UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

or

or

or

Date of the event requiring this shell company report.                    

Commission file number: 001-32827

BANCO MACRO S.A.

(Exact Name of Registrant as Specified in its Charter)

Macro Bank, Inc.

(Translation of registrant’s name into English)

Argentina

(Jurisdiction of incorporation or organization)

Sarmiento 447, City of Buenos Aires, Argentina

(Address of registrant’s principal executive offices)

Jorge Scarinci

FinancialFinance and Investor Relations Manager

Banco Macro S.A.

401 Sarmiento, 3^th Floor

Buenos Aires—C1041AAI, Argentina

Telephone: (+54-11-5222-6730)

Facsimile: (+54-11-5222-7826)

(Name, telephone, e-mail and/or facsimile member and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

11,235,670 Class A ordinary shares, par value Ps. 1.00Ps.1.00 per share

573,249,498573,327,358 Class B ordinary shares, par value Ps. 1.00Ps.1.00 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨x                Accelerated filer  x¨                Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  ¨    Item 18  x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  x

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 23 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court.

Yes  ¨    No  ¨

Please send copies of notices and communications from the Securities and Exchange Commission to:

Table of Contents

Certain defined terms

In this annual report, we use the terms “the registrant,” “we,” “us,” “our” and the “Bank” to refer to Banco Macro S.A. and its subsidiaries, on a consolidated basis. References to “Banco Macro” refer to Banco Macro S.A. on an individual basis. References to “Class B shares^” refer to shares of our Class B common stock and references to “ADSs” refer to American depositary shares representing our Class B shares, except where the context requires otherwise.otherwise requires. References to our “2036 Notes” refer to our 9.75% Fixed/Floating Rate Non-Cumulative Junior Subordinated Bonds due 2036. References to our “2017 Notes” refer to our 8.50% Notes due 2017. Except where the context otherwise requires, reference to our “notes” refer to our 2036 Notes and our 2017 Notes.

The term “Argentina” refers to the Republic of Argentina. The terms “Argentine government” or the “government” refer to the federal government of Argentina, the term “Argentine Congress” refer to Argentine National Congress, the legislative branch of the government of Argentina, the term “Central Bank” refers to theBanco Central de la República Argentina, or the Argentine Central Bank, the term “Superintendency” refers to theSuperintendencia de Entidades Financieras y Cambiarias or the Superintendency of Financial and Exchange Entities, the term “CNV” refers to theComisión Nacional de Valores, or the Argentine Securities Commission, the term “BCBA” refers to theBolsa de Comercio de Buenos Aires,or the Buenos Aires Stock Exchange, the term “MAE” refers to the “Mercado Abierto Electrónico,” or the Electronic Open Market, the term “NYSE” refers to the New York Stock Exchange, the term “AFIP” refers to theAdministración Federal de Ingresos Públicos or the Argentine Tax Authority, the term “IGJ” refers to theInspección General de Justicia, or Public Registry of Commerce and the term “ANSES” refers to theAdministración Nacional de la Seguridad Social or National Social Security Agency.

The terms “U.S. dollar” and “U.S. dollars” and the symbol “US$” refer to the legal currency of the United States. The terms “Peso” and “Pesos” and the symbol “Ps.” refer to the legal currency of Argentina. “U.S. GAAP” refers to generally accepted accounting principles in the United States, “Argentine GAAP” refers to generally accepted accounting principles in Argentina and “Central Bank Rules” refers to the accounting and other regulations of the Central Bank. The term “INDEC” refers to the National Statistics Institute (Instituto Nacional de Estadísticas y Censos, “INDEC”).

The term “GDP” refers to gross domestic product and all references in this annual report to GDP growth are to real GDP growth.

The term “CER,” or benchmark stabilization coefficient, is an index issued by the Argentine government which is used to adjust value of credits and deposits. This index is based onAssets and liabilities indexed by CER are adjusted according to the National Urban Consumer Price Index (Índice de Precios al Consumidor Nacional Urbano, the “IPCNU”), the new Argentine consumer price index published bythat replaces the National Institute of Statisticsprior measurement and Census (“INDEC”).will be used on a going forward basis to calculate CER indexation.

Presentation of certain financial and other information

We maintain our financial books and records in Pesos and prepare and publish our consolidated financial statements in Argentina in conformity with Central Bank Rules, which differ in certain significant respects from U.S. GAAP and, to a certain extent, from Argentine GAAP. Our consolidated financial statements contain a description of the principal differences between Central Bank Rules and Argentine GAAP. Under Central Bank Rules, our consolidated financial statements were adjusted to account for the effects of wholesale-price inflation in Argentina for the periods through February 28, 2003. For the periods subsequent to February 28, 2003, the inflation adjustments were no longer applied to our consolidated financial statements under Central Bank Rules. However, in reviewing our consolidated financial statements, investors should consider that, in recent years, there have been significant changes in the prices for relevant economic variables, such as salary cost, loan ratesinterest and exchange rates, which are not required to be reflected by adjustments to such financial statements pursuant to local regulations.

Our consolidated financial statements consolidate the financial statements of the following companies:

Our audited consolidated financial statements as of and for the three years ended December 31, 20132014 included in this annual report have been reconciled to U.S. GAAP. See note 3335 to our audited consolidated financial statements as of and for the three years ended December 31, 20132014 for a reconciliation of our consolidated financial statements to U.S. GAAP. See also Item 5.A “Operating and Financial Review and Prospects” for a reconciliation of Central Bank Rules to U.S. GAAP.

Due to the modification of certain disclosure methods for certain items on the consolidated balance sheets and the consolidated statements of income, which did not affect the shareholders’ equity of the Bank, the consolidated financial statements as of December 31, 2012 and 2011 were modified for the sole purpose of comparability with the consolidated financial statements as of December 31, 2013.2013 and 2014.

Our financial information in conformity with Central Bank Rules is sent on a monthly basis to the Central Bank and is published on its websitewww.bcba.gob.arwww.bcra.gob.ar. In addition, we also file quarterly and annual financial statements with the Central Bank, the CNV and the BCBA.

Rounding

Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Market position

We make statements in this annual report about our competitive position and market share in, and the market size of, the Argentine banking industry. We have made these statements on the basis of statistics and other information from third-party sources that we believe are reliable. Although we have no reason to believe any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share and market size or market growth data provided by third parties or by industry or general publications.

Our internet site is not part of this annual report

We maintain an internet site atwww.macro.com.ar. Information contained in or otherwise accessible through this website is not a part of this annual report. All references in this annual report to this Internet site are inactive textual references to this URL, or “uniform resource locator” and are for your informational reference only.

Cautionary statement concerning forward-looking statements

This annual report contains certain statements that we consider to be “forward-looking statements”. We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things:

The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “forecast” and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this annual report because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur and are not guarantees of future performance.

Sections of this annual report that by their nature contain forward-looking statements include, but are not limited to, Item 3. “Key Information,” Item 4. “Information on the Bank,” Item 5. “Operating and Financial Review and Prospects” and Item 11. “Quantitative and Qualitative Disclosure About Market Risk”.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. Selected Financial Data

The following tables present summary historical consolidated financial data for each of the periods indicated. You should read this information in conjunction with our consolidated financial statements and related notes, and the information under Item 5. “Operating and Financial Review and Prospects” included elsewhere in this annual report.

We have derived our selected consolidated financial data as of and for the three years ended December 31, 2012 and 20132014 from our audited consolidated financial statements included in this annual report. We have derived our selected consolidated financial data for the years ended December 31, 2009, 2010, 2011 and 20112012 from our audited consolidated financial statements not included in this annual report. Such financial information has been restated mainly due to the modification of certain disclosure methods for certain accounts and items on the consolidated balance sheets and consolidated statements of income, which did not affect the shareholders’ equity of the Bank. Solely for the convenience of the reader, the reference exchange rate for U.S. dollars as of December 31, 2013,2014, as reported by the Central Bank was Ps. 6.518Ps.8.552 to US$1.00. See Item 10. “Additional Information - ExchangeInformation-Exchange Controls” for additional information regarding Peso/U.S. dollar exchange ratios.

(1)	Net interest income divided by average interest earning assets.

(2)	Service charge income divided by the sum of gross intermediation margin and service charge income.

(3)	Administrative expenses divided by the sum of gross intermediation margin and service charge income.

(4)	For the purpose of computing the ratio of earnings to fixed charges excluding interest on deposits, earnings consist of income before income taxes plus fixed charges; fixed charges excluding interest on deposits consist of gross interest expense minus interest on deposits.

(5)	For the purpose of computing the ratio of earnings to fixed charges including interest on deposits, earnings consist of income before income taxes plus fixed charges; fixed charges including interest on deposits is equal to gross interest expense.

(6)	Liquid assets include cash, cash collateral, repos, LEBACsLebacs and NOBACsNobacs and interfinancing loans.

(7)	Non-performing loans include all loans 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.

(8)

Were workers performing their duties pursuant to the“Acciones de entrenamiento para el trabajo” program of the Ministry of Labor, Employment and Social Security and other casual workers included, the number of employees of the Bank would have been 8,209, 8,459, 8,534, 8,708 and 8,728 for 2010, 2011, 2012, 2013 and 2014 respectively. We do not account for such workers as employees, as the Bank does not remunerate them for their services, which are paid directly by the Argentine province where they work.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

You should carefully consider the risks described below with all of the other information included in the annual report before deciding to invest in our Class B shares or our ADSs or our notes. If any of the following risks actually occurs, it may materially harm our business and our financial condition and results of operations. As a result, the market price of our Class B shares, our ADSs or our notes could decline and you could lose part or all of your investment.

Investors should carefully read this annual report in its entirety. They should also take into account and evaluate, among other things, their own financial circumstances, their investment goals, and the following risk factors.

Risks relating to Argentina

Argentina’s economic growthperformance may not be sustainable.

The Argentine economy has experienced significant volatility in recent decades, with periods of low or negative growth, high inflation and currency devaluation. Since the 2001 economic crisis, Argentina recovered significantly by increasing at a substantial level its real GDP, at an average of 8.5% on annual basis between 2003 and 2008. As a result of the 2008 world economic crisis, Argentina GDP’sGDP´s growth rate decreased up to 0.9% in 2009, but it returned to 9.2% growth in 2010 and 8.9% growth in 2011. During 2012, the Argentine economy experienced a slowdown with GDP increasing at a rate of 1.9%. In March 2014, the Argentine government announced a new method of calculating GDP as requested by the International Monetary Fund or “IMF”(“IMF”) (using 2004 as the base year instead of 1993, which was the base reference year used in the prior method of GDP calculation). As a result of

Following changes in the new method, the estimatedmethodology used in calculating GDP, INDEC reported that Argentina´s GDP´s growth rate for 2013 was revised from 4.9%3% and 0.5% for 2014. This decrease was principally due to 3%. No assurance can be given that the growth experienceddeceleration of the global economy and macroeconomic conditions in Argentina during recent years will be achieved2014.

A less favorable international economic environment, a lack of stability, competitiveness of the Peso against other foreign currencies, the low level of confidence among consumers and foreign and domestic investors, a higher inflation rate and future political uncertainties, among other factors, may affect the development of the Argentine economy and cause volatility in 2014 or future years or that the economy will not contract.local capital markets

Substantially all our operations, properties and customers are located in Argentina. As a result, our business is to a very large extent dependent upon the political,economic, social and economicpolitical conditions prevailing in Argentina. No assurance can be given that future economic, social and political developments in Argentina, over which we have no control, will not have a material adverse effect on our business, financial condition and results of operations.

The Argentine economy could be adversely affected by economic developments in the global markets.

Financial and securities markets in Argentina are influenced by economic and market conditions in other markets worldwide. The international scenario shows contradictory signals of global growth, as well as high financial and exchange uncertainty. MostThe global financial crisis that commenced in the last quarter of 2008 negatively affected the economies of several countries around the world, including Argentina and certain of its trading partners. In late 2011, the global financial system experienced unprecedented volatility and disruption. The resulting financial turmoil caused greater restrictions on access to credit, low liquidity, extreme volatility in foreign exchange markets and securities, and capital flight from emerging markets, including Argentina. In this context, and for the first time in history, on August 5, 2011, Standard & Poor’s Financial Services downgraded the debt instruments issued by the United States from “AAA” to “AA+”. On January 13, 2012, Standard & Poor’s Rating Services downgraded the instruments of nine European countries including France and Italy. Financial markets reacted adversely to the crisis, curtailing the ability of certain of these countries to refinance their outstanding debt.

Moreover, emerging economies have been affected by the change in the U.S. monetary policy, resulting in the sharp unwinding of speculative asset positions, depreciations and increased volatility in the value of their currencies and higher interest rates. The general appreciation of the U.S. dollar resulting from a more restrictive U.S. monetary policy contributed to the fall of the international price of raw materials, increasing the difficulties of emerging countries which are exporters of these products. There is gobal uncertainty about the degree of recovery of the United States, with no substantial positive signals from other developed countries and an increased risk of a general deceleration in developing countries, specifically China.

Although economic conditions vary from country to country, investors’ perceptions of events occurring in other countries have in the past and may continue to substantially affect capital flows into and investments in securities from issuers in other countries, including Argentina.

The Argentine financial system and securities markets may also be adversely affected by events in developed countries’ economies or events in other emerging markets. A prolonged slowdown in economic activity in Argentina or negative effects on the Argentine financial system or the securities markets would adversely affect our business, financial condition and results of operations.

Argentina’s economy is vulnerable to external shocks that could be caused by significant economic difficulties of its major regional trading partners or by more general “contagion” effects.

Argentina’s economy is vulnerable to adverse developments affecting its principal trading partners. A significant decline in the economic growth of any of Argentina’s major trading partners, such as Brazil, China or the United States, could have a material adverse impact on Argentina’s trade balance and adversely affect Argentina’s economic growth. The economic performance of other trading partners such as Chile, Spain and Canada may also affect Argentina’s trade balance.

Recent economic slowdowns have led to declines in exports in 2014 of 42% with Spain, 26%27% with Chile, 23%18% with Canada, 4%China, 14% with Brazil,MERCOSUR (Brazil) and 7%10% with the United States in 2013,NAFTA (USA and Canada), each as compared to 2012.2013. Declining demand for Argentine exports could have a material adverse effect on Argentina’s economic growth.

Because international investors’ reactions to the events occurring in one market sometimes demonstrate a “contagion” effect in which an entire region or class of investment is disfavored by international investors, Argentina could be adversely affected by negative economic or financial developments in other countries. This “contagion” effect, in turn, may have an adverse effect on our business, financial condition and results of operations.

Argentina’s ability to obtain financing from international markets is limited, which may impair its ability to implement reforms and public policies and foster economic growth.

Argentina’s 2001 default and its failure to fully restructure its sovereign debt and negotiate with the holdout creditors has limited and may continue to limit Argentina’s ability to access international capital markets. In 2005, Argentina completed the restructuring of a substantial portion of its indebtedness and settled all of its debt with the International Monetary Fund, or “IMF”.IMF. Additionally, in June 2010, Argentina completed the renegotiation of approximately 67% of the defaulted bonds that were not swapped in the 2005 restructuring. As a result of the 2005 and 2010 debt swaps, Argentina has restructured approximately 91% of its defaulted debt that was eligible for restructuring. Holdout creditors that declined to participate in the exchanges commenced numerous lawsuits against Argentina in several countries, including the United States, Italy, Germany, and Japan. Additionally, on May 29, 2014, the Argentine government and representatives of the Paris Club creditors reached an agreement to clear Argentina’s debt due to the Paris Club creditors, in arrears, in the total amount of US$9.7 billion as of April 30, 2014.

In related cases brought before the U.S. District Court for the Southern District of New York (the “District Court”), the plaintiffs argued that allowing Argentina to make payments under the new bonds issued pursuant to the debt swaps while it remained in default on its pre-2002 bonds violates thepari passu clause in the original bonds and entitles the plaintiffs to injunctive relief barring Argentina from making payments on the new bonds without making comparable payments on the original bonds. In late October 2012, the U.S. Court of Appeals for the Second Circuit in New York affirmed the U.S. District Court for the Southern District of New York’sCourt’s ruling that thepari passu clause in the pre-2002 bonds prevents Argentina from making payments unless it makes ratable payments to the holdout creditors at the same time. On November 21, 2012, the U.S. District Court for the Southern District of New York specified that ratable payments to the holdout creditors would be the full amount owed on the bonds (including interest) and ordered Argentina to pay the approximately US$1.331.3 billion plus interest owed to the holdout creditors party to such proceedings.

