end of the year it began to improve.
The definition of non-performing lending in the table comes from the Central Bank and is not comparable to the non-performing loans definition in “Selected Statistical Information.” (See footnote (2) on the table below).
| | | | | | | | | | | | | | | Year Ended December 31, | | | | 2007 | | | 2008 | | | 2009 | | | | | | | | | | | | | | | Banco Macro | | | | | | | | | | | | | Allowances/total loans | | | 2.2 | % | | | 3.7 | % | | | 3.9 | % | Non-performing loans ratio | | | 1.6 | | | | 2.6 | | | | 3.3 | | | | | | | | | | | | | | | Allowances/lending (1) | | | 2.2 | % | | | 3.6 | % | | | 3.7 | % | Non-performing lending ratio (2) | | | 1.5 | | | | 2.6 | | | | 3.2 | | | | | | | | | | | | | | | Financial System | | | | | | | | | | | | | Allowances/lending (1) | | | 3.0 | % | | | 3.0 | % | | | 3.8 | % | Non-performing lending ratio (2) | | | 2.7 | | | | 2.7 | | | | 3.0 | |
| | | Source: Central Bank
| | (1) | | Includes loans, other receivables from financial transactions, financial leases, memorandum accounts—other guarantees provided and unused portion of loans granted (included in Debtors Rating Standards).
| | (2) | | Non-performing lending includes all lending to borrowers classified as “3- troubled/medium risk”, “4-with high risk of insolvency/high risk”, “5-irrecoverable” and “6-irrecoverable According to Central Bank’s rules” under the Central Bank loan classification system.
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Implementation of improved credit risk policies and procedures
During the year 2009, the Credit Risk Department stressed its actions aimed at increasing the quality and efficiency of the credit risk rating process for Corporate Banking customers. We carried out a circuit reengineering, including the amendments of policies, rules and procedures, an intensive Training Program and the implementation of a new Credit File Management System, which allows us to make a more efficient follow up of our credit portfolio. These actions were aimed at speeding up transaction approvals, which resulted on a clear improvement in customer response time.
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As to our policy regarding credit facilities to individuals, we made some changes in the generation of financing operations, including the startup of a new evaluation system for the Private Salary Program segment, which evaluates companies and employees through credit point tables. These changes caused a significant reduction in delinquency ratios.
The year 2009 was also marked by an important improvement in all management indicators within the Pre-Legal Recovery department. We strengthened our recovery strategies, improved management quality and obtained better results in debt regularization and irregular portfolio collection actions.
In the year 2009, we put in place a new recovery system, which will operate on an integrated manner with the portfolio systems and will contribute to improve the delinquent portfolio follow up and management procedures.
The actions carried out allowed the Bank to keep a high quality portfolio, strengthened in turn by the improved coverage with provisions for bad-debt risk, based on a strict debtor rating and provision policy.
Implementation of shares repurchase program
In January 2008, we implemented a share “buy back” program. This decision was adopted due to the material impact on the price of domestic shares (including the quotation of the shares of Banco Macro, the current international macroeconomic context and the fluctuations in the capital market in general) following the reduction of prices in international markets triggered by the crisis facing the sub prime mortgage loans market in the United States of America (See “Macroeconomic Context”).
Likewise, the Board of Directors of Banco Macro considered the financial strength of the institution, and the price/income ratio resulting from the price of the shares of Banco Macro and the profits reported by it. Therefore, in line with the commitment of the Board of Directors to Banco Macro and its shareholders and to help reduce the fluctuations of quotations, minimizing any possible temporary imbalance between supply and demand within the market, and due to the excessive cost of capital resulting from quotation prices at such time, it established a share “buy back” program. The Board of Directors authorized repurchases of up to Ps.210 million or up to 30 million shares or their equivalent in ADSs within a price range of Ps.6.50 and Ps.7.00 per Class B Share. The program, which originally was going to last up to 120 calendar days, was extended through April 30, 2009, and, in addition, the price range was amended several times and finally established in the range of Ps.0.01 and Ps.4.00. It was a useful method to keep the share value, and the results are visible when comparing Macro shares to its competitors’.
As a result of the share “buy back” program, the Bank repurchased 90,641,692 Class B shares for a total approximate amount of Ps.437 million (89,493,692 Class B shares at an average price of Ps.4.799 per share and 114,800 ADSs at an average price of US$22 per ADS).
In April and September 2009, Banco Macro’s shareholders approved, and the corresponding authorizations were obtained from the CNV and BCBA, to reduce paid-in capital stock held by Banco Macro in an amount of up to Ps. 90,641,692, represented by an equivalent amount of Class B shares (i.e., the total amount of shares purchased under the share “buy back” program). For further information, please refer to item 5.B “Liquidity and Capital Resources”.
Repurchase of own Notes
In January 2008, we also started to make some repurchases of our 8.50% Notes Due 2017 and 10.750% Argentine Peso-Linked Notes Due 2012. The following table shows all the repurchases that the bank has made as of March 31, 2010:
| | | | | | | | | Date | | 8.50% Notes Due 2017 | | | 10.750% Argentine Peso-Linked Notes Due 2012 | | January 2008 | | | 9,500,000 | | | | — | | September 2008 | | | 10,850,000 | | | | — | | October 2008 | | | 12,375,000 | | | | 1,500,000 | | November 2008 | | | 1,300,000 | | | | 6,160,000 | | December 2008 | | | 8,530,000 | | | | 800,000 | | February 2009 | | | — | | | | 200,000 | | April 2009 | | | — | | | | 4,500,000 | | May 2009 | | | 1,050,000 | | | | 21,020,000 | | August 2009 | | | — | | | | 1,825,000 | | | | | | | | | | | | | | | | | | Total repurchased | | | 43,605,000 | | | | 36,005,000 | | Total cancelled | | | 43,605,000 | | | | 36,005,000 | | | | | | | | |
As of March 31, 2010, we have repurchased and cancelled US$43,605,000 of our 8.50% Notes Due 2017 and US$36,005,000 of our 10.750% Argentine Peso-Linked Notes Due 2012.
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PRINCIPAL TRENDS AFFECTING OUR BUSINESS
We believe that the following trends in the Argentine economy, the banking sector and our business have affected and will, for the foreseeable future, continue to affect our results of operations and profitability. Our continued success and ability to increase our value to our shareholders will depend, among other factors, upon the continued economic recovery in Argentina and the corresponding re-emergence of the market for long-term private sector lending.
International context
The world economic activity continues recovering and growth is expected to be stimulated by emerging economies, as well as also by the recovery of the United States and European Union economies. Nevertheless, the relevant macroeconomic imbalances experienced by some European countries (see Item 3d “Risk Factors-Abrupt changes in the fiscal and monetary policies of the main economies worldwide might cause recessive effects on our economy”) might affect the sustainability of this trend in the medium term. The principal risks would be associated to unemployment and the deterioration of developed countries’ public finances, deepened by the anti-cyclical measures adopted during the crisis.
In a general context of economic performance improvement, Latin American financial systems registered a moderate activity when compared to recent years, although it isbeing lower than expected, that financial intermediation will gain dynamism maintaining a spectrum of narrowed risks.
Argentine economic performance
Argentina’s overall economic performance had a substantial effect on our financial results. During 2007, 2008 and 2009, GDP growth was 8.7%, 7% and 0.9%, respectively. Although GDP growth in 2008 was 7.0%, the international markets volatility affected the private, domestic and foreign expectations.
After the worst of the international crisis was left behind, the local economic activity began to recover in the second half of 2009 and it is expected that this trend consolidates during 2010. The Central Bank’s survey of independent forecasting firms indicates a consensus GDP growth estimate of 4% in 2010.approximately 6.0% for 2011. For more information, see Item 3D—Risk Factors.
Expected economic growth would be supported by:
• | | Consumer spending: after almost two years of recession, consumption is beginning to recover. In addition, consumers see our products (personal and credit card loans) as a way of hedging against inflation. | | • | | Export levels: although the trade balance will be lower than the one registered in 2009, an increase in the level of exports due to commodities and the automobile sector is expected. | | • | | Soybean harvest record: after two years of low harvest levels, 2010 appears as an extraordinary year for this commodity. In addition, the agricultural sector works as an engine for regional economies. | | • | | High inflation: high levels of public expenditure lead to the aggregate demand growing faster than the offer, thus producing an upward adjustment in prices. |
Private sector lending
As a consequence of the international crisis and its impact in the local economy, the activity of financial intermediation diminished its pace of growth. This was reflected in the evolution of the volume of loans and deposits in the last two years.
The evolution of the loans to the private sector during the last three years showed a growth of 42% in 2007, of 20% in 2008 and of 9% in 2009, forIn this context, the financial system as a whole. This trend was also reflected in the evolution of our portfolio. Our private sector lending portfolio increased to Ps. 9,336 million (69%) in 2007, to Ps. 10,893 million (17%) in 2008is regaining depositors’ and to Ps. 11,248 million (3%) in 2009.
We see the following trends in this important area of our business:
Low cost of funds; high levels of liquidity. As a result of our low cost of fundsborrowers’ confidence, while benefiting from improved conditions, favorable growth opportunities and our high level of liquidity, a key driver of our results is our ability to increase our lending within the scope of our credit policy, as such lending is always at a positive margin. Therefore, we have seen increases in our gross intermediation margin as our private sector lending has increased.
Growth prospects subject to development of inflation and long-term fixed rate lending. We believe that the main obstacle preventing a faster recovery of Argentina’s private sector lending has been the uncertain outlook on long-term inflation, which has a significant impact on both the supply of andincreasing demand for long-term loans as borrowers try to hedge against inflation risk by borrowing at fixed rates while lenders hedge against inflation risk by offering loans at floating rates. As a result, most of the increase in the volume of private loans in the financial system until December 31, 2009 was concentrated in short-termservices and products. For example, the ratio of personal loans, overdrafts and documents to GDP has increased from 3% in June 2003 to 6% as of December 31, 2009 while long-term loans represented by mortgages and secured loans have decreased from 3% to 2% of GDP during the same period (despite substantial GDP growth during the period).
Stable intermediation spread. Based on the low banking penetration in Argentina, we believe that the expected loan growth mix, with a larger participation of consumer loans compared to commercial loans, will improve spreads. However, price competition could offset this effect and intermediation spreads might remain stable.
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Private sector loan portfolio credit quality
During the last years we had a slight deterioration of our portfolio; our non-performing loans increased from 1.55% as of December 31, 2007 to 2.64% and 3.25% on 2008 and 2009, respectively. These figures reflect the level and evolution registered by the private banking system as a whole.
At the end of 2008, we created additional allowances above those required by the Central Bank, with the aim of maintaining the coverage ratio set forth by the Bank’s standards of prudence. As a result, the Bank’s coverage level reached 141.81% of the irregular loan portfolio. During 2009, we continued with our policy of creating allowances in addition to those presently required by regulators. The coverage level as of December 31, 2009 was 119.45%.
We expect that based on our loan growth expectations and the recovery of the economy, asset quality standards should improve by the end of the year.
Organic growth complemented by strategic acquisitions
We will continue to consider strategic acquisition opportunities to complement our branch network consistently with our strategy. Due to our significant excess liquidity and capital, we are in a position to continue to complement organic growth with strategic acquisitions.
We evaluate the effectiveness of our acquisition strategy by how it complements our organic growth strategy and whether or not such acquisitions result in the Bank increasing its customer base, expanding its loan portfolio and generating more fee income from transactional services.
RESULTS OF OPERATIONS The following discussion of our results of operations is for the Bank as a whole and without reference to any operating segments. We do not manage the Bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources or assessing profitability. We consider loans to the private sector and the level of deposits to be key measures of our core business. Total loans toAs a consequence of the private sector grew to Ps. 9,336 million as of December 31, 20072008 global financial crisis, loan growth decelerated in 2008 and to Ps. 10,893 million as of December 31, 2008, increasing 69% and 17% respectively from previous years.
2009, but recovered in 2010. The 2008 international crisis impacted in our activity level and also in our credit quality, following the trend of the financial system. The Our loan portfolio to the private sector loan portfolio only increased 3% during 2009grew to Ps. 10,893 million as of December 31, 2008, increasing 17%, to Ps. 11,248 million. Themillion as of December 31, 2009, increasing 3%, and to Ps. 15,933 million as of December 31, 2010, increasing 42%. During 2008, 2009 and 2010 the credit lines with major performance were the consumer lines. Additionallyloans (personal loans and credit card loans), increasing 19%, 5% and 45%, respectively. In 2010, within a context of increased prices and reduced rates, the financial system, as well as the Bank, benefited from a continuous demand of consumer loans, the main growth driver of our portfolio in this year. During 2009 we have reduced our public sector loans by the pre-cancellation of Ps.216.9Ps.300.6 million of debt with guaranteed loans secured by the Argentine government (“Préstamos Garantizados” or “PGNs”) and by the exchange of PGNs into BONAR 2014 by Ps. 277.8 million. For additional information regarding transactions performed with PGNs see note 2In 2010 the Bank reduced its position in securities issued by the Central Bank and other government securities, recording a public sector exposure to our audited consolidated financial statements for the year ended December 31, 2009.total assets ratio of 2.5% (not including LEBACs and NOBACs). The level of our deposits grew by 35% from Ps. 10,071 to Ps. 13,591 million as of December 31, 2007. During 2008 and 2009 total deposits increased 16%, 17% and 17% respectively, totalizing Ps. 18,593 million as of December 31, 2009.26% during 2008, 2009 and 2010, respectively. During 2008, the deposits from AFJP (Argentine Pension Funds)pension funds) included as private sector deposits were transferred to the public sector, as a consequence deposits from public sector increased 122% from December 2007 to December 2008 and deposits from private sector only showed a 1% increase. During 2009, private sector deposits were the main source of the increase in total deposits, mainly due to the growth in time deposits. In 2010 private sector and public sector deposits increased 21% and 44% respectively, totaling Ps.23,407.4 million. The Bank maintains a high liquidity ratio. The ratio was 51.3%48.8%, 48.8%53.7% and 53.7%40.7% as of December 31, 2007, 2008, 2009 and 2009,2010, respectively, above the average of the financial system as a whole. During the last three years the Bank increased the level of liquid assets as cash and LEBACS/NOBACS portfolio. During 2009 we increased our Lebac/Nobac portfolio and repos. The Bank resorted to new sources of funding to prepare for potential changes in the Argentine loan market over the long-term. In December 2006, Banco Macro issued a series of subordinated notes for a nominal US$150 million due 2036 at a fixed rate of 9.75% for the first ten years and at LIBOR plus 7.11% for the following years. In addition, in January 2007, the Bank issued a US$150 million series of 10-year notes due 2017 at a fixed rate of 8.50% and, in June 2007, Banco Macro issued a US$100 million series of Argentine peso-linked notes due 2012 at a fixed rate of 10.750%. We have repurchased some of these notes. For further information please refer to “Repurchase of own notes”.
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YEAR ENDED DECEMBER 31, 2010 COMPARED TO YEAR ENDED DECEMBER 31, 2009 AND YEAR ENDED DECEMBER 31, 2009 COMPARED TO YEAR ENDED DECEMBER 31, 2008 AND YEAR ENDED DECEMBER 31, 2008 COMPARED TO YEAR ENDED DECEMBER 31, 2007 Net Incomeincome The following table sets forth certain components of our income statement for the years ended December 31, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | 2007 | | 2008 | | 2009 | | | 2008 (1) | | 2009 (1) | | 2010 (2) | | | | (in thousands of pesos) | | | (in thousands of pesos) | | | Financial income | | 1,890,422 | | 3,029,860 | | 3,860,452 | | | 3,029,860 | | 3,860,452 | | 3,728,438 | | Financial expenses | | | (805,265 | ) | | | (1,342,062 | ) | | | (1,511,607 | ) | | | (1,342,062 | ) | | | (1,511,607 | ) | | | (1,330,170 | ) | Gross intermediation margin | | 1,085,157 | | 1,687,798 | | 2,348,845 | | | 1,687,798 | | 2,348,845 | | 2,398,268 | | Provision for loan losses | | | (94,717 | ) | | | (297,606 | ) | | | (197,512 | ) | | | (297,606 | ) | | | (197,512 | ) | | | (215,040 | ) | Service charge income | | 662,326 | | 891,700 | | 1,050,275 | | | 891,700 | | 1,050,275 | | 1,324,541 | | Service charge expenses | | | (150,282 | ) | | | (172,401 | ) | | | (226,599 | ) | | | (172,401 | ) | | | (226,599 | ) | | | (285,365 | ) | Administrative expenses | | | (997,466 | ) | | | (1,270,002 | ) | | | (1,522,420 | ) | | | (1,270,002 | ) | | | (1,522,420 | ) | | | (1,917,314 | ) | Net other income | | 84,610 | | 85,122 | | | (36,317 | ) | | Income before income tax | | 589,628 | | 924,611 | | 1,416,272 | | | Net other income (expense) | | | 85,122 | | | (36,317 | ) | | 77,983 | | Minority interest | | | | (3,354 | ) | | | (5,092 | ) | | | (6,868 | ) | Net income before income tax | | | 921,257 | | 1,411,180 | | 1,376,205 | | Income tax | | | (92,345 | ) | | | (261,207 | ) | | | (659,250 | ) | | | (261,207 | ) | | | (659,250 | ) | | | (365,775 | ) | Minority Interest | | | (2,083 | ) | | | (3,354 | ) | | | (5,092 | ) | | | | | | | | | | | Net income | | 495,200 | | 660,050 | | 751,930 | | | 660,050 | | 751,930 | | 1,010,430 | | | | | | | | | | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2010. | | (2) | | The results of operations of Banco Privado are consolidated with Banco Macro from September 20, 2010. |
Our consolidated net income for 2010 increased 34% to Ps.1,010.4 million from Ps. 751.9 million in 2009. Our consolidated net income for 2009 increased 14% to Ps. 751.9 million from Ps. 660.0 million infor 2008. Our consolidated net income for 2008 increased 33% to Ps. 660.0 million from Ps. 495.2 million for 2007. Financial Incomeincome The components of our financial income for the years ended December 31, 2007, 2008, 2009 and 20092010 were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | 2007 (1) | | 2008 (1) | | 2009 | | | 2008 (1) | | 2009 (1) | | 2010 (2) | | | | (in thousands of pesos) | | | (in thousands of pesos) | | | | Interest on cash and due from banks | | 19,917 | | 7,010 | | 363 | | | 7,010 | | 363 | | 275 | | Interest on loans to the financial sector | | 32,157 | | 15,584 | | 7,491 | | | 15,584 | | 7,491 | | 13,668 | | Interest on overdrafts | | 177,490 | | 357,215 | | 340,275 | | | 357,215 | | 340,275 | | 278,851 | | Interest on documents (3) | | 103,428 | | 184,852 | | 195,069 | | | 184,852 | | 195,069 | | 146,321 | | Interest on mortgage loans | | 68,065 | | 97,057 | | 104,016 | | | 97,057 | | 104,016 | | 112,498 | | Interest on pledge loans (2) | | 51,480 | | 64,499 | | 55,081 | | | Interest on pledged loans (4) | | | 64,499 | | 55,081 | | 51,258 | | Interest on credit card loans | | 55,665 | | 117,952 | | 183,369 | | | 117,952 | | 183,369 | | 210,058 | | Interest on other loans (4) | | 578,737 | | 1,032,837 | | 1,243,788 | | | Interest on other loans (5) | | | 1,032,837 | | 1,243,788 | | 1,538,828 | | Interest on other receivables from financial intermediation | | 18,471 | | 14,416 | | 74 | | | 14,416 | | 74 | | 966 | | Interest on financial leases | | | 73,481 | | 49,433 | | 42,991 | | Income from government and private securities, net | | 488,757 | | 641,299 | | 1,370,981 | | | 641,299 | | 1,370,981 | | 988,707 | | Income from guaranteed loans (6) | | 35,043 | | 37,043 | | 7,232 | | | 37,043 | | 7,232 | | 62,053 | | Net income from options | | 1,604 | | 261 | | — | | | 261 | | — | | 616 | | CER (Indexation by benchmark stabilization coefficient) (5) | | 78,065 | | 70,477 | | 18,652 | | | CVS (Indexation by salary variation coefficient) | | 1,605 | | 818 | | 728 | | | CER (Indexation by benchmark stabilization coefficient) adjustment (7) | | | 70,477 | | 18,652 | | 46,176 | | CVS (Indexation by salary variation coefficient) adjustment | | | 818 | | 728 | | 688 | | Difference in quoted prices of gold and foreign currency | | 48,823 | | 143,094 | | 133,731 | | | 143,094 | | 133,731 | | 160,209 | | Other (7) | | 131,115 | | 245,446 | | 199,602 | | | | | | | | | | | | Other (8) | | | 171,965 | | 150,169 | | 74,275 | | Total financial income | | 1,890,422 | | 3,029,860 | | 3,860,452 | | | 3,029,860 | | 3,860,452 | | 3,728,438 | | | | | | | | | | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2009.2010. | | (2) | | Includes primarily income on secured car loans.The results of operations of Banco Privado are consolidated with Banco Macro from September 20, 2010.
| | (3) | | Includes income on factoring, check cashing advances and loans with promissory notes. | | (4) | | Includes interestprimarily income on loans not classified under prior headings.secured automobile loans. | | (5) | | Includes CER accrued for all the assets subject to adjustment by CER.interest on loans not classified under prior headings , including interest on personal loans. | | (6) | | Includes income on loans to the Argentine government that were issued in exchange for federal and provincial government bonds. | | (7) | | Includes CER accrued for all the assets subject to adjustment by CER. | | (8) | | Principally results from forward foreign currencypre-financing and financing export transactions and result from lending activity.premiums on repos. |
2010 and 2009 —Our financial income decreased 3% as compared to 2009, driven primarily by a lower income from government and private securities. 66
Income from government and private securities decreased by 28% compared to 2009, due to lower realized gains from government securities holding in investment accounts and, at the same time, lower unrealized gains during 2010 as a consequence of the performance of Central Bank notes during both years. The average rate gained from government securities was 16% for 2010 (nominal rate). Interest on loans (i.e., for all loans in the aggregate, excluding guaranteed loans) grew 10% as a result of an increase in the financial intermediation activities and the average portfolio volume (the average loan portfolio to private and financial sector grew by 16.5% as compared to 2009) This increase in volume was affected by interest rate decreases (average rate for private sector loans in 2010 was 18.7% compared to 20.2% in 2009). The main variances of total interest on loans were from interest on other loans (including personal loans and other loans) that increased 24% and interest on credit card loans that increased 15% year on year. These are the lines with more improvement. The average volume of personal loans increased by 24% and the average volume of credit card loans grew by 30% as compared to 2009. Other income decreased 51% during 2010 or Ps. 75.9 million compared to 2009. This decrease was principally due to lower income from export pre-financing and financing and less premiums on reverse repurchase agreements. 2009 and 2008 —Our financial income increased 27% as compared to 2008 driven by a higher income from government and private securities and interest on loans. 64
Income from government and private securities increased by 114% compared to 2008, as a result of an increase in the Bank’s bond portfolio price and on higher realized gains from the sale of part of this portfolio (main gains were from government securities holding in investment accounts). On the other hand, during 2009, the average portfolio of government and private securities increased by 45% compared to 2008’s average balance. Interest on loans (i.e., for all loans in the aggregate, excluding guaranteed loans) grew 14% mainly as a result of an increase in interest rates (private sector average rate in 2009 was 20.24% compared to 18.61% in 2008). The main variances of total interest on loans were from interest on other loans that increased 20% (including consumerpersonal loans and other loans) and interest on credit card loans that increased 55%. Thus, the share of our total financial income from private sector loans decreased from 62% in 2008 to 55% in 2009 the same level than 2007. In the other hand the share from government and private securities increased from 21% in 2008 to 36% in 2009. On the other hand, CER adjustments fell 74% compared to 2008, due to the use of PGN for the pre-cancellation of Central Bank debt. 2008 and 2007. Our financial income increased 60% as compared to 2007. Interest on loans increased 75% due to higher interest rates and a higher volume of loans to the private sector. Thus, the share of our total financial income from private sector loans increased from 55% in 2007 to 61% in 2008.
The main drivers of this growth have been interest on credit card loans increased 112%, interest on overdrafts increased 101%, interest on documents increased 79% and interest on other loans increased 78% (including personnel loans) during 2008. The increase in interest on credit card loans and overdrafts was mainly due to an increase on the average rate: average credit card rate increased 56% and average overdraft rate increased 41%. The increase in interest on documents and personal loans was mainly due to an increase on the average balance, by 60% and 62%, respectively.
Income from government and private securities climbed 31% mainly driven by LEBAC/NOBAC results, which increased 35% (the average rate of LEBACs/NOBACs increased from 10.05% during 2007 to 13.53% during 2008).
Difference in quoted prices of gold and foreign currency increased 193% during 2008, the increase was explained by the impact of higher FX rate on the Bank’s net long FX position and FX trading results.
Our other income increased 87% during 2008 as compared to the same period in 2007. This increase is principally due to higher forward FX gains (U.S. dollar — Argentine peso) as result of a significant increase in volume and timely change to long position (trading activity increased 226% in 2008 compared to 2007).
The following tables set forth the changes in financial income due to increases (decreases) in volume and increases (decreases) in nominal rates of average interest-earning assets. Such financial income excludes exchange differences and premiums on forward sales of foreign exchange: | | | | | | | | | | | | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | vs. | | | vs. | | | vs. | | | | December 31 2006 | | | December 31 2007 | | | December 31 2008 | | Changes in financial income | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | Due to changes in the volume of interest-earning assets | | | 622,135 | | | | 575,552 | | | | 415,524 | | Due to changes in average nominal rates of interest-earning assets | | | 57,122 | | | | 373,687 | | | | 556,974 | | | | | | | | | | | | | | | | | | | | | | | | | Net change | | | 679,257 | | | | 949,239 | | | | 972,498 | | | | | | | | | | | |
Changes in financial income | | | | | | | | | | | | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | vs. | | | vs. | | | vs. | | | | December 31 2006 | | | December 31 2007 | | | December 31 2008 | | Changes in financial income due to changes in volume | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | Government securities | | | 156,313 | | | | 51,613 | | | | 353,671 | | Loans to private and financial sector | | | 432,609 | | | | 546,098 | | | | 53,321 | | Loans to public sector | | | 4,905 | | | | (635 | ) | | | (36,236 | ) | Other assets | | | 28,308 | | | | (21,524 | ) | | | 44,768 | | | | | | | | | | | | | | | | | | | | | | | | | Net change | | | 622,135 | | | | 575,552 | | | | 415,524 | | | | | | | | | | | |
| | | | | | | | | | | | | | | December 31 2008 | | | December 31 2009 | | | December 31 2010 | | | | vs. | | | vs. | | | vs. | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | | | | | | | | | | | | | Due to changes in the volume of interest-earning assets | | | 575,552 | | | | 415,524 | | | | 417,730 | | Due to changes in average nominal rates of interest-earning assets | | | 373,687 | | | | 556,974 | | | | (572,891 | ) | | | | | | | | | | | | | | Net change | | | 949,239 | | | | 972,498 | | | | (155,161 | ) |
Changes in financial income due to changes in volume | | | | | | | | | | | | | | | December 31 2008 | | | December 31 2009 | | | December 31 2010 | | | | vs. | | | vs. | | | vs. | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | | | | | | | | | | | | | Government securities | | | 51,613 | | | | 353,671 | | | | 17,666 | | Loans to private and financial sector | | | 546,098 | | | | 53,321 | | | | 407,577 | | Loans to public sector | | | (635 | ) | | | (36,236 | ) | | | (5,270 | ) | Other assets | | | (21,524 | ) | | | 44,768 | | | | (2,243 | ) | | | | | | | | | | | | | | Net change | | | 575,552 | | | | 415,524 | | | | 417,730 | |
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| | | | | | | | | | | | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | vs. | | | vs. | | | vs. | | | | December 31 2006 | | | December 31 2007 | | | December 31 2008 | | Changes in financial income due to changes in nominal rates | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | Government securities | | | 6,612 | | | | 45,829 | | | | 318,338 | | Loans to private and financial sector | | | 72,404 | | | | 263,966 | | | | 214,313 | | Loans to public sector | | | (46,757 | ) | | | (12,882 | ) | | | (22,375 | ) | Other assets | | | 24,863 | | | | 76,774 | | | | 1,948 | | | | | | | | | | | | | | | | | | | | | | | | | Net change | | | 57,122 | | | | 373,687 | | | | 556,974 | | | | | | | | | | | |
Changes in financial income due to changes in nominal rates | | | | | | | | | | | | | | | December 31 2008 | | | December 31 2009 | | | December 31 2010 | | | | vs. | | | vs. | | | vs. | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | | | | | | | | | | | | | Government securities | | | 45,829 | | | | 318,338 | | | | (297,253 | ) | Loans to private and financial sector | | | 263,966 | | | | 214,313 | | | | (236,004 | ) | Loans to public sector | | | (12,882 | ) | | | 22,375 | | | | 99,691 | | Other assets | | | 76,774 | | | | 1,948 | | | | (139,325 | ) | | | | | | | | | | | | | | Net change | | | 373,687 | | | | 556,974 | | | | (572,891 | ) |
Financial expenses The components of our financial expenses for the years ended December 31, 2007, 2008, 2009 and 20092010 were as follows: | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | | | | | | | | | | | | | 2008 | | 2009 (1) | | 2010 (2) | | | | 2007 (1) | | 2008 (1) | | 2009 | | | (in thousands of pesos) | | | | (in thousands of pesos) | | | Interest on checking accounts | | 19,968 | | 17,708 | | 16,423 | | | 17,708 | | 16,423 | | 4,073 | | Interest on savings accounts | | 11,372 | | 14,534 | | 17,094 | | | 14,534 | | 17,094 | | 19,639 | | Interest on time deposits | | 457,395 | | 933,881 | | 1,146,013 | | | 933,881 | | 1,146,013 | | 954,465 | | Interest on interfinancing received loans (received call) | | 4,608 | | 3,909 | | 2,679 | | | 3,909 | | 2,679 | | 4,444 | | Interest on other financing from the financial institutions | | 226 | | 28 | | 62 | | | 28 | | 62 | | 6 | | Interest on other liabilities from financial intermediation (2) | | 70,706 | | 91,083 | | 81,510 | | | Interest on other liabilities from financial intermediation (3) | | | 91,083 | | 81,510 | | 62,889 | | Interest on subordinated corporate bonds | | 49,858 | | 47,523 | | 54,874 | | | 47,523 | | 54,874 | | 57,381 | | Other interest | | 9,768 | | 8,762 | | 2,692 | | | 8,762 | | 2,692 | | 1,961 | | Net loss from options | | — | | — | | 1 | | | — | | 1 | | — | | CER adjustment (3) | | 43,717 | | 32,946 | | 4,341 | | | CER adjustment (4) | | | 32,946 | | 4,341 | | 4,890 | | Contribution to Deposit Guarantee Fund | | 20,182 | | 25,945 | | 30,038 | | | 25,945 | | 30,038 | | 35,151 | | Other (4) | | 117,465 | | 165,743 | | 155,880 | | | | | | | | | | | | Other (5) | | | 165,743 | | 155,880 | | 185,271 | | Total financial expenses | | 805,265 | | 1,342,062 | | 1,511,607 | | | 1,342,062 | | 1,511,607 | | 1,330,170 | | | | | | | | | | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2009.2010. | | (2) | | The results of operations of Banco Privado are consolidated with Banco Macro from September 20, 2010. | | (3) | | Includes lines of credit from other banks, repurchase agreements and liquidity assistance from the Central Bank. | | (3)(4) | | Includes CER accrued for all the liabilities subject to adjustment by CER. | | (4)(5) | | Mainly resulting from turn overturnover tax. |
2010 and 2009-Financial expenses decreased 12% as compared to 2009. The decrease of financial expenses is mainly explained by a decrease in interest on deposits by 17%, primarily based on the decrease of interest on time deposits. This reduction was due to a decline in interest rates, which had an adverse effect on the Argentine financial system as a whole during 2010, and were not set off by the increase in the volume of deposits. The highest average increase in volume corresponds to demand deposits (non interest bearing) that grew 47% as compared to the average volume recorded in 2009. Time deposits increased by 15% as compared to the average volume recorded in 2009, while the average rate on such deposits fell from an average 11.4% in 2009 to an average 8.3% in 2010. During 2010, other expenses increased by 19%, mainly due to an increase on turnover tax as a result of our higher computable financial income. 2009 and 2008:- Financial expenses increased 13% as compared to 2008. The increase of financial expenses is mainly explained by interest on deposits, which grew 22%23%, based on the growth of interest fromon time deposits. This growth was originated mainly by the increasing volume of deposits which grew 20% in average during 2009 while the average interest rates were at similar levels than the average of 2008. The main driver of this increase was the growth in public sector deposits as a consequence of the nationalization of deposits held in the accounts of Pension Fund Administratorspension fund administrators as of December 2008. In 2009, CER adjustments fell sharply, by 87%, explained by the pre-cancellation of Central Bank debt. 2008 and 2007: Financial expenses increased 67% as compared to 2007.
The increase of financial expenses is mainly explained by interest on deposits, which grew 98%, based on the growth of interest from time deposits (104%).This growth was originated by two factors: the increasing volume of time deposits, which grew 37% in average during 2008 and the higher prevailing interest rates owing to with the increase in interest rates in the financial system as a whole (for time deposits in pesos, the average interest rate was 9.4% in 2007 and 13.2% in 2008).
“Other expenses” showed a significant growth of 41% during 2008, mainly due an increase on turnover tax due to higher computable financial income.
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The following tables set forth the changes in financial expense due to increases (decreases) in volume and increases (decreases) in nominal rates of average interest-bearing liabilities. Such financial expense excludes exchange rate variations and premiums on forward purchases of foreign exchange, contributions to Deposit Guarantee Fund, mandatory contributions and taxes on interest income: | | | | | | | | | | | | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | vs. | | | vs. | | | vs. | | | | December 31 2006 | | | December 31 2007 | | | December 31 2008 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | Financial Expense due to changes in the volume of interest-bearing liabilities | | | 291,394 | | | | 266,157 | | | | 111,170 | | Financial Expense due to changes in average nominal rates of interest-bearing liabilities | | | 51,275 | | | | 218,692 | | | | 31,052 | | | | | | | | | | | | Net change | | | 342,669 | | | | 484,849 | | | | 142,222 | | | | | | | | | | | |
Changes in financial expense | | | | | | | | | | | | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | vs. | | | vs. | | | vs. | | | | December 31 2006 | | | December 31 2007 | | | December 31 2008 | | Changes in financial expense due to changes in volume | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | Deposits | | | 153,069 | | | | 276,410 | | | | 154,251 | | Borrowings from Central Bank and other financial institutions | | | 21,537 | | | | (8,515 | ) | | | (24,951 | ) | Corporate Bonds | | | 101,188 | | | | 14,163 | | | | (3,004 | ) | Other liabilities | | | 15,600 | | | | (16,265 | ) | | | (15,126 | ) | | | | | | | | | | | | | | | | | | | | | | | | Net change | | | 291,394 | | | | 266,157 | | | | 111,170 | | | | | | | | | | | |
| | | | | | | | | | | | | | | December 31 2008 | | | December 31 2009 | | | December 31 2010 | | | | vs. | | | vs. | | | vs. | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | Financial Expense due to changes in the volume of interest-bearing liabilities | | | 266,157 | | | | 111,170 | | | | 154,225 | | Financial Expense due to changes in average nominal rates of interest-bearing liabilities | | | 218,692 | | | | 31,052 | | | | (370,221 | ) | Net change | | | 484,849 | | | | 142,222 | | | | (215,996 | ) |
| | | | | | | | | | | | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | vs. | | | vs. | | | vs. | | | | December 31 2006 | | | December 31 2007 | | | December 31 2008 | | Changes in financial expense due to changes in nominal rates | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | | Deposits | | | 36,596 | | | | 193,460 | | | | 57,451 | | Borrowings from Central Bank and other financial institutions | | | 9,472 | | | | 1,545 | | | | (11,833 | ) | Corporate Bonds | | | 1,711 | | | | (1,723 | ) | | | 108 | | Other liabilities | | | 3,496 | | | | 25,410 | | | | (14,674 | ) | | | | | | | | | | | | | | | | | | | | | | | | Net change | | | 51,275 | | | | 218,692 | | | | 31,052 | | | | | | | | | | | |
Changes in financial expense due to changes in volume | | | | | | | | | | | | | | | December 31 2008 | | | December 31 2009 | | | December 31 2010 | | | | vs. | | | vs. | | | vs. | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | Deposits | | | 276,410 | | | | 154,251 | | | | 156,739 | | Borrowings from Central Bank and other financial institutions | | | (8,151 | ) | | | (24,951 | ) | | | (1,644 | ) | Corporate Bonds | | | 14,163 | | | | (3,004 | ) | | | (870 | ) | Other liabilities | | | (16,265 | ) | | | (15,126 | ) | | | — | | | | | | | | | | | | | | | Net change | | | 266,157 | | | | 111,170 | | | | 154,225 | |
Changes in financial expense due to changes in nominal rates | | | | | | | | | | | | | | | December 31 2008 | | | December 31 2009 | | | December 31 2010 | | | | vs. | | | vs. | | | vs. | | | | December 31 2007 | | | December 31 2008 | | | December 31 2009 | | | | Increase (Decrease) | | | Increase (Decrease) | | | Increase (Decrease) | | | | (in thousands of pesos) | | Deposits | | | 193,460 | | | | 57,451 | | | | (358,243 | ) | Borrowings from Central Bank and other financial institutions | | | 1,545 | | | | (11,833 | ) | | | (8,946 | ) | Corporate Bonds | | | (1,723 | ) | | | 108 | | | | (121 | ) | Other liabilities | | | 25,410 | | | | (14,674 | ) | | | (2,911 | ) | | | | | | | | | | | | | | Net change | | | 218,692 | | | | 31,052 | | | | (370,221 | ) |
Provision for loan losses 2010 and 2009-Provision for loan losses increased 9% in 2010 mainly as result of the growth in lending activity, which increased 39% as a consequence of the recovery of the economic activity. This increase was partially offset by a decrease in the provisions we created in addition to those required by the Central Bank Rules, from Ps.86 million in 2009 to Ps.65 million in 2010. 2009 and 2008: -Provision for loan losses decreased 34% compared to 2008. At the end of 2009, although the economic activity was experiencing certain recovery, it was considered necessary to keep an additional provision that would allow the Bank to manage changes in the economic cycle. Therefore, a decision was made to continue with the provision strategy adopted back in December 2008, adapting its volume to actual delinquency charges during the fiscal year. As a result of such decision, the Executive Committee ordered an increase in provisions for loan losses in the amount of Ps.86 million, to be added to the amount currently required by regulators. 2008 and 2007: Provision for loan losses increased 214% compared to 2007. As we are all aware, the world’s economy is sustaining a highly virulent crisis that is affecting, to a lesser or larger extent, the levels of economic activity and employment and dragging down foreign trade. This scenario leads us to the assumption that some of the loans that currently make up our portfolio might sustain an impairment in value. Therefore, the Executive Committee has decided to increase provision for loan losses as of December 31, 2008 in PS.153.7 million to those presently required by regulators.
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Service charge income The following table provides a breakdown of our service charge income by category for the years ended December 31, 2007, 2008, 2009 and 2009:2010: | | | | | | | | | | | | | | | | | | | | | | | | | | | 2007 (1) | | 2008 (1) | | 2009 | | | Year Ended December 31, | | | | (in thousands of pesos) | | | 2008 (1) | | 2009 (1) | | 2010 (2) | | | | | (in thousands of pesos) | | Service charges on deposit accounts | | 398,569 | | 587,426 | | 669,668 | | | 587,259 | | 669,564 | | 816,100 | | Debit and credit card income | | 95,644 | | 153,210 | | 171,746 | | | 153,210 | | 171,746 | | 222,537 | | Other fees related to foreign trade | | 15,947 | | 19,261 | | 26,682 | | | 19,428 | | 26,786 | | 28,358 | | Credit-related fees | | 53,995 | | 63,669 | | 60,741 | | | 63,669 | | 60,741 | | 96,574 | | Capital markets and securities activities | | 2,951 | | 2,517 | | 1,721 | | | 2,517 | | 1,721 | | 2,079 | | Lease of safe-deposit boxes | | 12,904 | | 16,282 | | 21,015 | | | Fees related to guarantees | | 2,789 | | 1,750 | | 629 | | | Other (2) | | 79,527 | | 47,585 | | 98,073 | | | | | | | | | | | | Total service charge income | | 662,326 | | 891,700 | | 1,050,275 | | | | | | | | | | | |
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| | | | | | | | | | | | | | | Year Ended December 31, | | | | 2008 (1) | | | 2009 (1) | | | 2010 (2) | | | | (in thousands of pesos) | | Lease of safe-deposit boxes | | | 16,282 | | | | 21,015 | | | | 32,053 | | Fees related to guarantees | | | 1,750 | | | | 629 | | | | 647 | | Other (3) | | | 47,585 | | | | 98,073 | | | | 126,193 | | Total service charge income | | | 891,700 | | | | 1,050,275 | | | | 1,324,541 | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2009.2010. | | (2) | | The results of operations of Banco Privado are consolidated with Banco Macro from September 20, 2010. | | (3) | | Includes insurance income. |
2010 and 2009- Service charge income increased 26% in 2010 compared to 2009, mainly due to higher fees charged on deposits accounts (22%), debit and credit card fee income (30%), credit related fees (59%) and other fees related to insurance, fees from collection agreements and others (28%). 2009 and 2008:Service charge income increased 18% as compared to 2008 mainly due to higher fees charged on deposits accounts (14%), debit and credit card fee income (12%) and other fees related to assurance,insurance, fees from collection agreements and others (106%). 2008 and 2007: Service charge incomeexpenses
Service charge expense increased 35% as compared26% in 2010 from Ps.226.6 million in 2009 to 2007Ps.285.4 million in 2010, mainly due to the increase inhigher loan origination fees and debit and credit card processing fees, linked with the volume of our operations. The main drivers were fees related to deposits, which grew 47% and represent 66% of total service charge income and fees related to debit and credit cards, which grew 60%. Service charge expensesactivity.
During 2009 service charge expenses increased 31% compared to 2008 with an increase of 43% on other service charge expenses mainly due to the increase of collections agreements costs. Service charge expense in 2008 increased 15% compared to 2007 mainly due to higher credit card and debit card processing fees (35% increased) and taxes (26% increased).
Administrative expenses The components of our administrative expenses for the years ended December 31, 2007, 2008, 2009 and 20092010 are reflected in the following table: | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | | | | | | | | | | | | | 2008 (1) | | 2009 (1) | | 2010 (2) | | | | 2007(1) | | 2008 (1) | | 2009 | | | (in thousands of pesos) | | | | (in thousands of pesos) | | | Personnel expenses | | 589,021 | | 798,236 | | 966,963 | | | 798,236 | | 966,963 | | 1,233,898 | | Directors and statutory auditors fees | | 37,695 | | 26,941 | | 36,413 | | | 26,941 | | 36,413 | | 59,391 | | Other professional fees | | 42,428 | | 55,012 | | 65,533 | | | 55,012 | | 65,533 | | 81,169 | | Advertising and publicity | | 50,343 | | 53,178 | | 46,861 | | | 53,178 | | 46,861 | | 63,437 | | Taxes | | 53,914 | | 70,994 | | 79,784 | | | 70,994 | | 79,784 | | 102,547 | | Depreciation of equipment | | 42,723 | | 50,543 | | 53,993 | | | 50,543 | | 53,993 | | 58,285 | | Amortization of organization costs | | 17,923 | | 25,557 | | 33,317 | | | 25,557 | | 33,317 | | 43,273 | | Maintenance, conservation and repair expenses | | 36,930 | | 48,251 | | 68,620 | | | 48,251 | | 68,620 | | 78,032 | | Security services | | 35,487 | | 42,241 | | 47,668 | | | 42,241 | | 47,668 | | 61,102 | | Electric power and communications | | 32,206 | | 37,240 | | 46,054 | | | 37,240 | | 46,054 | | 48,529 | | Lease payments | | 18,686 | | 21,769 | | 34,638 | | | 21,769 | | 34,638 | | 40,526 | | Insurance | | 6,110 | | 6,090 | | 7,331 | | | 6,090 | | 7,331 | | 9,902 | | Stationery and office supplies | | 14,739 | | 15,335 | | 11,817 | | | 15,335 | | 11,817 | | 10,339 | | Other | | 19,261 | | 18,615 | | 23,428 | | | 18,615 | | 23,428 | | 26,884 | | | | | | | | | | | Total administrative expenses | | 997,466 | | 1,270,002 | | 1,522,420 | | | 1,270,002 | | 1,522,420 | | 1,917,314 | | | | | | | | | | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2009.2010. | | (2) | | The results of operations of Banco Privado are consolidated with Banco Macro from September 20, 2010. |
2010 and 2009- Administrative expenses increased 26% in 2010 when compared to 2009, mainly due to higher personnel expenses. The 28% increase in personnel expenses is attributed to salary adjustments of 23.5% agreed with the labor unions in April 2010 and higher bonus provisions for the year. Directors and statutory audit fees increased 63% as compared to 2009. Advertising and publicity increased 35% due to higher promotion and advertising expenses during the year. 2009 and 2008:- Administrative expenses increased 20% as compared to 2008, mainly due to higher personnel expenses. The 21% increase in personnel expenses is attributed to the salary adjustments of 19% agreed with the labor unions in April 2009 and higher compensation provisions for the year. 2008 and 2007: Administrative expensesNet other income (expense)
Net other income for 2010 was Ps. 78 million. Other income increased 27% asby 37%, or Ps. 45.5 million in 2010 when compared to 2007, mainly2009 due to personnelhigher recovery on loans and allowances reversed. Other expenses which grew 36%. This increase in personneldecreased by 43%, or Ps. 68.8 million, mainly as a result of non-recurrent tax expenses is attributed to salary adjustments and to the increase in the number of employees.during 2009 as explained below. 6870
Net other income
For the year 2009, the Bank accounted a Ps. 36 million loss for net other income. As compared to 2008, the other income fell by 35% (Ps. 66 million) mainly due to lower recovery on loans and allowances reversed. In addition, other expenses rose by 53% (Ps. 55 million) as compared to 2008, as a result of a non-recurrent tax expense of Ps.40.2 million made to enter into the debt regularization system established by means of a Resolution of the Buenos Aires City Tax Authorities (DGR CABA). Net otherIncome tax
During 2010, we had income increased 1% (ortax expenses of Ps. 0.5 million)365.8 million, compared to Ps. 659.3 million recorded in 20082009 and Ps. 261.2 million recorded in comparison2008. The decrease as compared to 20072009 was due to an increase of Ps. 4.9 million in other income and an increase of Ps. 4.4 million in other expenses. The main variation in other income resulted from athe higher income from long-term investments due to dividends received from Visa S.A. and lower levels of recovered loans and allowances reversed. The main variations in other expenses were driven by an increase in allowancestax impact during 2009. Tax effective rate for other receivables, uncollectibility and other allowances as well as a decrease in other expenses. Incomefiscal year 2010 was 26% while the tax rate was 35%.
The income tax expense for 2009 was Ps. 659.3 million, increasing 152% aswhen compared to 2008. Such increase is due to a higher net income before income tax, an increase in market value of the Bank’s bond portfolio in 2009 that caused an increase in income tax to be paid as a consequence of the tax treatment of this portfolio as marked to market, and as a result of the tax impact of the pre-cancellation of Central Bank debt with PGNs. During 2008, we had income tax expenses of Ps.261.2 million, compared to Ps.92 million recorded in 2007 (increasing 182.9%), this can be traced to the complete use of the tax-loss carry forwards which belonged to Nuevo Banco Bisel and the estimated accrued income tax.PGN.
B. Liquidity and Capital Resources Our main source of liquidity consists of deposits, which totaled Ps.18.6 billionPs. 23,407.4 million as of December 31, 2010, Ps. 18,592.9 million as of December 31, 2009 and Ps. 15.8 billion15,828.4 million as of December 31, 2008 and Ps.13.6 billion as of December 31, 2007.2008. These deposits include deposits generated by our branch network, from institutional, very large corporate clients and from provincial governments for whom we act as financial agent. We consider the deposits generated by our branch network and the provincial deposits to be stable. Approximately 22% of the Bank’s total deposits derives from the non-financial government sector, in particular as a consequence of the Bank’s role as financial agent of several provinces. This is an important source of low-cost funding. Funding continued increasing during 20092010 driven mainly by the increase in total deposits, which grew 17%26% year over year.year, representing 80% of our total funding as of December 31, 2010. These deposits were used primarily for financing the growth in credit for the private sector withand the remainder, being invested in profitable liquid assets, such as government and private securities and cash and due from banks.assets. This approach has enabled us to maintain a high liquidity to deposits ratio of 53.7%40.71% as of December 31, 20092010 while awaitingwe await a return to stronger demand for private sector loans. In December 2006, we issued a series of subordinated notes for a nominal US$150 million due 2036 at a fixed rate of 9.75% for the first ten years and at LIBOR plus 7.11% for the following years. The notes are treated as capital for regulatory purposes. In addition, in January 2007 we issued a US$150 million series of 10-year notes due 2017 at a fixed rate of 8.50% and in June 2007 we issued a US$100 million series of Argentine Peso-Linked Notes due 2012 at a fixed rate of 10.750%. The proceeds from the placement of the notes will be used to make medium-term loans.
In June 2007, the general ordinary and extraordinary shareholders’ meeting approved the increase of the US$400,000,000 (U.S. dollars four hundred million) of the Global Program for the issuance of Negotiable Obligations to US$700,000,000 (U.S. dollars seven hundred million), or an equal amount in other currencies, as set forth in the original program.
In January 2008, we signed a 24-month extension to the US$50 million loan from Credit Suisse First Boston International, at 8.55% rate and maturing in January 2010. As of January 2010 this loan was cancelled.
During 2008 and 2009, Banco Macro repurchased and cancelled non-subordinated 8.50% Notes Due 2017 for a face value amount of US$43,605,000 and Argentine Peso-Linked 10.75% Notes Due 2012 for a face value amount of US$36,005,000. As of December 31, 2009, the outstanding principal amount of 8.50% Notes Due 2017 was US$106,395,000 and of 10.75% Notes Due 2012 was US$63,995,000. During 2010 we repaid the loan from Credit Suisse First Boston International for an aggregate principal amount of US$50 million. On January 8, 2008, Banco Macro’s Board of Directors decided to establish the terms and conditions for the acquisition of its own shares issued by Banco Macro. See Item 16E “Purchasesshares. Based on the established conditions, up to April 12, 2009 the Bank had repurchased an aggregate amount of Equity Securities by the Issuer and Affiliated Purchasers” for more details.90,641,692 of its own shares. On October 1, 2008, Banco Macro’s Board of Directors requested the BCBA’s prior authorization to reduce its subscribed and paid-in capital stock by an amount of up to Ps. 60 million, representing 60,000,000 Class B shares (with a face value of Ps. 1 each and entitled to 1 vote per share), which were included in the Bank’s portfolio and were acquired under section 68, Law No. 17,811 in accordance with the share buy-back program (See Item 16E “Repurchase original program and modifications”).program. On April 21, 2009, and after BCBA authorization, Banco Macro’s general ordinary and extraordinary shareholders’ meeting approved the abovementioned capital reduction. During July 2009, the CNV authorized, the IGJ registered, and the Central Bank consented to the capital stock reduction. On May 8, 2009, Banco Macro’s Board of Directors requested the BCBA’s prior authorization to reduce its subscribed and paid-in capital stock by an amount of up to Ps. 30,641,692, representing 30,641,692 Class B shares (with a face value of Ps. 1 each and entitled to 1 vote per share), which is treasury stock and which was purchased under section 68, Law No. 17,811. On September 10, 2009, Banco Macro’s shareholders’ meeting approved the abovementioned capital reduction subject to the BCBA’s consent. Subsequently, the BCBA and the CNV approved such capital reduction, the IGJ recorded it and the Central Bank acknowledged it. 69
Additionally, the Bank currently has access to uncommitted lines of credit with foreign banks and to letters of credit. On April 26, 2011 our shareholders’ meeting approved the increase of the maximum aggregate principal amount of our Global Medium-Term Note Program from U$S 700 million up to U$S 1,000 million (or its equivalent in other currencies). The CFO manages the excess liquidity by analyzing interest rates from a limited number of liquid and short-term assets including Central Bank Bills, deposits with the Central Bank and overnight loans to highly rated companies. The amount allocated to overnight loans is determined by the amount of deposits received from institutional investors, and as such, there is a high degree of volatility in our overnight allocations. We believe that we have adequate working capital to meet our current and reasonably foreseeable needs. As of December 31, 2009,2010, we had excess capital of Ps. 2,3642,562 million (176%(145% of minimum capital requirement). The Bank’s excess capital is aimed at supporting growth, and consequently, a higher leverage of the Bank’s balance sheet. 71
For further information regarding management and administration guidelines in relation to liquidity risk please note 17 “Risk management policies” to our audited consolidated financial statements for the year ended December 31, 2010. Additionally for further information regarding our restricted assets, assets in custody and trust agreements please see notes 7 “Restricted and pledged assets”, 11 “Items in custody” and 13 “Trust agreements” to our audited consolidated financial statements, for the year ended December 31, 2009.2010. Minimum capital requirements Our excess capital (representing the amount in excess of minimum reserve requirements of the Central Bank) is as set forth in the table: | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | | | 2007 | | 2008 | | 2009 | | | 2008 | | 2009 | | 2010 | | | | (in thousands of pesos, except | | | (in thousands of pesos, except | | | | ratios and percentages) | | | ratios and percentages) | | Calculation of excess capital: | | | Allocated to assets at risk | | 749,855 | | 939,296 | | 970,578 | | | 939,296 | | 970,578 | | 1,261,695 | | Allocated to Bank premises and equipment, intangible assets and equity investment assets | | 95,729 | | 87,113 | | 95,705 | | | 87,113 | | 95,705 | | 122,669 | | Market risk(1) | | 127,445 | | 49,899 | | 39,764 | | | 49,899 | | 39,764 | | 55,857 | | Interest rate risk | | 102,343 | | 204,510 | | 201,451 | | | 204,510 | | 201,451 | | 283,150 | | Government sector and securities in investment account | | 38,609 | | 60,780 | | 36,544 | | | 60,780 | | 36,544 | | 38,476 | | Incremental requirement | | 36,202 | | — | | — | | | | | | | | | | | | Required minimum capital under Central Bank Rules | | 1,150,183 | | 1,341,598 | | 1,344,042 | | | 1,341,598 | | 1,344,042 | | 1,761,847 | | | | | | | | | | | Basic net worth | | 2,697,416 | | 2,688,679 | | 3,193,973 | | | 2,688,679 | | 3,193,973 | | 3,621,564 | | Complementary net worth | | 461,405 | | 625,756 | | 691,107 | | | 625,756 | | 691,107 | | 959,851 | | Deductions | | | (189,145 | ) | | | (200,610 | ) | | | (176,784 | ) | | | (200,610 | ) | | | (176,784 | ) | | | (257,277 | ) | | | | | | | | | | Total capital under Central Bank Rules | | 2,969,676 | | 3,113,825 | | 3,708,296 | | | 3,113,825 | | 3,708,296 | | 4,324,138 | | | | | | | | | | | | | | Excess capital | | 1,819,493 | | 1,772,227 | | 2,364,254 | | | 1,772,227 | | 2,364,254 | | 2,562,291 | | | | | | | | | | | | | | Selected capital and liquidity ratios: | | | Regulatory capital/risk weighted assets | | | 26.81 | % | | | 22.95 | % | | | 27.38 | % | | | 22.95 | % | | | 27.38 | % | | | 24.74 | % | Average shareholders’ equity as a percentage of average total assets | | | 13.91 | % | | | 12.71 | % | | | 12.75 | % | | | 12.71 | % | | | 12.75 | % | | | 13.30 | % | Total liabilities as a multiple of total shareholders’ equity | | 6.27 | x | | 6.95 | x | | 7.00 | x | | 6.95 | x | | 7.00 | x | | 7.07 | x | Cash as a percentage of total deposits | | | 22.94 | % | | | 22.26 | % | | | 26.98 | % | | | 22.26 | % | | | 26.98 | % | | | 22.22 | % | Liquid assets as a percentage of total deposits (2) | | | 52.01 | % | | | 48.80 | % | | | 53.70 | % | | | 48.80 | % | | | 53.70 | % | | | 40.71 | % | Loans as a percentage of total assets | | | 50.60 | % | | | 50.29 | % | | | 41.31 | % | | | 50.29 | % | | | 41.31 | % | | | 47.46 | % |
| | | (1) | | Average Var for December. | | (2) | | Liquid assets include cash, LEBACs, NOBACs, interbanking loans and overnight loans to highly rated companies. |
We believe that our capital resources are sufficient for our present requirements on an individual and a consolidated basis. 70
Funding Our principal source of funding is deposits from individuals and businesses located in Argentina. Deposits include checking accounts, savings accounts and time deposits. The following table sets forth our sources of funding as of December 31, 2007, 2008, 2009 and 2009.2010. | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31 | | | As of December 31 | | | | 2007 (1) | | 2008 (1) | | 2009 | | | 2008 (1) | | 2009 (1) | | 2010 | | | | (in thousands of pesos) | | | (in thousands of pesos) | | Deposits | | | From the non-financial government sector | | 1,774,121 | | 3,937,961 | | 3,613,924 | | | 3,937,961 | | 3,613,924 | | 5,216,109 | | From the financial sector | | 13,310 | | 22,438 | | 14,052 | | | 22,438 | | 14,052 | | 15,776 | | From the non-financial private sector and foreign residents | | | Checking accounts | | 2,599,682 | | 2,581,060 | | 3,275,826 | | | 2,581,060 | | 3,275,826 | | 4,178,758 | | Savings accounts | | 2,780,350 | | 2,716,913 | | 3,445,577 | | | 2,716,913 | | 3,445,577 | | 4,526,697 | | Time deposits | | 5,907,005 | | 6,031,882 | | 7,711,471 | | | 6,031,882 | | 7,711,471 | | 8,714,101 | | Investment accounts (2) | | 63,063 | | 155,936 | | 52,286 | | | 155,936 | | 52,286 | | 178,010 | | Other (3) | | 391,176 | | 321,020 | | 416,503 | | | 321,020 | | 416,503 | | 518,807 | | Accrued interest, adjustments, foreign exchange and quoted price differences payable | | 62,442 | | 61,147 | | 63,227 | | | 61,147 | | 63,227 | | 59,135 | | Borrowing from Central Bank and financial institutions | | | Central Bank | | 347,896 | | 302,760 | | 1,897 | | | 302,760 | | 1,897 | | 1,877 | | Banks and international institutions | | 164,829 | | 232,422 | | 227,214 | | | 232,422 | | 227,214 | | 45,697 | | Financing received from Argentine financial institutions | | 160,296 | | 73,806 | | 189,971 | | | 73,806 | | 189,971 | | 76,870 | | Other | | 493,912 | | 627,140 | | 733,943 | | | 627,140 | | 733,943 | | 1,173,873 | | Minority interest in subsidiaries | | 12,640 | | 15,568 | | 20,684 | | | 15,568 | | 20,684 | | 27,499 | | Non-subordinated Corporate Bonds | | 799,537 | | 724,873 | | 616,735 | | | 724,873 | | 616,735 | | 636,464 | | Subordinated Corporate Bonds | | 490,695 | | 521,681 | | 572,473 | | | 521,681 | | 572,473 | | 598,470 | | Shareholders’ equity | | 2,713,020 | | 2,821,911 | | 3,358,801 | | | 2,821,911 | | 3,358,801 | | 4,152,842 | | | | | | | | | | | Total funding | | 18,773,974 | | 21,148,518 | | 24,314,584 | | | 21,148,518 | | 24,314,584 | | 30,120,985 | | | | | | | | | | |
| | | (1) | | See note 4.2 to our audited consolidated financial statements for the year ended December 31, 2009.2010. | | (2) | | Time deposit payable at the option of the depositor. | | (3) | | Includes, among others, expired time deposits and judicial deposits. |
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Critical accounting policies Our accounting and reporting policies comply with Central Bank Rules, which differ in certain significant respects from U.S. GAAP. See note 3532 to theour audited consolidated financial statements as of and for the three years ended December 31, 20092010 included in this annual report for a reconciliation of our audited financial statements to U.S. GAAP. The preparation of our financial statements requires management to make estimates and assumptions of assets and liabilities, income, expenses and contingencies. Our financial position and results of operations can be affected by these estimates and assumptions, which are integral to understanding our financial position. Critical accounting policies are those policies that management believes are the most important to the portrayal of our financial condition and results of operations, and require management to make estimates that are subjective or complex. Most accounting policies are not considered by management to be critical accounting. Several factors are considered in determining whether or not a policy is critical in the preparation of our financial statements. These factors include, among others, whether the estimates are material to our financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including information from third parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under Central Bank Rules. Significant accounting policies are discussed in note 4 to our audited consolidated financial statements as of and for the three years ended December 31, 2009.2010. Income tax In estimating accrued taxes, we assess the relative merits and risks of the appropriate tax treatment considering statutory, judicial and regulatory guidance in the context of the tax position. Because of the complexity of tax laws and regulations, interpretation can be difficult and subject to legal judgment and given specific facts and circumstances. It is possible that others, given the same information, may at any point reach different reasonable conclusions regarding the estimated amounts of accrued taxes. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of the status of examinations being conducted by various taxing authorities, and newly-enacted statutory and regulatory guidance that impact the relative merits and risks of tax positions. These changes, when they affect accrued taxes, can be material to our operating results. As explained in note 5 to our audited consolidated financial statements, Central Bank Rules do not require the recognition of deferred tax assets and liabilities and, therefore, income tax is recognized on the basis of amounts due in accordance with Argentine tax regulations and no deferred tax and liabilities are recognized. For purposes of U.S. GAAP reporting, the Bank applieswe apply FASB ASC 740 “Income Tax”. Under this method, income tax is recognized based on the liability method whereby deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax basis of assets and liabilities at each reporting date. FASB ASC 740 requires that an allowance for deferred tax assets to the extent that it is more likely than not that they will not be realized, based on the weight of available evidence. In order to determine the amount of the valuation allowance required, in accordance with FAS ASC 740-10-30-16 through 30-25, we evaluate for each consolidated entity all available evidence, both positive and negative and the future realization of the tax benefit in a relatively short period of time, considering future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards and tax-planning strategies. FASB ASC 740 also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2010, 2009 2008 and 2007.2008. 71
Exposure to the Argentine Public Sectorpublic sector and Private Securitiesprivate securities PGNs During the fiscal year ended December 31, 2001, and as a consequence of Presidential Decree No. 1,387/01, the Bankwe exchanged a portion of federal government securities effective as of November 6, 2001, and received so-called PGNs in consideration thereof. The loans received in this exchange were not significant. In addition, we have PGNs acquired in the market and also through business combinations. PGNPGNs as of December 31, 2008 and 2007 were valued according to Central Bank Communication “A” 3,911, as supplemented. As of December 31, 2010 and 2009, PGNs were valued according to Central Bank Communication “A” 4,898 at the higher of the present value published by Central Bank and “A” 3,911, as mentioned inthe book value of the prior month (see note 4.4.c) to our audited consolidated financial statements as of and for the yearthree years ended December 31, 2009.2010).
We have additional PGNs acquired in the market and also through business combinations. Under USU.S. GAAP, the difference between the cost of each acquired loan and its expected future cash flows is accounted for in accordance with FASB ASC 310-30 “Loans and debts acquired with deteriorated credit quality”. In accordance with this rule, the Bankwe should continue to estimate cash flows expected to be collected over the life of the loan.
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As of December 31, 2008, based on available information and events, the Bankwe estimated that the PGNs were impaired, applying FASB ASC 310-10-35 “Receivables — Overall — Subsequent measurement”, and it estimated allowances for such loans in accordance with FASB ASC 310. During 2009 we entered into an exchange agreement whereby we exchanged a portion of our PGNs and received government securities (Bonar 2014) (see note 2 to our consolidated financial statements for the year ended December 31, 2009).
Under Central Bank Rules, the assets exchanged were valued at their carrying amounts. In addition, also under Central Bank Rules, government securities were classified as “Holding in special investment account” (see note 35.b) to our consolidated financial statements for the year ended December 31, 2009).
Under US GAAP, FASB ASC 310-30-35 “Loan refinancing or Restructuring” requires to recognize government securities received in exchange for PGNs at fair value and derecognize the PGNs transferred at their carrying amounts. In addition, under FASB ASC 320 “Investment – Debt and Equity securities” government securities were classified as available for sale securities (see note 35.b) to our consolidated financial statements for the year ended December 31, 2009).
Additionally, in 2009 we decided to transfer a portion of our PGNs to set off loans granted by Central Bank.
As of December 31, 2010 and 2009, taking into account the available information and the significant improvement in the expected cash flow to be collected, we estimated that PGNs were not impaired.impaired, applying FASB ASC 310-30. In accordance with FASB ASC 310-30,that rule, valuation allowances required in 2008 were reversed as of December 31, 2009. In 2009, we subscribed an exchange agreement with the previousgovernment whereby it exchanged a portion of the PGNs and received government securities (BONAR 2014). Under Central Bank Rules, the assets exchanged were valued at their carrying amounts. Therefore the exchange did not have a significant impact on income. In addition, the government securities were classified as “Holding in special investment account” (see note 32.b) to our audited consolidated financial statements as of and for the three years ended December 31, 2010). Under U.S. GAAP, FASB ASC 310-30-35 “Loan refinancing or Restructuring” requires to recognize the government securities received at fair value and derecognize the guaranteed loans transferred at their carrying amounts. In addition, under FASB ASC 320 “Investment — Debt and Equity securities” the government securities were classified as available for sale securities (see note 32.b) to our consolidated financial statements for the year were reversed. Government and private securitiesended December 31, 2010).
Instruments issued by the Central Bank and other unlisted securities As of December 31, 2009, 2008 and 2007, we had InstrumentsPursuant to Central Bank Rules, instruments issued by the Central Bank and other unlisted securities (mainly government securities and Corporate Bonds). Under Central Bank rules, these securities were valued at thetheir quoted price of each security or at thetheir cost value increased by their internal rate of return (as provided by Communication “A” 4,414) as mentioned in note 4.4.b.2)the case may be. For more information, see notes 4.4.b.3), 4.4.h.3)b.4), b.5), 4.4.h.4) iii and 4.4.h.4)4.4.h.5) to our audited consolidated financial statements as of and for the yearthree years ended December 31, 2009.2010.
Under USAccording to U.S. GAAP, these securities should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported as net of income tax within the shareholders’ equity accounts in accordance with FASB ASC 320.