On appeal, the U.S. Court of Appeals for the Second Circuit ordered Argentina to submit a payment plan proposal for the holdout creditors, which Argentina did on March 29, 2013. On August 23, 2013, the U.S. Court of Appeals for the Second Circuit rejected Argentina’s payment proposal and affirmed the U.S. District Court for the Southern District of New York’sCourt’s November 21, 2012 injunctions.injunctions (the “Injunction”). However, in the same ruling, the U.S. Court of Appeals for the Second Circuit stayed the enforcement of the injunctions pending the resolution by the U.S. Supreme Court of any timely petition for a writ ofcertiorari. certiorari. In this regard, Argentina filed a petition for a writ ofcertiorari on June 24, 2013, which was denied as premature. Later, on February 18, 2014, Argentina and certain holders of the new bonds timely filed petitions for a writ ofcertiorari. The certiorari. On June 16, 2014, the U.S. Supreme Court has not yet ruleddenied Argentina’s petition for awrit of certiorariin connection therewith and, subsequently, on those petitions.

June 18, 2014, the U.S. Court of Appeals for the Second Circuit lifted its stay on the District Court’s Injunction. Separately, on December 17, 2010,June 16, 2014, the U.S. Supreme Court affirmed a District Court granted plaintiff holdout bondholders’ motionruling to compel discovery from certain financial institutions concerning, among other things, Argentina’s assets.

On August 20, 2012,June 23, 2014, the U.S.District Court appointed a special master to mediate settlement negotiations between Argentina and the litigating bondholders. On June 26, 2014, the District Court denied Argentina’s request for a further stay of Appealsthe Injunction. In addition, on or about June 27, 2014, Argentina transferred to The Bank of New York Mellon, in its capacity as trustee, amounts due June 30, 2014 in respect of certain of its restructured bonds. The District Court, however, prohibited such payment and ordered Argentina and the holders of its non-restructured bonds to agree on a payment schedule. Following negotiations between Argentina and the litigating bondholders, Argentina

and such bondholders failed to reach an agreement in respect of its defaulted debt. By July 30, 2014, the end of the grace period provided under Argentina’s relevant restructured bonds for the Second Circuit affirmedpayment of debt service thereunder, Argentina and the holdout creditors had not arrived on an agreement and The Bank of New York Mellon complied with the order of the District Court’s ruling. Court to not deliver the funds previously deposited by Argentina for payment to the holders of the restructured bonds under foreign law. While Argentina asserted that it complied with its obligation to the holders of the restructured bonds by making such deposit, and that the indenture trustee had the obligation to deliver such payment, on such date Standard & Poor’s Rating Services downgraded Argentina’s foreign currency credit rating to “selective default”, or “SD”, while on July 31, 2014, Fitch Ratings Inc. downgraded Argentina’s foreign currency issuer default rating to “restricted default”, or “RD”.

On January 7, 2013, Argentina filed a petition for a writ ofcertiorari concerning the permissible scope of discovery into its assets. In JanuarySeptember 11, 2014, the United States SupremeArgentine Congress enacted Law No. 26,984, with the purpose of implementing legal mechanisms to allow restructured bondholders to collect payments under such bonds. Law No. 26,984 established a new account in the name of Nación Fideicomisos S.A. with the Central Bank in order to make payments to restructured bondholders. Furthermore, Law No. 26,984 set forth that the executive branch could implement an exchange of restructured bonds for Argentine law-governed bonds and for French law-governed bonds. As of the date of this annual report, no such mechanism has been implemented by the Argentine government. Separately, during August 2014 the Central Bank revoked The Bank of New York Mellon’s authorization to operate in Argentina. In connection with these and other actions taken by the Argentine government, the District Court granted Argentina’s petition forheld Argentina in contempt on September 29, 2014.

The District Court authorized limited exceptions to the Injunction allowing certain custodians of Argentine law-governed bonds to process payments in August 2014, September 2014 and December 2014. Payments on the remaining restructured bonds have not been processed as a writconsequence ofcertiorari on that issue. the Injunction and various restructured bondholders have been seeking the release of such payments in court. As of the date of this annual report, the District Court has not authorized any other such releases or payments.

The continuation and outcome of this litigation may continue to prevent Argentina from obtaining favorable terms or interest rates when accessing international capital markets. Litigation initiated by holdout creditors or other parties may result in material judgments against the Argentine government and could result in attachments of, or injunctions relating to, Argentina’s assets, which could have a material adverse effect on the country’s economy and affect our ability to access international financing. In addition, litigation initiated by holdouts could eventually bring Argentina to be considered in default of its obligations and cause acceleration of the existing exchange debt due to cross default clauses which could have a material adverse effect on the on the country’s economy, and consequently, our business, financial condition and results of operations.

Argentina is subject to litigation by foreign shareholders of Argentine companies and holders of Argentina’s defaulted bonds, which have resulted and may result in adverse judgments or injunctions against Argentina’s assets and limit its financial resources.

Foreign shareholders of several Argentine companies, including public utilities, and bondholders that did not participate in the exchange offers described above, have filed claims in excess of US$20 billion in the aggregate with the International Centre for Settlement of Investment Disputes (the ‘‘ICSID’’“ICSID”) alleging that the emergency measures adopted by the government differ from the just and equal treatment standards set forth in several bilateral investment treaties to which Argentina is a party. During 2013, Argentina agreed to settle five separate investment treaty arbitration claims at a cost of around US$500 million. As of December 31, 2013,2014, there were ICSID judgments outstanding against Argentina for approximately US$677 billion,64 million, plus interest and expenses,expenses. On April 9, 2015, the ICSID held that Argentina must pay US$405 million in damages for prejudices suffered in relation to the termination of theAguas Argentinas water and furthermore,waste water management concession contract in Buenos Aires. Furthermore, the United Nations Commission on International Trade Law (“UNCITRAL”) has issued rulings against Argentina for approximately US$280 million, plus interest and expenses.

Litigation, as well as ICSID and UNCITRAL claims against the Argentine government, have resulted in material judgments and may result in new material judgments against the government, and could result in attachments of or injunctions relating to assets of Argentina that the government intended for other uses. As a result, the Argentine government may not have all the necessary financial resources to honor its obligations, implement reforms and foster growth, which could have a material adverse effect on the country’s economy, and consequently, our business, financial condition and results of operations.

Government intervention could adversely affect the Argentine economy.

Substantially all our operations, properties and customers are located in Argentina. As a result, our business is to a very large extent dependent upon the political, social and economic conditions prevailing in Argentina. In recent years, the Argentine government has increased its direct intervention in the economy and in private sector operations and companies, limiting certain aspects of private sector businesses.

In 2008,May 2013, the Argentine Congress passed a law providing for the expropriation of 51% of the share capital of YPF (Yacimientos Petroliferos Fiscales S.A.), the principal Argentine oil company, which shares were owned by Repsol, S.A. and its affiliates. In February 2015, the Argentine government expropriatedsent a bill to the country’s largest airline (Aerolíneas Argentinas),Congress in order to revoke certain train concessions, return the national rail network to state control and provide powers to review all concessions currently in 2012, took controlforce.

In addition, Supply Law No. 26,991 (the “Supply Law”) became effective on September 28, 2014. The Supply Law applies to all economic processes linked to goods, facilities and services which, either directly or indirectly, satisfy basic needs of YPF S.A. (“YPF”), the largest oilpopulation and gas company, bothgrants broad delegations of powers to the enforcement authority to interfere in such processes. The Supply Law also provides that in a situation of shortage or scarcity of goods or services which were privatizedsatisfy basic needs destined to the general welfare of the population, the enforcement authority may order their sale, production, distribution and delivery throughout Argentina.

Furthermore, financial institutions operate in a highly regulated environment. See “—The amendment of the Central Bank’s Charter and the Convertibility Law may adversely affect the Argentine economy” and “—Governmental measures and regulatory framework affecting financial entities could have a material adverse effect on the operations of financial entities”. As of the date of this annual report, three different bills to amend the Financial Institutions Law No. 21,526 as amended (the “Financial Institution Law”) have been put forth for review in the 90’s. In May 2012, shares owned by the Spanish group Repsol, representing 51%Argentine Congress, seeking to amend different aspects of the capital stock of YPF were expropriated and the board and management of YPF were replaced. Repsol has filed a claim before the ICSID against Argentina and YPF for violationFinancial Institutions Law. A thorough amendment of the existing Treaty for Investment Promotion and Protection agreed between Spain and Argentina. Likewise, Repsol has filedFinancial Institutions Law would have a lawsuit against The Bank of New York Mellon and YPF insubstantial effect on the U.S. District Court in Manhattan, claiming that Argentina failed to issuebanking system as a tender offer for Class D shares of YPF in accordance with YPF’s bylaws. Repsol has filed several claims againstwhole.

Moreover, the Argentine government beforehas in the ICSIDpast enacted laws and the Argentine courts claiming an aggregate amount of around US$10 billion. After long negotiations,regulations requiring private sector companies to maintain certain salary levels and provide their employees with additional benefits. Employers, both in February 2014 the Argentine government and Repsol reached an agreement under which the Argentine government will deliver to Repsol (pro solvendo) Argentine public debt securities in a nominal amount of US$5.0 billion (which amount may be increased up to an additional US$1.0 billion). Such agreement was approved by Repsol’s shareholders on March 28, 2014 and by the Argentine Congress on April 24, 2014.

Moreover, as a result of the amendment of the social security system in 2008, in 2009 all the assets managed by formerly private pension funds were transferred to a separate fund (Fondo de Garantía de Sustentabilidad or “FGS”) managed by the ANSES upon the passing of regulation seeking to guarantee the sustainability of the public pension system. As result of such assignment, FGS holds shares in listed companies, including us, which inand private sector, have also been experiencing intense pressures from their personnel, or from the labor unions representing them, demanding salary increases and certain cases, including inbenefits for the case ofworkers, given the Bank, entitles FGS to nominate members of the board of directors and supervisory committees. Pursuant to Decree No. 1278/2012 issued by the Executive Branch on July 25, 2012, those directors appointed by the FGS in listed companies will report directly to the Ministry of Economy (Secretaría de Política Económica), and shall comply with a mandatory information regime set forth by such Decree, including among other obligations, the obligation to report to such Secretariat the agenda of each board of directors’ meeting and the related documentation.

Furthermore, on February 4, 2014, in order to reduce pressure on the foreign exchange rate, the Central Bank reduced the limits of the foreign currency net global position of financial institutions in Argentina. As a result, Argentine financial entities, including us, sold part of their position in U.S. dollars to comply with such rule. See “—Argentine banking regulations—Foreign currency net global position.”high inflation rates.

Actions taken by the Argentine government concerning the economy, including decisions with respect to interest rates, taxes, price controls, salary increases, provision of additional employee benefits foreign exchange controls and potential changes in the foreign exchange market, have had and could continue to have a material adverse effect on Argentina’sArgentina´s economic growth and in turn affect our financial condition and results of operations. In addition, any additional Argentine government policies to preempt, or in response to, social unrest could adversely and materially affect the economy, and thereby our business.

Expropriations, interventions and other direct involvement by the Argentine government in the economy may have an adverse impact on the level of foreign investment in Argentina, the access of Argentine companies to the international capital markets and Argentina’s commercial and diplomatic relations with other countries.

Argentina’s foreign trade measures may lead to a decrease in exports and retaliation by trading partners.

In 2012, the Argentine government introduced a procedure pursuant to which local authorities must pre-approve the import of products and services to Argentina as a pre-condition to permit such import and the consequent access to the foreign exchange market for the payment of the imported products or services. Members of Mercosur and other countries have complained against these measures, and some have filed claims against Argentina with the World Trade Organization.

In addition, during the recent years, the Argentine government has increasingly issued regulations and taken certain actions seeking to control the value of the Peso and offset mismatches on the country’s balance of payments. Such measures, among others, may affect diplomatic commercial relations among Argentina and its trading partners, affecting the trade balance.

Repeated complaints from various countries against import restrictions implemented by Argentina, suspension of export preferences or retaliations by trading partners may have an adverse effect on Argentine exports, affect the trade balance and, consequently, adversely impact Argentina’s economy. Diminished foreign trade would also adversely impact our business, financial condition and results of operations.

Exchange controls and capital inflow and outflow restrictions have limited, and can be expected to continue to limit, the availability of international credit and may impair our ability to make payments on our obligations.

Since 2002, Argentina has imposed exchange controls and transfer restrictions substantially limiting the ability of companies to retain foreign currency or make payments abroad. In June 2005, the government issued Decree No. 616/2005, which established additional controls on capital inflows including the requirement that 30% of all funds remitted to Argentina remain deposited in a domestic financial institution as a U.S. dollar deposit for one year without yielding interest.

and outflows. In addition, since 2011, the Argentine government has increased controls on the incurrence of foreign currency-denominated indebtedness, the sale of foreign currency and the acquisition of foreign assets by local residents.residents, limiting the possibility of transferring funds abroad. Furthermore, new regulations werehave been issued insince 2012 pursuant to which certain foreign exchange transactions are subject to prior approval by Argentine tax authorities.

During 2013 and January 2014, the level of international reserves deposited with the Central Bank significantly decreased, resulting in a reduced capacity of the Argentine government to intervene in the foreign exchange market and to provide access to such markets to private sector entities like us. For more information, see Item 10.D “Exchange Controls”.

Since the enhancement of exchange controls in November 2011, it is widely reported that in the countries where the Peso (bill) is traded, the Peso/U.S. dollar exchange rate differs substantially from the official foreign exchange rate in Argentina. Additionally, the level of international reserves deposited with the Central Bank significantly decreased from US$47.4 billion as of November 1, 2011 to US$31.5 billion as of March 31, 2015, resulting in a reduced capacity of the Argentine government to intervene in the foreign exchange market and to provide access to such markets to private sector entities like us.

Additional controls could have a negative effect on the economy and on private sector companies, including our business, and may adversely affect Argentine entities’ ability to accesaccess the international capital markets for credit. Furthermore, in such event, the imposition of future restrictions on the transfers of funds abroad may impede our ability to transfer dividends to ADS holders or interest or principal payments to the holders of our notes.

A decline in the international prices for Argentina’s main commodity exports or a climate disaster could have an adverse effect on Argentina’s economic growth.

High commodity prices have contributed significantly to the increase in Argentine exports since the third quarter of 2002 as well as in governmental revenues from export taxes. taxes (witholdings). However, this reliance on the export of certain commodities, such as soy, has made the Argentine economy more vulnerable to fluctuations in their prices.

If international commodity prices decline, the Argentine government’s revenues would decrease significantly affecting Argentina’s economic activity. Accordingly, a decline in international commodity prices could adversely affect Argentina’s economy, which in turn would produce a negative impact on our financial condition and results of operations.

In addition, adverse weather conditions can affect production of commodities by the agricultural sector, which account for a significant portion of Argentina’s export revenues. These circumstances would have a negative impact on the levels of government revenues, availability of foreign exchange and the government’s ability to service its sovereign debt, and could either generate recessionary or inflationary pressures, depending on the government’s reaction. Either of these results would adversely impact Argentina’s economy growth and, therefore, our business, financial condition and results of operations.

An increase in inflation could have a material adverse effect on Argentina’s economic prospects.

In recent years, Argentina has confronted inflationary pressure, as evidenced by significantly higher fuel, energy and food prices. According to inflation data published by the National Statistics Institute (Instituto Nacional de Estadística y Censos, INDEC), from 2011 to 2013,INDEC, the Argentine consumer price index (“CPI”) increased 9.5%, 10.8% in 2012 and 10.9%, respectively; the in 2013. The wholesale price index increased 12.7%, 13.1% and 14.8%, respectively. These amounts differed with private estimates during such periods.

Since 2007, INDEC, which is the only institution in Argentina with the statutory authority to produce official nationwide statistics, experienced a controversial process of institutional reforms. The accuracy of the statistical information released by the INDEC has been called into question by numerous private sectors and by the IMF. In February 2014, after a long period of analysis, the INDEC published itscreated a new “Nationalindex, the National Urban Consumer Price Index” preparedIndex (Índice de Precios al Consumidor Nacional Urbano, the “IPCNU”), that aims to more broadly reflect changes in cooperationconsumer prices by measuring 520 products and services in all of international organizations such asArgentina’s 23 provincial capitals, the IMF, which captures the variationCity of Buenos Aires and major cities in the prices of goods and services included in the national consumption basket, i.e. including six regions (NW, NE, Cuyo, La Pampa, Patagonia and GBA).country, which total 40 urban areas. This new index shows an inflation rate of 3.7%23.9% in 2014, 1.1% in January 2014, 3.4%2015, 0.9% in February 20142015 and 2.6%1.3% in March 2014.2015.

In the past, inflation has materially undermined the Argentine economy and Argentina’s ability to create conditions that would permit growth. High inflation may also (i) undermine Argentina’s competitiveness abroad producing, inter alia, an increaseand lead to a decline in unemploymentprivate consumption that also affects employment levels, salaries and (ii)interest rates. Moreover, a high inflation rate could undermine confidence in the Argentine financial system, reducing the Peso deposit base and negatively impact the country’simpacting long-term credit markets.

There can be no assurance that inflation rates will not continue to escalate in the future or that the measures adopted or that may be adopted by the Argentine government to control inflation will be effective or successful. Inflation remains a challenge for Argentina. Significant inflation could have a material adverse effect on Argentina’s economy and in turn could increase our costs of operation, in particular labor costs, and may negatively impact our financial condition and results of operations. See “—Failure by the Argentine government to follow the International Monetary Fund’s recommendations could further strain relations with the IMF”.

Failure by the Argentine government to follow the International Monetary Fund’s recommendations could further strain relations with the IMF.

During the past years, Argentina’s relations with the International Monetary Fund (the “IMF”)IMF have been strained. Due to generalized complaints against INDEC’s quality of official data, in December 2010, Argentina accepted to begin working with the IMF for technical assistance in order to prepare a new CPI with the aim of modernizing the current statistical system. During the first quarter of 2011, a team from the IMF started working in conjunction with the INDEC. In addition, on February 1, 2013 the IMF issued a declaration of censure against Argentina in connection with its failure to address the quality of the official data reported to the IMF for CPI and Gross Domestic Product (GDP). Furthermore, on December 9, 2013 the IMF recognized Argentina’s ongoing work and intention to introduce a new national CPI in early 2014. The IMF also noted that Argentina was working to address shortcomings in its GDP data.

As a result, the IMF adopted a decision calling on Argentina to implement specified actions to address the quality of its official CPI and GDP data according to a specified timetable. Such specified actions include the public release of a new national CPI and revised GDP estimates, by the end of March 2014. On February 13, 2014, the INDEC published a new CPI calculated with a methodologythe IPCNU, agreed by the IMF, which rose 3.7% for January 2014 and 3.4% for February 2014.IMF. Moreover, in March 2014, the Argentine government announced a new method of calculating GDP (using 2004 as the base year instead of 1993, which was the base reference year used in the prior method of GDP calculation), which showed a rise of 3% for 2013. Further actions must be implemented by.

In December 15, 2014, the IMF byrecognized the endprogress of September 2014 andArgentine authorities to remedy the endinaccurate provision of February 2015.data, but has delayed the definitive evaluation of the new index.

If the IMF finds that the methodology of INDEC for calculating a new national CPI or GDP is inaccurate, or concludes that its methodology shall be adjusted, that could derive in financial and economic hazards for Argentina, including lack of financing from such organization. If these measures are adopted, the Argentine economy could suffer material adverse effects, either by limiting access to international financial markets or increasing the financing cost associated therewith, which in turn would adversely affect our financial condition and results of operations.

Significant devaluation of the Peso against the U.S. dollar may adversely affect the Argentine economy.

Despite the positive effects of the real depreciation of the Peso on the competitiveness of certain sectors of the Argentine economy, it also had a far-reaching negative impact on the Argentine economy and on the financial condition of businesses and individuals. The devaluation of the Peso had a negative impact on the ability of Argentine businesses to honor their foreign currency-denominated debt, led to very high inflation initially, significantly reduced real wages, had a negative impact on businesses whose success is dependent on domestic market demand, such as utilities and the financial industry.

During 2013, the stock of the international reserves of the Central Bank decreased from U.S.$ US$44.3 billion in 2012 to U.$.S US$30.6 billion in 2013, mainly due to financing of private deficit (mainly from tourism) and payment of Argentine external indebtedness, in spite of the restrictions imposed by the Argentine external indebtedness. In addition, Argentina experienced a 9% decrease ingovernment on the level of its reserves during January 2014. foreign exchange market since 2011.

In order to contain the fall in reserves, the Central Bank accelerated the rate of nominal devaluation of the Peso. During the first quarter of 2014, the Peso-U.S. dollar exchange rate has significantly increased, resulting in a strong devaluation of the Peso (see “—from Ps.6.9120 per dollar to Ps.8.0183 per dollar in two days. The value of Peso gradually depreciated during 2014. See Item 10.D “Exchange Controls—Exchange rates”). The stock of international reserves of the Central Bank was US$31.4 billion as of December 31, 2014 and US$31.5 billion as of March 31, 2015.

The Argentine macroeconomic environment, in which we operate, was affected by such devaluation which had an impact on our financial and economic position. The estimated impact of the abovementioned devaluation, considering our currency exposure of net assets and liabilities, amounted to Ps. 696 million. If the Peso devalues significantly, all of the negative effects on the Argentine economy related to such devaluation could recur, with adverse consequences to our business, financial condition and results of operations.

Significant appreciation of the Peso against the U.S. dollar may adversely affect the Argentine economy.

A substantial increase in the value of the Peso against the U.S. dollar presents risks for the Argentine economy. A significant real appreciation of the Peso could affect Argentina’s competitiveness abroad and adversely affect exports and employment level. This could have a negative effect on GDP growth as well as reduce the Argentine public sector’s revenues by reducing tax collection in real terms. A contraction of the Argentine economy may have a material adverse effect in our business, our financial condition and results of operations.

In addition, the appreciation of the Peso against the U.S. dollar would negatively impact the financial condition of entities whose foreign currency-denominated assets exceed their foreign currency-denominated liabilities.

Our primary assets and revenues are denominated in Pesos while approximately 16%13% of our total assets and 14%12% of our total liabilities are denominated in foreign currencies.

High public expenditure could result in long lasting adverse consequences for the Argentine economy.

During the last few years, the Argentine government has substantially increased public expenditure. In 2013,2014, public sector expenditure increased by 33%43% year over year and the government reported primary fiscal deficit. During recent years, the Argentine government has resorted to the Central Bank and to the ANSES to source part of its funding requirements.

In light of increasingly tight public finances, the Argentine government has commenced revising its subsidy policies, particularly those related to energy, electricity and gas, water and public transportation. Changes in these policies could materially and adversely impact consumer purchase capacity and economic activity and lead to an increase in prices, because they occur in a context of high inflation and high interest rates.

We cannot assure you that the government will not seek to finance its deficit by gaining access to the liquidity available in the local financial institutions. In that case, government initiatives that increase the exposure of local financial institutions to the public sector would affect our liquidity and assets quality and impact negatively on clients’ confidence.

In addition, a further deterioration in fiscal accounts could negatively affect the government’s ability to access the international financing markets and could result in increased pressure on the Argentine private sector to cover the government’s financial needs. This would adversely impact the Argentine economy and our financial condition and results of operations.

Argentine government measures to preempt, or in response to, economic instability and the related social unrest may adversely affect the Argentine economy.

Despite Argentina’s economic recovery during the past years, social and political tensions and high levels of poverty have not abated. Future Argentine government policies to preempt, or in response to, social unrest could adversely and materially affect the economy, and thereby our business.

The amendment of the Central Bank’s Charter and the Convertibility Law may adversely affect the Argentine economy.

On March 22, 2012, the Argentine Congress passed Law No. 26,739, which amended the charter of the Central Bank (the “Central Bank’s Charter)Charter”) and Law No. 23,298 (the “Convertibility Law”). This new law amends the objectives of the Central Bank (established in its charter) and removes certain provisions previously in force. Pursuant to the amendment, the Central Bank focuses on promoting monetary and financial stability as well as development with social equity.

AThe key component of the amendment of the Central Bank charterCharter relates to the use of the international reserves. reserves and the implementation of polices by the Central Bank in order to interfere in the fixing of interest rates and terms of loans to financial institutions.

Pursuant to this amendment, Central Bank reserves may be made available to the government for the repayment of debt or to finance public expenses. During 2013, the currency reserves in U.S. dollars held by the Argentine government in the Central Bank have significantly decreased. Thisdecreased, from US$44.3 billion in 2012 to US$30.6 billion in 2013, while during 2014 the reserves slightly increased up to US$31.4 billion as of December 31, 2014. The stock of the international reserves of the Central Bank was US$31.5 billion as of March 31, 2015.

The use of Central Bank reserves for the expanded purposes may result in Argentina being more vulnerable to inflation or external shocks, affecting the country’s capacity to overcome the effects of an external crisis.

Increased uncertainty due to the upcoming Presidential and Congressional elections could have an adverse effect on the Argentine economy.

Presidential and Congressional elections in Argentina are scheduled to take place on October 25, 2015. There is a general uncertainty as to who will win the elections and what impact the outcome could produce on the Argentine economy. The uncertainty about the probable outcomes of the general elections and the measures to be subsequently taken could have an adverse effect on financial institutions and the Argentine economy as a whole.

Risks relating to the Argentine financial system

The health of Argentina’s financial system depends on the growth of long-term credit market.

In recent years, the loan portfolio of the Argentine financial system grew significantly. Loans to the private sector grew by approximately 46% in 2011, 32% in 2012, and 31% in 2013 and 20% in 2014 for the financial system as a whole. In spite of the recovery of the credit activity, the long-term loans market (pledged loans and mortgage loans) did not grow at the same pace.pace and grew only 7% to the private sector in 2014.

Since most deposits are short-term deposits, a substantial portion of the loans must have the same maturity, and there is a small portion of long-term credit lines.

The uncertainty of the level of inflation for future years is a principal obstacle preventing a faster recovery of Argentina’s private sector long-term lending. This uncertainty has had and may continue to have 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.

If longer-term financial intermediation activity does not grow, the ability of financial institutions, including us, to generate profits will be negatively affected.

The health of the financial system depends upon the ability of financial institutions, including us, to retain the confidence of depositors.

As a consequence of the 2008 global economic crisis, the banking industry in Argentina suffered a significant slowdown. This trend was reversed by the end of 2009. Total deposits with the financial system increased by 23% in 2011, 29% in 2012, and 26% in 2013.

2013 and 30% in 2014 but the ratio of total financial system deposits to GDP is still low when compared to international levels and lower than the periods prior to the crisis. The average total deposits of the Argentine financial system represented 25%20% of GDP during 2013 compared to 28% and 31% on average in 2012 and 2011, respectively.2014.

In spite of the increasing trend showed during previous years, the deposit base of the Argentine financial system, including ours, may be affected in the future by adverse economic, social and political events. If there were a loss of confidence upon these events and, therefore, depositors withdraw significant holdings from banks, there will be a substantial negative impact on the manner in which financial institutions, including us, conduct their business and on their ability to operate as financial intermediaries. International loss of confidence in the financial institutions may also affect sensibility of Argentine depositors.

The asset quality of financial institutions, including us, may be affected by the exposure to public sector debt.

Financial institutions have bonds of, and loans to, the Argentine federal and provincial governments as part of their portfolios. Exposure to public sector of the financial system has decreased year after year, from 48.9% in 2002 to 9.3%9.1% in 2013.2014.

As of December 31, 2014, our exposure to the public sector, not including Lebacs (Letras del Banco Central) and Nobacs (Notas del Banco Central), totaled approximately Ps.3.5 billion, representing 4.7% of our total assets.

To some extent, the value of the assets held by Argentine banks, as well as their income generation capacity, is dependent on the Argentine public sector’s creditworthiness, which is in turn dependent on the government’s ability to promote sustainable long-term economic growth, in the long run, generate tax revenues and control public spending.

As of December 31, 2013, our exposure to the public sector, not including LEBACs (Letras del Banco Central) and NOBACs (Notas del Banco Central), totaled approximately Ps. 1.7 billion, representing 2.9 % of our total assets.

Our asset quality and that of other financial institutions may deteriorate if the Argentine private sector is affected by economic events in Argentina or the international financial crisis.

The capacity of many Argentine private sector debtors to repay their loans has deteriorated as a result of certain economic events in Argentina or the international economic crisis, materially affecting the asset quality of financial institutions, including us. From the end of 2008, we had consistently established large allowances for loan losses to cover the risks inherent to our private sector loan portfolio.

During 2010 andFrom 2009 to 2011, the ratio of the non-performing private sector lending showed a great decline, from the levels reported for 2009, with a record minimum ratio of 1.4% as of December 31, 2011 for the financial system as a whole. Such improvements were reflected in both the consumer loan portfolio and the commercial portfolio. During 2012 and 2013, the ratio of the non-performing private sector lending increased, standing at 1.7% as of December 31, 2012. During 2012 and 2013,2013. During 2014, the ratio of the non-performing private sector lending remained stable (1.7%increased to 2.0% for the financial system as of December 31, 2013).a whole.

Our credit portfolio quality ratio and coverage ratio followed the financial system trend standing at 1.7% and 149.1% ratios1.9% for our entire portfolio, respectively, as of December 31, 2013.2014. During 2014 our coverage ratio reached 135.3%.

Despite of the good quality of our portfolio we may not succeed in recovering substantial portions of loans that were provisioned. If Argentina’s economic growth slows down and the financial condition of the private sector deteriorates, the financial system, including us, will experience an increase in the incidence of non-performing loans.

Class actions against financial entities for an indeterminate amount may adversely affect the profitability of the financial system.

Certain public and private organizations have initiated class actions against financial institutions in Argentina. The Argentine National Constitution and Law No. 24,240 (the “Consumer Protection Law”) contain certain provisions regarding class actions. However, their guidance with respect to procedural rules for instituting and trying class action cases is limited. Nonetheless, by means of anad hoc doctrine construction, Argentine courts have admitted class actions in some cases, including various lawsuits against financial entities related to “collective interests” such as alleged overcharging on products, applied interest rates, advice in the sale of public securities, etc. If class action plaintiffs were to prevail against financial institutions, their success could have an adverse effect on the financial industry and on our business.

Limitations on enforcement of creditors’ rights in Argentina may adversely affect financial institutions.

To protect debtors affected by the economic crisis, beginning in 2002 the Argentine government adopted measures that temporarily suspended proceedings to enforce creditors’ rights, including mortgage foreclosures and bankruptcy petitions. Such limitations have restricted creditors’ ability to collect defaulted loans. Most of these measures have been rescinded; however, we cannot assure you that in an adverse economic environment the government will not adopt new measures in the future, which could have a material adverse effect on the financial system and our business.

The application of the Consumer Protection Law may prevent or limit the collection of payments with respect to services rendered by us.

The Consumer Protection Law sets forth certain rules and principles designed to protect consumers, which include our customers. The Consumer Protection Law was amended on March 12, 2008 by Law No. 26.36126,361 to expand its applicability and the penalties associated with violations thereof.

Additionally, Law No. 25,065 (as amended by Law No. 26,010 and Law No. 26,361, the “Credit Card Law”) also sets forth several mandatory regulations designed to protect credit card holders.

Both the involvement of the applicable administrative authorities at the federal, provincial and local levels, and the enforcement of the Consumer Protection Law and the Credit Card Law by the courts are increasing. This trend has increased general consumer protection levels. We cannot provide any assurance that judicial and administrative rulings based on the applicable regulation, or measures adopted by the enforcement authorities, will not increase the consumer protection given to debtors and other clients in the future, or that they will not favor the claims initiated by consumer groups or associations, and in such event, certain penalties and remedies could prevent or limit the collection of payments due from services and financing provided by banks engaged in such practices and materially adversely affect the financial condition and results of those entities.

Future governmental measures and/or regulationsLimitations on enforcement of creditors’ rights in Argentina may adversely affect financial institutions.

To protect debtors affected by the economyeconomic crisis, beginning in 2002, the Argentine government has adopted measures that temporarily suspended proceedings to enforce creditors’ rights, including mortgage foreclosures and bankruptcy petitions. Such limitations have restricted creditors’ ability to collect defaulted loans. Most of these measures have been rescinded. However, we cannot assure you that in an adverse economic environment the government will not adopt new measures in the future, restricting the ability of creditors to enforce their rights, which could have a material adverse effect on the financial system and our business.

Governmental measures and regulatory framework affecting financial entities could have a material adverse effect on the operations of financial institutions.entities.

The Argentine government has historically exercised significant influence over the economy, and financialeconomy. Financial institutions, in particular, have operated in a highly regulated environment. Between 2001 and 2014, a series of new regulations were issued, mainly regulating the foreign exchange market, capital and minimum cash requirements, lending activity, interest rate limits and dividend distribution for financial institutions. In the first quarter ofthis regard, in 2012 the Central Bank’s Charter was amended resultingBank increased the capital requirements for financial institutions carrying out activities in Argentina, establishing a minimum capital level to mitigate operational risk. The Central Bank has stated that this requirement is based on the credit risk policies under Basel II.

Moreover, the Central Bank imposed new restrictions on the distribution of dividends, including a limitation on the maximum distributable amount of dividends which cannot exceed the excess in minimum regulatory capital, exclusively considering, to such end, a 75% incremental adjustment to the capital requirement; requiring that the capital remaining after the distribution of dividends must be sufficient to meet the regulatory capital requirement increased by 75%. This limitation prevented us from distributing dividends for fiscal years 2011 and 2012. In January 2015, Communication “A” 5694 of the Central Bank, established that those entities considered as domestic systemically important (D-SIB), like us, must take into account an increase influenceextra minimum capital requirement equivalent to 1% of government over the total risk-weighted assets (RWA) which they must comply with using exclusively ordinary capital level 1 (Con1), according the schedule described in Item 4.B “Business—Argentine banking regulation—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution”. Pursuant to the Central Bank Communication “A” 5707, if dividends were to be distributed, this requirement becomes immediately effective. We have met the regulatory threshold for dividend distribution for fiscal year 2014 and we are currently awaiting Central Bank approval to pay dividends for that fiscal year.