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Holdings in special investment accounts in accordance with Central Bank RulesGovernment securities
According to Central Bank Communication “A” 4,861 dated October 30, 2008, as supplemented, we classified certain government securities, including a significant portion of secured bonds (BOGARs), under “special investment accounts”, as disclosed in note 2120 to our audited consolidated financial statements as of and for the yearthree years ended December 31, 2009.2010. These government securities are recorded at their cost value increased by their internal rate of return and adjusted by the benchmark stabilization coefficient (CER), as applicable (see note 4.4.b.1)i. to our audited consolidated financial statements as of and for the yearthree years ended December 31, 2009)2010). In accordance with Central Bank Communication “A” 5,024, dated December 2010, the holdings of Argentine government securities and Central Bank monetary regulation instruments recorded under this valuation system should be reversed and booked at market value. Therefore, during 2010 we reclassified these securities. In addition, considering the favorable market situation and improvement in the conditions of the assets, we sold a significant portion of such holdings. As of December 31, 2007 BOGARs were2010 we classified as holdingthose remaining government securities under “holdings for trading or intermediation valuedtransactions” recorded at their quoted price (see note 4.4.b.2) to our audited consolidated financial statements as mentioned in note 4.4.b.1) ii.of and for the three years ended December 31, 2010). As of December 31, 2010, 2009 and 2008, and 2007, we dodid not have the intention of keeping such holdings until their maturity. Consequently, under USU.S. GAAP, these holdings in investment accounts should be considered as “available for sale” and carried at fair value with the unrealized gains and losses reported as net of income tax within the shareholders’ equity accounts in accordance with FASB ASC 320. Allowance for loan losses The loan loss reserve represents the estimate of probable losses in the loan portfolio. Determining the loan loss reserve requires significant management judgments and estimates including, among others, identifying impaired loans, determining customers’ ability to pay and estimating the fair value of underlying collateral or the expected future cash flows to be received. Actual events will likely differ from the estimates and assumptions used in determining the loan loss reserve. Additional loan loss reserves could be required in the future. The loan loss reserve is maintained in accordance with the Central Bank rules.Rules. This results from evaluating the degree of debtors’ compliance and the guarantees and collateral supporting the respective transactions. Increases in the reserve are based on the deterioration of the quality of existing loans, while decreases in the reserve are based on regulations requiring the charge-off of nonperforming loans classified as “non-recoverable” after a certain period of time and on management’s decisions to charge-off non-performing loans evidencing a very low probability of recovery. In addition, under Central Bank rules,Rules, we record recoveries on previously charged-off loans directly to income and recordsrecord the amount of charged-off loans in excess of amounts specifically allocated as a direct charge to the consolidated income of statement. The Bank doesWe do not partially charge off troubled loans until final disposition of the loan, rather, the allowance is maintained on a loan-by-loan basis for its estimated settlement value. 74
Under the Central Bank rules,Rules, a minimum loan loss reserve is calculated primarily based upon the classification of commercial loan borrowers and upon delinquency aging (or the number of days the loan is past due) for consumer loan borrowers. Although we are required to follow the methodology and guidelines for determining the minimum loan loss reserves, as set forth by the Central Bank, we are allowed to establish additional loan loss reserves. For commercial loans, we are required to classify all commercial loan borrowers. In order to classify them, we must consider different parameters related to each of those customers. In addition, based on the overall risk of the portfolio, we consider whether or not additional loan loss reserves in excess of the minimum required are needed. For the consumer loan portfolio, we classify loans based upon delinquency aging, consistent with the requirements of the Central Bank. Minimum loss percentages required by the Central Bank are also applied to the totals in each loan classification. We record provisions after evaluating the loan portfolio in terms of delay (for consumer loans) or constant monitoring (for commercial loans). This process determines whether an increase or decrease in charges for non-performing loans is required based on our estimate of whether the credit is worsening or improving, or whether the loan is repaid. Our loan loss charges have been historically stable (absent the impact of the Argentine crisis), accommodating qualitative and quantitative changes in the composition of our loan portfolio. As we are all aware, the world’s economy is sustaining a highly virulent crisis that is affecting, to a lesser or larger extent, the levels of economic activity and employment and dragging down foreign trade. This scenario leads us to the assumption that some of the loans that currently make up our portfolio might sustain ana impairment in value. Therefore, the Executive Committeeexecutive committee has decided to increase the allowance for loan losses related to the loan portfolio as of December 31, 2010, 2009 and 2008 to such amounts presently required by regulators. Under USU.S. GAAP, a portion of the total allowance typically consists of amounts that are used, for example, to cover loans that are analyzed on a “pool” or homogeneous basis and to supplement specific allowances in recognition of the uncertainties inherent in point estimates. The accounting for its loan loss reserve under Central Bank Rules differs in some respects with practices of US-based banks, as discussed below. In addition, all loans reserves from business combinations recorded under Central Bank Rules, since the effective date of FASB ASC 310-30, were reversed under U.S. GAAP purposes as of each acquisition date, due to the fact that it is not appropriate to report such acquired impaired loans on a gross basis, since the Bank is not expected to incur those losses. Credit card loans We establish a reserve for credit card loans based on the past due status of the loan. All loans without preferred guarantees past due over 180 days have been reserved at 50%, in accordance with Central Bank Rules. Under USU.S. GAAP, we adopted a policy to charge offfully provision loans which are 180 days past due. 73
Impaired loans—Non Financial Private Sector and residents abroad We apply FASB ASC 310 for computing USU.S. GAAP adjustments. FASB ASC 310 requires a creditor to measure impairment of a loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. This Statement is applicable to all loans (including those restructured in a troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogenous loans that are collectively evaluated for impairment. Loans are considered impaired when, based on management’s evaluation, a borrower will not be able to fulfill its obligation under the original loan terms. Interest recognition—non-accrual loans The method applied to recognize income on loans is described in note 4.4.d). of our audited consolidated financial statements as of and for the yearthree years ended December 31, 2009.2010. Additionally, the accrual of interest is discontinued generally when the related loan is non-performing and the collection of interest and principal is in doubt, generally after 90 days of being past due. Accrued interest remains on our books and is considered a part of the loan balance when determining the reserve for credit losses. Under U.S. GAAP, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses. 75
Intangible assets—Judgments due to court decisions related to foreign currency- denominated deposits
As mentioned in notes 2 and 4.4.l.2) of our audited consolidated financial statements for the year ended december 31, 2009, we capitalized as intangible assets the exchange rate differences related to the devolution to depositors of certain foreign currency denominated deposits converted to pesos and to the effect of converting judicial deposits to U.S. dollars. These intangible assets are being amortized under the straight-line method in accordance with Central Bank rules.
Under US GAAP, the right to obtain these compensations is deemed a contingent gain which can not be recognized until realized, pursuant to FASB ASC 450.
Additionally, as of December 2009, 2008 and 2007, as mentioned in note 4.4.l.2) to our consolidated financial statements for the year ended December 31, 2009, we recorded the effects of the Argentine Supreme Court rulings dated December 27, 2006, and August 28, 2007, upon payment of court decisions, in conformity with Central Bank indications in the notice dated August 4, 2008.
Under US GAAP, in accordance with FASB ASC 450, we should have recorded a liability to cover the contingent losses related to the application of the Argentine Supreme Court ruling dated December 27, 2006 and August 28, 2007.
Business combination We acquire financial institutions and, in some circumstances, acquire the assets and liabilities or branches of other financial institutions. According to Central Bank Rules, business acquisitions are recorded at the book value of the acquired company. Consequently, the difference between the purchase price and its interest valued by the equity method in the books of the acquirer, is recorded as positive goodwill (when the purchase price is higher than the interest valued by the equity method) or negative goodwill (when the purchase price is lower than the interest valued by the equity method), as the case may be. If goodwill is positive, Central Bank Rules establish that such goodwill should be amortized under the straight-line method based on an estimated useful life of ten years. If goodwill is negative, Central Bank Communication “A” 3,984 establishes specific amortization methods; the maximum amortization allowed per annum is 20%. Under U.S. GAAP, applying FASB ASC 805, a business combination occurs when an entity acquires net assets that constitute a business or acquires equity interests of one or more entities and obtains control over that entity or entities. The acquisition of all or part of a financial institution that meets the definition of a business combination is accounted for by the purchaseacquisition method. The cost of an acquired entity shall be allocated to the assets acquired including intangible assets and liabilities based on their estimated fair values at the date of acquisition. Fair value of financial and non-financial instruments FASB ASC 820 defines fair value, establishes a consistent framework for measuring fair value, and enhances disclosures about fair value measurements. The adoption of FASB ASC 820 (effective January 1, 2008 and in particular effective January 1, 2009 for the measurement of nonfinancial assets and nonfinancial liabilities) had affected our accounting and reporting of fair value as follows:value. • | | Inclusion of nonfinancial assets and nonfinancial liabilities, which for the Bank primarily related to other real estate owned. | | • | | Estimation of fair value when the volume of level of activity for an asset or liability has significantly decreased in relation to normal market activity; additional guidance to determine when a transaction is not orderly; and enhanced disclosure of fair value measurements. |
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FASB ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, FASB ASC 820 has established a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: | | Level 1: Unadjusted quoted prices for identical assets or liabilities in an active market that the Bank has the ability to access. |
| | Level 2: Other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include the following: |
| a) | | Quoted prices for similar assets or liabilities in active markets;
| |
| b) | | Quoted prices for identical or similar assets or liabilities in less-active markets; | |
| c) | | Pricing models whose inputs are observable for substantially the full term of the asset or liability; and | |
| d) | | Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability. |
| | | Level 3: Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. |
Effective January 1, 2010, we adopted new accounting guidance under FASB ASC 820 that requires additional disclosures and clarifies existing disclosure requirements about the level of disaggregation, inputs and valuation techniques. Now reporting entities must disclose separately the amounts and reasons for certain significant transfers among the three hierarchy levels. In addition, in the reconciliation for Level 3 fair value measurements, a reporting entity should present separately information about purchase, sales, issuances and settlements; this requirement is effective since January 1, 2011. We use fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting. This is done primarily for government and private securities (debt instruments issued by Argentine Governmentgovernment and the Central Bank, shares, mutual funds and corporate bonds) classified as available for sale or trading account, forward transactions pending settlement and derivatives (forward transactions without delivery of underlying assets and interest rate swaps). FASB ASC 825 allows to report certain financial assets and liabilities at fair value. The option may be applied instrument by instrument, but is on an irrevocable basis. We did not elect to apply the fair value option. Fair value is used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values, such as for loans held for sale, impaired loans, and other real estate. Fair value is also used for annual disclosures required by FASB ASC 825 “Financial Instruments”. Further, because of the characteristics of all nonfinancial instruments there were no disclosure required regarding such assets.
As of December 31, 2009, 2008 and 2007, we We have no assets measured at fair value on a nonrecurring basisbasis.
Repurchase agreements We entered into repo and reverse repo agreements of financial instruments. Under Central Bank Rules, we derecognize the securities transferred under the repurchase agreements and record an asset related to the future repurchase of these securities. Contemporaneously, we record a liability related to the cash received in the transaction. The asset related to securities to be repurchased is measured under the same criteria as the transferred securities, as mentioned in note 4.4 to our audited consolidated financial statements as of and for the three years ended December 31, 2010. Similer treatment is applied to reverse repo agreements. Under U.S. GAAP, FASB ASC 860, these transactions do not qualify as sales and therefore these transactions are recorded as secured financings. 76
C. Research and Development, Patents and Licenses, Etc. Not applicable. D. Trend Information AtWe believe that the endfollowing trends in the international context, the Argentine economy, the banking sector and our business have affected and will, for the foreseeable future, continue to affect our results of fiscal yearoperations and profitability. Our continued success and ability to increase our value to our shareholders will depend, among other factors, upon the continued economic recovery in Argentina and the corresponding re-emergence of the market for long-term private sector lending.
International context The world economic activity continues recovering and growth is expected to be stimulated by emerging economies, as well as also by the recovery of the United States and European Union economies. Nevertheless, the relevant macroeconomic imbalances experienced by some European countries might affect the sustainability of this trend in the medium term. The principal risks would be associated to unemployment and the deterioration of developed countries’ public finances, deepened by the anti-cyclical measures adopted during the crisis. In a general context of economic performance improvement, Latin American financial systems continued showing strenghs, although it is expected that financial intermediation will gain dynamism maintaining a spectrum of narrowed risks. Argentine economic performance During 2008 and 2009, we wereArgentina was affected by the first private bankexisting global volatility, which resulted in shareholders’ equity terms,a reduction of GDP growth rate from 7% in 2008 to 0.9% in 2009. During 2010, the third bankeconomic activity improved significantly; GDP grew by 9.2%, reaching rates similar to those recorded before the 2008 global financial crisis. As a consequence of the economic downturn in 2008-2009, certain financial indicators of the financial system in general and of the Bank in particular, deteriorated. The Central Bank’s survey of independent forecasting firms indicates a consensus GDP growth estimate of 6.0% for 2011. Expected economic growth would be supported by: • Consumer spending: consumption has strongly recovered in 2010. In addition, consumers see our products (personal and credit card loans) as a way of hedging against inflation. • Export levels: although the trade balance will be lower than the one registered in 2010, the result is expected to be positive. • Record-high soy price: notwithstanding the draught affecting the Argentine farmland, the high international prices have more than set off the decrease in the harvested volumes. • High inflation: high levels of public expenditure lead to the aggregate demand growing faster than the offer, thus producing an upward adjustment in prices. Private sector lending As a consequence of the 2008 global financial crisis and its impact in the local economy, the activity of financial intermediation diminished its pace of growth. During 2008 and 2009 loan growth decelerated, but recovered in 2010. The evolution of loans to the private sector during the last three years showed a growth of 20% in 2008, 9% in 2009 and 37% of 2010, for the financial system as a whole. This trend was also reflected in the evolution of our portfolio. Our private sector loan portfolio increased to Ps.10,893 million (17%) in 2008, to Ps.11,248 million (3%) in 2009 and to Ps.15,933 million (42%) in 2010. We see the following trends in this important area of our business: Low cost of funds; high levels of liquidity. As a result of our low cost of funds and our high level of liquidity, a key driver of our results is our ability to increase our lending within the scope of our credit policy, as such lending is always at a positive margin. Therefore, we have seen increases in our gross intermediation margin as our private sector lending has increased. Growth prospects subject to development of inflation and long-term fixed rate lending. We believe that the main obstacle preventing a faster recovery of Argentina’s private sector lending has been the uncertain outlook on long-term inflation, which has a significant impact on both the supply of and demand for long-term loans as borrowers try to hedge against inflation risk by borrowing at fixed rates while lenders hedge against inflation risk by offering loans at floating rates. As a result, most of the increase in the volume of private loans in the financial system until December 31, 2010 was concentrated in short-term products. For example, the ratio of personal loans, overdrafts and documents to GDP has increased from 3% in June 2003 to 8% as of December 31, 2010 while long-term loans represented by mortgages and secured loans have decreased from 3% to 2% of GDP during the same period (despite substantial GDP growth during the period). 77
Stable intermediation spread. Based on the low banking penetration in Argentina, we believe that the expected loan growth mix, with a larger participation of consumer loans compared to commercial loans, will improve spreads. However, price competition could offset this effect and intermediation spreads might remain stable. Lending portfolio credit quality In 2008, the improvement of the financial system’s lending portfolio credit quality from previous years was interrupted by new signals of volatility. During 2009, the credit quality marginally deteriorated, more as a result of slow dynamics in private lending than as a result of an increase in delinquency. During 2010 the credit quality began to improve. During 2008-2009 we had a slight deterioration of our portfolio; our non-performing lending level increased from 2.6% in 2008 to 3.2% in 2009. During 2010, the credit quality began to improve and the second banklevel of non-performing lending decresead to 2.1%. These figures reflect the same level and evolution registered by the financial system as a whole. The table below reflects the portfolio credit quality of the Bank and the financial system for 2008, 2009 and 2010: | | | | | | | | | | | | | | | As of December 31, | | | | 2008 | | | 2009 | | | 2010 | | Banco Macro | | | | | | | | | | | | | Allowances/lending (1) | | | 3.6 | % | | | 3.7 | % | | | 3.1 | % | Non-performing lending ratio (2) | | | 2.6 | % | | | 3.2 | % | | | 2.1 | % | | | | | | | | | | | | | | Financial System | | | | | | | | | | | | | Allowances/lending (1) | | | 2.9 | % | | | 3.1 | % | | | 2.4 | % | Non-performing lending ratio (2) | | | 2.5 | % | | | 2.8 | % | | | 1.7 | % |
Source: Central Bank | | | (1) | | Includes loans, other receivables from financial transactions, financial leases, memorandum accounts—other guarantees provided and unused portion of loans granted (included in Debtors Rating Standards). | | (2) | | Non-performing lending includes all lending to borrowers classified as “3—troubled/medium risk”, “4—with high risk of insolvency/high risk”, “5—irrecoverable” and “6—irrecoverable according to Central Bank Rules” under the Central Bank loan classification system. |
At the end of 2008 and during 2009 and 2010, we created additional allowances above those required by the Central Bank, with the aim of maintaining the coverage ratio set forth by the Bank’s standards of prudence. As a result, the Bank’s coverage level reached 147.2% of the non-performing lending portfolio as of December 31, 2010. We expect that based on our loan growth expectations and the recovery of the economy, asset quality standards should improve by the end of the year. Organic growth complemented by strategic acquisitions Acquisitions have fueled growth over the last years. During 2010, we acquired Banco Privado; this acquisition will enable us to deposits, thus becoming the privateserve a greater number of customers with our current structure, to complement lines of business and to achieve greater economies of scale by additionally providing Banco Privado with a more efficient financing structure and permitting its clients access to a network with a greater geographical coverage (for additional information please see “Item 4.A “Information on the Bank — History and development of the Bank”). We will continue to consider strategic acquisition opportunities to complement our branch network consistently with our strategy. Due to our significant excess liquidity and capital, we are in a position to continue to complement organic growth with strategic acquisitions. We evaluate the effectiveness of our acquisition strategy by how it complements our organic growth strategy and whether or not such acquisitions result in the Bank increasing its customer base, expanding its loan portfolio and generating more fee income from transactional services. Commercial and balance sheet strategies We have the most extensive branch network among private-sector banks in Argentina, with 94% of our branches inlocated outside of the interiorCity of Argentina. ThisBuenos Aires. The great spreading over Argentine regional economies and the sectors that are availing themselves of the economic recovery imply a key advantage with respect to other banks upon competing in the credit expansion service in Argentina. In addition, this strong network of branches and the functions of financial agents from different provinces provide us with a source of growth and low costs in its deposit base. We have experience in generating and marketing bank products aimed at a broad population segment that was not supplied by the traditional bank system: The use of bank services by state and private employees and retirees through the opening of savings accounts.
Granting of personal loans to state and private employees and retirees.
The delivery of limited-risk credit cards as a result of diversification and the automatic debit of the minimum account payment.
Marketing of other types of services, such as insurance, interbank transfers, service payments, etc.
This penetration strategy permitted the Bank to generate a significant commercial portfolio, based on the experience of small- and medium-sized enterprises engaged in regional activities, thus consolidating this portfolio with another one aimed at large local and international companies traditionally operating with the financial system. The combination of these factors permitted to create a funding/use matrix in two types of markets, natural persons deriving from segments with medium or low bank services use and companies, which form the pillar of the Bank’s strategy:
Creating an excellent source of resources with very low volatility and costs.
Expanding the portfolio related to loans distributed among a significant number of people, the risk in this type of financing being relatively low.
Applying the market’s lowest rates in personal loans and credit cards, thus enabling the systematic growth of loan stock.
Fixing strategic agreements with companies to allow the Bank to place commercial loans in companies with profitable projects and growth prospects, and providing new individuals’ accounts simultaneously to allow them to receive their salaries.
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Experience provides us with the excellent opportunity to repeat such experience in all Argentine regions, even in the urban centers in which the financial market has not had an active presence permanently. However, there are segments related to population or small- and medium-sized enterprises that are hardly supplied with bank products.
We will continue with itsthe diversification and atomization strategy regarding the credit portfolio, thus enabling to obtain satisfactory efficiency, growth, security and profitability in commercial management. It also intends to stress its presence in the assistance to small- and medium-sized enterprises, emphasizing the election of dynamic economic sectors and growth potential in industrial, commercial and service areas for the purpose of contributing to companies’ expansion and ensuring an acceptable return of the funds assigned. At the same time, a complete range of corporate financial services will be offered, including exports and imports financing, letters of credit confirmation and opening, and granting guarantees to third parties on behalf of its customers. Please see “Item 5 — Operating
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We maintain a strong position with respect to excess capital, the liquidity ratio and financial reviewthe level of our provisions for loan losses. To counteract the effects that a run on deposits may have, one of our main priorities is to give depositors confidence that we would be able to absorb losses and prospects — Principal trends affectingfulfill our business”.obligations to them. Our practice of maintaining high liquidity levels throughout the business cycles helps us to withstand the economic crisis by serving two key purposes. First, we have funds available in the face of adverse systemic events. Second, we give our depositors confidence that they would be able to have access to their deposits at any time, even during the depth of a crisis. We also minimize excess cash deposited in the Central Bank, without harming our overall liquidity position. In this way, we maximize the return on our liquidity stock by keeping funds in more profitable assets, such as Central Bank-issued LEBACs/NOBACs and overdrafts to highly rated large corporations. E. Off-Balance Sheet Arrangements We enter into various transactions involving off-balance sheet financial instruments (see Note 33 to the Consolidated Financial Statements). Weand we use these instruments to meet the risk management, trading and financing needs of clientscustomers or for our proprietary trading and asset and liability management purposes. These instruments are subject to varying degrees of credit and market risk. We monitor credit risk and market risk associated with on- and off-balance sheet financial instruments on an aggregate basis. We use the same credit policies in determining whether to enter or extend option contracts, commitments, conditional obligations and guarantees as we do for granting loans. Our management believes that the outstanding off-balance sheet items do not represent an unusual credit risk. For additional information of financial instruments with off-balance sheet risk see note 30 to our consolidated financial statements for the year ended December 31, 2010. F. Contractual Obligations The following table represents our contractual obligations and commercial commitments as of December 31, 2009:2010: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments due by period | | | Payments due by period | | | | Less than | | After | | | Less than | | After | | | | Total | | 1 year | | 1-3 years | | 3-5 years | | 5 years | | | Total | | 1 year | | 1-3 years | | 3-5 years | | 5 years | | | | (in thousands of pesos) | | | (in thousands of pesos) | | Contractual obligations | | | | | | | | | | | | | Central Bank | | 1,897 | | 1,363 | | 109 | | — | | 425 | | | 1,877 | | 1,452 | | — | | — | | 425 | | Banks and international institutions | | 227,214 | | 227,214 | | — | | — | | — | | | 45,697 | | 45,697 | | — | | — | | — | | Corporate Bonds | | 616,735 | | 15,719 | | 197,066 | | — | | 403,950 | | | 636,464 | | 16,393 | | 197,066 | | — | | 423,005 | | Financing received from Argentine financial institutions | | 189,971 | | 149,122 | | 8,403 | | 10,621 | | 21,825 | | | 75,637 | | 34,893 | | 9,342 | | 14,766 | | 16,636 | | Other | | 733,943 | | 652,330 | | 4,528 | | 1,398 | | 75,687 | | | 1,175,106 | | 1,093,308 | | 2,847 | | 237 | | 78,714 | | Operating leases | | 48,700 | | 20,100 | | 19,191 | | 5,392 | | 4,017 | | | 75,637 | | 27,270 | | 30,906 | | 12,781 | | 4,680 | | Subordinated corporate bonds | | 572,473 | | 2,968 | | — | | — | | 569,505 | | | 598,470 | | 2,100 | | — | | — | | 596,370 | | | | | | | | | | | | | | | Total contractual obligations | | 2,390,933 | | 1,068,816 | | 229,297 | | 17,411 | | 1,075,409 | | | 2,608,888 | | 1,221,113 | | 240,161 | | 27,784 | | 1,119,830 | | | | | | | | | | | | | | | Commercial commitments | | | Lines of credit | | 29,449 | | 29,449 | | — | | — | | — | | | 67,020 | | 67,020 | | — | | — | | — | | Guarantees | | 216,039 | | 54,853 | | 50,391 | | 12,683 | | 98,112 | | | 196,876 | | 65,289 | | 20,642 | | 15,031 | | 95,914 | | Standby letters of credit | | 221,226 | | 215,950 | | 5,276 | | — | | — | | | 80,684 | | 79,576 | | 1,108 | | — | | — | | | | | | | | | | | | | | | Total commercial commitments | | 466,714 | | 300,252 | | 55,667 | | 12,683 | | 98,112 | | | 344,580 | | 211,885 | | 21,750 | | 15,031 | | 95,914 | | | | | | | | | | | | | | |
| | | Item 6. | | Directors, Senior Management and Employees |
A. Directors and Senior Management We are managed by our Board of Directors, which is currently comprised of twelve members and four alternate members. Currently, the shareholders present at any annual ordinary meeting may determine the size of the Board of Directors, provided that there shall be no less than three and no more than twelve directors. Any director so appointed will serve for three fiscal years. If the shareholders elect more than eightnine board members, each director will be re-elected as a staggered board, to be renewed by thirds, provided that in all cases no less than three directors shall be renewed each time. The annual ordinary shareholders’ meeting may also appoint an equal or lesser number of alternate directors, to hold office for the same term than regular directors, to fill any vacancy in the board occurring for any reason whatsoever, and shall further determine the order of substitution. Alternate directors shall hold office until the regular directors in whose place they have acted as substitutes shall resume office, and in case any such absence is permanent, until the next ordinary meeting of shareholders where at directors shall be appointed. Both regular and alternate directors may be re-elected indefinitely. 7679
DUTIES AND LIABILITIES OF DIRECTORS Under Argentine corporate law, directors have the obligation to perform their duties with the loyalty and the diligence of a prudent business person. Directors are jointly and severally liable to a corporation, the shareholders and third parties for the improper performance of their duties, for violating the law, the corporation’s bylaws or regulations, if any, and for any damage caused by fraud, abuse of authority or gross negligence. The following are considered integral to a director’s duty of loyalty: (i) the prohibition on using corporate assets and confidential information for private purposes; (ii) the prohibition on taking advantage, or to allow another to take advantage, by action or omission, of the business opportunities of the Bank; (iii) the obligation to exercise board powers only for the purposes for which the law, the corporation’s bylaws or the shareholders’ or the Board of Directors’ resolutions have intended; and (iv) the obligation to take strict care so that acts of the board do not go, directly or indirectly, against the Bank’s interests. A director must inform the Board of Directors and the supervisory committee of any conflicting interest he may have in a proposed transaction and must abstain from voting thereon. Under Argentine law, the Board of Directors is in charge of the management and administration of the Bank and, therefore, makes any and all decisions in connection therewith, as well as those decisions expressly provided for in the Argentine corporate law, the Bank’s bylaws and other applicable regulations. Furthermore, the board is generally responsible for the execution of the resolutions passed by shareholders meetings and for the performance of any particular task expressly delegated by the shareholders. In general, our Board of Directors is more involved in operating decision-making than might be customary in other jurisdictions. BOARD OF DIRECTORS The following table sets forth information about the members and alternate members of our Board of Directors as of December 31, 2009:2010: | | | | | | | | | | | | Year of | | | | | | | | | | | Year First | | Expiration of | | Year First | | Year of Expiration | Name | | Position | | Age | | Appointed | | Term | | Position | | Age | | Appointed | | of Term | Jorge Horacio Brito | | Chairman | | 57 | | 2002 | | 2011 | | Chairman | | 58 | | 2002 | | 2011 | Delfín Jorge Ezequiel Carballo | | Vice Chairman | | 57 | | 2002 | | 2011 | | Vice Chairman | | 58 | | 2002 | | 2011 | Jorge Pablo Brito | | Director | | 30 | | 2002 | | 2011 | | Director | | 31 | | 2002 | | 2011 | Marcos Brito | | Director | | 27 | | 2007 | | 2011 | | Director | | 28 | | 2007 | | 2011 | Juan Pablo Brito Devoto | | Director | | 49 | | 2002 | | 2010 | | Director | | 50 | | 2002 | | 2010 | Roberto Julio Eilbaum | | Director | | 65 | | 2002 | | 2010 | | Director | | 66 | | 2002 | | 2010 | Luis Carlos Cerolini | | Director | | 55 | | 2002 | | 2010 | | Director | | 56 | | 2002 | | 2010 | Carlos Enrique Videla | | Director | | 64 | | 2002 | | 2009 | | Director | | 65 | | 2002 | | 2012 | Alejandro Macfarlane | | Director | | 44 | | 2005 | | 2009 | | Director | | 45 | | 2005 | | 2012 | Guillermo Eduardo Stanley | | Director | | 61 | | 2006 | | 2009 | | Director | | 62 | | 2006 | | 2012 | Constanza Brito | | Director | | 28 | | 2007 | | 2009 | | Director | | 29 | | 2007 | | 2012 | Rafael Magnanini | | | Director | | 51 | | 2010 | | 2012 | Mario Eduardo Bartolomé | | Alternate director | | 64 | | 2004 | | 2011 | | Alternate director | | 65 | | 2004 | | 2011 | Ernesto Eduardo Medina | | Alternate director | | 42 | | 2002 | | 2011 | | Alternate director | | 43 | | 2002 | | 2011 | Delfin Federico Ezequiel Carballo | | Alternate director | | 25 | | 2009 | | 2011 | | Alternate director | | 26 | | 2009 | | 2011 | Fernando Raúl García Pulles | | Alternate director | | 54 | | 2007 | | 2011 | | Alternate director | | 55 | | 2007 | | 2011 |
The following table sets forth information about the members and alternate members of our Board of Directors elected by the most recent Ordinary shareholders’ meeting held on April 6, 2010.26, 2011. | | | | | | | | | | | | Year of | | | | | | | | | | | Year First | | Expiration of | | Year First | | Year of Expiration | Name | | Position | | Age | | Appointed | | Term | | Position | | Age | | Appointed | | of Term | Jorge Horacio Brito | | Chairman | | 57 | | 2002 | | 2011 | | Chairman | | 58 | | 2002 | | 2011 | Delfín Jorge Ezequiel Carballo | | Vice Chairman | | 57 | | 2002 | | 2011 | | Vice Chairman | | 58 | | 2002 | | 2011 | Jorge Pablo Brito | | Director | | 30 | | 2002 | | 2011 | | Director | | 31 | | 2002 | | 2011 | Marcos Brito | | Director | | 27 | | 2007 | | 2011 | | Director | | 28 | | 2007 | | 2011 | Juan Pablo Brito Devoto | | Director | | 50 | | 2002 | | 2010 | | Director | | 51 | | 2002 | | 2013 | Roberto Julio Eilbaum | | Director | | 65 | | 2002 | | 2010 | | Luis Carlos Cerolini | | Director | | 56 | | 2002 | | 2010 | | Director | | 57 | | 2002 | | 2013 | Carlos Enrique Videla | | Director | | 65 | | 2002 | | 2012 | | Director | | 66 | | 2002 | | 2012 | Alejandro Macfarlane | | Director | | 44 | | 2005 | | 2012 | | Director | | 45 | | 2005 | | 2012 | Guillermo Eduardo Stanley | | Director | | 61 | | 2006 | | 2012 | | Director | | 63 | | 2006 | | 2012 | Constanza Brito | | Director | | 28 | | 2007 | | 2012 | | Director | | 29 | | 2007 | | 2012 | Rafael Magnanini (1) | | Director | | 51 | | 2010 | | 2012 | | Rafael Magnanini | | | Director | | 52 | | 2010 | | 2012 | Roberto José Feletti (1) | | | Director | | 52 | | 2011 | | 2013 | Mario Eduardo Bartolomé | | Alternate director | | 64 | | 2004 | | 2011 | | Alternate director | | 65 | | 2004 | | 2011 | Ernesto Eduardo Medina | | Alternate director | | 43 | | 2002 | | 2011 | | Alternate director | | 44 | | 2002 | | 2011 | Delfin Federico Ezequiel Carballo | | Alternate director | | 25 | | 2009 | | 2011 | | Alternate director | | 26 | | 2009 | | 2011 | Fernando Raúl García Pulles | | Alternate director | | 54 | | 2007 | | 2011 | | Alternate director | | 56 | | 2007 | | 2011 |
| | | (1) | | Pending Central Bank approvalRoberto José Feletti was elected by ANSES, through the exercise of its cumulative voting rights. See Item 10 “Additional Information — Memorandum and Articles of Association—Quorum and voting requirements” for a description of cumulative voting.
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The following family relationships exist within the Board of Directors: (i) Chairman Jorge Horacio Brito and Vice Chairman Delfín Jorge Ezequiel Carballo are brothers-in-law; (ii) Directors Jorge Pablo Brito and Marcos Brito are the sons of Chairman Jorge Horacio Brito and the nephews of vice chairmanVice Chairman Delfín Jorge Ezequiel Carballo; (iii) Director Constanza Brito is the daughter of Chairman Jorge Horacio Brito and the niece of vice chairmanVice Chairman Delfín Jorge Ezequiel Carballo; (iv) Chairman Jorge Horacio Brito and Director Juan Pablo Brito Devoto are cousins; (v) Directors Jorge Pablo Brito, Marcos Brito and Constanza Brito are siblings; (vi) Delfín Federico Ezequiel Carballo is the son of Vice Chairman Delfín Jorge Ezequiel Carballo and the nephew of Chairman Jorge Horacio Brito; and (vii) Delfín Federico Ezequiel Carballo and Directors Jorge Pablo Brito, Marcos Brito and Constanza Brito are cousins. 80
SENIOR MANAGEMENT Our senior management oversees our day-to-day operations to ensure that our overall strategic objectives are being implemented and reports to our chief executive officer and our chief financial officer. In addition, we have the following committees comprised of different directors and senior management: executive committee, internal audit committee, systems committee, senior credit committee, executive committee on assets and operationsliabilities, operational risk committee, anti-money laundering committe and systemssenior legal recovery committee. The following table sets forth certain relevant information of our executive officers and our senior management as of December 31, 2009:management: | | | | | | | | | | Year First | | | | | | | Names | | Position | | Age | | Appointed | | Position | | Age | | Year First Appointed | Jorge Horacio Brito | | Chief Executive Officer | | 57 | | 2002 | | Chief Executive Officer | | 58 | | 2002 | Delfín Jorge Ezequiel Carballo | | Chief Financial Officer | | 57 | | 2002 | | Chief Financial Officer | | 58 | | 2002 | Juan Pablo Brito Devoto | | Chief Accounting Officer | | 49 | | 2002 | | Chief Accounting Officer | | 50 | | 2002 | Jorge Pablo Brito | | Coordinator of the Executive Committee | | 30 | | 2006 | | Coordinator of the executive committee | | 31 | | 2006 | Guillermo Goldberg | | Deputy general manager | | 52 | | 2005 | | Deputy general manager | | 53 | | 2007 | Ernesto Eduardo Medina | | Deputy general manager | | 42 | | 2007 | | Deputy general manager | | 43 | | 2007 | Jorge Francisco Scarinci | | Financial and Investor relations manager | | 39 | | 2006 | | Financial and investor relations manager | | 40 | | 2006 | Ana María Magdalena Marcet | | Credit risk manager | | 48 | | 2002 | | Credit risk manager | | 49 | | 2002 | Miguel Leon Gurfinkiel | | Government portfolio manager | | 59 | | 2006 | | Government portfolio manager | | 60 | | 2006 | Horacio Ricardo Sistac | | Corporate banking manager | | 53 | | 2005 | | Corporate banking manager | | 54 | | 2005 | Francisco Muro | | Retail banking manager | | 36 | | 2008 | | Retail banking manager | | 37 | | 2008 | Brian Anthony | | Distribution and sales manager | | 36 | | 2005 | | Distribution and sales manager | | 37 | | 2005 | Eduardo Roque Covello | | Operations manager | | 52 | | 2004 | | Operations manager | | 53 | | 2004 | Máximo Eduardo Lanusse | | Administration manager | | 36 | | 2007 | | Gerardo Adrián Alvarez | | | Administration manager | | 41 | | 2010 | Daniel Hugo Violatti | | Accountancy and Tax manager | | 47 | | 2003 | | Accountancy and tax manager | | 48 | | 2003 | Constanza Brito | | Human Resources and Organization and processes manager | | 28 | | 2005 | | Human resources and organization and processes manager | | 29 | | 2005 | Marcelo de la Llave | | | Security and fraud control manager | | 47 | | 2010 | Claudia Cueto | | | Systems manager | | 50 | | 2010 | Byron Fabian Arias Jaramillo | | | Systems security manager | | 31 | | 2010 | Carmen Esther Estévez | | Internal audit manager | | 52 | | 2002 | | Internal audit manager | | 53 | | 2002 | María Milagro Medrano | | | Institutional relations manager | | 34 | | 2002 | Ernesto López | | Legal manager | | 37 | | 2008 | | Legal manager | | 38 | | 2008 | María Milagro Medrano | | Institutional relations manager | | 33 | | 2002 | | Gerardo Adrian Alvarez | | Security and Fraud control manager | | 40 | | 2008 | | Miguel Angel Fernandez | | Systems manager | | 53 | | 2009 | | Alberto Figueroa | | Management Control and Relationship with Central Bank manager | | 49 | | 2009 | | Management control and relationship with the regulatory authorities manager | | 50 | | 2009 | Guillermo Powell | | Systems Security Manager | | 50 | | 2009 | | Sebastian Palla | | | Investment banking manager | | 36 | | 2010 |
Set forth below are brief biographical descriptions of the current members of our Board of Directors and our senior management as of December 31, 2009.management. The business address of each of our current directors and management is Sarmiento 447, Buenos Aires, Republic of Argentina. Jorge Horacio Brito was born on July 23, 1952. He is the chairman of our Board of Directors, our Chiel Executive Officer and a member of our executive committee and senior credit committee. He has been with our bank since June 1988. Mr. Brito is the chairman ofAsociación de Bancos Argentinos(Argentine (Argentine Bank Association orADEBA). He also serves as chairman of the Board of Directors ofBanco del Tucumán S.A.,Macro Securities S.A. Sociedad de Bolsa, Inversora Juramento S.A.andInversora JuramentoBanco Privado de Inversiones S.A. Delfín Jorge Ezequiel Carballo was born on November 21, 1952. He is the vice-chairman of our Board of Directors, our Chief Financial Officer and a member of our executive committee, our senior credit committee, our operational risk committee and our assets and liabilities committee and our senior credit committee. Mr. Carballo holds a law degree from the Law School of the Catholic University in Argentina. He has been with our bank since June 1988. Mr. Carballo also serves as vice-chairman of the Board of Directors of, Banco del Tucumán S.A.,andMacro Securities S.A. Sociedad de Bolsa.BolsaandBanco Privado de Inversiones S.A. Jorge Pablo Brito was born on June 29, 1979. He is a member of our Board of Directors, the coordinator of our executive committee and a member of our senior credit committee, our systems committee, our assets and liabilities committee, our senior legal recoveryoperational risk committee and our internal auditsenior legal recovery committee. He has been a member of the board since June 2002. Mr. Brito also serves as chairman of the Board of Directors ofMacro Warrants S.A., as vice-chairman of the Board of Directors ofInversora Juramento S.A.,as directorsdirector ofBanco del Tucumán S.A., Sud Inversiones y& Análisis S.A.and, Macro Securities S.A. Sociedad de Bolsa.BolsaandBanco Privado de Inversiones S.A. Marcos Brito was born on October 5, 1982. He holds an economics degree from the UniversidadUniversity Torcuato Di Tella. He is a member of our Board of Directors and a member of our assets and liabilities committee and our senior legal recovery committee. Mr. Brito also serves as director ofInversora Juramento S.A.andBanco Privado de Inversiones S.A. 78
Juan Pablo Brito Devoto was born on March 25, 1960. He is a member of our Board of Directors, our Chief Accounting Officer and a member of our internal audit committee, our systems committee and our systemssenior legal recovery committee. He has been with our bank since June 1988. Mr. Brito Devoto holds an accounting degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Brito Devoto serves as a chairman of the Board of Directors ofMacro Bank, and Sud Inversiones y& Análisis S.A.,as director ofBanco Privado de Inversiones S.A.and as alternate director ofBanco del Tucumán S.A.andMacro Securities S.A. Sociedad de Bolsa. 81
Roberto Julio Eilbaum was born on December 23, 1944. He is a member of our Board of Directors and a member of our assets and liabilities committee and our anti-money laundering committee. He has been a member of the board since June 2002. Mr. Eilbaum holds a law degree from the Law School of the University of Buenos Aires in Argentina. Mr. Eilbaum also serves as vice-chairman of the Board of Directors ofSud Inversiones y Analisis S.A, and as alternate directorBanco del Tucumán S.A.
Luis Carlos Cerolini was born on January 27, 1954. He is a member of our Board of Directors and has been a member of the board since April 2000. He is a member of our anti-money laundering committee and our senior legal recovery committee. Mr. Cerolini holds a law degree granted by the National University of Córdoba in Argentina. Mr. Cerolini also serves as vice-chairmanchairman ofProvincanje S.A.and director ofBanco del Tucumán S.A., Sud Inversiones y& Análisis S.A., Macro Securities S.A. Sociedad de Bolsa, Macro Warrants S.A., Banco Privado de Inversiones S.A. andACH S.A. Cámara Compensadora Electrónica. Carlos Enrique Videla was born on March 21, 1945. He is a member of our Board of Directors and an independent member of our audit committee and our internal audit committee. He has been a member of the board since December 1999. Mr. Videla holds a law degree from the Law School of the Catholic University of Argentina. Alejandro Macfarlane was born on August 16, 1965. He is a member of our Board of Directors, and has been a member since April 2005, and is an independent member of our audit committee. He also serves as chairman of the Board of Directors ofEmpresa Distribuidora y Comercializadora Norte or Edenor S.A. Guillermo Eduardo Stanley was born on April 27, 1948. He has worked for the Bank since May 2005 and he has been a member of our Board of Directors since May 2006. He is an independent member of our audit committee. He also serves as director ofHavanna S.A. Constanza Brito was born on October 2, 1981. She is a member of our Board of Directors and the Human Resources and Organization and Processes manager for the Bank. She is a member of our systems committee, our operational risk committee and our internal audit committee. Ms. Brito has a degree in Human resources from the University of Salvador. She has been a member of our staff since May 2005. Ms. Brito also serves as director ofBanco Privado de Inversiones S.A.and alternate director ofBanco del Tucumán S.A. Mario Eduardo Bartolomé was born on August 12, 1945. He is an alternate member of our board of director and has served on the board since July 2004.
Delfín Federico Ezequiel Carballo was born on July 4, 1984. He holds an economics degree from the Universidad Torcuato Di Tella. He is an alternate member of our Board of Directors.
Fernando Raúl García Pulles was born on April 15, 1955. He is an independent member of our audit committee. He has a law degree and Doctor of Juridical Sciences degree, both granted by the Catholic University of Argentina. Mr. García Pulles served as Deputy Attorney General from 1991 to 1995. He is a partner ofEstudio García Pulles-Calatrava & Asociadosand off-counsel lawyer inEstudio O’Farrell.
Rafael Magnanini was born on February 10, 1959. On April 6, 2010 he has been appointed as director of the Bank. He holds a degree in agriculture engineering from the University of Buenos Aires. Roberto José Feletti was born on October 22, 1958. Mr Felleti holds an accounting degree and a master degree in financial administration from the School of Economics of the University of Buenos Aires in Argentina. He currently serves at the Argentine Ministry of Economy as Secretary of Public Economic Policies. He is also an alternate director ofCorporacion Andina de Fomento C.A.F. and member ofConsejo Consultivo del Banco Latinoamericano de Exportaciones (BLADEX). He was appointed as a member of our Board of Directors on April 26, 2011. Mario Eduardo Bartolomé was born on August 12, 1945. He is an alternate member of our Board of Directors and has served on the board since July 2004. Ernesto Eduardo Medina was born on January 9, 1967. He is an alternate member of our Board of Directors, a deputy general manager and a member of our systems committee, our operational risk committee and our anti-money laundering committee. He has been a member of our staff since February 1989. Mr. Medina holds a public accountant and business administration degree from the School of Economics of the University of Buenos Aires in Argentina. In addition, Mr. Medina holds a degree in systems analysis from the University of Buenos Aires in Argentina, as well as a psychology degree from the UniversidadBusiness and Social Sciences University. Mr. Medina also serves as director of Banco del Tucumán S.A. and as alternate director of Banco Privado de Ciencias Empresariales y Sociales.Inversiones S.A. Delfín Federico Ezequiel Carballo was born on July 4, 1984. He holds an economics degree from the University Torcuato Di Tella. He is an alternate member of our Board of Directors. Fernando Raúl García Pulles was born on April 15, 1955. He is an alternate member of our Board of Directors and independent alternate member of our audit committee. He has a law degree and Doctor of Juridical Sciences degree, both granted by the Catholic University of Argentina. Mr. García Pulles served as Deputy Attorney General from 1991 to 1995. He is a partner ofEstudio O’Farrell. Guillermo Goldberg was born on January 31, 1957. He is our Deputy Generaldeputy general manager. He is a member of our systems committee, our asset and liabilities committee and our operational risk committee. Mr. Goldberg holds an economics degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Goldberg has been with us since July 2005. Jorge Francisco Scarinci was born on May 19, 1970. He is the head ofour financial and investor relations manager and our finance manager. He is a member of our assets and liabilities committee. Mr. Scarinci holds a degree from the School of Economics of the University of Belgrano in Argentina, a master in finance from the University of CEMA and became CFA in 2001. Ana María Magdalena Marcet was born on February 24, 1961. She is our credit portfoliorisk manager. She has been a member of our staff since December 1996. She is a member of our senior credit committee and our senior legal recovery senior committee. Ms. Marcet holds a public accountant, economics and business administration degree from the School of Economics of the University of Buenos Aires and a master in banking management from the University of CEMA, both located in Argentina. Miguel Leon Gurfinkiel was born on December 13, 1950. He is the Governmentgovernment portfolio manager. He has been a member of our staff since April 2006. 79
Horacio Ricardo Sistac was born on March 7, 1956. He is our Corporate Bankingcorporate banking manager. He is a member of our assets and liabilities committee. Mr. Sistac holds a public accounting degree from the Catholic University of Buenos Aires in Argentina. Mr. Sistac has been with us since September 2005. Francisco Muro was born on March 2, 1973. He is our Retailretail banking manager and a member of our assets and liabilities committee. Mr. Muro holds an accounting degree from the School of Economics of the University of Buenos Aires and an MBA from the IAE (Universidad Austral). Mr. Muro has been with us since August 2004. 82
Brian Anthony was born on April 17, 1973. He is our distribution and sales manager. He is a member of our systems committee and our assets and liabilities committee. Mr. Anthony holds a business administration degree from the CAECE University. Mr. Anthony has been with us since September 2005. Eduardo Roque Covello was born on February 20, 1957. He is the Operationsoperations manager and a member of the Bank’s Operations and Systems Committee.our systems committee. Mr. Covello holds a business administration degree from the Business School in Argentina. He has been a member of our staff since January 1996. Máximo Eduardo LanusseGerardo Adrián Alvarez was born on October 11, 1973.December 13, 1969. He is our administration manager. Mr. LanusseAlvarez holds a law degree from the University of Buenos Aires.Argentine Federal Police and a post-graduate degree in Money Laundering from UniversityTorcuato Di Tella. He has been the Administration managerwith us since February 2007.January 2006.
Daniel Hugo Violatti was born on May 27, 1962. He is our accountingaccountancy and tax manager. He is a member of our systems committee and has been a member of our staff since December 1997. Mr. Violatti holds an accounting degree from the School of Economics of the University of Buenos Aires in Argentina. Marcelo de la Llave was born on April 21, 1963. He is our security and fraud control manager. He holds a criminal and social sciences degree from the University of Argentine Federal Police. He has been with us since January 2006. Claudia Cueto was born on March 22, 1960. She is our systems manager and a member of our systems committee. She holds a system degree fromUniversidad Argentina de la Empresa. She has been with us since August 2008. Byron Fabian Arias Jaramillo was born on May 7, 1979. He is our system security manager and a member of our systems committee. He holds a systems engineer degree from National Technical College (Ecuador). He has been with us since July 2008. Cármen Esther Estévez was born on April 28, 1957. She is our internal audit manager and a member of our internal audit committee. Ms. Estévez holds an accounting degree and a mastersmaster degree in system audits from the School of Economics of the University of Buenos Aires in Argentina. She has been a member of our staff since October 1997. María Milagro Medrano was born on October 27, 1976. She is our institutional relations manager and a member of our systems committee. She is an alternate director ofBanco del Tucumán S.A.Ms. Medrano holds a business administration degree from the Catholic University of Salta in Argentina. She has been a member of our staff since April 1997. Ernesto López was born on October 5, 1972. Mr. López holds a law degree from the Law School of the University of Buenos Aires in Argentina. He is our legal manager.manager and a member of our senior legal recovery committee. He has been a member of our staff since October 1999. María Milagro Medrano was born on October 27, 1976. She is our institutional relations manager and a member of our operations and systems committee. She is an alternate director ofBanco del Tucumán S.A.. Ms. Medrano holds a business administration degree from the Catholic University of Salta in Argentina. She has been a member of our staff since April 1997.
Gerardo Adrián Alvarez was born on December 13, 1969. He is our security and fraud control manager. Mr. Alvarez holds a law degree from the University of Argentine Federal Police and a post-graduate degree in Money Laundering from Universidad Torcuato Di Tella. He has been with us since January 2006.
Miguel Angel Fernández was born on January 11, 1956. He is our systems manager and a member of our systems committee. He holds a business administration degree from de Universidad de Buenos Aires in Argentina. He has been with us since August 2008.
Alberto Figueroa was born on September 1, 1960. He is our Management Controlmanagement control and Relationshipsrelationship with the Central Bankregulatory authorities manager. He is a member of our operational risk committee and our anti-money laundering committee. He holds a public accounting degree from de Universidad deUniversity of Buenos Aires in Argentina.Aires. He has been with us since March 2007. Guillermo PowelSebastian Palla was born on April 20, 1959.June 12, 1974. He is our systems security manager and a member of our systems committee.investment banking manager. He holds a systems analysteconomics degree from the Universidad Argentina JFK.UniversityTorcuato Di Tella. He has been at the Bankwith us since July 2005.February 2009.
B. Compensation Argentine law provides that the compensation paid to all directors and syndics (including those directors who are also members of senior management) in a fiscal year may not exceed 5.0% of net income for such year, if the Bank is not paying dividends in respect of such net income. Argentine law increases the annual limitation on director compensation to up to 25.0% of net income based on the amount of such dividends, if any are paid. In the case of directors that perform duties at special commissions or perform administrative or technical tasks, the aforesaid limits may be exceeded if a shareholders’ meeting so approves and such issue is included in the agenda and is in accordance with the regulations of the CNV. In any case, the compensation of all directors and members of the supervisory committee requires shareholders’ approval at an ordinary meeting. The aggregate amount of compensation paid by usBanco Macro and their subsidiaries to all of ourtheir directors, alternate directors and members of supervisory committe for the fiscal year 2010 was Ps.49.8 million. The aggregate amount of compensation paid by Banco Macro to its senior management for the fiscal year 20092010 was Ps. 49.6Ps.15.1 million. Neither we nor any of our subsidiaries have entered into any agreement that provides for any benefit or compensation to any director after the expiration of his term or upon his retirement. 8083
C. Board Practices Corporate Governance As a listed company on the NYSE, we are required under the rules governing listed companies to (i) comply with SEC’s requirements concerning audit committee, (ii) submit an annual written affirmation to the NYSE in relation to the members of our audit committee and interim written affirmations if applicable, (iii) disclose any significant ways in which our corporate governance practices differ from those followed by domestic companies under the NYSE listing standards, and (iv) our CEO must promptly notify the NYSE in writing after any executive officer becomes aware of any non-compliance with any of the applicable NYSE corporate governance rules. We incorporate the information regarding the significant ways in which our corporate governance practices differ from those followed by domestic companies under the NYSE listing standards by reference to our websitewww.macro.com.ar. For further information see item 16.G. Independence of the Members of the Board of Directors and the Supervisory Committee The members of the Board of Directors and the supervisory committee of a public company such as us must inform the CNV within ten days from the date of their appointment whether such members of the Board of Directors or the supervisory committee are “independent.”“independent”. A director shall not be considered independent in certain situations, including where a director (i) owns a 35% equity interest in a company, or a lesser interest if such director has the right to appoint one or more directors of a company (hereinafter “significant participation”) or has a significant participation in a corporation having a significant participation in the company or a significant influence in the company; (ii) depends on shareholders, or is otherwise related to shareholders, having a significant participation in the company or of other corporations in which these shareholders have directly or indirectly a significant participation or significant influence; (iii) is or has been in the previous three years an employee of the company; (iv) has a professional relationship or is a member of a corporation that maintains professional relationships with, or receives remuneration (other than the one received in consideration of his performance as a director) from, a company or its shareholders having a direct or indirect significant participation or significant influence on the same, or with corporations in which the shareholders also have a direct or indirect significant participation or a significance influence; (v) directly or indirectly sells or provides goods or services to the company or to the shareholders of the same who have a direct or indirect significant participation or significant influence, for higher amounts than his remuneration as a member of the administrative body; or (vi) is the spouse or parent (up to second grade of affinity or up to fourth grade of consanguinity) of persons who, if they were members of the administrative body, would not be independent, according to the above listed rules. Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Roberto Jose Feletti and Fernando Raúl García Pulles qualify as independent members of the Board of Directors under these criteria. On April 6, 201026, 2011 Alejandro Almarza, Santiago Marcelo Maidana, Leonardo Pablo Cortigiani,Roberto Julio Eilbaum, Vivian Haydee Stenghele, Carlos Javier Piazza, Horacio Della Rocca and Alejandro Carlos Piazza and Javier Rodrigo Siñeriz were appointed as members of our supervisory committee, all of whom, qualify as independent members. For information on the expiration of current terms of directors see “Item 6.A.”6.A”. For information on service contracts with directors providing benefits upon termination of employment see Item “6.B Compensation.” Supervisory Committee Our bylaws provide for a supervisory committee, which consists of three syndics and three alternate syndics that serve for a term of one fiscal year. Pursuant to the Argentine corporate law, only lawyers and accountants admitted to practice in Argentina or civil partnerships composed of such persons may serve as syndics of an Argentinesociedad anónima, or limited liability corporation. The primary responsibilities of the supervisory committee are to monitor the management’s compliance with Argentine corporate law, the bylaws, its regulations, if any, and the shareholders’ resolutions, and to perform other functions, including, but not limited to: (i) attending meetings of the Board of Directors, management committee and shareholders, (ii) calling extraordinary shareholders’ meetings when deemed necessary and ordinary and special shareholders’ meetings when not called by the Board of Directors and (iii) investigating written complaints of shareholders. In performing these functions, the supervisory committee does not control our operations or assess the merits of the decisions made by the directors. The supervisory committee has unlimited access to our books and registers and a right to request as much information as necessary for the performance of its duties. The following table sets forth certain relevant information of the members of our supervisory committee as of December 31, 2009:2010: | | | | | | | | | | | | | | | | | | | Year of | | Current | | Year of | | Current | Name | | Position | | Age | | Appointment | | Term Ends | | Position | | Age | | Appointment | | Term Ends | Alejandro Almarza | | Syndic | | 54 | | 2009 | | April 2010 | | Syndic | | 52 | | 2010 | | April 2011 | Santiago Marcelo Maidana | | Syndic | | 79 | | 2009 | | April 2010 | | Syndic | | 80 | | 2010 | | April 2011 | Leonardo Pablo Cortigiani | | Syndic | | 41 | | 2009 | | April 2010 | | Syndic | | 42 | | 2010 | | April 2011 | Carlos Javier Piazza | | Alternate syndic | | 51 | | 2009 | | April 2010 | | Alternate syndic | | 52 | | 2010 | | April 2011 | Horacio Della Rocca | | Alternate syndic | | 57 | | 2009 | | April 2010 | | Alternate syndic | | 57 | | 2010 | | April 2011 | Alejandro Carlos Piazza | | Alternate syndic | | 55 | | 2009 | | April 2010 | | Alternate syndic | | 56 | | 2010 | | April 2011 |
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The following table sets forth certain relevant information of the members of our supervisory committee elected by the Ordinary shareholders’ meeting held on April 6, 2010:26, 2011: | | | | | | | | | | | | | | | | | | | Year of | | Current | | Year of | | Current | Name | | Position | | Age | | Appointment | | Term Ends | | Position | | Age | | Appointment | | Term Ends | Alejandro Almarza | | Syndic | | 55 | | 2010 | | April 2011 | | Syndic | | 53 | | 2011 | | April 2012 | Santiago Marcelo Maidana | | Syndic | | 80 | | 2010 | | April 2011 | | Leonardo Pablo Cortigiani | | Syndic | | 41 | | 2010 | | April 2011 | | Roberto Julio Eilbaum | | | Syndic | | 66 | | 2011 | | April 2012 | Vivian Haydee Stenghele (1) | | | Syndic | | 41 | | 2011 | | April 2012 | Carlos Javier Piazza | | Alternate syndic | | 51 | | 2010 | | April 2011 | | Alternate syndic | | 52 | | 2011 | | April 2012 | Horacio Della Rocca | | Alternate syndic | | 57 | | 2010 | | April 2011 | | Alejandro Carlos Piazza | | Alternate syndic | | 55 | | 2010 | | April 2011 | | Alternate syndic | | 56 | | 2011 | | April 2012 | Javier Rodrigo Siñeriz (1) | | | Alternate syndic | | 40 | | 2011 | | April 2012 |
| | | (1) | | Vivian Haydee Stenghele and Javier Rodrigo Siñeriz were elected by ANSES, through the exercise of its cumulative voting rights. See Item 10 “Additional Information — Memorandum and Articles of Association — Quorum and voting requirements” for a description of cumulative voting. |
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Set forth below are brief biographical descriptions of the members of our supervisory committee as of December 31, 2009:committee: Alejandro Almarza is a syndic on our supervisory committee. Mr. Almarza holds an accounting degree form the University of Buenos Aires in Argentina. Mr. Almarza also serves as syndic ofMacro Securities S.A. Sociedad de BolsaandSud Inversiones y& Análisis S.A., and as alternate syndic ofBanco del Tucumán S.A.andBanco Privado de Inversiones S.A.Mr. Almarza was admitted to the Accountants Professional Association of the City of Buenos Aires in 1983. Santiago Marcelo MaidanaRoberto Julio Eilbaum is a syndic on our supervisory committee. Mr. MaidanaEilbaum holds a law degree from the Law School of the University of Buenos Aires in Argentina.
Vivian Haydee Stenghele is a syndic on our supervisory committee. Ms. Stenghele holds an accounting degree from the University of Buenos Aires in Argentina. Mr. MaidanaMs. Stenghele also serves as syndic ofMacro SecuritiesNucleoelectrica Argentina S.A. Sociedad de BolsaandSud Inversiones y AnálisisNacion Factoring S.A.Mr. Maidana was admitted to the Bar and as alternate syndic of the City of Buenos Aires in 1957. Leonardo Pablo CortigianiS.A. San Miguel. Ms. Stenghele is a syndic on our supervisory committee. Mr. Cortigiani also serves as syndicmember ofMacro Securities S.A. Sociedad de BolsaandSud Inversiones y Análisis S.A. Mr. Cortigiani holds an accounting degree form the University of Buenos Aires in Argentina. Mr. Cortigiani was admitted to the Accountants Professional Association of the City of Buenos Aires in 1995.Aires.
Carlos Javier Piazza is an alternate syndic on our supervisory committee. Mr. Piazza holds an accounting degree form the University of Buenos Aires in Argentina. Mr. Piazza also serves as syndic ofMacro Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversion S.A. and served as alternate syndic ofMacro Securities S.A. Sociedad de Bolsa,andSud Inversiones y& Análisis S.A. andBanco Privado de Inversiones S.A.Mr. Piazza was admitted to the Accountants Professional Association of the City of Buenos Aires in 1983. Horacio Della Rocca is an alternate syndic on our supervisory committee. Mr. Della Rocca holds an accounting degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Della Rocca also serves as syndicof Macro Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión S.A.and as alternate syndic ofBanco del Tucumán S.A., Macro Securities S.A. Sociedad de BolsaandSud Inversiones y Análisis S.A.Mr. Della Rocca was admitted to the Accountants Professional Association of the City of Buenos Aires in 1977.
Alejandro Carlos Piazza is an alternate syndic on our supervisory committee. Mr. Piazza holds accounting and business administration degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Piazza also serves as syndicof Macro Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión S.A.and as an alternate syndic ofMacro Securities S.A. Sociedad de Bolsa, andSud Inversiones y& Análisis S.A., Banco del Tucumán S.A.andBanco Privado de Inversiones S.A.Mr. Piazza was admitted to the Accountants Professional Association of the City of Buenos Aires in 1978. Javier Rodrigo Siñeriz is a syndic on our supervisory committee. Mr. Siñeriz holds a law degree from the Law School of the University of Buenos Aires in Argentina. Mr. Siñeriz also serves as syndic ofPellegrini S.A. Gerente de Fondos Communes de Inversión, Nación Factoring S.A. and Intercargo SAC and as alternate syndic ofNación Leasing S.A., Nación Servicios S.A., Energia Argentina S.A., Fabrica Argentina de Aviones Brig. San Martin S.A., Lineas Aereas Federales S.A., Operadora Ferroviares SE and Tandanor SAClyN. Audit Committee Our audit committee is comprised of three directors, all of which have independent status according to CNV, and one alternate director, who is also independent. The Argentine independence standards under the rules of the CNV differ in many ways from the NYSE, NASDAQ or the U.S. federal securities law standards. All of the members of our audit committee who were appointed through a resolution of the Board of Directors dated May 2, 2007 were elected for one-fiscal year renewable terms. They were renewed by the Board of Directors in June 6, 2008, in April 24, 2009, and in May 7, 2010.2010 and May 5, 2011. The audit committee is responsible for the fulfillment of the duties within its powers, as set forth under the Argentine Decree No. 677/2001, including, among others, the following: (i) delivering an opinion regarding the board of director’s proposal of appointment of our external auditors and controlling their independent status, (ii) supervising the correct performance of our internal control and accounting systems, (iii) supervising the observance of the policies regarding information about our risk management, and (iv) delivering an opinion regarding transactions with related parties or transactions that may threaten any conflicts of interest. Furthermore, the audit committee has unlimited access to our books and registers and a right to request as much information as necessary for the performance of its duties. The following table sets forth certain relevant information of the members of the audit committee as of December 31, 2009:2010: | | | | | | | | | | | | | | | | | | | Year of | | | | Year of | | | Name | | Position | | Age | | Appointment | | Status | | Position | | Age | | Appointment | | Status | Guillermo Eduardo Stanley | | Chairman | | 61 | | 2007 | | Independent | | Chairman | | 62 | | 2007 | | Independent | Carlos Enrique Videla | | Vice Chairman | | 64 | | 2007 | | Independent | | Vice Chairman | | 65 | | 2007 | | Independent | Alejandro Macfarlane | | Member | | 44 | | 2007 | | Independent | | Member | | 45 | | 2007 | | Independent | Fernando Raúl García Pulles | | Alternate Member | | 54 | | 2007 | | Independent | | Alternate Member | | 55 | | 2007 | | Independent |
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Committees Reporting to the Board of Directors and to the CEO and the CFO The following committees are under the supervision of our Board of Directors: Executive committee. The executive committee is responsible for the management of the business and common affairs of the Bank and its powers include to: (i) manage the business and common affairs of the Bank and all other matters delegated by the Board of Directors; (ii) develop the commercial, credit and financial policy of the Bank subject to the goals approved by the Board of Directors; (iii) establish, maintain, eliminate, restructure or move the offices and areas of the administrative and operating organization of the Bank; (iv) establish special committees and approve various operating structures and determine the scope of their functions and duties; (v) approve personnel, including to appoint the General Manager, Assistant Managers, Executive Vice Presidents and other Department Heads and Managers, and to set the amount of their remunerations, working terms and conditions and any other personnel policy measure, including promotions; (vi) propose the establishment, opening, moving or closing of branches, agencies or representatives in the country or abroad; and (vii) supervise the management of subsidiary companies and of the other companies in which the Bank holds a participating interest and to propose to the Board of Directors the incorporation, acquisition or total or partial sale of participating interests in companies in financial services. The following table sets forth certain relevant information of the members of our executive committee as of December 31, 2009:2010: | | | Name | | Position | Jorge Horacio Brito | | Chairman | Delfín Jorge Ezequiel Carballo | | Vice Chairman | Jorge Pablo Brito | | Director — coordinator |
Internal audit committee.The internal audit committee is responsible for supervising the correct functioning of our internal control systems and procedures. Furthermore, this committee reviews our annual and quarterly financial statements, the external auditor’s reports, the syndic’s reports, the relevant financial information and the audit committee’s reports. The following table sets forth certain relevant information of the members of the internal audit committee as of December 31, 2009:2010: | | | Name | | Position | Jorge PabloConstanza Brito | | Director | Juan Pablo Brito Devoto | | Director | Carlos Enrique Videla | | Director — Independent | Carmen Esther Estévez | | Internal audit manager — coordinator |
Systems.The systems committee is responsible for the issuance of the systems and operations management policies. Furthermore, this committee verifies that the several management plans are in accordance with our business strategy and oversees the implementation of our strategic projects. The main functions of the systems committee are: i) oversees the proper functioning of Information Technology and Systems ii) contributes to the improvement of the information technology and systems environment effectiveness; iii) notes Systems Plan; iv) periodically evaluates the Systems Plan and reviews its compliance; v) reviews the reports issued by environmentally related audits of Information Technology and Systems and oversees the implementation of corrective actions designed to stabilize or minimize weaknesses observed; and vi) maintains timely communication with officials of the External Audit Management Systems Division of the Superintendence of Financial and Exchange EntitiesSuperintendency in relation with the problems identified in inspections and monitor actions undertaken to solve such problems. The systems committee meets quarterly and prepares a written report which details the topics discussed at each meeting, as well as the points that require further follow-up. This record is sent to the Board of Directors for their knowledge. The following table sets forth certain relevant information of senior members of the systems committee as of December 31, 2009:2010: | | | Name | | Position | Jorge Pablo Brito | | Director | Juan Pablo Brito Devoto | | Director | Guillermo Goldberg | | Deputy general manager | Ernesto Eduardo Medina | | Deputy general manager | Miguel Angel FernandezClaudia Cueto | | Systems manager — coordinator | Eduardo Roque Covello | | Operations manager | Brian Anthony | | Distribution and Sales Manager | Constanza Brito | | Human Resources and Organization and Processes manager | María Milagro Medrano | | Institutional relations manager | Daniel Hugo Violatti | | Accountancy and Tax manager | Guillermo PowellByron Fabián Arias | | System’s security manager |
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Senior credit committee.The senior credit committee is responsible for the issuance of our credit policy and credit analysis guidelines. Furthermore, this committee reviews and approves credit transactions in excess of Ps. 6,000,00010,000,000 and examines periodic reports related to our loan portfolio. The following table sets forth certain relevant information of the senior members of the senior credit committee, as of December 31, 2009:2010: | | | Name | | Position | Jorge Horacio Brito | | Chairman | Delfín Jorge Ezequiel Carballo | | Vice Chairman | Jorge Pablo Brito | | Director | Ana M.María Magdalena Marcet | | Credit Risk manager — coordinator |
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Committee on assets and liabilities.The committee on assets and liabilities is responsible for the financial strategy of the Bank. In addition, it carries on deep market analysis and establishes strategic policies related to the Bank’s liquidity, market, interest rate and currency risks. The following table sets forth certain relevant information of the senior members of our committee on assets and liabilities as of December 31, 2009:2010: | | | Name | | Position | Delfin Jorge Ezequiel Carballo | | Vice Chairman | Jorge Pablo Brito | | Director | Roberto Julio Eilbaum (1) | | Director | Guillermo Goldberg | | Deputy general manager | Jorge Francisco Scarinci | | Financial and Investor relations manager — coordinator | Brian Anthony | | Distribution and Sales manager | Horacio Ricardo Sistac | | Corporate banking manager | Francisco Muro | | Retail banking manager | Marcos Brito | | Director |
| | | (1) | | As from April 26, 2011 Mr. Eilbaum is no longer a Director. |
Operational Risk committee. The operational risk committee is responsible for the evaluation of the risk operations administration model. It has the authority to investigate any topic that may need the intervention of the committee and its functions include: (i) appraising changes in policies, procedures and structures and submitting them to the consideration of the Board of Directors; (ii) evaluating periodic reports from the Operational Risk Area and informing the Executive Board of any relevant details; (iii) reviewing, at least annually, the Bank’s firm-wide framework regarding management of operational risk; (iv) promoting the creation of an organizational culture that prioritizes the administration of Operational Risk, including standards of conduct, integrity and behavior ethics for personnel; and (v) providing an executive-level forum for discussion and decision-making on all aspects of Operational Risk and its management, compliant with all the obligations imposed by applicable laws and decrees. The following table sets forth certain relevant informationthe name and positions of the senior management members of our operational risk committee as of December 31, 2009:2010: | | | Name | | Position | Jorge Pablo Brito | | Director | Constanza Brito | | Director | Guillermo Goldberg | | Deputy general manager | Ernesto Eduardo Medina | | Deputy general manager | Alberto Figueroa | | Management Control and Relationship with Central Bank manager |
Anti-money laundering committee. The anti-money laundering committee is responsible for Planning, coordinating and monitoring compliance with anti-money laundering policies approved by the Board of Directors and its powers include to: (i) define policies for compliance with anti-money laundering corporate guidelines, (ii) be a permanent forum for the discussion of money laundering and terrorist financing risks that affect the Entity in its entirety, (iii) promote the definition of strategies so that the Entity will establish more effective controls to prevent money laundering and terrorist financing and implement such controls, (iv) take care of the continued updating of the Manual of Procedures for the prevention of money laundering and terrorist financing, in accordance with regulatory changes and new Entity needs, (v) monitor the implementation of a program designed to provide training and raise awareness regarding the prevention and control of asset laundering and terrorist financing, (vi) establish appropriate mechanisms for the internal reporting of unusual / suspicious activities, (vii) report any unusual or suspicious transactions to the relevant Agencies in compliance with applicable regulations, and subsequently inform the Board of Directors, (viii) provide support to the head of the anti-money laundering committee in the examination of unusual or suspicious transactions, (ix) approve and follow-up the work program submitted by the anti-money laundering committee for the relevant fiscal year, for which it will report to the Board of Directors and (x) perform any other duties that may be imposed under applicable laws and regulations. The following table sets forth certain relevant information of the senior members of our anti-money laundering committee as of December 31, 2009:2010: | | | Name | | Position | Luis Carlos Cerolini | | Director | Roberto Julio Eilbaum (1) | | Director | Ernesto Eduardo Medina | | Deputy general manager | Alfredo Cobos | | Responsible for Anti-money laundering sector — coordinator | Alberto Figueroa | | Management Control and Relationship with Central Bank manager |
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| | | (1) | | As from April 26, 2011 Mr. Eilbaum is no longer a Director. |
Senior Legal Recovery committee.The senior legal recovery committee manages outstanding loans on behalf of the Board of Directors, which nevertheless retains its power in that regard. The committee’s functions and powers are to: a) approve special recovery policies for different bank segments; b) analyze and decide on payment or refinancing proposals that are exceptional to specified refinancing policies and reductions and also meet some of the following requirements: - -The principal owed is higher than Ps. 500,000; or — implies a capital reduction in excess of Ps. 100,000; c) analyze and decide on proposals for the termination of account management and the filing of court proceedings for unpaid principal amounts higher than Ps. 500,000; d) analyze and decide on the selection of Law Firms to manage principal debts in excess of Ps. 500,000; e) discuss and decide on recovery policies or portfolio sales proposed by the Junior Recovery Committee; f) approve write off of debts higher than Ps. 500,000; g) determine, in both court and out-of-court tenders, the value of property guaranteeing financing in cases where powers granted exceed the scope of those conferred upon other empowered institutions. 87
The following table sets forth certain relevant information of the senior members of our Senior Legal Recovery committee as of December 31, 2009:2010: | | | Name | | Position | Luis Carlos Cerolini | | Director | Jorge Pablo Brito | | Director | Juan Pablo Brito Devoto | | Director | Ernesto López | | Legal manager-coordinator | Ana M.María Magdalena Marcet | | Credit Risk manager | Marcos Brito | | Director |
D. Employees As of December 31, 20092010 we had 7,8638,209 employees, 35%38% of whom worked at our headquarters and the remaining 65%62% at our branches. Our employees are represented by a national bank union, which negotiates a collective bargaining agreement setting minimum wages for all of its members. We maintain good relations with our employees and have never experienced a work stoppage. | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | Employees | | 2007 | | 2008 | | 2009 | | | 2008 | | 2009 | | 2010 | | Headquarters | | 2,713 | | 2,805 | | 2,775 | | | 2,805 | | 2,775 | | 3,081 | | Branches | | 5,201 | | 5,168 | | 5,088 | | | 5,168 | | 5,088 | | 5,128 | | | | | | | | | | | Total | | 7,914 | | 7,973 | | 7,863 | | | 7,973 | | 7,863 | | 8,209 | | | | | | | | | | |
E. Share Ownership As of December 31, 2009,2010, the persons who are currently members of our Board of Directors, our Supervisory Committeesupervisory committee or are our senior management held as a group 243,367,414237,320,185 shares of our capital stock. This represented approximately 41%40% of our outstanding capital stock as of such date and 45%44% of the voting rights. Other than Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Luis Carlos Cerolini and Carlos Enrique Videla, no member of our Board of Directors, the Supervisory Committee or senior management directly or beneficially owned shares as of December 31, 2009.2010. The following table sets forth the beneficial ownership of our shares by the members of our Board of Directors, our Supervisory Committee and members of senior management as of December 31, 2009:2010: | | | | | | | | | | | | | | | | | | | | Number of | | Number of | | Percentage of | | Percentage of | | | | | | | | | | | | | | | | | | | | Class A | | Class B | | Capital stock | | Voting rights | | | Number of Class A | | Number of Class B | | Percentage of | | Percentage of | | Shareholder Name | | shares owned | | shares owned | | (%) | | (%) | | | shares owned | | shares owned | | Capital stock (%) | | Voting rights(%) | | Jorge Horacio Brito | | 5,292,143 | | 117,431,806 | | | 20.64 | % | | | 22.50 | % | | 5,362,889 | | 115,140,594 | | | 20.27 | % | | | 22.20 | % | Delfín Jorge Ezequiel Carballo | | 4,895,416 | | 108,408,833 | | | 19.06 | % | | | 20.78 | % | | 4,895,416 | | 106,605,523 | | | 18.76 | % | | | 20.50 | % | Juan Pablo Brito Devoto | | 281,590 | | 6,310,409 | | | 1.11 | % | | | 1.21 | % | | 281,590 | | 5,020,799 | | | 0.89 | % | | | 1.01 | % | Jorge Pablo Brito | | — | | 500,000 | | | 0.08 | % | | | 0.08 | % | | Luis Carlos Cerolini | | — | | 168,500 | | | 0.03 | % | | | 0.03 | % | | — | | 7,500 | | | 0.00 | % | | | 0.00 | % | Carlos Enrique Videla | | 5,874 | | 72,843 | | | 0.01 | % | | | 0.02 | % | | 5,874 | | — | | | 0.00 | % | | | 0.00 | % | | | | | | | | | | | | Total | | 10,475,023 | | 232,892,391 | | | 40.93 | % | | | 44.62 | % | | 10,545,769 | | 226,774,416 | | | 39.92 | % | | | 43.71 | % | | | | | | | | | | | |
As of March 31, 2010,2011, the persons who are currently members of our Board of Directors, our Supervisory Committee or are our senior management held as a group a total of 243,170,698235,919,314 shares of our capital stock. This represented approximately 41%40% of our outstanding capital stock and 45%43% of the voting rights as of such date. Other than Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Luis Carlos Cerolini and Carlos Enrique Videla, no member of our Board of Directors, the Supervisory Committee or senior management directly or beneficially owned shares as of March 31, 2010.2011. 85
The following table sets forth the beneficial ownership of our shares by the members of our Board of Directors, our supervisory committee and members of senior management, as of March 31, 2010:2011: | | | | | | | | | | | | | | | | | | | | Number of | | Number of | | Percentage of | | Percentage of | | | | | | | | | | | | | | | | | | | | Class A | | Class B | | Capital stock | | Voting rights | | | Number of Class A | | Number of Class B | | Percentage of | | Percentage of | | Shareholder Name | | shares owned | | shares owned | | (%) | | (%) | | | shares owned | | shares owned | | Capital stock (%) | | Voting rights(%) | | Jorge Horacio Brito | | 5,292,143 | | 117,431,806 | | | 20.64 | % | | | 22.50 | % | | 5,362,889 | | 114,443,904 | | | 20.15 | % | | | 22.09 | % | Delfín Jorge Ezequiel Carballo | | 4,895,416 | | 108,408,833 | | | 19.06 | % | | | 20.78 | % | | 4,895,416 | | 105,908,833 | | | 18.64 | % | | | 20.39 | % | Juan Pablo Brito Devoto | | 281,590 | | 6,310,409 | | | 1.11 | % | | | 1.21 | % | | 281,590 | | 5,020,799 | | | 0.89 | % | | | 1.01 | % | Jorge Pablo Brito | | — | | 372,700 | | | 0.06 | % | | | 0.06 | % | | Luis Carlos Cerolini | | — | | 137,000 | | | 0.02 | % | | | 0.02 | % | | — | | 9 | | | 0.00 | % | | | 0.00 | % | Carlos Enrique Videla | | 5,874 | | 34,927 | | | 0.01 | % | | | 0.01 | % | | 5,874 | | — | | | 0.00 | % | | | 0.00 | % | | | | | | | | | | | | Total | | 10,475,023 | | 232,695,675 | | | 40.90 | % | | | 44.58 | % | | 10,545,769 | | 225,373,545 | | | 39.68 | % | | | 43.49 | % | | | | | | | | | | | |
| | | Item 7. | | Major Shareholders and Related Party Transactions |
A. Major Shareholders As of December 31, 2009,2010, we had 594,485,168 outstanding shares of common stock, consisting of 11,235,670 Class A shares and 583,249,498 Class B shares. Each share of our common stock represents the same economic interests, except that holders of our Class A shares are entitled to five votes per share and holders of our Class B shares are entitled to one vote per share. As of December 31, 2009, we had 5,378 shareholders. The following table sets forth information regarding the ownership of our Class A and Class B shares as of December 31, 2009:2010: 88
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of | | Number of | | Percentage of | | Percentage of | | | Number of | | Number of | | | | | | | | Class A | | Class B | | capital stock | | Voting rights | | | Class A shares | | Class B shares | | Percentage of | | Percentage of | | Shareholder Name | | shares owned | | shares owned | | Total | | (%) | | (%) | | | owned | | owned | | Total | | capital stock (%) | | Voting rights (%) | | ANSES | | — | | 182,053,609 | | 182,053,609 | | | 30.62 | %(1) | | | 28.47 | % | | — | | 182,210,297 | | 182,210,297 | | | 30.65 | % | | | 28.50 | % | Jorge Horacio Brito | | 5,292,143 | | 117,431,806 | | 122,723,949 | | | 20.64 | % | | | 22.50 | % | | 5,362,889 | | 115,140,594 | | 120,503,483 | | | 20.27 | % | | | 22.20 | % | Delfín Jorge Ezequiel Carballo | | 4,895,416 | | 108,408,833 | | 113,304,249 | | | 19.06 | % | | | 20.78 | % | | 4,895,416 | | 106,605,523 | | 111,500,939 | | | 18.76 | % | | | 20.50 | % | Other Shareholders | | 1,048,111 | | 175,355,250 | | 176,403,361 | | | 29.68 | %(2) | | | 28.25 | % | | 977,365 | | 179,293,084 | | 180,270,449 | | | 30.32 | %(1) | | | 28.80 | % | | | | | | | | | | | | | | Total | | 11,235,670 | | 583,249,498 | | 594,485,168 | | | 100.00 | % | | | 100.00 | % | | 11,235,670 | | 583,249,498 | | 594,485,168 | | | 100.00 | % | | | 100.00 | % | | | | | | | | | | | | | |
| | | (1) | | Although ANSES holds capital stock for up to 30.62%, pursuant to section 8 of Law No. 26,425 and its cross-reference to section 76 of Law No. 24,241, such shareholder’s voting rights are limited to 5%. In the shareholders meetings held on April 21, May 12 and 27, 2009, ANSES made reserve of the right to vote without such limit.