Since January 2015, and pursuant to Central Bank Communication “A” 5707, financial system. For example, inentities must make an accounting entry of any administrative and/or disciplinary penalties and adverse criminal judgments held by courts, provisioning 100% of the respective penalty

provided under each such action. Such provisions must be maintained until payment is made or a final judgment is passed. According to Central Bank Communication “A” 5707, if dividends were to be distributed, this provisioned amount must also be deducted from the distributable amount. In January 2015, according to such regulations, the Bank created provisions for administrative and/or disciplinary sanctions, which were applied or initiated by the Central Bank, UIF and CNV. Such provisions totaled Ps.11.4 million.

Since June 2012, the Central Bank has established thata new regime to finance productive investment by which certain financial entities, including us, must allocate an amount equal to at least 5%5.0% of the monthly average of the daily balance of the deposits held with such entities by the non-financial private sector, at a fixed interest rate in Pesos determined by the Central Bank, to fund investment projects for the acquisition of capital goods; the construction of plants; the marketing of goods or the acquisition of property (subject in this case to certain additional requirements). The Central Bank extended the term of this ruling in December 2012, December 2013 and in December 2013. 2014. In December 2014, the Central Bank increased the required monthly average of the daily balance of deposits held and assigned to such credit lines from 5.0% to 6.5%.

Furthermore, the Central Bank setshas set certain regulations granting broad protections to consumers of financial services that providesprovide more control over the relationship between them and their customerscustomers. In 2014, the Central Bank established (i) a scheme of maximum active benchmark rates for consumer loans and imposedsecured loans, (ii) new mechanism of regulation by setting a minimum deposit rate for certain deposits of natural persons and (iii) that prior authorization will be required to implement new fees for new products and/or services offered and to increase existing fees, whether or not the obligation to report any change in their fees with a prior 90-day notice. products are considered basic.

In addition, in February 2014, the Central Bank established that the net global position in foreign currency of financial institutions cannot exceed the lesser of 30% of the RPC or the liquid funds of the institution.institution and, in September 2014, such threshold was decreased to 20%. For more information, see Item 4.B “Argentine banking regulation”. As a result, financial entities, including us, sold part of their position in U.S. dollars to comply with such rule. We cannot assure that laws and regulations currently governing the economy or the bankingfinancial sector will not continue to change in the future or that any changes will not adversely affect our business, financial condition and results of operations.

AsMoreover, any insolvency proceeding against financial institutions would be subject to the powers of and intervention by the Central Bank, which may limit remedies otherwise available and extend the duration of the dateproceedings. Finally, special rules that govern subordinations of this report, three different billscredits in case of financial institutions in Argentina, which give priority to amenddepositors with respect to most other creditors, may negatively affect other shareholders in case of judicial liquidation or bankruptcy of the Financial Institutions Law No. 21,526 as amended (the “Financial Institution Law”) have been put forth for reviewBank.

Such and future changes in the Argentine Congress, seekingregulatory framework could limit the ability of financial institutions, including us, to amend different aspectsmake long-term decisions, such as asset allocation decisions, that could cause uncertainty with respect to the future financial condition and results of operations. We cannot assure that laws and regulations currently governing the Financial Institutions Law. A thorough amendmenteconomy or the financial sector will not continue to change in the future or that any changes will not adversely affect our business, financial condition and results of the Financial Institutions Law would have a substantial effect on theoperations. For more information, see Item 4.B “Argentine banking system as a whole.regulation”.

Argentina’s insufficient or incorrect implementation of certain anti-money laundering and combating the financing of terrorism (“AML/CFT”) recommendations may result in difficulties to obtain international financing and attract direct foreign investments.

In October 2010, the Financial Action Task Force (“FATF”) issued a Mutual Evaluation Report (the “Mutual Report”) on Anti-Money Laundering and Combating the Financing of Terrorism in Argentina, including the evaluation of Argentina as of the time of the on-site visit which took place in November 2009. This report statesstated that since the latest evaluation, finalized in June 2004, Argentina had not made adequate progress in addressing a number of deficiencies identified at the time.time, and the FATF has since placed Argentina on an enhanced monitoring process.

Moreover, in February 2011, Argentina, represented by the Minister of Justice, attended the FATF Plenary, in Paris, in order to present a preliminary action plan. FATF granted an extension to implement changes.

In June, 2011 Argentina made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. In compliance with recommendations made by the FATF on money laundering prevention, on June 1, 2011 the Congress enacted Law No. 26,683. Under this law, money laundering is now a crime per se, and self-laundering money is also considered a crime.

Additionally, in June 2012, the Plenary meeting of the FATF held in Rome highlighted the progress made by Argentina but also urged the country to make further progress regarding its AML/CFT deficiencies.

Notwithstanding the improvements that Argentina made, the FATF as ofin October 2012 hasthe FATF determined that certain strategic AML/CFT deficiencies continue, including, among others, (i) addressing the remaining deficiencies with regardcontinued, and that Argentina would be subject to the criminalization of money laundering; (ii) further improving procedures for the confiscation of funds related to money laundering and freezing terrorist assets; (iii) enhancing financial transparency; (iv) ensuring a fully operational and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements; (v) further enhancing the AML/CFT supervisory program for all financial sectors; (vi) further improving and broadening customer due diligence measures; and (vii) establishing appropriate channels for international co-operation and ensuring effective implementation.continued monitoring.

Since October 2013, Argentina has taken steps towards improving its AML/CFT regime, including by issuing new regulations strengthening suspicious transaction reporting requirements and the financial sector regulator’s existing powers to apply sanctions for AML/CFT deficiencies. However,Such progress has been recognized by the FATF. In this regard, the FATF (pursuant to its report dated February 14,June 27, 2014) determinedstated that certain strategicArgentina had made significant progress in addressing the deficiencies in its AML/CFT deficiencies remain.measures as identified in the Mutual Report, and that subsequent to the adoption of such measures, Argentina must continuehad strengthened its legal and regulatory framework, including (i) reforming and strengthening money laundering penalties by enhancing the scope of reporting parties covered and transferring AML/CFT supervision to workthe Financial Intelligence Unit (the “UIF”); (ii) enhancing terrorist financing penalties, in particular by criminalizing the financing of terrorist acts, terrorists, and terrorist organizations; (iii) issuing, through the UIF, a series of resolutions concerning customer due diligence (CDD) and record-keeping requirements as well as other AML/CFT measures to be taken by reporting

parties; and (iv) creating a framework to comply with United Nations Security Council Resolutions 1267 and 1373. As a result of such progress, the FATF Plenary decided that Argentina had taken sufficient steps in addressing technical compliance with the core and key recommendations to be removed from the monitoring process. In addition, on implementingOctober 24, 2014 the FATF welcomed Argentina’s significant progress in improving its AML/CFT regime and noted that Argentina had established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had previously identified in June 2011 and stated that Argentina would no longer be subject to the FATF’s AML/CFT compliance monitoring process and that Argentina would work with the FATF and the Financial Action Task Force of Latin America (Grupo de Acción Financiera de América del Sur, or “GAFISUD”) as it continued to address these deficiencies, including by: (i) addressing the remaining deficiencies with regardfull range of AML/CFT issues identified in its Mutual Report.

Although Argentina has made significant improvements in its AML/CFT regulations, and is no longer subject to the framework for freezing terrorist-related assets, and (ii) further enhancing the range and proportionality of the sanctions available for non-compliance withFATF’s on-going global AML/CFT requirements. The FATF encouragescompliance process, no assurance can be given that Argentina to address its remaining deficiencies and continue the process of implementing its action plan.

The FATF will continue to monitor the progress of Argentina regarding the compliancecomply with AML/CFT international standards. Therefore,standards, or that Argentina will not be subject to the outcome of new evaluationsFATF’s on-going global AML/CFT compliance process in the future, circumstances which could adversely affect Argentina’s ability to obtain financing from international markets and attract foreign investments.

Risks relating to us

Our target market may be the most adversely affected by economic recessions.

Our business strategy is to increase fee income and loan origination in our target market, low- and middle-income individuals and smallsmall- and medium-sized businesses.

This target market is particularly vulnerable to economic recessions and, in the event of such a recession, growth in our target market may slow and consequently adversely affect our business. The Argentine economy as a whole, and our target market in particular, have not stabilized enough for us to be certain that demand will continue to grow. Therefore, we cannot assure you that our business strategy will in fact be successful.

Our controlling shareholders have the ability to direct our business and their interests could conflict with yours.

As of March 31, 2014,2015, our controlling shareholders directly or beneficially owned 10,539,89510,551,332 Class A shares and 224,221,644220,829,718 Class B shares in the aggregate. Although currently there is no formal agreement among them, together our controlling shareholders control virtually all decisions with respect to our company made by shareholders. They may, without the concurrence of the remaining shareholders, elect a majority of our directors, effect or prevent a merger, sale of assets or other business acquisition or disposition, cause us to issue additional equity securities, effect a related party transaction and determine the timing and amounts of dividends, if any. Their interests may conflict with your interests as a holder of Class B shares, ADSs or notes, and they may take actions that might be desirable to the controlling shareholders but not to other shareholders or holders of our notes.

We will continue to consider acquisition opportunities, which may not be successful.

We have historically expanded our business primarily through acquisitions. We will continue to consider attractive acquisition opportunities that we believe may offer additional value and are consistent with our business strategy. We cannot assure you, however, that we will be able to identify suitable acquisition candidates or that we will be able to acquire promising target financial institutions on favorable terms. Although to date all acquisitions have been authorized byterms or that the Central Bank and other relevant authorities, we cannot assure you thatwill approve any future acquisition will also be authorized by these authorities.such transaction. Additionally, our ability to obtain the desired effects of any such acquisitions will depend in part on our ability to successfully complete the integration of those businesses. The integration of acquired businesses entails significant risks, including:

liability assumption risks.

Increased competition in the banking industry may adversely affect our operations.

We expect that competition with respect to smallsmall- and medium-sized businesses is likely to increase. As a result, even if the demand for financial products and services from these markets continues to grow, competition may adversely affect our results of operations by decreasing the net margins we are able to generate.

Reduced spreads between interest rates received on loans and those paid on deposits without corresponding increases in lending volumes could adversely affect our profitability.

The spread for Argentina’s financial system between the interest rates on loans and deposits could be affected as a result of increased competition in the banking sector and the government’s tightening of monetary policy in response to inflation concerns.

Since 2009, the interest rate spreads throughout the financial system have increased. This increase was sustained by a steady demand for consumer loans in recent years. In 2013 and 2014, borrowing and lending rates increased significantly. However, the net interest margin of the financial system remained stable due to a substantial growth both in the loan and deposit portfolios.

However, weIn June 2014, the Central Bank established a scheme of maximum active benchmark rates for consumer loans and secured loans and additionally, in October 2014, established a new mechanism of regulation by setting a minimum deposit rate for certain deposits of natural persons. For more information, see Item 4.B “Argentine banking regulation”.

We cannot guarantee that this trendinterest rate spreads will continueremain unless increases in lending or additional cost-cuttings takecost-cutting takes place. A reversereversal of this trend in such terms could adversely affect our profitability.

Our estimates and established reserves for credit risk and potential credit losses may prove to be inaccurate and/or insufficient, which may materially and adversely affect our financial condition and results of operations.

A number of our products expose us to credit risk, including consumer loans, commercial loans and other receivables. Changes in the income levels of our borrowers, increases in the inflation rate or an increase in interest rates could have a negative effect on the quality of our loan portfolio, causing us to increase provisions for loan losses and resulting in reduced profits or in losses.

We estimate and establish reserves for credit risk and potential credit losses. This process involves subjective and complex judgments, including projections of economic conditions and assumptions on the ability of our borrowers to repay their loans. We may not be able to timely detect these risks before they occur, or due to limited resources or available tools, our employees may not be able to effectively implement our credit risk management system, which may increase our exposure to credit risk.

Overall, if we are unable to effectively control the level of non-performing or poor credit quality loans in the future, or if our loan loss reserves are insufficient to cover future loan losses, our financial condition and results of operations may be materially and adversely affected.

Changes in market conditions, and any risks associated therewith, could materially and adversely affect our financial condition and results of operations.

We are directly and indirectly affected by changes in market conditions. Market risk, or the risk that values of assets and liabilities or revenues will be adversely affected by variation in market conditions, is inherent in the products and instruments associated with our operations, including loans, deposits, securities, bonds, long-term debt and short-term borrowings. Changes in market conditions that may affect our financial condition and results of operations include fluctuations in interest and currency exchange rates, securities prices, changes in the implied volatility of interest rates and foreign exchange rates, among others.

Cybersecurity events could negatively affect our reputation, our financial condition and our results of operations.

We depend on the efficient and uninterrupted operation of internet-based data processing, communication and information exchange platforms and networks, including those systems related to the operation of our ATM network. We have access to large amounts of confidential financial information and control substantial financial assets belonging to our customers as well as to us. In addition, we provide our customers with continuous remote access to their accounts and the possibility of transferring substantial financial assets by electronic means. Accordingly, cybersecurity is a material risk for us. Cybersecurity incidents, such as computer break-ins, phishing, identity theft and other disruptions could negatively affect the security of information stored in and transmitted through our computer systems and network infrastructure which may result in significant liability to us in excess of insurance coverage, and may cause existing and potential customers to refrain from doing business with us.

In addition, contingency plans in place may not be sufficient to cover liabilities associated with any such events and, therefore, applicable insurance coverage may be deemed inadequate, preventing us from receiving full compensation for the losses sustained as a result of such a disruption.

Although we intend to continue to implement security technology devices and establish operational procedures to prevent such damage, we cannot assure you that all of our systems are entirely free from vulnerability and these security measures will be successful. If any of these events occur, it could damage our reputation, entail serious costs and affect our transactions, as well as our results of operations and financial condition.

DifferencesIf we should fail to comply with all applicable banking and securities laws and regulations or detect money laundering and other illegal or inappropriate activities in a comprehensive or timely manner, the business interests and reputation of the Bank may be harmed.

We must be in compliance with all applicable banking and securities laws and regulations. In recent years, the Argentine government and relevant governmental agencies have modified policies and mechanisms of control over financial activity, as well as the parameters surrounding monetary and disciplinary penalties that may affect our results of operations and reputation.

For example, on November 29, 2012, the Argentine Congress passed the “Capital Markets Law”, which modified the public offer regime set forth by Law No.17,811, as amended. One of the most significant amendments introduced by such law refers to the powers of the CNV. The incorporation of Section 20 raises concern in the market, especially among listed companies, since it entitles the CNV to (i) appoint supervisors with powers of veto on resolutions adopted by a company’s board of directors and (ii) disqualify a company’s board of directors for a period of 180 days when, as determined by the CNV, the interests of the minority shareholders and/or security holders are infringed. In addition, pursuant to section 51 of the Capital Markets Law, the CNV may suspend registered broker agents on a preventive basis, as ocurred during the first quarter of 2015 to several financial system entities, including with Banco Macro and our subsidiary Macro Securities. For more information see Item 8. “Legal Proceedings”.

In addition, anti-money laundering laws and regulations require, among other things, that we adopt and implement control policies and procedures which involve “know your customer” principles that comply with the applicable regulations and reporting suspicious or unusual transactions to the applicable regulatory authorities. While we have adopted policies and procedures intended to detect and prevent the use of our network for money laundering activities and by terrorists, terrorist organizations and other types of organizations, those policies and procedures may fail to fully eliminate the risk that we have been or are currently being used by other parties, without our knowledge, to engage in activities related to money laundering or other illegal activities.

To the extent that we do not comply with banking and securities laws and regulations or we don’t detect illegal activities from an anti-money laundering or other standpoint, the relevant governmental agencies (including the Central Bank, the CNV and the UIF) are authorized and empowered to impose fines, suspensions and other penalties on the Bank.

We cannot assure you that relevant governmental agencies will not continue to impose penalties or that such penalties will not adversely affect our business, reputation, financial condition and results of operations.

Argentine corporate disclosure and governance requirements differ from those regulating highly-developed capital markets, such as the United States, and differences in the accounting standards betweenapplicable in Argentina and certain countries with highly developed capital markets, such as the United States may make it difficult to compare our financial statements and reported earnings with companies in other countries, andsuch as the United States.

PubliclyAs a foreign private issuer, the Bank applies disclosure policies and requirements that differ from those governing U.S. domestic registrants. The securities laws of Argentina that govern publicly listed companies, such us, impose disclosure requirements that are more limited than those in the United States. In addition, publicly available corporate information about us in Argentina is different from and may be more difficult to obtain than the information available for registered public companies in certain countries with highly developed capital markets, such as the United States. See Item 16.G “Corporate Governance”.

Moreover, there are important differences between accounting and financial reporting standards applicable to financial institutions in Argentina and to those in the U.S. Except as otherwise described herein, we prepare our financial statements in accordance with Central Bank Rules, which differ in certain significant respects from U.S. GAAP and, to a certain extent, from Argentine GAAP. As a result, our financial statements and reported earnings are not directly comparable to those of banks in the United States.

The instability See Item 5. “Operating and Financial Review and Prospects-U.S. GAAP and Central Bank Rules Reconciliation” for a description of the Argentine regulatory framework, in particular the regulatory framework affecting financial entities, could have a material adverse effect on financial entities’ activities, including us.

During 2011, 2012 and 2013 a series of new regulations have been issued, mainly regulating the foreign exchange market, capital and minimum cash requirements, lending activity and dividend distribution for financial institutions.

In this regard, theprincipal differences between Central Bank increasedRules and U.S. GAAP and how they affect our financial statements and note 35 to our audited consolidated financial statements as of and for the capital requirementsthree years ended December 31, 2014 for financial institutions carrying out activities in Argentina establishing a minimum capital level to mitigate operational risk. Thesummary of significant differences between Central Bank has stated that this new requirement is based on the credit risk policies under Basel II.

Moreover, the Central Bank imposed new restrictions on the distribution of dividends, including a limitation on the maximum distributable amount of dividends which cannot exceed the excess in minimum regulatory capital, exclusively considering, to such end, a 75% incremental adjustment to the capital requirement; i.e. the capital remaining after the distribution of dividends must be sufficient to meet the regulatory capital requirement increased by 75%. This limitation prevented us from distributing dividends for fiscal years 2011Rules and 2012. We have met the regulatory threshold for dividend distribution for the fiscal year 2013 and we are currently awaiting Central Bank approval to pay dividends for that fiscal year.

The Central Bank established that certain financial entities, including us, must allocate an amount equal to at least 5% of the monthly average of the daily balance of the deposits held with such entities by the non-financial private sector, at a fixed interest rate in Pesos determined by the Central Bank, to fund investment projects for the acquisition of capital goods; the construction of plants; the marketing of goods or the acquisition of property (subject in this case to certain additional requirements). The Central Bank extended the term of this ruling in December 2012 and in December 2013. Furthermore, the Central Bank sets certain regulations that provides more control over the relationship between the banks and their customers and imposed the obligation to report any change in their fees with a prior 90-day notice.U.S. GAAP.

On February 4,12, 2014, the Central Bank, issuedthrough Communication “A” 5536 in connection with foreign exchange net global positions for Argentine banks (i.e.5541, established the amount of foreign currency either in currency or securities held by Argentine financial entities) and futures contracts. In particular, Communication “A” 5536 set forth two new limits: (a) Net Position of Foreign Exchange: accordinggeneral guidelines towards conversion to the rule,IFRS issued by the general limitInternational Accounting Standards Board (IASB) for preparing financial statements of the monthly averageentities under its supervision, for the annual fiscal years beginning on January 1, 2018, as well as those of daily balances converted into Pesos atinterim-periods. The Bank is in the reference exchange rate cannot be greater than the lesserprocess of either (i) 30% of the bank’s computable capital (responsabilidad patrimonial computable or“RPC”) calculatedimplementing such IFRS conversion process. See note 7 to our audited consolidated financial statements as of the prior month, and (ii) the liquid assets of the institution. The difference in excess of such percentage must be sold within three months; (b) Futures Contracts: the new rule establishes a specific limit for the positive overall net term position of foreign exchange, which cannot be higher than 10% of a bank’s RPC calculated as of the prior month. These limits must be complied with before April 30,three years ended December 31, 2014.

Changes in the regulatory framework could limit the ability of financial institutions, including us, to make long-term decisions, such as asset allocation decisions, that could cause uncertainty with respect to the future financial condition and results of operations.

Risks relating to our Class B shares and the ADSs

Holders of our Class B shares and the ADSs may not receive any dividends.

In 2003, the Central Bank prohibited financial institutions from distributing dividends. In 2004, the Central Bank amended the restriction to require the Central Bank’s prior authorization for the distribution of dividends. We have consistently obtained authorization from the Central Bank to distribute dividends corresponding to fiscal years 2003 through 2010. Under new Central Bank Rules on distribution of dividends, the capital remaining after the distribution of dividends must be sufficient to meet the regulatory capital increased by 75%. See “Risks relating to the Argentine financial system—Governmental measures and regulatory framework affecting financial entities could have a material adverse effect on the operations of financial entities”. In January 2015, Communication “A” 5694 of the Central Bank, established that those entities considered as domestic systemically important (D-SIB), like us, must take into account an extra minimum capital requirement equivalent to 1% of the total risk-weighted assets (RWA) which they must comply with using exclusively ordinary capital level 1 (Con1), according the schedule described under section “Argentine banking regulation—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution”.

Since January 2015, Central Bank Communication “A” 5707 has required that financial entities must make an accounting entry of any administrative and/or disciplinary penalties and adverse criminal judgments held by courts, provisioning 100% of the respective penalty provided under each such action. Such provisions must be maintained until payment is made or a final judgment is passed. Pursuant to Central Bank Communication “A” 5707, if dividends were to be distributed, this provisioned amount must also be deducted from the distributable amount.

For the fiscal years ended December 31, 2011 and 2012, we were not able to distribute dividends because we did not reach the regulatory threshold for dividend distribution under Central Bank regulations. For the fiscal yearyears ended December 31, 2013 and 2014, we reached such regulatory threshold and, in compliance with current regulations, in March 20142015 we requested approval from the Central Bank for the payment of dividends for that fiscal year.year 2014. Authorization for such payment was pending as of the date of this annual report.

No assurance can be given that in the future we will be able to reach the regulatory threshold or that if so, the Central Bank will continue to grant us the authorization to distribute dividends by our shareholders at the annual ordinary shareholders’ meeting or that such authorization shall be for the full amount of distributable dividends.

Additional regulatory and contractual restrictions exist which could affect the distribution of earnings and are included in note 15 of16 to our audited consolidated financial statements as of and for the three years ended December 31, 2013.2014.

Holders of our Class B shares and the ADSs located in the United States may not be able to exercise preemptive rights.

Under Argentine Corporate Law No. 19,550 (the “Argentine Corporate Law”), if we issue new shares as part of a capital increase, our shareholders may have the right to subscribe to a proportional number of shares to maintain their existing ownership percentage. Rights to subscribe for shares in these circumstances are known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed shares remaining at the end of a preemptive rights offering on a pro rata basis, known as accretion rights. Upon the occurrence of any future increase in our capital stock, United States holders of Class B shares or ADSs will not be able to exercise the preemptive and related accretion rights for such Class B shares or ADSs unless a registration statement under the Securities Act is effective with respect to such Class B shares or ADSs or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to those Class B shares or ADSs. We cannot assure you that we will file such a registration statement or that an exemption from registration will be available. Unless those Class B shares or ADSs are registered or an exemption from registration applies, a U.S. holder of our Class B shares or ADSs may receive only the net proceeds from those preemptive rights and accretion rights if those rights can be sold by the depositary; if they cannot be sold, they will be allowed to lapse. Furthermore, the equity interest of holders of Class B shares or ADSs located in the United States may be diluted proportionately upon future capital increases.

Changes in the Argentine tax laws may adversely affect the results of our operations and the tax treatment of our Class B Sharesshares and/or ADSs.

On September 23, 2013, Law No. 26,893 amending the Income Tax Law was enacted. According to the amendments, the distribution of dividends is subject to income tax at a rate of 10.0%, unless they are distributed to Argentine corporate entities, and the sale, exchange or disposition of shares and other securities not traded in or listed on capital markets and securities exchanges is subject to income tax at a rate of 15.0% when the income is obtained by Argentine resident individuals or by foreign beneficiaries. These amendments were recently regulated by Decree 2334/2013. See “Item 10. Additional Information—E.Taxation—“Taxation—Material Argentine tax considerations relating to our Class B shares and ADSs”. However, as of the date of this annual report,today, many aspects of suchboth taxes currently remain unclear and, pursuantunclear. Pursuant to certain announcements made by Argentine tax authorities, suchboth new taxes arewould be subject to further rulemakingregulation and interpretation, which may adversely affect the results of the Bank and our subsidiaries, as well as the tax treatment of our Class B Sharesshares and/or ADSs.

Non-Argentine companies that own our Class B shares directly and not as ADSs may not be able to exercise their rights as shareholders unless they are registered in Argentina.

Under Argentine law, foreign companies that own shares in an Argentine corporation incorporated within the City of Buenos Aires, are required to register with IGJ, in order to exercise certain shareholder rights, including voting rights. If you own Class B shares directly (rather than in the form of ADSs) and you are a non-Argentine company and you fail to register with IGJ, your ability to exercise your rights as a holder of our Class B shares may be limited.

You may not be able to sell your ADSs at the time or the price you desire because an active or liquid market may not develop.

Prior to March 24, 2006, there has not been a public market for the ADSs or, in the case of our Class B shares, a market outside of Argentina. We cannot assure you that any market for our Class B shares or for the ADSs will be available or liquid or the price at which the Class B shares or the ADSs may be sold in that market.

The relative volatility and illiquidity of the Argentine securities markets may substantially limit your ability to sell Class B shares underlying the ADSs at the price and time you desire.

Investing in securities that trade in emerging markets, such as Argentina, often involves greater risk than investing in securities of issuers in the United States, and such investments are generally considered to be more speculative in nature. The Argentine securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets in the United States, and is not as highly regulated or supervised as some of these other markets. There is also significantly greater concentration in the Argentine securities market than in major securities markets in the United States. The ten largest companies in terms of market capitalization represented approximately 96%more than 90% of the aggregate market capitalization of the BCBA as of December 31, 2013.2014. Accordingly, although you are entitled to withdraw the Class B shares underlying the ADSs from the depositary at any time, your ability to sell such shares at a price and time at which you wish to do so may be substantially limited. Furthermore, new capital controls imposed by the Central Bank could have the effect of further impairing the liquidity of the BCBA by making it unattractive for non-Argentines to buy shares in the secondary market in Argentina.

Our shareholders may be subject to liability for certain votes of their securities.

Our shareholders are not liable for our obligations. Instead, shareholders are generally liable only for the payment of the shares they subscribe. However, shareholders who have a conflict of interest with us and who do not abstain from voting may be held liable for damages to us, but only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or negligently vote in favor of a resolution that is subsequently declared void by a court as contrary to Argentine Corporate Law or our bylaws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.

Our Class B shares or the ADSs may have been characterized as stock in a ‘‘passive“passive foreign investment company’’company” in the past, or may be so characterized in the future, for U.S. federal income tax purposes.

The application of the “passive foreign investment company” rules to equity interests in banks such as us is unclear under current U.S. federal income tax law. While we do not believe that we are currently a passive foreign investment company, the test for determining our “passive foreign investment company” status is a factual one based upon a periodic evaluation of our assets and income and is unclear when applied to banking businesses such as our own. In addition, we may have been a PFIC in the past. It is therefore possible that our Class B shares or the ADSs could be characterized as stock in a “passive foreign investment company” for U.S. federal income tax purposes, which could have adverse tax consequences to U.S. holders (as defined in “Item 10. Additional Information—E.Taxation—Item 10.E “Taxation—Material U.S. Federal Income Tax Considerations”) in some circumstances. If we were classified as a passive foreign investment company in the past, U.S. holders of our Class B shares or the ADSs that held such Class B shares or ADSs at that time generally would be subject to special rules and adverse U.S. tax consequences with respect to certain distributions made by us and on any gain recognized on the sale or other disposition of our Class B shares or the ADSs. In addition, if we are treated as a passive foreign investment company in future tax years, U.S. holders of our Class B shares or the ADSs in such future periods may be subject to these same rules. In either case, U.S. holders might be subject to a greater U.S. tax liability than might otherwise apply and incur tax on amounts in advance of when U.S. federal income tax would otherwise be imposed. A U.S. holder of our Class B shares or the ADSs might be able to avoid these rules and consequences by making an election to mark such shares to market (although it is not clear if this election is available for the Class B shares). U.S. holders should carefully read “Item 10. Additional Information—E.Taxation—Item 10.E “Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Companies” and consult their tax advisors regarding the “passive foreign investment company” rules.

Risks relating to our notes

The notes are effectively subordinated to our secured creditors and our depositors.

Unless otherwise specified, the notes rank at leastpari passuin right of payment with all of our existing and future unsecured and unsubordinated indebtedness, other than obligations preferred by statute or by operation of law, including, without limitation, tax and labor-related claims and our obligations to depositors.

In particular, under Financial Institutions Law, all of our existing and future depositors will have a general priority right over holders of notes issued under our medium-term note program. The Financial Institutions Law provides that in the event of judicial liquidation or insolvency, all depositors would have priority over all of our other creditors (including holders of notes), except certain labor creditors and secured creditors. Moreover, depositors would have priority over all other creditors, with the exception of certain labor creditors, to funds held by the Central Bank as reserves, any other funds at the time of any revocation of our banking license and proceeds from any mandatory transfer of our assets by the Central Bank.

We have issued and may also issue additional subordinated notes. In that case, in addition to the priority of certain other creditors described in the preceding paragraphs, subordinated notes will also rank at all times junior in right of payment to certain of our unsecured and unsubordinated indebtedness.

Exchange controls and restrictions on transfers abroad may impair your ability to receive payments on the notes.

In 2001 and 2002, Argentina imposed exchange controls and transfer restrictions, substantially limiting the ability of companies to retain foreign currency or make payments abroad. Since then, these restrictions have been substantially eased, including those requiring the Central Bank’s prior authorization for the transfer of funds abroad in order to pay principal and interest on debt obligations. Furthermore, new regulations were issued in 2012 and 2013, which are still in place, pursuant to which certain foreign exchange transactions cannot be effected unless they are previously approved by Argentine tax authorities. Argentina may impose exchange controls and transfer restrictions in the future, among other things, in response to capital flight or a significant depreciation of the peso.

In such event, your ability to receive payments on the notes may be impaired.

We may redeem the notes prior to maturity.

The notes are redeemable at our option in the event of certain changes in Argentine taxes and, if so specified, the notes may also be redeemable at our option for any other reason. We may choose to redeem those notes at times when prevailing interest rates may be relatively low. Accordingly, an investor may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the notes.

As a financial institution, any bankruptcy proceeding against us would be subject to intervention by the Central Bank, which may limit remedies otherwise available and extend the duration of proceedings.

If we are unable to pay our debts as they come due, the Central Bank would typically intervene by appointing a reviewer, request us to file a reorganization plan, transfer certain of our assets and liabilities and possibly revoke our banking license and file a liquidation petition before a local court. Upon any such intervention, noteholders’ remedies may be restricted and the claims and interests of our depositors and other creditors may be prioritized over those of noteholders. As a result, the noteholders may realize substantially less on their claims than they would in a bankruptcy proceeding in Argentina, the United States or any other country.

Holders of notes may find it difficult to enforce civil liabilities against us or our directors, officers and controlling persons.

We are organized under the laws of Argentina and our principal place of business (domicilio social) is in the City of Buenos Aires, Argentina. Most of our directors, officers and controlling persons reside outside the United States. In addition, all or a substantial portion of

our assets and their assets are located outside of the United States. As a result, it may be difficult for holders of notes to effect service of process within the United States on such persons or to enforce judgments against them, including any action based on civil liabilities under the U.S. federal securities laws. Based on the opinion of our Argentine counsel, there is doubt as to the enforceability against such persons in Argentina, whether in original actions or in actions to enforce judgments of U.S. courts, of liabilities based solely on the U.S. federal securities laws.

The ratings of the notes may be lowered or withdrawn depending on various factors, including the rating agency’s assessment of our financial strength and Argentine sovereign risk.

Independent credit rating agencies may assign credit ratings to the notes. The ratings of the notes reflect the relevant rating agency’s assessment of our ability to make timely payment of principal and interest on the notes. Moreover, the methods of assigning ratings used by Argentine rating agencies may differ in important aspects from those used by the rating agencies in the United States or other countries. The ratings of the notes are not a recommendation to buy, sell or hold the notes, and the ratings do not comment on market prices or suitability for a particular investor. We cannot assure you that the ratings of the notes will remain for any given period of time or that the

ratings will not be lowered or withdrawn. A downgrade in ratings will not be an event of default with respect to the notes. The assigned ratings may be raised or lowered depending, among other things, on the rating agency’s assessment of our financial strength as well as its assessment of Argentine sovereign risk generally, and any change to these may affect the market price or liquidity of the notes.

Risks relating to our 2036 Notes

Interest on the 2036 Notes may be limited to the extent we do not have sufficient Distributable Amounts.

No interest on the 2036 Notes will be due and payable in the event that the payment of such interest, together with any other payments or distributions (other than payments in respect of redemptions or repurchases) on or in respect of our parity obligations (including the notes) previously made or scheduled to be made during the distribution period in which such interest payment Datedate falls, would exceed our distributable amounts for such distribution period. Interest payments on the notes are non-cumulative such that if an interest payment is not made in full as a result of the limitation described in the preceding sentence, such unpaid interest will not accrue or be due and payable at any time and, accordingly, holders of 2036 Notes will not have any claim thereon, whether or not interest is paid with respect to any other interest period.