| | (2) | | The 20.95%24.91% of capital stock is held in the form of ADSs issued by The Bank of New York. |
As of March 31, 2010,2011, we had 594,485,168 outstanding shares of common stock, consisting of 11,235,670 Class A shares and 583,249,498 Class B shares. Each share of our common stock represents the same economic interests, except that holders of our Class A shares are entitled to five votes per share and holders of our Class B shares are entitled to one vote per share. Other than aforementioned differences among holders of Class A shares and holders of Class B shares, the holders of these shares listed in the table below do not have different voting rights. As of March 31, 2010, we had 5,136 shareholders. The following table sets forth information regarding the ownership of our Class A and Class B shares as of March 31, 2010:2011: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of | | Number of | | Percentage of | | Percentage of | | | Number of | | Number of | | | | | | | | Class A | | Class B | | capital stock | | Voting rights | | | Class A shares | | Class B shares | | Percentage of | | Percentage of | | Shareholder Name | | shares owned | | shares owned | | Total | | (%) | | (%) | | | owned | | owned | | Total | | capital stock (%) | | Voting rights (%) | | ANSES | | — | | 182,210,297 | | 182,210,297 | | | 30.65 | %(1) | | | 28.50 | % | | — | | 182,210,297 | | 182,210,297 | | | 30.65 | % | | | 28.50 | % | Jorge Horacio Brito | | 5,292,143 | | 117,431,806 | | 122,723,949 | | | 20.64 | % | | | 22.50 | % | | 5,362,889 | | 114,443,904 | | 119,806,793 | | | 20.15 | % | | | 22.09 | % | Delfín Jorge Ezequiel Carballo | | 4,895,416 | | 108,408,833 | | 113,304,249 | | | 19.06 | % | | | 20.78 | % | | 4,895,416 | | 105,908,833 | | 110,804,249 | | | 18.64 | % | | | 20.39 | % | Other Shareholders | | 1,048,111 | | 175,198,562 | | 176,246,673 | | | 29.65 | %(2) | | | 28.22 | % | | 977,365 | | 180,686,464 | | 181,663,829 | | | 30.56 | %(1) | | | 29.02 | % | | | | | | | | | | | | | | Total | | 11,235,670 | | 583,249,498 | | 594,485,168 | | | 100.00 | % | | | 100.00 | % | | 11,235,670 | | 583,249,498 | | 594,485,168 | | | 100.00 | % | | | 100.00 | % | | | | | | | | | | | | | |
| | | (1) | | Although ANSES holds capital stock for up to 30.65%, pursuant to section 8 of Law No. 26,425 and its cross-reference to section 76 of Law No. 24,241, such shareholder’s voting rights are limited to 5%. In the shareholders meetings held on April 21, May 12 and 27, 2009 and April 6, 2010 ANSES made reserve of the right to vote without such limit.
| | (2) | | The 21.66%24.76% of capital stock is held in the form of ADSs issued by The Bank of New York. |
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The table below represents the evolution of our capital stock and the material changes in equity participation of the major shareholders, in both cases, since December 31, 2006:2007: | | | | | | | | | | | Outstanding Capital Stock | | | | | | Date | | Stock (Ps.) | | | Event | | Major Shareholders | December 31, 20062007 | | | 683,943,437 | | | | | Jorge H. Brito 19.81 % | | | | | | | | | Delfín Jorge Ezequiel Carballo 17.72% | | | | | | | | | Juan Pablo Brito Devoto 0.10% | | | | | | | | | | December 31, 2007 | | | 683,943,437 | | | Transfer of shares | | Jorge H. Brito 18.87% (1) | | | | | | | | | Delfín Jorge Ezequiel Carballo 16.80% (1) | | | | | | | | | Juan Pablo Brito Devoto 0.10% (1) | | | | | | | | | | February 29, 2008 | | | 683,978,973 | | | Capital Increase (2)(1) | | Jorge H. Brito 18.17% | | | | | | | | | Delfín Jorge Ezequiel Carballo 16.56% | | | | | | | | | Juan Pablo Brito Devoto 0.98% | | | | | | | | | | December 31, 2008 | | | 683,978,973 | | | Transfer of shares (3)(2) | | Jorge H. Brito 18.17% | | | | | | | | | Delfín Jorge Ezequiel Carballo 16.56% | | | | | | | | | Juan Pablo Brito Devoto 0.98% | | | | | | | | | ANSES 26.62% | | | | | | | | | | April 30, 2009 | | | 623,978,973 | | | Capital Decrease (4)(3) | | Jorge H. Brito 20.11% | | | | | | | | | Delfín Jorge Ezequiel Carballo 18.15% | | | | | | | | | Juan Pablo Brito Devoto 1.07% | | | | | | | | | ANSES 29.18% | | | | | | | | | | September 30, 2009 | | | 594,485,168 | | | Capital Increase/Decrease (4) (5) (6) | | Jorge H. Brito 20.78% | | | | | | | | | Delfín Jorge Ezequiel Carballo 19.05% | | | | | | | | | Juan PabloANSES 30.62% | | | | | | | | | | December 31, 2010 | | | 594,485,168 | | | | | Jorge H. Brito Devoto 1.11%20.27% | | | | | | | | | Delfín Jorge Ezequiel Carballo 18.76% | | | | | | | | | ANSES 30.62%30.65% |
| | | (1) | | Monthly movements mainly from November 2006 to May 2007. | | (2) | | On June 4 and June 5, 2007, shareholders’ meetings for Banco Macro and Nuevo Banco Suquía, respectively, resolved to authorize the merger of Nuevo Banco Suquía into the Bank and an increase in the capital stock of the Bank’s from Ps.683,943,437 to Ps.683,978,973, issuing 35,536 Class B ordinary shares with a Ps. 1.00 par value each and the right to one vote per share, to be granted to the minority shareholders of Nuevo Banco Suquía, as a result of the merger. Although this capital increase was authorized in 2007, the new shares were issued on February 12, 2008. | | (3)(2) | | On November 20, 2008, the Argentine Congress passed Law No. 26,425 unifying the Argentine pension and retirement system into a system publicly administered by the National Social Security Agency (Administración Nacional de la Seguridad Social), or ANSES, eliminating the retirement savings system previously administered by private pension funds under the supervision of a governmental agency. In accordance with the new law, private pension funds transferred all of the assets administered by them under the retirement savings system to ANSES. These transferred assets included shares of Banco Macro. ANSES is subject to the same investment rules, prohibitions and restrictions that were applicable to the Argentine private pension funds under the retirement savings system, including Sections 75 and 76 of Law 24,241, which limited the voting rights of private pension funds in shareholders’ meetings to 5% of the relevant company’s shares. | | (4)(3) | | Related to the reduction of the capital stock by 60,000,000 registered Class B shares entitled to 1 vote each with a face value of Ps. 1 per share. These shares were included in the Bank’s portfolio and were acquired under section 68, Law No. 17,811, as a result of the macroeconomic context and fluctuations that the capital market was going through in general. On April 21, 2009, and after BCBA authorization, the Bank’s general ordinary and extraordinary shareholders’ meeting and special shareholders’ meeting approved the abovementioned capital reduction. During July 2009, the CNV authorized, the IGJ registered, and the Central Bank consented to the capital stock reduction. | | (5)(4) | | Related to the capital increase through the issuance of Ps. 1,147,887 of new common, registered Class B shares with a face value of Ps. 1, each one entitled to one vote, delivered to the minority shareholders of former Nuevo Banco Bisel, in the merger process with such bank. | | (6)(5) | | Related to the reduction of the capital stock by 30,641,692 Class B registered shares each one entitled to one vote, with a face value of ARS 1 per share. These shares were included in the Bank’s portfolio and were acquired under section 68, Law No. 17,811 for the same reasons mentioned in paragraph (4)(3) above. On September 10, 2009, the Bank’s general ordinary and extraordinary shareholders’ meeting approved the abovementioned capital reduction subject to the BCBA’s consent. Subsequently, the BCBA and the CNV approved such capital reduction, the IGJ recorded it and the Central Bank acknowledged it. |
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B. Related Party Transactions We are not party to any transactions with, and have not made any loans to, any of our directors, key management personnel or other related persons, nor are there any proposed transactions with such persons, except for those permitted by applicable law. Some of our directors have been involved in certain credit transactions with us. The Argentine Corporate law and Central Bank regulations allow directors of a corporation to enter into a transaction with such corporation if the transaction is in line with prevailing market practice. Additionally, lending to persons or entities affiliated with us is subject to the regulations of the Central Bank. These regulations set limits on the amount of credit that can be extended to affiliates based on, among other things, a percentage of our adjusted shareholders’ equity. We are required by the Central Bank to present, on a monthly basis, a list of the outstanding amount of credit advanced to directors, controlling shareholders, officers and other related entities, which is recorded in the minute book of the Board of Directors. Central Bank Rules establish that loans to directors, controlling shareholders, officers and other related entities must be granted on an equal basis with respect to rates, tenor and guarantees as loans granted to the general public. Additionally, the Central Bank establishes limits for the transactions with related parties. 87
“Related parties” is defined as our directors, our senior officers, our syndics, our controlling shareholders as well as individuals related to them and any entities directly or indirectly affiliated with any of these parties that are not required to be consolidated. For the years ended December 31, 2010, 2009 2008 and 20072008 an aggregate of Ps.Ps .55.0 million, 15.7 million, Ps. 17.8 million and Ps. 15.817.8 million, respectively, in financial assistance granted by us (including loans, leasing and guarantees granted) was outstanding to related parties. The single largest amount of financial assistance outstanding as of December 31, 20092010 was a dollar denominated loan by total amount of Ps. 2.318.7 million to Inversora Juramento S.A. with an average dollar interest rate of 16.8%3.30%. All of these loans (a) were made in the ordinary course of business; (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (c) did not involve more than the normal risk of collectibility or present other unfavorable features. Likewise, as of December 31, 2010, 2009 2008 and 2007,2008, the deposits made by related parties to the Bank amounted to Ps. 124.4181.0 million, Ps. 67.1124.4 million and Ps. 141.767.1 million, respectively. For further information regarding related parties transactions see note 8 to our consolidated financial statements for the year ended December 31, 2009.2010. C. Interest of experts and counsel Not applicable. | | | Item 8. | | Financial Information |
A. Consolidated Statements and Other Financial Information See Item 18 and our audited consolidated financial statements as of December 31, 2010 included in this annual report. Legal Proceedings We are involved in normal collection proceedings and other legal proceedings in the ordinary course of business. We are not involved in any litigation or other legal proceedings that, if adversely determined, would individually or in the aggregate have a material adverse effect on our operations. For further information regarding Legal Proceedingsproceedings see note 16 “Tax claims” to our consolidated financial statements for the year ended December 31, 2009.2010. Dividend Policy Although we do not have, and have no current plans to adopt, a formal dividend policy governing the amount and payment of dividends, we currently intend to pay dividends subject to approval by a majority vote of our shareholders. All shares of our capital stock arepari passuwith respect to the payment of dividends. The following table sets forth the cash dividends paid to our shareholders in 2003 through 2009.2010. All banks were prohibited by the Central Bank from paying dividends in respect of the results of 2001 and 2002. | | | | | | | | | | | | | | | | | | | | | | | | | | | Aggregate | | | Aggregate Dividend | | | | Dividend | | | Dividends per Share | | Payment | | | | Payment | | | Based on financial statements for year ended | | Dividends per Share | | (in millions of | | | December 31, | | Payment Dates | | (in pesos) | | pesos) | | | Based on financial statements for year ended December 31, | | | Payment Dates | | (in pesos) | | (in millions of pesos) | | 2003 | | July 2004 | | 0.10 | | 60.9 | | | July 2004 | | 0.10 | | 60.9 | | 2004 | | April 2005 | | 0.05 | | 30.4 | | | April 2005 | | 0.05 | | 30.4 | | 2005 | | May 2006 | | 0.10 | | 68.4 | | | May 2006 | | 0.10 | | 68.4 | | 2006 | | May 2007 | | 0.15 | | 102.6 | | | May 2007 | | 0.15 | | 102.6 | | 2007 | | May 2008 | | 0.25 | | 171.0 | | | May 2008 | | 0.25 | | 171.0 | | 2008 | | September 2009 | | 0.25 | | | 149.9 | (2) | | September 2009 | | 0.25 | | | 149.9 | (1) | 2009 | | Pending | (1) | | 0.35 | | 208.1 | | | June 2010 | | 0.35 | | 208.1 | | 2010 | | | May 2011 | | 0.85 | | 505.3 | |
| | | (1) | | For the fiscal year ended December 31, 2009, dividends approved by the shareholders’ meeting held on April 6, 2010 have been approved by the Central Bank on May 28, 2010. Payment date to be announced. | | (2) | | For the fiscal year ended December 31, 2008, dividends paid in cash were Ps. 148.3Ps.148.3 million based on the outstanding number of shares on the payment dates.dates.
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Central Bank and contractual limitations on distribution of dividends The Central Bank has imposed restrictions on the payment of dividends, substantially limiting the ability of financial institutions to distribute such dividends without its prior consent. The Central Bank has eased these restrictions through Communication “A” 4,589, as amended by Communication “A” 4,591, “A” 5,072 and others, by providing for a mechanism for the calculation of distributable profits of the financial institutions: The Superintendency of Financial Institutions will review the ability of the Bank to distribute dividends upon the Bank’s requests for its approval. Such request has to be filed within 30 business days prior to the shareholders meeting that will resolve the approval of the annual financial statements. The Superintendency of Financial Institutions will authorize the distribution of dividends when none of the following circumstances are verified during the month preceding the request for the payment of dividends: (i) we are subject to a liquidation procedure or the mandatory transfer of assets by the Central Bank in accordance with section 34 or 35 bis of the Financial Institutions Law; (ii) we are receiving financial assistance from the Central Bank; (iii) we are not in compliance with or have failed to comply on a timely basis with our reporting obligations to the Central Bank; or (iv) we are not in compliance with minimum capital requirements (both on an individual and consolidated basis) or with minimum cash reserves (on average). Any distribution of dividends will be authorized only to the extent the Bank complies with the minimum capital and minimum cash requirements calculated considering the proposed distribution and any applicable adjustment established by the regulations in force. We have consistently obtained authorization from the Central Bank to distribute dividends corresponding to Fiscal yearfiscal years 2003 through 2009.2010. Additional regulatory and contractual restrictions exist which could affect the distribution of earnings and are included in Notenote 15 of our audited consolidated Financial Statementsfinancial statements as of and for the three years ended December 31, 2009.2010. Amounts available for distribution and distribution approval process Under Argentine corporate law, declaration and payment of annual dividends, to the extent funds are legally available, is determined by our shareholders at the annual ordinary shareholders’ meeting. Generally, but not necessarily, the Board of Directors makes a recommendation with respect to the payment of dividends. Dividends may be lawfully declared and paid only out of our retained earnings stated in our yearly financial statements according to Central Bank Rules and approved by a shareholders’ meeting as described below. The Board of Directors submits our financial statements for the preceding fiscal year, together with reports thereon by the supervisory committee, at the annual ordinary shareholders’ meeting for approval. Within four months of the end of each fiscal year, an ordinary shareholders’ meeting must be held to approve the financial statements and determine the allocation of our net income for such year. Under applicable CNV regulations, but subject to prior Central Bank approval, cash dividends must be paid to shareholders within 30 days of the shareholders’ meeting approving such dividends. We have not been able to make payment of dividends within this term in connection with fiscal years 2008 and 2009 due to Central Bank’s delay in granting its approval. In the case of stock dividends, shares are required to be delivered within three months of our receipt of notice of the authorization of the CNV for the public offering of the shares arising from such dividends. Legal reserve requirement According to the Argentine Financial Institutions Law, or the Financial Institutions Law, and Central Bank regulations, we are required to maintain a legal reserve of 20% of our yearly income plus or minus prior-year adjustments and minus the accumulated loss at the prior year closing period. The legal reserve is not available for distribution to shareholders. Under Argentine corporate law and our bylaws, our yearly net income (as adjusted to reflect changes in prior results) is allocated in the following order: (i) to comply with the legal reserve requirement, (ii) to pay the accrued fees of the members of the Board of Directors and statutory supervisory committee; (iii) to pay fixed dividends, which are applied first to pending and unpaid dividends and holders of preferred stock (if applicable); (iv) for voluntary or contingent reserves, as may be resolved from time to time by our shareholders at the annual ordinary shareholders’ meeting; and (v) the remainder of the net income for the year may be distributed as dividends on common stock or as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting. 91
Personal assets tax Our shareholders approved the absorption of personal asset tax by us for the fiscal year 2010. There can be no assurance that in the future this tax will be absorbed by the Bank. For more information, see “Item 10. Additional Information—E.Taxation—Material Argentine tax considerations relating to our Class B shares and ADSs—Personal Assets Tax”. B. Significant Changes Except as otherwise disclosed in this annual report, there has been no undisclosed significant change since the date of the most recent annual financial statements included herein. 89
| | | Item 9. | | The Offer and Listing |
A. Offer and listing details The table below shows the high and low market prices in pesos for our Class B shares on the BCBA for the periods indicated: | | | | | | | | | | | | | | | | | | | Ps. per Class B Share | | | Ps. per Class B Share | | Banco Macro | | High | | Low | | | High | | Low | | | | | 2010: | | | 2011: | | | | | | April | | 10.80 | | 12.60 | | | 18.40 | | 15.40 | | March | | 12.65 | | 10.25 | | | 17.90 | | 16.00 | | February | | 10.95 | | 9.40 | | | 19.00 | | 16.35 | | January | | 11.60 | | 10.30 | | | 21.40 | | 18.35 | | | | | 2009: | | | 2010: | | | December | | 11.30 | | 10.40 | | | 22.50 | | 19.10 | | November | | 12.65 | | 10.30 | | | 21.00 | | 19.00 | | | | | 2010 | | | 22.50 | | 9.40 | | 2009 | | 12.65 | | 3.36 | | | 12.65 | | 3.36 | | 2008 | | 8.46 | | 2.12 | | | 8.46 | | 2.12 | | 2007 | | 12.30 | | 7.20 | | | 12.30 | | 7.20 | | 2006 | | 9.51 | | 5.32 | | | 9.51 | | 5.32 | | 2005 | | 5.45 | | 3.47 | | | | | 2010 | | | 4th quarter | | | 22.50 | | 16.95 | | 3rd quarter | | | 18.70 | | 11.60 | | 2nd quarter | | | 12.65 | | 9.60 | | 1st quarter | | | 12.65 | | 9.40 | | | | | 2009 | | | 4th quarter | | 12.65 | | 9.20 | | | 12.65 | | 9.20 | | 3rd quarter | | 9.29 | | 5.90 | | | 9.29 | | 5.90 | | 2nd quarter | | 6.55 | | 3.74 | | | 6.55 | | 3.74 | | 1st quarter | | 4.19 | | 3.36 | | | 4.19 | | 3.36 | | | | | 2008 | | | 4th quarter | | 6.15 | | 2.12 | | | 3rd quarter | | 6.60 | | 5.00 | | | 2nd quarter | | 8.46 | | 5.37 | | | 1st quarter | | 8.16 | | 6.70 | | |
| | | Source: | | Source: BCBA Bulletin.
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The ordinary shares trade on the NYSE in the form of ADSs issued by The Bank of New York, as depositary. Each ADS represents ten ordinary shares. The table below shows the high and low market prices of the ADSs in dollars on the NYSE for the periods indicated. | | | | | | | | | | | US$ per ADS | | Banco Macro (1) | | High | | | Low | | | | | | | | | | | 2010: | | | | | | | | | April | | | 32.31 | | | | 27.83 | | March | | | 32.77 | | | | 26.01 | | February | | | 28.88 | | | | 23.74 | | January | | | 30.50 | | | | 27.35 | | | | | | | | | | | 2009: | | | | | | | | | December | | | 29.97 | | | | 27.12 | | November | | | 33.85 | | | | 26.96 | | | | | | | | | | | 2009 | | | 33.85 | | | | 8.72 | | 2008 | | | 26.67 | | | | 4.92 | | 2007 | | | 39.11 | | | | 22.40 | | 2006 | | | 31.96 | | | | 18.35 | | | | | | | | | | | 2009 | | | | | | | | | 4th quarter | | | 33.85 | | | | 23.95 | | 3rd quarter | | | 24.46 | | | | 15.19 | | 2nd quarter | | | 17.27 | | | | 9.63 | | 1st quarter | | | 12.83 | | | | 8.72 | | | | | | | | | | | 2008 | | | | | | | | | 4th quarter | | | 19.11 | | | | 4.92 | | 3rd quarter | | | 21.62 | | | | 15.44 | | 2nd quarter | | | 26.67 | | | | 16.61 | | 1st quarter | | | 25.99 | | | | 20.86 | |
Source: Reuters | | | | | | | | | | | US$ per ADS | | Banco Macro (1) | | High | | | Low | | | | | | | | | | | 2011: | | | | | | | | | | | | | | | | | | April | | | 43.74 | | | | 35.95 | | March | | | 42.04 | | | | 38.21 | | February | | | 46.84 | | | | 38.65 | | January | | | 51.94 | | | | 44.98 | | | | | | | | | | | 2010: | | | | | | | | | December | | | 56.57 | | | | 47.88 | | November | | | 53.73 | | | | 47.55 | | | | | | | | | | | 2010 | | | 56.57 | | | | 23.74 | | 2009 | | | 33.85 | | | | 8.72 | | 2008 | | | 26.67 | | | | 4.92 | | 2007 | | | 39.11 | | | | 22.40 | | 2006 | | | 31.96 | | | | 18.35 | | | 2010 | | | | | | | | | 4th quarter | | | 56.57 | | | | 42.83 | | 3rd quarter | | | 47.46 | | | | 28.99 | | 2nd quarter | | | 32.31 | | | | 24.58 | | 1st quarter | | | 32.77 | | | | 23.74 | | | | | | | | | | | 2009 | | | | | | | | | 4th quarter | | | 33.85 | | | | 23.95 | | 3rd quarter | | | 24.46 | | | | 15.19 | | 2nd quarter | | | 17.27 | | | | 9.63 | | 1st quarter | | | 12.83 | | | | 8.72 | |
| | | Source: | | Reuters | | (1) | | theThe Bank was first listed on NYSE in March 2006
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B. Plan of Distribution Not applicable. C. Markets Our Class B shares are currently traded on the BCBA under the symbol ‘BMA’. Additionally, our ADSs have been trading on the NYSE since March 24, 2006 under the symbol ‘BMA’. Our (i) 9.75% Fixed/Floating Rate Non-Cumulative Junior Subordinated Notes Due 2036, (ii) 8.50% Notes Due 2017 and (iii) 10.750% Argentine Peso-Linked Notes Due 2012 are all currently listed on both the BCBA and the Luxembourg Stock Exchange. D. Selling Shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the issue Not applicable. | | | Item 10. | | Additional Information |
A. Share Capital Not applicable B. Memorandum and Articles of Association General We are a financial institution incorporated on November 21, 1966 as asociedad anónima,or a stock corporation, duly incorporated under the laws of Argentina for a 99-year period and registered on March 8, 1967 with the Public Registry of Commerce of BahiaBahía Blanca, Province of Buenos Aires, Argentina, under Nr.No. 1154 of Book 2, VolumeFolio 75 ofSociedades Anónimas.Estatutos .We subsequently changed our legal address to the City of Buenos Aires and registered it with the IGJ on October 10,8, 1996 under Nr.No. 9777 of Book 119, Volume A ofsociedades anónimas.nimasA translation of our bylaws has been filed as an exhibit to our 20062009 annual report on form 20-F filed on July 13, 2007.June 1, 2010. As of December 31, 2009,2010, our capital stock consists of Ps. 594,485,168, represented by 11,235,670 common, book-entry Class A shares, with a par value of one peso each and the right to five votes per share, and 583,249,498 common, book-entry Class B shares, with a par value of one peso each and the right to one vote per share. Under our bylaws, we may issue different classes of shares of common stock entitled with one to five votes per share. However, as long as we remain public we cannot issue additional shares of any class of capital stock that could entitle the holder thereof to more than one vote per share. All outstanding shares are fully paid. Our Class B shares have been listed on the BCBA since November 1994. Our ADSs have been listed in the NYSE since March 24, 2006. Holders of Class A shares are permitted to convert their shares into Class B shares on a one-for-one basis. Corporate Purpose Our bylaws sets forth that our corporate purpose is to engage within or outside of Argentina in any banking transaction contemplated and authorized under the Financial Institutions Law and other laws, rules and regulations governing banking activities in the place of performance, under the guidelines and with prior authorization, if appropriate, of the Central Bank. In addition, we are capable of acting as an agent in connection with securities in the open market, and in any exchange transactions contemplated under the legal provisions in effect governing the activity, under the guidelines and with the prior authorization, if appropriate, of the CNV. To that effect, we have full legal capacity to develop rights, incur obligations, and execute any kind of act and transaction related thereto. Furthermore, we are capable of having interests in other domestic or foreign financial institutions with the prior authorization of the Central Bank. 9193
Shareholders’ liability Shareholders’ liability for losses of a company is limited to the value of their shareholdings in the company. Under Argentine corporate law, however, shareholders who voted in favor of a resolution that is subsequently declared void by a court as contrary to Argentine laws or a company’s bylaws (or regulations, if any) may be held jointly and severally liable for damages to such company, other shareholders or third parties resulting from such resolution. See also “Risk“Risk Factors— Our shareholders may be subject to liability for certain votes of their securities”. Redemption and rights of withdrawal Our shares are subject to redemption in connection with a reduction in capital by the vote of a majority of shareholders at an extraordinary shareholders’ meeting. Any shares so redeemed must be cancelled by us. Whenever our shareholders approve a spin-off or merger in which we are not the surviving corporation, the change of our corporate legal status, a fundamental change in our corporate purpose, change of our domicile outside of Argentina, voluntary withdrawal from public offering or delisting, our continuation in the case of mandatory delisting or cancellation of the public offering authorization, or a total or partial recapitalization following a mandatory reduction of our capital or liquidation, any shareholder that voted against such action that was approved or did not attend the meeting at which the decision was taken, may withdraw and receive the book value of its shares, determined on the basis of our latest balance sheet prepared or that should have been prepared in accordance with Argentine laws and regulations, provided that such shareholder exercises its appraisal rights within a determined period. However, because of the absence of legal precedent directly on point, there is doubt as to whether holders of ADSs will be able to exercise appraisal rights either directly or through the depositary with respect to Class B shares represented by ADSs. Appraisal rights must be exercised within the five days following the adjournment of the meeting at which the resolution was adopted, in the event that the dissenting shareholder voted against such resolution, or within 15 days following such adjournment if the dissenting shareholder did not attend such meeting and can prove that he was a shareholder on the date of such meeting. In the case of merger or spin-off, appraisal rights may not be exercised if the shares to be received as a result of such transaction are authorized for public offering or listed. Appraisal rights are extinguished if the resolution giving rise to such rights is revoked at another shareholders’ meeting held within 75 days of the meeting at which the resolution was adopted. Payment on the appraisal rights must be made within one year of the date of the shareholders’ meeting at which the resolution was adopted, except when the resolution was to delist our stock or to continue following a mandatory delisting, in which case the payment period is reduced to 60 days from the resolution date. Preemptive and accretion rights In the event of a capital increase, a holder of existing common shares of a given class has a preemptive right to subscribe for a number of shares of the same class sufficient to maintain the holder’s existing proportionate holdings of shares of that class. In addition, shareholders are entitled to the right to subscribe on pro-rata basis for the unsubscribed shares remaining at the end of a preemptive rights offering, known as accretion rights. Holders of ADSs may be restricted in their ability to exercise preemptive rights if an annual report under the Securities Act relating thereto has not been filed or is not effective or an exemption is not available. Preemptive rights are exercisable during the 30 days following the last publication of notice to the shareholders in the Official Bulletin of the Republic of Argentina, or the Official Gazette and an Argentine newspaper of wide circulation. Pursuant to Argentine corporate law, in the case of public companies, such 30-day period may be reduced to a minimum of ten days if so approved by the company’s shareholders at an extraordinary shareholders’ meeting. Shares not subscribed by the shareholders by virtue of their exercise of preemptive rights or accretion rights may be offered to third parties. Voting rights Under our bylaws, each Class A share entitles the holder thereof to five votes at any meeting of our shareholders and Class B shares entitle the holders thereof to one vote per share. However, according to Argentine corporate law, shares entitle the holder to only one vote per share to vote the approval of: an early dissolution, a merger or spin-off when we are not the surviving entity, a reduction of capital stock and redemption of shares, a transformation from one type of entity to another, a limitation of shareholders’ preemptive rights, a transfer of our domicile outside Argentina, and a fundamental change of our corporate purpose set forth in our bylaws. In such cases Class A shares are entitled to only one vote per share and Class B shares are entitled to only one vote per share. In addition, pursuant to Argentine applicable law, as long as we remain public we cannot issue additional shares of any class of capital stock that could entitle the holder thereof to more than one vote per share. Registration requirements of foreign companies that hold Class B shares directly Under Argentine regulations, foreign companies that hold shares directly (and not as ADSs) in an Argentine company must register with the IGJ to exercise certain shareholder rights, including voting rights. The registration requires the filing of corporate and accounting documents in order to demonstrate that the foreign shareholder’s main activity is conducted outside of Argentina. 94
Liquidation rights In the case of our liquidation or dissolution we are requested to communicate such event to the Central Bank, and our assets will be applied to satisfy our outstanding liabilities and proportionally distributed first among our holders of preferred stock as per the terms of the preferred stock, if any. If any surplus remains, it will be proportionally distributed among holders of our common stock. 92
Ordinary and extraordinary meetings Shareholders’ meetings may be ordinary meetings or extraordinary meetings. We are required to convene and hold an ordinary meeting of shareholders within four months of the close of each fiscal year to consider the matters specified in the first two paragraphs of Section 234 of the Argentine Corporation Law, such as the approval of our financial statements, allocation of net income for such fiscal year, approval of the reports of the Board of Directors and the statutory audit committee and election and remuneration of directors and members of the statutory audit committee. In addition, pursuant to Decree No. 677/2001, at an ordinary shareholders’ meetings, our shareholders must consider (i) the disposition of, or creation of any lien over, our assets as long as such decision has not been performed under the ordinary course of business; (ii) the execution of administration or management agreements; and (iii) whether to approve the payment of any agreement providing assets or services to us as long as such payment is material when measured against the volume of the ordinary course of business and our shareholders’ equity. Other matters which may be considered at an ordinary meeting convened and held at any time include the responsibility of directors and members of the statutory audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the authority of an ordinary meeting, including amendment of the bylaws, issuance of debentures, early dissolution, merger, spin off, reduction of capital stock and redemption of shares, transformation from one type of entity to another and limitation of shareholders’ preemptive rights.
Notices of meetings Notices of shareholders’ meetings are governed by the provisions of Argentine Corporations Law, and in case of publicly traded companies, Law No. 17,811. Furthermore, notice of shareholders’ meetings must be published for five days in the Official Gazette, in an Argentine newspaper of wide circulation and in the publications of Argentine exchanges or securities markets in which our shares are traded, at least twenty (20) but not more than forty five (45) days prior to the date on which the meeting is to be held. Such notice must include information regarding the type of meeting to be held, the date, time and place of such meeting and the agenda. If a quorum is not available at such meeting, a notice for a second meeting, which must be held within 30 days of the date on which the first meeting was called, must be published for three days, at least eight days before the date of the second meeting. The above-described notices of shareholders’ meetings may be effected simultaneously for the second meeting to be held on the same day as the first meeting, only in the case of ordinary meetings. Shareholders’ meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote of such shares. Quorum and voting requirements The quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the shares present that are entitled to vote on such action. If a quorum is not available at the first meeting a second meeting may be held at which action may be taken by the holders of an absolute majority of the shares present, regardless of the number of such shares. The quorum for an extraordinary shareholders’ meeting on first call is 60% of the shares entitled to vote, and if such quorum is not available, a second meeting may be held, for which the quorum is 20% of the shares entitled to vote. Action may be taken at extraordinary shareholders’ meetings by the affirmative vote of an absolute majority of shares present that are entitled to vote on such action, except that: the approval of a majority of shares with voting rights (for these purposes non-voting preferred shares shall have voting rights), without application of multiple votes, is required at both the first and second meeting for: (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in our bylaws, (iii) our anticipated dissolution, (iv) the total or partial redemption of shares, (v) our merger or spin-off, if we are not the surviving entity, or (vi) the transformation of our corporate legal status, in which cases resolutions shall be adopted by the affirmative vote of the majority of shares with the right to vote. Preferred shares will be entitled to one vote in these circumstances. Argentine corporate law reserves the right to cumulative voting in order to elect up to one third of the directors to fill vacancies of the Board of Directors, sharing such part with candidates voted for by means of the plural system. Cumulative voting is a system designed to protect minority interests, as it gives rise to the possibility, but does not ensure, that minority interests will be able to elect some of their candidates to the Board of Directors. Such system works by multiplying the number of members that are taking part in the proceeding by the number of contemplated vacancies, which cannot exceed one third of the vacancies. The larger the number of vacancies, the greater the possibility that minority groups or shareholders will win positions in the Board of Directors. Shareholders’ meetings may be called by the Board of Directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of the statutory audit committee are required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our outstanding capital stock. If the board or the statutory audit committee fails to call a meeting following such a request, a meeting may be ordered by the CNV or by the courts. In order to attend a meeting, a shareholder must also deposit with us a certificate of book-entry shares registered in its name and issued by Caja de Valores S.A. at least three business days prior to the date on which the meeting is to be held. If so entitled to attend a meeting, a shareholder may be represented by proxy. Proxies may not be granted to our board, members of the statutory audit committee, officers or employees. 9395
Election of directors Currently, the shareholders present at any annual ordinary meeting may determine the size of the Board of Directors, provided that there shall be no less than three and no more than twelve directors. Any director so appointed will serve for three fiscal years. If the shareholders elect more than eightnine board members, each director will be re-elected as a staggered board, to be renewed by thirds, provided that in all cases no less than three directors shall be renewed each time. The annual ordinary shareholders’ meeting may also appoint an equal or lesser number of alternate directors, to hold office for the same term than regular directors, to fill any vacancy in the board occurring for any reason whatsoever, and shall further determine the order of substitution. Alternate directors shall hold office until the regular directors in whose place they have acted as substitutes shall resume office, and in case any such absence is permanent, until the next ordinary meeting of shareholders where at directors shall be appointed. Both regular and alternate directors may be re-elected indefinitely. Anti-takeover provisions Our bylaws do not contain any provision that would (i) oblige us to disclose information regarding our shareholders; and (ii) have the effect of delaying, deferring or preventing a change in control, the last of which may happen only in the event of a merger, acquisition or public offering for acquisition. Tender offer regime Optional mandatory tender offer regime in the case of a change in control Mandatory tender offer or exchange in Argentina We elected to automatically become subject to the optional mandatory tender offer regime under Decree 677/2001 regarding transparency in a public offering (Regimen de Transparencia de la Oferta Públíca). In this context, the regulation provides that in certain circumstances a tender offer (“oferta pública de adquisción”or OPA) with respect to some or all of the outstanding shares as described below must be launched. Pursuant to such regulation, the relevant circumstances include anyone intending to purchase, either directly or indirectly, for cash, either individually or collectively, either in one act or in a series of successive acts during a period of 90 consecutive days, a number of voting shares, subscription rights or stock options, negotiable securities or similar securities which directly or indirectly, and by computing the prior holding of such person, may entitle such person to subscribe, purchase or convert voting shares, shares entitled to or that once exercised grant the right to a “significant share” in the voting capital stock and/or in the votes of a company having publicly traded shares. In such cases, the OPA must be launched by the prospective purchaser within 10 days of having made the decision to participate in such offer, except in those cases expressly mentioned in the CNV rules. Such obligation is not applicable in cases where the acquisition of the significant share does not imply the acquisition of the company’s control. It also does not apply in cases where there is a change of control as a consequence of a corporate reorganization, merger or split-off. However, the regulation is applicable in certain cases of indirect acquisitions by means of a merger of the purchaser with the controlling shareholding company of the affected company or the taking of control of such controlling shareholding company. Concept of a “Significant Share” The regulations establish a duty to effect an offer with respect to a part or all of the outstanding shares depending on the percentage of the capital stock or relating to the votes to be acquired. Decree 677/2001 establishes that in no circumstance can a “significant share” be less than 35% of the capital stock and/or the votes of the affected company. The regulations provide for the following duties relating to the OPA: | • | | Whenever the goal is to acquire participation rights equal to or greater than 35% of the capital stock and/or the company’s votes, the offer must be made for a number of securities that would enable the purchaser to acquire at least 50% of the voting capital stock of the affected company. | | | • | | Whenever an entity already holds participation rights equal to or greater than 35% of the voting capital stock and/or the company’s votes but less than 51% of such rights, and the intention is to increase such share of the affected company’s capital stock at least 6% during a 12-month period, the offer shall be made on the number of securities representing at least 10% of the voting capital stock of the affected company. | | | • | | Whenever participation rights equal to or greater than 51% of the voting capital stock and/or the company’s votes are sought, the offer shall be made for the number of securities that would enable the purchaser to obtain 100% of the voting capital stock of the affected company. The application of this stipulation shall have priority over the stipulations discussed in the preceding paragraphs. |
Determination of the price of the OPA in the case of a change in control The price shall determined by the offeror with the following exceptions: Whenever the purchaser would have purchased other securities related to the offering in the prior 90 consecutive days beginning as of the date the price was announced, the price cannot be lower than the highest price the purchaser would have paid in such transactions. 96
Whenever the purchaser would have obtained firm sales commitments from the controlling shareholder or other shareholders with the right to take part in the public offering, the price cannot be lower than the price provided for in such commitments. The CNV can authorize different offering prices in the hypothetical situation that the assignment of control goes hand in hand with indemnity or warrant clauses on a certain risk or deferred payment stated in the financial statements of the affected company, by virtue of the controlling party’s shareholdings. Such difference cannot exceed 20%. Penalties for breach Without prejudice to the penalties established by the CNV, the regulation provides that anyone purchasing shares of a company in violation of such regime cannot exercise their political rights derived from the shares thus purchased, or that may be hereinafter purchased without launching the relevant OPA, and if exercised, the agreements shall be considered void for administrative purposes. Should a resale of the purchased shares occur in violation of the regime, the new purchaser of such shares may only exercise the political rights corresponding to them if the purchase was made in good faith, and provided the purchaser does not maintain any of the relationships with the transferor that are established in the regulation. Tender offer regime in the case of a voluntary withdrawal from the public offering and listing system in Argentina Decree 677/2001 and its regulation also established that when a company, whose shares are publicly offered and listed in Argentina, agrees to voluntary withdraw from the public offering and listing system in Argentina, it must follow the procedures provided for in the CNV’s regulations and it must likewise launch an OPA for its aggregate shares and/or subscription rights or securities convertible into shares or stock options under the terms provided for in such regulation. It is not necessary to extend the public offering to those shareholders that voted for the withdrawal at the shareholders’ meeting. The public offering can only be made as a purchase and sale and the consideration must be cash. The acquisition of one’s own shares must be made with liquid and realized profits or with free reserves, whenever paid up in full, and for the amortization or disposition thereof, within the term set forth in section 221 of the Argentine Companies Law and the company must present the CNV with evidence that it has the necessary solvency to effect such purchase and that the payment for the shares will not affect its solvency. Determination of the price of the OPA in the case of a voluntary withdrawal from the public offering and listing system in Argentina The price offered should be an equitable price, as such, one must consider the following relevant criteria: The equity value of the shares, taking into account a special financial statement for the withdrawal from the public offering system and/or listing. The value of the company, in accordance with discounted cash flow criteria and/or ratios applicable to comparable businesses or companies. The company’s liquidation value. Average quotation prices on the stock exchange where the shares are listed during the six month period immediately preceding the withdrawal application, no matter the number of sessions necessary for such negotiation. The consideration offered beforehand, or the placement of the new shares, in the event that a public offering has been made with regard to the same shares or if new_shares have been issued, if applicable, during the last year, to be counted as of the date of the agreement for the withdrawal application. Under no circumstances can the price offered be lower than the average quotation price discussed in this paragraph. Form and transfer Our current capital stock is represented by book-entry shares. Our shareholders are required to hold their shares through book-entries directly made by Caja de Valores S.A. in the stock registry of the company carried by Caja de Valores S.A. or through book-entries with brokers, banks and other entities approved by the CNV that have accounts with Caja de Valores S.A., or with the participants of the Caja de Valores S.A. Caja de Valores S.A. is in charge of maintaining a stock registry on our behalf based on information received from shareholders that choose to hold their shares directly by registration on the stock registry of the company and from participants of the Caja de Valores S.A., and in accordance with Argentine law only those holders listed in the stock registry either directly or through participants of the Caja de Valores S.A. will be recognized as shareholders. Shares held by participants of the Caja de Valores S.A. have the same rights as shares recorded in our shareholders’ register. C. Material Contracts None.During the past two years we did not enter into or become a party to any contract that is required to be disclosed under this item.
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D. Exchange controls Exchange rates On January 7, 2002, the Argentine congress enacted the Public Emergency Law, abandoning over ten years of fixed peso-U.S. dollar parity at Ps.1.00 per US$1.00. After devaluing the peso and setting the official exchange rate at Ps.1.40 per US$1.00, on February 11, 2002, the government allowed the peso to float. The shortage of U.S. dollars and their heightened demand caused the peso to further devalue significantly in the first half of 2002 reaching a value of Ps. 3,8675 per US$1.00 in June 2002. The following table sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in pesos per U.S. dollar and not adjusted for inflation. There can be no assurance that the peso will not depreciate again in the future, particularly while the restructuring of a substantial portion of Argentina’s foreign debt remains unresolved. The Federal Reserve Bank of New York does not report a noon buying rate for pesos. | | | | | | | | | | | | | | | | | | | Exchange Rates | | | | | | | | | | | | Average | | | Period- | | | | High | | | Low | | | (1) | | | end | | 2005 | | | 3.0523 | | | | 2.8592 | | | | 2.9230 | | | | 3.0315 | | 2006 | | | 3.1072 | | | | 3.0305 | | | | 3.0741 | | | | 3.0695 | | 2007 | | | 3.1797 | | | | 3.0553 | | | | 3.1156 | | | | 3.1510 | | 2008 | | | 3.4537 | | | | 3.0128 | | | | 3.1614 | | | | 3.4537 | | 2009 | | | 3.8545 | | | | 3.4497 | | | | 3.7301 | | | | 3.7967 | | November 2009 | | | 3.8192 | | | | 3.7988 | | | | 3.8110 | | | | 3.8102 | | December 2009 | | | 3.8205 | | | | 3.7920 | | | | 3.8070 | | | | 3.7967 | | January 2010 | | | 3.8230 | | | | 3.7942 | | | | 3.8042 | | | | 3.8230 | | February 2010 | | | 3.8677 | | | | 3.8310 | | | | 3.8512 | | | | 3.8598 | | March 2010 | | | 3.8763 | | | | 3.8543 | | | | 3.8627 | | | | 3.8763 | | April 2010 | | | 3.8862 | | | | 3.8682 | | | | 3.8761 | | | | 3.8862 | |
| | | | | | | | | | | | | | | | | | | Exchange Rates | | | | High | | | Low | | | Average (1) | | | Period-end | | 2006 | | | 3.1072 | | | | 3.0305 | | | | 3.0741 | | | | 3.0695 | | 2007 | | | 3.1797 | | | | 3.0553 | | | | 3.1156 | | | | 3.1510 | | 2008 | | | 3.4537 | | | | 3.0128 | | | | 3.1614 | | | | 3.4537 | | 2009 | | | 3.8545 | | | | 3.4497 | | | | 3.7301 | | | | 3.7967 | | 2010 | | | 3.9857 | | | | 3.7942 | | | | 3.9127 | | | | 3.9758 | | November 2010 | | | 3.9840 | | | | 3.9567 | | | | 3.9676 | | | | 3.9840 | | December 2010 | | | 3.9857 | | | | 3.9732 | | | | 3.9776 | | | | 3.9758 | | January 2011 | | | 4.0008 | | | | 3.9715 | | | | 3.9813 | | | | 4.0008 | | February 2011 | | | 4.0305 | | | | 4.0088 | | | | 4.0220 | | | | 4.0305 | | March 2011 | | | 4.0520 | | | | 4.0288 | | | | 4.0372 | | | | 4.0520 | | April 2011 | | | 4.0837 | | | | 4.0495 | | | | 4.0655 | | | | 4.0805 | |
| | | Source: | | Central Bank | | (1) | | Based on daily closing price. |
Exchange controls In 2001 and 2002, the Central Bank, among other restrictive measures, restricted the transferinflow and outflow of U.S. dollars abroadforeign currency into and from Argentina without its prior approval. In 2003 and 2004,Since then, the Argentine government has substantially eased these restrictions. However,restrictions but dual controls are still in June 2005, the Argentine government imposed certain additional restrictions on inflows and outflows of foreign currency to the Argentine foreign exchange market.place. Pursuant to such restrictions, new indebtedness and debt refinancings with non-Argentine residents from the private sector entered ininto the local foreign exchange market must be mandatory settled into through the local exchange market (i.e., be transferred into Argentina and exchanged for Argentine pesos) and must have a term of at least 365 calendar days as from the settlement date of such funds, among others.
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Additionally, the regulation prohibitscurrently applicable foreign exchange regulations prohibit the prepayment of any such indebtedness before the expiration of such 365-day term, irrespective of the payment method and whether or not liquidationpayment includes a foreign exchange trade in the local market. The following transactions are exempted from this restriction: (i) foreign trade financings; (ii) purchase of primary stock and debt security issuances through public offerings and listed on self-regulated markets; and (iii) foreign financial indebtedness, provided that (a) the proceeds from the exchange settlement, net of taxes and expenses, are used for the purchase of foreign currency to cancel principal on foreign debt and/or to invest in long term foreign assets; or (b) they have an average term of not less than two years (including payments of principal and interest for purposes of the calculation), and to the extent they are applied to the net purchase of fixed assets, as defined by Argentine GAAP. As a result, any inflow of funds to the local foreign exchange market arising from, but not limited to: (i) foreign indebtedness, except in the above-mentioned instances; (ii) primary stock issuances of companies residing in Argentina not made pursuant to public offerings and not listed on self-regulated markets, or secondary issuances of such stock, to the extent they do not constitute foreign direct investments (i.e., represent at least a 10% interest in the local company); (iii) non-resident portfolio investments to hold Argentine currency and assets and liabilities in the financial and non-financial private sector, to the extent that they do not arise from the primary subscription of debt securities issued pursuant to a public offering and listed on a self-regulated market and/or the primary subscription of stock of companies residing in Argentina pursuant to a public offering and listed on a self-regulated market; and (iv) non-resident portfolio investments to purchase any right on securities issued by the public sector in the over-the-counter market, must comply with the following requirements, among others: (1) fund inflows may only be transferred out of the local foreign exchange market upon the lapse of a term of 365 calendar days as from the date on which the funds entered the country; and (2) the placement of a nominative, non-transferable and non-compensated deposit in U.S. dollars for an amount equal to the 30% of the amount involved in the transaction for a term of 365 calendar days, pursuant to the terms and under the conditions established in the applicable regulations. As of the date hereof, original maturity of certain debt securities issued pursuant to a primary public offering and listed on a self-regulated market shall be exempt from the minimum stay period of 365 calendar days for purposes of purchasing foreign currency to repay such debt. These restrictions do not apply toAlthough the proceeds received by us from the issuance and sale of notes under this program.our notes program are subject to mandatory settlement into Argentina, they are not subject to the mandatory 30% deposit or the aforementioned 365-day stay period. 98
E. Taxation Material U.S. Federal Income Tax Considerationsfederal income tax considerations relating to our Class B shares and ADSs The following discussion is a summary of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our Class B shares or ADSs. This discussion applies only to beneficial owners of Class B shares or ADSs that are “U.S. holders” (as defined below) that hold Class B shares or ADSs as “capital assets” (generally, property held for investment). This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), final, temporary and proposed Treasury regulations, administrative pronouncements of the IRS and judicial decisions, all as currently in effect and all of which are subject to change (possibly on a retroactive basis) and to different interpretations. This discussion does not purport to address all U.S. federal income tax considerations that may be relevant to a particular U.S. holder, and you are urged to consult your own tax advisor regarding your specific tax situation. The discussion does not address the tax considerations that may be relevant to U.S. holders in special tax situations, such as: dealers in securities or currencies;
tax-exempt organizations;
traders in securities that elect to mark to market;
certain financial institutions;
partnerships or other pass-through entities;
holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
holders that hold Class B shares or ADSs as part of a hedge, straddle, conversion transaction, constructive sale transaction or other integrated transaction;
holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power of our shares;
real estate investment trusts; or
regulated investment companies.
| • | | dealers in securities or currencies; | | | • | | insurance companies; | | | • | | tax-exempt organizations; | | | • | | traders in securities that elect to mark to market; | | | • | | certain financial institutions; | | | • | | partnerships or other pass-through entities; | | | • | | holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; | | | • | | U.S. expatriates; | | | • | | holders that hold Class B shares or ADSs as part of a hedge, straddle, conversion transaction, constructive sale transaction or other integrated transaction; | | | • | | holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power of our shares; | | | • | | real estate investment trusts; or | | | • | | regulated investment companies. |
This discussion does not address the estate, gift, or alternative minimum tax consequences of holding Class B shares or ADSs or the indirect consequences to holders of equity interests in partnerships or other entities that own our Class B shares or ADSs. Moreover, this discussion does not address the state, local, or non-U.S. income or other tax consequences of an investment in our Class B shares or ADSs, or any aspect of U.S. federal taxation other than income taxation. We are uncertain whether we currently are a passive foreign investment company (a “PFIC”) or will be a PFIC in a future tax year. As discussed below under “Passive Foreign Investment Companies,”Companies”, the application of the PFIC rules to banks is unclear under present federal U.S. federal income tax law. A determination that we are a PFIC generally will result in unfavorable consequences to a U.S. holder. You should carefully consider the discussion under “Passive Foreign Investment Companies” and consult your own tax advisor regarding the consequences of investing in a PFIC. Unless otherwise noted, the following discussion assumes that we are not a PFIC. 95
You should also consult your own tax advisor regarding the U.S. federal, state, local, and foreign income and other tax consequences of purchasing, owning and disposing of our Class B shares or ADSs in your particular circumstances. For the purposes of this discussion, you are a “U.S. holder” if you are a beneficial owner of Class B shares or ADSs and you are for U.S. federal income tax purposes: an individual who is a citizen or resident of the United States;
a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
| • | | an individual who is a citizen or resident of the United States; | | | • | | a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | | | • | | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | | | • | | a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. |
If a partnership holds our Class B shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A prospective investor who is a partner of a partnership holding our class B shares or ADSs shares should consult its own tax advisor. In general, for U.S. federal income tax purposes, U.S. holders that are beneficial owners of ADSs will be treated as the beneficial owners of the Class B shares represented by those ADSs. Taxation of Dividends.Distributions of cash with respect to the Class B shares or ADSs (other than distributions in redemption of the Class B shares that are treated as sales or exchanges under Section 302(b) of the Code or upon our liquidation) will, to the extent made from our current or accumulated earnings and profits as determined under U.S. federal income tax principles, constitute dividends for U.S. federal income tax purposes. Whether such current or accumulated earnings and profits will be sufficient for all such distributions on the Class B shares or ADSs to qualify as dividends for U.S. federal income tax purposes depends on our future profitability and other factors, many of which are beyond our control. 99
We do not currently maintain calculations of our earnings and profits under U.S. federal income tax principles. Unless and until these calculations are made, distributions should be presumed to be taxable dividends for U.S. federal income tax purposes. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes. In general, cash dividends (including amounts withheld in respect of Argentine taxes) paid with respect to: the Class B shares generally will be includible in the gross income of a U.S. holder as ordinary income on the day on which the dividends are received by the U.S. holder; or the Class B shares represented by ADSs generally will be includible in the gross income of a U.S. holder as ordinary income on the day on which the dividends are received by the depositary; and, in either case, these dividends will not be eligible for the dividends received deduction allowed to corporations. To the extent that a distribution by us exceeds the amount of our earnings and profits, it will be treated as a non-taxable return of capital to the extent of the U.S. holder’s adjusted tax basis in the Class B shares or ADSs, and thereafter as capital gain. Subject to certain exceptions for short-term and hedged positions, the amount of dividends received by certain U.S. holders (including individuals) with respect to the ADSs before January 1, 20112013 will be subject to taxation at a maximum rate of 15% under current law if the dividends represent “qualified dividend income.”income”. Dividends paid on the ADSs will be treated as qualified dividend income if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) we were not in the year prior to the year in which the dividend was paid, and are not in the year in which the dividend is paid, a PFIC. Under current guidance recently issued by the IRS, the ADSs should qualify as readily tradable on an established securities market in the United States so long as they are listed on the NYSE, but no assurances can be given that the ADSs will be or remain readily tradable under future guidance. See below for a discussion of our potential PFIC classification. Based on existing IRS guidance, it is not entirely clear whether dividends received with respect to the Class B shares will be treated as qualified dividend income, because the Class B shares are not themselves listed on a U.S. exchange. In addition, the U.S. Treasury Department has announced its intention to promulgate additional procedures pursuant to which holders of ADSs or Class B stock and intermediaries through whom such securities are held will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividend income. Because such procedures have not yet been issued, we are not certain that we will be able to comply with them. You should consult your own tax advisors regarding the availability of the preferential dividend tax rate in the light of your own particular circumstances. Dividends paid in pesos will be includible in the gross income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day they are received by the U.S. holder, in the case of Class B shares, or the depositary, in the case of Class B shares represented by ADSs, regardless of whether the payment is in fact converted to U.S. dollars. If dividends paid in pesos are converted into U.S. dollars on the day they are received by the U.S. holder or the depositary, as the case may be, U.S. holders should not be required to recognize foreign currency gain or loss in respect of the dividend income. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included in the gross income of a U.S. holder through the date such payment is converted into U.S. dollars (or otherwise disposed of) will be treated as U.S. source ordinary income or loss. However, U.S. holders should consult their own tax advisors regarding the treatment of any foreign currency gain or loss if any pesos received by the U.S. holder or the depositary are not converted into U.S. dollars on the date of receipt. 96
A U.S. holder will be entitled, subject to a number of complex limitations and conditions, to claim a U.S. foreign tax credit in respect of any Argentine income taxes withheld on dividends received on shares. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, the dividends should generally constitute “passive category income,” or in the case of certain U.S. holders, “general category income.”income”. U.S. holders who do not elect to claim a credit for any foreign taxes paid during the taxable year may instead claim a deduction of such Argentine income taxes, provided that the U.S. holder elects to deduct (rather than credit) all foreign income taxes paid or accrued for the taxable year. Dividends received with respect to the common shares will be treated as foreign source income, which may be relevant in calculating a U.S. holder’s foreign tax credit limitation. The rules relating to computing foreign tax credits or deducting foreign taxes are extremely complex, and U.S. holders are urged to consult their independent tax advisors regarding the availability of foreign tax credits with respect to any Argentine income taxes withheld from a dividend on the common shares. The IRS has expressed concern that intermediaries in connection with depositary arrangements may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. persons who are holders of depositary shares. Accordingly, investors should be aware that the discussion above regarding the availability of foreign tax credits for Argentine withholding tax on dividends paid with respect to Class B shares represented by ADSs could be affected by future action taken by the IRS. Taxation of Capital Gains.Deposits and withdrawals of Class B shares by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes. In general, gain or loss realized by a U.S. holder on the sale, redemption or other taxable disposition of Class B shares or ADSs will be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized (including the gross amount of the proceeds of the sale or other taxable disposition before the deduction of any Argentine tax) on the taxable disposition and such U.S. holder’s adjusted basis in the Class B shares or the ADSs. Capital gains of certain non-corporate U.S. holders, including individuals, derived with respect to capital assets held for more than one year may be eligible for various reduced rates of taxation, which rates currently are scheduled to increase on January 1, 2011.2013. For example, for capital assets held for over one year, the maximum rate of tax under current law generally will be 15% (rather than the higher rates of tax generally applicable to items of ordinary income). The deductibility of capital losses is subject to limitations. Any gain or loss realized by a U.S. holder will generally be treated as a U.S. source gain or loss for U.S. foreign tax credit purposes. 100
If Argentine withholding tax is imposed on the sale or disposition of Class B shares or ADSs, the amount realized by a U.S. holder will include the gross amount of the proceeds of such sale or disposition before deduction of the Argentine withholding tax. The availability of U.S. foreign tax credits for these Argentine taxes and any Argentine taxes imposed on distributions that do not constitute dividends for U.S. tax purposes is subject to various limitations and involves the application of rules that depend on a U.S. holder’s particular circumstances. In particular, because any gain from the sale or other disposition of Class B Sharesshares or ADSs generally will be treated as U.S. source income, a U.S. holder may not be able to fully utilize its U.S. foreign tax credits in respect of such Argentine withholding taxes unless such U.S. holder has other income from foreign sources. U.S. holders are urged to consult their own tax advisors regarding the application of the U.S. foreign tax credit rules to their investment in, and disposition of, Class B shares or ADSs. Passive Foreign Investment Companies.U.S. holders should carefully consider the discussion below regarding our potential treatment as a PFIC for U.S. federal income tax purposes. In general, if during any taxable year of a non-U.S. corporation, 75% or more of the corporation’s gross income consists of certain types of “passive” income, or the average value during a taxable year of the “passive assets” of the corporation (generally assets that generate passive income) is 50% or more of the average value of all the corporation’s assets, the corporation will be treated as a PFIC under U.S. federal income tax law. Passive income for this purpose generally includes interest, dividends, royalties, rents and gains from commodities and securities transactions. Certain exceptions are provided, however, for passive income derived in the conduct of an active business. We are unable to determine with certainty that we are not a PFIC because the application of the PFIC rules to banks is unclear under present U.S. federal income tax law. Banks generally derive a substantial part of their income from assets that are interest bearing or that otherwise could be considered passive under the PFIC rules. The IRS has issued a notice and has proposed regulations that exclude from passive income any income derived in the active conduct of a banking business by a qualifying foreign bank (the “active bank exception”). The IRS notice and proposed regulations have different requirements for qualifying as a foreign bank, and for determining the banking income that may be excluded from passive income under the active bank exception. Moreover, the proposed regulations have been outstanding since 1994 and will not be effective unless finalized. Because final regulations have not been issued and because the definition of banking income for purposes of the active bank exception is unclear under both the notice and the proposed regulations, our status under the PFIC rules is subject to considerable uncertainty. We conduct, and intend to continue to conduct, a significant banking business, and therefore we believe we should qualify as an active foreign bank. However, there can be no assurance that a sufficient amount of our assets will be treated as generating qualifying banking income to avoid our characterization as a PFIC. In particular, we presently hold a significant amount of cash and securities that may be considered passive assets, even if we are treated as an active foreign bank. Accordingly, U.S. holders could be subject to U.S. federal income tax under the rules described below. U.S. holders should consult their tax advisors regarding this issue. 97
If we are treated as a PFIC for any taxable year, a U.S. holder would be subject to special rules (and may be subject to increased tax liability and form filing requirements) with respect to (a) any gain realized on the sale or other disposition of Class B shares or ADSs, and (b) any “excess distribution” made by us to the U.S. holder (generally, any distribution during a taxable year in which distributions to the U.S. holder on the Class B shares or ADSs exceed 125% of the average annual distributions the U.S. holder received on the Class B shares or ADSs during the preceding three taxable years or, if shorter, the U.S. holder’s holding period for the Class B shares or ADSs). Under those rules, (a) the gain or excess distribution would be allocated ratably over the U.S. holder’s holding period for the Class B shares or ADSs, (b) the amount allocated to the taxable year in which the gain or excess distribution is realized and to taxable years before the first day on which we became a PFIC would be taxable as ordinary income, (c) the amount allocated to each prior year in which we were a PFIC would be subject to U.S. federal income tax at the highest tax rate in effect for that year and (d) the interest charge generally applicable to underpayments of U.S. federal income tax would be imposed in respect of the tax attributable to each prior year in which we were a PFIC. In addition, as discussed above, a U.S. holder would not be entitled to (if otherwise eligible for) the preferential reduced rate of tax payable on certain dividend income. A U.S. holder may mitigate these effects by electing mark-to-market treatment for its ADSs or Class B shares, provided the relevant shares constitute “marketable stock” as defined in Treasury regulations. Our ADSs and our Class B shares will be “marketable stock” if they are “regularly traded” on a “qualified exchange or other market”. The term “qualified exchange or other market” includes the NYSE. Our ADSs will be “regularly traded” if they are traded on at least 15 days during each calendar quarter, other than in de minimis quantities. For the calendar year of our initial public offering, our ADSs will be regularly traded if they are regularly traded, other than in de minimis amounts, on one-sixth of the days remaining in the quarter in which the offering occurred, and on at least 15 days during each remaining quarter of the calendar year. No assurance can be provided that our ADSs will be characterized as regularly traded on a qualified exchange or other market for this purpose. Our Class B shares will be treated as listed on a “qualified exchange or other market” for purposes of the relevant Treasury regulations if the exchange on which they are listed has sufficient trading volume, listing, financial disclosure and surveillance, is regulated or supervised by a governmental authority of the country in which the market is located, and meets certain other characteristics. It is unclear whether the BCBA would meet these requirements and whether there would be sufficient trading of the Class B shares for the Class B shares to be characterized as “regularly traded.”traded”. It is therefore unclear whether a U.S. holder would be able to elect mark-to-market treatment for the Class B shares. A U.S. holder electing the mark-to-market regime generally would compute gain or loss at the end of each taxable year as if the Class B shares or ADSs had been sold at fair market value. Any gain recognized by the U.S. holder under mark-to-market treatment, or on an actual sale, would be treated as ordinary income, and the U.S. holder would be allowed an ordinary deduction for any decrease in the value of Class B shares or ADSs as of the end of any taxable year, and for any loss recognized on an actual sale, but only to the extent, in each case, of previously included market-to-market income not offset by previously deducted decreases in value. Any loss on an actual sale of Class B shares or ADSs would be a capital loss to the extent in excess of previously included mark-to-market income not offset by previously deducted decreases in value. A U.S. holder’s tax basis in Class B shares or ADSs would increase or decrease by gain or loss taken into account under the mark-to-market regime. 101
A mark-to-market election under the PFIC rules applies to all future years of an electing U.S. holder during which the Class B shares or ADSs are regularly traded on a qualifying exchange, unless revoked with the IRS’s consent. If we are characterized as a PFIC and, at any time, we have non-U.S. subsidiaries that are classified as PFICs, U.S. holders generally will be deemed to own, and also would be subject to the PFIC rules with respect to, their indirect ownership interests in that lower-tier PFIC. If we are characterized as a PFIC, the U.S. holder could incur liability for the deferred tax and interest charge described above if either: (1) | | we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or | | (2) | | (1) we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or (2) the U.S. holder disposes of all or part of its Class B shares or ADSs. |
A mark-to-market election under the PFIC rules with respect to shares would not apply to a lower-tier PFIC, and a U.S. holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in that lower-tier PFIC. Consequently, U.S. holders of shares could be subject to the PFIC rules with respect to income of the lower-tier PFIC the value of which already had been taken into account indirectly via mark-to-market adjustments. Furthermore, if we are characterized as a PFIC, a U.S. holder will be required to annually file an IRS Form 8621. Under recent legislation, the statute of limitations on assessment and collections will remain open with respect to unreported PFIC interests. Information Reporting and Backup Withholding.Information reporting requirements will apply to dividends in respect of the Class B shares or ADSs or the proceeds from the sale, exchange, or redemption of the Class B shares or ADSs paid within the United States (and, in some cases, outside of the United States) to U.S. holders, unless, in either case, the U.S. holder is an exempt recipient (such as a corporation). A 28% backup withholding tax may apply to such amounts if the U.S. holder fails to provide an accurate taxpayer identification number or to report interest and dividends required to be shown on its U.S. federal income tax returns. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against the U.S. holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. 98
Material Argentine Tax Considerationstax considerations relating to our Class B shares and ADSs The following discussion is a summary of the material Argentine tax considerations relating to the purchase, ownership and disposition of our Class B shares or ADSs. Dividends tax. Dividends paid on our Class B shares or ADSs, whether in cash, property or other equity securities, are not subject to income tax withholding, except for dividends paid in excess of our taxable accumulated income at the previous fiscal period which are subject to withholding at the rate of 35% applicable on such excess and regarding both local and foreign shareholders. Capital gains tax. Due to the amendments made to the Argentine Income Tax Law by Law 25,414, Decree 493/2001 (the “AITL”) and the abrogation of Law 25,414 by 25,556, it is not clear whether certain amendments are in effect. Although opinion No. 351 of the National Treasury General Attorney Office solved the most important matters related to capital gains, certain issues still remain unclear: Resident individuals. Pursuant to a reasonable construction of the AITL: (i) income obtained from the sale, exchange or other disposition of our Class B shares or ADSs by resident individuals who do not sell or dispose of Argentine shares on a regular basis would not be subject to Argentine income tax; and (ii) although there still exists uncertainty regarding this issue, income obtained from the sale, exchange or other disposition of our Class B shares or ADSs by resident individuals who sell or dispose of Argentine shares on a regular basis should be exempt from Argentine income tax.