The distributable amountsamount available for paymentpayments of interest on the 2036 Notes on an interest payment date is based principally on our unappropriated retained earnings from the prior year. Subject to certain limited exceptions, Argentine law does not restrict our shareholders from approving the payment of dividends to themselves out of our unappropriated retained earnings, and the indenture relating to the notes does not restrict our ability to pay dividends unless interest on the notes has not been paid in full as scheduled. In addition, distributable amounts available for payment of interest on the 2036 Notes depends on the amount of payments or other distributions on or in respect of our parity obligations previously made or schedule to be made during the relevant distribution period. Although we do not currently have any parity obligations outstanding, the indenture relating to the notes will not restrict our ability to issue parity obligations in the future. Accordingly, we cannot assure you that we will have sufficient distributable amounts to make interest payments on the 2036 Notes.

We may be prevented by the Central Bank or Argentine banking regulations from making interest or other payments on or in respect of the 2036 Notes.

No interest on the 2036 Notes will be due and payable on an Interest Payment Dateinterest payment date in the event that we would be prevented from paying interest on the notesNotes on such interest payment date as a result of (X) a general prohibition by the Central Bank on paying interest or making eitherother payments or distributions on or in respect of our parity obligations (including the notes) or (Y) as provided in CommunicationCommunications “A” 5485 of the Central Bank or any successor regulations thereto, if (a) we are subject to a liquidation procedure or the mandatory transfer of our assets by the Central Bank in accordance with Sections 34 or 35 bis of the Financial Institutions Law or successors thereto; (b) we are receiving financial assistance from the Central Bank;Bank (except liquidity assistance under the pesification rules pursuant to Decree No. 739/2003); (c) we are not in compliance with or have failed to comply on a timely basis with our reporting obligations to the Central Bank; (d) we are not in compliance with minimum capital requirements (both on an individual and consolidated basis) or with minimum cash reserves (on average); or (e) we are subject to significant penalties imposed by the UIF except ifunless certain corrective actions have been implemented by the Superintendency or if a risk mitigation plan has been required.

As a result of the 2001 Argentine crisis, all banks were prohibited by the Central Bank from paying dividends in 2002 and 2003. As the economy recovered, the Central Bank eased the prohibition but still requires prior authorization for the distribution of dividends by banks. Although the prohibition is no longer in effect, we cannot assure you that, if confronted with a similar crisis, the Central Bank will not prevent banks from making interest payments on parity obligations, including the 2036 Notes.

The 2036 Notes are unsecured and subordinated and, in the event of our bankruptcy, the 2036 Notes will rank junior to our unsubordinated obligations and certain of our subordinated obligations.

The 2036 Notes constitute our unsecured and subordinated obligations. In the event of our bankruptcy, the 2036 Notes will rank junior to all claims of our unsubordinated creditors and certain of our subordinated creditors. By reason of the subordination of the notes, in the case of our bankruptcy, although the notes would become immediately due and payable at their principal amount together with accrued interest thereon, our assets would be available to pay such amounts only after all such creditors have been paid in full. We expect to incur from time to time additional obligations that rank senior to the notes, and the indenture relating to the notes does not prohibit or limit the incurrence of such obligations.

Under Argentine law, our obligations under the 2036 Notes will also be subordinated to certain statutory preferences such as tax and labor-related claims and our obligations to depositors. In particular, under the Financial Institutions Law, all of our existing and future depositors will have a general priority right over holders of notes. The Financial Institutions Law provides that in the event of our bankruptcy or insolvency, all depositors would have priority over all of our other creditors (including holders of notes), except certain labor creditors and secured creditors. Moreover, depositors would have priority over all other creditors, with the exception of certain labor creditors, to funds held by the Central Bank as reserves, any other funds at the time of any revocation of our banking license and proceeds from any mandatory transfer of our assets by the Central Bank.

If we do not satisfy our obligations under the 2036 Notes, your remedies will be limited.

Payment of principal on the 2036 Notes may be accelerated only in certain events involving our bankruptcy. There is no right of acceleration in the case of a default in the performance of any of our covenants, including a default in the payment of principal, premium or interest.

The U.S. federal income tax treatment of the 2036 Notes is unclear.

Because of certain features of the 2036 Notes, the U.S. federal income tax treatment applicable to the 2036 Notes is uncertain. While we do not intend to treat the 2036 Notes as subject to the “contingent payment debt instrument” rules under U.S. federal income tax regulations, it is possible that the U.S. Internal Revenue Service (“IRS”) could assert such treatment. If this assertion were successful, U.S. holders (as defined in Item 10.E “Taxation—Material U.S. Federal Income Tax Considerations”) generally would be required to include interest income on a constant yield basis at a rate that could differ from, and could at certain times be in excess of, the stated interest on the 2036 Notes. In addition, any gain on the sale of 2036 Notes derived by a U.S. holder would be treated as ordinary income rather than capital gain.

It is also possible that the IRS could assert that the 2036 Notes should be treated as equity for U.S. federal income tax purposes. If this assertion were successful, U.S. holders could also be subject to adverse tax rules (including an interest charge on and ordinary income treatment of any gain derived with respect to the notes) if it were also determined that we are a “passive foreign investment company” for U.S. federal income tax purposes. While we do not believe that we are currently a passive foreign investment company, the test for determining “passive foreign investment company” status is a factual one based upon a periodic evaluation of our assets and income and is unclear when applied to banking businesses such as our own. Thus we cannot provide any assurance that we will not be determined to be a “passive foreign investment company” as of the issuance of the 2036 Notes or in any future period.

Certain definitions.

“Parity Obligations” means (i) all claims in respect of our obligations, or our guarantees of liabilities, that are eligible to be computed as part of our Tier 1 capital under Argentine banking regulations (without taking into account any limitation placed on the amount of such capital); and (ii) all claims in respect of any of our other obligations (including guarantees) that rank, or are expressed to rank,pari passu with the 2036 Notes.

“Distribution Period” means, with respect to an Interest Payment Date, the period from and including the date of our annual ordinary shareholders’ meeting immediately preceding such Interest Payment Date to but excluding the date of our annual ordinary shareholders’ meeting immediately following such Interest Payment Date.

“Distributable Amounts” for a Distribution Period means the aggregate amount, as set out in our audited financial statements for our fiscal year immediately preceding the beginning of such Distribution Period, prepared in accordance with Central Bank Rules and approved by our shareholders, of our unappropriated retained earnings minus: (i) required legal and statutory reserves; (ii) asset valuation adjustments as determined and notified by the Superintendency, whether or not agreed to by us, and the asset valuation adjustments indicated by our external auditor, in each case to the extent not recorded in such financial statements; and (iii) any amounts resulting from loan loss or other asset valuation allowances permitted by the Superintendency including adjustments arising from the failure to put into effect an agreed upon compliance plan. For the avoidance of doubt, the calculation of Distributable Amounts in respect of a particular Distribution Period shall be made prior to the appropriation or allocation of any amounts to any voluntary or contingent reserves and any dividends or distributions on any Junior Obligations or Parity Obligations during such Distribution Period.

Item 4. Information on the Bank

A. History and development of the Bank

Our legal and commercial name is Banco Macro S.A. We are a financial institution incorporated on November 21, 1966 as asociedad anónima, 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 the City of Bahía Blanca, in the Province of Buenos Aires, Argentina under No. 1154 of Book 2, Volume 75 ofEstatutos. We subsequently changed our legal address to the City of Buenos Aires and registered it with the IGJ on October 8, 1996 under No. 9777 of Book 119, Volume A ofSociedades Anónimas.

Our principal executive offices are located at Sarmiento 447, City of Buenos Aires, Argentina, and our telephone number is(+ (+ 54-11-5222-6500). We have appointed CT Corporation System as our agent for service of process in the United States, located at 111 Eight Avenue, New York, New York, 10011.

Our history – Banco Macro S.A.

Banco Macro commenced operations as a non-banking financial institution in 1985, through the acquisition of Macro Compañía Financiera S.A. (created in 1977). 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, the name of “Banco Macro S.A.”

From then onwards and up to 1995, Banco Macro operated as a wholesale bank, being a pioneer in corporate bonds issuances. It mainly acted in the areas of money market, trading of government and corporate bonds and financial services for medium and big companies.

Since 1994, Banco Macro has substantially changed its business strategy, focusing on retail banking in market areas with a low level of banking transactions and high growth potential and the Bank has focused on the regional areas outside the City of Buenos Aires. Following this strategy, in 1996, we started to acquire entities as well as assets and liabilities resulting from the privatization of provincial and other banks, including Banco Misiones, Banco Salta and Banco Jujuy.

In 2001, 2004, 2006 and 2006,2010, Banco Macro acquired the control of Banco Bansud S.A., Nuevo Banco Suquía S.A. and, Nuevo Banco Bisel S.A. and Banco Privado de Inversiones S.A., respectively, expanding through these acquisitions its presence in the south and center of the country. Such entities merged with us on December 2003, October 2007, and August 2009 respectively.

During the fiscal year endedand December 31,2013, respectively. In addition, during 2006, weBanco Macro acquired 79.84% of the capital stockcontrol of Banco del Tucumán and increased our participation to 89.93% of its capital stock during fiscal year 2007.

Additionally, on September 20, 2010, Banco Macro acquired 100% of the capital stock of Banco Privado de Inversiones S.A. (“Banco Privado”), with the intention of reinforcing the strategy in Buenos Aires area. In December 2013, a merger with Banco Privado was completed. See “—Banco Privado”.

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-servicesmulti-service bank.

In addition, Banco Macro performs certain transactions through its subsidiaries, including mainly Banco del Tucumán, Macro Bank Limited, Macro Securities S.A., Macro Fiducia S.A. and Macro Fondos S.G.F.C.I. S.A.

Our shares have been publicly listed on the BCBA since November 1994, and since March 24, 2006 on the NYSE.

Banco Privado

On March 30, 2010, we signed a share purchase agreement with the shareholders of Banco Privado to purchase 100% of the shares of such entity. On September 9, 2010 the Central Bank issued Resolution 198/2010 stating that there were not objections for Banco Macro to acquire 100% of Banco Privado’s capital stock and to transfer 1% to each of our subsidiaries Macro Fiducia S.A. and Macro Securities S.A.

On September 20, 2010, 100% of the capital stock of Banco Privado was transferred to the Banco Macro, which paid US$23.3 million, out of which, US$10.4 million is related to a guaranteed amount, as provided in the purchase agreement. As of such date, Banco Privado’s assets and liabilities amounted to Ps. 403.7 million and Ps. 368.0 million respectively.

On September 22, 2010, we made an irrevocable capital contribution of Ps.50 million to Banco Privado as provided in Resolution No. 443 of the Superintendency dated September 15, 2010.

On December 20, 2010, the Bank sold 1% of Banco Privado’s shares to each of our subsidiaries Macro Fiducia S.A. and Macro Securities S.A. for a total aggregate amount of Ps.0.7 million. Consequently, as of December 31, 2012, Banco Macro held 98% of the capital stock and votes of Banco Privado.

Banco Privado’s integration enables us to serve a greater number of customers expanding our credit card business, in particular in the City of Buenos Aires, achieving greater economies of scale and permitting former Banco Privado’s clients access to a network with a greater geographical coverage.

On August 15, 2012, the Domestic Trade Department (Secretaría de Comercio Interior) of the Ministry of Economy and Public Finance, following the opinion issued by the National Commission of Competition Defense (the Argentine antitrust authority) on August 1, 2012, granted antitrust clearance to the acquisition of the capital stock of Banco Privado by the Bank.

On March 7, 2013, the Boards of Directors of Banco Macro and Banco Privado entered into a “preliminary merger agreement”, which established the merger of the latter with and into Banco Macro retroactively effective since January 1, 2013, based on the financial statements of such banks as of December 31, 2012.

On June 10, 2013, the special general shareholders’ meetings of Banco Macro and Banco Privado, our subsidiary at the time, approved the “preliminary merger agreement”, the special purpose consolidated merger balance sheet as of December 31, 2012, the related exchange of shares and the corresponding increase in capital of Banco Macro.

The share exchange in connection with the merger was agreed at 0.106195 of a Banco Macro common share per Banco Privado common share. The minority shareholders of Banco Privado are entitled to receive 0.106195 shares of Banco Macro for each Banco Privado common share they hold. Consequently, Banco Macro will issue 77,860 Class B shares of common stock with a face value of Ps 1.

On July 10, 2013, after the term within which the Bank’s creditors could file objections elapsed, the “final merger agreement” was signed.

On December 23, 2013, the board of directors of the Central Bank authorized Banco Privado to merge with and into Banco Macro and on January 23, 2014, the CNV gave its approval. Additionally, the CNV authorized the public offering of shares to be delivered to the former minority shareholders of Banco Privado. As a result, on December 27, 2013, Banco Privado merged with and into Banco Macro.

Investment in property

In 2011 we acquired from the Government of the City of Buenos Aires a site located at Av. Eduardo Madero No. 1180, in the City of Buenos Aires, for an aggregate amount of Ps. 110Ps.110 million. The Bank has developed a project to build its new corporate offices on this site. Work commencedWorks were initiated in 2012 and isare expected to be completed by 2016.2017. As of December 31, 20132014 the total aggregate amount invested in the project was Ps. 96Ps.292.7 million (approximately US$19.340.8 million at the applicable exchange rates as of the respective dates of such investments). The total cost of this project, is estimated at approximately US$146160 million.

For more information, see Item 4D.4.D “Property, plants and equipment.”equipment”.

B. Business Overview

We are one of the leading banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and by our focus on low- and middle-income individuals and smallsmall- and medium-sized businesses, generally located outside of the City of Buenos Aires. We believe this strategy offers significant opportunity for continued growth in our banking business. According to the Central Bank, as of November 30, 2013,2014, we were ranked first in terms of branches, second in terms of equity and third in terms of total loans and total deposits among private banks in Argentina.

As of December 31, 2013,2014, on a consolidated basis, we had:

Our consolidated net income for the year ended December 31, 20132014 was Ps. 2,443.6Ps.3,479.5 million (US$374.9406.9 million), representing a return on average equity of 33.3%33.4% and a return on average assets of 4.6%5.1%.

In general, given the relatively low level of banking intermediation in Argentina currently, there are limited products and services being offered. We are focusing on the overall growth of our loan portfolio by expanding our customer base and encouraging them to make use of our lending products. We have a holistic approach to our banking business; 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 and assessing profitability. We offer savings and checking accounts, credit and debit cards, consumer finance loans and other credit-related products and transactional services available to our individual customers and smallsmall- and medium-sized businesses through our branch network. We also offerPlan Sueldo payroll services, lending, corporate credit cards, mortgage finance, transaction processing and foreign exchange. In addition, ourPlan Sueldo payroll processing services for private companies and the public sector give us a large and stable customer deposit base.

Our competitive strengths

We believe we are well positioned to benefit from opportunities created by the economic and business environment in Argentina. Our competitive strengths include the following:

Our strategy

Our competitive strengths position us to better participate in the coming yearsfuture development of the Argentine financial system, whichsystem.

For the last three years, we believe will be strongerhave been operating in accordance with our sustainability policy based on five business-related strategic pillars that impact all our clients, establishing a short-, medium- and long-term sustainability strategy. Our strategic sustainability pillars are:

Our goal is to promote the overall growth of the Bank by increasing our customer base, expanding our loan portfolio and generating more fee income from transactional services. We achieve this goal by managing the Bank on a holistic basis, focusing our growth strategy on the marketing and promotion of our standard banking products and services. We have pursued our growth strategy by acquiring banks throughout Argentina, which has enabled us to significantly expand our branch network and customer base. We make acquisition decisions in the context of our long-term strategy of focusing on low- and middle-income individuals, small and medium-sized businesses and to complete our national coverage of Argentina, especially in provinces outside of the City of Buenos Aires. We have taken advantage of the opportunities presented by the Argentine financial system to move into new locations by acquiring banks or absorbing branches from banks liquidated by the Central Bank.

We intend to continue enhancing our position as a leading Argentine bank. The key elements of our strategy include:

•

ExpandPlan Sueldo payroll services. We will continue to actively market ourPlan Sueldo payroll services, emphasizing the benefits of our extensive network for companies with nationwide or regional needs.

Our products and services

We provide our customers with a combination of standard products and services that isare designed to suit individual needs. We have two broad categories of customers: (i) retail customers, which include individuals and entrepreneurs;entrepreneurs and (ii) corporate customers, which include small, medium and large companies and major corporations. In addition, we provide services to four provincial governments. We offer a relatively narrow range of standard products, which are generally available to both our retail and corporate customers. We have a holistic approach to our banking business with a single commercial division responsible for all of our customers and our branch network;business; 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. Our strategy is to grow our business, as demand for credit in Argentina increases by focusing on cross-selling opportunities among our broad customer base. The following discussion of our business follows the broad customer categories of retail and corporate as a way to understand who our customers are and the products and services that we provide.

Retail customers

Overview

Retail customers are individuals and entrepreneurs. We provide services to them throughout Argentina, in particular outside of the City of Buenos Aires, which has higher concentrations of low- and middle-income individuals who are traditionally underserved by large private banks. We serve our retail customers through our extensive, nationwide branch network. Approximately 93% of our branches are located outside of the City of Buenos Aires.

We offer our retail customers traditional banking products and services, such as savings and checking accounts, time deposits, credit and debit cards, consumer finance loans (including personal loans), mortgage loans, automobile loans, overdrafts, credit-related services, home and car insurance coverage, tax collection, utility payments, automatic teller machines (“ATMs”) and money transfers.

Our retail customers provide us with a key source of funding as well as a significant interest and fee income. We believe that our large retail customer client base provides us with an excellent opportunity to expand the volume of our lending business. For example, of our retail customers, only 26% currently have a personal loan from us and only 42%41% currently have a credit card, and we believe there is strong potential to increase these percentages.

Our efforts werehave been aimed at strengthening relationships with our customers by offering them the products that are best suited to their needs and circumstances, based onthrough our individualized, professional advice, which we believe is an important feature that distinguishes us in serving our target markets.

We defined as ourOur main goals for the retail bank:bank are to consolidatekeep the leading and competitive position of our personal loans portfolio; toportfolio, increase our market share in the credit cards business, using this product as a tool to strengthen relations with the various customer segments; tosegments, improve credit quality ratios; toratios and promote an atomizeda diversified time deposit portfolio and to generate a strong and stable fee base.

In 2011 market conditions continuedthis regard, and aiming to improve andcontinue growing in the demand for household financing, mainly consumer loans (personal and credit card loans) continued to increase. During 2012, the demand for household financing continuedmarket, we intensified efforts to increase mainly in terms of consumer loans (personalconsumption and credit card loans), allowing us to attain sometotal assets. In 2014, we also improved the use of our strategic goals in this area. clients’ information as a tool to implement better cross selling, client retention and default prevention commercial actions.

In 2013 we maintained our2014, the market share of our consumer loans,financing product lines remained stable, maintaining a sustained leadership andleading position, competitive positioningposition of theour personal loan portfolio and our significant growth inof our credit cards.card products.

Savings and checking accounts and time deposits

We generate fees from providing savings and checking account maintenance, account statements, check processing and other direct banking transactions, direct debits, fund transfers, payment orders and bank debit cards. In addition, our time deposits provide us with a strong and stable funding base.

During 2011 and 2012, we continued fostering the diversified development of our funding sources and established a solid commission base. Our commercial and customer bonding actions enabled us to achieve growth in the deposit portfolio above market levels, mainly due to an increase in time deposits of retail customers (less than 1 million) which intensified funding atomization.diversification. In 2013, the portfolio showed a significant growth of 33.5%, driven by a significant increase in demand deposits. In 2014, the deposit portfolio increased by 29% with an increase in demand deposits of 20% and time deposits of 35%. Our growth is mainly driven by funds fromPlan Sueldo and retirement accounts.

In 2012 the government established that all payments made to pensioners by the ANSES must take place through financial institutions, which in our case resulted in the opening of over 200,000 accounts. Likewise, in 2013 the payment of governmental family allowancescredits into bank accounts was implemented, massively, resulting in the opening of over 45,000 accounts and the issuance of the associated debit cards. In 2014 we recorded an increase of approximately 180,000 accounts.

Our “Debit Card” product is critical within the framework of our strategies to increase customer transactions by encouraging the use of accounts. Its secondary purpose is to develop account balances due to increased deposits into transactional accounts, thus expanding our demand deposits base. With respect to transactional accounts, during 2013, the monetary volume of purchase transactions increased by 49%, 40% and 45% in 2012, 2013 and 2014, respectively, while the number of debit card purchases increased by 31%, 27%. and 15% in the same respective periods.

The following table reflects the number of retail accounts as of December 31, 2011, 2012, 2013 and 2013:2014:

Lending products and services

We offer personal loans, document discounts, (housing) mortgages, overdrafts, pledged loans and credit card loans to our retail customers.

We intend to continue to increase our retail lending by focusing our marketing efforts on underserved target markets such as the low- and middle-income individuals and to cross-sell our retail lending products to our existing customers, particularly those who have savings and checking accounts with us because we provide payroll and pension services to their employers.

In 2012, the Bank increased theits market share in consumer loans, consolidating the Bank’sBank´s leadership and competitiveness in the personal loans market. In this context and focused on our continuous growth in the credit card market, we have reinforced our actions aiming to increase credit card consumption and total assets. The credit quality of the portfolio remained strong, improving the balance of risk assumed and benefits obtained from this portfolio. The efficiency of our marketing efforts was improved by implementing new channels (external marketing agencies and sales force).

In 2013, our retail loan portfolio (which we define here as loans to individuals and loans to very small companies in an amount up to Ps. 20,000) grew by 30% as of December 31, 2013 as compared to December 31, 2012, which allowed us to maintain our market share and leadership in consumer loans.

During 2013 our growth in personal loans reached 28%, this. This growth was accompanied by a substantial increase in profitability. This performanceprofitability, which allowed us to maintain our leading position with a market share of 14% in 2013. Growth during 2013 was closely related to direct and mass communication campaigns launched in mid-2012 through highly efficient and low-cost and innovative communication channels. Text, voice and multimedia messaging actions were added to those already implemented.

In addition, aiming to strengthen our relationship with our customers and generating automatic loan extension mechanisms, two new Personal Loanpersonal loan extension channels were added in 2013: “pronto cash on line” whereby customers can obtain a loan in seconds directly through Home Banking and “Pronto“pronto cash telefónico”nico”, which allows customers to call our 0810 linetoll-free number and obtain cash immediately, to the extent they are pre-qualified.

To continue growing in the credit card market, actions aiming to increase consumption and total assets were stengthened.strengthened. An aggressive new accounts and client acquisition plan was developed, supplemented with direct marketing campaigns to promote consumption and use of credit cards by phone.

We maintained our point-of-sale promotion strategy, offering discounts and interest free payment installments, resulting in increased additional card consumption and automatic debits on credit cards.

We are also one of the major credit card issuers in Argentina, with approximately 1.9 million credit cards in circulation as of December 31, 2013. One of our initiatives to expand lending is to encourage low- and middle-income customers to use credit cards for larger purchases.

As a result of our actions, the credit card portfolio grew by 41% in 2013 as compared to 2012, attaining a market share of 8%. in 2013.

During 2014, our retail loan portfolio increased by 21%, as compared to 2013, maintaining the second position among other institutions in the financial system in terms of volume of personal loan and credit card portfolios.

Our growth in personal loans during 2014 reached 16%, which allowed us to maintain our leading position with a market share of 14% in 2014, achieved as a result of our continuing with the mass communication strategy started in 2013. In addition to the communication tools already used by the Bank, mainly based on mobile devices, we included the “pre-approved loan notice”, through an alert on the Bank’s homebanking page. With the aim of improving the service and streamlining the granting of loans, we developed internal campaigns to encourage lending through automatic channels.

Our credit card business grew significantly in 2014, with the portfolio balance increasing by 35% and the consumption increasing by 43% as compared to the values reported as of December 31, 2013. During the year, an aggressive telemarketing program was executed aiming to improve benchmarks, including product activation, increased consumption and higher limits. Efforts were made to improve efficiency and reduce service costs, resulting in a material increase in the number of accounts subscribing to our e-account statement service. During the year we observed a significant increase in the profitability of these products, due to the implementation of a strategy aimed at increasing fees and reducing funding costs while not affecting business volumes.

We are a major credit card issuer in Argentina, with approximately 2.5 million credit cards in circulation as of November 30, 2014. One of our initiatives to expand lending is to encourage low- and middle-income customers to use credit cards for larger purchases.

As of December 31, 2011, 2012, 2013 and 2013,2014, our retailconsumer loan portfolio (which we define here as loans to individuals and loans to very small companies in an amount up to Ps. 20,000) was as follows:

The table below sets forth additional information related to our retail loan portfolio (which we define here as loans to individuals and loans to very small companies in an amount up to Ps. 20,000) asAs of December 31, 2013:

Personal2014, personal loans, the most representative share of our portfolio, carried as of December 31, 2013 an annual average interest rate of 37.5%38.6% and an average maturity of 44.340.1 months. Interest rates and maturities vary across products.

Plan Sueldo payroll services

Since 2001, Argentine labor law has provided for the mandatory payment of wages through accounts opened by employers in the name of each employee at financial institutions within two kilometers of the workplace, in the case of urban areas, and ten kilometers of the workplace, in the case of rural areas. There are similar requirements in place for pension payments.

We handle payroll processing for private sector companies and the public sector, orMacrosueldos, which require employers to maintain an account with us for the direct deposit of employee wages. Currently, we provide payroll services for the governments of the Argentine provinces of Misiones, Salta, Jujuy and Tucumán and forin the private sector for a total aggregate of 1.81.9 million retail clients (including retirees). OurPlan Sueldo payroll services provide us with a large and diversified deposit base with significant cross-selling potential.

Corporate customers

Overview

We provide our corporate customers with traditional banking products and services such as deposits, lending (including overdraft facilities), check cashing advances and factoring, guaranteed loans and credit lines for financing foreign trade and cash management services. We also provide them trust, payroll and financial agency services, corporate credit cards and other specialty products.

The corporate business is focused on the classification by sizes and sectors. We have four categories for our corporate customers: smallsmall-sized companies, which register up to Ps.100 million in sales per year; mediummedium-sized companies, which register more than Ps.100 million and less than Ps.150 million in sales per year; majorlarge-sized companies, which register more than Ps.150 million in sales per year; and agro companies, which include individuals and companies who operate in agriculture or in the commerce of itsagricultural products.

As in previous years, the Bank continued developing its descentralizeddecentralized segment-specific service strategy aimingaimed at improving customer service. At present, the Bank has a network of branches with business officials specialized in each category, offering a wide range of products, including working capital facilities, investment projects, leasings and foreign trade transactions.

Our corporate customer base also acts as a source of demand for our excess liquidity through overnight and short-term loans to majorlarge-sized corporate customers. See Item 5.B.5.B “Operating and Financial Review and Prospects - Liquidity and Capital Resources.”Resources”.

Lending products and services

Most of our current lending activity consists of working capital loans to smallsmall- and medium-sized businesses. Our historic focus on smallsmall- and medium-sized businesses has enabled us to diversify our credit risk exposure, by granting smaller-sized loans to clients in diverse business sectors. As of December 31, 2013,2014, our 20 largest private sector loans accounted for 10%9% of our total corporate loans.

We offer short-term and medium- to long-term corporate lending products.

Short-term: Products include credit lines for up to 180 days and consist mainly of overdraft facilities, corporate credit and debit cards and factoring, as well as foreign trade related financing, such as pre-export, post-shipment and import financing. These products also include contingency lines, such as short-term guarantees (performance guarantees and bid bonds) and import letters of credit. The credit risk assigned to these kinds of transactions is the debtor rating described below, unless increased as a result of a pledge or a guarantee.

Medium- to long-term: Products include credit lines and specific lending facilities of more than 180 days. Credits are usuallyasset-based, such as leasing, whereby a credit enhancement is achieved by means of the underlying asset.

Medium- to long-term facilitiesfacility risks are mitigated through different mechanisms that range from pledges and mortgages to structured deals through financial trusts whereby the debtor pledges the underlying asset, mostly future income flows. Regardless of the term and based on the fact that these credit lines are devoted to small to medium-sizemedium-sized companies, our policy is to require personal guarantees from the owners, although the underlying debtor rating remains unchanged.

Our lending activities

In 2012, our corporate loan portfolio recorded a 32% increase as compared to 2011, driven mainly by increases in pledged loans, document discounts and, to a lesser extent, overdrafts. Loans to agrocompanies and small-sized companies grew by 31% and 25%, respectively, in 2012 as compared to 2011, contributing to the increased diversification and stability of our corporate sector (defined hereloan portfolio. In 2012, the credit portfolio for the small-sized companies increased mainly as companies with loans outstandinga consequence of an increase in excessmedium- and long-term loans. The Bank’s strategy was essential to reach more clients, offering them a wide range of Ps.20,000) totaled Ps. 15,418 millionproducts subject to a fast approval process. Medium- and large-sized companies’ portfolio increased 22% and 20%, respectively, as compared to 2011.

In 2012, we began providing financing through Credit Facilities for Productive Investments (Linea de Créditos para la Inversión Productiva) extending credit to certain of December 31, 2013. our clients in an aggregate amount of Ps.1.0 billion throughout the year.

In 2013, our corporate loan portfolio recorded a 19% increase compared to 2012. This development was driven by an increase in long term facilities, mainly pledge loans and mortgage loans.

As in 2012, the contribution of the agribusiness and SMEs segments,small- and medium-sized companies, which were once again the most dynamic, was critical in 2013. Loans to agrocompanies and small sizedsmall-sized companies, grew by 36% and 44%, respectively, in 2013 as compared to 2012 contributing2012. Medium- and large-sized companies’ loan portfolio increased 9% and 4%, respectively, as compared to 2012.

During 2013, we provided a total of Ps.2.5 billion in financing through our Credit Facilities for Productive Investments, an amount above the increased atomization and stabilitymandatory minimum amount required by Central Bank regulations, supporting the Bank’s commitment to finance productive activities. The total outstanding amount as of December 31, 2013 was Ps.3.0 billion.

In 2014, our corporate loan portfolio (without loans to large-sized companies) increased by 17%, driven by an increase in pledge loans, discounted checks, work progress certificates and credit cards. This increase was offset by a 28% decrease in the large-sized companies’ loan portfolio.

In respect of agribusiness banking, the weather in 2014 was not as harsh as in 2013, resulting in increased yields of traditional crops. In areas with higher productive potential, yields were in line with historical average values and in certain areas poor yields recorded in the agricultural sector continued to be onetwo previous years were reversed. However, the general profitability of the most active playerssector is still affected by taxation and export controls, resulting in termsstagnation of financialbusiness activity.

During 20132014 we covered the financial needs atof more than 17,50015,000 agricultural producers, such as working capital financing, including overapproximately 1,000 investment projects fortotaling over Ps. 613Ps.578 million through the Credit Facilities for Productive Investments (Línea de Créditos para la Inversión Productiva).Investments. Additionally, actionsmeasures adopted in connection with Macro Agro Cards were especially important, resulting in a more effective activation of accounts and an increase in consumption volumes and portfolio balances of 272%51% and 95%62%, respectively, in 2013,2014 mainly as a result of the new alliances. Loans to agribusiness companies grew by 14% in 2014 as compared to 2013.

In 2013,2014, the creditloan portfolio for the small sized companiesPymes increased significantly22%, mainly as a consequence of andue to the increase in mediumdiscounted checks, pledged loans and long term loans.other advances. Through our Credit Facilities for Productive Investments, (Línea de Créditos para la Inversión Productiva), the Bank funded venture projects for over 2,5001,500 companies from 1,600 in 2012, for an aggregate amount of Ps. 1,134Ps.935 million. In this regard, the bank’sBank’s strategy was essential to reach more clients, offering them a wide range of products subject to a fast approval process.

In 2013,2014, the medium size companies and majormedium-sized companies’ loan portfolio increased 9% and 4%14%, respectively, as compared to 2012.2013.

As of December 31, 2013 the Bank had disbursed Ps. 2,480 millionDuring 2014 we provided Ps.3.6 billion in financing through our Credit Facilities for Productive Investments, anInvestments. As of December 31, 2014, the total amount above the mandatory minimum amount required by the Central Bank regulations, supporting the Bank’s commitment to finance productive activities.

outstanding was Ps.4.5 billion.

As of December 31, 2011, 2012, 2013 and 2013,2014, our loans to companies werecommercial loan portfolio was as follows:

Transaction services

We offer transaction services to our corporate customers, such as cash management, customer collections, payments to suppliers, payroll administration, foreign exchange transactions, foreign trade services, corporate credit cards, and information services, such as our Datanet and Interpymes services. There are usually no credit risks involved in these transactions, except for intra-day gapping (payments done against incoming collections), as well as settlement and pre-settlement related to foreign exchange transactions which, in general, are approved following the debtor rating process explained below.process.

Payments to suppliers. Our payments to suppliers servicesservice enable our customers to meet their payment obligations to their suppliers on a timely basis through a simple and efficient system. This service also provides payment liquidations, tax payment receipts, invoices and any other documents required by the payer.

Collection services. Our collection services include cash or check deposits at our 430434 branches, automatic and direct debits from checking or savings accounts and the transportation of funds collected from corporate customers to our branches for deposit. Our extensive branch network enables us to offer fast and efficient collection services throughout Argentina, which is of critical importance to both regional and nationwide companies.

Datanet and Interpymes. We provide our corporate clients with access to the Datanet service, which is an electronic banking network linking member banks in Argentina. These services permit our clients to obtain reliable on-line information on a real-time basis from their bank accounts in Datanet as well as, to perform certain transactions.

Interpymes is an electronic banking system designed to meet the needs of small businesses. It does not require special installation procedures and is easily accessible through the Internet, helping to simplify day-to-day operations for our customers.