Foreign beneficiaries. Capital gains obtained by non-residents or foreign entities from the sale, exchange or other disposition of our Class B shares or ADSs are exempt from income tax. Pursuant to a reasonable construction of the AITL, and although the matter is not completely free from doubt, such treatment should also apply to those foreign beneficiaries that qualify as offshore entities.
Local entities. Capital gains obtained by Argentine entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina) derived from the sale, exchange or other disposition of our Class B shares or ADSs are subject to income tax at the rate of 35%. Losses arising from the sale of our Class B shares or ADSs can be offset against the same type of income.
| • | | Resident individuals. Pursuant to a reasonable construction of the AITL: (i) income obtained from the sale, exchange or other disposition of our Class B shares or ADSs by resident individuals who do not sell or dispose of Argentine shares on a regular basis would not be subject to Argentine income tax; and (ii) although there still exists uncertainty regarding this issue, income obtained from the sale, exchange or other disposition of our Class B shares or ADSs by resident individuals who sell or dispose of Argentine shares on a regular basis should be exempt from Argentine income tax. | | | • | | Foreign beneficiaries. Capital gains obtained by non-residents or foreign entities from the sale, exchange or other disposition of our Class B shares or ADSs are exempt from income tax. Pursuant to a reasonable construction of the AITL, and although the matter is not completely free from doubt, such treatment should also apply to those foreign beneficiaries that qualify as offshore entities. | | | • | | Local entities. Capital gains obtained by Argentine entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina) derived from the sale, exchange or other disposition of our Class B shares or ADSs are subject to income tax at the rate of 35%. Losses arising from the sale of our Class B shares or ADSs can be offset against the same type of income, for a five-year period. |
Personal assets tax. Argentine entities, such as us, have to pay the personal assets tax corresponding to Argentine and foreign individuals and foreign entities for the holding of our shares at December 31 of each year. The applicable tax rate is 0.5% and is levied on thevalor patrimonial proporcional, or the book value, of the shares arising from the last balance sheet. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of such paid tax from the applicable Argentine individuals and/or foreign shareholders. The Argentine company may seek this reimbursement of Personal Assets Tax by setting off the applicable tax against any amount due to its shareholders or in any other way or, under certain circumstances, waive its right under Argentine law to seek reimbursement from the shareholders. 102
Value added tax: The sale, exchange or other disposition of our Class B shares or ADSs and the distribution of dividends are exempted from the value added tax. Transfer taxes: The sale, exchange or other disposition of our Class B shares or ADSs is not subject to transfer taxes. Stamp taxes: Argentine residents may be subject to stamp tax in certain Argentine provinces in case transfer of our Class B shares or ADSs is performed or executed in such jurisdiction by means of written agreements. In the City of Buenos Aires the sale of Class B shares or ADSs is exempt from stamp tax. Other taxes: There are no Argentine inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class B shares or ADSs, except for the province of Buenos Aires. In such jurisdiction, there is a tax on free transmission of goods, including inheritance, legacies, donations, etc. TheSince January 2011, the tax rates have been set between 5%4% and 10.5%21.925% according to the taxable base and the degree of kinship involved. Free transmission of Class B shares or ADSs could be subject to this tax. In addition, turnover tax could be applicable to Argentine residents on the transfer of Class B sharesshares. Tax treaties. Argentina has signed tax treaties for the avoidance of double taxation with Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. There is currently no tax treaty or convention in effect between Argentina and the United States. It is not clear when, if ever, a treaty will be ratified or entered into effect. As a result, the Argentine tax consequences described in this section will apply, without modification, to a holder of our Class B shares or ADSs that is a U.S. resident. Foreign shareholders located in certain jurisdictions with a tax treaty in force with Argentina may be exempted from the payment of the personal asset tax. F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. 99
H. Documents on Display We are required to file annual reports, including exhibits, and other information with the SEC and to furnish interim information on Form 6-K. You may read and copy any documents filed by the Company at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website athttp://www.sec.gov which contains reports and other information regarding registrants that file electronically with the SEC. We are subject to the reporting requirements of the Exchange Act of 1934, as applied to foreign private issuers. Because we are a foreign private issuer, the SEC’s rules do not require us to deliver proxy statements or to file quarterly reports. In addition, our “insiders” are not subject to the SEC’s rules that prohibit short-swing trading. We prepare quarterly and annual reports containing consolidated financial statements in accordance with Central Bank Rules. Our annual consolidated financial statements are certified by an independent accounting firm. We have appointed The Bank of New York to act as depositary for our ADSs. During the time the deposit agreement remains in force, we will furnish the depositary with: summaries of all notices of general meetings of shareholders and other reports and communications that are made generally available to our shareholders.
| • | | our annual reports; and | | | • | | summaries of all notices of general meetings of shareholders and other reports and communications that are made generally available to our shareholders. |
The depositary will, as provided in the deposit agreement, if we so request, arrange for the mailing of summaries in English of the reports and communications to all record holders of our ADSs. Any record holder of ADSs may read the reports, notices, or summaries thereof, and communications at the depositary’s office located at 101 Barclay Street, New York, New York 10286. I. Subsidiary Information Not applicable. 103
| | | Item 11. | | Quantitative and Qualitative Disclosure About Market Risk |
Market Risk Market risk is the risk of loss arising from fluctuations in financial markets variables such as interest rates, foreign exchange rates and other rates or prices. This risk is a consequence of our lending, trading and investments businesses and mainly consists of interest rate risk, foreign exchange risk and financial asset quotes. For additional information regarding market risk management see note 18 to our audited consolidated financial statements for the year ended December 31, 2009.
We evaluate, upgrade and improve market risks measurements and controls on a daily basis. In order to measure significant market risks (whether they arise in trading or non-trading portfolios) we use the VaR methodology. This methodology is based on statistical methods that take into account many variables that may cause a change in the value of our portfolios, including interest rates, foreign exchange rates, securities prices, volatility and any correlation among them. VaR is an estimation of potential losses that could arise from reasonably likely adverse changes in market conditions. It expresses the maximum amount of loss expected (given confidence interval) over a specified time period, or “time horizon,” if that portfolio were held unchanged over that time period. All VaR models, while forward-looking, are based on past events and are dependent upon the quality of available market data. The quality of our VaR’s models is therefore continuously monitored. As calculated by the Bank, VaR is an estimate of the expected maximum loss in the market value of a given portfolio over a five-day horizon at a one-tailed 99% confidence interval. We assume a five day holding period and adverse market movements of 2.32 standard deviations as the standard for risk measurement and comparison. The following table shows the 5-day 99% confidence VaR for the Bank combined trading portfolios for 2009the last two years (in millions of pesos):
| | | | | | | 2009 | | Minimum
| | | 39.8 | | Maximum
| | | 67.2 | | Average
| | | 56.8 | | December 2009
| | | 39.8 | |
| | | | | | | | | | | 2009 | | | 2010 | | | Minimum | | | 39.8 | | | | 36.6 | | Maximum | | | 67.2 | | | | 72.5 | | Average | | | 56.8 | | | | 57.1 | | December 31 | | | 39.8 | | | | 55.9 | |
In order to take advantage of good trading opportunities we have sometimes increased risk, however during periods of uncertainty have also reduced it. The main source of our VaR was during 20092010 the foreign exchange portfolio. The following tables show the VaR for trading portfolio by categories for the last two years (in millions of pesos): | | | | | | | | | Currency risk for foreign exchange position | | 2009 | | | 2010 | | | Minimum | | | 18.2 | | | | 19.6 | | Maximum | | | 37.0 | | | | 41.1 | | Average | | | 29.3 | | | | 29.2 | | December 31 | | | 22.0 | | | | 19.7 | |
| | | | | | | | | Market risk for securities position | | 2009 | | | 2010 | | | Minimum | | | 12.9 | | | | 12.9 | | Maximum | | | 45.2 | | | | 44.0 | | Average | | | 27.5 | | | | 27.9 | | December 31 | | | 17.8 | | | | 36.2 | |
Equity and Commodity Price Risk Equity and commodity risks are the risks associated with adverse movements in the value of equity securities and commodities or related indexes. We do not have any material exposure to either of them. Interest Rate Risk Interest-rate risk is the effect on our net interest income of the fluctuations of market interest rates. Sensitivity to interest rate arises in our normal course of business as the repricing characteristics of its interest-earning assets do not necessarily match those of its interest-bearing deposits and other borrowings. The repricing structure of assets and liabilities is matched when an equal amount of assets and liabilities re-price for any given period. Any excess of assets or liabilities over these matched items results in a gap or mismatch. 100
Our interest rate sensitivity analysis measures the risk arising from the different sensitivity of assets and liabilities when interest rate changes occur (“duration” approach). It covers all the assets and liabilities excluding tradable portfolios. In this case our VaR model or maximum potential loss in the net economic value of the portfolio of assets and liabilities due to interest rate risk increases, considers a 3-month horizon and with a confidence level of 99%. Our methodology also captures the real interest rate risk, which is the risk arising from the mismatch produced as a consequence of an imperfect correlation between inflation rate movements and financing interest rate variations. 104
The following table shows the 3-month 99% confidence VaR for the Bank combined interest rate position for 2009last two years (in millions of pesos): | | | | | | | 2009 | | Minimum
| | | 198.3 | | Maximum
| | | 261.2 | | Average
| | | 227.8 | | December 2009
| | | 198.3 | |
| | | | | | | | | | | 2009 | | | 2010 | | Minimum | | | 198.3 | | | | 180.1 | | Maximum | | | 261.2 | | | | 283.5 | | Average | | | 227.8 | | | | 243.8 | | December 31 | | | 198.3 | | | | 283.5 | |
Foreign Exchange Risk
The following table shows the VaRFor additional information regarding markert risk management see note 17 to our audited consolidated financial statements for the Bank combined foreign exchange position for 2009 (in millions of pesos):
| | | | | | | 2009 | | Minimum
| | | 18.9 | | Maximum
| | | 37.0 | | Average
| | | 29.3 | | December 2009
| | | 22.0 | |
Equity and Commodity Price Risk
Equity and commodity risk are the risks associated with adverse movements in the value of equity securities and commodities or related indexes. We do not have any material exposure to either of them.year ended December 31, 2010.
| | | Item 12. | | Description of Securities Other Than Equity Securities |
A–A- Not applicable
B–B- Not applicable
C–C- Not applicable
D –— American Depositary Shares Fees and Charges Applicable to ADS Holders The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary also collects fees for making distributions to investors, by deducting those fees from amounts being distributed or by selling a portion of the distributable property to pay the fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. | | | Persons depositing or withdrawing shares mustmay be request to pay: | | For: | | | | US$5.00 (or less) per 100 ADSs (or portion thereof) | | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | | | | | | • Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | | | | US$02 (or less) per ADS (or portion thereof) | | • Any cash distribution to ADS registered holders
| | | | A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs US$02 (or less) per ADS (or portion thereof) | | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders |
• Any cash distribution to ADS registered holders 101
| | | Persons depositing or withdrawing shares must pay: | | For: | | | | Registration fees | | • Registration of transfer of shares on our stock registry to or from the name of the depositary or its nominee or the custodian, or its nominee when making deposits or withdrawals | | | | Expenses of the depositary | | • Cable, telex and facsimile transmissions | | | | | | • Conversion of foreign currencies into U.S. dollars | | | | Taxes and other governmental charges the depositary or the custodian, have to pay on any ADS or share underlying an ADS | | • As necessary | | | | Any charges incurred by the depositary or its agents, including the custodian, for servicing the deposited securities | | • As necessary |
Fees and Direct and Indirect Payments Made by the Depositary to us Past Fees and Payments During 2009,2010, we received from the depositary a reimbursement of US$ 75,000US $75,000 for (i) investor relation expenses, (ii) annual NYSE listing fees, and (iii) standard out-of-pocket administrative, maintenance and shareholder service expenses for providing services to the registered American depositary receipts holders, consisting, without limitation, of expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls, incurred by us during the year ended December 31, 2008.2009. In addition, the depositary waived the cost of various support services that it provided to us. Future Fees and Payments The depositary has agreed to reimburse us for expenses incurred by us in connection with the administration and maintenance of the ADSs program, including, but not limited to, investor relation expenses, annual NYSE listing fees or other program related expenses. The depositary has also agreed to pay its standard out-of-pocket administrative, maintenance and shareholder services expenses for providing services to the registered American depositary receipts holders, which consist, without limitation, of expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. There are limits and conditions on the amount of expenses for which the depositary will reimburse us, but the amount of such reimbursements is not necessarily tied to the amount of fees the depositary collects from investors. In addition, the depositary has waived the cost of various support services that it provides to us. 105
We are expecting to receive from the depositary reimbursements for expenses incurred by us during the year ended December 31, 2009. We do not expect them to differ significantly from the total2010 by an amount received for the year ended December 31, 2008.of approximately US$200,000. PART II | | | Item 13. | | Defaults, Dividend Arrearages and Delinquencies |
None. | | | Item 14. | | Material Modifications to the Rights of Security Holders and Use of Proceeds |
None. 102
Item 15. | | | Item 15. | | Controls and Procedures |
Disclosure Controls and Procedures We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2009.2010. There are, as described below, inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities Exchange Act is recorded, processed, summarized and reported as and when required. Management’s Annual Report on Internal Control over Financial Reporting The management of the Bank is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Bank’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Bank’s internal control over financial reporting includes those policies and procedures that: | a) | | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank; |
| | b) | | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the Bank; and |
| | c) | | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Bank’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Bank’s management assessed the effectiveness of the Bank’s internal control over financial reporting as of December 31, 2009.2010. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on its assessment and those criteria, the Bank’s management concluded that, as of December 31, 20092010 the Bank’s internal control over financial reporting was effective. The effectiveness of the Bank’s internal control over financial reporting as of December 31, 2009,2010, has been audited by Pistrelli, Henry Martin y Asociados S.R.L. (Member of Ernst & Young Global), an independent registered public accounting firm, as stated in their report which appears herein. Attestation Report of the Independent Registered Public Accounting Firm The Bank’s independent registered public accounting firm, Pistrelli, Henry Martin y Asociados S.R.L. (Member of Ernst & Young Global), has issued an attestation report on the effectiveness of the Bank’s internal control over financial reporting. The report follows below: 106
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of BANCO MACRO S.A. and subsidiaries Sarmiento 447 City of Buenos Aires We have audited the internal control over financial reporting of BANCO MACRO S.A. (a bank organized under Argentine legislation) and its subsidiaries (the Bank) as of December 31, 2009,2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Bank’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Bank’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 103
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, BANCO MACRO S.A. and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009,2010, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America), the consolidated balance sheets of BANCO MACRO S.A. and its subsidiaries as of December 31, 20092010 and 2008,2009, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 20092010 of BANCO MACRO S.A. and its subsidiaries, and our report dated May 28, 201017, 2011 expressed an unqualified opinion thereon. City of Buenos Aires, May 28, 201017, 2011
PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. Member of Ernst & Young Global CARLOS M. SZPUNAR
Partner Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting during 20092010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. | | | Item 16A. | | Audit Committee Financial Expert |
The Board of Directors has determined that Guillermo Eduardo Stanley, independent member of the audit committee, meets the attributes defined in Item 16A of Form 20-F for “audit committee financial experts”. In addition to the general code of ethicsconduct that applies to all of our employees, we have adopted a code of ethics that applies to directors and senior management, including specifically to our principal executive officers, and principal financial and accounting officer and controller, as well as persons performing similar functions. The text of our code of ethics for our principal executive officers and principal financial and accounting officer and controller is posted on our web site at:www.macro.com.ar./scp/codigoEtica.asp. There has been no change in our Code of Ethics during the period covered by this annual report. 107
| | | Item 16C. | | Principal Accountant Fees and Services |
Fees Paid to the Bank’s Principal Accountant Since 2006 Pistrelli, Henry Martin y Asociados S.R.L. (Member of Ernst & Young Global) has served as our principal external auditor. Fees payable to Pistrelli, Henry Martin y Asociados S.R.L. (Member of Ernst & Young Global) in 20082009 and 20092010 are detailed below.
| | | | | | | | | | | | For the year ended December 31, | | | | | | | | | | Thousands of pesos | | 2008 | | 2009 | | | 2009 | | 2010 | | | | | Audit Fees | | 9,097 | | 9,380 | | | 9,380 | | 9,413 | | Audit Related Fees | | 442 | | 240 | | | 240 | | 276 | | Tax Fees | | — | | — | | | — | | — | | All Other Fees | | 35 | | — | | | — | | 51 | | | | | | | | | Total | | 9,574 | | 9,620 | | | 9,620 | | 9,740 | | | | | | | | |
Audit Fees Audit fees were paid for professional services rendered by the auditors for the audit of our consolidated financial statements. 104
Audit-Related Fees Audit-related fees are typically services that are reasonably related to the performance of the audit or review of the consolidated financial statements and are not reported under the audit fees item above. This item includes fees for attestation services on our financial information. Tax Fees The auditors do not provide any tax advice. All Other Fees Fees disclosed in the table above under “All Other Fees” consisted of other fees paid for professional services.services. Audit Committee’s Pre-approval Policies and Procedures Our audit committee is responsible for, among other things, the oversight of our independent auditors. During the year, the audit committee reviews together with management and the independent auditor, the audit plan, audit related services and other non-audit services and approves, at least on a yearly basis, the related fees. | | | Item 16D. | | Exemptions from the Listing Standards for Audit Committees |
Not applicable. | | | Item 16E. | | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maximum number of shares/pesos | | | | Total number of | | | | | | | Total number of | | | that may yet be purchased under the | | | | shares | | | Average price | | | shares purchased as | | | program | | Period | | purchased | | | paid per share | | | part of the program | | | in Shares | | | in Ps. | | 2008 | | | | | | | | | | | | | | | | | | | | | Month #1 January 1- 31 | | | 291,432 | | | | 6.871 | | | | 291,432 | | | | 29,708,568 | | | | 207,997,588 | | Month #2 February 1- 29 | | | 1,148,000 | | | | 6.939 | | | | 1,439,432 | | | | 28,560,568 | | | | 200,030,622 | | Month #3 March 1- 31 | | | — | | | | — | | | | 1,439,432 | | | | 28,560,568 | | | | 200,030,622 | | Month #4 April 1- 30 | | | — | | | | — | | | | 1,439,432 | | | | 28,560,568 | | | | 200,030,622 | | Month #5 May 1- 31 | | | 3,580,870 | | | | 6.655 | | | | 5,020,302 | | | | 24,979,698 | | | | 176,261,596 | | Month #6 June 1- 30 | | | 7,970,482 | | | | 6.108 | | | | 12,990,784 | | | | 17,009,216 | | | | 115,048,015 | | Month #7 July 1- 30 | | | 14,752,394 | | | | 5.550 | | | | 27,743,178 | | | | 22,256,822 | | | | 112,030,278 | | Month #8 August 1- 31 | | | 14,560,016 | | | | 5.830 | | | | 42,303,194 | | | | 7,696,806 | | | | 40,293,946 | | Month #9 September 1- 30 | | | 5,143,270 | | | | 5.741 | | | | 47,446,464 | | | | 5,082,578 | | | | 10,767,691 | | Month #10 October 1- 31 | | | 13,219,536 | | | | 3.839 | | | | 60,666,000 | | | | 41,334,000 | | | | 152,055,524 | | Month #11 November 1- 30 | | | 12,252,676 | | | | 3.136 | | | | 72,918,676 | | | | 29,081,324 | | | | 124,147,791 | | Month #12 December 1- 31 | | | 2,622,842 | | | | 3.842 | | | | 75,541,518 | | | | 26,458,482 | | | | 112,213,159 | | | | | | | | | | | | | | | | | | | | | | | 2009 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Month #1 January 1- 31 | | | 4,158,482 | | | | 3.853 | | | | 79,700,000 | | | | 22,300,000 | | | | 97,531,279 | | Month #2 February 1- 28 | | | 6,520,000 | | | | 3.706 | | | | 86,220,000 | | | | 15,780,000 | | | | 67,587,946 | | Month #3 March 1- 31 | | | 3,352,873 | | | | 3.631 | | | | 89,572,873 | | | | 12,427,127 | | | | 61,462,567 | | Month #4 April 1- 29 | | | 1,068,819 | | | | 3.841 | | | | 90,641,692 | | | | 11,358,308 | | | | 57,564,636 | | | | | | | | | | | | | | | | | | | TOTAL | | | 90,641,692 | | | | 4.826 | | | | 90,641,692 | | | | 11,358,308 | | | | 57,564,636 | | | | | | | | | | | | | | | | | |
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Repurchase original program and modifications
1. | | On January 8, 2008, the Board of Directors decided to establish the following terms and conditions for the acquisition of its own shares issued by Banco Macro under the provisions of Section 68 of Law No. 17,811 (added by Decree No. 677/2001) and the rules of the CNV: (a) maximum amount of the investment: up to Ps. 210,000,000; (b) maximum number of shares to be acquired: up to 30,000,000 common, book entry, Class B shares with a par value of Ps. 1 (one Peso) each and entitled to 1 (one) vote per share, in the form of shares or ADSs representing 10 shares each, which amount does not exceed the limitation of the 10% of the capital of the Bank, as established by the applicable Argentine laws and regulations; (c) payable price: between Ps. 6.50 per share and up to Ps. 7.00 per share, and (d) term for the acquisition: 120 calendar days from the date of publication of the relevant information in the BCBA Bulletin, subject to any renewal or extension to be duly informed to the public in such Bulletin. |
2. | | In May 2008 the Board of Directors of the Bank decided to extend the term for the acquisition of certain shares issued by the Bank for 30 additional calendar days and to amend the price range fixing such range between Ps. 6.00 and up to Ps. 7.00 per share. |
3. | | In June 2008 the Board of Directors decided to extend the term for the acquisition of shares until July 6, 2008 and fixed the price range between Ps. 5.00 and up to Ps. 7.00 per share. |
4. | | In July 2008 the Board of Directors of the Bank decided to increase the maximum amount of funds to be applied to the repurchase of shares up to Ps. 290,000,000 and the maximum number of shares subject to repurchase up to 50,000,000, to amend the price range of the shares, fixing such range between Ps. 4.00 and up to Ps. 7.00 per share and to extend the term for the acquisition of shares until September 5, 2008. |
5. | | On September 4, 2008 the Board of Directors of the Bank decided to extend the maximum number of shares subject to repurchase up to 52,529,042, to amend the price range of the shares, fixing such range between Ps. 4.00 and up to Ps. 6.00 per share and to extend the term for the acquisition of shares until October 5, 2008. |
6. | | In October 2008 the Board of Directors of the Bank decided to increase the maximum amount of funds to be applied to the repurchase of shares up to Ps. 390,000,000, the maximum number of shares up to 68,000,000 and to amend the price range of the shares, fixing such range between Ps. 1.00 and up to Ps. 6.00 per share. |
7. | | On October 29, 2008 the Board of Directors of the Bank decided to increase the maximum amount of funds to be applied to the repurchase of shares up to Ps. 495,000,000, the maximum number of shares up to 102,000,000, to amend the price range of the shares, fixing such range between Ps. 0.01 and up to Ps. 4.00 per share and to extend the term for the acquisition of shares until December 19, 2008. This term was subsequently extended until April 30, 2009 by the Board of Directors meeting held on April 1, 2009. |
In accordance with the above, until April 29, 2009, the Bank acquired 89,493,692 common Class B shares with a face value of Ps. 1 and entitled to 1 vote each and 114,800 ADSs (equivalent to 1,148,000 common Class B shares with a face value of Ps. 1 and entitled to 1 vote each) for a total amount of Ps. 437,435,364. On April 21 and on September 10, 2009, the Bank reduced its capital stock in an amount of Ps. 60,000,000 and Ps. 30,641,692, respectively, representing 60,000,000 and 30,641,692 Class B shares, with a par value of Ps. 1 each and entitled to 1 vote per share.
Purchases of Corporate Bonds by the Issuer and Affiliated Purchasers
| | | | | | | | | | | 2017 Notes v/n | | | 2012 Notes v/n | | | | US$ | | | US$ | | Period | | (1) | | | (2) | | 2008 | | | | | | | | | January | | | 9,500,000 | | | | — | | September | | | 10,850,000 | | | | — | | October | | | 12,375,000 | | | | 1,500,000 | | November | | | 1,300,000 | | | | 6,160,000 | | December | | | 8,530,000 | | | | 800,000 | | | | | | | | | Total 2008 | | | 42,555,000 | | | | 8,460,000 | | | | | | | | | | | | | | | | | | 2009 | | | | | | | | | February | | | — | | | | 200,000 | | April | | | — | | | | 4,500,000 | | May | | | 1,050,000 | | | | 21,020,000 | | August | | | — | | | | 1,825,000 | | | | | | | | | Total 2009 | | | 1,050,000 | | | | 27,545,000 | | | | | | | | | | Total Repurchased | | | 43,605,000 | | | | 36,005,000 | | | | | | | | |
106
As of December 31, 2009, the Bank repurchased and formally cancelled non-subordinated 2017 Notes for a face value amount of US$43,605,000. Therefore, as of December 31, 2009, the remaining principal of 2017 Notes totals a face value of US$106,395,000.
As of December 31, 2009, the Bank repurchased and formally cancelled non-subordinated 2012 Notes for a face value amount in pesos equivalent to US$36,005,000. Therefore, the remaining principal of 2012 Notes totals a face value amount in pesos equivalent to US$63,995,000.None.
| | | Item 16F. | | Change in Registrant’s Certifying Accountant |
Not applicable. | | | Item 16G. | | Corporate Governance |
Companies listed on the NYSE must comply with certain standards regarding corporate governance as codified in Section 303A of NYSE’s Listed Company Manual, as amended. Nevertheless, the “Bank”, while a listed company, qualifies also as a foreign private issuer and, as such, is permitted to follow its home country corporate governance practices, governed by the Business Companies Law, Decree No. 677/01 and the Standards of the CNV, in lieu of the provisions of Section 303A, except that it is required to comply with Sections 303A.06, 303A.11 and 303A.12(b) and (c). Accordingly: (i) we must satisfy the audit committee requirements of Rule 10A-3 under the Securities Exchange Act of 1934 (the “Exchange Act”) (Section 303A.06); 108
(ii) we must provide a brief description of any significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards (Section 303A.11); and (iii) (y) our Chief Executive Officer (as of the date hereof, Mr. Jorge Brito) must promptly notify the NYSE in writing after any executive officer of the Bank becomes aware of any non-compliance with the applicable NYSE corporate governance rules (Section 303A.12(b)); and (z) we must submit an executed written affirmation (in relation to the members of our audit committee) annually or interim written affirmations, if required to the NYSE (Section 303A.12(c)). As required by Section 303A.11 of NYSE’s Listed Company Manual, the table below discloses any significant differences between the NYSE rules and the Bank’s corporate governance practices pursuant to Argentine corporate governance rules. | | | NYSE Corporate Governance Standards - Section 303.A | | Banco Macro Corporate Practices | | | | 303A.01-Independent Directors-Listed companies must have a majority of independent directors on its Board of Directors. | | Neither Argentine law nor our by-laws require us to have a majority of independent directors. | | | | 303A.02-Independence Tests-No director qualifies as “independent” unless the Board of Directors affirmatively determines that the director has no material relationship with the listed company (whether directly or as a partner, shareholder, or officer of an organization that has a relationship with the company), and emphasizes that the concern is independence from management. The board is also required, on a case by case basis,This section establishes general standards to express an opinion with regard to the independence or lack of independence, of each individual director.determine directors’ independence. | | Pursuant to General Resolution No. 368/01 of the CNV, as amended (T.O. 2001), a director is not independent if such director is:
| (a) No director qualifies as “independent” unless the Board of Directors affirmatively determines that the director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company).The Board of Directors is also required to identify which directors are independent and disclose the basis for that determination. (b) In addition, a director is not independent if: A. the director is or has been within the last three years, an employee, or an immediate family member is, or has been within the last three years, an executive officer, of the listed company, its parent or a consolidated subsidiary, other than employment as interim chairman or CEO or other executive officer; B. the director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than U.S.$120,000 in direct compensation from the listed company, its parent or a consolidated subsidiary, other than director and committee fees and pension or other forms of deferred compensation for prior services (provided such compensation is not contingent in any way on continued service); C. (i) the director is a current partner or employee of a firm that is the listed company’s internal or external auditor; (ii) the director has an immediate family member who is a current partner of such firm; (iii) the director has an immediate family member who is a current employee of such firm and personally works on the company’s audit; or (iv) the director or an immediate family member was within the last three years a partner or employee of such firm and personally worked on the company’s audit within that time; D. the director, or an immediate family member is, or has been with the last three years, employed as an executive officer of another company where any of the listed company’s present executive officers at the same time serves or served on that company’s compensation committee; E. the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from the listed company its parent or a consolidated subsidiary for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of U.S.$1 million, or 2% of such other company’s consolidated gross revenues. There is a three-year “look-back” period before non-independent directors can be considered independent.“Immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, and anyone (other than domestic employees) who share such person’s home. | | (a) a member of management or an employee of shareholders who hold material holdings in the listed company or of other entities in which these shareholders have material holdings or over which these shareholders exercise a material influence;
(b) is currently an employee or has, in the last three years, been an employee of the listed company;
(c) a person who has a professional relationship or is part of a company or professional association that maintains professional relations with, or that receives remunerations or fees (other than directors’ fees) from, the listed company or from shareholders that have material holdings in the listed company, or with a company in which such shareholders have material holdings or exercise a material influence;
(d) a person who has material holdings in the listed company or in an entity that has material holdings in, or exercises a material influence over, the listed company; |
107
| | | NYSE Corporate Governance Standards - Section 303.A | | Banco Macro Corporate Practices | | | | | |
(e) a person who provides goods or services to the listed company or to shareholders that have material holdings in or exercise a material influence over the listed company and receives compensation for such services that is substantially higher than that received as director of the listed company; or
(f) the member is married or is a family member to an individual who would not qualify as independent.
“Material holdings” are shareholdings, either directly or indirectly, that represent at least 35% of the capital stock of the relevant entity, or a smaller percentage when the person has the right to elect one or more directors per class of shares or by having entered into agreements with other shareholders relating to the governance and the management of the relevant entity or of its controlling shareholders. | | | | 303A.03-Executive Sessions-Non-management directors of each listed company must meet at regularly scheduled executive sessions without management. | | Neither Argentine law nor our by-laws require the holding of such meetings and we do not hold non-management directors meetings.
Our by-laws provide, however, that the board shall meet as often as required by the interests of the Bank and at least once a month. | | | | 303A.04-Nominating/Corporate Governance Committee-Listed companies must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. | | Neither Argentine law nor our by-laws require the establishment of a nominating/corporate governance committee. We doAlthough our by-laws provide the possibility to create a nominating/corporate governance committee, the Bank does not have a nominating/corporate governance committee.
| | | | | | Directors are nominated and appointed by the shareholders. |
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| | | NYSE Corporate Governance Standards - Section 303.A | | Banco Macro Corporate Practices | | 303A.05-Compensation Committee-Listed companies must have a compensation committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. | | Neither Argentine law nor our by-laws require the establishment of a compensation committee. We do not have a compensation committee.
The compensation of our directors is determined at the annual ordinary shareholders’ meeting. Additionally, the audit committee must issue an opinion regarding the reasonableness and adequacy of such compensation. | | | | 303A.06/07-Audit Committee/Requirements-Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. (a) The audit committee must have a minimum of three members. All of its members shall be financially literate or must acquire such financial knowledge within a reasonable period and at least one of its members shall have experience in accounting or financial administration. In addition to any requirement of Rule 10A-3(b)(1), all audit committee members must satisfy the independence requirements for independence set out in Section 303A.02. (b) The audit committee must have a written charter that establishes the duties and responsibilities of its members, including, at a minimum, some of the duties and responsibilities required by Rule 10A-3 of the Exchange Act and the following responsibilities set forth in NYSE Sections 303A.07(c)(iii)(A)-H) of the NYSE Manual. A. at least annually, obtain and review a report by the independent auditor describing: the firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (to assess the auditor’s independence) all relationships between the independent auditor and the listed company; B. meet to review and discuss the listed company’s annual audited consolidated financial statements and quarterly financial statements with management and the independent auditor, including reviewing the company’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; C. discuss the listed company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; D. discuss policies with respect to risk assessment and risk management; E. meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with independent auditors; F. review with the independent auditor any audit problems or difficulties and management’s response; G. set clear hiring policies for employees or former employees of the independent auditors; and H. report regularly to the Board of Directors. (c) 303A.07(c) provides that each listed company must have an internal audit function to provide management and the audit committee with ongoing assessments of the company’s risk management processes and system of internal control. If a member of the audit committee is simultaneously a member of the audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its members may serve, then, in each case the Board of Directors shall determine whether the simultaneous service would prevent such members from effectively serving on the listed company’s audit committee, and shall disclose in the annual proxy statement of the company or in the company’s annual report on Form 10-K, which is filed with the SEC. | | (a) Argentine law requires that the audit committee be composed of three or more members from the Board of Directors (with a majority of independent directors), all of whom must be well-versed in business, financial or accounting matters. In addition, we are not required to satisfy the audit committee requirements of Rule 10A-3. All of the members of our Audit Committee, as appointed on May 7, 2010, satisfy the independence requirements of Rule 10A-3. (b) A comparable provision, relating to an audit committee member’s simultaneous membership on the audit committee of other public companies, does not exist under Argentine law or CNV standards. (c) The responsibilities of an audit committee, as provided in Decree No. 677/2001 and the CNV standards, are essentially the same as those provided for under Rule 10A-3 of the Exchange Act, including, but not limited to, the following: | | A. discussing the adequacy of its charter and reporting any proposed changes to the Board of Directors;
B. overseeing the performance of internal control systems, the administrative-accounting system and of all financial information or other facts which could be submitted to the controlling authorities in compliance with the applicable reporting regime; |
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| | | NYSE Corporate Governance Standards - Section 303.A | | Banco Macro Corporate Practices | | | | (c) The audit committee must have a written charter that establishes the duties and responsibilities of its members, including, at a minimum, some of the duties and responsibilities required by Rule 10A-3 of the Exchange Act and the following responsibilities set forth in NYSE Sections 303A.07(c)(iii)(A)-H) of the NYSE Manual.
A. at least annually, obtain and review a report by the independent auditor describing: the firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (to assess the auditor’s independence) all relationships between the independent auditor and the listed company;
B. meet to review and discuss the listed company’s annual audited consolidated financial statements and quarterly financial statements with management and the independent auditor, including reviewing the company’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
C. discuss the listed company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies;
D. discuss policies with respect to risk assessment and risk management;
E. meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with independent auditors;
F. review with the independent auditor any audit problems or difficulties and management’s response;
G. set clear hiring policies for employees or former employees of the independent auditors; and
H. report regularly to the Board of Directors.
(d) 303A.07(d) provides that each company must have an internal audit function to provide management and the audit committee with ongoing assessments of the company’s risk management processes.
| | C. issuing an opinion about the Board of Directors’ proposal for the appointment of the external auditors to be retained by the Bank, and ensuring that auditors are objective and independent;
D. reviewing external and internal auditors’ plans, evaluating their performance, and issuing an opinion to that end;
E. analyzing the different services provided by the external auditors;
F. reporting on the fees invoiced by external auditors for other related services that secure third-party reliability;
G. supervising the enforcement of the Bank’s risk management information policies;
H. providing the market with full disclosure with respect to transactions that give rise to conflict of interests with the Bank’s members or controlling shareholders;
I. issuing an opinion on the reasonableness of any proposal regarding Directors, management fees and stock option plans proposed by the Board of Directors;
J. issuing an opinion on the compliance with applicable legal requirements and on the reasonableness of the terms of any issuance of stock or convertible securities that exclude or limit shareholders’ preferential subscription rights;
K. assessing compliance with relevant rules of conduct;
L. issuing a related-party transaction opinion as provided by applicable regulations;
M. preparing an performance plan annually for each fiscal year which is presented to the Bank’s Board of Directors and the Supervisory Committee; and
N. complying with all other obligations imposed by applicable laws and regulations. | | | | 303A.08-Shareholder Approval of Equity Compensation Plans-Shareholders must be given the opportunity to vote on equity compensation-compensation plans and material revisions thereto, except for employment inducement awards, certain grants, plans and amendments in the context of mergers and acquisitions, and certain specific types of plans.plans as set forth in the NYSE rules. | | We do not currently offer equity-based compensation to our directors, executive officers or employees, and have no policy on this matter. | | | | 303A.09-Corporate Governance Guidelines-Listed companies must adopt and disclose corporate governance guidelines. | | Neither Argentine law nor our by-laws require the adoption or disclosure of corporate governance guidelines. The CNV, through General Resolution 516/07, issued a recommended Code of Corporate Governance for listed companies. Using the CNV recommended code as basis, on June 3, 2009, our Board of Directors approved a Code of Corporate Governance for the Bank. |
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| | | NYSE Corporate Governance Standards - Section 303.A | | Banco Macro Corporate Practices | | 303A.10-Code of Business Conduct and Ethics-Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and within four business dayspromptly disclose any waivers of the code for directors or executive officers. | | Neither Argentine law nor our by-laws require the adoption or disclosure of a code of business conduct. We, however, have adopted a code of business conduct that applies to all our employees. In addition, we have adopted a specific Code of Ethics for our Directors and Senior Financial Officers. |
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| | | NYSE Corporate Governance Standards - Section 303.A | | Banco Macro Corporate Practices | | | | 303A.12 Certification Requirements-(a) Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards, qualifying the certification to the extent necessary. (b) Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of this Section 303A. (c) Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim written affirmation as and when required by the interim written affirmation form specified by the NYSE. | | Comparable provisions do not exist under Argentine law and CNV standards.
Nevertheless, the Bank has complied with the certification requirements under Section 303A.12 of the NYSE rules. |
PART III | | | Item 17. | | Financial Statements |
We have responded to Item 18 in lieu of responding to this Item. | | | Item 18. | | Financial Statements |
See pages F-1 through F-96F-100 of this annual report. EXHIBIT INDEX | | | | | Exhibit Number | | Description | | | | | | | 1.1 | * | | Amended and Restated Bylaws of the Bank, as amended on April 21, 2009.2009 is incorporated by reference to the annual report on Form 20-f filed on June 1st, 2010 (File No. 001-32827). | | | | | | | 2.1 | | | Deposit Agreement among the registrant, The Bank of New York, as depositary, and the holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipts, incorporated by reference to the Registration Statement on Form F-1, as amended, filed by the Bank on March 20, 2006 (File No. 333-130901). | | | | | | | 8 | | | See Note 4.1 to our audited consolidated financial statements for information regarding our subsidiaries. | | | | | | | 12.1 | * | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | | | | 12.2 | * | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | | | | 13.1 | * | | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | | | | 13.2 | * | | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
110111
SIGNATURE The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. | | | | | | BANCO MACRO S.A. | | | By: | /s/ Jorge Horacio Brito | | | | Name: | Jorge Horacio Brito | | | | Title: | Chief Executive Officer | |
Date: June 1, 2010May 17, 2011 111112
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE YEARS ENDED DECEMBER 31, 2009,2010, TOGETHER WITH THE REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F - 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of BANCO MACRO S.A. and subsidiaries Sarmiento 447 City of Buenos Aires We have audited the accompanying consolidated balance sheets of BANCO MACRO S.A. (a bank organized under Argentine legislation) and its subsidiaries (the Bank) as of December 31, 20092010 and 2008,2009, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2009.2010. These financial statements are the responsibility of the Bank’s Management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of BANCO MACRO S.A. and its subsidiaries as of December 31, 20092010 and 2008,2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2009,2010, in accordance with Central Bank of Argentine Republic rules applicable to the consolidated financial statements, which differ in certain respects from the accounting principles generally accepted in the United States of America (see note 3532 to the consolidated financial statements). We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America), the internal control over financial reporting of BANCO MACRO S.A. and its subsidiaries as of December 31, 2009,2010, based on criteria established in Internal Control –— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 28, 201017, 2011 expressed an unqualified opinion thereon. City of Buenos Aires, May 28, 201017, 2011 PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
Member of Ernst & Young Global CARLOS M. SZPUNAR Partner F - 2
BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 20092010 AND 20082009 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | | 2010 | | 2009 (1) | | ASSETS | | | | | | CASH | | | Cash on hand | | 1,304,922 | | 1,008,136 | | | 1,406,971 | | 1,304,922 | | Due from banks and correspondents | | | Central Bank of Argentina | | 2,910,020 | | 2,059,057 | | | 3,089,851 | | 2,910,020 | | Local Others | | 11,454 | | 9,225 | | | 17,446 | | 11,454 | | Foreign | | 789,559 | | 447,263 | | | 687,487 | | 789,559 | | Other | | 237 | | 216 | | | 249 | | 237 | | | | | | | | | | | | | | | 5,016,192 | | 3,523,897 | | | 5,202,004 | | 5,016,192 | | | | | | | | | | | | | | | | GOVERNMENT AND PRIVATE SECURITIES | | | Holdings in investment accounts | | 659,371 | | 448,305 | | | — | | 659,371 | | Holdings for trading or financial intermediation | | 1,511,071 | | 344,467 | | | 532,582 | | 464,851 | | Government securities under repo transactions with Central Bank or Argentina | | | 2,299,088 | | 1,046,220 | | Unlisted government securities | | 79,449 | | 69,958 | | | 175,053 | | 79,449 | | Instruments issued by the Central Bank of Argentina | | 4,650,421 | | 3,838,911 | | | 4,005,766 | | 4,650,421 | | Investments in listed private securities | | 80,876 | | 77,685 | | | 17,588 | | 773 | | Less: Allowances | | | (44 | ) | | | (27 | ) | | | (3 | ) | | | (44 | ) | | | | | | | | | | | | | | 6,981,144 | | 4,779,299 | | | 7,030,074 | | 6,901,041 | | | | | | | | | | | | | | | | LOANS | | | To the non-financial government sector | | 206,484 | | 744,507 | | | 336,430 | | 206,484 | | To the financial sector | | | Interbank financing | | 50,000 | | 42,030 | | | 110,100 | | 50,000 | | Other financing to Argentine financial institutions | | 40,442 | | 37,836 | | | 45,100 | | 40,442 | | Accrued interest, adjustments, foreign exchange and quoted price differences receivables | | 474 | | 557 | | | 501 | | 474 | | To the non-financial private sector and foreign residents | | | Overdrafts | | 1,436,292 | | 1,556,433 | | | 2,032,986 | | 1,436,292 | | Documents | | 1,412,551 | | 1,348,585 | | | 1,805,226 | | 1,412,551 | | Mortgage loans | | 746,762 | | 738,592 | | | 902,734 | | 746,762 | | Pledged loans | | 262,508 | | 339,895 | | | 347,321 | | 262,508 | | Personal loans | | 4,006,592 | | 3,806,442 | | | 5,802,442 | | 4,006,592 | | Credit cards | | 950,098 | | 869,101 | | | 1,553,183 | | 950,098 | | Other | | 2,271,756 | | 2,071,927 | | | 3,302,223 | | 2,271,756 | | Accrued interest, adjustments, foreign exchange and quoted price differences receivables | | 182,168 | | 195,026 | | | 216,888 | | 182,168 | | Less: Unposted payments | | | (29 | ) | | | (29 | ) | | — | | | (29 | ) | Less: Unearned discount | | | (21,246 | ) | | | (32,596 | ) | | | (30,121 | ) | | | (21,246 | ) | Less: Allowances | | | (448,045 | ) | | | (438,348 | ) | | | (514,910 | ) | | | (448,045 | ) | | | | | | | | | | | | | | 11,096,807 | | 11,279,958 | | | 15,910,103 | | 11,096,807 | | | | | | | | | | | | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
F - 3
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 20092010 AND 20082009 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | | 2010 | | 2009 (1) | | OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION | | | Central Bank of Argentina | | 1,284,709 | | 412,305 | | | 2,545,880 | | 1,284,709 | | Amounts receivable from spot and forward sales pending settlement | | 37,042 | | 494,737 | | | 248,714 | | 37,042 | | Securities and foreign currency receivable from spot and forward purchases pending settlement | | 536,560 | | 54,282 | | | 77,567 | | 536,560 | | Unlisted corporate bonds | | 80,746 | | 53,389 | | | 279,306 | | 123,793 | | Receivables from forward transactions without delivery of underlying asset | | 5,295 | | 109 | | | 2,840 | | 5,295 | | Other receivables not covered by debtors classification standards | | 598,224 | | 597,319 | | | 642,223 | | 635,280 | | Other receivables covered by debtors classification standards | | 69,296 | | 70,512 | | | 40,280 | | 41,835 | | Less: Allowances | | | (231,219 | ) | | | (228,588 | ) | | | (237,513 | ) | | | (231,219 | ) | | | | | | | | | | | | | | 2,380,653 | | 1,454,065 | | | 3,599,297 | | 2,433,295 | | | | | | | | | | | | | | | | ASSETS SUBJECT TO FINANCIAL LEASES | | | Assets subject to financial leases | | 250,239 | | 360,781 | | | RECEIVABLES FROM FINANCIAL LEASES | | | Receivables from financial leases | | | 249,081 | | 271,470 | | Accrued interest and adjustments | | | 4,339 | | 6,230 | | Less: Allowances | | | (3,649 | ) | | | (5,391 | ) | | | (6,021 | ) | | | (3,649 | ) | | | | | | | | | | | | | | 246,590 | | 355,390 | | | 247,399 | | 274,051 | | | | | | | | | | | | | | | | INVESTMENTS IN OTHER COMPANIES | | | In financial institutions | | 531 | | 483 | | | 557 | | 531 | | Other | | 10,925 | | 15,561 | | | 10,789 | | 10,925 | | Less: Allowances | | | (1,497 | ) | | | (247 | ) | | | (1,676 | ) | | | (1,497 | ) | | | | | | | | | | | | | | 9,959 | | 15,797 | | | 9,670 | | 9,959 | | | | | | | | | | | | | | | | OTHER RECEIVABLES | | | Receivables from sale of assets | | 12,231 | | 43,358 | | | 7,229 | | 12,231 | | Minimum presumed income tax — Tax credit | | 10,280 | | 25,767 | | | — | | 10,280 | | Other | | 357,483 | | 196,000 | | | 605,691 | | 357,483 | | Accrued interest and adjustments on receivables from sale of assets | | 481 | | 2,502 | | | 330 | | 481 | | Other accrued interest and adjustments | | | 290 | | — | | Less: Allowances | | | (13,980 | ) | | | (15,838 | ) | | | (16,529 | ) | | | (13,980 | ) | | | | | | | | | | | | | | 366,495 | | 251,789 | | | 597,011 | | 366,495 | | | | | | | | | | | | | | | | BANK PREMISES AND EQUIPMENT, NET | | 433,625 | | 430,842 | | | 445,531 | | 433,625 | | | | | | | | | | | | | | | | OTHER ASSETS | | 114,342 | | 137,357 | | | 181,256 | | 114,342 | | | | | | | | | | | | | | | | INTANGIBLE ASSETS | | | Goodwill | | 55,045 | | 63,477 | | | 100,945 | | 55,045 | | Organization and development costs, including Differences due to court orders | | 155,529 | | 135,069 | | | 196,352 | | 155,529 | | | | | | | | | | | | | | | 210,574 | | 198,546 | | | 297,297 | | 210,574 | | | | | | | | | | | | | | | | ITEMS PENDING ALLOCATION | | 2,857 | | 3,332 | | | 4,765 | | 2,857 | | | | | | | | | | | | | | | | TOTAL ASSETS | | 26,859,238 | | 22,430,272 | | | 33,524,407 | | 26,859,238 | | | | | | | | | | | | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
F - 4
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 20092010 AND 20082009 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | | 2010 | | 2009 (1) | | LIABILITIES | | | | | | DEPOSITS | | | From the non-financial government sector | | 3,613,924 | | 3,937,961 | | | 5,216,109 | | 3,613,924 | | From the financial sector | | 14,052 | | 22,438 | | | 15,776 | | 14,052 | | From the non-financial private sector and foreign residents | | | Checking accounts | | 3,275,826 | | 2,581,060 | | | 4,178,758 | | 3,275,826 | | Savings accounts | | 3,445,577 | | 2,716,913 | | | 4,526,697 | | 3,445,577 | | Time deposits | | 7,711,471 | | 6,031,882 | | | 8,714,101 | | 7,711,471 | | Investment accounts | | 52,286 | | 155,936 | | | 178,010 | | 52,286 | | Other | | 416,503 | | 321,020 | | | 518,807 | | 416,503 | | Accrued interest, adjustments, foreign exchange and quoted price differences payables | | 63,227 | | 61,147 | | | 59,135 | | 63,227 | | | | | | | | | | | | | | | 18,592,866 | | 15,828,357 | | | 23,407,393 | | 18,592,866 | | | | | | | | | | | | | | | | OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION | | | Central Bank of Argentina — Other | | 1,897 | | 302,760 | | | 1,877 | | 1,897 | | Banks and international institutions | | 219,743 | | 224,968 | | | 45,506 | | 219,743 | | Non-subordinated Corporate Bonds | | 601,016 | | 708,354 | | | 620,071 | | 601,016 | | Amounts payable for spot and forward purchases pending settlement | | 492,183 | | 68,499 | | | 93,609 | | 492,183 | | Securities and foreign currency to be delivered under spot and forward sales pending settlement | | 1,076,047 | | 679,495 | | | 2,561,740 | | 1,076,047 | | Put options sold premiums | | 80 | | — | | | 398 | | 80 | | Financing received from Argentine financial institutions | | | Interbank financing | | 145,000 | | 25,000 | | | 30,068 | | 145,000 | | Other financing received from Argentine financial institutions | | 18,957 | | 24,139 | | | 17,278 | | 18,957 | | Accrued interest payables | | 78 | | 16 | | | 25 | | 78 | | Forward transactions amounts pending settlement without delivery of underlying asset | | — | | 5,949 | | | 755 | | — | | Other | | 732,686 | | 625,981 | | | 1,173,873 | | 732,686 | | Accrued interest, adjustments, foreign exchange and quoted price differences payables | | 50,383 | | 49,783 | | | 46,083 | | 50,383 | | | | | | | | | | | | | | | 3,338,070 | | 2,714,944 | | | 4,591,283 | | 3,338,070 | | | | | | | | | | | | | | | | OTHER LIABILITIES | | | Fees | | 624 | | 676 | | | 447 | | 624 | | Other | | 883,458 | | 442,026 | | | 633,244 | | 883,458 | | | | | | | | | | | | | | | 884,082 | | 442,702 | | | 633,691 | | 884,082 | | | | | | | | | | | | | | | | PROVISIONS | | 88,275 | | 83,004 | | | 105,830 | | 88,275 | | | | | | | | | | | | | | | | SUBORDINATED CORPORATE BONDS | | 572,473 | | 521,681 | | | 598,470 | | 572,473 | | | | | | | | | | | | | | | | ITEMS PENDING ALLOCATION | | 3,987 | | 2,105 | | | 7,399 | | 3,987 | | | | | | | | | | | | | | | | MINORITY INTEREST IN SUBSIDIARIES | | 20,684 | | 15,568 | | | 27,499 | | 20,684 | | | | | | | | | | | | | | | | TOTAL LIABILITIES | | 23,500,437 | | 19,608,361 | | | 29,371,565 | | 23,500,437 | | | | | | | | | | | | | | | | SHAREHOLDERS’ EQUITY | | 3,358,801 | | 2,821,911 | | | 4,152,842 | | 3,358,801 | | | | | | | | | | | | | | | | TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | 26,859,238 | | 22,430,272 | | | 33,524,407 | | 26,859,238 | | | | | | | | | | | | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
The accompanying notesNotes 1 through 3532 to the consolidated financial statements are an integral part of these statements. F - 5
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 20092010 AND 20082009 MEMORANDUM ACCOUNTS (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | | 2010 | | 2009 (1) | | | DEBIT-BALANCE ACCOUNTS | | 12,204,355 | | 13,368,350 | | | 15,219,447 | | 12,204,355 | | | | | | | | | | | | | | | | Contingent | | 4,430,261 | | 3,669,663 | | | 5,542,009 | | 4,430,261 | | Guarantees received | | 3,963,188 | | 3,295,985 | | | 5,197,200 | | 3,963,188 | | Other not covered by debtors classification standards | | 359 | | 346 | | | 229 | | 359 | | Contingent debit-balance contra accounts | | 466,714 | | 373,332 | | | 344,580 | | 466,714 | | | | | Control | | 6,152,834 | | 5,435,013 | | | 7,835,246 | | 6,152,834 | | Receivables classified as irrecoverable | | 797,220 | | 774,299 | | | 845,119 | | 797,220 | | Other | | 5,094,428 | | 4,401,411 | | | 6,745,666 | | 5,094,428 | | Control debit-balance contra accounts | | 261,186 | | 259,303 | | | 244,461 | | 261,186 | | | | | Derivatives | | 1,033,601 | | 3,598,362 | | | 1,022,181 | | 1,033,601 | | Notional value of call options taken | | 25,229 | | 24,349 | | | Notional value of put options taken | | | — | | 25,229 | | Notional value of forward transactions without delivery of underlying asset | | 461,234 | | 2,219,777 | | | 555,897 | | 461,234 | | Interest rate swap | | 157,917 | | 39,422 | | | 157,066 | | 157,917 | | Derivatives debit-balance contra accounts | | 389,221 | | 1,314,814 | | | 309,218 | | 389,221 | | | | | Trust activity | | 587,659 | | 665,312 | | | 820,011 | | 587,659 | | Trust funds | | 587,659 | | 665,312 | | | 820,011 | | 587,659 | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
F - 6
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 20092010 AND 20082009 MEMORANDUM ACCOUNTS (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | | 2010 | | 2009 (1) | | | | CREDIT-BALANCE ACCOUNTS | | | (12,204,355 | ) | | | (13,368,350 | ) | | | (15,219,447 | ) | | | (12,204,355 | ) | | | | | | | | | | | | | | | Contingent | | | (4,430,261 | ) | | | (3,669,663 | ) | | | (5,542,009 | ) | | | (4,430,261 | ) | Guarantees provided to the Central Bank of Argentina | | — | | | (141,353 | ) | | Credit lines granted (unused portion) covered by debtors classification standards | | | | (57,533 | ) | | — | | Other guarantees provided covered by debtors classification standards | | | (85,213 | ) | | | (84,136 | ) | | | (66,192 | ) | | | (85,213 | ) | Other guarantees provided not covered by debtors classification standards | | | (130,826 | ) | | | (57,758 | ) | | | (130,684 | ) | | | (130,826 | ) | Other covered by debtors classification standards | | | (250,675 | ) | | | (90,085 | ) | | | (90,171 | ) | | | (250,675 | ) | Contingent credit-balance contra accounts | | | (3,963,547 | ) | | | (3,296,331 | ) | | | (5,197,429 | ) | | | (3,963,547 | ) | | | | Control | | | (6,152,834 | ) | | | (5,435,013 | ) | | | (7,835,246 | ) | | | (6,152,834 | ) | Checks to be credited | | | (261,186 | ) | | | (259,303 | ) | | | (244,461 | ) | | | (261,186 | ) | Control credit-balance contra accounts | | | (5,891,648 | ) | | | (5,175,710 | ) | | | (7,590,785 | ) | | | (5,891,648 | ) | | | | Derivatives | | | (1,033,601 | ) | | | (3,598,362 | ) | | | (1,022,181 | ) | | | (1,033,601 | ) | Notional value of call options sold | | | (32,905 | ) | | — | | | | (17,587 | ) | | | (32,905 | ) | Notional value of put options sold | | | (69,900 | ) | | | (99,826 | ) | | | (54,780 | ) | | | (69,900 | ) | Notional value of forward transactions without delivery of underlying asset | | | (286,416 | ) | | | (1,214,988 | ) | | | (236,851 | ) | | | (286,416 | ) | Derivatives credit-balance contra accounts | | | (644,380 | ) | | | (2,283,548 | ) | | | (712,963 | ) | | | (644,380 | ) | | | | Trust activity | | | (587,659 | ) | | | (665,312 | ) | | | (820,011 | ) | | | (587,659 | ) | Trust activity credit-balance contra accounts | | | (587,659 | ) | | | (665,312 | ) | | | (820,011 | ) | | | (587,659 | ) |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
The accompanying notesNotes 1 through 3532 to the consolidated financial statements are an integral part of these statements. F - 7
BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 2008 AND 20072008 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | 2007 (1) | | | 2010 | | 2009 (1) | | 2008 (1) | | FINANCIAL INCOME | | | Interest on cash and due from banks | | 363 | | 7,010 | | 19,917 | | | 275 | | 363 | | 7,010 | | Interest on loans to the financial sector | | 7,491 | | 15,584 | | 32,157 | | | 13,668 | | 7,491 | | 15,584 | | Interest on overdrafts | | 340,275 | | 357,215 | | 177,490 | | | 278,851 | | 340,275 | | 357,215 | | Interest on documents | | 195,069 | | 184,852 | | 103,428 | | | 146,321 | | 195,069 | | 184,852 | | Interest on mortgage loans | | 104,016 | | 97,057 | | 68,065 | | | 112,498 | | 104,016 | | 97,057 | | Interest on pledged loans | | 55,081 | | 64,499 | | 51,480 | | | 51,258 | | 55,081 | | 64,499 | | Interest on credit card loans | | 183,369 | | 117,952 | | 55,665 | | | 210,058 | | 183,369 | | 117,952 | | Interest on financial leases | | | 42,991 | | 49,433 | | 73,481 | | Interest on other loans | | 1,243,788 | | 1,032,837 | | 578,737 | | | 1,538,828 | | 1,243,788 | | 1,032,837 | | Interest on other receivables from financial intermediation | | 74 | | 14,416 | | 18,471 | | | 966 | | 74 | | 14,416 | | Income from government and private securities, net | | 1,370,981 | | 641,299 | | 488,757 | | | 988,707 | | 1,370,981 | | 641,299 | | Income from guaranteed loans — Presidential Decree No. 1,387/01 | | 7,232 | | 37,043 | | 35,043 | | | 62,053 | | 7,232 | | 37,043 | | Net income from options | | — | | 261 | | 1,604 | | | 616 | | — | | 261 | | CER (Benchmark Stabilization Coefficient) adjustment | | 18,652 | | 70,477 | | 78,065 | | | 46,176 | | 18,652 | | 70,477 | | CVS (Salary Variation Coefficient) adjustment | | 728 | | 818 | | 1,605 | | | 688 | | 728 | | 818 | | Difference in quoted prices of gold and foreign currency | | 133,731 | | 143,094 | | 48,823 | | | 160,209 | | 133,731 | | 143,094 | | Other | | 199,602 | | 245,446 | | 131,115 | | | 74,275 | | 150,169 | | 171,965 | | | | | | | | | | | | | | | | | | | 3,860,452 | | 3,029,860 | | 1,890,422 | | | 3,728,438 | | 3,860,452 | | 3,029,860 | | | | | | | | | | | | | | | | | | | | FINANCIAL EXPENSE | | | Interest on checking accounts | | 16,423 | | 17,708 | | 19,968 | | | 4,073 | | 16,423 | | 17,708 | | Interest on savings accounts | | 17,094 | | 14,534 | | 11,372 | | | 19,639 | | 17,094 | | 14,534 | | Interest on time deposits | | 1,146,013 | | 933,881 | | 457,395 | | | 954,465 | | 1,146,013 | | 933,881 | | Interest on interfinancing received loans (received call) | | 2,679 | | 3,909 | | 4,608 | | | 4,444 | | 2,679 | | 3,909 | | Interest on other financing from financial institutions | | 62 | | 28 | | 226 | | | 6 | | 62 | | 28 | | Interest on other liabilities from financial intermediation | | 81,510 | | 91,083 | | 70,706 | | | 62,889 | | 81,510 | | 91,083 | | Interest on subordinated bonds | | 54,874 | | 47,523 | | 49,858 | | | 57,381 | | 54,874 | | 47,523 | | Other interest | | 2,692 | | 8,762 | | 9,768 | | | 1,961 | | 2,692 | | 8,762 | | Net expense from options | | 1 | | — | | — | | | — | | 1 | | — | | CER adjustment | | 4,341 | | 32,946 | | 43,717 | | | 4,890 | | 4,341 | | 32,946 | | Contribution to Deposit Guarantee Fund | | 30,038 | | 25,945 | | 20,182 | | | 35,151 | | 30,038 | | 25,945 | | Other | | 155,880 | | 165,743 | | 117,465 | | | 185,271 | | 155,880 | | 165,743 | | | | | | | | | | | | | | | | | | | 1,511,607 | | 1,342,062 | | 805,265 | | | 1,330,170 | | 1,511,607 | | 1,342,062 | | | | | | | | | | | | | | | | | | | | GROSS INTERMEDIATION MARGIN — GAIN | | 2,348,845 | | 1,687,798 | | 1,085,157 | | | 2,398,268 | | 2,348,845 | | 1,687,798 | | | | | | | | | | | | | | | | | | | | PROVISION FOR LOAN LOSSES | | 197,512 | | 297,606 | | 94,717 | | | 215,040 | | 197,512 | | 297,606 | | | | | | | | | | | | | | | | | | | | SERVICE-CHARGE INCOME | | | Related to lending transactions | | 60,741 | | 63,669 | | 53,995 | | | 96,574 | | 60,741 | | 63,669 | | Related to deposits | | 669,668 | | 587,426 | | 398,569 | | | 816,100 | | 669,564 | | 587,259 | | Other commissions | | 29,032 | | 23,528 | | 21,687 | | | 31,084 | | 29,136 | | 23,695 | | Other | | 290,834 | | 217,077 | | 188,075 | | | 380,783 | | 290,834 | | 217,077 | | | | | | | | | | | | | | | | | | | 1,050,275 | | 891,700 | | 662,326 | | | 1,324,541 | | 1,050,275 | | 891,700 | | | | | | | | | | | | | | | | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
F - 8
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 2008 AND 20072008 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | 2007 (1) | | | 2010 | | 2009 (1) | | 2008 (1) | | SERVICE-CHARGE EXPENSE | | | Commissions | | 61,620 | | 57,077 | | 49,965 | | | 80,233 | | 59,216 | | 54,215 | | Other | | 164,979 | | 115,324 | | 100,317 | | | 205,132 | | 167,383 | | 118,186 | | | | | | | | | | | | | | | | | | | 226,599 | | 172,401 | | 150,282 | | | 285,365 | | 226,599 | | 172,401 | | | | | | | | | | | | | | | | | | | | ADMINISTRATIVE EXPENSES | | | Personnel expenses | | 966,963 | | 798,236 | | 589,021 | | | 1,233,898 | | 966,963 | | 798,236 | | Directors’ and statutory auditors’ fees | | 36,413 | | 26,941 | | 37,695 | | | 59,391 | | 36,413 | | 26,941 | | Other professional fees | | 65,533 | | 55,012 | | 42,428 | | | 81,169 | | 65,533 | | 55,012 | | Advertising and publicity | | 46,861 | | 53,178 | | 50,343 | | | 63,437 | | 46,861 | | 53,178 | | Taxes | | 79,784 | | 70,994 | | 53,914 | | | 102,547 | | 79,784 | | 70,994 | | Depreciation of equipment | | 53,993 | | 50,543 | | 42,723 | | | 58,285 | | 53,993 | | 50,543 | | Amortization of organization costs | | 33,317 | | 25,557 | | 17,923 | | | 43,273 | | 33,317 | | 25,557 | | Other operating expenses | | 216,128 | | 170,926 | | 144,158 | | | 248,430 | | 216,128 | | 170,926 | | Other | | 23,428 | | �� | | 18,615 | | 19,261 | | | 26,884 | | 23,428 | | 18,615 | | | | | | | | | | | | | | | | | | | 1,522,420 | | 1,270,002 | | 997,466 | | | 1,917,314 | | 1,522,420 | | 1,270,002 | | | | | | | | | | | | | | | | | | | | NET INCOME FROM FINANCIAL INTERMEDIATION | | 1,452,589 | | 839,489 | | 505,018 | | | 1,305,090 | | 1,452,589 | | 839,489 | | | | | | | | | | | | | | | | | | | | OTHER INCOME | | | Income from long-term investments | | 7,618 | | 25,847 | | 890 | | | 6,168 | | 7,618 | | 25,847 | | Penalty interest | | 23,884 | | 14,982 | | 7,580 | | | 26,775 | | 23,884 | | 14,982 | | Recovered loans and allowances reversed | | 46,921 | | 94,490 | | 133,118 | | | 69,981 | | 46,921 | | 94,490 | | CER adjustment | | 74 | | 95 | | 194 | | | 107 | | 74 | | 95 | | Other | | 43,480 | | 53,036 | | 41,743 | | | 64,492 | | 43,480 | | 53,036 | | | | | | | | | | | | | | | | | | | 121,977 | | 188,450 | | 183,525 | | | 167,523 | | 121,977 | | 188,450 | | | | | | | | | | | | | | | | | | | | OTHER EXPENSE | | | Penalty interest and charges payable to the Central Bank of Argentina | | 20 | | 181 | | 64 | | | 20 | | 20 | | 181 | | Charge for other receivables uncollectibility and other allowances | | 21,275 | | 37,242 | | 15,599 | | | 32,517 | | 21,275 | | 37,242 | | Amortization of differences from deposits dollarization | | 20,633 | | 29,509 | | 29,279 | | | 17,475 | | 20,633 | | 29,509 | | Depreciation and loss of other assets | | 6,847 | | 2,151 | | 5,303 | | | 3,662 | | 6,847 | | 2,151 | | Goodwill amortization | | 8,432 | | 8,439 | | 9,250 | | | 10,305 | | 8,432 | | 8,439 | | Other | | 101,087 | | 25,806 | | 39,420 | | | 25,561 | | 101,087 | | 25,806 | | | | | | | | | | | | | | | | | | | 158,294 | | 103,328 | | 98,915 | | | 89,540 | | 158,294 | | 103,328 | | | | | | | | | | | | | | | | | | | | MINORITY INTEREST IN SUBSIDIARIES | | | (5,092 | ) | | | (3,354 | ) | | | (2,083 | ) | | | (6,868 | ) | | | (5,092 | ) | | | (3,354 | ) | | | | | | | | | | | | | | | | | | | INCOME BEFORE INCOME TAX | | 1,411,180 | | 921,257 | | 587,545 | | | 1,376,205 | | 1,411,180 | | 921,257 | | | | | | | | | | | | | | | | | | | | INCOME TAX | | 659,250 | | 261,207 | | 92,345 | | | 365,775 | | 659,250 | | 261,207 | | | | | | | | | | | | | | | | | | | | NET INCOME FOR THE FISCAL YEAR | | 751,930 | | 660,050 | | 495,200 | | | 1,010,430 | | 751,930 | | 660,050 | | | | | | | | | | | | | | | | | | | | NET INCOME PER SHARE (2) — stated in pesos | | 1.26 | | 1.00 | | 0.72 | | | 1.70 | | 1.26 | | 1.00 | | | | | | | | | | | | | | | | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. | | (2) | | See noteNote 9. to the accompanying consolidated financial statements. |
The accompanying notesNotes 1 through 3532 to the consolidated financial statements are an integral part of these statements. F - 9
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 2008 AND 20072008 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments | | Earnings reserved | | | | | | | Adjustments | | Earnings reserved | | | | | | | | Capital | | Stock | | to | | Special | | | | | | | Capital | | Stock | | to | | Special | | | | | | | | stock | | issuance | | shareholders’ | | Corporate | | Unappropriated | | | | | stock | | issuance | | Shareholders’ | | Corporate | | Unappropriated | | | | Changes | | (1) | | premium | | equity | | Legal | | Bonds | | Voluntary | | earnings (1) | | Total | | | (1) | | premium | | equity | | Legal | | Bonds | | Voluntary | | earnings (1) | | Total | | | | | Balances as of December 31, 2006 | | 683,979 | | 394,584 | | 4,511 | | 297,845 | | — | | 211 | | 933,967 | | 2,315,097 | | | | | | Merger of Nuevo Banco Bisel S.A.: | | | | | | - Balance of Nuevo Banco Bisel S.A. | | 911,240 | | 33,086 | | 447 | | 17,318 | | 169 | | | (47,071 | ) | | 915,189 | | | - Merger effects (1) | | | (910,092 | ) | | | (28,920 | ) | | | (447 | ) | | | (17,318 | ) | | | (169 | ) | | 47,071 | | | (909,875 | ) | | | | | Distribution of unappropriated earnings, as approved by the Shareholders’ Meeting held on April, 26, 2007: | | | | | | - Legal reserve | | 84,860 | | | (84,860 | ) | | | - Cash dividends (2) | | | (102,591 | ) | | | (102,591 | ) | | - Special reserve — Corporate Bonds (3) | | 45,515 | | | (45,515 | ) | | | | | | Reversal of Special Reserve — Corporate Bonds (3) | | | (45,515 | ) | | 45,515 | | | | | | Net income for the fiscal year | | 495,200 | | 495,200 | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2007 | | 685,127 | | 398,750 | | 4,511 | | 382,705 | | — | | 211 | | 1,241,716 | | 2,713,020 | | | 685,127 | | 398,750 | | 4,511 | | 382,705 | | — | | 211 | | 1,241,716 | | 2,713,020 | | | | | | | | | | | | | | | | | | | | | | | | Distribution of unappropriated earnings, as approved by the Shareholders’ Meeting held on April, 29,2008: | | | | | | - Legal reserve | | 99,038 | | | (99,038 | ) | | | 99,038 | | | (99,038 | ) | | - Cash dividends (2) | | | (170,995 | ) | | | (170,995 | ) | | | (170,995 | ) | | | (170,995 | ) | - Special reserve — Corporate Bonds (3) | | 46,083 | | | (46,083 | ) | | | 46,083 | | | (46,083 | ) | | | | | Reversal of Special Reserve — Corporate Bonds (3) | | | (46,083 | ) | | 46,083 | | | Reversal of Special Reserve - Corporate Bonds (3) | | | | (46,083 | ) | | 46,083 | | | | | Own shares reacquired | | | (380,164 | ) | | | (380,164 | ) | | Own shares reacquired (4) | | | | (380,164 | ) | | | (380,164 | ) | | | | Net income for the fiscal year | | 660,050 | | 660,050 | | | 660,050 | | 660,050 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2008 | | 685,127 | | 398,750 | | 4,511 | | 481,743 | | — | | 211 | | 1,251,569 | | 2,821,911 | | | 685,127 | | 398,750 | | 4,511 | | 481,743 | | — | | 211 | | 1,251,569 | | 2,821,911 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Own shares reacquired (4) | | | | (56,665 | ) | | | (56,665 | ) | | | | Capital Stock decrease approved by the Shareholders’ Meeting of April 21, 2009 (4) | | | | (60,000 | ) | | 60,000 | | | | | Capital stock decrease approved by the Shareholders’ meeting of September 10, 2009 (4) | | | | (30,642 | ) | | 30,642 | | | | | Distribution of unappropriated earnings, as approved by the Shareholders’ Meeting held on May, 12,2009: | | | | | | - Legal reserve | | | 132,010 | | | (132,010 | ) | | - Cash dividends (2) | | | | (148,335 | ) | | | (148,335 | ) | - Special reserve — Corporate Bonds (3) | | | 50,510 | | | (50,510 | ) | | - Tax on Personal Assets | | | | (10,040 | ) | | | (10,040 | ) | | | | Reversal of Special Reserve - Corporate Bonds (3) | | | | (50,510 | ) | | 50,510 | | | | | Net income for the fiscal year | | | 751,930 | | 751,930 | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2009 | | | 594,485 | | 398,750 | | 4,511 | | 613,753 | | — | | 211 | | 1,747,091 | | 3,358,801 | | | | | | | | | | | | | | | | | | | | |
F - 10
(Contd.) BANCO MACRO S.A. AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 2008 AND 20072008 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments | | Earnings reserved | | | | | | | Adjustments | | Earnings reserved | | | | | | | | Capital | | Stock | | to | | Special | | | | | | | Capital | | Stock | | to | | Special | | | | | | | | stock | | issuance | | shareholders’ | | Corporate | | Unappropriated | | | | | stock | | issuance | | shareholders’ | | Corporate | | Unappropriated | | | | Changes | | (1) | | premium | | equity | | Legal | | Bonds | | Voluntary | | earnings (1) | | Total | | | (1) | | premium | | equity | | Legal | | Bonds | | Voluntary | | earnings (1) | | Total | | | | | Own shares reacquired | | | (56,665 | ) | | | (56,665 | ) | | | | | Capital Stock decrease approved by the Shareholders’ Meeting of April 21, 2009 (4) | | | (60,000 | ) | | 60,000 | | | | | | Capital stock decrease approved by the Shareholders’ meeting of September 10, 2009 (4) | | | (30,642 | ) | | 30,642 | | | | | | Distribution of unappropriated earnings, as approved by the Shareholders’ Meeting held on May, 12,2009: | | | Distribution of unappropriated earnings, as approved by the Shareholders’ Meeting held on April, 6,2010: | | | | | | - Legal reserve | | 132,010 | | | (132,010 | ) | | | 150,387 | | | (150,387 | ) | | - Cash dividends (2) | | | (148,335 | ) | | | (148,335 | ) | | | (208,070 | ) | | | (208,070 | ) | - Special reserve — Corporate Bonds (3) | | 50,510 | | | (50,510 | ) | | | 55,527 | | | (55,527 | ) | | - Tax on Personal Assets | | | (10,040 | ) | | | (10,040 | ) | | | (8,319 | ) | | | (8,319 | ) | | | | Reversal of Special Reserve — Corporate Bonds (3) | | | (50,510 | ) | | 50,510 | | | Reversal of Special Reserve - Corporate Bonds (3) | | | | (55,527 | ) | | 55,527 | | | | | Net income for the fiscal year | | 751,930 | | 751,930 | | | 1,010,430 | | 1,010,430 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2009 | | 594,485 | | 398,750 | | 4,511 | | 613,753 | | — | | 211 | | 1,747,091 | | 3,358,801 | | | Balances as of December 31, 2010 | | | 594,485 | | 398,750 | | 4,511 | | 764,140 | | — | | 211 | | 2,390,745 | | 4,152,842 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | Includes the retroactive accounting effects of legal merger of Nuevo Banco Bisel S.A. mentioned in note 3.7.Note 3.6. The legal capital structure is described in noteNote 9. to the accompanying consolidated financial statements. See notes 3.7.Notes 3.6 and 4.2.4.2 to the accompanying consolidated financial statements. | | (2) | | Through resolutions of April 16, 2007, April 11, 2008, and September 4, 2009 and May 28, 2010, respectively, the Central Bank authorized the above mentioned cash dividends distribution. | | (3) | | See noteNote 10. to the accompanying consolidated financial statements.statements | | (4) | | See notesNotes 4.4.q.2) and 9. to the accompanying consolidated financial statements.statements |
The accompanying notesNotes 1 through 3532 to the consolidated financial statements are an integral part of these statements. F - 11
BANCO MACRO S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 2008 AND 20072008 (Figures stated in thousands of pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | 2009 | | 2008 (1) | | 2007 (1) | | | 2010 | | 2009 (1) | | 2008 (1) | | Changes in cash and cash equivalents | | | Cash and cash equivalents at beginning of fiscal year | | 3,523,897 | | 3,117,426 | | 2,626,908 | | | 5,396,063 | | 3,523,897 | | 3,117,426 | | Cash and cash equivalents at end of fiscal year | | 5,396,063 | | 3,523,897 | | 3,117,426 | | | 5,990,480 | | 5,396,063 | | 3,523,897 | | | | | | | | | | | | | | | | | Net increase in cash and cash equivalents | | 1,872,166 | | 406,471 | | 490,518 | | | 594,417 | | 1,872,166 | | 406,471 | | | | | | | | | | | | | | | | | | | | Causes of changes in cash and cash equivalents | | | | | | Operating activities | | | Net collections / (payments): | | | - Government and private securities | | | (516,662 | ) | | 80,038 | | | (68,837 | ) | | 3,131,177 | | | (516,662 | ) | | 80,038 | | - Loans | | | - to the financial sector | | | (2,801 | ) | | 95,190 | | 310,024 | | | | (51,069 | ) | | | (2,801 | ) | | 95,190 | | - to the non-financial government sector | | 58,098 | | 66,026 | | 36,674 | | | | (24,793 | ) | | 58,098 | | 66,026 | | - to the non-financial private sector and foreign residents | | 1,630,838 | | 236,273 | | | (2,687,238 | ) | | | (2,224,016 | ) | | 1,630,838 | | 236,273 | | - Other receivables from financial intermediation | | | (228,120 | ) | | | (53,947 | ) | | | (509,249 | ) | | | (1,769,683 | ) | | | (228,120 | ) | | | (53,947 | ) | - Assets subject to financial leases | | 170,624 | | 85,202 | | | (31,295 | ) | | - Receivables from financial leases | | | 67,018 | | 170,624 | | 85,202 | | - Deposits | | | - from the financial sector | | | (8,386 | ) | | 10,705 | | 8,232 | | | 1,725 | | | (8,386 | ) | | 10,705 | | - from the non-financial government sector | | | (532,281 | ) | | 1,981,008 | | 473,453 | | | 1,531,907 | | | (532,281 | ) | | 1,981,008 | | - from the non-financial private sector and foreign residents | | 2,083,281 | | | (668,310 | ) | | 2,614,398 | | | 2,011,260 | | 2,083,281 | | | (668,310 | ) | - Other liabilities from financial intermediation | | | - financing facilities from the financial sector (received calls) | | 117,083 | | | (866 | ) | | | (3,320 | ) | | | (119,490 | ) | | 117,083 | | | (866 | ) | - others (except liabilities included under financing activities) | | 475,800 | | | (91,712 | ) | | 278,226 | | | 188,107 | | 475,800 | | | (91,712 | ) | Collections related to service-change income | | 1,043,723 | | 882,354 | | 658,863 | | | 1,312,098 | | 1,043,723 | | 882,354 | | Payments related to service-charge expenses | | | (220,860 | ) | | | (168,091 | ) | | | (146,606 | ) | | | (278,375 | ) | | | (220,860 | ) | | | (168,091 | ) | Administrative expenses paid | | | (1,405,088 | ) | | | (1,120,663 | ) | | | (873,034 | ) | | | (1,780,237 | ) | | | (1,405,088 | ) | | | (1,120,663 | ) | Payments of organization and development expenses | | | (44,144 | ) | | | (45,258 | ) | | | (57,438 | ) | | | (79,155 | ) | | | (44,144 | ) | | | (45,258 | ) | Net collections from penalty interest | | 23,874 | | 14,801 | | 7,569 | | | 26,756 | | 23,874 | | 14,801 | | Differences from payments related to court orders | | | (30,327 | ) | | | (16,733 | ) | | | (34,445 | ) | | | (20,570 | ) | | | (30,327 | ) | | | (16,733 | ) | Collections of dividends from other companies | | 6,397 | | 26,939 | | 636 | | | 6,369 | | 6,397 | | 26,939 | | Other (payments)/collections related to other income and losses | | | (25,351 | ) | | | (12,831 | ) | | 15,679 | | | Other collections/(payments) related to other income and losses | | | 64,149 | | | (25,351 | ) | | | (12,831 | ) | Net (payments) / collections from other operating activities | | | (38,934 | ) | | 6,636 | | | (14,711 | ) | | | (115,183 | ) | | | (38,934 | ) | | 6,636 | | Payment of income tax / minimum presumed income tax | | | (350,396 | ) | | | (81,967 | ) | | | (80,183 | ) | | | (726,269 | ) | | | (350,396 | ) | | | (81,967 | ) | | | | | | | | | | | | | | | | Net cash flows generated in/(used in) operating activities | | 2,206,368 | | 1,224,794 | | | (102,602 | ) | | Net cash flows generated in operating activities | | | 1,151,726 | | 2,206,368 | | 1,224,794 | | | | | | | | | | | | | | | | | | | | Investing activities | | | Net payments for bank premises and equipment | | | (34,329 | ) | | | (72,819 | ) | | | (77,661 | ) | | | (57,434 | ) | | | (34,329 | ) | | | (72,819 | ) | Net (payments) / collections for other assets | | | (1,080 | ) | | 23,731 | | | (1,559 | ) | | | (69,191 | ) | | | (1,080 | ) | | 23,731 | | Payments from purchases of investments in other companies | | — | | | (635 | ) | | — | | | | (91,857 | ) | | — | | | (635 | ) | Collections from sales of investments in other companies | | 150 | | 922 | | 33 | | | — | | 150 | | 922 | | Other (payments) / collections for investing activities | | | (8,138 | ) | | 5,032 | | | (1,678 | ) | | Other collections/(payments) for investing activities | | | 12,077 | | | (8,138 | ) | | 5,032 | | | | | | | | | | | | | | | | | Net cash flows used in investing activities | | | (43,397 | ) | | | (43,769 | ) | | | (80,865 | ) | | | (206,405 | ) | | | (43,397 | ) | | | (43,769 | ) | | | | | | | | | | | | | | | | | | | Financing activities | | | Net (payments) / collections: | | | - Non-subordinated corporate bonds | | | (108,424 | ) | | | (133,211 | ) | | 749,464 | | | | (56,372 | ) | | | (108,424 | ) | | | (133,211 | ) | - Central Bank of Argentina | | | - Other | | | (76,814 | ) | | | (79,206 | ) | | | (53,681 | ) | | | (19 | ) | | | (76,814 | ) | | | (79,206 | ) | - Banks and International Institutions | | | (22,318 | ) | | 47,204 | | | (15,844 | ) | | | (176,042 | ) | | | (22,318 | ) | | 47,204 | | - Subordinated corporate bonds | | | (56,225 | ) | | | (18,397 | ) | | | (13,240 | ) | | | (58,827 | ) | | | (56,225 | ) | | | (18,397 | ) | - Financing received from Argentine financial institutions | | | (5,171 | ) | | | (63,489 | ) | | 82,885 | | | | (1,685 | ) | | | (5,171 | ) | | | (63,489 | ) | Irrevocable capital | | — | | — | | 182 | | | Payment of dividends | | | (148,350 | ) | | | (171,004 | ) | | | (102,591 | ) | | | (208,124 | ) | | | (148,350 | ) | | | (171,004 | ) | Other payments from financing activities | | | - Own shares reacquired | | | (56,665 | ) | | | (380,164 | ) | | — | | | — | | | (56,665 | ) | | | (380,164 | ) | - Other collections | | — | | — | | | (3,230 | ) | | | | | | | | | | | | | | | | | Net cash flows (used in)/generated in financing activities | | | (473,967 | ) | | | (798,267 | ) | | 643,945 | | | Net cash flows used in financing activities | | | | (501,069 | ) | | | (473,967 | ) | | | (798,267 | ) | | | | | | | | | | | | | | | | | | | Financial income and holding gains on cash and cash equivalents | | 183,162 | | 23,713 | | 30,040 | | | 150,165 | | 183,162 | | 23,713 | | | | | | | | | | | | | | | | | | | | Net increase in cash and cash equivalents | | 1,872,166 | | 406,471 | | 490,518 | | | 594,417 | | 1,872,166 | | 406,471 | | | | | | | | | | | | | | | | |
| | | (1) | | See noteNote 4.2. to the accompanying consolidated financial statements. |
The accompanying notesNotes 1 through 3532 to the consolidated financial statements are an integral part of these statements F - 12
BANCO MACRO S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 20092010 AND 20082009 (Figures stated in thousands of pesos, except otherwise indicated)
| | Macro Compañía Financiera S.A. was created in 1977 as a non-banking financial institution. In May 1988, it received the authorization to operate as a commercial bank and it was incorporated as Banco Macro S.A. Subsequently, as a result of the merger process with other entities, it adopted other names (among them, Banco Macro Bansud S.A.) and since August 2006, Banco Macro S.A. (hereinafter, the Bank). |
| | Banco Macro S.A.’s shares have been publicly listed on the BCBA (Buenos Aires Stock Exchange) since November 1994, and in March 24, 2006, it listed its shares on the New York Stock Exchange (see also note 9). | Banco Macro S.A.’s shares have been publicly listed on the BCBA (Buenos Aires Stock Exchange) since November 1994, and in March 24, 2006, it listed its shares on the New York Stock Exchange. | | Since 1994, Banco Macro S.A.’s market strategy was mainly focused on the regional areas outside the City of Buenos Aires. Following this strategy, in 1996, Banco Macro S.A. started to acquire entities and assets and liabilities during the privatization of provincial and other banks. |
| | In December 2001, 2004 and 2006, the Bank acquired control of Banco Bansud S.A., Nuevo Banco Suquía S.A. (see note 3.5) and Nuevo Banco Bisel S.A. (see note 3.7)In 2001, 2004 and 2006, the Bank acquired control of Banco Bansud S.A., Nuevo Banco Suquía S.A. and Nuevo Banco Bisel S.A. (see Note 3.6), respectively. Such entities merged with and into Banco Macro S.A. on December 2003, October 2007 and August 2009, respectively. |
| | Additionally, during the fiscal year ended 2006, Banco Macro S.A. acquired 79.84% of the capital stock of Banco del Tucumán S.A., totaling 89.93% of this capital stock in 2007. | During fiscal years 2006 and 2010, Banco Macro S.A. acquired control of Banco del Tucumán S.A., and Banco Privado de Inversiones S.A. (see Note 3.7), respectively. | | The Bank currently offers traditional bank products and services to companies, including those operating in regional economies, as well as to individuals, thus reinforcing the Bank’s objective to be a multi-services bank. |
| | In addition, the Bank performs certain transactions through its subsidiaries, including mainly Banco del Tucumán S.A., Banco Privado de Inversiones S.A., Macro Bank Limited (an entity organized under the laws of Bahamas), Macro Securities S.A. Sociedad de Bolsa, Sud Inversiones & Análisis S.A. and Macro Fondos SGFCI S.A., Macro Bank Limited (an entity organized under the laws of Bahamas), Macro Securities S.A. Sociedad de Bolsa, Sud Inversiones & Análisis S.A. and Macro Fondos S.G.F.C.I.S.A. |
| | The chart showing the organizational structure as of December 31, 2009 is disclosed in noteThe chart showing the organizational structure as of December 31, 2010 is disclosed in Note 4.1. with the percentages indicating the ownership in each subsidiary. |
2. | | CHANGES IN THE ARGENTINE MACROECONOMIC ENVIRONMENT AND THE SITUATIONS OF THE FINANCIAL SYSTEM AND THE BANK |
| | The financial and capital markets |
| | During the year 2008 the financial markets of the world’s leading countries were rocked by volatility, lack of liquidity and credit. Instead, in early 2009, although signs of a tendency towards normalcy or initiation of a globaleconomic recovery are not consolidated, this situation began turning around. | During the year 2008 the financial markets of the world’s leading countries were rocked by volatility, lack of liquidity and credit. Consequently, a worldwide economic deceleration was evidenced by stock indexes on international markets. Instead, in early 2009, although signs of a tendency towards normalcy or initiation of a globaleconomic recovery are not consolidated, this situation began turning around, showing signs of stabilization and registering improvements in financial markets and a decrease in market volatility. However, they have not fully recovered and there are still high volatility levels. | | In Argentina, stock markets had shown decreases in the prices of government and private securities, as well as increases in interest rates, the country risk and in foreign exchange rates, and the effects of the mentioned economic deceleration began to show. Furthermore, on October, 2008, the AFJP (private pension fund managers) system was brought to an end. | In Argentina, stock markets had shown decreases in the prices of government and private securities, as well as increases in interest rates, the country risk and in foreign exchange rates, and the effects of the mentioned economic deceleration began to show. Furthermore, on October, 2008, the AFJP (private pension fund managers) system was brought to an end. Starting from the second half of 2009, the abovementioned situation began a reversal process as the country risk premium has dropped, government securities registered significant rises in their listed prices and the foreign exchange and interest rates reduced their volatility. Subsequently, during the second quarter of 2010, the Argentine Government restructured of the government debt that had not been restructured upon the 2005 exchange. | | Starting from the second half of 2009, the abovementioned situation began a reversal process as the country risk premium has dropped, government securities registered significant rises in their listed prices and the foreign exchange and interest rates reduced their volatility. | The accompanying consolidated financial statements should be read considering the circumstances previously mentioned. F - 13
BANCO MACRO S.A. AND SUBSIDIARIES | | On February 2, 2009, joint Resolutions 08/2009 and 05/2009 issued by the Secretariat of Finance of the National Ministry of Economy and Public Finance, established a debt exchange transaction of certain guaranteed loans for a new bond or promissory note referred to as “Argentine Bond or PromissoryLegal actionsThe Argentine economic and financial situation worsened in late 2001, when the Argentine government suspended payments on the sovereign debt and imposed severe restrictions on cash withdrawals from financial institutions. The measures adopted by the Federal Executive Government with respect to the public emergency in political, economic, financial and foreign exchange matters (mainly, pesification of deposits denominated in US dollars) triggered a number of legal actions (known as recursos de amparo — constitutional rights protection actions), brought by individuals and companies against the Federal Government, the Central Bank and the financial institutions. On December 27, 2006, the Argentine Supreme Court revoked prior instance judgments that ordered the reimbursement of deposits in US dollars and decided that depositors are entitled to reimbursement of their deposits switched to pesos at the Ps. 1.40-to-USD 1 exchange rate, adjusted by the CER through the payment date, and interest should be applied to such amount at a 4% rate p.a., which may not be compounded through the payment date. As regards courts deposit in US dollars, on March 20, 2007, the Argentine Supreme Court ruled that principal should be reimbursed with no deterioration in value whatsoever, and that the sums should be kept in their original currency. Taken into account the Central Bank rules (see Note 4.4.l.2)), as of December 31, 2010, and 2009, the Bank booked in “Intangible assets” the amounts of 54,680 and 50,532, respectively, net of related amortizations, with respect to the payments and provisions made by the bank in relation to the previous order. Additionally, as of December 31, 2010 and 2009, the Bank recorded the additional liability (representing the difference between the original deposit and the amount capitalized as intangible asset) related to such regulation under the “Provisions” account in the amount of 14,473 and 19,979, respectively. Considering what has been mentioned in Note in Argentine pesos at the Badlar (the Badlar rate is a daily wholesale rate, an average of the interest rates for time deposits above one million pesos offered by commercial banks, based on Central Bank survey) interest rate + 275 basis points maturing in 2014”, issued on January 30, 2009, with maturity date of January 30, 2014, thereby extending the original maturity date of such guaranteed loans to 2014. The annual interest rate paid on a quarterly basis shall be 15.4% for the first year and Badlar rate plus 275 basis points for the rest of the period. |
| | On January 29, 2009, and February 10, 2009, the Bank entered into an exchange agreement whereby it exchanged the guaranteed loans for a book value of 277,832 and received Argentina bonds (Bonar) at the Badlar interest rate + 275 basis points, in Argentine pesos maturing in 2014 for a book value of 277,832. Under Central Bank rules, the accounting of the exchange did not have impact in the consolidated financial statements of the Bank. As of December 31, 2009, the remaining amount of such holdings was classified in special investment accounts (see note 4.4.b.1)i.). |
| | Additionally, in January and February 2009, as set forth by Central Bank Resolution No. 06/2009 the Bank decided to prepay the loans received to acquire Argentine Government bonds intended for the depositors of former Nuevo Banco Suquía S.A and former Nuevo Banco Bisel S.A. (see note 7.2.b). |
| | On September 1, 2009, Joint Resolutions 216/2009 and 57/2009 issued by the Secretariat of Finance of the National Ministry of Economy and Public Finance, established a debt exchange transaction of certain guaranteed loans and government securities for a new bond or promissory note referred to as “Argentine Bond or Promissory Note in Argentine pesos at the Badlar interest rate + 275 basis points maturing in 2014” and/or new bond or promissory note referred to as “Argentine Bond or Promissory Note in Argentine pesos at the Badlar interest rate + 300 basis points maturing in 2015”, issued on September 10, 2009, due in 6 semi-annual installments, the first 5 of which will be amortized at 16.66% and the last one at 16.70%, principal payable on March 10 and September 10 of each year, beginning on March 10, 2013. Interest is accrued and payable on a quarterly basis. As from the issuance date and through September 10, 2011, the amount related to the 300 basis points margin will be capitalized at Badlar rate and paid, and as from December 10, 2011, all interest will be paid in cash. |
| | The Bank executed an agreement on September 7, 2009, whereby it delivered government securities with a book value of 19,061 and received Bonar Badlar + 275 basis points in Argentine pesos maturing in 2014 for book value of 19,061, which were sold by December 31, 2009. Under Central Bank rules, the accounting of the exchange did not have impact in the consolidated financial statements of the Bank. Additionally, on September 9, 2009, it executed an agreement whereby it delivered guaranteed loans for a book value of 1,022 in exchange for Bonar Badlar + 300 basis points in Argentine pesos maturing in 2015 for a book value of 1,022, which were all classified for trading or financial intermediation (see note 4.4.b.1)ii). |
| | On April 29, 2010 the National Government issued the Decree No. 563 which provides for the restructuring of the National State debt for those bonds that were eligible for the exchange provisions of Decree No. 1735 dated December 9, 2004 and had not been submitted to it. At the date of issuance of these financial statements, the restructuring was in the launching stage. |
| | The accompanying consolidated financial statements should be read considering the circumstances previously mentioned. |
| | The Argentine economic and financial situation worsened in late 2001, when the Argentine government suspended payments on the sovereign debt and imposed severe restrictions on cash withdrawals from financial institutions. |
| | The measures adopted by the Federal Executive Government with respect to the public emergency in political, economic, financial and foreign exchange matters (mainly, pesification of deposits denominated in US dollars) triggered a number of legal actions (known as recursos de amparo — constitutional rights protection actions), brought by individuals and companies against the Federal Government, the Central Bank and the financial institutions. |
F - 14
BANCO MACRO S.A. AND SUBSIDIARIES
| | On December 27, 2006, the Argentine Supreme Court revoked prior instance judgments that ordered the reimbursement of deposits in US dollars and decided that depositors are entitled to reimbursement of their deposits switched to pesos at the Ps. 1.40-to-USD 1 exchange rate, adjusted by the CER through the payment date, and interest should be applied to such amount at a 4% rate p.a., which may not be compounded through the payment date. |
| | With regards to court deposit in US dollars, on March 20, 2007, the Argentine Supreme Court ruled establishing that the sums should be kept in their original currency. |
| | Taken into account the Central Bank rules (see note 4.4.l.2)), as of December 31, 2009, and 2008, the Bank booked in “Intangible assets” the amounts of 50,532 and 40,657, respectively, net of related amortizations, with respect to the payments and provisions made by the bank in relation to the previous order. |
| | Additionally, as of December 31, 2009 and 2008, the Bank recorded the additional liability (representing the difference between the original deposit and the amount capitalized as intangible asset) related to such regulation under the “Provisions” account in the amount of 19,979 and 18,233, respectively. Considering what has been mentioned in note 4.4.l.2), the Bank’s Management believes that there would be no significant effects, other than those recognized in accounts, that could derive from the final outcome of such actions. |
| 3.1. | | Agreement with the Misiones Provincial Government |
| | | The Bank and the Misiones Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a term of five years since January 1, 1996, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent. |
| | | In addition, on November 25, 1999, and on December 28, 2006, extensions to such agreement were agreed upon, making it currently effective through December 31, 2019. |
| | | As of December 31, 2010 and 2009, the deposits of the Misiones Provincial Government amounted to 900,550 and 458,678 (including 67,177 and 2008, the deposits of the Misiones Provincial Government amounted to 458,678 and 389,076 (including 61,159 and 52,889 related to court deposits), respectively. |
| 3.2. | | Agreement with the Salta Provincial Government |
| | | The Bank and the Salta Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a term of ten years since March 1, 1996, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent. |
| | | In addition, on February 22, 2005, such agreement was extended through March 1, 2016. |
| | | As of December 31 2009 and 2008, the deposits of the Salta Provincial Government amounted to 259,912 and 453,723 (including 111,370 and 89,835 related to court deposits), respectively. | As of December 31, 2010 and 2009, the deposits of the Salta Provincial Government amounted to 719,785 and 259,912 (including 108,853 and 111,370 related to court deposits), respectively.F - 14
BANCO MACRO S.A. AND SUBSIDIARIES | 3.3. | | Agreement with the Jujuy Provincial Government |
| | | The Bank and the Jujuy Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since January 12, 1998, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent. |
| | | Additionally, on April 29, 2005, such agreement was extended through November 4, 2014. |
| | | As of December 31, 2010 and 2009, the deposits of the Jujuy Provincial Government amounted to 516,077 and 347,028 (including 61,182 and 2008, the deposits of the Jujuy Provincial Government amounted to 347,028 and 384,868 (including 54,815 and 49,201 related to court deposits), respectively. |
F - 15
BANCO MACRO S.A. AND SUBSIDIARIES
| 3.4. | | Agreements with Tucumán Provincial and Municipal Governments |
Banco del Tucumán S. A. executed special-relationship agreements with the Government of the Province of Tucumán and with the Municipality of San Miguel de Tucumán, appointing it their exclusive financial agent, as well as revenue collection and obligation payment agent, through 2011 and 2013, respectively. In addition, on June 30, 2010, the services agreement with the Tucumán Provincial Government was extended through July 8, 2021. As of December 31, 2010 and 2009, the deposits held by the Tucumán Provincial Government and the Municipality of San Miguel del Tucumán in Banco del Tucumán S.A. amounted to 874,498 and 426,832 (including 298,841 and 271,381 related to court deposits), respectively. | 3.5. | | Uniones Transitorias de Empresas (joint ventures) |
| a) | | Banco Macro S.A. — Siemens Itron Business Services S.A. |
| | | On April 7, 1998, the Bank entered into a joint venture agreement with Siemens Itron Business Services S.A. in which each holds a 50% equity interest, whereby a provincial data processing center would be provided to manage tax-related issues, to modernize tax collection systems and procedures in the Province of Salta, and to manage and perform the recovery of taxes and municipal assessments payable. |
| | | As of December 31 2009 and 2008, the net assets of such joint venture recorded in the Bank’s consolidated financial statements through the proportionate consolidation method amounted to 3,986 and 4,153 respectively. |
| | | Also, as of December 31 2009, 2008 and 2007, the net income recorded through the method mentioned in the previous paragraph, amounted to 7,346, 7,217 and 8,311, respectively. |
| b) | | Banco Macro Bansud S.A. — Montamat & Asociados S.R.L. |
| | | On October 22, 2004, the Bank entered into an UTE (joint venture)On October 22, 2004, the Bank entered into a joint venture agreement with Montamat & Asociados S.R.L under the name “BMB M&A — Unión Transitoria de Empresas”, in which each hold a 50% equity interest. The purpose of such agreement is to render audit services related to oil and gas royalties and fiscal easements in the province of Salta to optimize tax collection in such province. |
| c) | | As of December 31 2009 and 2008, the net assets of such joint venture recorded in the Bank’s consolidated financial statements using the proportionate consolidation method amounted to 10 and 4, respectively. |
| | | Also, as of December 31 2009 and 2008, net loss booked under the method mentioned in the previous paragraph was 12 and 78, respectively, while as of December 31, 2007, the Bank recorded net income of 4,276. |
| 3.5. | | Legal Merger of Nuevo Banco Suquía S.A.
|
| | | On March 14, 2007, the Boards of Directors of Banco Macro S.A. and Nuevo Banco Suquía S.A. entered into a “Preliminary merger agreement”, whereby Nuevo Banco Suquía S.A. would merge with and into Banco Macro S.A. retroactively effective as from January 1, 2007, on the basis of the financial statements of such banks as of December 31, 2006. |
| | | On June 4 and 5, 2007, the General Regular and Special Shareholders’ Meetings of Banco Macro S.A. and Nuevo Banco Suquía S.A., respectively, approved such preliminary merger agreement, as well as the consolidated balance sheet for merger purposes as of December 31, 2006, and the shares exchange relationship. Furthermore, Banco Macro S.A.’s shareholders’ meeting mentioned above approved the capital stock increase of Ps. 683,943,437 to Ps. 683,978,973 through the issuance of 35,536 common registered Class B shares with a face value of Ps. 1, each entitled to one vote, to be delivered to the minority shareholders of the absorbed bank. |
| | | During 2007, the Central Bank ´s Board of Directors and the CNV (Argentine Securities Commission) authorized such merger. Additionally, the CNV and the BCBA authorized the public offering of shares to be delivered to the minority shareholders of Nuevo Banco Suquía— Gestiva S.A. |
| | | Finally, on October 16, 2007, Banco Macro S.A. carried out the merger of Nuevo Banco Suquía S.A. with and into the former. | On May 4, 2010, the creation of a joint venture between the Bank and Gestiva S.A. was approved under the name “Banco Macro S.A. — Gestiva S.A. — Unión Transitoria de Empresas” in which each hold 50% equity interest. The purpose of such joint venture is to provide a comprehensive tax processing and management system for the province of Misiones, its administration and collection of taxes thereof. | | | On February 12, 2008, the shares issued were credited to the minority shareholders of the absorbed bank. | As of December 31, 2010, and 2009, the net assets of such joint ventures recorded in the Bank’s consolidated financial statements through the proportionate consolidation method amounted to 7,797 and 3,996, respectively. | | | Under Central Bank rules, the accounting of the merger did not have a significant impact on the consolidated financial statements of the Bank. |
F - 16
BANCO MACRO S.A. AND SUBSIDIARIESAlso, as of December 31, 2010, 2009 and 2008 the net income recorded through the method mentioned in the previous paragraph, amounted to 18,487, 7,334 and 7,139 respectively.
| 3.6. | | Banco del Tucumán S.A.
|
| | | In line with its strategy to increase its market position in Argentina’s provinces, on November 24, 2005, the Bank signed a stock purchase agreement with Banco Comafi S.A. for 75% of the capital stock and voting rights of Banco del Tucumán S.A. Such event was approved by the Central Bank on March 6, 2006, through Board of Governors’ Resolution No. 50, as well as by the Technical Coordination Department of the Economy and Production Ministry on April 7, 2006. |
| | | In this regard, on May 5, 2006, the Bank acquired 164,850 class “A” shares in Banco del Tucumán S.A., representing 75% of its capital stock, and on the same date took control over such institution. |
| | | The Bank paid 45,961 in cash for the acquisition. In addition, the Bank shall pay over to Banco Comafi S.A. 75% of the amounts to be recovered over the ten years following the date of the abovementioned agreement related to consumer loan portfolio, for which an allowance was fully recorded as of the purchase date. As of the date of acquisition, such liabilities amounted to about 1,662 (as of December 31, 2009, it amounted to 68). Consequently, the total acquisition price amounted to 47,623. |
| | | Under Central Bank rules, Banco del Tucumán S.A.’s net assets as of May 5, 2006 amounted to 40,065. |
| | | Therefore, pursuant Central Bank rules, the Bank recorded a positive goodwill amounting to 17,574, which arises from the difference between the total acquisition price (47,623) and 75% of Banco del Tucumán S.A.’s shareholders’ equity as of such date (30,049). The goodwill is amortized using the straight line method over ten years pursuant to Central Bank rules. |
| | | Additionally, from September through December 2006, Banco Macro S.A. acquired Class “C” shares in Banco del Tucumán S.A., representing 4.84% of the capital stock, which gave rise to an additional positive goodwill of 668. |
| | | As of December 31, 2009, and 2008, the positive goodwill resulting from such acquisitions was recorded under “Intangible assets” in the amount of 11,567 and 13,395, respectively (net of amortizations for 6,676 and 4,849, respectively). |
| | | Additionally, on November 28, 2006, the General Regular and Special Shareholders’ Meeting of Banco del Tucumán S.A. approved a capital increase of 21,980, establishing an additional paid-in capital of 26,171. During January 2007, Banco Macro S.A. subscribed the total increase, thus increasing its overall interest in Banco del Tucumán S.A. to 89.93%. |
| | | Also, according to the service agreement signed on August 15, 2001, Banco del Tucumán S.A. will act as the exclusive financial agent of the Provincial Government until 2011. It also acts as the exclusive financial agent of the Municipality of San Miguel del Tucumán. |
| | | As of December 31, 2009 and 2008, the deposits held by the Tucumán Provincial Government and the Municipality of San Miguel del Tucumán in Banco del Tucumán S.A. amounted to 426,832 and 405,577 (including 271,381 and 218,026 related to court deposits), respectively. |
| 3.7. | | Legal merger of Nuevo Banco Bisel S.A. |
| | | | On March 19, 2009, the Boards of Directors of Banco Macro S.A. and Nuevo Banco Bisel S.A. entered into a “Preliminary merger agreement”, which established the incorporation of the latter to Banco Macro S.A. retroactively as from January 1, 2009, on the basis of the financial statements of such banks as of December 31, 2008 (see also notesNotes 4.2. and 7.1.f)7.1.e)). |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | On May 27, 2009, the General Regular and Special Shareholders’ Meetings of Banco Macro S.A. and Nuevo Banco Bisel S.A., respectively, approved such preliminary merger agreement, as well as the consolidated special balance sheet for merger purposes as of December 31, 2008, and the exchange ratio. Furthermore, Banco Macro S.A.’s Shareholders’ Meeting, mentioned above, approved the capital stock increase through the issuance of 1,147,887 common registered Class B shares with a face value of Ps. 1, each entitled to one vote, to be delivered to the minority shareholders of the absorbed bank (Sud Inversiones & Análisis S.A. and Macro Securities S.A. Sociedades de Bolsa). |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | Subsequently, the BCBA, the Central Bank and the CNV (Argentine securities commission), authorized the abovementioned merger, which was registered with the IGJ (Business Associations Regulatory Agency). Additionally, the CNV and the BCBA authorized the public offering of shares to be delivered to the minority shareholders of former Nuevo Banco Bisel S.A. |
| | | | Finally, on August 18, 2009, the Central Bank reported Nuevo Banco Bisel S.A.’s merger with and into Banco Macro S.A. |
| | | | In September 2009, the shares issued were accredited to the minority shareholders of the bank merged with and into the Bank. Additionally, during October 2009, Sud Inversiones & Análisis S.A. and Macro Securities S.A. Sociedad de Bolsa sold those shares to unrelated parties. (see also note 4.2.). |
| | | | Under Central Bank rules, the accounting of the merger did not have a significant impact on the consolidated financial statements of the Bank. |
| | 3.8.3.7. | | Banco Privado de Inversiones S.A |
| | | | After a period of negotiations,On March 30, 2010, the Bank signed a shareentered into an agreement to purchase agreement, under which, subject to satisfaction of certain conditions, including the approval100% of the transaction byshares of Banco Privado de Inversiones S.A. | | | | | On September 9, 2010, the Central Bank willissued Resolution 198/2010 whereby it stated that there are no objections for Banco Macro S.A. to acquire shares representing 100% of share capital and votes of Banco Privado de Inversiones S.A. for USD 23,3 millions.capital stock and to transfer 1% thereof to Sud Inversiones y Análisis S.A. and 1% to Macro Securities S.A. Sociedad de Bolsa. |
| | | | On September 20, 2010, 100% of the capital stock of Banco Privado de Inversiones S.A. has a broad basewas transferred to the Bank, which paid USD 23.3 million, out of customers and businesses that will provide volume and experiencewhich, USD 10.4 million is related to an escrowed amount, as provided in the credit card business, in a region where the Bank considers appropriate to expand their development.purchase agreement mentioned above. |
| | | | The transaction will enableAs of such date, Banco Privado de Inversiones S.A’s assets and liabilities amounted to 403,686 and 368,034, respectively; consequently, shareholders’ equity amounted to 35,652. Therefore, the Bank booked a positive goodwill amounting to serve a greater number56,205, which arises from the difference between the total price of customers with the structure that currently owns, to complement lines of businesstransaction and to achieve greater economies of scale by providing, in addition, to Banco Privado de Inversiones S.A. a more efficient financing structure and’s shareholders’ equity as of such date, which will be amortized in ten years pursuant to their clients the access to a network with greater geographical coverage.Central Bank rules. |
| | | | AccordingOn September 22, 2010, the Bank made an irrevocable capital contribution of 50,000 to Banco Privado de Inversiones S.A. as provided in Resolution No. 443 of the last information published by the Central Bank, the following data are disclosed as of December 31, 2009:SEFyC (Financial Institutions and Foreign Exchange Regulatory Agency) dated September 15, 2010. |
| | | Total liabilities: 418,762 |
| | | Total shareholders’ equity: 23,858 |
| | | At the date of issuance of these consolidated financial statements, the Central BankNational Commission of Competition Defense has not issued a decisionan authorization in this respect. | | | | | On December 20, 2010, Banco Macro S.A. sold 366,590 of Banco Privado de Inversiones S.A. common shares to Sud Inversiones y Análisis S.A. and another 366,590 to Macro Securities S.A. Sociedad de Bolsa for a total amount of 740. Consequently, as of December 31, 2010, Banco Macro S.A. holds 98% of Banco Privado de Inversiones S.A.’s capital stock. |
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BANCO MACRO S.A. AND SUBSIDIARIES 4. | | SIGNIFICANT ACCOUNTING POLICIES |
| | The preparation of the Bank’s consolidated financial statements requires Management to make estimates and assumptions to determine the recorded amounts of assets and liabilities, income, expenses and contingencies, as well as the related disclosures, as of each balance sheet date. However, uncertainty about theses assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. |
| | In the process of applying the Bank’s accounting policies, management has exercised judgment and estimates in determining the amounts recognized in the financial statements. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| 4.1. | | Consolidation and basis of presentation |
| | | The Consolidated Financial Statements have been prepared in accordance with accounting principles issued by the Central Bank (Central Bank rules). |
| | | For the purpose of these consolidated financial statements, certain disclosures related to formal legal requirements for reporting in Argentina have been omitted since they are not required for SEC (Securities and Exchange Commission) reporting purposes. |
| | | Under Central Bank’s rules and FACPCE (Federación Argentina de Consejos Profesionales de Ciencias Económicas — Argentine Federation of Professional Council in Economic Sciences) Technical Resolutions, Banco Macro S.A. has consolidated the following subsidiaries: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity | | | Equity | | | | | | | | | | | | | | | | | | Investment | | | Investment | | | | | | | | | | Percentage held of | | | amounts as of | | | amounts as of | | | | Shares | | | Capital | | | | | | | December 31, | | | December 31, | | Company | | Class | | Number | | | Stock | | | Votes | | | 2009 | | | 2008 | | | | | | | | | | | | | | | | | | | | | | | | | Banco del Tucumán S.A. | | Common | | | 395,341 | | | | 89.932 | % | | | 89.932 | % | | | 182,755 | | | | 137,741 | | | | | | | | | | | | | | | | | | | | | | | | | Macro Bank Limited (a) | | Common | | | 9,816,899 | | | | 99.999 | % | | | 99.999 | % | | | 164,576 | | | | 99,973 | | | | | | | | | | | | | | | | | | | | | | | | | Macro Securities S.A. Sociedad de Bolsa (b) | | Common | | | 12,776,680 | | | | 99.921 | % | | | 99.921 | % | | | 28,374 | | | | 17,477 | | | | | | | | | | | | | | | | | | | | | | | | | Sud Inversiones & Análisis S.A. (b) | | Common | | | 6,475,143 | | | | 98.605 | % | | | 98.605 | % | | | 14,509 | | | | 12,376 | | | | | | | | | | | | | | | | | | | | | | | | | Macro Fondos S.G.F.C.I. S.A. (b) | | Common | | | 327,183 | | | | 99.936 | % | | | 99.936 | % | | | 1,503 | | | | 1,180 | | | | | | | | | | | | | | | | | | | | | | | | | Nuevo Banco Bisel S.A. (c) | | Common | | | 841,682,603 | | | | | | | | | | | | | | | | | | | | Preferred | | | 66,604,774 | | | | 99.997 | % | | | 99.997 | % | | | — | | | | 1,384,059 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity Investment amounts | | | | Shares | | | Percentage held of | | | as of | | | | | | | Capital | | | | | | | December 31, | | | December 31, | | Company | | Class | | | Number | | | Stock | | | Votes | | | 2010 | | | 2009 | | | | | | | | | | | | | | | | | | | | | | | | | | | Banco del Tucumán S.A. | | Common | | | 395,341 | | | | 89.932 | % | | | 89.932 | % | | | 243,810 | | | | 182,755 | | | | | | | | | | | | | | | | | | | | | | | | | | | Banco Privado de Inversiones S.A. (a) | | Common | | | 35,925,820 | | | | 99.985 | % | | | 99.985 | % | | | 84,454 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Macro Bank Limited (b) | | Common | | | 9,816,899 | | | | 99.999 | % | | | 99.999 | % | | | 184,060 | | | | 164,576 | | | | | | | | | | | | | | | | | | | | | | | | | | | Macro Securities S.A. Sociedad de Bolsa (c) y (d) | | Common | | | 12,776,680 | | | | 99.921 | % | | | 99.921 | % | | | 26,914 | | | | 28,374 | | | | | | | | | | | | | | | | | | | | | | | | | | | Sud Inversiones & Análisis S.A. | | Common | | | 6,475,143 | | | | 98.605 | % | | | 98.605 | % | | | 13,155 | | | | 14,509 | | | | | | | | | | | | | | | | | | | | | | | | | | | Macro Fondos SGFCI S.A. | | Common | | | 327,183 | | | | 99.936 | % | | | 99.936 | % | | | 1,765 | | | | 1,503 | |
| | | (a) | | ConsolidatesBanco Macro S.A.’s indirect equity interest derives from Sud Inversiones y Análisis S.A. and Macro Securities S.A. Sociedad de Bolsa. | | (b) | | Consolidated with Sud Asesores (ROU) S.A. (voting rights: 100%, equity interest: 817)1,038). | | (b) | | Until March 31, 2008, Macro Fondos S.G.F.C.I. S.A. was consolidated into Sud Inversiones & Análisis S.A. As from such date it is consolidated into Macro Securities S.A. Sociedad de Bolsa. | | (c) | | See note 3.7.Consolidated with Macro Fondos SGFCI S.A. |
| (d) | | The indirect equity interest of Banco Macro S.A comes from Sud Inversiones & Análisis S.A. | | Intercompany transactions were eliminated in the consolidation process. |
| | | In addition, as of December 31, 2007, the Bank consolidated its financial statements with Macro Valores S.A. and with Red Innova Administradora de Fondos de Inversión S.A. As of that date, these subsidiaries were not significant. |
| | | On March 19, 2008, Banco Macro S.A. sold its shares in Macro Valores S.A. |
| | | As of December 31, 2008, Red Innova Administradora de Fondos de Inversión settled the full amount of its liabilities and subsequently, in accordance with the decision approved by the Shareholders’ Meeting held December 19, 2008, it distributed all of its assets proportionately among its shareholders. |
| | | Furthermore, the financial statements of Macro Bank Limited (consolidated with Sud Asesores (ROU) S.A.) were conformed to the Central Bank rules. Also, as they are originally stated in US dollars, they were translated into pesos following the procedures indicated below: |
| (a) | | (a) Assets and liabilities were translated at the reference exchange rate or the exchange rate reported by the Central Bank trading room and effective for the foreign currency at the closing of transactions on the last business day of the years ended December 31, 20092010 and 2008.2009. |
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BANCO MACRO S.A. AND SUBSIDIARIES | (b) | | | | (b) Figures related to the owners’ contributions (capital stock, additional paid-in capital and irrevocable capital contributions) were translated applying the effective exchange rates as of the date on which such contributions were paid in. |
| (c) | | (c) Retained earnings were estimated by the difference between assets, liabilities and owners’ contributions, translated into pesos, as indicated above. |
| (d) | | (d) The amounts of income were translated into pesos, as described in (a) above. The difference between retained earnings at beginning of year and retained earnings at year-end was recorded in “Financial income — Difference in quoted prices of gold and foreign currency’’ or “Financial expense — Difference in quoted prices of gold and foreign currency” accounts, as the case may be. |
| 4.2. | | Comparative information |
| | | | The consolidated financial statements as of December 31, 2009,2010, are presented comparatively with those of December 31, 20082009 and 2007.2008. |
| | | | By means of Communiqués “A” 5,047, “A” 5,094 as supplemented, the Central Bank introduced amendments to the valuation and disclosure methods applicable to financial leases and to the disclosure methods for holdings of government securities issued in Argentine pesos, resulting from reverse repurchase agreements executed with the Central Bank, respectively. As a result, certain accounts and items on the balance sheet, the statements of income, changes in shareholders’ equity and cash flows as of December 31, 2010, as well as certain supplementary information, were reclassified due to the application of such communiqués and had no impact whatsoever on shareholders’ equity or income (loss) in prior years. | | | | | Additionally, and mainly as a result of the legal merger of Nuevo Banco Bisel S.A. described en note 3.7.in Note 3.6., the Bank made certain reclassifications in the consolidated financial statements as of December 31, 2008, and 2007, so as to make them comparable with the current consolidated financial statements. |
| | 4.3. | | Restatement into constant pesos |
| | | | Professional accounting standards in Argentina establish that the financial statements should be stated in constant pesos. In a monetary stability context, the nominal currency is used as constant currency; however, during inflationary or deflationary periods, financial statements are required to be stated in constant currency as of the latest balance sheet date, recognizing the variations in the domestic wholesale price index (domestic WPI) published by the INDEC (Argentine Institute of Statistics and Censuses), in conformity with the restatement method under FACPCE Technical Resolution No. 6. |
| | | | The Bank’s consolidated financial statements reflect the changes in the peso purchasing power through February 28, 2003, under Presidential Decree No. 664/03, IGJ General Resolution No. 4/2003, CNV (Argentine Securities Commission) General Resolution No. 441, and Central Bank Communiqué “A” 3,921. Professional accounting standards provide that the restatement method established by Technical Resolution No. 6 should have been discontinued as from October 1, 2003. |
| | | | Before February 28, 2003, the financial statements were restated in constant currency on a monthly basis, using INDEC’s domestic WPI measurements. The restatement coefficient for a given month resulted from dividing the index value at the end of the month by the value at the beginning. The procedure is as follows: |
| i) | | Assets and liabilities are classified into monetary and non-monetary. |
| | ii) | | Monetary assets and liabilities are those that are not adjusted for inflation, but generate a monetary gain (loss). The effect of inflation is broken down depending on its origin, i.e., monetary gain (loss) on financial intermediation, monetary gain (loss) on other transactions and monetary gain (loss) on other operating expenses. |
| | iii) | | Non-monetary assets and liabilities, shareholders’ equity and statement-of-income accounts are restated. |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | The main valuation methods used to prepare these consolidated financial statements as of December 31, 2009,2010, and 2008,2009, were: |
| a) | | Assets and liabilities denominated in foreign currency: |
| | | | The assets and liabilities denominated in US dollars were valued at Central Bank benchmark US dollar exchange rate effective as of the last business day of each year. Additionally, assets and liabilities denominated in other foreign currencies were translated at the exchange rate communicated by the Central Bank’s dealing room. Foreign exchange differences were recorded in the statement of income for each year. |
| | b) | | Government and private securities: |
| i. | | Listed government securities — Holdings in special investment accounts: | | | | | As of December 31, 2009, in accordance with the provisions of Central Bank Communiqués “A” 4,676 4,861 of June 5, 2007, and October 30, 2008,4,861, as supplemented, the Bank chose to classify certain government securitiesholdings as “Special investment accounts”. These government securitiesThose holdings were valued at the acquisition cost defined in such communiqués, increased by the accrual of the internal rate of return as from the date of inclusion in this classification, net of the contra account, as further described below.classification. |
| | | | WhenAdditionally, when the market value of each security isthese holdings was lower than the book value defined above, the accrual of the internal rate of return and the CER will bewas recorded in a contra balance sheetan offset account created for this purpose, until the book value equals the market value. This contra account will be recognized in the income statement when the market value of the | | | b.2) | | Listed government securities is above their book value.— Holdings for trading or intermediation transactions and repurchase agreements: |
| | | | As provided by Central Bank Communiqué “A” 5,024, as of December 31, 2010, such valuation method should be fully settled, and no other holdings will be included therein. |
| ii. | | Holdings for trading or financial intermediation and instruments issued by the Central Bank: theyThey were valued at the quoted price of each security effective aton the last business day of each year. Differences in quoted market values were recorded in the statement of income for each fiscal year. |
| i.b.3) | | Unlisted government securities: they were valued in accordance with Central Bank Communiqués “A” 4,898 and 3,911, respectively. Both communiqués, that specifically develop valuation method for certain assistance to the non-financial government sector, establish comparisons of present and book values, as the case may be, as well as the potential use of contra accounts. |
| | | | In particular,As of December 31, 2010, and 2009, as set forth in Central Bank Communiqué “A” 4,898, as supplemented, the case of holdings of government securities without volatility published(active market in accordance with Central Bank rules) and included onin the list of present values publishedcurrent securities disseminated by the Central Bank Communiqué “A” 4,898 provides that they should bewere valued at the higher of the present value publisheddisseminated by the Central Bank and the book value as of January 31, 2009, net of interest collected after such date and the related contra account, as further described below (book value).prior month. |
| | | | When the present value of these holdings is lower than their book value, the accrual of interest and, if applicable, of the adjustment resulting from applying CER will be recorded onin an accumulated basis, in a contraoffset account created to such end until the book value equals the present value, and such contra account is reversed into income whenvalue. | | | b.4) | | Listed instruments issued by the present value exceeds the book value.Central Bank: |
| | | | The present values published byHoldings in the Central Bank are based on the yield curve for securities related to the same type of instrument, with normalproprietary portfolio and usual quoted price and of similar duration,those received from repurchase agreements were valued according to the methodology published by such institution. |
| ii. | | Instruments issued byeffective quoted market value for each instrument on the Central Bank: theylast business day of each year. Differences in quoted market values were valued at their cost value increased exponentially by their internal raterecorded in the statement of return, as provided by Central Bank Communiqué “A” 4,414.income for each year. |
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BANCO MACRO S.A. AND SUBSIDIARIES | b.5) | | Unlisted instruments issued by the Central Bank: | | | | | As provided in Central Bank Communiqué “A” 4,414, as supplemented, the holdings in the proprietary portfolio and those received from repurchase agreements, were valued at acquisition cost plus interest accrued as of each year-end, exponentially applying the internal rate of return as per their issue terms and conditions. The accruals of the internal rate of return mentioned above were charged to income for each year. |
| c) | | Guaranteed loans — Presidential Decree No. 1,387/01: |
| | | | As of December 31, 2010, and 2009, and 2008, they were valuedas set forth in accordance with Central Bank Communiqués “A” 4,898, and 3,911, respectively. Both communiqués, that specifically develop valuation method for certain loans toas supplemented, the non-financial government sector, establish comparisons of present and book values, as the case may be, as well as the potential use of contra accounts. |
| | | Particularly, in the case of guaranteed loans issued by the Argentine Government under Presidential Decree No. 1387/01, Communiqué “A” 4,898, establishes that they should be2001 were valued at the higher of the present value publisheddisseminated by the Central Bank and the book value as of January 31, 2009, netthe prior month (net of interest collected after such datethe offset account and the related contra account (book value) as further explained in note 4.4.b.2).i.services collected). |
| | | | As mentionedWhen the present value of these holdings is lower than their book value, the accrual of interest will be recorded in note 2.,an offset account created to such end until the book value equals the present value. | | | | | In addition, in 2009, the Bank entered into exchange agreements whereby it exchanged the guaranteed loans for a book value of 296,893 and received Argentina bonds (Bonar) at the Badlar interest rate + 275 basis points, in Argentine pesos maturing in 2014 for the same amount. These transactions did not have any effects in the income statement. |
| | | As a consequence of such Communiqué as of December 31, 2008 the technical value of the guaranteed loans totaled 850,452, while the book value was 722,757; thus, the discount for those holding totaled 127,695. As of December 31, 2009 there was no discount to be booked. |
| | | | Interest has been accrued according to a compound interest formula in the period in which it was generated, except interest on transactions in foreign currency and those whose maturity does not exceed 92 days, on which interest has been accrued according to a simple interest formula. |
| | | | The Bank suspends the interest accrual whenever loan payments are not settled (generally, after 90 days) or when the recoverability of the collection of principal or interest accrued is doubtful. Accrued interest is considered part of the loan balance when determining the allowances for loan losses. Afterwards, interest is only recognized on a cash basis. |
| | | | Receivables and payables have been indexed by the CER, wherever applicable, as follows: |
| e.1) | | Holdings in special investment accounts and unlisted government securities: as explained in notesNote 4.4.b.1).i. and 4.4.b.2).i.4.4.b.3), respectively. |
| | e.2) | | Guaranteed loans: as explained in noteNote 4.4.c). |
| | e.3) | | Other loans and receivables from sale of assets: they were adjusted according to Communiqué “A” 3,507, and supplementary regulations, which established that payments made until September 30, 2002, were to be made under the original conditions of each transaction and would be considered prepayments. Since February 3, 2002, principal was adjusted by the CER through each year-end, where applicable. |
| e.4) | | Deposits and other assets and liabilities: they were adjusted by CER as of the last business day of each year. |
| f) | | Allowance for loan losses and provision for granted guarantees: |
| | | | These provisions have been calculated based on the estimated uncollectibility risk of the Bank’s credit portfolio, which, among other factors, results from the evaluation of the degree of debtors compliance and the guarantee/security supporting the respective transactions, under Central Bank Communiqué “A” 2,950, as supplemented, and the Bank’s provisioning policies. |
| | | | When loans covered by specific allowances are settled or generate a reversal of the allowances recorded in the current year, and in cases where the allowances set in prior years exceed what is considered necessary, the excess allowance is reversed with effects on income for the current year. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | The recovery of receivables previously classified under “Debit-balance control memorandum accounts — Receivables classified as irrecoverable” are chargedrecorded directly to income. |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | The Bank assesses the credit risk related to possible commitments and determines the appropriate amount of allowances to be recorded. The allowances related to amounts recorded in memorandum accounts granted guarantees are included under “Provisions”. |
| | g) | | Loans and deposits of government securities: |
| | | | They were valued at the quoted price of each security effective on the last business day of each year, plus the related accrued interest. Differences in quoted market values were recorded in the statement of income as of each year. |
| | h) | | Other receivables from financial intermediation and Other liabilities from financial intermediation: |
| h.1) | | Amounts receivable from spot and forward sales pending settlement and amounts payable for spot and forward purchases pending settlement: they were valued based on the prices agreed upon for each transaction, plus related premiums accrued through the end of each year. |
| | h.2) | | Securities and foreign currency to be received for spot and forward purchases pending settlement and to be delivered for spot and forward sales pending settlement: |
| i) | | Listed: they were valued at the effective quoted prices for each of them on the last business day of each year. Differences in quoted market values were recorded in the statement of income for each year. | | | ii) | | Unlisted: they were valued as provided by Central Bank Communiqué “A” 4,414, at their cost value increased exponentially by their internal rate of return. |
| h.3) | | Securities to be received for repurchase agreement and to be delivered for reverse repurchase agreement: |
| i) | | Listed: they were valued at the effective quoted prices for each of them on the last business day of each year. Differences in quoted market values were recorded in the statement of income for each year. |
| ii) | | Unlisted: they were valued as provided by Central Bank Communiqué “A” 4,414, at their cost value increased exponentially by their internal rate of return. |
| h.3)h.4) | | Debt securities and certificates of participation in financial trusts: |
| i.i) | | Debt securities: they were valued as provided by Central Bank Communiqué “A” 4,414, at their cost value increased exponentially by their internal rate of return, translated into pesos pursuant to the method described in noteNote 4.4.a), as the case may be. |
| ii.ii) | | Certificates of participation in the Fideicomiso Financiero Suquía and Fideicomiso Financiero Bisel financial trust: they were valued based on the cost of shareholders’ equity of former Nuevo Banco Suquía S.A. and former Nuevo Banco Bisel S.A., respectively, plus interest accrued, net of redemptions. As of December 31, 2009,2010, and 2008,2009, an allowance was booked for the full amounts receivable booked on account of such certificates, as they were deemed unrecoverable. |
| iii.iii) | | Other certificates of participation: they were stated at amortized cost value increased, as the case may be, by interest accrued until the last business day of each year, translated into pesos according to the method described in noteNote 4.4.a), as the case may be. |
| | | The values recorded, net of allowances recorded, do not exceed the recoverable values from the respective trusts. |
| h.4)h.5) | | Unlisted corporate bonds purchased: |
| | | | They were valued by the accrual method based on their internal rate of return, as provided by Central Bank Communiqué “A” 4,414 and supplementary regulations. |
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BANCO MACRO S.A. AND SUBSIDIARIES | h.5)h.6) | | Non-subordinated corporate bonds issued: |
| | | | They were valued at the amount due for principal and interest accrued as of each year-end, translated into pesos pursuant to the method described in noteNote 4.4.a), as the case may be. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| i) | | Assets subject toReceivables from financial leases: |
| | | | They were valued at the net investment in the lease less unearned income and calculatedcalculate in accordance with the conditions agreed upon in the respective agreements, by applying the interest rate imputed therein. |
| | j) | | Investments in other companies: |
| j.1) | | In non-controlled financial institutions (less than 50% ownership interest), supplementary and authorized activities: |
| i. | | In Argentine pesos: they were valued at acquisition cost, plus the nominal value of share-dividends received, restated as explained in noteNote 4.3. |
| ii. | | In foreign currency: they were valued at the acquisition cost in foreign currency, plus the nominal value of share-dividends received, translated into pesos in accordance with the criterion stated in noteNote 4.4.a). |
| | | Such net values do not exceed the values calculated by the equity method on the basis of the latest financial statements published by the companies. |
| j.2) | | In other non-controlled companies: they were valued at acquisition cost, plus the nominal value of share-dividends received, restated as described in noteNote 4.3., net of allowances for impairment in value. Such net values do not exceed the values calculated by the equity method on the basis of the latest financial statements published by the companies. |
| k) | | Bank premises and equipment and other assets: |
| | | | They were valued at their acquisition cost, restated as explained in noteNote 4.3., less the related accumulated depreciation calculated based on their estimated useful life using the straight line method. |
| l.1) | | Goodwill and organization and development costs (except differences due to court orders — Nondeductible for the determination of the computable equity): they were valued at their cost, restated as explained in noteNote 4.3., less the related accumulated amortization, calculated under the straight line method over their estimated useful life. |
| l.2) | | Differences due to court orders (amparos) — NondeductibleNot included for the determination of the computable equity: represent the difference between the amount of the original foreign currency translated at the exchange rate applied upon payment of the recursos de amparo (constitutional rights protection actions) and the amount recorded under Central Bank rules (convert into Argentine pesos at the Ps. 1.4 to USD 1 exchange rate, or its equivalent in other currencies, plus CER). Additionally, and as disclosed in Central Bank Communiqué “A” 3,916, since April 2003 the sums related to the amounts paid are amortized straight line over 60 months. |
| | | | In addition, the Central Bank informed the Bank through a notice dated August 4, 2008, that the permission established by Communiqué “A” 3,916 (allowing the difference between the amount of the “amparos” and the amounts recorded as liabilities to be capitalized as intangible assets) is applicable only to such differences which were actually paid. |
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BANCO MACRO S.A. AND SUBSIDIARIES | m) | | Valuation of derivatives: |
| m.1) | | Put options sold on Boden 2012 and 2013 coupons: such options were valued at the exchange value of the bonds plus interest and the CER adjustment accrued on the last business day of each year- end. |
| | m.2) | | Interest rate swap: this included the equivalent in pesos of the notional value in relation to which the Bank agreed to pay / charge a variable rate and charge / pay a fixed rate. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | m.3) | | Forward transactions without delivery of underlying asset: they were valued at the quoted price of the underlying assets upon maturity, effective on the last business day of each fiscal year. Differences in quoted market values were recorded in the statement of income of each year. |
| | m.4) | | Put options purchased / call options sold: valued at the agreed-upon exercise price. |
| | | In all cases, see also note 33. | In all cases, see also Note 30. | | | | The Bank charges these payments directly to income. |
| | o) | | Provisions included in liabilities: |
| | | | The Bank carries certain contingent liabilities related to current or future claims, lawsuits and other proceedings, including those related to labor and other obligations. Liabilities are recorded when it is probable that future costs will be incurred and whenever such costs may be reasonably estimated. |
| | p) | | Subordinated corporate bonds: |
| | | | They were valued at the amount due for principal and interest accrued as of each year, translated into pesos pursuant to the method described in noteNote 4.4.a). |
| | q) | | Shareholders’ equity accounts: |
| q.1) | | They are restated as explained in noteNote 4.3., except for the “Capital Stock” account which has been kept at its original value. The adjustment resulting from its restatement as explained in noteNote 4.3. was included in the “Adjustments to Shareholders’ Equity” account. |
| q.2) | | The purchase cost of own shares reaquired was debited to the “Unappropriated earnings” account. Furthermore, the face value of such shares was reclassified from “Outstanding shares” to “Shares in treasury”. The decrease in own shares reacquired as a result of the capital decrease was credited against unappropriated retained earnings (see also noteNote 9). |
| r) | | Consolidated Statement of income accounts: |
| r.1) | | Accounts reflecting monetary transactions occurred in the fiscal years ended December 31, 2010, 2009 2008 and 20072008 (financial income and expenses, service-charge income and service-charge expenses, provision for loan losses, administrative expenses, etc.), were computed at their historical amountamounts on a monthly accrual basis. |
| r.2) | | Accounts reflecting the effects of the sale, retirement or consumption of non-monetary assets were computed on the basis of restated amounts of such assets, restated as mentioned in noteNote 4.3. |
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BANCO MACRO S.A. AND SUBSIDIARIES | s) | | Statement of cash flows: |
| | | For the purpose of reporting cash flows,The Bank considers cash and cash equivalents to include the following accounts: Cash and Government and private securities which mature less than 90 days as from their date of acquisition. AsBelow is a breakdown of December 31, 2009, such securities total 379,871, whilethe reconciliation of the “Cash and cash equivalent” item on the Statement of cash flows with the related balance sheet accounts as of December 31, 20082010, 2009 and 2007, the Bank had no such securities.2008: |
| | | | | | | | | | | | | | | 2010 | | | 2009 | | | 2008 | | | | | | | | | | | | | | | Cash | | | 5,202,004 | | | | 5,016,192 | | | | 3,523,897 | | | | | | | | | | | | | | | Government and private securities | | | | | | | | | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | 198,790 | | | | 379,871 | | | | — | | | | | | | | | | | | | | | Instruments issued by Central Bank of Argentina | | | 589,686 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 5,990,480 | | | | 5,396,063 | | | | 3,523,897 | | | | | | | | | | | |
5. | | INCOME TAX AND MINIMUM PRESUMED INCOME TAX (TOMPI) |
| | As required by Central Bank’s rules, the Bank calculates income tax by applying the effective 35% rate to the estimated taxable income for each year, without considering the effect of temporary differences between book and taxable income. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | In 1998, Law No. 25,063 established minimum presumed income tax for a ten-year term. At present, after subsequent extensions, such tax is effective through December 30, 2019. This tax is supplementary to income tax, while the latter is levied on the taxable income for the year, minimum presumed income tax is a minimum levy assessment by applying the 1% over the 20% of certain assets as provided by the law for financial institutions. Therefore, the Bank’s tax obligation for each year will be equal to the higher of these taxes. However, if minimum presumed income tax exceeds income tax in a given tax year, such excess may be computed as a payment on account of any income tax in excess of minimum presumed income tax that may occur in any of the following ten years, once accumulated net operating losses (NOLs) have been used. |
| | As of December 31, 2010, 2009 and 2008, the Bank accrued income tax expense of 365,775, 659,250 and 2007, the Bank accrued income tax expense of 659,250, 261,207, and 92,345, respectively. |
| | As of December 31, 2009 and 2008, the Bank maintained a total amount of 10,280 and 25,767, respectively, for minimum presumed income tax credit under “Other receivables”. Such credit isAs of December 31, 2009, the Bank maintained a total amount of 10,280 for minimum presumed income tax credit under “Other receivables”. Such credit was considered as an asset because the Bank estimated that it will be used within 10 years, as established by Central Bank Communiqué “A” 4,295, as supplemented. The Bank used within 10 years, as established by Central Bank Communiqué “A” 4,295, as supplemented. The Bank expects to use the tax credit as of December 31, 2009 in 2010. |
| | In addition as of December 31, 2010 and 2009, and 2008, the Bank made income tax prepayments for 334,846 and 173,927, and 46,092, respectively, which were recorded in the “Other receivables” account. |
6. | | DIFFERENCES BETWEEN CENTRAL BANK RULES AND PROFESSIONAL ACCOUNTING STANDARDS EFFECTIVE IN ARGENTINA |
| | Through Resolution CD No. 93/2005, the CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires) adopted technical resolutions and interpretations issued by FACPCE governing board through April 1, 2005. Subsequently, the CPCECABA, through Resolutions 42/2006, 34 and 85/2008, and 25 and 52/2009, approved Technical Resolutions Nos. 23 through 27, respectively. In this regard, Technical Resolutions No. 26 and 27 will be effective for the annual or interim-period financial statements for the fiscal years beginning January 1, 2011. | The CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires) adopted the technical resolutions and interpretations issued by FACPCE governing board through Technical Resolution No. 27. As of the date of issue of these financial statements, the CPCECABA had not approved Technical Resolutions No. 28 and 29 issued by the FACPCE. | | These professional accounting standards differ, in certain valuation and disclosure aspects, from Central Bank rules. The differences between those standards, which the Bank deemed significant to these consolidated financial statements, are as follows: | These professional accounting standards differ, in certain valuation and disclosure aspects, from Central Bank rules. The differences between those standards, which the Bank deemed significant to these consolidated financial statements, are as follows:F - 24
BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | | | | | Adjustments under professional | | | | accounting standards to equity | | Item | | 2010 | | | 2009 | | | 2008 | | | | | | | | | | | | | | | Government securities and assistance to the government sector (a) | | | | | | | | | | | | | | | | | | | | | | | | | | Holdings in special investment accounts | | | — | | | | 237,913 | | | | (31,557 | ) | | | | | | | | | | | | | | Holdings of unlisted government securities | | | 17,279 | | | | 9,160 | | | | (21,639 | ) | | | | | | | | | | | | | | Unlisted instruments issued by the Central Bank | | | (18,427 | ) | | | (2,392 | ) | | | (33,776 | ) | | | | | | | | | | | | | | Guaranteed loans — Presidential Decree No. 1,387/01 | | | (14,806 | ) | | | 8,805 | | | | (259,617 | ) | | | | | | | | | | | | | | Business combinations (b) | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisition of Nuevo Banco Bisel S.A. | | | (119,165 | ) | | | (127,663 | ) | | | (101,467 | ) | | | | | | | | | | | | | | Other | | | (71,453 | ) | | | (69,547 | ) | | | (62,443 | ) | | | | | | | | | | | | | | Intangible assets — Organization and development expenses (c) | | | (53,544 | ) | | | (50,378 | ) | | | (40,090 | ) | | | | | | | | | | | | | | Other receivables from financial intermediation (d) | | | — | | | | — | | | | 27,633 | | | | | | | | | | | | | | | Deferred assets — Income tax (e) | | | 40,131 | | | | 46,667 | | | | 78,009 | | | | | | | | | | | | | | | Other assets (f) | | | 1,680 | | | | 2,832 | | | | 3,560 | | | | | | | | | | | | | | | Liabilities — Provisions (g) | | | (51,362 | ) | | | (51,413 | ) | | | (46,923 | ) | | | | | | | | | | | | | | | | | | | | | | | | Total | | | (269,667 | ) | | | 3,984 | | | | (488,310 | ) | | | | | | | | | | |
| | | a) | | Holdings recorded in special investment accounts, unlistedGovernment securities and assistance to the government securities, unlisted instruments issued by Central Bank and guaranteed loans:sector: they are valued in accordance with the regulations and standards issued by the Argentine Government and the Central Bank described in notesNotes 4.4.b.1)i, 4.4.b.2), 4.4.b.3), 4.4.b.5) and 4.4.c). According to professional accounting standards, those holdings booked in special investment accounts for which the Bank does not show intention of keeping through their maturity and holdings of unlisted government securities and instruments issued by the Central Bank, should be valued at their market value, whereas holdings of guaranteed loans should be valued at their present value. Additionally, effective loan-loss provisioning regulations issued by the Central Bank establish that receivables from the nonfinancial government sector are not subject to loan-loss provisioning, whereas professional accounting standards require receivables to be compared with their recoverable value every time financial statements are prepared. |
| | | The Bank’s particular During 2010 considering the favorable market situation and improvements in connection with these holdings and financing is as follows: |
| a.1) | | Holdingsconditions of the assets recorded in special investment accounts: As of December 31, 2009 and 2008,accounts, the Bank recorded 659,371 and 448,305, respectively, for certain portfoliohas sold a significant part of Argentine government securities. According to the professional accounting standards, as the Bank does not show indications of keeping such holdings through their maturity, they should be valued at their market value. According to this valuation method, assets as of December 31, 2009, would have increased by 237,913, while assets as of December 31, 2008, would have decreased by 31,557.such. |
| a.2) | | Holdings of unlisted government securities: as of December 31, 2009, 2008 and 2007, the Bank recorded 78,865, 69,182 and 19,329, respectively. According to professional accounting standards, such assets should be stated at market value. According to this valuation method, assets as of December 31, 2009 and 2007, would have increased by 9,160 and 1,957, respectively, and as of December 31, 2008, assets would have decreased by 21,639. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| a.3) | | Unlisted instruments issued by the Central Bank: as of December 31, 2009 and 2008, the Bank recorded unlisted portfolio and used in repo transactions of Central Bank internal bills and notes for 4,860,850 and 2,636,437, respectively. According to professional accounting standards, such assets should be stated at market value. According to this valuation method, assets as of December 31, 2009 and 2008, would have decreased by 2,392 and 33,776, respectively. |
| a.4) | | Guaranteed loans Decree No. 1,387/01: as of December 31, 2009, 2008 and 2007, the Bank recorded 190,412, 722,757 and 729,862, respectively. According to professional accounting standards and considering the statements made in note 4.4.c), these assets should be valued at their present value. According to this valuation method, assets as of December 31, 2009, would have increased by 8,805 and decreased by 259,617 and 95,810, respectively. |
| b) | | Intangible assets: as of December 31, 2009, 2008 and 2007, the Bank capitalized under intangible assets 50,378, 40,090 and 51,975, respectively, net of the related amortization amounts, related to the foreign exchange differences of the reimbursement in original currency of certain deposits switched into pesos and the effect of court deposits dollarization. Such accounting treatment differs from the valuation and disclosure methods established by professional accounting standards, which require charging to expense the abovementioned amounts. According to this valuation method, assets as of December 31, 2009, 2008 and 2007, would have decreased by 50,378, 40,090 and 51,975, respectively. |
| c) | | As of December 31, 2009, 2008 and 2007, as mentioned in note 4.4.l.2), the Bank recorded the effects of the Argentine Supreme Court rulings dated December 27, 2006, and August 28, 2007, upon payment of such precautionary measures, in conformity with Central Bank indications in the notice dated August 4, 2008. According to the professional accounting standards, as of December 31, 2009, 2008 and 2007, the Bank should have recorded a liability of approximately 51,413, 46,923 and 63,014, respectively. According to this valuation method, liability as of December 31, 2009, 2008 and 2007, would have increased by 51,413, 46,923 and 63,014, respectively. |
| d) | | As of December 31, 2008, the Bank recorded 29,105 under Other receivables from financial intermediation — nonsubordinated corporate bonds issued by the Bank itself, mentioned in note 10.b.2) and b.3), respectively, valued as mentioned in note 4.4.h.4), and 56,738 under Other liabilities from financial intermediation and recorded the liabilities generated by the issuance thereof valued as mentioned in note 4.4.h.5). According to professional accounting standards, such repurchased corporate bonds should be considered settled. Consequently, liability as of December 31, 2008, would have decreased by 27,633. |
| e) | | Income tax: the Bank and its subsidiaries record income tax by applying the effective rate to the estimated taxable income without considering the effect of temporary differences between book and taxable income. In accordance with professional accounting standards, income tax should be recognized through the deferred tax method, which consists in recognizing (as receivable or payable) the tax effect of temporary differences between the book and tax valuation of assets and liabilities, and in subsequently charging them to income for the years in which such differences are reversed, considering the possible effects of utilizing net operating losses (NOLs) in the future. If the deferred tax method had been applied, as of December 31, 2009, 2008 and 2007, the Bank would have recorded an additional asset of 46,667, 78,009 and 64,415, respectively. |
| f) | | Business combinations: under the standards set forth by the Central Bank, business acquisitions are recorded according to the book values of the acquired company. Consequently, the difference between the purchase price and its interest valued by the equity method in the books of the acquirer, is recorded as positive goodwill (when the purchase price is higher than the interest valued by the equity method) or negative goodwill (when the purchase price is lower than the interest valued by the equity method), as the case may be. If goodwill is positive, Central Bank standards establish that such goodwill should be amortized under the straight-line method based on an estimated useful life of ten years. If goodwill is negative, Central Bank Communiqué “A” 3,984 establishes specific amortization methods; the maximum amortization allowed per annum is 20%. |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | According to professional accounting standards effective in Argentina, business combinations are recorded based on the market values of the acquired company’s identifiable net assets. Consequently, the difference between the purchase price and the identifiable net asset measurement value is recorded as positive or negative goodwill, as the case may be. If goodwill is positive, such goodwill (i) will depreciate systematically throughout the estimated useful life and (ii) will be compared with its recoverable value as of each year-end. If goodwill is negative, such goodwill will be allocated to income (loss) in accordance with the changes in the specific circumstances that created such negative goodwill. |
| c) | | | The Bank’s specific situationIntangible assets: the Bank and its subsidiaries capitalized under “Intangible Assets” net of the related amortization amounts, the foreign exchange differences related to the reimbursement of certain deposits in relationforeign currency converted to how business combinations are recorded is as follows: |
| f.1) | | Acquisitionpesos and the effect of Banco Bansud S.A.: under Central Bank standards, the Bank’s acquisition of Banco Bansud S.A. generated an original negative goodwill in the amount of 365,560. As of December 31, 2009, 2008 and 2007, such goodwill was fully amortized. |
| | | court deposits dollarization. According to professional accounting standards, the abovementioned purchase would have generated an original negative goodwill inabove mentioned amounts are charged to expense and the amountbook value of 39,722 and, therefore,surpluses paid should decrease to their recoverable value. As of the date of issuance of the accompanying financial statements, the existing evidence does not support that the book value of such assets is fully or partially recoverable. | | d) | | Other receivables from financial intermediation: as of December 31, 2009, 2008, the Bank recorded 29,105 under “Other receivables from financial intermediation” — nonsubordinated corporate bonds issued by the Bank itself, mentioned in Note 10.b.2) and 2007,b.3), respectively, valued as mentioned in Note 4.4.h.5), and 56,738 under Other liabilities from financial intermediation and recorded the residual value of such goodwill would have totaled 9,254, 9,609 and 11,944, respectively. Consequently, assetsliabilities generated by the issuance thereof valued as of December 31, 2009, 2008 and 2007, would have decreased by 9,254, 9,609 and 11,944, respectively. |
| f.2) | | Acquisition of Nuevo Banco Suquía S.A.: under Central Bank standards, the Bank’s acquisition of Nuevo Banco Suquia S.A. generated an original negative goodwillmentioned in the amount of 483. As of December 31, 2009, 2008 and 2007, such goodwill was recorded under Provisions (Liabilities)Note 4.4.h.6). |
| | | According to professional accounting standards, the abovementioned acquisition would have led to an original negative goodwill in the amount of 72,445 and the recognition of 38,043 of profit from the purchase. Therefore, as of December 31, 2009, 2008 and 2007, the residual value as of such goodwill would have totaled 58,299, 61,082 and 63,865, respectively.repurchase corporate bonds should be considered settled. Consequently, liability as of December 31, 2009, 2008, and 2007, would have increaseddecrease by 57,816, 60,599 and 63,382, respectively.27,633. |
| f.3)e) | | AcquisitionIncome tax: the Bank and its subsidiaries determine income tax applying the effective rate to the estimated taxable income, without considering the effect of Banco del Tucumán S.A.: under Central Bank standards, the Bank’s acquisition of Banco del Tucumán S.A. (see also note 3.6.) generated an original positive goodwill in the amount of 18,242. As of December 31, 2009, 2008temporary differences between book and 2007, the residual value of such goodwill totaled 11,567, 13,395 and 15,222, respectively. |
| | | taxable income. According to professional accounting standards, income tax should be booked following deferred tax method, recognizing (as a receivable or payable) the abovementioned acquisition would not have generated goodwill. Consequently,tax effect of temporary differences between book and tax valuation of assets asand liabilities, and subsequently charging them to income for the years in which such differences are reversed, considering the possibility of December 31, 2009, 2008 and 2007, would have decreased, as a result ofusing net operating losses (NOLs) in the reversing of positive goodwill recorded under Central Bank standards, by 11,567, 13,395 and 15,222, respectively.future. |
| f) | | | Additionally, the valuation of identifiable net assets at market values generated adjustments, in addition to those specified in previous subsections, which as of December 31, 2009, 2008 and 2007, would have increased assets by 9,090, 21,160 and 27,326, respectively, |
| f.4) | | Acquisition of Nuevo Banco Bisel S.A.: under Central Bank standards, the Bank’s acquisition of Nuevo Banco Bisel S.A. generated an original positive goodwill in the amount of 66,042. As of December 31, 2009, 2008 and 2007, the residual value of such goodwill totaled 43,478, 50,082 and 56,686, respectively. |
| | | According to professional accounting standards, the abovementioned purchase would have generated the original negative goodwill in the amount of 107,745 and, therefore, as of December 31, 2009, 2008 and 2007, the residual value of such goodwill would have totaled 96,881, 100,140 and 103,400, respectively. Consequently, assets as of December 31, 2009, 2008 and 2007, would have decreased by 140,359, 150,222 and 160,086, respectively. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | Additionally, the valuation of identifiable net assets at market values generated adjustments, in addition to those specified in previous subsections, which as of December 31, 2009, 2008 and 2007, would have increased assets by 12,696, 48,755 and 54,158, respectively. |
| g) | | As of December 31, 2009, 2008 and 2007,Other assets: the Bank recorded interest rate swap agreements in Memorandum accounts, as mentioned in note 4.4.m.2), inconformity with the amount of 157,917, 39,422 and 36,238, respectively.Central Bank accounting standards under memorandum accounts. According to professional accounting standards effective in Argentina, the measurement of derivative financial instruments should be made at their net realizable value if they have quoted prices, or lacking this, using mathematical models that are appropriate in relation to the instrument’s characteristics and which use data that can be verified. If those | | g) | | Liabilities: the Bank books the effects of the Argentine Supreme Court rulings dated December 27, 2006, and August 28, 2007, upon payment of such precautionary measures, in conformity with Central Bank indications in the notice dated August 4, 2008. According to professional accounting standards, had been applied, as of December 31, 2009, 2008 and 2007, the Bank should have recorded assets in the amount of 2,832, 3,560 and 2,446, respectively.a liability related to this item. |
| | | If professional accounting standards would have been applied, Bank’s shareholders’ equity, as of December 31, 2009, 2008 and 2007, would have been applied, the Bank’s shareholders’ equity as of December 31, 2010, 2009 and 2008, would have decreased by around 269,667, increased by around 3,984 and decreased by around 488,310 and 311,131, respectively. Consequently, income for the year ended December 31, 2009 and 2008, would have increased by around 492,294 and decreased by around 488,310, respectively. Consequently, income for the years ended December 31, 2010, 2009 and 2008, would have decreased by around 273,651, would have increased by around 492,294 and would have decrease by around 177,179, respectively. |
| | | | There are certain disclosure differences between the criteria established by Central Bank and Argentine professional accounting standards. |
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BANCO MACRO S.A. AND SUBSIDIARIES 7. | | RESTRICTED AND PLEDGED ASSETS |
| | As of December 31, 2010, and 2009, and 2008, the following Bank’s assets are restricted: |
| 7.1) | | Government and private securities : |
| a) | | Secured Bonds under Presidential Decree No. 1,579/02 for 24,94540,598 and 22,21124,945 (face value of 24,400), respectively, provided as security for the loan received from Banco de Inversión y Comercio Exterior S.A. (BICE) to finance the “Paso San Francisco” public work, in accordance with the noteNote sent by the Bank on November 5, 2002, BICE’s reply dated November 18, 2002, and the security agreement covering the abovementioned securities dated January 29, 2004. |
| | b) | | Central Bank notesNotes (NOBACs) of 27,12822,097 and 118,58027,128 (for a face value of 26,70021,410 and 112,281)26,700), respectively, used to perform forward foreign currency trading transactions through Rosario Futures Exchange (Rofex) and Mercado Abierto Electrónico S.A. (MAE). |
| | c) | | NOBACs for an amount of 13,1467,844 and 49,78713,146 (for a face value of 13,0007,600 and 47,600)13,000), respectively, used to guarantee the repayment of the loan in pesos agreed upon under the Global Credit Program for Micro-, Small- and Medium-sized Enterprises received from the Under-department of Small- and Medium-sized Enterprises and Regional Development (SSEPyMEyDR). |
| | d) | | NOBACs for an amount of 2,0105,501 and 1,569 (for a face value of 2,000 and 1,500), respectively, used as security for the Credit Program for Production and Employment Development in the Province of San Juan (Communiqué “A” 769, as supplemented). |
| e) | | NOBACs for 10,591 (for a face value of 10,426) as of December 31, 2009,5,330 and 10,424), respectively, used to perform interest rate swap transactions, through Mercado Abierto Electrónico S.A. (MAE). |
| | f)e) | | Argentine Government Bonds in Argentine pesos at private Badlar + 275 basis points for an amount of 79,200 and 66,428 (face(for a face value of 80,000), as of December 31, 2009,respectively, used as security in favor of SEDESA, in replacement of former Nuevo Banco Bisel S.A.’s preferred shares to secure payment of all obligations undertaken in the sales agreement executed on May 28, 2007. The price payable was set at 66,240, plus 4% nominal interest rate p.a., to be compounded through its settlement which will be made before the expiration of the 15-year term as from the takeover date of former Nuevo Banco Bisel S.A. (August 11, 2021). |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | g) | | As of December 31, 2008, the investment in Mercado de Valores de Buenos Aires S.A. includes an amount of 2,087 resulting from a stock exchange-regulated repurchase agreement executed on December 26, 2008, expiring on January 2, 2009, whereby Argentine government bonds in US dollars maturing in 2012 were paid, for a residual value of 1,250, which as of December 31, 2008, were secured on such market. As of December 31, 2009, after several renewals, the transaction was settled. |
| h)f) | | Other government and private securities for 8101,462 and 218,2,820, respectively. |
| a) | | Agreements for loans backed by pledges and unsecured loans for 2,599 and 9,876, and 20,367, respectively, provided as guarantee in favor of the Mypes II Trust Fund, in full compliance with the terms and conditions of the program called “Mypes II (a)” and under the Global Credit Program for Small-sized and Micro-enterprises. |
| b) | | Guaranteed Loans, Mortgage Bills and collateral mortgages for 356,127 as of December 31, 2008, securing the loan granted by the Central Bank to former Nuevo Banco Suquía S.A. and former Nuevo Banco Bisel S.A. to purchase “Argentine Government Bonds 2005, 2007 and 2012”, used for the deposit exchange option exercised by the holders of deposits with such banks. As mentioned in note 2, during February 2009, the Bank decided to prepay the amount owed under such loan, delivering part of the guaranteed loans and paying the rest in cash. |
| 7.3) | | Other receivables from financial intermediation: |
| a) | | Special guarantee checking accounts opened at the Central Bank for transactions related to the electronic clearing houses and similar entities, for an amount of 242,426287,135 and 208,482,242,426, respectively. |
| | b) | | Contributions to the mutual guarantee association Risk Fund of Garantizar S.G.R.SGR for 10,00010,170 and 9,961,10,000 respectively, resulting from contributions amounting to 10,000 made by the Bank on December 21, 2009, in its capacity as contributory partner of that company. Such contribution may be fully or partially reimbursed once two and December 13, 2007, respectively, andthree years have elapsed from the date of contribution. | | | c) | | Contribution to the Risk Fund of Macroaval S.G.R.SGR for 5,3685,622 and 5,000, as of December 31, 2009 and 2008,5,368, respectively, resulting from a contribution of the abovementioned amountmade by the Bank on December 31, 2008, in its capacity as contributory partner of such company. Such contribution may be fully or partially reimbursed once two and three years have elapsed from the date of contribution. |
| | | On December 18, 2009, Garantizar S.G.R. returned 80% of the original capital contributed in 2007 as partial settlement; whereas the final settlement will be made during the first quarter of 2010. |
| c) | | As of December 31, 2008, has an equity interests in the Risk Fund of Puente Hnos. S.G.R. for 3,986 resulting from a 4,000 contribution made by Macro Fondos Sociedad Gerente de Fondos Comunes de Inversión S.A. on October 19, 2007. On August 12, 2009, Macro Fondos Sociedad Gerente de Fondos Comunes de Inversión S.A. requested the reimbursement of the contribution made to the risk fund. In this regard, on October 20, 2009, Puente Hnos. S.G.R. reimbursed 4,000, net of the contingent risk fund of 142, which will be reimbursed as such assets are recovered. |
| d) | | As of December 31, 2008, other receivables of 1,1412010 it keeps certain amounts related to credit card customers consumptions abroad as securities amounting to 1,257. |
F - 27
BANCO MACRO S.A. AND SUBSIDIARIES | 7.4) | | Investments in other companies: |
| a) | | As of December 31, 2009,2010, and 2008, investments in Tunas del Chaco S.A., Emporio del Chaco S.A. and Proposis S.A. in the amount of 2,205, and 2,235, respectively, under the deferment of federal taxes, subscribed in accordance with the promotion system established by Law No. 22,021, as amended by Law No. 22,702. This system enables the payment of the abovementioned taxes to be deferred up to the fifth year after the launch of the project (in this case, 2007), while it sets forth that the investment must be kept in assets for a period of at least five years as from January 1 of the year following the year in which the investment was made (in this case 2003). |
| b) | | As of December 31, 2009, and 2008, this includes other investments in other companies in the amount of 1,453. |
F - 30
BANCO MACRO S.A. AND SUBSIDIARIES
| a) | | Security deposits related toIt carries as guaranty mainly transactions carried out on institutional markets, credit card transactions, fortrust activities and lease guaranties amounting to 42,276 and 30,008, and 20,094, respectively. |
| b) | | Other security deposits for 10,27715,539 and 8,266,10,277, respectively. |
8. | | TRANSACTIONS WITH RELATED PARTIES |
| | Banco Macro S.A.’s receivables / payables and income (loss) from transactions performed with subsidiaries and related parties are as follows. As mentioned in noteBanco Macro S.A.’s receivables / payables and income (loss) from transactions performed with subsidiaries and related parties are as follows. As mentioned in Note 4.1., transactions with subsidiaries were eliminated in the consolidation process: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other | | | | | | | Macro | | Other | | | | | | | | Macro | | subsidiaries | | | | | | | Banco | | Securities | | subsidiaries | | | | | | | | Banco del | | Macro | | Securities S.A. | | and related | | | | | | | Banco del | | Privado de | | Macro | | S.A. | | and related | | | | | | | | Tucumán | | Bank | | Sociedad de | | parties | | Total | | Total | | | Tucumán | | Inversiones | | Bank | | Sociedad | | parties | | Total | | Total | | | | S.A. | | Limited | | Bolsa | | (1) | | 2009 | | 2008 | | | S.A. | | S.A. | | Limited | | de Bolsa | | (1) | | 2010 | | 2009 | | | | | ASSETS | | | | | | Cash | | — | | 2,996 | | — | | — | | 2,996 | | 2,785 | | | — | | — | | 3,090 | | — | | — | | 3,090 | | 2,996 | | | | | Loans | | — | | — | | — | | 13,216 | | 13,216 | | 41,390 | | | — | | — | | — | | — | | 51,676 | | 51,676 | | 13,216 | | | | | Other receivables from financial intermediation | | 70,100 | | — | | 5 | | — | | 70,105 | | 92,489 | | | 120,401 | | — | | — | | 5,050 | | — | | 125,451 | | 70,105 | | | | | Assets subject to financial leases | | — | | — | | — | | 2,462 | | 2,462 | | 581 | | | Receivables from financial leases | | | — | | — | | — | | — | | 2,124 | | 2,124 | | 2,462 | | | | | Other receivables | | — | | — | | — | | 14,700 | | 14,700 | | 535 | | | 25 | | 1,251 | | — | | — | | — | | 1,276 | | 14,700 | | | | | Items pending allocation | | 4 | | — | | — | | — | | 4 | | 4 | | | 83 | | — | | — | | — | | — | | 83 | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | 70,104 | | 2,996 | | 5 | | 30,378 | | 103,483 | | 137,784 | | | 120,509 | | 1,251 | | 3,090 | | 5,050 | | 53,800 | | 183,700 | | 103,483 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | Deposits | | — | | 583 | | 4,900 | | 125,007 | | 130,490 | | 78,481 | | | — | | 92 | | 16,991 | | 7,085 | | 181,483 | | 205,651 | | 130,490 | | | | | Other liabilities from financial intermediation | | 70,073 | | — | | 107 | | — | | 70,180 | | 104,789 | | | 120,151 | | — | | — | | 8,628 | | — | | 128,779 | | 70,180 | | | | | Other liabilities | | 64 | | — | | — | | — | | 64 | | 93 | | | — | | — | | — | | — | | — | | — | | 64 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | 70,137 | | 583 | | 5,007 | | 125,007 | | 200,734 | | 183,363 | | | 120,151 | | 92 | | 16,991 | | 15,713 | | 181,483 | | 334,430 | | 200,734 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | MEMORANDUM ACCOUNTS | | | | | | Debit Balance accounts — Control | | — | | 261,790 | | — | | 170,849 | | 432,639 | | 317,920 | | | Debit balance accounts — Contingent | | | — | | — | | — | | — | | 1,162 | | 1,162 | | — | | | | | Credit Balance accounts — Contingent | | — | | 37,967 | | 2,213 | | — | | 40,180 | | 2,213 | | | Debit balance accounts — Control | | | — | | — | | 125,051 | | — | | 257,237 | | 382,288 | | 432,639 | | | | | Credit Balance accounts — Derivatives (2) | | — | | — | | — | | — | | — | | 35,992 | | | Credit balance accounts — Contingent | | | 923 | | — | | — | | 2,213 | | — | | 3,136 | | 40,180 | | | | | Credit balance accounts — Derivatives (2) | | | — | | — | | — | | — | | 99,413 | | 99,413 | | — | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Macro | | Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Securities | | subsidiaries | | | | | | | | | Macro | | Other | | | | | | | | | | Banco del | | Macro | | S.A. | | and related | | | | | | | | | Banco | | Securities | | subsidiaries | | | | | | | | | | Tucumán | | Bank | | Sociedad | | parties | | Total | | Total | | Total | | | Banco del | | Privado de | | Macro | | S.A. | | and related | | | | | | | | | | S.A. | | Limited | | de Bolsa | | (1) | | 2009 | | 2008 | | 2007 | | | Tucumán | | Inversiones | | Bank | | Sociedad | | parties | | Total | | Total | | Total | | | | | S.A. | | S.A. | | Limited | | de Bolsa | | (1) | | 2010 | | 2009 | | 2008 | | INCOME (LOSS) | | | | | | Financial income | | 1,249 | | — | | 6 | | | 1,539 | (2) | | 2,794 | | 6,407 | | 169 | | | 2 | | 44 | | — | | — | | | 2,855 | (2) | | 2,901 | | 2,794 | | 6,407 | | | | | Financial expenses | | | (3,456 | ) | | | (4 | ) | | — | | | (1,565 | ) | | | (5,025 | ) | | | (4,134 | ) | | | (4,825 | ) | | Financial expense | | | | (3,300 | ) | | | (121 | ) | | — | | — | | | (3,099 | ) | | | (6,520 | ) | | | (5,025 | ) | | | (4,134 | ) | | | | Service-charge income | | 25 | | 6 | | 46 | | 460 | | 537 | | 235 | | 410 | | | 30 | | 5 | | 12 | | 52 | | 1,050 | | 1,149 | | 545 | | 235 | | | | | Service-charge expenses | | — | | — | | — | | — | | — | | — | | | (1 | ) | | | | | Other income | | 5,898 | | — | | — | | 1 | | 5,899 | | 8,068 | | 4,967 | | | 6,427 | | — | | — | | — | | — | | 6,427 | | 5,899 | | 8,068 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total income | | 3,716 | | 2 | | 52 | | 435 | | 4,205 | | 10,576 | | 720 | | | Total income / (loss) | | | 3,159 | | | (72 | ) | | 12 | | 52 | | 806 | | 3,957 | | 4,213 | | 10,576 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | Related to receivables from and payables to other related parties to the Bank in the normal course of business, under normal market conditions, in terms of interest rates and prices, as well as guarantees required. | | (2) | | In 2009, theThe Bank has recorded foreign currency trading transactions without delivery of the underlying asset and involving related parties, in its memorandum accounts. According to the Bank’s policy, they are matched in terms of amounts and maturity with transactions carried out with third parties who are not related parties. As of December 31, 2010, 2009 and 2008, although there is no position for these transactions, the net intermediation income from such transaction generated earnings for the year of around 32, 113 and 311, respectively. |
| | As of December 31, 2009, 2008 and 2007, the legal capital structure without considering the retroactive accounting effects of the legal merger of Nuevo Banco Bisel S.A. mentioned in note 3.7.As of December 31, 2010, 2009 and 2008, the legal capital structure without considering the retroactive accounting effects of the legal merger of Nuevo Banco Bisel S.A. mentioned in Note 3.6., is as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SHARES | SHARES | | CAPITAL STOCK | | SHARES | | CAPITAL STOCK | | | | Votes | | Pending | | | | | | | Votes | | Pending | | | | | | | | per | | Issued and | | issuance or | | In | | | | | per | | Issued and | | issuance or | | In | | | | Class | | Number | | share | | outstanding | | distribution | | treasury | | Paid-in | | | Number | | share | | outstanding | | distribution | | treasury | | Paid-in | | | | | Registered Class A shares of common stock | | 11,235,670 | | 5 | | 11,236 | | — | | — | | 11,236 | | | 11,235,670 | | 5 | | 11,236 | | — | | — | | 11,236 | | | | | Registered Class B shares of common stock | | 672,743,303 | | 1 | | 672,707 | | 36 | | — | | 672,743 | | | 672,743,303 | | 1 | | 672,743 | | — | | — | | 672,743 | | | | | | | | | | | | | | | Total 2007 | | 683,978,973 | | 683,943 | | 36 | | — | | 683,979 | | | | | | | | | | | | | | | | | | | Registered Class B shares of common stock (1) | | — | | 1 | | 36 | | | (36 | ) | | — | | — | | | | | | Acquired Registered Class B shares of common stock | | — | | 1 | | | (75,542 | ) | | — | | 75,542 | | — | | | — | | 1 | | | (75,542 | ) | | — | | 75,542 | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Total 2008 | | 683,978,973 | | 608,437 | | — | | 75,542 | | 683,979 | | | 683,978,973 | | 608,437 | | — | | 75,542 | | 683,979 | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquired Registered Class B shares of common stock | | | — | | 1 | | | (15,100 | ) | | — | | 15,100 | | — | | Capital stock decrease — Registered Class B shares of common stock (1) | | | | (60,000,000 | ) | | 1 | | — | | — | | | (60,000 | ) | | | (60,000 | ) | Capital stock increase — Registered Class B shares of common stock (2) | | | 1,147,887 | | 1 | | 1,148 | | — | | — | | 1,148 | | Capital stock decrease — Registered Class B shares of common stock (3) | | | | (30,641,692 | ) | | 1 | | — | | — | | | (30,642 | ) | | | (30,642 | ) | | | | | | | | | | | | | | | | Total 2009 | | | 594,485,168 | | 594,485 | | — | | — | | 594,485 | | | | | | | | | | | | | | | | |
F - 3229
BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | | | | | | SHARES | | | CAPITAL STOCK | | | | | | | | Votes | | | | | | | Pending | | | | | | | | | | | | | | per | | | Issued and | | | issuance or | | | In | | | | | Class | | Number | | | share | | | outstanding | | | distribution | | | treasury | | | Paid-in | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquired Registered Class B shares of common stock | | | — | | | | 1 | | | | (15,100 | ) | | | — | | | | 15,100 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Capital stock decrease — Registered Class B shares of common stock (2) | | | (60,000,000 | ) | | | 1 | | | | — | | | | — | | | | (60,000 | ) | | | (60,000 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Capital stock increase — Registered Class B shares of common stock (3) | | | 1,147,887 | | | | 1 | | | | 1,148 | | | | — | | | | — | | | | 1,148 | | | | | | | | | | | | | | | | | | | | | | | | | | | Capital stock decrease — Registered Class B shares of common stock (4) | | | (30,641,692 | ) | | | 1 | | | | — | | | | — | | | | (30,642 | ) | | | (30,642 | ) | | | | | | | | | | | | | | | | | | | | | Total 2009 | | | 594,485,168 | | | | | | | | 594,485 | | | | — | | | | — | | | | 594,485 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Registered Class A shares of common stock | | | 11,235,670 | | | | 5 | | | | 11,236 | | | | — | | | | — | | | | 11,236 | | | | | | | | | | | | | | | | | | | | | | | | | | | Registered Class B shares of common stock | | | 583,249,498 | | | | 1 | | | | 583,249 | | | | — | | | | — | | | | 583,249 | | | | | | | | | | | | | | | | | | | | | | Total 2009 | | | 594,485,168 | | | | | | | | 594,485 | | | | — | | | | — | | | | 594,485 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | SHARES | | | CAPITAL STOCK | | | | | | | | Votes | | | | | | | Pending | | | | | | | | | | | | | | per | | | Issued and | | | issuance or | | | In | | | | | Class | | Number | | | share | | | outstanding | | | distribution | | | treasury | | | Paid-in | | As of December 31, 2010: | | | | | | | | | | | | | | | | | | | | | | | | | Registered Class A shares of common stock | | | 11,235,670 | | | | 5 | | | | 11,236 | | | | — | | | | — | | | | 11,236 | | Registered Class B shares of common stock | | | 583,249,498 | | | | 1 | | | | 583,249 | | | | — | | | | — | | | | 583,249 | | | | | | | | | | | | | | | | | | | | | | Total 2010 | | | 594,485,168 | | | | | | | | 594,485 | | | | — | | | | — | | | | 594,485 | | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | Related to the capital increase through the issuance of Ps. 35,536 new book-entry Class B shares of common stock entitled to one vote and with a face value of Ps. 1 per share, delivered to the minority shareholders of Nuevo Banco Suquía S.A. in the legal merger process of that bank (see also note 3.5). | | (2) | | Related to the reduction of the capital stock by 60,000,000 registered Class B shares entitled to 1 vote each with a face value of Ps. 1 per share. These shares were included in the Bank’s portfolio and were acquired under section 68, Law No. 17,811, as a result of the macroeconomic context and fluctuations that the capital market was going through in general. On April 21, 2009, and after BCBA authorization, the Bank’s General Regular and Special Shareholders’ meeting approved the abovementioned capital reduction. During July 2009, the CNV authorized, the I.G.J.IGJ registered, and the Central Bank consented to the capital stock reduction. | | (3)(2) | | Related to the capital increase through the issuance of Ps. 1,147,887 of new common, registered Class B shares with a face value of Ps. 1, each one entitled to one vote, delivered to the minority shareholders of former Nuevo Banco Bisel S.A., in the legal merger process of that bank (see also note 3.7.Note 3.6.). | | (4)(3) | | Related to the reduction of the capital stock by 30,641,692 Class B registered shares each one entitled to one vote, with a face value of Ps 1 per share. These shares were included in the Bank’s portfolio and were acquired under section 68, Law No. 17,811 for the same reasons mentioned in paragraph (2) above. On September 10, 2009, the Bank’s General Regular and Special Shareholders’ meeting approved the abovementioned capital reduction subject to the BCBA’s consent. On November 23 and December 29, 2009 and January 15 and March 25, 2010, the BCBA, consented to such capital reduction, the CNV approved it, the IGJ recorded it and the Central Bank acknowledged it, respectively. |
| | In addition, net income per common share for the fiscal years ended December 31, 2010, 2009 2008 and 2007,2008, was computed by dividing net income by the weighted average number of outstanding common shares for each year. |
F - 33
BANCO MACRO S.A. AND SUBSIDIARIES
10. | | CORPORATE BONDS ISSUANCE |
| | The amounts recorded in the consolidated financial statements related to corporate bonds are as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CORPORATE BONDS | | Remaining of | | | | | | | | Remaining of | | | | | | Original face | | face value as of | | As of December, 31 | | | Original face | | face value as of | | As of December, 31 | | Class | | value | | 12/31/2009 | | 2009 | | 2008 | | | value | | 12/31/2010 | | 2010 | | 2009 | | | | | | | Subordinated | | USD | 4,000,000 | a) | | USD | 400,000 | | 963 | | 1,802 | | | USD | 4,000,000 | a) | | — | | — | | 963 | | Subordinated — Class 1 | | USD | 150,000,000 | b.1) | | USD | 150,000,000 | | 571,510 | | 519,879 | | | USD | 150,000,000 | b.1) | | USD | 150,000,000 | | 598,470 | | 571,510 | | Non-subordinated — Class 2 | | USD | 150,000,000 | b.2) | | USD | 106,395,000 | | 418,257 | | 419,378 | | | USD | 150,000,000 | b.2) | | USD | 106,395,000 | | 437,986 | | 418,257 | | Non-subordinated — Class 3 | | USD | 100,000,000 | b.3) | | USD | 63,995,000 | | 198,478 | | 305,495 | | | USD | 100,000,000 | b.3) | | USD | 63,995,000 | | 198,478 | | 198,478 | | | | | | | | | | | | | | | Total | | 1,189,208 | | 1,246,554 | | | | | 1,234,934 | | 1,189,208 | | | | | | | | | | | | | | |
F - 30
BANCO MACRO S.A. AND SUBSIDIARIES | | Maturities of the corporate bonds as of December 31, 2009,2010, are as follows: |
| | | | | | | | | Fiscal Year | | Amounts | | | Amounts | | | | | 2010 | | 18,687 | | | 2011 | | | 18,493 | | 2012 | | 197,066 | | | 197,066 | | 2017 | | 403,950 | | | 423,005 | | 2036 | | 569,505 | | | 596,370 | | | | | | | | | Total | | 1,189,208 | | | 1,234,934 | | | | | | | | |
| | | a) | | On January 20, 1997, the general special shareholders’ meeting of former Banco de Salta S.A. (which was absorbed by the Bank in 1999) approved issuing Subordinated Corporate Bonds in the amount of USD 4,000,000 to exercise the power granted to it by the second clause of the Loan Agreement entered into with former Banco Provincial de Salta on June 28, 1996. In addition, the general special shareholders’ meeting of former Banco de Salta S.A. held on May 29, 1997, approved the IPO of such Corporate Bonds. Through Resolution No. 1,006, dated December 19, 1997, the CNV authorized the IPO of former Banco de Salta S.A. for the issuance of Corporate Bonds, and it also approved the public offering of such bonds. | |
| | Through December 31, 2009, the Bank had amortized the equivalent of USD 3,600,000 (original value). | The installments of the corporate bonds were settledpaid by the Bank in the original currency until February 3, 2002, the day on which the amounts payable were switched into pesos at Ps. 1-to-USD 1, adjusted by CER. |
| | | On August 2, 2010, the Bank settled the last installment in the amount of USD 200,000 (original value). |
| b) | | On September 1, 2006 and June 4, 2007, the general regular shareholders’ meeting approved the creation, and subsequent extension, of a Global Program for the Issuance of simple Corporate Bonds in a short, medium or long term, either subordinated or non-subordinated, with or without guarantee, in accordance with the provisions of Law No. 23,576, as amended by Law No. 23,962, and further applicable regulations, up to a maximum amount outstanding at any time during the term of the program of USD 700,000,000 (seven hundred million US dollars), or an equal amount in other currencies, under which it will be possible to issue different classes and/or series of corporate bonds denominated in US dollars or other currencies and reissue the successive classes or series to be amortized. |
| b.1) | | On December 18, 2006, under the abovementioned Global Program, Banco Macro S.A. issued the 1st series of Class 1 subordinated notesNotes for a face value of USD 150,000,000 (US dollars one hundred and fifty million). The main characteristics of this issuance are: |
Included in the Bank’s required minimum capital (computable equity), as established by Communiqué “A” 4,576.
The notes fall due within a 30-year term, with full amortization upon maturity (December 18, 2036), with a full redemption option in 10 years as from the issuance date.
Interest payments will be made with a semiannual frequency (June 18 and December 18, every year).
F - 34
BANCO MACRO S.A. AND SUBSIDIARIES | • | | Included in the Bank’s required minimum capital (computable equity), as established by Communiqué “A” 4,576. | | | • | | The Notes fall due within a 30-year term, with full amortization upon maturity (December 18, 2036), with a full redemption option in 10 years as from the issuance date. | | | • | | Interest payments will be made with a semiannual frequency (June 18 and December 18, every year). |
During the first 10 years, the interest rate will be a fixed one (9.75%), and a variable one for the remaining years (six-month LIBOR, plus 7.11%). As established by Communiqué “A” 4,576 the interest rate payable can be increased only once over the life of the instrument and subsequent to the 10-year term as from their issuance. They do not include covenants that change the subordination order. F - 31
BANCO MACRO S.A. AND SUBSIDIARIES No interest on the notesNotes will be neither fall due and payable if: (i) payments of such interest exceed the distributable amount, as defined in the pricing supplement dated November 23, 2006; (ii) there is a general prohibition by the Central Bank; (iii) the Bank is subject to the provisions of sections 34 or 35 bis, Financial Institutions Law; (iv) the Bank is receiving financial assistance from the Central Bank under Article 17 of Central Bank Charter; (v) the Bank is not in compliance with or have failed to comply in a timely basis with reporting obligations to the Central Bank; and/or (vi) the Bank is not in compliance with minimum capital requirements (both on an individual and consolidated basis) or with minimum cash reserves (on average). The unpaid interest is not cumulative.
They have authorizations both for their public offering and their listing on domestic or foreign stock exchanges or markets.
| • | | The unpaid interest is not cumulative. | | | • | | They have authorizations both for their public offering and their listing on domestic or foreign stock exchanges or markets. |
In no case, the payment of financial services may exceed net unappropriated retained earnings as per the financial statements for the last fiscal year, with an external auditor’s report, which should be appropriated to a reserve created to such end, as established by Communiqué “A” 4,576. | | | The Bank used the funds from such issuance to grant loans. |
| b.2) | | On January 29, 2007, the Bank issued the 1st series of Class 2 nonsubordinated corporate bonds at a fixed rate of 8.5% p.a., simple, not convertible into shares, fully amortizable upon maturity (February 1, 2017), for a face value of USD 150,000,000 (one hundred and fifty million US dollars), under the terms and conditions set forth in the price supplement dated January 10, 2007. Interest will be paid semiannually on February 1 and August 1 of every year. Additionally, the Bank has the option to redeem such issuance, either fully or partially, at any time and periodically. The Bank used the funds from such issuance to grant loans. |
| b.3) | | On June 7, 2007, the Bank issued the 1st series of Class 3 nonsubordinated corporate bonds (peso-linked notes)Notes) at a fixed rate over principal in pesos of 10.75% p.a., simple, not convertible into shares, fully amortizable upon maturity (June 7, 2012), for a face value of USD 100,000,000 (one hundred million US dollars), under the terms and conditions set forth in the price supplement dated May 18, 2007. Interest will be paid semiannually on June 7 and December 7 of every year. Additionally, the Bank may fully redeem the issuance for tax purposes. The Bank used the funds from such issuance to grant loans. |
| | On August 16, 2007, the SEC authorized the abovementioned exchange offers mentioned in b.1) through b.3). |
| | Because of the macroeconomic context and fluctuations that the capital market went through in general, as of December 31, 2009, the Bank repurchased nonsubordinated corporate bonds of Class 2 and 3 for a face value amount of USD 79,610,000 (43,605,000 and 36,005,000 of Class 2 and 3, respectively), which were fully settled. Consequently, the Bank recognized total income for such repurchases amounting to 101,291 (69,071 for the year ended December 31, 2009)2009 and the remaining amount is related to prior years). |
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BANCO MACRO S.A. AND SUBSIDIARIES | | On April 26, 2011 the Bank’s shareholders’ meeting approved the increase of the maximum aggregate principal amount of our Global Medium-Term Note Program from USD 700 million up to USD 1,000 million (or its equivalent in other currencies). |
| 11.1. | | Portfolio Management |
| a) | | On March 1, 1996, former Banco de Salta S.A. (which was absorbed by the Bank in 1999) and the Government of the Province of Salta entered into an Agreement to Manage the Loan Portfolio of former Banco Provincial de Salta related to the nonfinancial private sector, whereby the Bank undertakes to perform all acts necessary to manage such portfolio. In consideration thereof, the Province of Salta recognizes to the Bank a percentage of the amounts effectively recovered. |
| | | As of December 31, 2009,2010, and 2008,2009, the loans portfolio managed for principal and interest, after application adjustments, amounted to 14,35914,214 and 14,434,14,359, respectively. |
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BANCO MACRO S.A. AND SUBSIDIARIES | b) | | By virtue of the agreement formalized on August 11, 1998, between former Banco de Jujuy S.A. (which was absorbed by the Bank in 2000) and the Government of the Province of Jujuy, the Bank undertakes to perform all acts necessary to manage the loan portfolio of the former Banco de la Provincia de Jujuy and to provide a monthly report on the tasks performed. In consideration thereof, the Province of Jujuy recognizes to the Bank, for all accounts and as a lump-sum and total consideration, a percentage of the amounts actually recovered. |
| | | As of December 31, 20092010 and 2008,2009, the loans portfolio managed amounts to 43,23842,603 and 43,388,43,238, respectively. |
| c) | | On April 6, 2001, through Provincial Decree No. 806, the Ministry of the Treasury of the Province of Salta approved an extension to the “Contract for the service of collecting, processing and arranging information, managing the loan portfolio and performing collection procedures related to the receivables of the IPDUV (Provincial Institute of Urban and Housing Development)” entered into on March 27, 2001, between such agency and the former Banco Macro S.A. Through that extension, the Bank will provide to the IPDUV, among others, the service of collecting the installments payable by successful bidders for housing and a service of performing collection procedures related to such institute’s receivables. In consideration thereof, the IPDUV recognizes to the Bank a percentage of the amounts effectively recovered. |
| | | As of December 31, 20092010 and 2008,2009, the loans portfolio managed amounts to 78,91162,885 and 84,508,78,911, respectively. |
| d) | | On August 19, 2002, ABN AMRO Bank N.V. Sucursal Argentina, as trustee, the former Scotiabank Quilmes S.A., as trustor, Banco Comafi S.A., as collecting agent and manager and the former Banco Bansud S.A. (currently Banco Macro S.A.), entered into an agreement for the LAVERC financial trust, whereby former Banco Bansud S.A. would be in charge of the collection management, custody, settlement and any other task related to the corpus assets which were originally recorded in the branches of former Scotiabank Quilmes S.A. |
| | | As of December 31, 20092010 and 2008,2009, the portfolio managed by the Bank amounted to 114,32899,833 and 124,982,114,328, respectively. |
| e) | | On June 30, 2006, the Bank and Sud Inversiones y Análisis S.A. entered into a management and custody agreement regarding the “RETUC 1” trust loan portfolio. |
| | | As of December 31, 20092010 and 2008,2009, the portfolio managed by the Bank for principal and accrued interest amounted to 58,86358,467 and 62,397,58,863, respectively. |
| f) | | On December 31, 2008, the Bank entered into a management and custody agreement regarding the “BATUC I” trust loan portfolio. As of December 31, 2009 and 2008, the portfolio managed by the Bank for principal and accrued interest amounted to 17,903 and 18,455, respectively. |
| g) | | In addition, as of December 31, 20092010 and 2008,2009, the Bank had under its management other portfolios for total amounts of 75,44184,936 and 72,260,93,344, respectively. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| 11.2. | | Mutual Funds | | | | | As of December 31, 2009,2010, the Bank, in its capacity as Depository Company, held in custody the shares of interest subscribed by third parties and securities from the following mutual funds (FCI): |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Shareholders’ | | Investments | | | Shareholders’ | | | | Fund | | Shares of interest | | equity | | (a) | | | Shares of interest | | equity | | Assets (a) | | | | Pionero Pesos | | 414,755,096 | | 562,343 | | 388,033 | | | 397,491,205 | | 567,379 | | 375,088 | | Pionero Renta Ahorro | | 64,186,694 | | 94,939 | | 91,351 | | | 34,921,271 | | 57,561 | | 56,904 | | Pionero Latam | | 1,881,140 | | 7,481 | | 6,638 | | | 1,671,391 | | 8,004 | | 10,608 | | Pionero FF – Fideicomiso Financieros | | 35,583,867 | | 46,729 | | 45,838 | | | 25,003,634 | | 36,101 | | 36,016 | | Pionero Renta | | 3,850,256 | | 10,069 | | 9,656 | | | 36,771,835 | | 131,399 | | 130,527 | | Pionero Acciones | | 1,452,743 | | 3,363 | | 3,272 | | | 1,251,979 | | 4,183 | | 3,926 | | Pionero Renta Dólares | | 3,037,512 | | 5,278 | | 4,946 | | | 6,653,558 | | 13,350 | | 12,253 | | Pionero América | | 351,823 | | 1,645 | | 1,478 | | | 342,851 | | 1,678 | | 1,608 | | Galileo Event Driven F.C.I. | | 10,429,862 | | 67,657 | | 57,746 | | | Galileo Argentina F.C.I. | | 2,142,564 | | 10,506 | | 8,726 | | | Galileo Event Driven FCI | | | 16,000,624 | | 121,823 | | 118,104 | | Galileo Argentina FCI | | | 4,105,386 | | 24,692 | | 24,281 | | | | | | | | | | | Total | | | 524,213,734 | | 966,170 | | 769,315 | | | | | | | | | | |
| | | (a) | | “Memorandum accounts – Debit-balance accounts – Control – Other” includes mainly items in custody. Consequently, this account includes the above mentioned amounts related to the mutual funds’ investment portfolios. |
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BANCO MACRO S.A. AND SUBSIDIARIES 12. | | BANK DEPOSITS GUARANTEE INSURANCE SYSTEM |
Law No. 24,485, and Presidential Decree No. 540/95, provided for the organization of a Bank Deposit Guarantee Insurance System, characterized as being limited, mandatory and for valuable consideration, designed to provide coverage for risks inherent in bank deposits, supplementary to the bank deposit privileges and protection offered by the system created by Financial Institutions Law. Such law also provided for the organization of SEDESA to manage the Deposit Guarantee Fund. Such company was organized in August 1995. The Bank holds a 10.5653% equity interest therein, according to the percentages set forth in Central Bank Communiqué “B” 9,756 of February 9, 2010. | | Law No. 24,485, and Presidential Decree No. 540/95, provided for the organization of a Bank Deposit Guarantee Insurance System, characterized as being limited, mandatory and for valuable consideration, designed to provide coverage for risks inherent in bank deposits, supplementary to the bank deposit privileges and protection offered by the system created by Financial Institutions Law. Such law also provided for the organization of SEDESA to manage the Deposit Guarantee Fund. Such company was organized in August 1995. The Bank holds a 9.9891% equity interest therein, according to the percentages set forth in Central Bank Communiqué “B” 10,060 of April 4, 2011. |
This system shall cover the deposits in Argentine pesos and foreign currency with the participating institutions as checking accounts, savings accounts, certificates of deposit or any other modes determined by Central Bank, as long as fulfilling the requirements under Presidential Decree No. 540/95 and any others established by the enforcement agency. On the other hand, Central Bank established that the deposits made by other financial institutions, those made by persons related to the Bank, deposits of securities, among others, would be excluded from the deposit guarantee system.
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BANCO MACRO S.A. AND SUBSIDIARIES | | This system shall cover the deposits in Argentine pesos and foreign currency with the participating institutions as checking accounts, savings accounts, certificates of deposit or any other modes determined by Central Bank, as long as fulfilling the requirements under Presidential Decree No. 540/95 and any others established by the enforcement agency. On the other hand, Central Bank established that the deposits made by other financial institutions, those made by persons related to the Bank, deposits of securities, among others, would be excluded from the deposit guarantee system. |
| | The Bank is related to different types of trusts. Below the different trust agreements are disclosed, according to the Bank’s business purpose: |
| 13.1. | | Interest in trusts for investment purposes. | | | | | As of December 31, 20092010 and 2008,2009, the amounts recorded in the Bank’s consolidated financial statements for certificates of participation (net of allowances for 224,193231,184 and 223,893,224,193, respectively) and debt securities held in financial trusts under “Other receivables from financial intermediation — Other receivables not covered by debtors classification regulations”, amounted to: |
| | | | | | | | | Financial trust | | 12/31/2009 | | | 12/31/2008 | | | | | | | | | | | Certificates of participation: | | | | | | | | | | | | | | | | | | Luján (a) | | | 77,348 | | | | — | | TST & AF (b) | | | 46,733 | | | | 33,148 | | Tucumán (c) | | | 25,163 | | | | 35,164 | | Gas Tucumán I (d) | | | 8,730 | | | | 12,191 | | Godoy Cruz (e) | | | — | | | | 14,642 | | Others (f) | | | 7,997 | | | | 18,771 | | | | | | | | | | | | | | | | | | Subtotal certificates of participation | | | 165,971 | | | | 113,916 | | | | | | | | | | | | | | | | | | Debt securities: | | | | | | | | | | | | | | | | | | Underwriting agreements (g) | | | 70,645 | | | | 136,513 | | San Isidro (h) | | | 82,925 | | | | 41,766 | | Created by Decree 976-01 (i) | | | 31,570 | | | | — | | Others | | | 21,647 | | | | 48,868 | | | | | | | | | | Subtotal debt securities | | | 206,787 | | | | 227,147 | | | | | | | | | | Total interest in trusts (1) | | | 372,758 | | | | 341,063 | | | | | | | | |
| | | | | | | | | Financial trust | | 2010 | | | 2009 | | | | | | | | | | | Certificates of participation: | | | | | | | | | | | | | | | | | | TST & AF (a) | | | 97,181 | | | | 46,733 | | Tucumán (b) | | | 63 | | | | 25,163 | | Luján (c) | | | — | | | | 77,348 | | Others (d) | | | 23,255 | | | | 16,727 | | | | | | | | | | | | | | | | | | Subtotal certificates of participation | | | 120,499 | | | | 165,971 | | | | | | | | | | | | | | | | | | Debt securities: | | | | | | | | | | | | | | | | | | Underwriting agreements (e) | | | 54,566 | | | | 70,645 | | San Isidro (f) | | | 87,920 | | | | 82,925 | | Created by Decree 976-01 (g) | | | 51,763 | | | | 31,570 | | Galtrust (h) | | | 32,874 | | | | — | | Chubut oil & gas royalties (i) | | | 24,313 | | | | — | | Others | | | 9,023 | | | | 21,647 | | | | | | | | | | | | | | | | | | Subtotal debt securities | | | 260,459 | | | | 206,787 | | | | | | | | | | | | | | | | | | Total interest in trusts (1) | | | 380,958 | | | | 372,758 | | | | | | | | |
| | | (1) | | See also note 24.Note 22. | | (a) | | Luján Trust | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | On May 20, 2003, the Luján trust was created for the purpose reduce the credit risk of the financing granted by Banco Macro S.A. to Federalia S.A. de Finanzas. | | | | The trust issued different classes of certificates of participation, all of them entitled to vote but with different economic rights. | | | | The main asset managed by the trust involves the real estate properties located in the districts of Luján, Navarro and General Rodríguez in the Province of Buenos Aires. | | | | As of December 31, 2007, the Bank was the beneficiary of 100% of the certificates issued by the trust. | | | | On June 6, 2008, the Bank sold on credit all of the certificates of participation to Federalia S.A. de Finanzas. | | | | On September 16, 2009, the Bank entered into an agreement with Federalia S.A. de Finanzas, whereby the Bank repurchased the 100% of this trust’s certificates. The Bank paid the price of this transaction part in cash and the rest by the settlement of the loan mentioned before. | | | | As per the latest accounting information available to date, corpus assets measured at cost basis amounted to 49,423. The recoverable value of corpus assets exceeds the Bank’s book values. | | | | This trust will end with the settlement of the certificates of participation and/or the sale of corpus assets. | | (b)(a) | | TST & AF Trust |
| | | On July 14, 1999, Austral Financial LLC, in its capacity as trustor, and First Trust of New York National Association, in its capacity as trustee, entered into a trust agreement known as TST & AF Financial Trust. On November 29, 2005, the trustor, the trustee and the beneficiaries (Austral Financial LLC, Proa del Puerto S.A. and Macro Bank Limited) agreed to replace the trustee by Sud Inversiones y Análisis S.A. |
| | | The purpose of the trust is to develop a real estate project in Puerto Madero (City of Buenos Aires) and the subsequent sale thereof to settle the certificates of participation. Therefore, it will terminate 30 years after its execution date and/or the date in which the project is paid in full, sold or otherwise fully dispose of. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | | The Trust issued certificates of participation with economic rights proportional to the capital invested by each Beneficiary. However, the trust is controlled jointly by all certificate-of-participation holders. |
| | | As of December 31, 20092010 and 2008,2009, Banco Macro S.A. is the beneficiary of 50%100% and 33%50% of the certificates of participation issued by the trust, respectively. |
| | | As per the latest accounting information available to date, corpus assets amounted to about 173,948.93,908. |
| | | On August 31, 2005, Federalia Sociedad Anónima de Finanzas, Maxifarm S.A. and Gabrinel S.A., in their capacity as trustors, entered into a trust agreement that created the financial trust “Fideicomiso Financiero Tucumán”.The trustors assigned to the trust debt securities issued by the trust “Fideicomiso República”, the purpose of which is the recoverability of certain assets, mainly loans and real property of former Banco República. |
| | | Tucumán Trust issued certificates of participation Class “A”, with characteristics of debt securities and Class “B” (subordinated to Class “A”). The unanimous vote of all certificates of participation is required to control the trust.trust (some of them with characteristics of debt securities). |
| | | As of December 31, 2007, Banco Macro S.A. held the Class “A” certificates. | | | | On June 6, 2008, partial settlements of the Tucuman Trust ´sTrust’s certificates were made by the Trust. In addition Banco Macro S.A. acquired the rest of Class “B” certificates. Consequently, since that date, Banco Macro S.A. owns 100% of the trust certificates. |
| | | As of December 31, 2009,2010, only class B certificates, entitled to the Trust equity, were pending payment. |
| | | As per the latest accounting information available to date, corpus assets (mainly, loans granted) amounted to about 31,452.8,744. |
| | | This trust will end with the full settlement of the certificates of participation. |
| (d)(c) | | GAS TucumáLuján I Trust |
| | | On July 31, 2006, Sud Inversiones & Análisis S.A., as Trustee, and Gasnor S.A., as Trustor, entered into aMay 20, 2003, the Luján trust agreement called “Fideicomiso Financiero GAS Tucumán I”. Thewas created for the purpose of this trust is to collectreduce the receivables (granted by Gasnor S.A.) accrued against customers who joined the plan related to the constructioncredit risk of the natural gas distribution network for new clients in the city of San Miguelfinancing granted by Banco Macro S.A. to Federalia S.A. de Tucumán, to settle the certificates to be issued.Finanzas. | |
| | In addition, Banco Macro S.A. granted a loan to Gasnor S.A. to finance the abovementioned construction works. Such loan provides that Gasnor S.A. may settle its payable by delivering such | The trust issued different classes of certificates of depositparticipation, all of them entitled to Banco Macro S.A.vote but with different economic rights (some of them with characteristics of debt securities). | |
| | As of the date of issuance of these financial statements, certificates of participation were issued for a face value amount of 18,942 which were assigned to Banco Macro S.A.; the remaining balance of which amounted to 8,516. | | | | According to the accounting information available as of the date of issuance of these consolidated financial statements, the corpus assets totaled 11,587. | | | | This trust will end with the full settlement of the certificates of participation. | | (e) | | Godoy Cruz Trust | | | | On August 29, 2006, Banco Finansur S.A., as trustee, and Corporación de los Andes S.A., as trustor, entered into an agreement to createThe main asset managed by the trust called “Fideicomiso Financiero Godoy Cruz”.involves the real estate properties located in the districts of Luján, Navarro and General Rodríguez in the Province of Buenos Aires. |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | The trustor assigned to the trust “Fideicomiso Godoy Cruz” buildings and plots of land located in the Godoy Cruz department, San Francisco del Monte district, Province of Mendoza. | | | | In addition, Class “A”, Class “B” (subordinated to the Class “A” certificates of participation) and Class “C” (subordinated to Class “A” and Class “B”) certificates of participation were issued. The unanimous vote of all certificates of participation is required to control the trust The purpose of the trust is to sell the assets mentioned above and to use the proceeds to settle the certificates of participation issued. | | | | As of December 31, 2008, Banco Macro S.A.2007, the Bank was the beneficiary of 100% of the Class “A”certificates issued by the trust. On June 6, 2008, the Bank sold on credit all of the certificates of participation.participation to Federalia S.A. de Finanzas. | |
| | As of | On September 16, 2009, Banco Macrothe Bank entered into an agreement with Federalia S.A. soldde Finanzas, whereby the Bank repurchased the 100% of its interestthis trust’s certificates. The Bank paid the price of this transaction part in this Trust to an unrelated company.cash and the rest by the settlement of the loan mentioned before. |
| | | On December 3, 2010, the Bank executed an agreement to sell 100% of the trust’s certificates, in two cash installments. On December 17, 2010, the first installment was paid, with the second installment falling due on May 30, 2011. |
| | | Including Fideicomiso Bisel Trust, which was created within the framework of the reorganization process of former Banco Bisel S.A., as established by section 35 bis, Law No. 21,526, on May 21, 2002, with assets transferred by former Banco Bisel S.A., and with Banco de la Nación Argentina being appointed as trustee (replaced by Sud Inversiones y Análisis S.A. as from May 20, 2008). The purpose of the trust is to realize the managed assets and settle the certificates of participation issued. As of December 31, 2009,2010, and 2008,2009, Banco Macro S.A., is beneficiary of 100% of the certificates issued by such trust. Additionally, an allowance was booked for the full amounts receivable booked on account of such certificates, since they were deemed unrecoverable. |
| (e) | | Underwriting agreements |
(g) | | | It relates to prepayments towards the placement price of trust securities of the financial trusts under public offerings, made by the Bank through underwriting agreements, such as Consubond, Tarjeta Shopping and Megabono,Consumax, among others. The assets managed for these trusts are mainly related to securitizations of consumer loans issued by others. Trust securities are placed once public offering is authorized by the CNV. Upon expiry of the placement period, once all trust securities have been placed on the market, the Bank recovers the disbursements made, plus the amount equal to the agreed-upon rate (“underwriting Price”). If after making the best efforts, such trust securities cannot be placed, the Bank (“Underwriter”) will retain the securities subject to underwriting. | |
| | As of the date of issuance of these financial statements, these prepayments were settled in full. | | (h)(f) | | San Isidro Trust |
| | | On June 4, 2001, Fideicomiso San Isidro was created for the purpose of securing loans that Banco Macro S.A. had previously granted to the trustor. The corpus asset was a real estate property. |
| | | The certificates of participation were delivered to Banco Macro S.A. to settle a loan granted previously to República S.A. de Finanzas. | |
| | In 2008, the Bank decided to develop | Subsequently, a real estatestate urbanization project. | | | | project was undertaken prior to the sale of the real property. On November 7, 2008, the Bank sold on credit all of the certificates of participation issued by the trust to an unrelated company. This loan was secured by such certificates. |
| | | Additionally, the trust issued debt securities to finance its activity for a total amount of USD 19,500,000.20,700,000. The Bank acquired such debt securities, which are entitled to vote, taking the control of the main decisions of the Trust. |
| | | According to the accounting information available as of the date of issuance of these consolidated financial statements, the corpus assets amounted to about 176,384.102,384. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | (i)(g) | | Trust created by Decree 976-01 |
| | | On September 13, 2001, the Argentine Government (trustor) and Banco de la Nación Argentina (trustee) entered into a trust agreement called “Fideicomiso Creado por Decreto 976-01” (Trust created by Presidential Decree 976-01). |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | The purpose of the Trust is the development of projects, works, services and maintenance on road and railway infrastructure in rural and semirural areas, among others. The trust revenues (corpus assets) arise, mainly, from collecting tax on gas oil, equivalent to 22% of the price per liter. Such tax was created by Law No. 26,028 and its effective term was subsequently extended until 2024 by Law 26,422. |
| | | As of the date of issuance of these consolidated financial statements, the debt securities acquired by the Bank account for less than 2% of the trust issues. |
| (h) | | Galtrust Financial Trust |
| | | On October 13, 2000, Banco de Galicia y Buenos Aires S.A. (trustor) and First Trust of New York N.A., permanent representation in Argentina (financial trustee), organized Galtrust I financial trust. The purpose of the trust is to collect the corpus assets (BOGAR 2018) and settle the debt securities and certificates of participation issued. |
| | | BOGAR 2018 arise from the exchange of loans in US dollars granted by the trustor to several provincial governments in Argentina, secured with Federal Tax Revenue Sharing System, under Presidential Decree No. 1,579 issued on August 27, 2002. |
| | | As of the date of issuance of these financial statements, the Bank is the beneficiary of the 26% of the debt securities in force. |
| (i) | | Chubut oil & gas royalties Trust |
| | | On July 6, 2010, the Province of Chubut (trustor) and Banco de Valores S.A. (trustee) entered into a trust agreement that created the financial trust “Fideicomiso Chubut regalías hidrocarburíferas” (Chubut oil & gas royalties Trust). |
| | | The purpose of such trust is to finance production projects, infrastructure works in the province of Chubut and financial investments aimed at increasing the state’s interest in the energy sector. Trust revenues (corpus assets) arise mainly from credits resulting from the assignment, by the Province in favor of the trustee, of the rights on such oil & gas royalties collected by the appointed concessionaire (Pan American Energy LLC., Argentine Branch). |
| | | As of the date of issuance of these financial statements, the debt securities acquired by the Bank account for 4% of the trust issues. |
| 13.2. | | Trusts created using financial assets transferred by the Bank | |
| | | The Bank transferred financial assets (loans) to trusts for the purpose of issuing and selling securities the collection of which is guaranteed by the cash flow resulting from such assets or group of assets. This way, the funds originally used to finance loans are recovered early, increasing the Bank’s lending capacity. | |
| | | The Bank does not hold securities issued by these trusts. | |
| | | As of December 31, 2009,2010, and 2008,2009, the trusts’ assets managed amount to 7,3537,396 and 4,296,7,353, respectively. | |
| 13.3. | | Trusts as collateral for the loans granted by the Bank | |
| | | As it is common in the Argentine banking market, the Bank requires, in some cases, that the debtors present certain assets or entitlements to receiving assets in a trust as a guarantee for the loans granted. This way, the risk of losses is minimized and access to the security is guaranteed in case of the debtor ´sdebtor’s noncompliance. | |
| | | Trusts usually act as conduits to collect cash from the debtor’s flow of operations and send it to the bank for the payment of the debtor’s loans and thus ensure compliance with the obligations assumed by the trustor and guaranteed through the trust. | | | | | Under this kind of trust, the Bank grants loans to trustors and creates a trust, where the trustor transfers an asset or right it owns to ensure compliance with the loan received. | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | Additionally, other guarantee trusts manage specific assets, mainly real property. | |
| | | Provided there is no noncompliance or delays by debtor in the obligations assumed with the beneficiary, the Trustee shall not execute the guaranty and all excess amounts as to the value of the obligations are reimbursed by the Trustee to the debtor. | |
| | | As of December 31, 20092010 and 2008,2009, the trusts’ managed amount to 380,175273,508 and 339,331,383,533, respectively. | |
| 13.4. | | Normal trust activities (The Bank acts as trustee) | |
| | | The Bank performs management duties in relation to the corpus assets according to the agreements and only performs trustee duties and has no other interests in the trust. | |
| | | In no case shall the Trustee be liable with its own assets or for any obligation deriving from the performance as trustee. Such obligations do not imply any type of indebtedness or commitment for the trustee and they will be fulfilled only through trust assets. In addition, the trustee will not encumber the corpus assets or dispose of them beyond the limits established in the related trust agreements. The fees earned by the Bank from its role as trustee are calculated according to the terms and conditions of the agreements. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | The trustsTrusts usually manage funds derived from the activities performed by trustors. On the last day of each month, the trust’s assets are not material because they are transferred periodically by the trustee (the Bank) to the beneficiary according to the trust agreement. To such end, the Bank enters into administration trust agreementstrustors for the following main purposes: |
| (a) | | Managing the trust’s corpus assets to guaranteeGuaranteeing in favor of the beneficiary the existence of the resources required to finance and/or pay certain obligations, such as the payment of amortization installments regarding work or service certificates, and the payment of invoices and fees stipulated in the related agreements. | |
| (b) | | Promoting the production development of the private economic sector at a provincial level. | |
| (c) | | In connection withBeing a party to public work concession agreementagreements granting road exploitation, management, keeping and maintenance. |
| | | Additionally, other trusts manage specific assets, mainly real property. |
| | | As of December 31, 2010 and 2009, and 2008, the trusts’ assets managed amount to 885,863 and 604,345, and 387,273, respectively. |
14. | | COMPLIANCE WITH REQUIREMENTS TO ACT AS OVER-THE-COUNTER SECURITIES MARKET BROKER |
| | Under CNV Resolution 368/01, the Bank’s shareholder’s equity exceeds the minimum amount required. |
15. | | RESTRICTION ON EARNINGS DISTRIBUTION |
| a) | | According to Central Bank provisions, 20% of income for the year plus/minus prior-year adjustments and less accumulated losses as of the prior year-end, if any, should be appropriated to Legal Reserve. Consequently, the Shareholders’ Meeting held on April 6, 2010,26, 2011, decided to apply 150,386202,086 out of unappropriatedUnappropriated retained earnings to increase such legal reserve. | |
| b) | | As established in the issuance conditions for the 1st series of Class 1 Corporate Bonds mentioned in noteNote 10.b.1), and as established by Central Bank Communiqué “A” 4,576 the Shareholders’ Meeting held on April 6, 2010,26, 2011, decided to appropriate 55,52758,146 out of unappropriated retained earnings”earnings to set a special reserve for interest to be paid upon the maturities taking place in June and December 2010.2011. | |
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BANCO MACRO S.A. AND SUBSIDIARIES | c) | | Under Law No. 25,063, dividends to be distributed in cash or in kind in excess of taxable income accumulated as of the end of the fiscal year immediately preceding the payment or distribution date shall be subject to a 35% income tax withholding as single and definitive payment. Income to be considered in each year will result from deducting the tax paid for the tax period(s) in which income was distributed or the related proportional amount from taxable income, and adding dividends or income from other corporations not computed upon determining such income in the same tax period(s). |
| d) | | Through Communiqué “A” 4,589, as supplemented,5,072, the Central Bank established the general procedure that should be followed by the financial institutions infor the distribution of earnings. In this regard, the banksAccording to that willprocedure, earnings may only be distributing earnings will have to requestdistributed upon express authorization fromby the Central Bank, and show compliance withprovided there are no records of the requirements establishedBank having received financial aid from the Central Bank due to illiquidity or shortages in payments of minimum capital, among other previous conditions listed in the abovementioned communiqués regarding information for. |
| | | Therefore, earnings may only be distributed as long as the month prior to the date on which the request is made. Consequently, to distributeBank has income after deducting, Unappropriated retained earnings, the following items mustamounts of the legal and statutory reserves which are mandatory, the positive net difference between the book value and market value or present value reported by Central Bank, as the case may be, deducted fromof government debt securities and/or of the Central Bank monetary regulation not valued at market price, amounts capitalized due to legal proceedings related to deposits, among other items. |
| | | As of December 31, 2010, the adjustments to be made to unappropriated retained earnings are as of year-end:follows: |
| i. | | Capitalized amounts for differences resulting fromrelated to compliance with court orderslegal measures related to deposits in the dollarizationamount of deposits of 48,998 (net of amortization -Banco Macro S.A. stand – alone basis-).52,273. | |
| ii. | | The positive net difference between the book value and the market value present value or discounted cash flow, as the case may be, of unlisted government securities and federal guaranteed loans in portfolio amountingthe amount of 13,765, (Banco Macro S.A. stand – alone basis). |
Under Central Bank standards, the Bank should consider the distributable amount to be either (i) the income obtained after deducting the items mentioned in the above paragraphs from unappropriated retained earnings, and (ii) the resulting amount from calculating the excess of computable capital over required minimum capital as of December 31, 2009 based on the requirement as of such date, whichever is lower, also considering the restrictions listed in the abovementioned paragraphs.
On May 28, 2010, the Central Bank notified the Bank that it had authorized the distribution of cash dividends amounting to 208,070.
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BANCO MACRO S.A. AND SUBSIDIARIES
| d) | | According to Law No. 25,063, the dividends distributed in cash or in kind will be subject to a 35% income tax withholding as a single and final payment. Dividend payments are subject to such withholding if they exceed the sum of: (i) the accumulated taxable earnings accumulated as of the year-end immediately prior to the payment or distribution date net of the income tax paid for the fiscal years which income is being distributed and (ii) certain tax-exempt income (such as dividend payments from other corporations). This is applicable for tax years ended as from December 31, 1998. | | | e) | | On June 16, 2006, the Bank and Crédit Suisse First Boston International entered into a loan agreement for USD 50,000,000, maturing on January 21, 2008, at LIBOR plus 1.95%. Such agreement includes restrictions mainly related to the compliance with the payments established. In the event of noncompliance with the agreement, the Bank will be unable to distribute dividends either directly or indirectly through its subsidiaries. On January 18, 2008, an addendum was signed changing the expiration date to January 21, 2010, and establishing a nominal interest rate of 8.55% p.a. Finally, on January 21, 2010, the Bank cancelled the mentioned loan contract.17,387. |
| | | Lastly, the maximum amount to be distributed cannot exceed the excess payments of required capital minimum considering, for this purpose only, an increasing adjustment of 30% the required amount and deducting the abovementioned adjustments, the capitalized amount for minimum presumed income tax and the reserves used to compensate instruments representing long-term debt liable to forming part of the Bank’s computable equity. |
| | | Having applied the above, the maximum amount to be distributed for the year ended December 31, 2010, totals 1,785,335. |
| | Subsequently, on April 6, 2010, 26, 2011,the Regular and Special General Shareholders’ Meeting of Banco Macro S.A. approved, among other issues, (i) the compensation paid to the Directors amounting to 31,154,41,776 (ii) the distribution of cash dividends for an amount of up 208,070505,312, which was authorized by the Central Bank on May 28, 2010March 18, 2011 and (iii) the write off of payments made on behalf of shareholders for their personal assets tax for an amount of 8,320.11,156. |
| | Federal Public Revenue Agency — Federal Tax Bureau (AFIP) has reviewed the tax returns filed by the Bank related to income tax and minimum presumed income tax in previous fiscal years. | |
| | Additionally, provincial and municipal tax agencies have conducted reviews of other taxes (mainly taxes on gross income) for the previous fiscal year.years. | |
| | Listed below are the most significant claims arising from these reviews: |
| a) | | AFIP objected the income tax returns filed by the former Banco Bansud S.A. (for fiscal years ended from June 30, 1995, through June 30, 1999, and the six-month irregular period ended December 31, 1999) and by the former Banco Macro S.A. (for fiscal years ended 1998, 1999 and 2000) income. |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | The issues under discussion and on which the regulatory agency bases its position are the impossibility to deduct the credits with collateral security and the requirement to begin judicial collection proceedings for outstanding receivables to be deducted for tax returnspurposes. Both issues were analyzed by the Federal Administrative Tax Court in similar cases, which issued a resolution in favor of the former Banco Macro S.A.position assumed by the Bank. |
The issues under discussion and on which the regulatory agency bases its position are the impossibility to deduct the credits with collateral security and the requirement to begin judicial collection proceedings for outstanding receivables to be deducted for tax purposes. Both issues were analyzed by the Federal Administrative Tax Court in similar cases, which issued a resolution in favor of the position assumed by the Bank.
| | | On June 29, 2009, and August 26, 2009, the Bank partly joined a settlement agreement under Law No. 26,476 Title I regarding the credits in question that lack collateral security. |
| b) | | AFIP objected to the income tax returns of the Bank for fiscal years ended December 31, 2002, 2003through December 31, 2004, and 2004.the minimum presumed income tax settlement of the Bank for such tax years. | |
| | | The matter under discussion and on which the tax agency bases its position is the tax value of the amount pending receipt at that time for the compensation bonds resulting from the asymmetric translation into pesos (Law No. 25,561, Presidential Decree No. 214/02 and 216/02). | |
| | | On August 31, 2009, the Bank joined a settlement agreement created by Law No. 26,476, Title I regardingregularizing the claim brought by tax authorities. | |
| c) | | The Buenos Aires City Tax Authorities (DGR CABA) attributed turnover tax differences to former Banco Macro S.A. for fiscal year ended 2002, in relation to the treatment of foreign exchange differences and the compensation bond. |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | On February 27, 2009, thea precautionary measure filed by the Bank was rejected and, therefore, an appeal was filed with Court of Appeals in and for the City of Buenos Aires. |
| | | In September 2010, the Bank joined a settlement agreement under Law No. 3,461, of the DGR CABA regularizing the claim brought by tax authorities. |
| d) | | The DGR CABA attributed turnover tax differences to former Banco Bansud S.A. for fiscal years ended 2002 and 2003, based mainly on the adjustments made in objections regarding foreign exchange differences and the compensation bond. | |
| | | In October 2009 and September 2010, the Bank partially joined a settlement agreement under General Resolution 1489/1,489/09 of a DGR CABA.CABA and under Law No. 3,461, of the DGR CABA regularizing the claim brought by tax authorities. | |
| e) | | The Buenos Aires Province Tax Authorities (DGR ARBA) attributed a turnover tax difference to Banco Macro S.A. related to mechanisms of distribution of gross income to the different provinces in relation to period 2002 and 2006. On May 5, and October 14, 2008, the Bank filed its defense brief which was dismissed. The Bank filed appeals with the Province of Buenos Aires Tax Appeal Court.Court, which are still pending judgement. |
| | | In August 2010, the Bank partially joined a settlement agreement under Law 12,914, Regulatory Resolution No. 35/2010. |
| | | Therefore, the items described in a) through e) above have now been settled. |
| | Additionally, there are other appeals which are not relevant with Tax Court. | |
| | The Bank’s Management believes there are no additional significant effects to those already recognized in the books that may result from the final outcome of such claims. |
17. | | ACCOUNTS IDENTIFYING COMPLIANCE OF THE MINIMUM CASH REQUIREMENTRISK MANAGEMENT POLICIES
|
| | In financing activities there are a multiple number of risks to which banks are exposed. These risks are managed through a continuous Identification, Evaluation, Measuring, Control/Mitigation and Monitoring process of the risk events or potential risk situations, so as to provide reasonable assurance regarding their impact. |
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BANCO MACRO S.A. AND SUBSIDIARIES | | All persons working at the Bank are responsible for the risk management process, in spite of the fact that the process begins with the Bank’s Board of Directors and has been designed to provide reasonable assurance that the Bank’s objectives are been fulfilled; every employee plays a specific role. |
| | The Board of Directors establishes the organizational risk strategies and approves the policies and structures upon which the Bank will base its comprehensive risk management. |
| | The members of the Board of Directors participate actively in the daily management, sharing their experience and knowledge of the financial system, forming different Committees (Executive, Audit, Anti-Money-Laundering, Internal Audit, IT, Assets and Liabilities (CAP), Loan, Recovery and Operational Risk Committees). |
| | Some of the key risks in financing activities involve: |
| | The following table showscredit risk results from the items computed by possibility of loss derived from our customers or counter-parties from fully or partially breaching financial obligations they have undertaken with the Bank. |
| | Banco Macro S.A. (stand-alone basis)has counter-party and Banco del Tucumán S.A., undercredit risk policies, aimed at its management and control, the purpose of which is to ensure risks fall within a risk tolerance level decided by the bank and the tolerance level established by Central Bank rules,regulations effective to constitutethis end. The Credit Risk Management is in charge of applying the minimum cash requirement for December 2009policies, administrating and monitoring the exposure to risk. The Board of Directors and the Executive and Senior Credit Committees are listed below, indicatingempowered to define and amend credit policies, the accounts balances.application of which is the responsibility of the abovementioned Management. |
| | | | | | | | | | | Banco Macro S.A. | | | | | | | (stand-alone | | | Banco del | | Item | | basis) | | | Tucumán S.A. | | | | Cash | | | | | | | | | Cash on hand | | | 1,110,141 | | | | 194,550 | | Amounts in Central Bank accounts | | | 2,693,319 | | | | 216,701 | | | | Other receivables from financial intermediation | | | | | | | | | | | Special guarantee accounts with the Central Bank | | | 217,420 | | | | 25,006 | | | | | | | | | | | Total | | | 4,020,880 | | | | 436,257 | | | | | | | | |
| | Procedural manuals and tools (information systems, rating and monitoring systems, measuring models, recovery policies) have been developed, which, as a whole, allow for a risk treatment based on the type of the customers. Compliance with Central Bank credit regulations related to credit diversification, grading (establishing credit limits based on the customers’ net worth) and concentration, is also monitored continuously. |
18. | | The Management of Corporate and Individual Risks and Micro-projects analyzes the credit risks of the different segments and provides technical support for credit decisions. The Senior Committee, Junior Committee, SME Banking Committee, Agro Committee, the Large and Regional Companies Committee and senior officers with customer-rating powers participate in the credit approval process, within a progressive scale in relation to the amount being requested, transaction’s terms and conditions. |
| | The Credit Administration and Transactions Management is also required to mitigate credit risks through its Credit Review, Lending Transactions and Credit Administration sectors. To do so, it monitors the documentation and settlement of transactions, among other matters. Also, the classification of debtors and the debtors’ guarantees are reviewed on a regular basis (so as to determine the sufficiency of the provisions in conformity with the standards established by the Central Bank in this regard). |
| | Within Credit Risk Management, the Analysis and Planning area duties involve monitoring risk exposure using tools such as alerts and indicators, preparing reports that serve as a source of information in portfolio management by the Bank’s Management, Credit Risk Management and the commercial areas. |
| | Also, Prelegal Recovery Management defines and carries out the recovery tasks involving the arrears portfolio. |
| | Finally, Management has a specific area focused on creating, amending and formalizing the standards and procedures that regulate the credit cycle and the purpose of which is to minimize and/or neutralize credit risks. |
| | RISK MANAGEMENT POLICIESOperational risk
|
In financing activities there are a multiple number of risks to which banks are exposed. These risks are managed through a continuous Identification, Evaluation, Measuring, Control/Mitigation and Monitoring process of the risk events or potential risk situations, so as to provide reasonable assurance regarding their impact.
All persons working at the Bank are responsible for the risk management process, in spite of the fact that the process begins with the Bank’s Board of Directors. The process has been designed to provide reasonable assurance of fulfilling the Bank’s objectives; every employee fulfills a specific role.
The Board of Directors establishes the organizational risk strategies and approves the policies and structures upon which the Bank will base its comprehensive risk management.
The members of the Board of Directors actively participate in the daily management, based on their experience and knowledge of the financial system, participate in different Committees (Executive, Audit, Anti-Money-Laundering, Internal Audit, IT, Assets and Liabilities (CAP), Loan, Recovery and Operational Risk Committees). | | The Bank adopted the definition of Operational risk under the Basel 2 Accord and the definition established by the Central Bank through its Communiqué “A” 4793, which consists in the risk of incurring losses due to the lack of adjustment or weaknesses in the internal processes, systems or persons, or due to external events. This definition includes legal risk but excludes strategic and reputation risk. |
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BANCO MACRO S.A. AND SUBSIDIARIES Some of the main risks are discussed below: | | The Bank has policies, procedures and structures, appointing a Head of Operational Risk and an Operational Risk Committee, to ensure an Operational Risk Management plan for identifying, assessing and managing risks, with the purpose of assisting Area Managers and the Bank’s Board of Directors, in an environment of rapidly changing and significant risks. |
Credit risk
Credit risk results from the possibility of loss derived from our customers or counter-parties fully or partially breaching financial obligations they have undertaken with the Bank.
Banco Macro S.A. has counter-party and credit risk policies, aimed at its management and control, the purpose of which is to ensure risks fall within a risk tolerance level established by the bank and the tolerance level established by the Central Bank regulations. Credit Risk Management is in charge of applying the policies, managing and monitoring the exposure to risk. The Board of Directors and the Executive and Senior Credit Committees are empowered to define and amend credit policies, the application of which is the responsibility of the abovementioned Management.
Procedural manuals and tools (information systems, rating and monitoring systems, measuring models, recovery policies) have been developed, which, as a whole, allow for a risk treatment based on the type of the customers. Compliance with the Central Bank credit regulations related to credit diversification, grading (establishing credit limits based on the customers’ net worth) and concentration, is also monitored continuously.
The Management of Corporate and Individual Risks and Micro-projects analyzes the credit risks of the different segments and provide technical support for credit decisions. The Senior Committee, Junior Committee, SME Banking Committee, Agro Committee, the Large and Regional Companies Committee and senior officers with customer-rating powers participate in the credit approval process. Different levels of approval are required based on the amount and terms and conditions of the loan requested.
The Credit Administration and Transactions Management is also required to mitigate credit risks through its Credit Review, Lending Transactions and Credit Administration sectors. In relation to this, among other matters, they control the formalization and settlement of the transactions and prepare reports on portfolio behavior. Also, the classification of debtors and the debtors’ guarantees are reviewed on a regular basis (so as to determine the sufficiency of the provisions in conformity with the standards established by the Central Bank).
Within Credit Risk Management, the duties of the Analysis and Planning area involve monitoring risk exposure using tools such as alerts and indicators, preparing reports that serve as a source of information in portfolio management by Bank’s Management, Credit Risk Management and the commercial areas.
In addition, Pre-legal Recovery Management defines and carries out the recovery tasks involving the arrears portfolio.
Finally, the Management has a specific area focused on creating, amending and formalizing the standards and procedures that regulate the credit cycle the purpose of which is to minimize and/or neutralize the credit risks.
Operational risk
The Bank adopted the definition of Operational risk under the Basel II Accord and the definition established by the Central Bank through its Communiqué “A” 4,793, which consists in the risk of suffering losses due to the lack of adjustment or defects in the internal processes, systems or persons, or due to external events. This definition includes legal risk but excludes strategic and reputation risk.
The Bank has policies, procedures and structures, and a Head of Operational Risk and an Operational Risk Committee, the main mission of which is to oversee an Operational Risk Management plan which includes policies, programs, measurements and competences for identifying, assessing and managing risks, with the purpose of assisting Area Managers and the Bank’s Board of Directors, in an environment of rapidly changing and significant risks.
In this context, the Evolutionary Comprehensive Operational Risk Management Model was developed, which involves the identification, measurement, management and monitoring of operational risks. A training plan was designed to begin communicating | | In this context, the Evolutionary Comprehensive Operational Risk Management Model was developed, which involves the identification, measurement, management and monitoring of operational risks. A training plan was designed to begin conveying the concepts inherent to Operational Risk and the cultural change that this generates, and an implementation plan of the model was put into practice to achieve full implementation of all of its stages. |
| | During fiscal 2010, the Bank continued to apply the above model, using it to carry out tasks intended to assess all of the processes. Progress was made in integrating the operational and technological risk assessment models, risk timing and impact assessment matrices were applied to assess processes and subprocesses. The qualitative assessment of risks was enhanced, identifying action plans and proposals to make improvements in critical processes, all of this complying fully with the set goals. |
| | Also a procedure has been applied to gather information on events and losses, the purpose of which is to reduce incidents and loss amounts, thus incorporating a quantitative assessment into the risk management model, by recording risk events and losses in a centralized database. |
| | During 2010, a tool was put in place to manage operational risk and used to manage identified risks. Different indicators are calculated so as to have an information system providing an overall view of the results of the different practices and tools involved in operational risk management. |
| | Aiming to reinforce the operational risk function, during 2010 progress was made in implementing the method through which the IT areas can identify, assess and control risks related to the Bank’s information assets and to specific events, generating information that is later taken into consideration when decisions have to be made. |
| | With regards to IT and information systems Risk Management, the Bank has contingency and business continuity plans in place to minimize the risks that could affect the Bank’s continuity of operations. |
| | Market and Liquidity Risk |
| | The market risk is defined by the uncertainty to which the Bank’s future results are exposed in light of adverse movements in market conditions. Should such adverse market conditions arise, the Bank would sustain unexpected losses or decreases in income as a result of changes in the value of the main market factors or variables, such as interest rates, foreign exchange rates and financial asset values, among others. |
| | The liquidity risk is related to the Bank suffering a shortage of funds to meet its obligations, and that hence, it is required to depend on assets or acquire alternative resources (in unfavorable conditions), in order to meet customer fund requirements. |
| | Banco Macro S.A. has written policies on the management and administration guidelines in relation to market, liquidity and price risks. |
| | The Bank’s investment strategy is reviewed on a regular basis by the CAP in the context of the economic and market tendencies in relation to the market risk, assets and liabilities concentration, maturity, expected rate of return and alternative investments, according to which the exceptions and capacities are also assessed. |
| | The CAP evaluates the Bank’s situation based on reports provided by Finance Management. To analyze the market risk it uses the VAR (Value at Risk) method, determining the present value of net assets, weighting it using the modified duration and the historical volatility of the interest rate at a 99% confidence interval. |
| | The Financial Planning area uses the following instruments in preparing its reports and recommendations: sensitivity analysis, stress tests, index curves, in addition to other simulations. The adoption of measures based on the information provided is left to the Finance Management’s discretion, in relation to several factors that it must take into consideration such as the market conditions or the complexity and variety of transactions. |
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BANCO MACRO S.A. AND SUBSIDIARIES In 2009, progress was made concerning the integration of operational and technology risk assessment models, risk impact and frequency matrices were applied to evaluate processes and sub-processes, qualitative assessment of risk was improved by identifying action plans and improvement proposals for critical processes. The bank believes that it fully met the objectives for fiscal 2009. | | The reports prepared contemplate the following aspects: changes in yield curves; a mismatch of assets and liabilities in relation to currency, rates, terms and based on their volatility and speed of realization; minimum cash; changes, rates and volatility of term deposits, and the participation of institutional investors; price and liquidity risk; limits established by the CAP and issuance of warnings. |
Additionally, a procedure to collect events and losses was implemented. Its aim is to help reduce the number of incidents and the amounts of the related losses, thus incorporating quantitative assessment to the risk management model, through risk events and losses log on a centralized base. | | Additionally, the Bank seeks to maintain an adequate degree of liquidity through the prudent management of assets and liabilities, in regards to both the cash flow as well as the concentration thereof. |
With respect to Risk Management related to the IT and information systems, the Bank has contingency and business continuity plans in place to minimize the risks that could affect the Bank’s continuity of operations. | | The administration of liquidity needs to be supported by a planning process that determines the current and future cash needs, considering changes in economic, political, regulatory and other conditions. This makes it necessary to identify forecast and possible cash outflows, as well as consider alternative strategies to handle assets and liabilities in critical situations. |
Market and Liquidity Risk
The market risk is defined by the uncertainty to which the Bank’s future results are exposed to adverse movements in market conditions. Should such adverse market conditions arise, the Bank would sustain unexpected losses or decreases in the income capacity as a result of changes in the value of the main market factors or variables, such as interest rates, foreign exchange rates and financial asset quotes, among others.
The liquidity risk is related to the Bank suffering a shortage of funds to meet its obligations, and that hence, it is required to depend on assets or acquire alternative resources (in unfavorable conditions), in order to meet customer fund requirements.
Banco Macro S.A. has written policies on the management and administration guidelines in relation to market, liquidity and price risks.
The Bank’s investment strategy is reviewed on a regular basis by the Assets and Liabilities Committee, considering the context of the economic and market tendencies in relation to the market risk, assets and liabilities concentration, maturity, expected rate of return and alternative investments, according to which the exceptions and capabilities are also assessed.
The Assets and Liabilities Committee evaluates the Bank’s situation based on reports provided by Finance Management. To analyze the market risk it uses the VAR (Value at Risk) method, determining the present value of net assets, weighting it using the modified duration and the historical volatility of the interest rate at a 99% confidence interval.
The Financial Planning area uses the following instruments in preparing its reports and recommendations: Sensitivity analysis, stress tests, index curves, in addition to other simulations. The adoption of measures based on the information provided is left to the Finance Management’s discretion, in relation to several factors that it must take into consideration such as the market conditions or the complexity and variety of transactions.
The reports prepared contemplate the following aspects: changes in yield curves; a mismatch of assets and liabilities in relation to currency, rates, terms and based on their volatility and speed of realization; minimum cash, changes, rates and volatility of term deposits, and the participation of institutional investors; price and liquidity risk; limits established by the Assets and Liabilities Committee and issuance of warnings.
Additionally, the Bank seeks to maintain an adequate degree of liquidity through the prudent management of assets and liabilities, with respect to the timing of the cash flows as well as the concentration of risk.
The administration of liquidity needs to be supported by a planning process that determines the current and future cash needs, considering changes in economic, political, regulatory and other conditions. This makes it necessary to identify forecast and possible cash outflows, as well as consider alternative strategies to handle assets and liabilities in critical situations.
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BANCO MACRO S.A. AND SUBSIDIARIES
| | The Bank evaluates the liquidity situation through different tools, some of which include: |
| 1. | | Business Plan.plan. This is the starting point to determine the cash needs of the current year. | |
| 2. | | Liquidity Test.test. This is used to define the amount of funding required in a predetermined series of future dates assuming normal market circumstances and without there being any significant changes in the business. | |
| 3. | | Stress Tests.tests. Used to quantify the impact of individual or systemic illiquidity scenarios. | |
| 4. | | Mismatch control. The Committee defines the amount of the accumulated mismatch that is acceptable for each one of the tranches or gaps in the liquidity test, both in the normal and stress scenarios. | |
| 5. | | Assets and Liabilities Assumptions. In the process of constructing the liquidity mismatches, whether in normal market or stress situations, assumptions used includeare to be included for the assets and liabilities of the balance sheet, taking into account the stability, diversification, and historical renewal percentagesrenovation percentages. |
| | Finally, the purpose of the price risk or interest rate policy is to ensure that the Committee has the adequate information, tools and procedures enabling it to measure, manage and control the price risk. |
| | One of the objectives in relation to the price risk is eliminating the unwanted risk from the different assets and liabilities.liabilities, but it is also the Bank’s objective to take advantage of the business opportunities that changes in interest rates and prices may offer. |
Finally, the purpose of the price risk or interest rate policy is to ensure that the Committee has the adequate information, tools and procedures enabling it to measure, manage and control the price risk.
One of the objectives in relation to the price risk is to eliminate the unwanted risk from the different assets and liabilities, but it is also the Bank’s objective to take advantage of the business opportunities that changes in interest rates and prices may offer.
The Finance Management reports to the Assets and Liabilities Committee on a monthly basis on the price risk exposure and the effects that may be caused in the Bank’s financial margin. The risk reports should clearly compare the existing exposure with the limits policy, using it for analysis purposes: Identification | | The Finance Management will report to the CAP on a monthly basis on the price risk exposure and the effects that may be caused in the Bank’s financial margin. The risk reports should clearly compare the existing exposure with the limits policy, using it for analysis purposes: identification of market factors, sensitivity to market factors, volatility, correlations, value at risk, index curves, stress tests, among others. |
19.18. | | BALANCES IN FOREIGN CURRENCY |
| | The balances of assets and liabilities denominated in foreign currency are as follows: |
| | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | | | 2009 | | 2008 | | | 2010 | | 2009 | | ASSETS | | | Cash | | 2,634,999 | | 1,289,351 | | | 2,199,875 | | 2,634,999 | | Government and private securities | | 1,596,822 | | 510,061 | | | 2,581,728 | | 1,548,189 | | Loans | | 1,899,185 | | 2,128,481 | | | 2,382,835 | | 1,899,185 | | Other receivables from financial intermediation | | 1,264,164 | | 413,169 | | | 2,846,622 | | 1,312,797 | | Assets under Financial Lease | | 72,334 | | 69,188 | | | Receivables from financial leases | | | 59,958 | | 72,334 | | Investments in other companies | | 550 | | 500 | | | 577 | | 550 | | Other receivables | | 30,036 | | 57,613 | | | 43,877 | | 30,036 | | Items pending allocation | | 257 | | 803 | | | 456 | | 257 | | | | | | | | | | | | | Total | | 7,498,347 | | 4,469,166 | | | 10,115,928 | | 7,498,347 | | | | | | | | | | | | | | | | LIABILITIES | | | Deposits | | 3,895,939 | | 2,521,198 | | | Other liabilities from financial intermediation | | 1,892,293 | | 901,277 | | | Other liabilities | | 5,546 | | 8,360 | | | Subordinated Corporate Bonds | | 571,510 | | 519,879 | | | Items pending allocation | | 2 | | 3 | | | | | | | | | | Total | | 6,365,290 | | 3,950,717 | | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | As of December 31, | | | | 2010 | | | 2009 | | LIABILITIES | | | | | | | | | | | | | | | | | | Deposits | | | 3,890,417 | | | | 3,895,939 | | Other liabilities from financial intermediation | | | 3,329,221 | | | | 1,892,293 | | Other liabilities | | | 5,495 | | | | 5,546 | | Subordinated Corporate Bonds | | | 598,470 | | | | 571,510 | | Items pending allocation | | | 3 | | | | 2 | | | | | | | | | | | | | | | | | | Total | | | 7,823,606 | | | | 6,365,290 | | | | | | | | |
20.19. | | INTEREST-BEARING DEPOSITS WITH OTHER BANKS |
| | Included in “Cash” there are: (a) no interest-bearing deposits with the Central Bank as of December 31, 2010 and 2009 and (b) interest-bearing deposits in foreign banks totaling 269,155 and 363,041 as of December 31, 2010 and 2009, while as of December 31, 2008 there are interest –bearing deposits totaling 2,059,041 and (b) interest-bearing deposits in foreign banks totaling 363,041 and 128,002 as of December 31, 2009 and 2008, respectively. |
| | In 2010 and 2009 interest-bearing deposits with the Central Bank did not yield a nominal annual interest rate. Additionally, interest-bearing deposits in foreign banks yielded a nominal annual interest rate of approximately 0.59% and 0.54% as of December 31, 2010 and 2009, respectively. |
20. | | GOVERNMENT AND PRIVATE SECURITIES |
| | | | | | | | | | | As of December 31, | | | | 2010 | | | 2009 | | GOVERNMENT SECURITIES | | | | | | | | | | | | | | | | | | Holdings in Special Investment Accounts | | | | | | | | | In pesos: | | | | | | | | | Federal Government bonds at 2% – Maturity 2014 | | | — | | | | 222,169 | | Federal Government bonds at Badlar + 2.75% – Maturity 2014 | | | — | | | | 191,384 | | Secured bonds Decree 1,579/02 at 2% – Maturity 2018 | | | — | | | | 178,979 | | Discount bonds at 5.83% – Maturity 2033 | | | — | | | | 18,207 | | Consolidation bonds at 2% – Sixth series – Maturity 2024 | | | — | | | | 5,350 | | | | | | | | | Subtotal holdings in Special Investment Accounts — In pesos | | | — | | | | 616,089 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Federal Government bonds at 7% – Maturity 2015 | | | — | | | | 38,881 | | Federal Government bonds at Libor – Maturity 2012 | | | — | | | | 1,784 | | Par bonds at variable rate – Maturity 2038 (governed by Argentina legislation) | | | — | | | | 1,594 | | Federal Government bonds at Libor – Maturity 2013 | | | — | | | | 562 | | Par bonds at variable rate – Maturity 2038 (governed by New York State legislation) | | | — | | | | 461 | | | | | | | | | Subtotal holdings in Special Investment Accounts — In foreign currency | | | — | | | | 43,282 | | | | | | | | | Subtotal holdings in Special Investment Accounts | | | — | | | | 659,371 | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | | | | | | | In pesos: | | | | | | | | | Federal Government bonds at Badlar + 2.75% – Maturity 2014 | | | 200,925 | | | | 1,464 | | Secured bonds Decree 1,579/02 at 2% – Maturity 2018 | | | 40,988 | | | | 1,433 | | Consolidation bonds of social security payables at 2% – Maturity 2014 | | | 7,029 | | | | 7,525 | | Discount bonds at 5.83% – Maturity 2033 | | | 6,956 | | | | 9,752 | | Federal Government bonds at 2% – Maturity 2014 | | | 3,674 | | | | 6,579 | | Federal Government bonds at 10.50% – Maturity 2012 | | | 1,059 | | | | 189 | | Federal Government bonds at Badlar + 3% – Maturity 2015 | | | 901 | | | | 1,064 | | Consolidation bonds at 2% – Sixth series – Maturity 2024 | | | 645 | | | | 382 | | Par bonds at variable rate – Maturity 2038 | | | 519 | | | | 261 | | GDP — Related Securities – Maturity 2035 | | | 54 | | | | 325 | | Others | | | 279 | | | | 943 | | | | | | | | | Subtotal holdings for trading or financial intermediation — In pesos | | | 263,029 | | | | 29,917 | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | As of December 31, | | | | 2010 | | | 2009 | | GOVERNMENT SECURITIES (contd.) | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Treasury Bill – Maturity 2011 | | | 198,790 | | | | — | | Federal Government bonds at Libor – Maturity 2012 | | | 42,466 | | | | 52,874 | | Federal Government bonds at 7% – Maturity 2015 | | | 1,640 | | | | 1,544 | | Federal Government bonds at Libor – Maturity 2013 | | | 1,113 | | | | 345 | | Federal Government bonds at 7% – Maturity 2017 | | | 1,026 | | | | — | | Treasury Bill – Maturity 2010 | | | — | | | | 379,666 | | Others | | | 64 | | | | 505 | | | | | | | | | Subtotal holdings for trading or financial intermediation – In foreign currency | | | 245,099 | | | | 434,934 | | | | | | | | | Subtotal holdings for trading or financial intermediation | | | 508,128 | | | | 464,851 | | | | | | | | | | | | | | | | | | Unlisted government securities | | | | | | | | | In pesos: | | | | | | | | | Province of Buenos Aires treasury bills at 168 days – Maturity 2011 | | | 50,084 | | | | — | | Province of Buenos Aires treasury bills at 84 days– Maturity 2011 | | | 49,575 | | | | — | | Federal Government bonds at Badlar + 3.50% – Maturity 2013 | | | 46,350 | | | | 44,541 | | Federal Government bonds at variable rate – Maturity 2013 | | | 7,523 | | | | 9,738 | | Province of Tucumán bonds at 2% – Maturity 2018 | | | 1,565 | | | | 1,984 | | Consolidation bonds at 2% – Maturity 2010 | | | — | | | | 199 | | Others | | | 3 | | | | 7 | | | | | | | | | Subtotal unlisted government securities – In pesos | | | 155,100 | | | | 56,469 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Province of Córdoba Debt Securities at 12% – Maturity 2017 | | | 17,498 | | | | 19,160 | | Province of Tucumán bonds at Libor – Maturity 2015 | | | 2,455 | | | | 3,820 | | | | | | | | | Subtotal unlisted government securities – In foreign currency | | | 19,953 | | | | 22,980 | | | | | | | | | Subtotal unlisted government securities | | | 175,053 | | | | 79,449 | | | | | | | | | | | | | | | | | | Instruments issued by the Central Bank of Argentina | | | | | | | | | In pesos: | | | | | | | | | Unlisted Central Bank bills and notes (Lebacs / Nobacs) | | | 3,167,344 | | | | 4,371,284 | | Listed Central Bank bills and notes (Lebacs/ Nobacs) | | | 681,949 | | | | 264,485 | | | | | | | | | Subtotal instruments issued by Central Bank | | | 3,849,293 | | | | 4,635,769 | | | | | | | | | | | | | | | | | | Securities under repurchase agreements | | | | | | | | | In pesos: | | | | | | | | | Unlisted Central Bank bills and notes (Lebacs / Nobacs) | | | 148,959 | | | | 14,652 | | Consolidation bonds at 2% – Sixth series – Maturity 2024 | | | 18,518 | | | | — | | Listed Central Bank bills and notes (Lebacs/ Nobacs) | | | 7,514 | | | | — | | Discount bonds at 5.83% – Maturity 2033 | | | 4,797 | | | | — | | Federal Government bonds at Badlar + 2.75% – Maturity 2014 | | | 990 | | | | — | | GDP — Related Securities – Maturity 2035 | | | 149 | | | | — | | | | | | | | | Subtotal securities under repurchase agreements – In pesos | | | 180,927 | | | | 14,652 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Federal Government bonds at 7% – Maturity 2013 | | | 2,299,088 | | | | — | | Federal Government bonds at 7% – Maturity 2017 | | | — | | | | 1,046,220 | | | | | | | | | Subtotal securities under repurchase agreement – In foreign currency | | | 2,299,088 | | | | 1,046,220 | | | | | | | | | Total government securities | | | 7,012,489 | | | | 6,900,312 | | | | | | | | | | | | | | | | | | PRIVATE SECURITIES | | | | | | | | | | | | | | | | | | Investments in listed private securities | | | | | | | | | In foreign currency: | | | | | | | | | Shares | | | 17,588 | | | | — | | Mutual Funds | | | — | | | | 773 | | | | | | | | | Subtotal listed private securities — In foreign currency | | | 17,588 | | | | 773 | | | | | | | | | | | | | | | | | | Total private securities | | | 17,588 | | | | 773 | | | | | | | | | Total government and private securities, before allowances | | | 7,030,077 | | | | 6,901,085 | | | | | | | | | Allowances | | | (3 | ) | | | (44 | ) | | | | | | | | Total government and private securities | | | 7,030,074 | | | | 6,901,041 | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | | | | | | After 1 year | | | After 5 years | | | �� | | | | | | | | | | Within 1 | | | but within 5 | | | but within 10 | | | After 10 | | | Without | | | | | | | year | | | years | | | years | | | years | | | due date | | | Total | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | GOVERNMENT SECURITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | | | | | | | | | | | | | | | | | | | | | | | In pesos: | | | 7,226 | | | | 232,631 | | | | 15,335 | | | | 7,837 | | | | — | | | | 263,029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Federal Government bonds at Badlar + 2.75% – Maturity 2014 | | | — | | | | 200,925 | | | | — | | | | — | | | | — | | | | 200,925 | | Secured bonds Decree 1,579/02 at 2% – Maturity 2018 | | | 4,216 | | | | 21,759 | | | | 15,013 | | | | — | | | | — | | | | 40,988 | | Consolidation bonds at 2% – Sixth series – Maturity 2024 | | | — | | | | 112 | | | | 322 | | | | 211 | | | | — | | | | 645 | | Discount bonds at 5.83% – Maturity 2033 | | | — | | | | — | | | | — | | | | 6,956 | | | | — | | | | 6,956 | | Consolidation bonds of social security payables at 2% — Maturity 2014 | | | 2,054 | | | | 4,975 | | | | — | | | | — | | | | — | | | | 7,029 | | Federal Government bonds at 2% – Maturity 2014 | | | 919 | | | | 2,755 | | | | — | | | | — | | | | — | | | | 3,674 | | Federal Government bonds at 10.50% – Maturity 2012 | | | — | | | | 1,059 | | | | — | | | | — | | | | — | | | | 1,059 | | Federal Government bonds at Badlar + 3% – Maturity 2015 | | | — | | | | 901 | | | | — | | | | — | | | | — | | | | 901 | | Par bonds at variable rate – Maturity 2038 | | | — | | | | — | | | | — | | | | 519 | | | | — | | | | 519 | | GDP — Related Securities – Maturity 2035 | | | — | | | | — | | | | — | | | | 54 | | | | — | | | | 54 | | Others | | | 37 | | | | 145 | | | | — | | | | 97 | | | | — | | | | 279 | | | | | | | | | | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | | | | | | | | | | | | | | | | | | | | | | | In foreign currency: | | | 220,404 | | | | 23,616 | | | | 1,058 | | | | 21 | | | | — | | | | 245,099 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Treasury Bill — Maturity 2011 | | | 198,790 | | | | — | | | | — | | | | — | | | | — | | | | 198,790 | | Federal Government bonds at Libor – Maturity 2012 | | | 21,233 | | | | 21,233 | | | | — | | | | — | | | | — | | | | 42,466 | | Federal Government bonds at 7% – Maturity 2015 | | | — | | | | 1,640 | | | | — | | | | — | | | | — | | | | 1,640 | | Federal Government bonds at Libor – Maturity 2013 | | | 371 | | | | 742 | | | | — | | | | — | | | | — | | | | 1,113 | | Federal Government bonds at 7% – Maturity 2017 | | | — | | | | — | | | | 1,026 | | | | — | | | | — | | | | 1,026 | | Others | | | 10 | | | | 1 | | | | 32 | | | | 21 | | | | — | | | | 64 | | | | | | | | | | | | | | | | | | | | | | | | | | | Unlisted government securities | | | | | | | | | | | | | | | | | | | | | | | | | In pesos: | | | 102,328 | | | | 52,196 | | | | 573 | | | | — | | | | 3 | | | | 155,100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Province of Buenos Aires treasury bills at 168 days – Maturity 2011 | | | 50,084 | | | | — | | | | — | | | | — | | | | — | | | | 50,084 | | Province of Buenos Aires treasury bills in pesos at 84 days– Maturity 2011 | | | 49,575 | | | | — | | | | — | | | | — | | | | — | | | | 49,575 | | Federal Government bonds at Badlar + 3.50% – Maturity 2013 | | | — | | | | 46,350 | | | | — | | | | — | | | | — | | | | 46,350 | | Federal Government bonds at variable rate – Maturity 2013 | | | 2,508 | | | | 5,015 | | | | — | | | | — | | | | — | | | | 7,523 | | Province of Tucumán bonds at 2% – Maturity 2018 | | | 161 | | | | 831 | | | | 573 | | | | — | | | | — | | | | 1,565 | | Others | | | — | | | | — | | | | — | | | | — | | | | 3 | | | | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | Unlisted government securities | | | | | | | | | | | | | | | | | | | | | | | | | In foreign currency: | | | 2,991 | | | | 11,963 | | | | 4,999 | | | | — | | | | — | | | | 19,953 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Province of Córdoba Debt Securities at 12% – Maturity 2017 | | | 2,500 | | | | 9,999 | | | | 4,999 | | | | — | | | | — | | | | 17,498 | | Province of Tucumán bonds at Libor – Maturity 2015 | | | 491 | | | | 1,964 | | | | — | | | | — | | | | — | | | | 2,455 | | | | | | | | | | | | | | | | | | | | | | | | | | | Instruments issued by the Central Bank of Argentina – In pesos: | | | 3,849,293 | | | | — | | | | — | | | | — | | | | — | | | | 3,849,293 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unlisted Central Bank bills and notes (Lebacs/Nobacs) | | | 3,167,344 | | | | — | | | | — | | | | — | | | | — | | | | 3,167,344 | | Listed Central Bank bills and notes (Lebacs/Nobacs) | | | 681,949 | | | | — | | | | — | | | | — | | | | — | | | | 681,949 | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | | | | | | | | Maturing | | | | | | | | | | | | After 5 | | | | | | | | | | | | | | | | | After 1 year | | | years but | | | | | | | | | | | | | Within 1 | | | but within | | | within 10 | | | After 10 | | | Without | | | | | | | year | | | 5 years | | | years | | | years | | | due date | | | Total | | | | Book Value | | Securities under repurchase agreement | | | 180,927 | | | | — | | | | — | | | | — | | | | — | | | | 180,927 | | | | | | | | | | | | | | | | | | | | | In pesos: | | | | | | | | | | | | | | | | | | | | | | | | | Unlisted Central Bank bills and notes (Lebacs / Nobacs) | | | 148,959 | | | | — | | | | — | | | | — | | | | — | | | | 148,959 | | Consolidation bonds at 2% – Sixth series – Maturity 2024 | | | 18,518 | | | | — | | | | — | | | | — | | | | — | | | | 18,518 | | Listed Central Bank bills and notes (Lebacs/ Nobacs) | | | 7,514 | | | | — | | | | — | | | | — | | | | — | | | | 7,514 | | Discount bonds at 5.83% – Maturity 2033 | | | 4,797 | | | | — | | | | — | | | | — | | | | — | | | | 4,797 | | Federal Government bonds at Badlar + 2.75% – Maturity 2014 | | | 990 | | | | — | | | | — | | | | — | | | | — | | | | 990 | | GDP — Related Securities – Maturity 2035 | | | 149 | | | | — | | | | — | | | | — | | | | — | | | | 149 | | | | | | | | | | | | | | | | | | | | | | | | | | | Securities under repurchase agreement | | | 2,299,088 | | | | — | | | | — | | | | — | | | | — | | | | 2,299,088 | | | | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | | | | | | | | | | | | | | | | | Federal Government bonds at 7% – Maturity 2013 | | | 2,299,088 | | | | — | | | | — | | | | — | | | | — | | | | 2,299,088 | | | | | | | | | | | | | | | | | | | | | | Total government securities | | | 6,662,257 | | | | 320,406 | | | | 21,965 | | | | 7,858 | | | | 3 | | | | 7,012,489 | | | | | | | | | | | | | | | | | | | | | | PRIVATE SECURITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments in listed private securities | | | — | | | | — | | | | — | | | | — | | | | 17,588 | | | | 17,588 | | | | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares | | | — | | | | — | | | | — | | | | — | | | | 17,588 | | | | 17,588 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total private securities | | | — | | | | — | | | | — | | | | — | | | | 17,588 | | | | 17,588 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total government and private securities, before allowances | | | 6,662,257 | | | | 320,406 | | | | 21,965 | | | | 7,858 | | | | 17,591 | | | | 7,030,077 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Allowances | | | | | | | | | | | | | | | | | | | | | | | (3 | ) | | | | | | | | | | | | | | | | | | | | | | | | | Total government and private securities | | | | | | | | | | | | | | | | | | | | | | | 7,030,074 | | | | | | | | | | | | | | | | | | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES In 2009 interest-bearing deposits with the Central Bank did not yield a nominal annual interest rate, while, as of December 31, 2008 interest-bearing deposits with the Central Bank yielded a nominal annual interest rate of 1.37%. Additionally, interest-bearing deposits in foreign banks yielded a nominal annual interest rate of approximately 0.54% and 1.71% as of December 31, 2009 and 2008, respectively.
21. | | GOVERNMENT AND PRIVATE SECURITIES
|
| | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | GOVERNMENT SECURITIES | | | | | | | | | | | | | | | | | | Holdings in Special Investment Accounts | | | | | | | | | In pesos: | | | | | | | | | Federal government bonds at 2% – maturity 2014 | | | 222,169 | | | | 3,582 | | Federal government bonds in pesos at Badlar + 2.75% – maturity 2014 | | | 191,384 | | | | — | | Consolidation bonds of social security payable in pesos at 2% – maturity 2010 and 2014 | | | — | | | | 83,847 | | Secured bonds Decree 1,579/02 at 2% – maturity 2018 | | | 178,979 | | | | 23,769 | | Discount bonds denominated in pesos at 5.83% – maturity 2033 | | | 18,207 | | | | 22,201 | | Consolidation bonds in pesos at 2% – Sixth series – maturity 2024 | | | 5,350 | | | | 4,122 | | | | | | | | | Subtotal holdings in Special Investment Accounts – In pesos | | | 616,089 | | | | 137,521 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Argentine government bonds in USD at 7% – maturity 2015 | | | 38,881 | | | | 49,590 | | Federal government bonds in USD at Libor – maturity 2012 and 2013 | | | 2,346 | | | | 236,110 | | Par bonds denominated in USD at variable rate – maturity 2038 (governed by Argentine legislation) | | | 1,594 | | | | 1,450 | | Par bonds denominated in USD at variable rate – maturity 2038 (governed by New York State legislation) | | | 461 | | | | 382 | | Argentine government bonds in USD at 7% – maturity 2017 | | | — | | | | 23,252 | | | | | | | | | Subtotal holdings in Special Investment Accounts – In foreign currency | | | 43,282 | | | | 310,784 | | | | | | | | | Subtotal holding in Special Investment Accounts | | | 659,371 | | | | 448,305 | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | | | | | | | In pesos: | | | | | | | | | Discount bonds denominated in pesos at 5.83% – maturity 2033 | | | 9,752 | | | | 209,277 | | Consolidation bonds of social security payables in pesos at 2% – maturity 2014 | | | 7,525 | | | | 1,324 | | Federal government bonds at 2% – maturity 2014 | | | 6,579 | | | | — | | Federal government bonds in pesos at Badlar + 2.75% – maturity 2014 | | | 1,464 | | | | — | | Secured bonds Decree 1,579/02 at 2% – maturity 2018 | | | 1,433 | | | | 652 | | Federal government bonds in pesos at Badlar + 300 Pbs – maturity 2015 | | | 1,064 | | | | — | | Consolidation bonds at 2% – maturity 2016 | | | 599 | | | | 1,523 | | Others | | | 1,501 | | | | 9,595 | | | | | | | | | Subtotal holdings for trading or financial intermediation – In pesos | | | 29,917 | | | | 222,371 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Argentine government bonds in USD at 7% – maturity 2017 | | | 1,046,220 | | | | 1,633 | | Treasury Bills in USD – maturity 2010 | | | 379,666 | | | | — | | Federal government bonds in USD at Libor – maturity 2012 | | | 52,874 | | | | 96,415 | | Argentine government bonds in USD at 7% – maturity 2015 | | | 1,544 | | | | 9,627 | | Others | | | 850 | | | | 14,421 | | | | | | | | | Subtotal holding for trading or financial intermediation – In foreign currency | | | 1,481,154 | | | | 122,096 | | | | | | | | | Subtotal holding for trading or financial intermediation | | | 1,511,071 | | | | 344,467 | | | | | | | | | | | | | | | | | | Unlisted government securities | | | | | | | | | In pesos: | | | | | | | | | Argentine government bonds in pesos at Badlar +3.50% – maturity 2013 | | | 44,541 | | | | 51,864 | | Federal government bonds at variable rate – maturity 2013 | | | 9,738 | | | | 10,385 | | Province of Tucuman bonds at 2% – maturity 2018 | | | 1,984 | | | | 2,290 | | Consolidation bonds at 2% – maturity 2010 | | | 199 | | | | — | | Others | | | 7 | | | | — | | | | | | | | | Subtotal unlisted government securities – In pesos | | | 56,469 | | | | 64,539 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Province of Córdoba debt securities in USD at 12% – maturity 2017 | | | 19,160 | | | | — | | Province of Tucumán bonds in USD at Libor – maturity 2015 | | | 3,820 | | | | 5,419 | | | | | | | | | Subtotal unlisted government securities – In foreign currency | | | 22,980 | | | | 5,419 | | | | | | | | | Subtotal unlisted government securities | | | 79,449 | | | | 69,958 | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | GOVERNMENT SECURITIES (contd.) | | | | | | | | | | | | | | | | | | Instruments issued by the Central Bank of Argentina | | | | | | | | | In pesos: | | | | | | | | | Listed Central Bank bills (LEBAC) | | | 196,021 | | | | — | | Listed Central Bank notes (NOBAC) | | | 68,464 | | | | 772,496 | | Unlisted Central Bank bills (LEBAC) | | | 2,246,840 | | | | — | | Unlisted Central Bank notes (NOBAC) | | | 2,124,444 | | | | 2,640,452 | | Unlisted Central Bank bills (LEBAC) – under repo transactions | | | 14,652 | | | | 425,963 | | | | | | | | | Subtotal instruments issued by Central Bank | | | 4,650,421 | | | | 3,838,911 | | | | | | | | | Total government securities | | | 6,900,312 | | | | 4,701,641 | | | | | | | | | | | | | | | | | | PRIVATE SECURITIES | | | | | | | | | | | | | | | | | | Investments in listed private securities | | | | | | | | | In pesos: | | | | | | | | | Mutual funds | | | 31,469 | | | | 5,544 | | Shares | | | — | | | | 378 | | Others | | | 1 | | | | 1 | | | | | | | | | Subtotal listed private securities – In pesos | | | 31,470 | | | | 5,923 | | | | | | | | | | | | | | | | | | In foreign currency: | | | | | | | | | Corporate bonds | | | 43,047 | | | | 63,629 | | Mutual funds | | | 6,359 | | | | 8,133 | | | | | | | | | Subtotal listed private securities – In foreign currency | | | 49,406 | | | | 71,762 | | | | | | | | | | | | | | | | | | Total private securities | | | 80,876 | | | | 77,685 | | | | | | | | | Total government and private securities, before allowances | | | 6,981,188 | | | | 4,779,326 | | | | | | | | | Allowances | | | (44 | ) | | | (27 | ) | | | | | | | | Total government and private securities | | | 6,981,144 | | | | 4,779,299 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Maturing | | | | | | | | After 1 year | | | After 5 years | | | | | | | | | | Within 1 | | | but within 5 | | | but within 10 | | | After 10 | | | | | | | year | | | years | | | years | | | years | | | Total | | | | Book value | | | GOVERNMENT SECURITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Holdings in Special Investment Accounts | | | | | | | | | | | | | | | | | | | | | In pesos: | | | 15,847 | | | | 489,926 | | | | 89,823 | | | | 20,493 | | | | 616,089 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Federal government bonds at 2% – maturity 2014 | | | — | | | | 222,169 | | | | — | | | | — | | | | 222,169 | | Federal government bonds in pesos at Badlar + 2.75% – maturity 2014 | | | — | | | | 191,384 | | | | — | | | | — | | | | 191,384 | | Secured bonds Decree 1,579/02 at 2% – maturity 2018 | | | 15,847 | | | | 75,973 | | | | 87,159 | | | | — | | | | 178,979 | | Discount bonds denominated in pesos at 5.83% – maturity 2033 | | | — | | | | — | | | | — | | | | 18,207 | | | | 18,207 | | Consolidation bonds in pesos at 2% – Sixth series – maturity 2024 | | | — | | | | 400 | | | | 2,664 | | | | 2,286 | | | | 5,350 | | | | | | | | | | | | | | | | | | | | | | | Holdings in Special Investment Accounts | | | | | | | | | | | | | | | | | | | | | In foreign currency | | | 735 | | | | 1,611 | | | | 38,881 | | | | 2,055 | | | | 43,282 | | | | | | | | | | | | | | | | | | | Argentine government bonds in USD at 7% – maturity 2015 | | | — | | | | — | | | | 38,881 | | | | — | | | | 38,881 | | Federal government bonds in USD at Libor – maturity 2012 and 2013 | | | 735 | | | | 1,611 | | | | — | | | | — | | | | 2,346 | | Par bonds denominated in USD at variable rate – maturity 2038 (governed by Argentine legislation) | | | — | | | | — | | | | — | | | | 1,594 | | | | 1,594 | | Par bonds denominated in USD at variable rate – maturity 2038 (governed by New York State legislation) | | | — | | | | — | | | | — | | | | 461 | | | | 461 | |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | | | | | | | | | | | | | | | | | | | | Maturing | | | | | | | | After 1 year | | | After 5 years | | | | | | | | | | Within 1 | | | but within 5 | | | but within 10 | | | After 10 | | | | | | | year | | | years | | | years | | | years | | | Total | | | | Book value | | GOVERNMENT SECURITIES (contd.) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | | | | | | | | | | | | | | | | | | | In pesos: | | | 2,225 | | | | 15,803 | | | | 1,344 | | | | 10,545 | | | | 29,917 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount bonds in pesos at 5.83% – maturity 2033 | | | — | | | | — | | | | — | | | | 9,752 | | | | 9,752 | | Consolidation bonds of social security payables in pesos at 2% – maturity 2014 | | | 1,701 | | | | 5,824 | | | | — | | | | — | | | | 7,525 | | Federal government bonds at 2% – maturity 2014 | | | — | | | | 6,579 | | | | — | | | | — | | | | 6,579 | | Federal government bonds in pesos at Badlar + 2.75% – maturity 2014 | | | — | | | | 1,464 | | | | — | | | | — | | | | 1,464 | | Secured bonds Decree 1,579/02 at 2% – maturity 2018 | | | 127 | | | | 608 | | | | 698 | | | | — | | | | 1,433 | | Federal government bonds in pesos at Badlar + 300 Pbs – Maturity 2015 | | | — | | | | 709 | | | | 355 | | | | — | | | | 1,064 | | Consolidation bonds at 2% – maturity 2016 | | | 100 | | | | 399 | | | | 100 | | | | — | | | | 599 | | Others | | | 297 | | | | 220 | | | | 191 | | | | 793 | | | | 1,501 | | | | | | | | | | | | | | | | | | | | | | | Holdings for trading or financial intermediation | | | | | | | | | | | | | | | | | | | | | In foreign currency: | | | 397,377 | | | | 35,888 | | | | 1,047,764 | | | | 125 | | | | 1,481,154 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Argentine government bonds in USD at 7% – maturity 2017 (1) | | | — | | | | — | | | | 1,046,220 | | | | — | | | | 1,046,220 | | Treasures Bills in USD — maturity 2010 | | | 379,666 | | | | — | | | | — | | | | — | | | | 379,666 | | Federal government bonds in USD at Libor – maturity 2012 | | | 17,625 | | | | 35,249 | | | | — | | | | — | | | | 52,874 | | Argentine government bonds in USD at 7% – maturity 2015 | | | — | | | | — | | | | 1,544 | | | | — | | | | 1,544 | | Others | | | 86 | | | | 639 | | | | — | | | | 125 | | | | 850 | | | | | | | | | | | | | | | | | | | | | | | Unlisted government securities | | | | | | | | | | | | | | | | | | | | | In pesos: | | | 2,810 | | | | 52,692 | | | | 967 | | | | — | | | | 56,469 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Argentine government bonds in pesos at Badlar + 3.50% – maturity 2013 | | | — | | | | 44,541 | | | | — | | | | — | | | | 44,541 | | Federal government bonds at variable rate – maturity 2013 | | | 2,434 | | | | 7,304 | | | | — | | | | — | | | | 9,738 | | Province of Tucuman bonds at 2% – maturity 2018 | | | 176 | | | | 842 | | | | 966 | | | | — | | | | 1,984 | | Consolidation bonds at 2% – maturity 2010 | | | 199 | | | | — | | | | — | | | | — | | | | 199 | | Others | | | 1 | | | | 5 | | | | 1 | | | | — | | | | 7 | | | | | | | | | | | | | | | | | | | | | | | Unlisted government securities | | | | | | | | | | | | | | | | | | | | | In foreign currency: | | | 3,032 | | | | 12,126 | | | | 7,822 | | | | — | | | | 22,980 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Province of Córdoba debt securities in USD at 12% – maturity 2017 | | | 2,395 | | | | 9,580 | | | | 7,185 | | | | — | | | | 19,160 | | Province of Tucuman bonds at 2% – maturity 2015 | | | 637 | | | | 2,546 | | | | 637 | | | | — | | | | 3,820 | | | | | | | | | | | | | | | | | | | | | | | Instruments issued by the Central Bank of Argentina | | | 4,635,769 | | | | 14,652 | | | | — | | | | — | | | | 4,650,421 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Listed Central Bank bills (LEBAC) | | | 196,021 | | | | — | | | | — | | | | — | | | | 196,021 | | Listed Central Bank notes (NOBAC) | | | 68,464 | | | | — | | | | — | | | | — | | | | 68,464 | | Unlisted Central Bank bills (LEBAC) | | | 2,246,840 | | | | — | | | | — | | | | — | | | | 2,246,840 | | Unlisted Central Bank notes (NOBAC) | | | 2,124,444 | | | | — | | | | — | | | | — | | | | 2,124,444 | | Unlisted Central Bank bills (LEBAC) – under repo transactions | | | — | | | | 14,652 | | | | — | | | | — | | | | 14,652 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total government securities | | | 5,057,795 | | | | 622,698 | | | | 1,186,601 | | | | 33,218 | | | | 6,900,312 | | | | | | | | | | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | | | | | | | | | | | | | | | | | | | | Maturing | | | | | | | | After 1 year | | | After 5 years | | | | | | | | | | Within 1 | | | but within 5 | | | but within 10 | | | After 10 | | | | | | | year | | | years | | | years | | | years | | | Total | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | PRIVATE SECURITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments in listed private securities | | | | | | | | | | | | | | | | | | | | | In Pesos: | | | 31,470 | | | | — | | | | — | | | | — | | | | 31,470 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mutual Funds | | | 31,469 | | | | — | | | | — | | | | — | | | | 31,469 | | Others | | | 1 | | | | — | | | | — | | | | — | | | | 1 | | | | | | | | | | | | | | | | | | | | | | | Investments in listed private securities | | | | | | | | | | | | | | | | | | | | | In foreign currency | | | 40,811 | | | | 1,240 | | | | 7,355 | | | | — | | | | 49,406 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate bonds | | | 34,452 | | | | 1,240 | | | | 7,355 | | | | — | | | | 43,047 | | Mutual Funds | | | 6,359 | | | | — | | | | — | | | | — | | | | 6,359 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total private securities | | | 72,281 | | | | 1,240 | | | | 7,355 | | | | — | | | | 80,876 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total government and private securities, before allowances | | | 5,130,076 | | | | 623,938 | | | | 1,193,956 | | | | 33,218 | | | | 6,981,188 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Allowances | | | | | | | | | | | | | | | | | | | (44 | ) | | | | | | | | | | | | | | | | | | | | | | | Total government and private securities | | | | | | | | | | | | | | | | | | | 6,981,144 | | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | Correspond to holdings received by repo transactions with the Central Bank with a maturity on January 4, 2010. |
| | Description of certain categories of loans in the accompanying Balance Sheets include: |
| a. | | Non-financial government sector: loans to the government sector, excluding government owned financial institutions. | |
| b. | | Financial sector: mainly, refers to short-term loans to financial institutions. | |
| c. | | Non financial private sector and foreign residents: loans given to the private sector (excluding financial institutions) and residents outside Argentina. |
| | The classification of the loan portfolio in this regard was as follows: |
| | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | | | 2009 | | 2008 | | | Description | | | 2010 | | 2009 | | Non-financial government sector | | 206,484 | | 744,507 | | | 336,430 | | 206,484 | | Financial sector | | 90,916 | | 80,423 | | | 155,701 | | 90,916 | | Non-financial private sector and foreign residents | | | Commercial | | | - With Senior “A” guarantees | | 226,381 | | 134,942 | | | 320,399 | | 226,381 | | - With Senior “B” guarantees | | 570,170 | | 466,211 | | | 869,936 | | 570,170 | | - Without Senior guarantees | | 3,860,755 | | 4,170,443 | | | 5,502,813 | | 3,860,755 | | Consumer | | | - With Senior “A” guarantees | | 27,932 | | 20,213 | | | 29,149 | | 27,932 | | - With Senior “B” guarantees | | 669,081 | | 718,608 | | | 673,329 | | 669,081 | | - Without Senior guarantees | | 5,893,133 | | 5,382,959 | | | 8,537,256 | | 5,893,133 | | | | | Less: Allowance | | | (448,045 | ) | | | (438,348 | ) | | | (514,910 | ) | | | (448,045 | ) | | | | | | | | | | | | Total loans, net of allowance | | 11,096,807 | | 11,279,958 | | | 15,910,103 | | 11,096,807 | | | | | | | | | | | | |
| | Senior “A” guarantees consist mainly of cash guarantees, gold guarantees, warrants over primary products and other forms of self-liquidating collateral. |
| | Senior “B” guarantees generally consist of mortgages and other forms of collateral pledged to secure the loan amount. |
| | “Without senior guarantees” consist, in general, of unsecured third-party guarantees. |
| | A breakdown of total loans by geographical location of borrowers is as follows: |
| | | | | | | | | Geographical location | | 2010 | | | 2009 | | Argentina | | | 16,422,685 | | | | 11,523,838 | | Uruguay | | | 1,316 | | | | 8 | | Brasil | | | 997 | | | | — | | France | | | 8 | | | | 8 | | Chile | | | 6 | | | | 11 | | Spain | | | 1 | | | | 127 | | United States of America | | | — | | | | 10,875 | | England | | | — | | | | 7,500 | | Australia | | | — | | | | 2,095 | | Venezuela | | | — | | | | 388 | | Paraguay | | | — | | | | 2 | | Less: Allowance | | | (514,910 | ) | | | (448,045 | ) | | | | | | | | Total loans, net of allowances | | | 15,910,103 | | | | 11,096,807 | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES Senior “B” guarantees generally consist of mortgages and other forms of collateral pledged to secure the loan amount.
“Without senior guarantees” consist, in general, of unsecured third-party guarantees.
A breakdown of total loans by geographical location of borrowers is as follows:
| | | | | | | | | | | 2009 | | | 2008 | | Argentina | | | 11,523,838 | | | | 11,688,928 | | United States of America | | | 10,875 | | | | — | | England | | | 7,500 | | | | — | | Australia | | | 2,095 | | | | 3,294 | | Venezuela | | | 388 | | | | — | | Spain | | | 127 | | | | — | | Chile | | | 11 | | | | — | | Uruguay | | | 8 | | | | 12,994 | | France | | | 8 | | | | 5 | | Paraguay | | | 2 | | | | — | | Bermuda | | | — | | | | 10,048 | | Canada | | | — | | | | 3,027 | | Peru | | | — | | | | 10 | | Less: Allowance | | | (448,045 | ) | | | (438,348 | ) | | | | | | | | Total loans, net of allowances | | | 11,096,807 | | | | 11,279,958 | | | | | | | | |
| | A breakdown of total loans by sector activity classified according to the principal business of the borrowers is as follows: | | | | | | | | | Economic Activity | | 2009 | | | 2008 | | Retail loans | | | 4,403,933 | | | | 4,023,725 | | Agricultural livestock- Forestry-Fishing- Mining — Hunting | | | 1,910,164 | | | | 1,538,027 | | Construction | | | 1,112,702 | | | | 563,526 | | Other services | | | 858,936 | | | | 852,658 | | Retail and consumer products | | | 747,897 | | | | 831,741 | | Foodstuff and beverages | | | 637,814 | | | | 521,849 | | Governmental services | | | 258,784 | | | | 886,749 | | Financial Services | | | 290,331 | | | | 289,450 | | Real estate, business and leases | | | 236,555 | | | | 267,604 | | Transportation, storage and communications | | | 190,796 | | | | 263,999 | | Manufacturing and wholesale | | | 140,620 | | | | 283,555 | | Chemicals | | | 129,145 | | | | 608,157 | | Electricity, oil, water | | | 75,095 | | | | 170,950 | | Hotels and restaurants | | | 29,949 | | | | 32,325 | | Others | | | 522,131 | | | | 583,991 | | Total loans | | | 11,544,852 | | | | 11,718,306 | | | | | | | | | Less: Allowance | | | (448,045 | ) | | | (438,348 | ) | | | | | | | | Total loans, net of Allowance | | | 11,096,807 | | | | 11,279,958 | | | | | | | | |
23. | | ALLOWANCES FOR LOAN LOSSES
|
| | The activity in the allowance for loan losses for the fiscal years presented is as follows: |
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 438,348 | | | | 220,422 | | | | 208,581 | | Provision for loan losses (a)(b) | | | 187,648 | | | | 314,532 | | | | 93,498 | | Charge Offs | | | (175,355 | ) | | | (76,246 | ) | | | (38,199 | ) | Reversals (b) | | | (2,596 | ) | | | (20,360 | ) | | | (43,458 | ) | | | | | | | | | | | Balance at the end of the fiscal year(c) | | | 448,045 | | | | 438,348 | | | | 220,422 | | | | | | | | | | | |
| | | | | | | | | Economic Activity | | 2010 | | | 2009 | | Retail loans | | | 6,512,629 | | | | 4,403,933 | | Agricultural livestock- Forestry-Fishing- Mining — Hunting | | | 2,286,297 | | | | 1,910,164 | | Construction | | | 1,009,744 | | | | 1,112,702 | | Other services | | | 1,281,916 | | | | 858,936 | | Retail and consumer products | | | 1,140,019 | | | | 747,897 | | Foodstuff and beverages | | | 917,874 | | | | 637,814 | | Transportation, storage and communications | | | 488,356 | | | | 190,796 | | Chemicals | | | 455,313 | | | | 129,145 | | Governmental services | | | 418,026 | | | | 258,784 | | Financial Services | | | 387,074 | | | | 290,331 | | Real estate, business and leases | | | 357,865 | | | | 236,555 | | Manufacturing and wholesale | | | 302,927 | | | | 140,620 | | Electricity, oil, water | | | 92,475 | | | | 75,095 | | Hotels and restaurants | | | 27,866 | | | | 29,949 | | Others | | | 746,632 | | | | 522,131 | | | | | | | | | Total loans | | | 16,425,013 | | | | 11,544,852 | | Less: Allowance | | | (514,910 | ) | | | (448,045 | ) | | | | | | | | Total loans, net of Allowance | | | 15,910,103 | | | | 11,096,807 | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | (a) | | As of December 31, 2009, the amount of “Provision for loan losses” disclosed in the Statements of Income, includes above amounts and the provision for “Other receivables for financial intermediation” and “Assets subject to financial lease” (see note 27.), minus 5,524 mainly related to Foreign currency exchange. | | (b) | | As of December 31, 2009 the amount of “Provisions for loan loss, net” disclosed in note 31., under US SEC Regulation S-X, includes above amounts and provision and reversals of “Assets subject to financial lease” disclosed in note 27. minus 28,915 mainly related to Recovered loans and Foreign currency exchange. | | (c) | | As of December 31, 2009, as disclosed in note 31, under SEC requirements, the amount of allowance for loan losses includes the allowance for assets subject to financial lease (see note 27.). |
24.22. | | OTHER RECEIVABLES AND PAYABLES FROM FINANCIAL INTERMEDIATION |
| | The breakdown of otherOther receivables from financial intermediation by guarantee type is as follows: |
| | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | Description | | 2009 | | 2008 | | | 2010 | | 2009 | | | | | With preferred guarantees | | 1,056,919 | | — | | | 2,398,732 | | 1,056,919 | | Without preferred guarantees | | 1,554,953 | | 1,682,653 | | | 1,438,078 | | 1,607,595 | | Allowances | | | (231,219 | ) | | | (228,588 | ) | | | (237,513 | ) | | | (231,219 | ) | | | | | | | | | | | | | | 2,380,653 | | 1,454,065 | | | 3,599,297 | | 2,433,295 | | | | | | | | | | | | |
The breakdown of private securities recorded in Other receivables from financial intermediation is as follows:
| | | | | | | | | | | As of December 31, | | Description | | 2009 | | | 2008 | | | | | | | | | | | Repurchased corporate bonds | | | — | | | | 29,105 | | Corporate bonds — Unlisted (1) | | | 80,746 | | | | 53,389 | | Certificates of participation in financial trusts — Unlisted (1) | | | 390,164 | | | | 337,809 | | Debt securities in financial trusts — Unlisted | | | 206,787 | | | | 227,147 | | | | | | | | | Total investments in unlisted private securities | | | 677,697 | | | | 647,450 | | | | | | | | |
| | The breakdown of private securities recorded in Other receivables from financial intermediation is as follows: |
| | | | | | | | | | | As of December 31, | | Description | | 2010 | | | 2009 | | | | | | | | | | | Corporate bonds — Unlisted (1) | | | 279,306 | | | | 123,793 | | Certificates of participation in financial trusts — Unlisted (1) | | | 351,683 | | | | 390,164 | | Debt securities in financial trusts — Unlisted | | | 260,459 | | | | 206,787 | | | | | | | | | Total investments in unlisted private securities | | | 891,448 | | | | 720,744 | | | | | | | | |
| | | (1) | | As of December 31, 20092010 and 2008, the Bank booked allowances for impairment in value amounting to 225,210 and 228,530, respectively (see also note 27). |
As of December 31, 2009, maturities for the private securities disclosed above are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | After 1 | | | After 5 | | | | | | | | | | | | | | | | | year but | | | years but | | | | | | | | | | | | | Within 1 | | | within 5 | | | within 10 | | | After 10 | | | Without | | | | | | | year | | | years | | | years | | | years | | | due date | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate bonds —Unlisted | | | 48,812 | | | | 31,744 | | | | — | | | | — | | | | 190 | | | | 80,746 | | | | | | | | | | | | | | | | | | | | | | | | | | | Certificates of participation in financial trusts —Unlisted | | | 2,243 | | | | 76,150 | | | | — | | | | 10,591 | | | | 301,180 | (1) | | | 390,164 | | Debt securities in financial trusts —Unlisted | | | 175,217 | | | | 20,323 | | | | 11,247 | | | | — | | | | — | | | | 206,787 | | | | | | | | | | | | | | | | | | | | | Total investments in unlisted private securities | | | 226,272 | | | | 128,217 | | | | 11,247 | | | | 10,591 | | | | 301,370 | | | | 677,697 | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | As of December 31, 2009, the Bank booked allowances for impairment in value amounting to 224,193.234,187 and 225,210, respectively (see also note 25). |
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BANCO MACRO S.A. AND SUBSIDIARIES
The Bank enters into forward transactions related to government securities and foreign currencies. The Bank recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date. The assets and liabilities related to such transactions are as follows:
| | | | | | | | | | | As of December 31, | | Description | | 2009 | | | 2008 | | | | | | | | | | | Amounts receivable from spot and forward sales pending settlement | | | | | | | | | | | | | | | | | | Receivable from spot sales of government and private securities pending settlement | | | 21,651 | | | | 60,858 | | Receivables from repurchase agreements of government securities | | | 14,657 | | | | 426,196 | | Receivables from forward sales of government securities | | | — | | | | 3,214 | | Receivables from spot sales of foreign currency settlement | | | 734 | | | | 4,469 | | | | | | | | | | | | 37,042 | | | | 494,737 | | | | | | | | | | | | | | | | | | Securities and foreign currency receivable from spot and forward purchases pending settlement | | | | | | | | | | | | | | | | | | Forward purchases of securities under repurchase agreements | | | 521,159 | | | | 5,626 | | Spot purchases of government and private securities pending settlement | | | 1,608 | | | | 35,228 | | Spot purchases of foreign currency pending settlement | | | 734 | | | | 1,640 | | Forward purchases of government securities | | | — | | | | 2 | | Other spot purchases | | | 13,059 | | | | 11,786 | | | | | | | | | | | | 536,560 | | | | 54,282 | | | | | | | | | | | | | | | | | | Amounts payable for spot and forward purchases pending settlement | | | | | | | | | | | | | | | | | | Payables for forward purchases of securities under repurchase agreements | | | 468,535 | | | | — | | Payables for spot purchases of government securities pending settlement | | | 14,552 | | | | 42,372 | | Payables under repo transactions | | | 8,362 | | | | 24,495 | | Payables for spot purchases of foreign currency pending settlement and forward purchases of foreign currency | | | 734 | | | | 1,632 | | | | | | | | | | | | 492,183 | | | | 68,499 | | | | | | | | | | | | | | | | | | Securities and foreign currency to be delivered under spot and forward sales pending settlement | | | | | | | | | | | | | | | | | | Forward sales of government securities under repurchase agreements | | | 1,060,887 | | | | 629,973 | | Spot sales of government and private securities pending settlement | | | 14,430 | | | | 43,307 | | Forward sales of foreign currency pending settlement | | | 730 | | | | 4,463 | | Forward sales of government securities | | | — | | | | 1,752 | | | | | | | | | | | | 1,076,047 | | | | 679,495 | | | | | | | | |
These instruments consist of foreign currency and securities contracts (spot and forward purchases and sales), whose valuation method is disclosed in note 4.4.h).
The fair value of these instruments was:
| | | | | | | | | | | End-of-year fair value | | Description | | 2009 | | | 2008 | | | | | | | | | | | Assets | | | 535,160 | | | | 53,571 | | Liabilities | | | 1,028,014 | | | | 681,295 | |
Premiums on these instruments have been included in the “Financial income” and “Financial expense” captions of the consolidated statement of income of each year.
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BANCO MACRO S.A. AND SUBSIDIARIES 25. | | As of December 31, 2010, maturities for the private securities disclosed above are as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | After 1 | | | After 5 | | | | | | | | | | | | | | | | | year but | | | years but | | | | | | | | | | | | | Within 1 | | | within 5 | | | within 10 | | | After 10 | | | Without | | | | | | | year | | | years | | | years | | | years | | | due date | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate bonds —Unlisted | | | 7,344 | | | | 224,538 | | | | 47,233 | | | | — | | | | 191 | | | | 279,306 | | Certificates of participation in financial trusts —Unlisted | | | 4,395 | | | | 114,350 | | | | — | | | | 8,851 | | | | 224,087 | (1) | | | 351,683 | | Debt securities in financial trusts —Unlisted | | | 154,839 | | | | 91,476 | | | | 14,144 | | | | — | | | | — | | | | 260,459 | | | | | | | | | | | | | | | | | | | | | Total investments in unlisted private securities | | | 166,578 | | | | 430,364 | | | | 61,377 | | | | 8,851 | | | | 224,278 | | | | 891,448 | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | As of December 31, 2010 the Bank booked allowances for impairment in value amounting to 231,184. |
| | The Bank enters into forward transactions related to government securities and foreign currencies. The Bank recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date. The assets and liabilities related to such transactions are as follows: |
| | | | | | | | | | | As of December 31, | | Description | | 2010 | | | 2009 | | | | | | | | | | | Amounts receivable from spot and forward sales pending settlement | | | | | | | | | | | | | | | | | | Receivables from repurchase agreements of government securities | | | 177,583 | | | | 14,657 | | Receivable from spot sales of government and private securities pending settlement | | | 38,734 | | | | 21,651 | | Receivables from spot sales of foreign currency settlement | | | 32,397 | | | | 734 | | | | | | | | | | | | 248,714 | | | | 37,042 | | | | | | | | | | | | | | | | | | Securities and foreign currency receivable from spot and forward purchases pending settlement | | | | | | | | | | | | | | | | | | Spot purchases of foreign currency pending settlement | | | 32,439 | | | | 734 | | Spot purchases of government and private securities pending settlement | | | 11,917 | | | | 1,608 | | Forward purchases of securities under repurchase agreements | | | 990 | | | | 521,159 | | Other spot purchases | | | 32,221 | | | | 13,059 | | | | | | | | | | | | 77,567 | | | | 536,560 | | | | | | | | | | | | | | | | | | Amounts payable for spot and forward purchases pending settlement | | | | | | | | | | | | | | | | | | Payables for spot purchases of government securities pending settlement | | | 36,674 | | | | 14,552 | | Payables for spot purchases of foreign currency pending settlement and forward purchases of foreign currency | | | 32,381 | | | | 734 | | Payables under repo transactions | | | 23,653 | | | | 8,362 | | Payables for forward purchases of securities under repurchase agreements | | | 901 | | | | 468,535 | | | | | | | | | | | | 93,609 | | | | 492,183 | | | | | | | | | | | | | | | | | | Securities and foreign currency to be delivered under spot and forward sales pending settlement | | | | | | | | | | | | | | | | | | Forward sales of government securities under repurchase agreements | | | 2,480,124 | | | | 1,060,887 | | Spot sales of government and private securities pending settlement | | | 49,186 | | | | 14,430 | | Forward sales of foreign currency pending settlement | | | 32,430 | | | | 730 | | | | | | | | | | | | 2,561,740 | | | | 1,076,047 | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES | | These instruments consist of foreign currency and securities contracts (spot and forward purchases and sales), whose valuation method is disclosed in note 4.4.h). The fair value of these instruments was: |
| | | | | | | | | | | End-of-year fair value | | Description | | 2010 | | | 2009 | | | | | | | | | | | Assets | | | 74,228 | | | | 535,160 | | Liabilities | | | 2,529,901 | | | | 1,028,014 | |
| | Premiums on these instruments have been included in the “Financial income” and “Financial expense” captions of the consolidated statement of income of each year. |
23. | | BANK PREMISES AND EQUIPMENT AND OTHER ASSETS |
| 25.123.1 | | Premises and Equipment | | | | | The major categories of the Bank’s premises and equipment, and related accumulated depreciation are presented in the following table: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December, 31 | | | As of December, 31 | | | | Estimated | | | | | | | Estimated | | | | | | | | useful life | | | | | | | useful life | | | | | | Description | | (years) | | 2009 | | 2008 | | | (years) | | 2010 | | 2009 | | | | | Buildings | | 50 | | 396,024 | | 370,522 | | | 50 | | 410,710 | | 396,024 | | Furniture and facilities | | 10 | | 98,332 | | 88,308 | | | 10 | | 112,624 | | 98,332 | | Machinery and equipment | | 5 | | 366,355 | | 362,325 | | | 5 | | 408,087 | | 366,355 | | Vehicles | | 5 | | 34,192 | | 33,976 | | | 5 | | 37,428 | | 34,192 | | Other | | — | | 1,552 | | 2,303 | | | — | | 1,408 | | 1,552 | | Accumulated depreciation | | | (462,830 | ) | | | (426,592 | ) | | | (524,726 | ) | | | (462,830 | ) | | | | | | | | | | | | Total | | 433,625 | | 430,842 | | | 445,531 | | 433,625 | | | | | | | | | | | | |
Depreciation expense was 58,285, 53,993 and 50,543 as of December 31, 2010, 2009 and 2008, respectively. | | | Depreciation expense was 53,993, 50,543 and 42,723 as of December 31, 2009, 2008 and 2007, respectively. | | | 25.223.2 | | Other assets | | | | | Other assets consisted of the following as of December 31, 2009 and 2008: |
| | | | | | | | | | | | | | | As of December, 31 | | | | Estimated | | | | | | | | | | useful life | | | | | | | | Description | | (years) | | | 2009 | | | 2008 | | | | | | | | | | | | | | | Works in progress | | | — | | | | 15,531 | | | | 22,801 | | Works of art | | | — | | | | 1,213 | | | | 1,206 | | Prepayments for the purchase of assets | | | — | | | | 1,335 | | | | 365 | | Foreclosed assets | | | 50 | | | | 19,498 | | | | 25,632 | | Leased buildings | | | 50 | | | | 4,543 | | | | 6,765 | | Stationery and office supplies | | | — | | | | 3,347 | | | | 5,346 | | Other assets (1) | | | 50 | | | | 82,141 | | | | 87,870 | | Accumulated depreciation | | | | | | | (13,266 | ) | | | (12,628 | ) | | | | | | | | | | | | Total | | | | | | | 114,342 | | | | 137,357 | | | | | | | | | | | | |
Other assets consisted of the following as of December 31, 2010 and 2009: | | | | | | | | | | | | | | | As of December, 31 | | | | Estimated | | | | | | | | | | useful life | | | | | | | | Description | | (years) | | | 2010 | | | 2009 | | | | | | | | | | | | | | | Works in progress | | | — | | | | 36,955 | | | | 15,531 | | Works of art | | | — | | | | 1,235 | | | | 1,213 | | Prepayments for the purchase of assets | | | — | | | | 57,862 | | | | 1,335 | | Foreclosed assets | | | 50 | | | | 13,199 | | | | 19,498 | | Leased buildings | | | 50 | | | | 3,893 | | | | 4,543 | | Stationery and office supplies | | | — | | | | 4,055 | | | | 3,347 | | Other assets (1) | | | 50 | | | | 78,385 | | | | 82,141 | | Accumulated depreciation | | | | | | | (14,328 | ) | | | (13,266 | ) | | | | | | | | | | | | Total | | | | | | | 181,256 | | | | 114,342 | | | | | | | | | | | | |
| | | (1) | | Mainly includes buildings not affectedacquired by banking activities.attachment in aide of execution, which under Central Bank rules are included in this line after a period of six months from the acquisition. |
Depreciation expense was 2,032, 1,583 and 1,313 at December 31, 2010, 2009 and 2008, respectively. F - 51
BANCO MACRO S.A. AND SUBSIDIARIES | | | Depreciation expense was 1,583, 1,313 and 1,598 at December 31, 2009, 2008 and 2007, respectively. | | | 25.323.3 | | Operating Leases | | | | | As of December 31, 2009, |
As of December 31, 2010, the Bank’s branch network includes certain branches that were located in properties leased to the Bank (some of which are renewable for periods between 2 and 10 years). |
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BANCO MACRO S.A. AND SUBSIDIARIES
The estimated future lease payments in connection with these properties are as follows: | | | | | Fiscal year end | | Amounts | | | | | | | 2010 | | | 20,100 | | 2011 | | | 12,958 | | 2012 | | | 6,233 | | 2013 | | | 3,271 | | 2014 | | | 2,121 | | 2015 and after | | | 4,017 | | | | | | Total | | | 48,700 | | | | | |
Some of which are renewable for periods between 2 and 10 years. | | | | | Fiscal year end | | Amounts | | | | | | | 2011 | | | 27,270 | | 2012 | | | 18,699 | | 2013 | | | 12,207 | | 2014 | | | 8,155 | | 2015 | | | 4,626 | | 2016 and after | | | 4,680 | | | | | | Total | | | 75,637 | | | | | |
As of December 31, 2010, 2009 2008 and 2007,2008, rental expenses amounted to 40,526, 34,638 21,769 and 18,686,21,769, respectively. As of such dates, there are no contractual obligations with separate amounts of minimum rentals, contingent rentals, and sublease rental income. | 26.1.24.1. | | Goodwill: | | | | | As of December 31, 2009 and 2008 goodwill breakdown is as follows: |
| | | | | | | | | | | | | | | As of December 31, | | | | Estimated | | | | | | | | | | useful life | | | | | | | | Description | | (years) | | | 2009 | | | 2008 | | | | | | | | | | | | | | | Goodwill for the purchase of Banco del Tucumán S.A., net of accumulated amortization of 6,676 as of December 31, 2009 (a) | | | 10 | | | | 11,567 | | | | 13,395 | | Goodwill for the purchase of Nuevo Banco Bisel S.A., net of accumulated amortization of 22,564 as of December 31, 2009 (b) | | | 10 | | | | 43,478 | | | | 50,082 | | | | | | | | | | | | | Total | | | | | | | 55,045 | | | | 63,477 | | | | | | | | | | | | |
As of December 31, 2010 and 2009 goodwill breakdown is as follows: | | | | | | | | | | | | | | | As of December 31, | | | | Estimated | | | | | | | | | | useful life | | | | | | | | Description | | (years) | | | 2010 | | | 2009 | | | | | | | | | | | | | | | Goodwill for the purchase of Banco del Tucumán S.A., net of accumulated amortization of 8,503 as of December 31, 2010 (a) | | | 10 | | | | 9,740 | | | | 11,567 | | Goodwill for the purchase of Nuevo Banco Bisel S.A., net of accumulated amortization of 29,169 as of December 31, 2010 (b) | | | 10 | | | | 36,874 | | | | 43,478 | | Goodwill for the purchase of Banco Privado de Inversiones S.A., net of accumulated amortization of 1,873 as of December 31, 2010 (c) | | | 10 | | | | 54,331 | | | | — | | | | | | | | | | | | | Total | | | | | | | 100,945 | | | | 55,045 | | | | | | | | | | | | |
| | | | | Amortization expense on goodwill was 8,432, 8,439 and 9,250 as of December 31, 2009, 2008 and 2007, respectively. | | (a) | | As mentioned in note 3.6., onOn May 5, 2006, Banco Macro acquired 75% of the capital stock of Banco del Tucumán in the amount of 45,961. The assets transferred amounted to 700,612 and the liabilities assumed amounted to 660,547. | |
| | Additionally, from September through December 2006, Banco Macro S.A. acquired 4.84% of the capital stock of Banco del Tucumán S.A. | |
| | Finally, on November 28, 2006, the General Regular and Special Shareholder’s Meeting of Banco del Tucumán S.A. approved a capital increase of 21,980, establishing an additional paid-in capital of 26,171. During January 2007, Banco Macro S.A. subscribed the total increase, thus increasing its overall interest in Banco del Tucumán S.A. to 89.93%. | |
| | Under Central Bank rules, this transaction resulted in Banco Macro’s positive goodwill amounting to 18,242, which is amortized in ten years and no impairment is required. | |
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BANCO MACRO S.A. AND SUBSIDIARIES (b) | | On August 11, 2006, the Bank acquired 92.73% of the capital stock of Nuevo Banco Bisel in the amount of 19,509. The assets transferred amounted to 1,824,644 and the liabilities assumed amounted to 1,804,534. | |
| | Under Central Bank rules, as a result of the acquisition, the Bank booked a positive goodwill amounting to 66,042, which is amortized in ten years and no impairment is required. See also note 3.7.3.6. |
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BANCO MACRO S.A. AND SUBSIDIARIES(c) | | On September 22, 2010, the Bank acquired 100% of the capital stock of Banco Privado de Inversiones in the amount of USD 23.3 million, out of which, USD 10.4 million is related to a guaranteed amount, as provided in the purchase agreement. The assets transferred amounted to 403,686 and the liabilities assumed amounted to 368,034. |
| 26.2. | Under Central Bank rules, as a result of the acquisition, the Bank booked a positive goodwill amounting to 56,205, which is amortized in ten years and no impairment is required. |
Amortization expense on goodwill was 10,305, 8,432 and 8,439 as of December 31, 2010, 2009 and 2008, respectively. | 24.2. | | Organization and development costs: | | | | | As of December 31, 20092010 and 2008,2009, the organization and development costs breakdown is as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | As of December 31, | | | | Estimated | | | | | | | Estimated | | | | | | | | useful life | | | | | | | useful life | | | | | | Description | | (years) | | 2009 | | 2008 | | | (years) | | 2010 | | 2009 | | | | | Differences due to courts orders — deposits dollarizations | | 5 | | 50,532 | | 40,657 | | | Differences due to courts orders – deposits dollarizations (a) | | | 5 | | 54,680 | | 50,532 | | Cost from information technology projects(b) | | 5 | | 78,158 | | 74,631 | | | 5 | | 100,937 | | 78,158 | | Organizational cost(c) | | 5 | | 8,001 | | 8,308 | | | 5 | | 2,602 | | 8,001 | | Other capitalized cost | | 5 | | 18,838 | | 11,473 | | | 5 | | 38,133 | | 18,838 | | | | | | | | | | | | | Total | | 155,529 | | 135,069 | | | 196,352 | | 155,529 | | | | | | | | | | | | |
| | | (a) | | Under Central Bank rules, the Bank records exchange differences related to payments and provisions made by the Bank in relation to the constitutional protection and court judgments resulting from court decisions mentioned in Note 4.4.l.2. | | (b) | | Under Central Bank rules, the Bank records as expense software cost relating to preliminary application development and post-implementation stages of software development. | | (c) | | Under Central Bank rules, the Bank records cost inherent to the set up and organization of the Bank. |
Amortization expense was 60,748, 53,950 55,066 and 47,20255,066 as of December 31, 2010, 2009 2008 and 2007,2008, respectively, which was recorded in Administrative expenses and Other expenses. Intangible assets changed as follows during fiscal years ended December 31, 2010, 2009 2008 and 2007:2008: | | | | | | | | | | | | | | | | Fiscal year ended December 31, | | | | | | | | | | | | | | | | 2009 | | 2008 | | 2007 | | | Fiscal year ended December 31, | | | | | 2010 | | 2009 | | 2008 | | Balance at the beginning of the fiscal year | | 198,546 | | 199,963 | | 164,047 | | | 210,574 | | 198,546 | | 199,963 | | Additions | | 74,867 | | 62,096 | | 92,368 | | | 157,940 | | 74,867 | | 62,096 | | Decreases | | | (457 | ) | | | (8 | ) | | — | | | | (164 | ) | | | (457 | ) | | | (8 | ) | Amortization expense | | | (62,382 | ) | | | (63,505 | ) | | | (56,452 | ) | | Amortization expense (1) | | | | (71,053 | ) | | | (62,382 | ) | | | (63,505 | ) | | | | | | | | | | | | | | | | Balance at the end of the fiscal year | | 210,574 | | 198,546 | | 199,963 | | | 297,297 | | 210,574 | | 198,546 | | | | | | | | | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES 25. | | OTHER ALLOWANCES AND PROVISIONS
|
| | The activity of the followingBank had recorded allowances deducted from assets or included in liabilities in accordance with Central Bank rules are as follows:and provisions for: | |
| | Allowances — Government and private securities
| | | | Recordedsecurities: recorded to cover possible impairment risk arising out of government securities. |
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 27 | | | | 27 | | | | 29 | | Provision for government and private securities | | | 28 | | | | — | | | | — | | Reversals | | | (11 | ) | | | — | | | | (2 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 44 | | | | 27 | | | | 27 | | | | | | | | | | | |
| | Loans: recorded in compliance with the provision of Communique “A” 2950, as supplemented, of the Central Bank, taking into account Notes 4.4.f). |
| | Other receivables from financial intermediation: recorded in compliance with the provision of Communique “A” 2950, as supplemented, of the Central Bank, taking into account Notes 4.4.f) and 4.4.h.4). |
| | Receivables from financial leases: recorded in compliance with the provision of Communique “A” 2950, as supplemented, of the Central Bank, taking into account Note 4.4.f). |
| | Investment in other companies: recorded to cover possible impairment risk arising from investments in other companies. |
| | Other receivables: recorded to cover collectibility risks of other receivables. |
| | Granted guarantees: recorded under Central Bank’s rules to cover contingent losses related to loan commitments. These amounts have been accrued in accordance with Central Bank’s rules, which are similar to FASB ASC 450 “Contingencies”. |
| | Negative goodwill: recorded to cover the difference between the purchase price and the book value of the net equity acquired of Banco Bansud S.A. and Nuevo Banco Suquía S.A. |
| | Other loss contingencies: mainly includes labor litigation and customer and other third-party claims. The amounts have been accrued in accordance with Central Bank’s rules, which are similar to FASB ASC 450 “Contingencies”. |
| | Difference from court deposit dollarization: recorded under Central Bank’s rules to cover the difference form court deposit dollarization (see Note 2.). |
| | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2010 | | | | Balance at | | | | | | | | | | | | | | | Balance at | | | | the beginning | | | | | | | | | | | | | | | the end of | | | | of the fiscal | | | | | | | | | | | | | | | the fiscal | | | | year | | | Provision | | | Reversals | | | Charge off | | | year | | Allowances | | | | | | | | | | | | | | | | | | | | | - Government and private securities | | | 44 | | | | 6 | | | | (47 | ) | | | — | | | | 3 | | - Loans | | | 448,045 | | | | 254,010 | (a)(b) | | | (28,747 | )(b) | | | (158,398 | ) | | | 514,910 | (c) | - Other receivables from financial intermediation | | | 231,219 | | | | 11,756 | | | | (3,458 | ) | | | (2,004 | ) | | | 237,513 | | - Receivables from financial leases | | | 3,649 | | | | 3,298 | | | | (926 | ) | | | — | | | | 6,021 | | - Investment in other companies | | | 1,497 | | | | 277 | | | | (98 | ) | | | — | | | | 1,676 | | - Other receivables | | | 13,980 | | | | 3,881 | | | | (981 | ) | | | (351 | ) | | | 16,529 | | | | | | | | | | | | | | | | | | Total of allowances | | | 698,434 | | | | 273,228 | | | | (34,257 | ) | | | (160,753 | ) | | | 776,652 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Provisions | | | | | | | | | | | | | | | | | | | | | - Granted guarantees | | | 966 | | | | — | | | | (182 | ) | | | — | | | | 784 | | - Negative goodwill | | | 483 | | | | — | | | | (483 | ) | | | — | | | | — | | - Other loss contingencies | | | 66,847 | | | | 34,492 | (d) | | | (509 | ) | | | (10,257 | ) | | | 90,573 | | - Difference from court deposit dollarization | | | 19,979 | | | | 2,194 | | | | (87 | ) | | | (7,613 | ) | | | 14,473 | | | | | | | | | | | | | | | | | | Total of provisions | | | 88,275 | | | | 36,686 | | | | (1,261 | ) | | | (17,870 | ) | | | 105,830 | | | | | | | | | | | | | | | | | |
F - 5754
BANCO MACRO S.A. AND SUBSIDIARIES Allowances — Other receivables from financial intermediation (mainly trusts) | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 | | | | Balance at | | | | | | | | | | | | | | | | | | | the beginning | | | | | | | | | | | | | | | Balance at the | | | | of the fiscal | | | | | | | | | | | | | | | end of the | | | | year | | | Provision | | | Reversals | | | Charge off | | | fiscal year | | Allowances | | | | | | | | | | | | | | | | | | | | | - Government and private securities | | | 27 | | | | 28 | | | | (11 | ) | | | — | | | | 44 | | - Loans | | | 438,348 | | | | 187,648 | | | | (2,596 | ) | | | (175,355 | ) | | | 448,045 | | - Other receivables from financial intermediation | | | 228,588 | | | | 4,202 | | | | (68 | ) | | | (1,503 | ) | | | 231,219 | | - Receivables from financial leases | | | 5,391 | | | | 138 | | | | (1,878 | ) | | | (2 | ) | | | 3,649 | | - Investment in other companies | | | 247 | | | | 1,266 | | | | (16 | ) | | | — | | | | 1,497 | | - Other receivables | | | 15,838 | | | | 2,477 | | | | (1,914 | ) | | | (2,421 | ) | | | 13,980 | | | | | | | | | | | | | | | | | | Total of allowances | | | 688,439 | | | | 195,759 | | | | (6,483 | ) | | | (179,281 | ) | | | 698,434 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Provisions | | | | | | | | | | | | | | | | | | | | | - Granted guarantees | | | 1,523 | | | | 24 | | | | (581 | ) | | | — | | | | 966 | | - Negative goodwill | | | 483 | | | | — | | | | — | | | | — | | | | 483 | | - Other loss contingencies | | | 62,765 | | | | 17,114 | | | | (2,069 | ) | | | (10,963 | ) | | | 66,847 | | - Difference from court deposit dollarization | | | 18,233 | | | | 1,746 | | | | — | | | | — | | | | 19,979 | | | | | | | | | | | | | | | | | | Total of provisions | | | 83,004 | | | | 18,884 | | | | (2,650 | ) | | | (10,963 | ) | | | 88,275 | | | | | | | | | | | | | | | | | |
Recorded in compliance with the provision of Communication “A” 2950, as supplemented, of the Central Bank, taking into account notes 4.4.f) and 4.4.h.3). | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2008 | | | | Balance at | | | | | | | | | | | | | | | | | | | the beginning | | | | | | | | | | | | | | | Balance at the | | | | of the fiscal | | | | | | | | | | | | | | | end of the | | | | year | | | Provision | | | Reversals | | | Charge off | | | fiscal year | | Allowances | | | | | | | | | | | | | | | | | | | | | - Government and private securities | | | 27 | | | | — | | | | — | | | | — | | | | 27 | | - Loans | | | 220,422 | | | | 314,532 | | | | (20,360 | ) | | | (76,246 | ) | | | 438,348 | | - Other receivables from financial intermediation | | | 206,939 | | | | 24,099 | | | | (1,689 | ) | | | (761 | ) | | | 228,588 | | - Receivables from financial leases | | | 4,898 | | | | 614 | | | | (121 | ) | | | — | | | | 5,391 | | - Investment in other companies | | | 697 | | | | 45 | | | | (8 | ) | | | (487 | ) | | | 247 | | - Other receivables | | | 27,034 | | | | 7,332 | | | | (517 | ) | | | (18,011 | ) | | | 15,838 | | | | | | | | | | | | | | | | | | Total of allowances | | | 460,017 | | | | 346,622 | | | | (22,695 | ) | | | (95,505 | ) | | | 688,439 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Provisions | | | | | | | | | | | | | | | | | | | | | - Granted guarantees | | | 1,660 | | | | 40 | | | | (177 | ) | | | — | | | | 1,523 | | - Negative goodwill | | | 483 | | | | — | | | | — | | | | — | | | | 483 | | - Other loss contingencies | | | 78,044 | | | | 28,792 | | | | (21,385 | ) | | | (22,686 | ) | | | 62,765 | | - Difference from court deposit dollarization | | | 21,146 | | | | 1,864 | | | | — | | | | (4,777 | ) | | | 18,233 | | | | | | | | | | | | | | | | | | Total of provisions | | | 101,333 | | | | 30,696 | | | | (21,562 | ) | | | (27,463 | ) | | | 83,004 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 228,588 | | | | 206,939 | | | | 178,319 | | Provision for other receivables for financial intermediation losses | | | 4,202 | | | | 24,099 | | | | 38,583 | | Charge off | | | (1,503 | ) | | | (761 | ) | | | (5,902 | ) | Reversals | | | (68 | ) | | | (1,689 | ) | | | (4,061 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 231,219 | | | | 228,588 | | | | 206,939 | | | | | | | | | | | |
Allowances — Assets subject to financial lease
Recorded in compliance with the provision of Communication “A” 2950, as supplemented, of the Central Bank, taking into account note 4.4.f).
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 5,391 | | | | 4,898 | | | | 3,489 | | Provision for assets subject to financial lease | | | 138 | | | | 614 | | | | 1,557 | | Charge off | | | (2 | ) | | | — | | | | — | | Reversals | | | (1,878 | ) | | | (121 | ) | | | (148 | ) | | | | | | | | | | | Balance at the end of the fiscal year(1) | | | 3,649 | | | | 5,391 | | | | 4,898 | | | | | | | | | | | |
| | | (a) | | As of December 31, 2010, the amount of “Provision for loan losses” disclosed in the Statements of Income, includes above amounts and the provision for “Other receivables for financial intermediation” and “Receivables from financial leases”, mainly, net of the related allowances for loan losses from acquisition of Banco Privado de Inversiones S.A. | | (1)(b) | | Under U.S.As of December 31, 2010 the amount of “Provisions for loan loss, net” disclosed in Note 28., under US SEC requirements,Regulation S-X, includes above amounts and provision and reversals of “Receivables from financial leases” disclosed in Note 27, mainly, net of those related to Recovered loans. | | (c) | | As of December 31, 2010, as disclosed in note 31, they were included in “Assets —Note 28, under SEC requirements Regulation S-X, the amount of Allowance for loans losses”.loan losses includes the allowance for Receivables from financial leases. | | (d) | | As of December 31, 2010, the amount of “Provision for losses on other receivables and other allowances” disclosed in the Statement of Income, mainly includes above amounts net of expenses related to contingent liabilities for probable claims, lawsuit and other proceeding, including those related to labor and other obligations. |
Allowances — Investment in other companies
Recorded to cover possible impairment risk arising from investments in other companies.
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 247 | | | | 697 | | | | 1,172 | | Provision for investment in other companies losses | | | 1,266 | | | | 45 | | | | 85 | | Charge off | | | — | | | | (487 | ) | | | (11 | ) | Reversals | | | (16 | ) | | | (8 | ) | | | (549 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 1,497 | | | | 247 | | | | 697 | | | | | | | | | | | |
Allowances — Other receivables
Following is a summary of amounts recorded to cover collectibility risks of other receivables.
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 15,838 | | | | 27,034 | | | | 36,153 | | Provision for other receivables losses | | | 2,477 | | | | 7,332 | | | | 1,936 | | Charge off | | | (2,421 | ) | | | (18,011 | ) | | | (3,959 | ) | Reversals | | | (1,914 | ) | | | (517 | ) | | | (7,096 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 13,980 | | | | 15,838 | | | | 27,034 | | | | | | | | | | | | | | | | | | | | | | | | | Total of allowances | | | 250,389 | | | | 250,091 | | | | 239,595 | | | | | | | | | | | |
F - 5855
BANCO MACRO S.A. AND SUBSIDIARIES Provisions — Granted Guarantees
Following is a roll-forward of the allowance recorded under Central Bank’s rules to cover contingent losses related to loan commitments. These amounts have been accrued in accordance with Central Bank’s rules, which are similar to FASB ASC 450 “Contingencies”.
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 1,523 | | | | 1,660 | | | | 1,674 | | Provision for granted guarantees losses | | | 24 | | | | 40 | | | | 55 | | Reversals | | | (581 | ) | | | (177 | ) | | | (69 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 966 | | | | 1,523 | | | | 1,660 | | | | | | | | | | | |
Provisions — Negative Goodwill
Following is the roll forward of the amounts recorded to cover the difference between the purchase price and the book value of the net equity acquired of Banco Bansud S.A. and Nuevo Banco Suquía S.A. from 2007 through 2009 was 483.
Provisions — Other loss contingencies
Principally includes labor litigation and customer and other third-party claims. The amounts have been accrued in accordance with Central Bank’s rules, which are similar to FASB ASC 450 “Contingencies”.
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 62,765 | | | | 78,044 | | | | 75,085 | | Provision for other contingent losses | | | 17,114 | | | | 28,792 | | | | 23,638 | | Charge off | | | (10,963 | ) | | | (22,686 | ) | | | (18,728 | ) | Reversals | | | (2,069 | ) | | | (21,385 | ) | | | (1,951 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 66,847 | | | | 62,765 | | | | 78,044 | | | | | | | | | | | |
Provision — Difference from court deposit dollarization
Following is the roll-forward of the provision recorded under Central Bank’s rules to cover the difference form court deposit dollarization (see note 2.).
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | Balance at the beginning of the fiscal year | | | 18,233 | | | | 21,146 | | | | — | | Provision from court deposits dollarization | | | 1,746 | | | | 1,864 | | | | 21,678 | | Charge off | | | — | | | | (4,777 | ) | | | (532 | ) | | | | | | | | | | | Balance at the end of the fiscal year | | | 19,979 | | | | 18,233 | | | | 21,146 | | | | | | | | | | | | | | Total of provisions | | | 88,275 | | | | 83,004 | | | | 101,333 | | | | | | | | | | | |
28.26. | | DEPOSITS AND OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION |
The aggregate amount of time deposits and investment accounts exceeding Ps.100 (thousands) or more as of December 31, 2010 and 2009 is 9,036,046 and investment accounts exceeding Ps.100 (thousands) or more as of December 31, 2009 and 2008 is 6,964,798, and 6,335,840, respectively. |
F - 59
BANCO MACRO S.A. AND SUBSIDIARIES
| 28.226.2 | | Central Bank of Argentina | | | | | The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 | | | As of December 31, 2008 | | | | | | | | Interest and | | | | | | | | | | | Interest and | | | | | | | | | | | CER | | | | | | | | | | | CER | | | | | | | Principal | | | adjustments | | | Rate | | | Principal | | | adjustments | | | Rate | | Short–term liabilities | | | 1,363 | | | | — | | | | — | | | | 35,746 | | | | 43,193 | | | | 1.95 | % | Long–term liabilities | | | 518 | | | | 16 | | | | 0.08 | % | | | 101,516 | | | | 122,305 | | | | 2.00 | % | | | | | | | | | | | | | | | | | | | | | | Total (1) | | | 1,881 | | | | 16 | | | | | | | | 137,262 | | | | 165,498 | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows: | | | (1) | | As mentioned in note 2, during January and February 2009, as set forth by Central Bank Resolution No. 06/2009 and 216/2009, the Bank prepaid the payable amounts resulting from loans received to acquire Argentine Government bonds intended for the depositors of former Nuevo Banco Suquía S.A. and former Nuevo Banco Bisel S.A. in the amount of 291,609 (see note 7.2.b)). |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2010 | | | As of December 31, 2009 | | | | | | | | Interest and | | | | | | | | | | | Interest and | | | | | | | | | | | CER | | | | | | | | | | | CER | | | | | | | Principal | | | adjustments | | | Rate | | | Principal | | | adjustments | | | Rate | | Short–term liabilities | | | 1,447 | | | | 5 | | | | 0.01 | % | | | 1,363 | | | | — | | | | — | | Long–term liabilities | | | 415 | | | | 10 | | | | 0.08 | % | | | 518 | | | | 16 | | | | 0.08 | % | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,862 | | | | 15 | | | | | | | | 1,881 | | | | 16 | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accrued interest is included in the “Central Bank of Argentina” under the “Other Liabilities from Financial Intermediation” in the accompanying Consolidated Balance Sheets. Amounts are unsecured. | 28.326.3 | | Banks and international institutions |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 | | | As of December 31, 2008 | | | | Principal | | | Interest | | | Rate | | | Principal | | | Interest | | | Rate | | Short–term liabilities | | | 219,743 | | | | 7,471 | | | | 7.78 | % | | | 52,283 | | | | 769 | | | | 4.92 | % | Long–term liabilities (1) | | | — | | | | — | | | | — | | | | 172,685 | | | | 6,685 | | | | 8.54 | % | | | | | | | | | | | | | | | | | | | | | | Total | | | 219,743 | | | | 7,471 | | | | | | | | 224,968 | | | | 7,454 | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Bank borrowed funds under various credit facilities from Banks and international institutions for specific purposes, as follows: | | | (1) | | On June 16, 2006 the Bank and Credit Suisse First Boston International entered into loan agreement for USD 50,000,000, maturing on January 21, 2008, at LIBOR plus 1.95%. Such agreement includes restrictions mainly related to the compliance with the payments established. In the event of noncompliance with the agreement, the Bank will be unable to distribute dividends either directly through its subsidiaries. On January 18, 2008, an addendum was signed changing the expiration date to January 21, 2010, and establishing a nominal interest rate of 8.54% per anum. As of December 31, 2009 the Bank had duly complied with the obligations assumed with the loan. Finally, on January 21, 2010, the Bank paid off the loan. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2010 | | | As of December 31, 2009 | | | | Principal | | | Interest | | | Rate | | | Principal | | | Interest | | | Rate | | Short–term liabilities | | | 45,506 | | | | 191 | | | | 1.89 | % | | | 219,743 | | | | 7,471 | | | | 7.78 | % | | | | | | | | | | | | | | | | | | | | | | | Total | | | 45,506 | | | | 191 | | | | | | | | 219,743 | | | | 7,471 | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accrued interest is included in the “Accrued interest, adjustments, foreign exchange and quoted price differences payable” under the “Other Liabilities from Financial Intermediation” in the accompanying Consolidated Balance Sheets. Amounts are unsecured. |
| 28.426.4 | | Financing received from Argentine financial institutions | | | | | The Bank borrowed funds under various credit facilities from the Argentine financial institutions for specific purposes, as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 | | | As of December 31, 2008 | | | | Principal | | | Interest | | | Rate | | | Principal | | | Interest | | | Rate | | Short–term liabilities | | | 146,679 | | | | 2,443 | | | | 9.45 | % | | | 30,181 | | | | 1,665 | | | | 10.33 | % | Long–term liabilities | | | 17,278 | | | | 23,571 | | | | 2.00 | % | | | 18,958 | | | | 23,002 | | | | 2.00 | % | | | | | | | | | | | | | | | | | | | | | | Total | | | 163,957 | | | | 26,014 | | | | | | | | 49,139 | | | | 24,667 | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Bank borrowed funds under various credit facilities from the Argentine financial institutions for specific purposes, as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2010 | | | As of December 31, 2009 | | | | Principal | | | Interest | | | Rate | | | Principal | | | Interest | | | Rate | | Short–term liabilities | | | 31,845 | | | | 3,048 | | | | 9.14 | % | | | 146,679 | | | | 2,443 | | | | 9.45 | % | Long–term liabilities | | | 15,501 | | | | 25,243 | | | | 2.00 | % | | | 17,278 | | | | 23,571 | | | | 2.00 | % | | | | | | | | | | | | | | | | | | | | | | Total | | | 47,346 | | | | 28,291 | | | | | | | | 163,957 | | | | 26,014 | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accrued interest and adjustments are included in “Accrued interest payables” under the Financing received from Argentine financial institutions and “Accrued interest, adjustments, foreign exchange and quoted price differences payable adjustments, foreign exchange and quoted price differences payable”payables” under the “Other liabilities from financial intermediation” in the accompanying consolidated balance sheets. Amounts are unsecured. F - 6056
BANCO MACRO S.A. AND SUBSIDIARIES Maturities of the long-term liabilities in the table above for each of the following periods are as follows: | | | | | | | | As of | | | | | December 31, | | | | | | Periods | | 2009 | | | As of December 31, 2010 | | 2011 | | 4,202 | | | 2012 | | 4,202 | | | 4,671 | | 2013 | | 4,202 | | | 4,671 | | 2014 | | 6,419 | | | 7,136 | | 2015 | | 6,863 | | | 7,630 | | 2016 | | 6,863 | | | 7,630 | | 2017 | | 6,862 | | | 7,630 | | 2018 | | 1,236 | | | 1,376 | | | | | | | | | | | 40,849 | | | 40,744 | | | | | | | | |
| 28.526.5 | | Others | | | | | The rest of liabilities included in “Others liabilities from financial intermediation” are liabilities assumed for the Bank, mainly related to operating banking activities. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 | | As of December 31, 2008 | | | As of December 31, 2010 | | As of December 31, 2009 | | | | Principal | | Interest | | Rate | | Principal | | Interest | | Rate | | | Principal | | Interest | | Rate | | Principal | | Interest | | Rate | | Short–term liabilities(1) | | 652,241 | | 89 | | | 0.02 | % | | 545,146 | | 37 | | | 0.02 | % | | 1,093,289 | | 19 | | | 0.01 | % | | 652,241 | | 89 | | | 0.02 | % | Long–term liabilities (1)(2) | | 80,445 | | 1,168 | | | 3.96 | % | | 80,835 | | 1,123 | | | 3.96 | % | | 80,584 | | 1,214 | | | 3.98 | % | | 80,445 | | 1,168 | | | 3.96 | % | | | | | | | | | | | | | | | | | | | | Total | | 732,686 | | 1,257 | | 625,981 | | 1,160 | | | 1,173,873 | | 1,233 | | 732,686 | | 1,257 | | | | | | | | | | | | | | | | | | | | |
| | | (1) | | Includes mainly pending settlement transactions and payment account. | | (1)(2) | | Includes the liability assumed with -SEDESASEDESA related to the acquisition of preferred shares of former Nuevo Banco Bisel S.A. in the amount of 74,51977,500 and 71,65374,519 as of December 31, 20092010 and 2008,2009, respectively (see notes 3.7. and 7.1.f)Note 7.1.e)). |
Additionally, the Bank has other liabilities related to corporate bonds and forward transactions (see notesNotes 10 and 24)22, respectively). Accrued interest is included in the “Accrued interest, adjustments, foreign exchange and quoted price differences payable” under the “Other Liabilities from Financial Intermediation” in the accompanying Consolidated Balance Sheets. Amounts are unsecured. 29.27. | | EMPLOYEE BENEFIT PLANS |
The Bank does not maintain pension plans for its personnel. The Bank is required to pay employer contributions, determined on the basis of total monthly payroll.
These expenses aggregated 142,440, 110,170 and 78,821 for the fiscal years ended December 31, 2009, 2008 and 2007, respectively, and are included in the “Administrative expenses—Personnel expenses” account. | | The Bank does not maintain pension plans for its personnel. The Bank is required to pay employer contributions, determined on the basis of total monthly payroll. |
30. | | These expenses aggregated 183,831, 142,440 and 110,170 for the fiscal years ended December 31, 2010, 2009 and 2008, respectively, and are included in the “Administrative expenses—Personnel expenses” account. |
28. | | MINIMUM CAPITAL REQUIREMENTSCONSOLIDATED INCOME STATEMENTS AND BALANCE SHEET
|
Under Central Bank’s rules, the Bank is required to maintain individual and consolidated minimum levels of equity capital (“minimum capital”). As of December 31, 2009 and 2008, the consolidated minimum capital is based upon risk-weighted assets and also considers interest rate risk and market risk. The required consolidated minimum capital and the consolidated Bank’s capital calculated under the Central Bank rules are as follows: | | The presentation of consolidated financial statements under Central Bank’s rules differs significantly from the format required by the U.S. SEC under Rules 9-03 and 9-04 of Regulation S-X (“Article 9”). The following consolidated financial statements were restated into constant pesos, as explained in Note 4.3. These consolidated financial statements were prepared using the measurement methods provided by Central Bank, but under US SEC requirements: |
| | | | | | | | | | | | | | | | | | | | | | | Excess of actual Minimum | | | | Required | | | Computable | | | Capital over Required | | | | Minimum Capital | | | Capital | | | Minimum Capital | | | | | | | | | | | | | | | December 31, 2009 | | | 1,344,042 | | | | 3,708,296 | | | | 2,364,254 | | December 31, 2008 | | | 1,341,598 | | | | 3,113,825 | | | | 1,772,227 | |
| | | | | | | | | | | | | Consolidated Statements of Income | | 2010 | | | 2009 (1) | | | 2008 (1) | | | | | | | | | | | | | | | Interest and fees on loans | | | 2,627,497 | | | | 2,343,185 | | | | 2,105,895 | | Interest on bearing deposits with other banks | | | 275 | | | | 363 | | | | 7,010 | | Interest on other receivables from financial intermediation | | | 46,654 | | | | 43,825 | | | | 174,038 | | Interest on securities and foreign exchange purchased under resale agreements | | | 33,839 | | | | 63,167 | | | | 28,010 | | Securities gains, net | | | 949,055 | | | | 1,321,130 | | | | 569,095 | |
F - 6157
BANCO MACRO S.A. AND SUBSIDIARIES | | | | | | | | | | | | | Consolidated Statements of Income | | 2010 | | | 2009 (1) | | | 2008 (1) | | | | | | | | | | | | | | | Other interest income | | | 38,396 | | | | 33,653 | | | | 23,166 | | | | | | | | | | | | Total interest income | | | 3,695,716 | | | | 3,805,323 | | | | 2,907,214 | | | | | | | | | | | | | | | | | | | | | | | | | Interest on deposits | | | 979,919 | | | | 1,181,701 | | | | 970,072 | | Interest on securities and foreign exchange purchased under resale agreements | | | 5,281 | | | | 2,314 | | | | 5,723 | | Interest on short-term borrowings | | | 31,843 | | | | 37,631 | | | | 29,227 | | Interest on long-term debt | | | 97,671 | | | | 106,278 | | | | 150,457 | | Other interest expense | | | 255,566 | | | | 206,122 | | | | 160,487 | | | | | | | | | | | | Total interest expense | | | 1,370,280 | | | | 1,534,046 | | | | 1,315,966 | | | | | | | | | | | | Net interest income | | | 2,325,436 | | | | 2,271,277 | | | | 1,591,248 | | | | | | | | | | | | | | | Provision for loan losses, net | | | (149,430 | ) | | | (154,397 | ) | | | (226,705 | ) | | | | | | | | | | | Net interest income after provision for loan losses | | | 2,176,006 | | | | 2,116,880 | | | | 1,364,543 | | | | | | | | | | | | | | | | | | | | | | | | | Service charges on deposit accounts and other fees | | | 811,190 | | | | 663,000 | | | | 570,968 | | Credit-card service charges and fees | | | 197,818 | | | | 158,418 | | | | 153,413 | | Other commissions | | | 34,779 | | | | 23,365 | | | | 19,557 | | Foreign currency exchange trading income | | | 28,358 | | | | 26,682 | | | | 19,261 | | Income from equity in other companies | | | 24,654 | | | | 14,953 | | | | 32,986 | | Foreign exchange, net | | | 153,134 | | | | 133,731 | | | | 143,094 | | Other | | | 199,642 | | | | 140,430 | | | | 119,576 | | | | | | | | | | | | Total non-interest income | | | 1,449,575 | | | | 1,160,579 | | | | 1,058,855 | | | | | | | | | | | | | | | | | | | | | | | | | Commissions | | | 81,464 | | | | 61,620 | | | | 57,077 | | Salaries and payroll taxes | | | 1,224,207 | | | | 963,889 | | | | 796,129 | | Outside consultants and services | | | 79,564 | | | | 64,436 | | | | 54,375 | | Depreciation of bank premises and equipment | | | 60,006 | | | | 55,255 | | | | 51,499 | | Rent | | | 40,367 | | | | 34,554 | | | | 21,685 | | Stationery and supplies | | | 9,913 | | | | 11,472 | | | | 15,050 | | Electric power and communications | | | 48,183 | | | | 45,747 | | | | 37,004 | | Advertising and publicity | | | 64,017 | | | | 46,861 | | | | 53,178 | | Taxes | | | 105,521 | | | | 79,444 | | | | 70,702 | | Directors’ and Statutory Audits’ fee | | | 59,391 | | | | 36,413 | | | | 26,941 | | Insurance | | | 9,882 | | | | 7,313 | | | | 6,073 | | Security services | | | 61,186 | | | | 47,668 | | | | 42,241 | | Maintenance, conservation and repair expenses | | | 78,647 | | | | 68,006 | | | | 47,743 | | Amortization of organization and development expenses (2) | | | 71,026 | | | | 62,151 | | | | 63,210 | | Provision for losses on other receivables and other allowances (3) | | | 32,517 | | | | 21,275 | | | | 37,242 | | Other | | | 210,514 | | | | 255,083 | | | | 118,638 | | | | | | | | | | | | Total non-interest expense | | | 2,236,405 | | | | 1,861,187 | | | | 1,498,787 | | | | | | | | | | | | | | | | | | | | | | | | | Income before income tax expense | | | 1,389,176 | | | | 1,416,272 | | | | 924,611 | | | | | | | | | | | | | | | Income tax expense | | | 371,878 | | | | 659,250 | | | | 261,207 | | | | | | | | | | | | | | | | | | | | | | | | | Income from continuing operations | | | 1,017,298 | | | | 757,022 | | | | 663,404 | | | | | | | | | | | | | | | | | | | | | | | | | Net income | | | 1,017,298 | | | | 757,022 | | | | 663,404 | | | | | | | | | | | | | | | | | | | | | | | | | Net income attributable to the noncontrolling interest | | | 6,868 | | | | 5,092 | | | | 3,354 | | | | | | | | | | | | | | | | | | | | | | | | | Net income attributable to the controlling interest | | | 1,010,430 | | | | 751,930 | | | | 660,050 | | | | | | | | | | | | | | | | | | | | | | | | | Earnings per common share | | | 1.70 | | | | 1.26 | | | | 1.00 | | | | | | | | | | | |
| | | (1) | | See Note 4.2. | | (2) | | See Notes 24 and 32.5. | | (3) | | See Note 25. |
F - 58
BANCO MACRO S.A. AND SUBSIDIARIES 31. | | CONSOLIDATED INCOME STATEMENTS AND BALANCE SHEET Central Bank rules also require certain classifications of assets and liabilities, which are different from those required by Article 9. The following table discloses the Bank’s consolidated balance sheets as of December 31, 2010, and 2009, as if the Bank followed the balance sheet disclosure requirements under Article 9: |
The presentation of consolidated financial statements under Central Bank’s rules differs significantly from the format required by the U.S. SEC under Rules 9-03 and 9-04 of Regulation S-X (“Article 9”). The following consolidated financial statements were restated into constant pesos, as explained in note 4.3. These consolidated financial statements were prepared using the measurement methods provided by Central Bank, but under US SEC requirements: | | | | | | | | | | | 2010 | | | 2009 (1) | | ASSETS | | | | | | | | | | | | | | | | | | Cash and cash equivalent | | | 4,005,929 | | | | 4,298,395 | | Interest-bearing deposits in other banks | | | 269,155 | | | | 363,041 | | Federal Funds sold and securities purchased under resale agreements of similar arrangements | | | 2,436,328 | | | | 1,056,940 | | Trading account assets | | | 142,825 | | | | 85,709 | | Investment securities available for sale | | | 4,632,956 | | | | 6,018,960 | | Loans | | | 16,732,999 | | | | 11,924,322 | | Allowance for loan losses | | | (520,931 | ) | | | (451,693 | ) | Premises and equipment | | | 626,606 | | | | 775,962 | | Due from customers on acceptances | | | 220,855 | | | | 381,501 | | Other assets | | | 1,525,804 | | | | 1,057,034 | | | | | | | | | Total assets | | | 30,072,526 | | | | 25,510,171 | | | | | | | | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | Interest-bearing deposits | | | 16,777,893 | | | | 14,502,258 | | Non interest-bearing deposits | | | 5,469,561 | | | | 3,354,322 | | Federal Funds purchased and securities sold under repurchase agreements | | | 24,664 | | | | 476,912 | | Other short-term borrowings | | | 1,191,743 | | | | 1,045,748 | | Long-term borrowings | | | 743,038 | | | | 724,012 | | Contingent liabilities | | | 105,830 | | | | 87,172 | | Other liabilities | | | 760,131 | | | | 986,288 | | Bank acceptances outstanding | | | 220,855 | | | | 381,501 | | Subordinated corporate bonds | | | 598,470 | | | | 572,473 | | | | | | | | | Total liabilities | | | 25,892,185 | | | | 22,130,686 | | | | | | | | | | | | | | | | | | Common stocks | | | 594,485 | | | | 594,485 | | Retained appropriated earnings | | | 764,351 | | | | 613,964 | | Retained unappropriated earnings | | | 2,390,745 | | | | 1,747,091 | | Other shareholders’ equity | | | 403,261 | | | | 403,261 | | Noncontrolling interests | | | 27,499 | | | | 20,684 | | | | | | | | | Total shareholders’ equity | | | 4,180,341 | | | | 3,379,485 | | | | | | | | | Total liabilities and shareholders’ equity | | | 30,072,526 | | | | 25,510,171 | | | | | | | | |
| | | | | | | | | | | | | Consolidated Statements of Income | | 2009 | | | 2008 (1) | | | 2007 (1) | | | | Interest and fees on loans | | | 2,343,185 | | | | 2,105,895 | | | | 1,287,555 | | Interest on bearing deposits with other banks | | | 363 | | | | 7,010 | | | | 19,917 | | Interest on other receivables from financial intermediation | | | 43,825 | | | | 174,038 | | | | 67,022 | | Interest on securities and foreign exchange purchased under resale agreements | | | 63,167 | | | | 28,010 | | | | 24,642 | | Securities gains, net | | | 1,321,130 | | | | 569,095 | | | | 437,832 | | Other interest income | | | 33,653 | | | | 23,166 | | | | 15,774 | | | | | | | | | | | | Total interest income | | | 3,805,323 | | | | 2,907,214 | | | | 1,852,742 | | | | | | | | | | | | | | | | | | | | | | | | | Interest on deposits | | | 1,181,701 | | | | 970,072 | | | | 501,168 | | Interest on securities and foreign exchange purchased under resale agreements | | | 2,314 | | | | 5,723 | | | | 10,998 | | Interest on short-term borrowings | | | 37,631 | | | | 29,227 | | | | 4,860 | | Interest on long-term debt | | | 106,278 | | | | 150,457 | | | | 161,374 | | Other interest expense | | | 206,122 | | | | 160,487 | | | | 100,068 | | | | | | | | | | | | Total interest expense | | | 1,534,046 | | | | 1,315,966 | | | | 778,468 | | | | | | | | | | | | Net interest income | | | 2,271,277 | | | | 1,591,248 | | | | 1,074,274 | | | | | | | | | | | | | | | Provision for loan losses, net | | | (154,397 | ) | | | (226,705 | ) | | | 12,079 | | | | | | | | | | | | Net interest income after provision for loan losses | | | 2,116,880 | | | | 1,364,543 | | | | 1,086,353 | | | | | | | | | | | | | | | | | | | | | | | | | Service charges on deposit accounts and other fees | | | 663,000 | | | | 570,968 | | | | 370,147 | | Credit-card service charges and fees | | | 158,418 | | | | 153,413 | | | | 102,856 | | Other commissions | | | 23,365 | | | | 19,557 | | | | 19,789 | | Foreign currency exchange trading income | | | 26,682 | | | | 19,261 | | | | 15,947 | | Income from equity in other companies | | | 14,953 | | | | 32,986 | | | | 13,477 | | Foreign exchange, net | | | 133,731 | | | | 143,094 | | | | 48,823 | | Other | | | 140,430 | | | | 119,576 | | | | 143,831 | | | | | | | | | | | | Total non-interest income | | | 1,160,579 | | | | 1,058,855 | | | | 714,870 | | | | | | | | | | | | | | | | | | | | | | | | | Commissions | | | 61,620 | | | | 57,077 | | | | 49,965 | | Salaries and payroll taxes | | | 963,889 | | | | 796,129 | | | | 587,480 | | Outside consultants and services | | | 64,436 | | | | 54,375 | | | | 41,802 | | Depreciation of bank premises and equipment | | | 55,255 | | | | 51,499 | | | | 43,972 | | Rent | | | 34,554 | | | | 21,685 | | | | 18,635 | | Stationery and supplies | | | 11,472 | | | | 15,050 | | | | 14,511 | | Electric power and communications | | | 45,747 | | | | 37,004 | | | | 31,980 | | Advertising and publicity | | | 46,861 | | | | 53,178 | | | | 50,343 | | Taxes | | | 79,444 | | | | 70,702 | | | | 53.242 | | Directors’ and Statutory Audits’ fee | | | 36,413 | | | | 26,941 | | | | 37,695 | | Insurance | | | 7,313 | | | | 6,073 | | | | 6,091 | | Security services | | | 47,668 | | | | 42,241 | | | | 35,487 | | Maintenance, conservation and repair expenses | | | 68,006 | | | | 47,743 | | | | 36,392 | | Amortization of organization and development expenses | | | 62,151 | | | | 63,210 | | | | 55,906 | | Provision for losses on other receivables and other allowances | | | 21,275 | | | | 37,242 | | | | 15,599 | | Other | | | 255,083 | | | | 118,638 | | | | 132,495 | | | | | | | | | | | | Total non-interest expense | | | 1,861,187 | | | | 1,498,787 | | | | 1,211,595 | | | | | | | | | | | |
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BANCO MACRO S.A. AND SUBSIDIARIES
| | | | | | | | | | | | | Consolidated Statements of Income (contd.) | | 2009 | | | 2008 (1) | | | 2007 (1) | | | | | | | | | | | | | | | Income before income tax expense | | | 1,416,272 | | | | 924,611 | | | | 589,628 | | | | | | | | | | | | | | | | | | | | | | | | | Income tax expense | | | 659,250 | | | | 261,207 | | | | 92,345 | | | | | | | | | | | | | | | Income from continuing operations | | | 757,022 | | | | 663,404 | | | | 497,283 | | | | | | | | | | | | | | | | | | | | | | | | | Net income | | | 757,022 | | | | 663,404 | | | | 497,283 | | | | | | | | | | | | | | | | | | | | | | | | | Net income attributable to the noncontrolling interest | | | 5,092 | | | | 3,354 | | | | 2,083 | | | | | | | | | | | | | | | | | | | | | | | | | Net income attributable to the controlling interest | | | 751,930 | | | | 660,050 | | | | 495,200 | | | | | | | | | | | | | | | | | | | | | | | | | Earnings per common share | | | 1.26 | | | | 1.00 | | | | 0.72 | | | | | | | | | | | |
Central Bank rules also require certain classifications of assets and liabilities, which are different from those required by Article 9. The following table discloses the Bank’s consolidated balance sheets as of December 31, 2009, and 2008, as if the Bank followed the balance sheet disclosure requirements under Article 9:
| | | | | | | | | | | 2009 | | | 2008 (1) | | ASSETS | | | | | | | | | | | | | | | | | | Cash | | | 4,298,395 | | | | 824,387 | | Interest-bearing deposits in other banks | | | 363,041 | | | | 2,187,043 | | Federal Funds sold and securities purchased under resale agreements of similar arrangements | | | 1,578,099 | | | | 635,633 | | Trading account assets | | | 1,212,237 | | | | 422,125 | | Investment securities available for sale | | | 5,512,247 | | | | 4,410,387 | | Loans | | | 11,896,861 | | | | 12,250,774 | | Allowance for loan losses | | | (451,693 | ) | | | (443,739 | ) | Premises and equipment | | | 775,962 | | | | 644,318 | | Due from customers on acceptances | | | 381,501 | | | | 147,843 | | Other assets | | | 1,004,392 | | | | 921,181 | | | | | | | | | Total assets | | | 26,571,042 | | | | 21,999,952 | | | | | | | | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | Interest-bearing deposits | | | 14,502,258 | | | | 12,214,166 | | Non interest-bearing deposits | | | 3,354,322 | | | | 3,091,498 | | Federal Funds purchased and securities sold under repurchase agreements | | | 1,537,783 | | | | 654,467 | | Other short-term borrowings | | | 1,045,748 | | | | 732,223 | | Long-term borrowings | | | 724,012 | | | | 1,199,675 | | Contingent liabilities | | | 87,172 | | | | 82,155 | | Other liabilities | | | 986,288 | | | | 518,765 | | Bank acceptances outstanding | | | 381,501 | | | | 147,843 | | Subordinated corporate bonds | | | 572,473 | | | | 521,681 | | | | | | | | | Total liabilities | | | 23,191,557 | | | | 19,162,473 | | | | | | | | | | | | | | | | | | Common stocks | | | 594,485 | | | | 685,127 | | Retained appropriated earnings | | | 613,964 | | | | 481,954 | | Retained unappropriated earnings | | | 1,747,091 | | | | 1,251,569 | | Other shareholders’ equity | | | 403,261 | | | | 403,261 | | Noncontrolling interests | | | 20,684 | | | | 15,568 | | | | | | | | | Total shareholders’ equity | | | 3,379,485 | | | | 2,837,479 | | | | | | | | | Total liabilities and shareholders’ equity | | | 26,571,042 | | | | 21,999,952 | | | | | | | | |
29. | | OPERATIONS BY GEOGRAPHICAL SEGMENT |
| | | (1) | | See note 4.2.The principal financial information, classified by country of office where transactions originate, is shown below: |
| | | | | | | | | | | | | | | As of December 31, | | | | 2010 | | | 2009 | | | 2008 | | Total revenues | | | 5,220,502 | | | | 5,032,704 | | | | 4,110,010 | | Argentina | | | 5,186,234 | | | | 4,952,908 | | | | 4,088,419 | | Bahamas | | | 34,268 | | | | 79,796 | | | | 21,591 | | | | | | | | | | | | | | | Net income | | | 1,010,430 | | | | 751,930 | | | | 660,050 | | Argentina | | | 990,907 | | | | 687,294 | | | | 656,611 | | Bahamas | | | 19,523 | | | | 64,636 | | | | 3,439 | | | | | | | | | | | | | | | Total assets | | | 33,524,407 | | | | 26,859,238 | | | | 22,430,272 | | Argentina | | | 32,793,241 | | | | 25,882,809 | | | | 22,036,045 | | Bahamas | | | 731,166 | | | | 976,429 | | | | 394,227 | |
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BANCO MACRO S.A. AND SUBSIDIARIES 32. | | OPERATIONS BY GEOGRAPHICAL SEGMENT
|
The principal financial information, classified by country of office where transactions originate, is shown below:
| | | | | | | | | | | | | | | As of December 31, | | | | 2009 | | | 2008 | | | 2007 | | | | | | | | | | | | | | | Total revenues | | | 5,032,704 | | | | 4,110,010 | | | | 2,736,273 | | Argentina | | | 4,952,908 | | | | 4,088,419 | | | | 2,704,895 | | Bahamas | | | 79,796 | | | | 21,591 | | | | 31,378 | | | | | | | | | | | | | | | Net income | | | 751,930 | | | | 660,050 | | | | 495,200 | | Argentina | | | 687,294 | | | | 656,611 | | | | 485,079 | | Bahamas | | | 64,636 | | | | 3,439 | | | | 10,121 | | | | | | | | | | | | | | | Total assets | | | 26,859,238 | | | | 22,430,272 | | | | 19,723,546 | | Argentina | | | 25,882,809 | | | | 22,036,045 | | | | 19,198,844 | | Bahamas | | | 976,429 | | | | 394,227 | | | | 524,702 | |
33.30. | | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
The Bank enters into various transactions involving off-balance-sheet financial instruments. These instruments could be used to meet the risk management, trading and financing needs of customers or for the Bank’s proprietary trading and asset and liability management purposes, and could be subject to varying degrees of credit and market risk. Credit risk and market risk associated with on- and off-balance-sheet financial instruments are monitored on an aggregate basis.
The Bank uses the same credit policies in determining whether to enter or extend call and put option contracts, commitments, conditional obligations and guarantees as it does for granting loans. | | The Bank enters into various transactions involving off-balance-sheet financial instruments. These instruments could be used to meet the risk management, trading and financing needs of customers or for the Bank’s proprietary trading and asset and liability management purposes, and could be subject to varying degrees of credit and market risk. Credit risk and market risk associated with on- and off-balance-sheet financial instruments are monitored on an aggregate basis. |
| 33.1 | The Bank uses the same credit policies in determining whether to enter or extend call and put option contracts, commitments, conditional obligations and guarantees as it does for granting loans. |
| | | In the normal course of business, the Bank enters into a variety of transactions principally in the foreign exchange and stock markets. Most counterparts in the derivative transactions are banks and other financial institutions. | |
| | | These instruments include: |
Options: they confer the right to the buyer, but no obligation, to receive or pay a specific quantity of an asset or financial instrument for a specified price at or before a specified date. Options may be traded on a stock exchange or under OTC (Over-the-Counter) agreements. Forwards and Futures: they are agreements to deliver or take delivery at a specified rate, price or index applied against the underlying asset or financial instrument, at a specific date. Futures are exchange traded at standardized amounts of the underling asset or financial instrument. Forwards contracts are OTC agreements and are principally dealt in by the Bank in securities/foreign exchange as forward agreements. Swaps: they are agreements between two parties with the intention to exchange cash flows and risks at a specific date and for a period in the future. Swaps may be exchange traded or OTC agreements. | • | | Options: they confer the rightPursuant to the buyer, but no obligation, to receive or pay a specific quantityCentral Bank’s rules, forward transactions with delivery of an asset orunderlying assets, must be recorded under “Other receivables from financial instrument for a specified price at or before a specified date. Options may be traded on a stock exchange or under OTC (Over-the-Counter) agreements. | | | • | | Forwardsintermediations” and Futures: they are agreements to deliver or take delivery at a specified rate, price or index applied against the underlying asset or“Other liabilities from financial instrument, at a specific date. Futures are exchange traded at standardized amounts of the underling asset or financial instrument. Forwards contracts are OTC agreements and are principally dealt in by the Bank in securities/foreign exchange as forward agreements. | | | • | | Swaps: they are agreements between two parts with the intention to exchange cash flows and risks at a specific date and for a periodintermediations” in the future. Swaps may be exchange traded or OTC agreements. |
Pursuant to Central Bank’s rules, forward transactions with delivery of underlying assets, must be recorded under “Other receivables from financial intermediations” and “Other liabilities from financial intermediations” in the accompanying balance sheets and they were valued as mentioned in noteaccompanying balance sheets and they were valued as mentioned in Note 4.4.h) (accrual method).
|