Tax collection and financial agency services. We also have exclusive, long-term arrangements to provide tax collection and financial agency services to four provinces.

Payroll services. We provide payroll services to four provinces and to the private sector. See “Our products and services – Retail customers”.

Our distribution network

As of December 31, 20132014, we had the largest private sector branch network in the country, with 430434 branches spread throughout Argentina. In particular, in line with our strategy of expanding nationally, we have extensive coverage ofin the provinces of Argentina with 93% of our branches located outside of the City of Buenos Aires. Furthermore, as of December 31, 20132014 we had 1,1331,272 ATMs, 836891 self-service terminals (“SSTs”), 6568 service points used for social security benefit payments and servicing of checking and savings accounts and an internet banking service (home banking).

The following table breaks down the distribution of our branches per province and sets forth our market share for all banks in those provinces as of OctoberDecember 31, 2013:2014:

Source:Central Bank

Technology and automated channels

The Bank’s technological development is continuous and the number of alternative methods to perform banking transactions is increasing. Automated channels allow our clients to perform banking transactions with enhanced speed, comfort and safety, offering a wide variety of available transactions.

During 2013the last three years we have focused on automatic channels, giving customers more accessible and flexible services. As a consequence,result, the use of automated channels continued expanding, in terms of volume of transactions and number of users.

New actions were implemented in 2014 to maintain high security, service quality and availability standards in our ATM network through preventive management and training strategies. This placed the Bank in a leading position as to service quality, which is especially important considering the number and geographical dispersion of ATMs installed by us. The transactions performed through the ATMs increased by 16% in 2012, 10% in 2013 and transactions performed through home banking increased by 17%15% in 2014, as compared with the previous year. The significant and sustained increase in the number of users and transactions evidences the effectiveness and level of acceptance of these services in the market.

Regarding the use of ATMs, we implemented new programs in order to maintain high standards of safety and service quality and availability. In addition, the Bank continued implementing technological improvements and updates to its ATMs. In 2013,2014, the Bank installed 500435 ATMs, of which 76%44% were replacements, 12%37% were new units and 12%19% were reinforcements. We have increased the number of access points in our branches, reaching a total of 1,1331,272 operating ATMs, and 836 SSTs, representing one of the widest networkreaching networks in the country. At present, 33% of ATMs have voice guidance for people who are blind or vision impaired and we expect to have this functionality available in all ATMs supporting the technology in 2015.

Furthermore, we continued withWe have self-service terminals distributed in our efforts to improvebranch network across the managementcountry, offering an ample variety of business processes and during 2012 we implemented a BPM (Business Process Management) software. During 2013 we continued implementingoperations, including the BPM software upon demand from the different Bank areas for the purposepossibility of improving efficiency and providing adequate flexibility.making deposits 24x7 all year long.

In 2012 we started with2014, new SSTs were installed, totaling 891 SSTs and incorporating the improvementsmart check deposit functionality. This development has been beneficial both to the Bank (increased efficiency) and to clients (safety and reduced transaction times).

In respect of our server platform, by creating a virtual version of our servers. In 2013, we continued optimizing the use of space, reducing costshome banking, we have implemented a collections service for companies, offering the following benefits: security (no cash or checks are transported to the branch), practicality (easy and improving quality.safe, backup of receipts in a PDF file, possibility to review the history of payments and receipts), accessibility (from any PC) and no additional cost. The transactions performed through home banking increased by 17% in 2013 and continued to grow during 2014.

Our “Macro Banca Móvil” channel has developed significantly in the last three years. In 2014 the number of users increased from 50,000 to 90,000 and the number of total transactions and the amounts involved doubled.

In line with the characteristics of the users and the technological trends supporting the development of the service, the “Macro Banca Móvil” application is available in the main virtual stores.

The mainsignificant and sustained increase in the number of users and transactions performed by authomated channels evidences the effectiveness and level of acceptance of these services in the market. Our challenge for 2015 is to continue developing new client offerings like investment products, including mutual funds, and the purchase and sale of securities through automated channels.

In 2014, the Bank implemented various technological developments, of 2013 include: including the following:

(i) implementation ofPost sale customer relationship management (“CMR”), a process which allows us to record contacts made by our clients through various channels, such as call centers and through our branches, and monitor service requests;

(ii) Claim CMR, a process which allows us to efficiently resolve client claims improve data quality, reduce back-log and identify any issues;

(iii) Business unit modelling, a system that allows us to manage the flow of users of queue ticket dispensers in branches and payment centers, (ii) definition of attendance standards and queue times in branches, (iii) creation ofhold a complaint handling module (CMR application), (iv) development of technological platform forincident management and services, (v) implementation of IP technology across the call center system, (vi) creationregister of the client contact centercommercial capabilities of each of our branches, thus allowing us to ensure that our standards are met and (vii) monitoringidentify deviations;

(iv) Interactive voice response, an update to our earlier system, which has allowed us to increase customer service and integrate online capabilities; and

(v) Server virtualization, a process which during 2015 will allow increase the capabilities and availability of ATMs.our servers.

The total amount that we plan to invest in technology in 20142015 is approximately US$ 4650 million.

Risk management policies

For purposes of complyingTo comply with the “Risk Management Guidelines for Financial Institutions” set forth under Communication “A” 5203, as amended, we have adopted various measures at our organizational structure level and have implemented actionsprocedures to ensure the establishment of an independent risk management the definition and/or adequacy of policies and procedures.process.

As to the Bank’s organizational structure, the board of directors has created a Risk Management Committee responsible for coordinating the application of risk management policies and the relevant responsible officers. For more information, see “Item 6. C”Item 6.C “Board Practices”. In this regard, theThe Committee includes the heads of financial risk, credit risk and operational risk, whichwho are in charge of implementing the guidelines contained in the Risk Managementrisk management framework policy.

Our risk management framework policy establishes the environment for the risk management process under the notions of risk identification, measurement, monitoring and mitigation. In addition, it lays out the duties of each organizational level in the process.

Our risk management process includes the definitionsetting of acceptable risk levels by the board of directors, of the accepted risk levels, the monitoring by responsible officers of the Bank’s compliance with such levels by responsible officers, the issuance of regular reports for the Risk Management Committee, the follow up ofon alerts and the application of action plans in connection with such alerts. In addition, our risk management process also definesalerts and the guidelines for the development of stress tests, which commenced in 2013 based on an action plan approved by the Risk Management Committee.

The development of the stress test program was established and planned. The process includes documenting and formalizing the program, including selecting the persons in charge of carrying it out the program, the frequency of testing and the validation of the system. It also provides forcontemplates the development of a contingency plan based on the test results. The Risk Management Committee leads and coordinates these tasks.

Additionally, the system is supplemented with policies and procedures specific to each risk (financial, credit, operational, counterparty credit, country risk, securitization, reputational, compliance, strategic risks, among others).

Economic capital estimate

In 2013, the Bank commenced with the capital self-assessment process.

Economic capital is the estimated amount of unexpected losses identified for each one of the individual risks (financial, credit, counterparty credit, concentration, operational, securitization, strategic and reputational) determined for the Bank on a consolidated basis.

Economic capital was first quantified based on the amounts as of December 31, 2013, in compliance with the provisions of Communication “A” 5394 and “A” 5398. StartingIn January 2014, it waswe implemented as a formal procedure to be calculated on a monthly basis,for quantitifying economic capital, both currentlycurrent and prospectively,prospective, and it is a tool used in the day-to-day management of risks, in preparing the business plan“business plan” and in the “stress tests”.

The methods used to measure the economic capital of each risk were documented and approved by management, pursuant to the internal rules on corporate governance and risk management.

The most significant risks managed by the Bank are financial risk, credit risk and operational risk.

Financial risk

Financial risk is understood to be comprised of liquidity, market and interest rate risks, which, independently or in an interrelated manner, can affect the Bank’s liquidity and solvency.

The Bank has strategies, policies and limits defined for each exposure which have been approved by the Boardboard of Directorsdirectors within the framework of market, liquidity and interest rate risk management. This process is reviewed periodically by the risk management committeeRisk Management Committee in accordance with the guidelines set forth by Central Bank.

The purpose of the financial risk policy is to ensure that the Risk Management Committee and senior management have the proper procedures, tools and information to enable them to measure, manage and control the applicable risks.

For more information on financial risk definition and management processes see note 18 “Risk management policies” to our audited consolidated financial statements as of and for the three years ended December 31, 2014.

Credit risk

Credit policy and credit risk management

Credit risk results from the possibility of loss derived from customers or counter-partiescounterparties from fully or partially breaching financial obligations they have undertaken with the Bank.

The Bank has counter-partycounterparty and credit risk policies and strategies, the purpose of which is to ensure that risks fall within a risk tolerance level decided by the board of directors, which is responsible for approving our strategy, significant credit policies and practices and level of risk tolerance.

The Credit Risk Management Committee is responsible for establishing the policies and procedures for risk management and monitoring our senior management’s activities involving the management of credit risks, among others. It advises the board of directors on the Bank’s risks.

The Credit Risk Department is responsible for the implementation of policies and procedures for managing and monitoring our credit risk exposure, enabling us to a clear identification, evaluation, control, follow up and mitigation of such risk.

During 2013, the Credit Risk Management Department was created, which is in charge of designing the company rating and individual scoring models, calculation of expected losses and economic capital and stress tests. It is also involved in designing the decision engines to approve the credit ratings on a mass scale and/or in a decentralized manner, and in generating the credit risk monitoring indicators.

Procedure manuals and tools (information systems, rating and follow-up systems, risk models, and deliquency recovery policies) are used to manage risk efficiently based on the type of client. One of the credit risk management tools used includes theinvolves evaluation or score models (for admission, behavior and collections), which are used at different stages of the credit cycle, attributingassigning an internal risk rating to customers, according to which the assigned credit limits are managed and according to which the portfolio is monitored. The Bank is

We are also developing models to use in relation to expected losses, forecasts and capital adequacy assessments, which are currently at different stages of progress and form part of our action plan to adjust to local regulations (Communications “A” 5394 and “A” 5398), the Basel principles and best practices for risk management In addition, we continuously monitor compliance with credit regulations of the Central Bank.

Credit risk rating and approval process

In order to determine the credit risk, our Credit Risk Department qualifies each individual or company by means of a risk rating model, assigning a rating to each debtor, taking into consideration quantitative as well as qualitative concepts. The Credit Risk Department has focused on its actions aimed aton increasing the quality and efficiency of the credit risk rating process.

There are specific policies and procedures for loan granting for Corporate and Retail customers, which differ according to the segment to which they belong.

Credit risk assessment for retail customers includes the use of risk applications based on screening and scoring methods related to an arrears level. There is also a mass-scale and centralized qualification process for clients and credit prequalification models for the assessment of potential customers from different sales campaigns.

Various credit committees, composed of members of the business and risk areas act under the supervision of our board of directors and are responsible for reviewing and determining whether to approve certain loans, depending upon relevant market targeted and the amount and type of loan:involved. These include a senior credit committee, a junior credit committee, a credit committee by business, a credit committee by region and a small agrobusinessagribusiness committee. The senior credit committee consists of members of the board of directors and senior management and considers loan proposals in excess of Ps.18Ps.25 million.

In Corporate Banking, approval by credit committees is required and specific risk reports are prepared by the customer or by the group of companies.companies to support credit decisions. To streamline this process of approving pre-defined products and smaller amounts, there are decentralized assessment methods in place for agro businessesagribusinesses, PYMEs and MSMEs.microprojects. There is an individual and joint powers system in place for managers and business officers which is applied exclusively to short termshort-term transactions involving small amounts or which have self-liquidating collateral.

The Retail Banking areaBank has assessment policiesa Management Information System according to the magnitude of its operations. Its components include an automated tool for the calculation of key performance indicators, for which alert and limit values have been determined in place to evaluate each customer depending the type of client. In order to streamlinemonitor business changes according to the processes,risk appetite defined by the requested assistanceboard of directors. Other credit risk management tools used are evaluation or score models, which are used at different stages of the credit cycle, attributing an internal risk rating to customers, according to which the assigned credit limits are managed and according to which the portfolio is entered intomonitored. Those tools are complemented with expected losses, forecast and capital adequacy assessment models, which are in different development and implementation stages, to adjust to local requirements (Communiqués “A” 5394 and “A” 5398), the related evaluation system, which produces an approval or a rejectionBasel principles and if applicable, determinesbest practices for risk management.

For more information on the maximum financing amount. There is also a widespread usecredit risk management process see note 18 “Risk management policies” to our audited consolidated financial statements as of scores (imposing a minimum limit of admission related to an acceptable arrears level), credit prequalification models to evaluate potential clients (which reduce and standardize analyses) andfor the permanent rating for consumer customers (which allows branches to provide assistance within the margins set out on a centralized basis).three years ended December 31, 2014.

Operational risk

Operational risk, which we define pursuant to the Basel II Accord and Communication “A” 5398 of the Central Bank, consists of the risk of suffering losses due to inadequate or failed in the internal processes, systems or persons, or due to external events. This definition includes legal risk but excludes strategic and reputational risk.

The Bank has policies, procedures and structures, appointing a head of operational risk and an operational risk committee, whose main objective is to secure an operational risk management plan which includes policies, programs, measurements and competencies 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 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.

A quantitative approach is used to measure operational risk and technological risk. As regards Risk ManagementIn respect of risk management related to the IT and information systems, we have contingency and business continuity plans in place to minimize the risks that could affect the Bank’s continuity of operations.

We have an incentives system to manage operational risk in such a way that it would encourage involvement and risk assessment. The risk assessment policy has also been reinforced for new products and in modifications to existing products.

In addition, in 20132014 we continued to implement improvements on different functions of our risk management system.system also continued.

Banking industry

The Argentine banking industry was affected by the 2008 globalFor more information on operational risk management processes see note 18 “Risk management policies” to our audited consolidated financial crisis. Since 2010, the sector has showed an upward trend in terms of scale, profitability, solvency and asset quality.

Scale

Following the improved economic and financial outlook in Argentina, the financial intermediation activities of banks with the private sector expanded during 2011, 2012 and 2013. Deposits from private sector increased by 32%, 26% and 29% on average in 2011, 2012 and 2013, respectively. Loans to the private sector increased by 47%, 35% and 32% on average in 2011, 2012 and 2013, respectively, mainly as a result of an increase in the economic activity as a whole. Total deposits grew by 31%, 23% and 27% on average in 2011, 2012 and 2013, respectively.

The level of private sector loans and deposits over GDP was still lowstatements as of and for the three years ended December 31, 2013, at 19% for private sector loans/GDP and 29% for total deposits/GDP. These levels in terms of GDP allow to forecast a considerable potential growth in upcoming years.2014.

Source: Central Bank

Profitability

The Argentine financial system and the profitability of banks were deeply affected by the 2001-2002 local crisis. Since 2003, the financial system has steadily been on its path to recovery, with a growing number of profit-making entities each year.

The Argentine financial system continues its consolidation process after reaching a stage of more stable profits, and accumulating positive results for over 12 years, which underscores the sector’s solvency.

In 2013 the profitability of the financial system increased by 50% to Ps. 29,169 million from Ps. 19,497 million in 2012, signaling a recovery in the intermediation activity and generating an improvement of profitability ratios.

Source: Central Bank

Asset Quality

The credit quality of the Argentine financial system showed a marginal decline as a consequence of the 2008 global financial crisis due to a slowdown in the placement of credit to the public sector and the increase in delinquency rates. This situation, started to reverse during mid-2009. During 2010 and 2011, the credit quality improved substantially, both for private and public sectors. In 2012, asset quality ratios deteriorated slightly as a consequence of the decrease in Argentina’s economic growth; however, the financial system continued to show low levels of non-performing portfolio and extensive coverage ratios for non-performing portfolio. During 2013, such ratios remained comparable to those from 2012.

As of December 31, 2013, the non-performing credit portfolio level reached 1.5% of the total credit portfolio, whereas the coverage ratio level reached 143%.

The following table shows the percentages of non-performing portfolios in the Argentine financial system:

Source: Central Bank

Competition

We believe that we have an important advantage over our competitors in providing banking products and services to small communities in the provinces of Argentina as a result of the close community relationships and strong loyalty we have developed over time with our customers in these areas.

We consider Banco Santander Río S.A., Banco de Galicia y Buenos Aires S.A., BBVA Banco Francés S.A., HSBC Bank Argentina S.A. and Banco Patagonia S.A. to be our main competitors among private banks. We also compete with regional banks.

In the future, we expect competition to increase in corporate transactions products, long-term lending, mortgage lending and other secured financings, credit cards, specialized credit packages,personal loans, payroll services and investment management services.

Competitive landscape

We are ranked as the third private bank and the fifth bank overall in Argentina in terms of total loans and total deposits as of November 30, 2013.2014. In terms of equity we are ranked as the second private bank and the third bank overall in Argentina as of November 30, 2013.2014. Below are the rankings of banks across these metrics: