===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
---------
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
November 27, 2002
---------
BBVA Banco Frances S.A.
(Exact name of registrant as specified in its charter)
BBVA Banco Frances S.A.
(Translation of registrant's name into English)
Reconquista 199, 1006
Buenos Aires, Argentina
(Address of principal executive office)
Indicate by check mark whether the registrant files or
will file annual reports under cover of Form
20-F or Form 40-F:
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby
furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A
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BBVA Banco Frances S.A.
TABLE OF CONTENTS
Item
----
1. BBVA Banco Frances reports financial statements at of June 30, 2002
and 2001 together with Accountant's review report
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BBVA Banco Frances S.A.
Date: November 27, 2002 By: /s/ Maria Elena Siburu de Lopez Oliva
--------------------------------------
Name: Maria Elena Siburu de Lopez Oliva
Title: Investor Relations Manager
[LOGO -- BBVA - BANCO FRANCES]
FINANCIAL STATEMENTS AS OF JUNE 30, 2002 AND 2001
TOGETHER WITH ACCOUNTANT'S REVIEW REPORT
ACCOUNTANT'S REVIEW REPORT
English translation of the report originally issued in Spanish
See Note 20 to the Financial Statements
To the Directors of
BBVA BANCO FRANCES S.A.
Reconquista 199
Buenos Aires
1. We have made a limited review of the accompanying balance sheet of BBVA
BANCO FRANCES S.A. (a bank organized under Argentine Legislation) as of
June 30, 2002, and the related statements of income, changes in
stockholders' equity and cash flows for the six-month period then ended.
We have also made a limited review of the consolidated balance sheet of
BBVA BANCO FRANCES S.A. and its subsidiaries as of June 30, 2002, and the
related consolidated statements of income and cash flows for the six-month
period then ended. These financial statements are the responsibility of
the Bank's Management.
2. The individual and consolidated financial statements of BBVA BANCO FRANCES
S.A. as of June 30, 2001, and for the six-month period then ended, which
are presented solely for comparative purposes, were subject to a review
performed by Pistrelli, Diaz y Asociados Sociedad Civil, as Andersen
member firm. The review report dated August 10, 2001, included a
qualification as to the valuation of government securities and certain
assets in government securities under repurchase agreements under
Argentine professional accounting standards. The effect of applying that
criterion on the stockholders' equity and income (loss) for the six-month
period then ended is disclosed in Note 5 to the accompanying financial
statements.
3. Our review was made in accordance with generally accepted auditing
standards in Argentina applicable to the limited review of interim
financial statements and with the "Minimum standards for independents
audits" of the Central Bank of Argentine Republic (BCRA) applicable to the
review of quarterly financial statements. A limited review is
substantially less in scope than an audit of financial statements, because
it does not require the application of all audit procedures necessary to
express an opinion on the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
- 2 -
4. As further explained in Note 1 to the accompanying financial statements,
during this year the Argentine economic model was deeply changed and the
currency board in force since March 1991 was amended, which included,
among other measures, the Argentine peso devaluation, the translation into
pesos of certain assets and liabilities in foreign currency, severe
restrictions on the cash withdrawal from the financial system and
transfers of funds abroad, the noncompliance with public debt payments and
the increase in domestic prices. These initial measures significantly
affected the liquidity, solvency and profitability of the financial system
as a whole, thus requiring the Federal Government and the BCRA to adopt
additional measures, in order to mitigate the effects referred to above
and foster the financial system restructuring, some of which are still in
the process of being issued and implemented. The audit report dated April
30, 2002, issued by Pistrelli, Diaz y Asociados Sociedad Civil, as
Andersen member firm, on the individual and consolidated financial
statements as of December 31, 2001, to which we refer, included a
disclaimer of opinion originated in significant uncertainties as to the
Bank's ability to continue to operate as a going concern and the
recoverability of the book values of the government and private securities
held, financing facilities and investments in other companies. Those
uncertainties continue to exist as of this reporting date and their
evolution is detailed in Notes 1 and 4 to the accompanying financial
statements. In addition, the Bank keeps booked goodwill in the "Intangible
assets" account. As a consequence of the abovementioned uncertainties, it
is not possible to determine the Bank's ability to recover this booked
amounts. As mentioned in Note 1 to the accompanying financial statements,
those statements have been prepared by the Bank following the going
concern criteria, understanding that the financial system restructuring as
a whole and the particular plans and actions to be implemented by the Bank
and its subsidiaries will allow it to continue with its operations and
keep the liquidity and solvency ratios required by the BCRA and,
therefore, do not include the adjustments related to the recoverability of
booked amounts of assets and the sufficiency of the amount of liabilities
that may be necessary if the situations described above are not resolved.
5. As detailed in note 1.2.e) to the accompanying financial statements, the
Bank capitalized under the "Other receivables" account the differences
between US-dollar denominated deposits paid in such currency or in pesos
at the freely floating exchange rate under protection actions and the
rescheduled deposit balance (converted at the USD 1-to-ARS 1,40 exchange
rate and adusted by the benchmark stabilization coefficient). As of June
30, 2002, such balance, net of allowances, was ARS 187,479,000. The
eventual recoverability of such assets is contingent on the resolution by
the Federal or Provincial Courts on the substance of the above legal
actions or the possible compensation granted by the Federal Government.
- 3 -
6. As explained in note 5 to the accompanying financial statements, in
valuing a portion of their government securities, certain assets in
government securities applied to repurchase agreements, the guaranteed
loans to the non-financial government sector and the compensation
established in Decree No. 905/2002, articles 28 and 29 of Executive Power,
the Bank and its subsidiaries applied certain criteria that are in
conformity with BCRA regulations but depart from effective Argentine
professional accounting standards. The effects of applying such criteria
on stockholders' equity as of June 30, 2002 and results of operations for
the six-month period then ended are disclosed in the abovementioned note
5.
7. In view of the significance of the uncertainties mentioned in the fourth
and fifth paragraphs, we are not in a position to make any representation
on the individual and consolidated financial statements of BBVA BANCO
FRANCES S.A. as of June 30, 2002.
8. In compliance with effective legal rules and Buenos Aires Stock Exchange
regulations, please note that:
a) These financial statements have been entered into the inventories and
financial statements book.
b) The financial statements mentioned in the first paragraph arise from
the accounting records kept, in all formal aspects, pursuant to
effective legal provisions and BCRA standards.
c) As of June 30, 2002, the amount payable in employer and employee
contributions to the Integrated Retirement and Pension System, as
evidenced by the Bank's records, totals ARS 2,701,059, and was not
due as of such date.
Buenos Aires, PISTRELLI, DIAZ Y ASOCIADOS SRL
November 18, 2002 CPCECABA Vol. 1 - Fo. 8
ERNESTO M. SAN GIL
Partner
Certified Public Accountant UBA
CPCECABA Vol. 119 - Fo. 114
BALANCE SHEETS AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
-Stated in thousands of pesos-
ASSETS 2002 2001
---------- ----------
CASH AND DUE FROM BANKS
Cash 154,550 431,381
Due from banks and correspondents 80,771 2,646,407
---------- ----------
235,321 3,077,788
---------- ----------
GOVERNMENT AND PRIVATE SECURITIES (Exhibit A)
Holdings in investment accounts 788,878 2,906,483
Holdings for trading or financial transactions 20,020 242,571
Unlisted Government Securities 521,878. 519,349
Investments in listed private securities 2,181 5,890
---------- ----------
1,332,957 3,674,293
---------- ----------
LOANS
To the non financial governmental sector (Exhibits B, C and D) 5,202,675 2,030,926
To the financial sector (Exhibits B, C and D) 49,948 401,406
To the non financial private sector and residents abroad (Exhibits B, C and D) 3,221,868 7,344,513
---------- ----------
Overdraft 223,258 696,709
Discounted instruments 437,057 1,640,997
Real estate mortgage 591,561 1,536,911
Security Agreements 15,245 54,521
Consumer 206,786 670,413
Credit cards 146,245 479,151
Other (Note 6) 1,461,626 2,184,884
Interest, adjustments and listed-price differences accrued and pending collection 145,572 104,874
Less: unused collections 765 4
Less: Interest documented together with main obligation 4,717 23,943
Less: Allowances (Exhibit J) 989,687 356,467
---------- ----------
7,484,804 9,420,378
---------- ----------
OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS
Central Bank of the Argentine Republic 321,550 146,588
Amounts receivable for spot and forward sales pending settlement 40,578 1,220,783
Instruments to be received for spot and forward purchases pending settlement 60,359 920,108
Premiums on options purchased - 2,995
Unlisted corporate bonds (Exhibits B, C and D) 200,407 178,789
Other receivables not covered by debtor classification regulations (Note 6) 2,495,204 175,966
Other receivables covered by debtor classification regulations (Exhibits B, C and D) 21,592 21,520
Interest and adjustments accrued and pending collection not covered by debtor classification 84 27
regulations
Interest and adjustments accrued and pending collection covered by debtor classification 6,330 24
regulations (Exhibits B, C and D)
Less: unused collections 73 -
Less: Allowances (Exhibit J) 21,517 6,379
---------- ----------
3,124,514 2,660,421
---------- ----------
ASSETS OUT ON FINANCING LEASE
Assets out on financing lease (Exhibits B, C and D) 19,346 39,772
Less: Allowances (Exhibit J) 380 532
---------- ----------
18,966 39,240
---------- ----------
INVESTMENTS IN OTHER COMPANIES (Exhibit E)
In financial institutions 996,405 607,963
Other (Note 6) 210,963 242,481
Less: Allowances (Exhibit J) 20,442 -
---------- ----------
1,186,926 850,444
---------- ----------
OTHER RECEIVABLES
Receivables from sale of goods (Exhibits B, C and D) 150 720
Other (Note 6) 522,132 241,180
Other accrued interest and adjustments receivable 1 2
Less: Allowances (Exhibit J) 190,990 5,178
---------- ----------
331,293 236,724
---------- ----------
BANK PREMISES AND EQUIPMENT (Exhibit F) 433,657 449,595
---------- ----------
OTHER ASSETS (Exhibit F) 128,910 121,349
---------- ----------
INTANGIBLE ASSETS (Exhibit G)
Goodwill 49,148 109,380
Organization and development expenses 139,161 145,175
---------- ----------
188,309 254,555
---------- ----------
SUSPENSE ITEMS 2,887 3,480
---------- ----------
TOTAL ASSETS 14,468,544 20,788,267
========== ==========
(Contd.)
BALANCE SHEETS AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note
20) -Stated in thousands of pesos-
LIABILITIES 2002 2001
---------- ----------
DEPOSITS (Exhibits H and I)
From the non financial governmental sector 54,585 5,967
From the financial sector 139,841 19,503
From the non financial private sector and residents abroad 6,075,895 14,471,857
---------- ----------
Checking accounts 890,161 995,383
Savings deposits 632,868 3,329,193
Certificates of deposit 3,722,322 9,972,691
Other 89,115 103,291
Interest, adjustments and listed-price differences accrued payable 741,429 71,299
---------- ----------
6,270,321 14,497,327
---------- ----------
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS
Central Bank of the Argentine Republic (Exhibit I) 1,535,190 25,260
---------- ----------
Other 1,535,190 25,260
Banks and International Organizations (Exhibit I) 1,375,675 507,289
Non-subordinated corporate bonds (Exhibit I) 570,000 588,297
Amounts payable for spot and forward purchases pending settlement 42,108 802,812
Instruments to be delivered for spot and forward sales pending settlement 35,787 1,190,311
Premiums on options sold - 2,995
Financing received from Argentine financial institutions (Exhibit I) 88,817 243,270
Other (Exhibit I) 310,828 170,890
Interest, adjustments and listed-price differences accrued payable (Exhibit I) 34,443 17,731
---------- ----------
3,992,848 3,548,855
---------- ----------
OTHER LIABILITIES
Other (Note 6) 1,550,206 289,596
---------- ----------
1,550,206 289,596
---------- ----------
ALLOWANCES (Exhibit J) 92,248 49,180
---------- ----------
SUBORDINATED CORPORATE BONDS (Exhibit I) 601,596 349,733
---------- ----------
SUSPENSE ITEMS 2,018 1,352
---------- ----------
TOTAL LIABILITIES 12,509,237 18,736,043
========== ==========
STOCKHOLDERS' EQUITY (as for the related statement) 1,959,307 2,052,224
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 14,468,544 20,788,267
========== ==========
MEMORANDUM ACCOUNTS
2002 2001
---------- ----------
DEBIT ACCOUNTS
Contingent
- Guaranties received 6,507,895 4,851,524
- Contra contingent debit accounts 4,245,022 2,017,626
---------- ----------
10,752,917 6,869,150
---------- ----------
Control
- Receivables classified as irrecoverable 504,322 957,144
- Other (Note 6) 21,398,239 29,178,665
- Contra control debit accounts 76,982 139,465
---------- ----------
21,979,543 30,275,274
---------- ----------
For Derivatives
- Notional value of call options purchased - 21,311
- Contra debit accounts for derivatives - 21,311
---------- ----------
- 42,622
---------- ----------
For trustee activities
- Funds received in trust 48,194 238,471
---------- ----------
48,194 238,471
---------- ----------
TOTAL 32,780,654 37,425,517
========== ==========
CREDIT ACCOUNTS
Contingent
- Credit lines granted (unused portion) covered by debtor classification
regulations (Exhibits B, C and D) 152,687 513,423
- Guaranties provided to the BCRA 2,019,957 24,247
- Other guaranties given covered by debtor classification regulations
(Exhibits B, C and D) 1,593,115 1,177,044
- Other guaranties given not covered by debtor classification regulations 1,734 6,468
- Other covered by debtor classification regulations (Exhibits B, C and D) 477,529 296,444
- Contra contingent credit accounts 6,507,895 4,851,524
---------- ----------
10,752,917 6,869,150
---------- ----------
Control
- Items to be credited 76,830 139,386
- Other 152 79
- Contra control credit accounts 21,902,561 30,135,809
---------- ----------
21,979,543 30,275,274
---------- ----------
For Derivatives
- Notional value of call options sold - 21,311
- Contra credit accounts for derivatives - 21,311
---------- ----------
- 42,622
---------- ----------
For trustee activities
- Contra credit accounts for trustee activities 48,194 238,471
---------- ----------
48,194 238,471
---------- ----------
TOTAL 32,780,654 37,425,517
========== ==========
The accompanying notes 1 through 20 and exhibits A through L and N are an
integral part of these statements.
STATEMENTS OF INCOME FOR THE SIX-MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
2002 2001
------------- ------------
FINANCIAL INCOME
Interest on cash and due from banks 2,930 25,949
Interest on loans to the financial sector 19,156 16,616
Interest on overdraft 101,262 69,771
Interest on discounted instruments 39,188 83,642
Interest on real estate mortage loans 54,703 91,195
Interest on security agreement loans 1,803 3,945
Interest on credit card loans 30,580 42,924
Interest on other loans 180,346 482,192
Interest on other receivables from financial transactions 12,568 39,976
Income from guaranteed loans - Decree 1387/01 994,319 -
Net income from government and private securities 125,221 185,789
Indexation by benchmark stabilization coefficient (CER) 623,788 -
Other (Note 6) 1,352,892 54,710
------------- ------------
3,538,756 1,096,709
------------- ------------
FINANCIAL EXPENSE
Interest on checking accounts 139,701 828
Interest on savings deposits 5,471 26,656
Interest on certificates of deposit 191,129 373,442
Interest on financing to the financial sector 10,466 298
Interest on other liabilities from financial transactions 50,227 56,186
Other interest 162,509 19,941
Indexation by CER 958,278 -
Other (Note 6) 223,143 57,063
------------- ------------
1,740,924 534,414
------------- ------------
GROSS INTERMEDIATION MARGIN 1,797,832 562,295
------------- ------------
PROVISION FOR LOAN LOSSES 433,188 123,611
------------- ------------
SERVICE CHARGE INCOME
Related to lending transactions 54,686 70,259
Related to borrowing transactions 85,696 114,703
Other commissions 6,752 10,450
Other (Note 6) 34,598 75,858
------------- ------------
181,732 271,270
------------- ------------
SERVICE CHARGE EXPENSE
Commissions 17,415 32,605
Other (Note 6) 5,684 13,112
------------- ------------
23,099 45,717
------------- ------------
MONETARY LOSS ON FINANCIAL INTERMEDIATION (4,176) -
------------- ------------
(Contd.)
STATEMENTS OF INCOME FOR THE SIX-MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
2002 2001
------------- ------------
OPERATING EXPENSES
Payroll expenses 158,495 251,504
Fees to Bank Directors and Statutory Auditors 175 2,018
Other professional fees 4,994 7,844
Advertising and publicity 7,753 17,065
Taxes 9,597 13,980
Other operating expenses (Note 6) 102,247 127,122
Other 19,663 31,300
------------- ------------
302,924 450,833
------------- ------------
MONETARY LOSS ON OPERATING EXPENSES (56,034) -
------------- ------------
NET INCOME FROM FINANCIAL TRANSACTIONS 1,160,143 213,404
------------- ------------
OTHER INCOME
Income from long-term investments - 103,106
Punitive interests 1,483 2,369
Loans recovered and reversals of allowances 16,798 38,472
Other (Note 6) 11,895 11,640
------------- ------------
30,176 155,587
------------- ------------
OTHER EXPENSE
From long-term investments 1,168,083 -
Punitive interests and charges paid to Central Bank of the Argentine Republic 1,067 8
Charge for uncollectibility of other receivables and other allowances 313,119 29,153
Other (Note 6) 67,981 35,812
------------- ------------
1,550,250 64,973
------------- ------------
MONETARY GAIN ON OTHER OPERATIONS 32,482 -
------------- ------------
NET (LOSS) INCOME BEFORE INCOME TAX AND TAX ON MINIMUM
PRESUMED INCOME (327,449) 304,018
------------- ------------
INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME - 80,831
------------- ------------
NET (LOSS) INCOME FOR THE PERIOD (327,449) 223,187
============= ============
The accompanying notes 1 through 20 and exhibits A through L and N are an
integral part of these statements.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
2002
-------------------------------------------------------
Noncapitalized
contributions
-------------------
Premiums on the Adjustments to
Capital issuance of stockholders'
Movements Stock shares equity (1)
----------------------------------------------------------------------------------------------------------------------
1. Balance at beginning of fiscal year (restated) 209,631 343,215 603,828
2. Adjustment to prior-year income (Note 3.1.c) - - -
------------ ------------- -----------
3. Subtotal 209,631 343,215 603,828
4. Decisions of stockholder's meeting of April 5, 2001
- Cash dividends - - -
5. Adjustment to Capital Stock of the interest in BBVA
Uruguay S.A. - - -
6. Sale of interest in BBVA Uruguay S.A. (Note 2.2) - - 19,482
7. Unrealized valuation difference (Note 1.2.a) - - -
8. Net (loss) income for the period - - -
------------ ------------- -----------
9. Balance at end of the period 209,631 343,215 623,310
============ ============= ===========
(Contd.)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
2002 2001
------------------------------------------------------------------------ ------------
Earnings reserved
------------------------
Unrealized
valuation Unappropriated
Movements Legal Other (2) difference (3) earnings Total Total
--------------------------------------------------------------------------------------------------------------------- ------------
1. Balance at beginning of year
(restated) 382,795 1,610 - 307,489 1,848,568 2,122,500
2. Adjustment to prior-year income
(Note 3.1.c) - - - - - (138,876)
---------- --------- --------- ------------- ------------- -----------
3. Subtotal 382,795 1,610 - 307,489 1,848,568 1,983,624
4. Decisions of stockholder's meeting
of April 5, 2001
- Cash dividends - - - - - (144,019)
5. Adjustment to Capital Stock of the
interest in BBVA Uruguay S.A. - - - - - (10,568)
6. Sale of interest in BBVA Uruguay
S.A. (Note 2.2) - - - - 19,482 -
7. Unrealized valuation difference
(Note 1.2.a) - - 418,706 - 418,706 -
8. Net (loss) income for the period - - - (327,449) (327,449) 223,187
---------- --------- --------- ------------- ------------- -----------
9. Balance at end of the period 382,795 1,610 418,706 (19,960) 1,959,307 2,052,224
========== ========= ========= ============ ============= ===========
BALANCE AT THE END OF THE PERIOD
(1) Adjustments to stockholders'equity include:
a) Adjustment to equity fund appraisal revaluation 36,865
b) Adjustment to Capital Stock 586,445
---------
623,310
---------
(2) Earnings reserved - Other includes:
Mandatory reserve recorded for granting loans to personnel 1,610
---------
(3) Including 5,410 related to the interest in the
Unrealized valuation difference booked by Rombo Cia.
Financiera S.A.
The accompanying notes 1 through 20 and exhibits A through L and N are an
integral part of these statements.
STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
-Stated in thousands of pesos-
2002 2001
---------- ---------
CHANGES IN CASH FLOWS
Cash and due from banks at beginning of fiscal year (restated) 1,523,397 992,635
Increase / (decrease) in funds (1,288,076) 2,085,153
---------- ---------
Cash and due from banks at end of the period 235,321 3,077,788
---------- ---------
REASONS FOR CHANGES IN CASH FLOWS
Financial income collected 756,974 923,577
Service charge income collected 202,274 271,131
Less:
Financial expenses paid 973,809 516,738
Services charge expenses paid 23,099 45,961
Operating expenses paid 251,856 390,657
---------- ---------
FUNDS PROVIDED BY/ (USED IN) RECURRING OPERATIONS (289,516) 241,352
---------- ---------
OTHER SOURCES OF FUNDS
Net increase in deposits 875,458 -
Net increase in other liabilities from financial transactions 4,130,889 -
Net increase in other liabilities 2,442,792 -
Net decrease in loans - 1,898,040
Net decrease in other receivables from financial transactions - 2,531,806
Other sources of funds 49,659 52,431
---------- ---------
TOTAL OF SOURCES OF FUNDS 7,498,798 4,482,277
---------- ---------
USE OF FUNDS
Net increase in government and private securities 1,115,889 2,092,958
Net increase in loans 2,091,655 -
Net increase in other receivables from financial transactions 2,540,495 -
Net increase in other assets 2,143,537 99,226
Net decrease in deposits - 58,780
Net decrease in other liabilities from financial transactions - 86,430
Net decrease in other liabilities - 132,387
Cash dividends - 144,019
Other uses of funds 17,014 24,676
---------- ---------
TOTAL FUNDS USED 7,908,590 2,638,476
---------- ---------
MONETARY LOSS GENERATED ON CASH AND DUE FROM BANKS 588,768 -
---------- ---------
INCREASE / (DECREASE) IN FUNDS (1,288,076) 2,085,153
========== =========
The accompanying notes 1 through 20 and exhibits A through L and N are an
integral part of these statements.
- 1 -
NOTES TO THE FINANCIAL STATEMENTS
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
(Stated in thousands of pesos)
1. MACROECONOMIC SITUATION OF THE FINANCIAL SYSTEM AND THE BANK AND
SUBSEQUENT EVENTS TO THE PERIOD END
1.1. Effects of the Argentine peso devaluation and other modifications to
economic rules
1.1.1. Macroeconomic situation of the financial system
The economic and financial situation in Argentina deteriorated
unrelentingly over the last few months; this was basically
reflected in an increase in sovereign risk, diminishing
reserves, continuing fiscal imbalance, lower deposits in the
overall financial system, deep recession with significant
drops in both consumption and investment, decreased real cash
flows, difficulties to settle short-term debt and a
deteriorating chain of payments.
On November 1, 2001, the Argentine Government announced a new
economic plan, the main measures of which related to the
comprehensive restructuring of public debt at lower interest
rates, launching a plan to revive the economy, and other
fiscal measures, while the convertibility law (whereby the
Argentine peso was pegged at par with the US dollar) and the
balanced-budget law were to remain in effect.
Although the domestic phase of the national public-debt
restructuring process pursuant to Decree No. 1387/01 was
successful, a new crisis broke out on November 30, 2001,
triggered by the loss of deposits out of the financial system,
which led the Government to issue Decree No. 1570/01, which
set tight restrictions on the withdrawal of cash from banks
and controls on the transfer of funds abroad while fostering
an increased dollarization of the economy.
By the end of the last year, the deterioration of the economic
and financial situation affected the institutions, with
several successive changes taking place at the highest levels
of the Federal Executive, which culminated with National
Congress electing a new President to complete the
constitutional period until December 10, 2003. In the interim,
the suspension of payments on public debt, was declared.
On January 6, 2002, National Congress enacted Public Emergency
and Foreign Exchange System Reform Law No.25,561, which
introduced deep changes to the economic framework effective
until then and, particularly, amended the Convertibility Law
(whereby the Argentine peso was pegged at par with the US
dollar) which had been in effect since 1991; Law No. 25,561
also empowered the Federal Executive to issue additional
monetary, financial and foreign exchange measures aimed at
overcoming the economic crisis in the medium term. The law and
decrees included, among others, the following measures:
a) The switch into pesos of certain debts towards the
financial sector originally denominated in US dollars and
outstanding as of December 31, 2001, at the exchange rate of
ARS 1 to USD 1;
b) The switch into pesos of private contracts stipulated in US
dollars or including indexation clauses, over a term of 180
days, at the exchange rate of one Argentine peso to each US
dollar;
- 2 -
c) The switch into pesos at the exchange rate of one Argentine
peso to each US dollar of public utility rates priorly
stipulated in US dollars, to be subsequently renegotiated on
a case-by-case basis;
d) The implementation of a new system levying duties on the
export of oil and gas;
e) Empowering the Federal Executive to establish compensatory
measures to avoid imbalances in financial institutions that
may result from the switch into pesos of certain
receivables.
f) The establishment of an "official" foreign exchange market
(ARS 1.4 to USD 1) and a "floating" exchange market.
The "switch into pesos" governmental system as of that date
kept, in general terms, the financial system balance (since
the imbalances generated by the asymmetrical exchange rates
were low with reference to the total assets and liabilities of
the financial system). The reaction of different sectors of
the economy forced the Federal Government to apply significant
changes to the original regulations, that emphasized the
original assymetry. In addition, the injunctions pursuant to
constitutional protection actions that require deposits to be
reimbursed, without rendering an opinion of the substance of
the matter, and the deep crisis arised among the Federal
Powers, originated by the beginning of the Supreme Court
judgement, increased the economic and financial system crisis.
Subsequently, new rules (Decrees No. 214/02 and No. 410/02,
among others) were issued that amended or supplemented
existing rules and regulations. The main new measures were:
a) The switch into pesos of all obligations, whatever their
cause or origin, to deliver sums of money stipulated in US
dollars or any other foreign currency outstanding as of the
date of enactment of Law No. 25,561, with the exceptions,
mainly, of financing related to foreign trade granted by
financial institutions, and the private and government
sectors' obligations to deliver sums to which foreign law is
applicable.
b) The switch into pesos of all deposits with all financial
institutions stipulated in US dollars or other foreign
currencies at an exchange rate of 1.4 Argentine pesos to
each US dollar, or its equivalent in other currencies.
c) The switch into pesos of all debts towards financial
institutions stipulated in US dollars or other foreign
currencies, whatever the amount or nature, at the exchange
rate of one Argentine peso to each US dollar, or its
equivalent in other currencies.
d) The conversion into pesos of obligations to deliver monies,
stipulated in US dollars or other foreign currencies,
unrelated to financial institutions and whatever their
origin or nature, at the exchange rate of one Argentine peso
to each US dollar, or its equivalent in other currencies.
e) The indexation of all receivables and payables referred to
in points b) through d) by applying a "benchmark
stabilization coefficient" ("CER") that is to be published
by the Central Bank of the Argentine Republic (BCRA) and,
additionally, the application of a minimum set interest rate
for deposits and a maximum set interest rate for loans. The
CER is applicable as from the publication of Decree No.
214/02. Obligations of any nature or origin arising after
the enactment of such Law No. 25,561, shall not be allowed
to contain and shall not be subject to adjustment clauses.
f) The issuance of a Bond to be borne by the Federal Treasury
to compensate the imbalances in the financial system
resulting from the exchange difference caused by the switch
of deposits with and payables to the financial system
mentioned in points b) and c) above.
Please find below a deeper description of some measures
adopted by the Federal Government effective as of the date of
filing these financial statements.
- 3 -
1.1.2. Relevant issues of the exchange system
Decree No. 71/2002 of the Argentine Executive and Communique
"A" 3425 of the BCRA established an "official" foreign
exchange market, mainly for exports, certain imports and
financial obligations, and a "floating" exchange market for
the rest of transactions. The official exchange rate was set
at ARS 1.40 to USD 1 and the "floating" exchange rate on the
first day on which the system operated, January 11, 2002, (it
had been suspended from December 23, 2001) ranged from ARS 1.6
to 1.7 to USD 1, selling rate. Federal Executive Decree No.
260/2002 of February 8, 2002, established a single floating
market where all foreign exchange transactions will be carried
out as from issuance of such decree. Foreign exchange
transactions will be made at the exchange rate freely agreed
between the parties, subject to the requirements and rules
established by the BCRA.
Foreign exchange transactions in the floating market have,
among others, the following characteristics:
a) The exchange rate will be freely agreed between supply and
demand. As of June 30, 2002, the exchange rate was ARS 3.80
to USD 1, and as of the date of filing this financial
statements, the exchange rate was ARS 3.5358 to USD 1.
b) Foreign exchange transactions may only be carried out at
institutions authorized by the BCRA.
c) Criminal Foreign Exchange Laws will apply to transactions
that do not conform to effective regulations .
d) Foreign currency will be sold only against the delivery of
peso notes. Other payment instruments are accepted, as
defined by the BCRA.
e) Transfers abroad to be made by the financial and
nonfinancial private sector and by government companies
have to be authorized by the BCRA, according to the
characteristics of the related payment.
f) Certain requirements related to the registration of
transactions and customer identification and certain
provisions of the information system must be complied with.
g) The requirements established by tax and money laundering
prevention laws must be complied with.
Foreign trade transactions and services to be settled in such
market are regulated by the BCRA as to the transactions to be
settled, terms and manner to credit the accounts.
The BCRA has regulated the purchase and sale of US dollars on
behalf of the BCRA. Such transactions will be conducted
through Financial Institutions that have enrolled in the
system. The regulations will include the transaction amounts
and formal requirements.
Communique "A" 3511 of March 14, 2002, issued by the BCRA
established restrictions on the Foreign Exchange Position
(FEP) of financial institutions, which is mainly formed by
holdings in foreign currency, plus foreign currency cash held
in Argentina or abroad, and foreign currency forward
transactions. The FEP of each Bank will not exceed 5% of the
computable equity of each Bank as of the end of November 2001.
Should that limits be exceeded, such exceed has to be cured
within certain dates established by the BCRA.
1.1.3. Compensation to Financial Institution due to the effects of
the devaluation and conversion into pesos
According to the provisions of Law No. 25,561 and of sections
2, 3 and 6 of Decree No. 214/2002, as amended and
supplemented, a significant portion of the assets and
liabilities were switched into Argentine pesos. Sections 28
and 29 of Decree No. 905/2002 of June 1, 2002, established a
compensation for financial institutions.
- 4 -
Under such sections, the Ministry of Economy will deliver
Federal Government Bonds denominated in Argentine pesos and US
dollars to the financial institutions as a full and final
compensation, for the negative monetary effects arising from
conversion into Argentine pesos at an asymmetrical exchange
rate of receivables and payables denominated in foreign
currency, as well as for the net negative position in foreign
currency resulting from its conversion into Argentine pesos.
BCRA Communiques "A" 3650 and "A" 3716, as supplemented,
determined the compensation procedures as follows:
a) The reference was the Financial Institution's balance sheet
as of December 31, 2001, which included, under assets, the
Federal Government's secured loans whose new conditions had
been accepted by means of the acceptance letter included in
Decree No. 644/2002 of April 18, 2002, taken at the value
at which they had been booked by foreign subsidiaries of
local financial institutions, net of "Investments in other
companies" booked by such local institutions as of December
31, 2001.
b) The stockholders' equity resulting from the balance sheet
mentioned in (a) was adjusted by applying the ARS 1.40 to
USD 1 exchange rate, or its equivalent in any other
currency, to the net position in foreign currency.
c) The amount to be compensated is the positive difference
between the adjusted stockholders' equity determined on the
basis of (b) above and the stockholders' equity resulting
from conversion into pesos of certain assets and
liabilities in foreign currency at the exchange rates
defined by the rules and regulations.
d) The compensation for each Financial Institution, determined
in Argentine pesos, will be paid by delivering "2% Federal
Government Bonds in Argentine pesos maturing in 2007".
e) Financial Institutions will have the right to request the
Bond swap mentioned in d) for "LIBOR 2012 Federal
Government Banks denominated in US dollars " at the ARS
1.40 to USD 1 exchange rate, for up to the amount of the
net negative position in foreign currency, resulting from
conversion into pesos of assets and liabilities booked in
the balance sheet as of December 31, 2001, as per the above
paragraphs.
f) The Federal Government, through the Ministry of Economy,
may issue additional bonds in US dollars to be subscribed
by Financial Institutions up to the amount of the net
position in foreign currency of such Financial Institution
and after allocating all the holdings in Bonds denominated
in Argentine pesos received as a compensation. The
subscription price of such will be ARS 140 to USD 100, face
value.
g) For purposes of financing the subscription of Bonds
referred to in (f), the BCRA may grant advances to such
financial institutions.
Decree 2167/2002 of October 28, 2002 ammended Section 29 of
Decree 905/2002, establishing that in the compensation
procedure, the assets reached by Decrees 214/2002 and 471/2002
booked in foreign subsidiaries owned by local financial
institutions, will be included in the Bank assets. On the
other hand, through Communique "B" 7564, BCRA set forth
certain interpretation criteria. As of filing date of these
Financial Statements, the BCRA has not issued the respective
procedure regulations.
1.1.4. Financial assistance to the governmental and private sectors
- Guaranteed loans - Decree No. 1387/2001
On November 1, 2001, the Federal Executive issued Decree
No. 1387/01 directing the Ministry of Economy to offer a
voluntary federal and provincial debt swap for loans
secured by the Federal Government or the Provincial
Development Trust Fund to obtain a reduction in the
interest of swapped debt, as well as an extension of
repayment terms.
- 5 -
Decrees 1387/01 and 1646/01 established the basic
characteristics of guaranteed loans (conversion at nominal
value plus interest accrued on the swapped obligation - one
to one -, issuance in the same currency that the swapped
obligation, tax exemption covering both the difference
between the swap and market or book value and of interest
and secured loans, allocation of revenues from the tax on
bank-account transactions and, in general, of all revenues
of the Federal Government arising from the Revenue Sharing
system to secure all principal and interest payments on
such secured loans). In addition, Decree No. 471/02
established, among other things, the conversion into pesos
of all the obligations of the federal, provincial or
municipal government in foreign currency governed by
Argentine law, at the ARS 1.40 to USD 1 exchange rate, or
its equivalent in any other currency, and adjusted on the
basis of the CER and the interest rate applicable to each
type of government security and guaranteed loan, on the
basis of their average life and original issuance currency.
Subsequently, the Federal Executive issued Decree No.
644/02 establishing the steps to be followed by banks to
accept the new conditions (conversion at the ARS 1.40 to
USD 1 rate, CER application and modification of the
interest rate), for purposes of receiving principal and
interest payments on guaranteed loans. If the new
conditions are not accepted, the banks receive the
securities originally submitted for the swap.
On August 27, 2002, through Decree No. 1579/02, the Federal
Executive instructed the Trustee Fund for Provincial
Development to bear provincial debt in the form of
Government Securities, Bonds, Treasury Bills, or Loans
voluntary converted into Secured Bonds. Likewise, it
empowered the Ministry of Economy to determine the term to
express the will to withdraw bids already submitted to
convert provincial debt under Section No. 25, Decree No.
1387/01, as supplemented, as the case may be.
Later, on October 25 and November 12, 2002, through
Resolutions Nos. 539/02 and 611/02, respectively, the
Ministry of Economy established the unified calculation
mechanism for all debts included in the conversion system
under Decree No. 1579/02, and it provided the term for
financial institutions that submitted bids to convert
provincial debt under Section No. 25, Decree No. 1387/01,
as supplemented, to express their will to withdraw them (10
business days as from the date when Resolution No. 539/02
becomes effective for provincial debt in the form of Loans,
and 15 days as from the date when Resolution No. 539/02
becomes effective for provincial debt in the form of
Government Securities, Bonds or Treasury Bills).
- Financial assistance to the private sector - Maximum rates
Decree No. 214/2002 established that certain debts in US
dollars or other foreign currency to the Financial System,
regardless of their amount and nature, be converted into
Argentine pesos at the ARS 1 to USD 1 or its equivalent in
any other currency. Furthermore, as from February 3, 2002,
the CER and a maximum interest rate determined by the BCRA
in Communique "A" 3561 became applicable to such loans.
Interest rates are determined on the basis of whether the
lender is an entity or an individual and depending on the
loan's guarantee, and the interest rate caps are 6% and 8%.
1.1.5. Amendment of the bankruptcy and insolvency law
On January 30, 2002, the Argentine Congress enacted Law No.
25,563 whereby it declared a state of productive and credit
emergency originated in the Argentine crisis. Such
emergency will extend until December 10, 2003. The law
established, among other things:
a) Suspension for 180 days as from the effective date of the
law of all insolvency proceedings and court and
out-of-court sales (included foreclosures and enforcement
of security interests of any origin).
b) Suspension for 180 days of any petition in bankruptcy.
Subsequently, Law No. 25,640 of September 11, 2002,
extended such term for 90 days.
- 6 -
Later, on May 15, 2002, the Government enacted Law No.
25,589 on bankruptcy and insolvency proceedings introducing
modifications to the above law. The main changes are:
a) within 90 days or within the longer term determined by the
court, the debtor will have an exclusivity period to submit
proposals to reach a compromise with credits.
b) Application of the "cramdown" device, whereby creditors may
takeover the debtor company.
1.1.6. CER application
Receivables and obligations denominated in foreign currency
as of the enactment of Law No. 25,561 were converted into
Argentine pesos at the ARS 1 to USD 1 or ARS 1.40 to USD 1,
as applicable. Such receivables and payables are updated by
application of the CER. Loans converted into Argentine
pesos will be indexed on the basis of the CER under the
above terms, plus a maximum interest rate established by
the BCRA, except in the case of (i) loans granted to
individuals secured by a collateral constituting the single
dwelling home, (ii) personal loans, whether secured by a
mortgage or not, originally agreed up to the amount of USD
12,000 or its equivalent in other currency, and (iii)
personal loans, secured by a security interest originally
agreed up to the amount of USD 30,000 or its equivalent in
any other currency, that will be adjusted as from October
1, 2002, on the basis of a "salary variation coefficient"
("CVS") that will be published by the INDEC (Argentine
Institute of Statistics and Census). Law No. 25,642 of
September 12, 2002, extended until September 30, 2002,
application of the CER established by section 4 of
Presidential Decree No. 214/2002 for all obligations of
individuals and/or entities to pay a sum of money not in
excess of ARS 400,000. The rates effective as of February
2, 2002, will remain effective until such date and, as from
October 1, 2002, they will accrue the lower of such rate or
the average interest rates prevailing in the financial
systems for such transactions in 2001 published by the
BCRA. Rescheduled deposits converted into Argentine pesos
will be subsequently indexed on the basis of the CER
published by the BCRA, that will be applied as from
February 3, 2002 (date of publication of Decree No.
214/2002), plus a minimum interest rate established by the
BCRA.
1.1.7. Deposits. Balance rescheduling. Swap for government bonds
(Swaps I and II)
- Balance rescheduling
As mentioned in the above paragraphs, the Federal Executive
has issued Decree No. 1570/2001 establishing severe
restrictions on the withdrawal of funds from Financial
Institutions. Subsequently, a number of rules were issued
that established a schedule for maturity of deposits
existing in the financial system. The BCRA issued a number
of Communiques that established the schedule for returning
deposits on the basis of their currency and amount.
In the case of deposits in Argentine pesos, three
reimbursement levels were determined, on the basis of the
amount of the deposits. The date for the first disbursement
in each category was March, August and December 2002. In
the case of deposits in foreign currency converted into
Argentine pesos, the method was similar to the above, and
the dates for the first reimbursement were January, March,
June and September 2003.
Swap I
Decrees No. 494/2002 of March 13, 2002, and 620/2002 of
April 17, 2002, established the general conditions and the
procedure through which the owners of deposits in foreign
currency and in Argentine pesos may exercise the option to
receive "Federal Government Bonds in US Dollars at a 2%
rate maturing in 2012", "Federal Government Capitalized
Bonds in US dollars at LIBOR plus 1% maturing in 2012" and
"Federal Government Bonds in Argentine pesos at a 3% rate
maturing in 2007", within the term established by Decree
No. 620/2002, i.e. by April 30, 2002.
For the purpose of improving the conditions of the
securities to be issued and to make the above option more
attractive, the Federal Executive issued Decree No.
905/2002, which established the options that will be
available to depositors on the features of their deposits
(Swap I).
- 7 -
The owners of deposits originally made in foreign currency
that were converted into Argentine pesos and then
rescheduled will have the option to receive through the
Financial Institution where they made their deposit, as
total or partial payment of such deposits, "Federal
Government Bonds in US dollars at LIBOR and maturing in
2012", at the rate of USD 100 in face value for every ARS
140 deposited.
On the other hand, the owners of deposits originally made
in Argentine pesos in financial institutions and the owners
of deposits originally made in foreign currency and that
were converted into Argentine pesos and rescheduled will
have the option to receive through the financial
institutions, as a total or partial payment of such
deposits, "Federal Government Bonds in Argentine pesos at a
2% rate, maturing in 2007".
Finally, the owners of deposits, regardless of their
currency of origin, that are (a) individuals aged 75 or
older, (b) individual that received the deposit amount as
severance payments or payment of a similar nature due to
labor termination, and (c) individuals undergoing
situations that pose a threat to their life, health or
physical integrity will have the option to receive through
the financial institution, as a total or partial payment of
such deposits, for up to the amount that was rescheduled,
"Federal Government Bonds in Us dollars at LIBOR maturing
in 2005", at the rate of USD 100 in face value for every
ARS 140 deposited.
The owners of deposits originally made in foreign currency
in financial institutions that have a rescheduled deposit
for up to ARS 10,000 will have the option to receive
through the financial institution, as a total or partial
payment of such deposits, for up to the abovementioned
amount "Federal Government Bonds in US dollars at LIBOR
maturing in 2005".
Finally, the owners of checking accounts, savings accounts
and other demand deposits will have the option of acquiring
through the financial institution "Federal Government Bonds
in US dollars at LIBOR maturing in 2012" and/or "Federal
Government Bonds in Argentine pesos at 2% rate maturing in
2007". The owners of checking accounts, savings accounts
and other demand deposits who are individuals will have the
option of submitting bids for acquiring "Federal Government
bonds in US dollars at LIBOR maturing in 2005".
Swap II
On September 17, 2002, the Federal Executive issued Decree
No. 1836/2002 (amended by Decree 2167/2002) that
established the basis for the second deposit swap. Such
decree established the options of deposit owners and
modified some sections of Decree No. 905/02.
Under the above regulations, the holders of certificates of
rescheduled deposits originally made in foreign currency
may opt to receive "Federal Government Bonds in US dollars
2013" from the related bank in exchange for such
certificates. These bonds will be subscribed at the rate of
USD 100 (face value) for each ARS 140 (face value) of the
certificate, adjusted by the benchmark stabilization
coefficient through the issuance date, and the related bank
will also grant a coupon put option.
Where deposit holders opt to receive the above bonds, the
banks where such deposits were made shall grant them a put
option for principal or interest coupons. The exercise
price in pesos shall equal the bond coupon face value in US
dollars converted into pesos at the USD 1-to-ARS 1.40
exchange rate, and adjusted by the benchmark stabilization
coefficient from February 3, 2002, through the coupon
maturity date.
The coupon put options shall be booked, and to that effect,
they shall be regarded as corporate bonds, they shall be
publicly traded, they shall be tradable in self-governed
Argentine markets, and they shall circulate independently
from the Government bonds to which they relate. The above
put option may be exercised within thirty days as from the
related coupon payment date, free of charges for the
deposit holder. Expiry of the above period implies expiry
of the put option related to that coupon.
On the other hand, deposit holders may opt to convert the
rescheduled amount into fixed-term bills in pesos issued by
each bank, jointly with an option issued by the Federal
Government to switch them into the original currency.
- 8 -
Those who opted to receive "Federal Government Bonds in US
dollars 2005" or "Federal Government Bonds in US dollars
2012" under Decree No. 905/2002 (Swap I) may choose to ask
the bank from which they received the above bonds to grant
them the above put option or to exchange the bonds for
fixed-term bills.
The above options may be exercised through December 12,
2002.
For purposes of obtaining such Bonds, the financial
institutions must first apply their holding in Federal
Government Bonds at a 9% rate maturing in 2002. For the
remaining amount of bonds to be subscribed on behalf of
depositors, financial institutions may opt between:
a) Swap them for Federal Government Bonds at a 2% rate in
Argentine pesos maturing in 2007 received as a
compensation as described in 1.1.3, federal government
guaranteed loans converted into pesos by Decree 471/02
and provincial government sector debts covered by
Decree 1387/01, including those incurred by the
Provincial Development Trust Fund.
b) Obtaining advances from the BCRA in Argentine pesos
secured by guarantees in the amount required to
acquire the abovementioned Bonds, so that financial
institutions may comply with the requests from
depositors. Financial institutions will provide
security covering such 100% of such advances with
assets considered at their book value, according to
the BCRA rules, in the order priority established in
section 15 of such Decree.
c) Pay them with their own resources without receiving
the BCRA's financial assistance.
1.1.8. Legal actions
The measures adopted by the Federal Executive with respect
to the political, economic, financial and foreign exchange
emergency triggered a number of legal actions to be filed
by individuals and companies, in the form of amparos
(judicial injunctions resulting in the immediate release of
frozen deposits), against the Federal Government and the
BCRA as the petitioners consider that the Law on Public
Emergency and its supplementary provisions are
unconstitutional. Based, mainly in the "Kiper against
Federal Government and Others" case, dictated by the
Supreme Court, the courts massively started to dictate
through amparos , the partial reimbursement of bank
deposits in US dollars or Argentine pesos at the "floating"
exchange rate. The Supreme Court has not dictated about the
constitutional sustenance of the "switch to pesos"
established by the Federal Government.
On March 11, 2002, the Argentine Association of
Government-owned and Private Banks and the Argentine Bank
Association filed a "per saltum" appeal with the Argentine
Supreme Court under section 195 bis of the Argentine Code
of Civil and Commercial Procedure (according to the
modification introduced by Law No. 25,561). The appeal was
filed for the benefit of government-owned and private banks
that are members of such associations and was based on the
Argentine institutional and systemic crisis and on the need
to comply with effective regulations to attain an ordered
and gradual solution for the restrictions affecting the
financial system and guaranteeing a plurality of interests.
Such appeal seek communication to all federal courts of
cases in which precautionary measures have been enforced or
are about to be enforced since the effective date of Decree
No. 1570/2001 until March 11, 2002, against banks that are
members of such associations.
- 9 -
Moreover, BF has joined, as additional party, the action
for declaratory judgment brought by ABA (Argentine Banking
Association) by reason of the enactment of Act No. 5303 by
the legislative body of the Province of San Luis, which
orders banks domiciled or having branches in the province
to pay all foreign currency deposits. To the date of
issuance of these financial statements, the Supreme Court
has issued a precautionary measure ordering the province
and provincial tribunals to refrain from enforcing such law
until the constitutional issue brought by ABA is resolved.
That is to say, whether the provincial legislative body is
empowered to enact laws that, in the opinion of ABA and the
banks, exceed the powers conferred under the terms of the
Argentine National Constitution.
On April 25, 2002, the Argentine Congress passed Law No.
25,587 on Public Emergency and Reform of the Exchange
System that establishes that, in any legal action brought
against, among others, financial institutions due to loans,
debts, obligations, deposits or rescheduling that may be
affected by the provisions included in Law No. 25,561, as
regulated and supplemented, the precautionary measure
established by section 230 of the Argentine Code of Civil
and Commercial Procedure will only be admitted where
maintenance of the situation, whether from a factual or
legal situation, will result in irreparable damage such as
impossibility to enforce the judgment. This public policy
provision will be applied to all outstanding cases and will
also apply to all precautionary measures pending
enforcement, regardless of the court-order date.
Finally, on July 24, 2002, the Federal Executive issued
Decree No. 1316/2002 establishing the temporary suspension
for 120 business days of compliance with and enforcement of
precautionary measures and final judgments issued in the
legal actions referred to in section 1 of Law No. 25,587.
Court orders must be recorded in financial institutions in
chronological order and the court ordering the measure must
be given notice that the financial institution acknowledges
such measures. Furthermore, the Bank will report, on a
weekly basis, all precautionary measures occurred in such
week to the BCRA. Suspended resolutions will be complied
with after expiration of the term in their chronological
order and within 30 business days. In the case of
exceptions to the above rules, the measure will presented
to the BCRA that will comply with the court orders on
behalf and account of the Bank.
1.2. Impact of the measures on the Bank's particular situation
As described in detail in note 1.1, since late in the year ended on
December 31, 2001, the financial system in general and the Bank in
particular have to cope with a significant impact in their liquidity
position, mainly as a result of mass withdrawals of deposits, actions
for infringement of fundamental rights and freedoms filed by
depositors, the ordering of precautionary measures and immediate
measures by tribunals, the suspension of court-enforced collections
and foreclosures, and the enactment of numerous laws, decrees,
resolutions from the Ministry of Economy and Communiques by the BCRA,
which led to frequent changes in the Bank's positions.
The liquidity crisis became especially aggravated in the second
quarter of the year, when cash withdrawals (accelerated by the
uncertainty derived from cash withdrawal restrictions) and the
reimbursement of deposits under precautionary measures, actions for
infringement of fundamental rights and freedoms, and immediate
measures reached their maximum level, with reimbursements by the bank
in the amounts of approximately ARS 467 million and USD 52 million in
such quarter. It should be noted that such precautionary measures,
actions for infringement of fundamental rights and freedoms, and
immediate measures order partial payment of foreign currency deposits
(USD) or an equivalent amount in Argentine pesos at the freely
floating exchange rate. To date, the debate about the
unconstitutionality of the law that provides the mandatory switch of
deposits into Argentine pesos has not been decided by the Supreme
Court of Justice.
The situation described above led the Board of the Bank to decide the
implementation of a plan to strengthen the Bank's stockholders'
equity and liquidity. Similarly, the Board of Governors of the BCRA
in exercise of its powers requested that the Bank formally submit a
regularization plan to the BCRA. By the end of May 2002, BF submitted
to the BCRA the mentioned plan intended to regularize and reorganize
the aspects related to complying with the technical regulation on
minimum cash, which had been affected
- 10 -
by the above-mentioned liquidity crisis triggered by the fall of
deposits, court rulings on the actions brought by depositors, and by
regulatory changes on prudential regulations. Such plan comprised the
measures that had been adopted in April and May 2002, in relation to
the financial assistance received from BBVA, the sale of stock
holding in a subsidiary abroad and advances due to illiquidity
received from the BCRA. The Board of the Bank also notified its
decision to capitalize BF and informed BBVA's intention to convert
into equity in BF the subordinated corporate bonds in the amount of
USD 130 million issued by BF and held by the former, as well as a
financial loan granted in April 2002, in the amount of USD 79.3
million, submitting this capitalization to the approval of the
related controlling authorities and the Stockholders' Meeting of BF.
Furthermore, the Board of the Bank reported the commencement of the
execution of an administrative restructuring plan, expense reduction,
and voluntary termination and early retirement of personnel.
Additionally, in July 2002, BF entered into repurchase agreements
with BBVA in the amount of USD 102.9 million, thus obtaining
additional liquidity to refinance its foreign trade lines and local
currency needs.
Moreover, the Bank agreed the refinancing of non-subordinated
corporate bonds totaling USD 150 million maturing October 31, 2002,
through a new bond issuance. Such refinancing included the interest
payment and a five percent of capital as of October 31, 2002, the
payment of a 5,26% of capital of the new bond in 180 days, while the
remaining capital will be paid in a year. Additionally, BF is in the
process of negotiation and instrumentation of the refinancing of its
foreign trade lines.
During the third quarter of the year, the situation improved
gradually, showing a decrease in the volume of legal actions seeking
the withdrawal of funds and a gradual change in deposit tendencies,
which started rising. In this quarter, precautionary measures under
actions for infringement of fundamental rights and freedoms paid by
the bank amounted to approximately ARS 293 million and USD 4 million.
Detailed below are the measures taken by the Argentine Government in
effect as of the date of filing these financial statements and which
have affected or could affect the Bank's equity and financial
position.
a) Compensation to financial institutions for the effects of the
devaluation and conversion into pesos
As mentioned in note 1.1.3. the amount that the Bank is to
receive in compensation under Decree No. 905 /2000 and
Communiques "A" 3650 and "A" 3716 as supplemented amount to:
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Balances as of December 31, 2001
---------------------------------------------------------------------
Exch. rate Exch. Rate Currently effective Difference
ARS 1 = ARS 1.4 = exchange rate under
USD 1 USD 1 decrees
---------------------------------------------------------------------
Assets 8,369,234 11,028,945 10,153,352 875,593
Liabilities 7,427,471 9,862,424 9,828,122 (34,302)
-------
Compensation 841,291
=======
Additionally, the remaining foreign exchange position after
computing the effect on the switch to pesos of applicable assets
and liabilites amounted to US dollars 618,699,800 (negative).
Accordingly, the Bank applied the compensation amount in
Argentina pesos of 841,291 to receive LIBOR 2012 Federal
Government Bonds denominated in US dollars for a face value of
600,922,400, (at the ARS 1,40 = USD 1 exchange rate). In
addition, that the net negative position in foreign currency
exceeded the amount of compensation to be received, the Bank
decided to take an advance from its BCRA account to subscribe
Bonds for a face value of USD 17,777,400 to compensate such
position. Subsequently, on September 11, 2002 and October 29,
2002, the Bank's account No. 017 with the Government Debt
Instruments Registration and Payment Center was credited by the
BCRA with Bonds for a face value of 421,890,000 and 88,894,100,
respectively, (net
- 11 -
of a gauging of 15%). Such Bonds remain blocked until the BCRA
gives definitive confirmation of the compensation amount. As of
June 30, 2002, the Bank carried the compensation to be received
in Federal Government Bonds under the "Other
Financial-Intermediation Receivables" account.
As required by BCRA Communique "A" 3703, the compensation
received was booked in January, 2002, as follows:
- The gain resulting from the asymmetrical switch into pesos,
which amounted to 616,533, was allocated to "Financial
Income - Gold and foreign currency exchange difference",
for the purpose of neutralizing the negative effects of the
switch into pesos.
- The amount of the compensation received for the difference
between Stockholders' Equity as of December 31, 2001, and
the Stockholders' Equity that resulted from adjusting the
net position in foreign currency switched into pesos at the
exchange rate USD 1 = ARS 1.4 , amounting to 224,758
(adjusted as of June 30, 2002: 413,296), was allocated to
the Stockholders' Equity account "Unrealized valuation
difference from compensation of the net position in foreign
currency".
b) Guaranteed Loans - Decree No. 1378/2001
As mentioned in note 1.1.4 and pursuant to Decrees Nos. 1387/01
and 1646/01, the Bank and its subsidiaries swapped a portion of
their holdings in federal government securities and/or loans to
the federal government sector outstanding as of November 6,
2001, for a nominal value of USD 3,291,795, for Guaranteed Loans
amounting to USD 3,360,403. Such guaranteed loans are recorded
in the consolidated financial statements under the account
"Loans - to the non-financial government sector" for a total
amount of 5,246,093 , net of discounts.
Subsequently, the Federal Executive established, by Decree No.
644/02, the steps that the financial institutions were to follow
to accept the new conditions so as to receive the payments of
principal and interest related to the Guaranteed Loans. In this
respect, on May 22 and July 12, 2002, the Bank and its
subsidiary, Banco Frances (Cayman) Ltd., accepted the
abovementioned changes to the conditions of the Guaranteed Loans
for a face value of USD 2,838,727,000. On the other hand,
Consolidar AFJP S.A., Consolidar Cia. de Seguros de Vida S.A.,
and Consolidar Cia. de Seguros de Retiro S.A. (except for loans
for a face value of USD 34,034,000, which new conditions were
accepted on May 21, 2002) did not accept the changes to the
conditions of the Guaranteed Loans for a face value of USD
487,642,000. This means reverting to the original government
securities, i.e. those that had been submitted for swapping.
In addition, the Bank has presented before Banco de la Nacion
Argentina, in its capacity as trustee for the FFDP (Provincial
Development Trust Fund), provincial governments securities and
loans granted to the government sectors of the provinces for a
nominal value of USD 481,572 thousands, so as to carry out the
swap provided by Decree No. 1387/01. Such transaction is
recorded under the account "Loans - to the non-financial
government sector" for the abovementioned value plus the related
accrued interest receivable as of June 30, 2002, converted into
pesos at the exchange rate of USD 1 = ARS 1.4 and adjusted by
the CER, as provided by Decrees Nos. 1387/01 and 471/02. On
October 25, 2002, the Ministry of Economy issued Resolution No.
539/2002, regulating Decree 1579/2002, establishing new
conditions for the provincial government debt swap, allowing the
financial institutions to decide its conversion for Guaranteed
Loans.
As mentioned in note 1.1(4), and considering Decree No. 1579/02
and Resolutions Nos. 539/02 and 611/02, to the issuance date of
these financial statements, the Bank and its subsidiaries had
not expressed their will to withdraw the bids to convert
provincial debt under Section No. 25, Decree No. 1387/01, as
supplemented.
c) Application of the CER
As mentioned in note 1.1.6., the Bank adjusted by the CER the
deposits that were switched into pesos and rescheduled, as well
as the loans switched into pesos. This adjustment is recorded in
the Statement of Income under the Financial Income and Financial
Expense accounts, respectively.
- 12 -
d) Deposits. Rescheduling of balances. Swap for Government Bonds
(Swap I)
As mentioned in note 1.1.7., as of July 29, 2002, the Bank's
customers opted to swap their rescheduled deposits into bonds as
follows:
Amount in
thousands of pesos
------------------
Section 2 of Decree No. 905 /2002 608,688
Section 3 of Decree No. 905 /2002 5,709
Section 4 of Decree No. 905 /2002 93,128
Section 5 of Decree No. 905 /2002 36,752
Section 24 of Decree No. 905 /2002 34,107
------------
Total 778,384
------------
% of total deposits 10,74%
% of deposits eligible for swap 31,20%
On September 17, 2002, the Federal Executive issued Decree No.
1836/2002, which established the conditions for Swap II of
deposits with the Financial System (amended by Decree N(degree)
2167/2002), for which deposit owners are entitled to opt and at
the same time amended some sections of Decree 905/02 as
explained in note 1.1.7. As of the filling date of these
financial statements the B.C.R.A. has not issued the procedure
regulations for the swap.
In accordance with matters disclosed in such note, the Bank will
opt to swap the eligible assets mentioned so as to obtain the
bonds requested by its depositors. Through a note dated October
25, 2002, the Bank informed the BCRA its will of swapping the
following holdings for the mentioned bonds suscription:
- Argentine Federal Government 9% Bonds for a valuation of
298,295.
- Guaranteed Loans of the Federal Governmental for an average
booking amount of 285,234.
- Provincial Governmental debts of an average booking amount
of 194,855.
e) Legal actions
As mentioned in note 1.1.8., the Bank has been notified of
injunctions, mainly pursuant to constitutional protection
actions, that require deposits to be reimbursed in cash in
amounts larger than provided under current legislation or
regulations, and/or the release of rescheduled deposits and/or
declare the inapplicability of legislation passed by National
Congress or measures issued by the Federal Executive or the
BCRA. As of June 30, 2002, the Bank had paid USD 76,012,000 for
actions in that currency, and ARS 546,344,000 for actions in
Argentine Pesos and in USD, paid in Argentine Pesos at the
"floating" exchange rate. Also, as of the date of filing these
Financial Statements, the Bank had paid USD 82,357,000 for
actions in that currency, and ARS 1,039,345,000 for actions in
Argentine Pesos and in USD, paid in Argentine Pesos at the
"floating" exchange rate.
Moreover, in view of the damage to the financial position of the
financial system overall and, naturally, of the Bank caused by
the execution of the precautionary measures ordered by the
various tribunals in relation to actions for infringement of
fundamental rights and freedoms and immediate measures, in
addition to the prejudice derived from the application to
certain bank loans of the salary variation coefficient instead
of the benchmark stabilization coefficient, BF reported these
prejudices
- 13 -
to the Ministry of Economy and the BCRA, making express reserve
of its rights to bring claims therefor.
As mentioned in the preceding paragraphs, the Bank capitalized
under the "Other receivables" account the differences between
US-dollar denominated deposits paid in such currency or in pesos
at the freely floating exchange rate under protection actions
and the rescheduled deposit balance (converted at the USD
1-to-ARS 1.40 exchange rate and adjusted by the benchmark
stabilization coefficient). As of June 30, 2002, such balance,
net of allowances, was ARS 187.479 (see Note 6). Following a
conservative accounting criterion, the Bank booked the
allowances it considered necessary to date to cover the future
recoverability of such assets.
As of the date of filing these Financial Statements, neither
Federal, nor Buenos Aires City nor Provincial courts had ruled
on the substance of the matter; accordingly, the final outcome
of these legal actions is unknown.
f) Advances requested from the BCRA and financing received from
BBVA Madrid
For the purpose of covering the decrease in deposits, the Bank
obtained, during the period March through July 2002, advances
from the BCRA, which as of June 30, 2002, and the filing date of
these financial statements amount to 1,483,751 and 1,786,355,
respectively, and are recorded under "Other liabilities from
financial transactions - Central Bank of the Argentine Republic
Other". In guarantee of such assistance, the Bank executed a
first-degree security agreement whereby it encumbered in favor
of the BCRA a portion of the Bank's credit rights under the
Guaranteed Loan Agreement executed on December 7, 2001, pursuant
to Federal Executive Decree No. 1387/2001 as supplemented and
amended.
In addition to the advances granted by the BCRA, BF received
from BBVA the following:
- In April 2002, the Bank received assistance from BBVA
Madrid in the amount of USD 159 million, in security for
which it provided Guaranteed Loans to the Argentine
Government and syndicated loans granted to customers of the
non-financial private sector.
- In May 2002, the Bank sold its equity interest in BBVA
Uruguay to BBVA Madrid for USD 55 million (see note 2.2.).
- During July 2002, the Bank entered into repurchase
agreements with BBVA Madrid for an amount of USD 102.9
million.
- As disclosed in note 2.3., BBVA has offered to convert into
equity its holdings of subordinated corporate bonds issued
by the Bank for an amount of about USD 130 million as well
as the loan for USD 79.3 million disbursed in April 2002.
g) Liquidity
BCRA Communique "A" 3498 introduced changes to the minimum cash
and minimum liquidity requirements systems. The minimum cash
requirements thus imposed are higher than before.
Subsequently, the BCRA provided that for the period November
2001 through February 2002, the minimum cash and minimum
liquidity requirements and the related cash and liquidity
actually held are to be calculated as an average over such
four-month period, that is to say that the aggregate over such
period of the daily balances of the items comprised is to be
divided over the total number of days in the period.
Lastly, the BCRA issued Communiques "A" 3597, 3598 and 3732,
which established the System for Minimum Application of
Resources from on-demand and term obligations in pesos. The
items included are basically deposits and other financial
intermediation on-demand obligations in pesos as well as
fixed-term deposits subject to CER indexation. The related
requirement was set at 18%.
The Bank requested the BCRA to allow it to reduce minimum cash
requirements by and up to the excess of mandatory deposit
allocation arising from franchises granted by the BCRA, as well
as to offset the November 2001 - February 2002 position
regarding minimum cash requirements in pesos against those in
foreign currency. This issue is being analyzed by the oversight
agency.
- 14 -
h) BCRA Information Requirements
The BCRA issued a series of communiques related to its monthly
accounting information requirements whereby, it provided
postponements, suspensions and new due dates, as well as
additional information requirements also on an exceptional
basis. The information involved included trial balances,
information on debtors to the financial system, makeup of groups
of companies and minimum capital requirements and capital
actually held. Such changes also affected the filing of
financial statements for the quarters ended March 31, June 30,
and September 30, 2002.
BCRA Communique "A" 3599 suspended the requirements to file the
information for January and February 2002 on debtors to the
financial system, makeup of groups of companies and minimum
capital requirements and capital actually held.
Communique "A" 3687 set a new due-dates calendar, which was
abrogated by Communique "A" 3691.
After a series of Communiques that postponed or suspended
information filing requirements, Communique "A" 3760 of October
4, 2002 and Communique "A" 3773 of October 17, 2002, set the
definitive due-dates calendar for trial balances, debtors to the
financial system and makeup of groups of companies, financial
statements consolidated with significant branches and
subsidiaries in Argentina and abroad, and the respective
consolidated debtors'-situation statement.
On October 30, 2002, the Bank filed with the BCRA, the Pro-forma
balance sheets as of December 31, 2001, which include the
effects of Law No. 25,561, and the Decrees and Regulations that
constitute its administrative order.
As of filing date of these Financial Statements, the Bank had
filed with the BCRA the following required information: Trial
Balances and financial statements consolidated with significant
branches and subsidiaries in Argentina and abroad, for January,
February, March, April, May and June 2002.
The negative consequences of the situations described above on the
Financial System overall and in particular on the Bank, involve the
significant illiquidity, the impact of the devaluation of the
Argentine peso and the switch into pesos, the recoverability of loans
to both the Government and the private sectors, lost profitability
and the mismatch of terms and currencies.
In addition, the measures taken by the Federal Executive (Decrees No.
905/02 and 1836/02) allowed progress towards the compensation for the
asymmetrical switch into pesos and coverage of the foreign currency
position. Swap I of rescheduled deposits for federal government bonds
allowed depositors to choose to take such bonds in exchange for their
deposits and, as from October 1, 2002, banks are authorized to
reimburse part of such deposits in cash (in the case of the bank,
such reimbursement will amount to ARS 10,000 plus the benchmark
stabilization coefficient). Moreover, SWAP II of deposits for bonds
began on October 1, 2002.
On the basis of the situation described, the search for solutions to
Argentina's economic and financial situation will require further
measures. For example, the possibility of covering deposits with some
form of insurance, the settlement of Private Sector loans with bonds,
the lifting of the suspension of foreclosures on assets provided as
collateral, the lifting of the suspension of CER application,
compensation to financial institutions for the suspension of the CER,
the resolution of constitutional protection actions, compensation due
to financial institutions for having returned - by court order
pursuant to constitutional protection actions - deposits in dollars
at the floating exchange rate, differentiated application of the CER
to assets and liabilities, and the maturity of rescheduled deposits.
As of the filing date of these financial statements, issues that are
key to the Argentine economy remain pending solution. These include
the reconstitution of the Financial System, closing an agreement with
the International Monetary Fund, initiating negotiations with foreign
creditors, negotiations with operators of privatized utilities, and
the negotiations to refinance corporate loans of the private sector
companies.
- 15 -
To the date of filing of these financial statements, BF has increased
its deposit portfolio and the volume of transactions, coming into
compliance with the minimum cash ratio, and, barring any situation
beyond its control, the Board of the Bank expects to maintain the
equilibrium level achieved. Thus, the BCRA and the Bank are
continually assessing the measures while on October 29, 2002, the
Bank filed an update of the evolution of the actions included in the
plan presented in May 2002, and the evolution of the actions carried
by the Bank.
The Board of the Bank is optimistic as to the development of future
operations, especially if the Federal Government is eventually able
to correct the profound imbalance caused by the execution of the
precautionary measures ordered under actions for infringement of
fundamental rights and freedoms and immediate measures due, mainly,
to the impact of exchange differences between the provisions of such
court rulings and of the legal rules on de-dollarization of deposits,
and if the Federal Government eventually compensates for the
financial loss that the application of the salary variation
coefficient instead of the benchmark stabilization coefficient causes
to the economic and financial position of the Bank and the system
overall. BF has reported this situation to the Ministry of Economy
and the BCRA, making express reserve of its rights to bring claims
therefor.
The Bank's Management is continually assessing the impact that such
measures could have on the Bank's equity and financial position.
These financial statements have been prepared on the basis of the
going-concern assumption, based on the understanding that the
restructuring of the Financial System overall, the government-debt
restructuring and the Bank's and its subsidiaries' own plans and
actions will allow it to continue operating and maintain the
liquidity and solvency indicators required by the BCRA and,
accordingly, these financial statements do not include any
adjustments related to the recoverability of the asset amounts booked
and the sufficiency of liabilities, as could be necessary should the
situations described above not be resolved favorably.
2. CORPORATE SITUATION AND BANK'S ACTIVITIES
2.1. Corporate situation
BBVA Banco Frances S.A. (BF) has its main place of business in Buenos
Aires and operates, as of June 30, 2002, a 278-branch network and 39
offices of its affiliate Credilogros Compania Financiera S.A.
As from December, 1996, BF is part of Banco Bilbao Vizcaya Argentaria
S.A. (BBVA) global strategy, which controls the bank with 68,24%
corporate stock as of June 30, 2002.
Part of BF's corporate stock is publicly traded and has been
registered with the Buenos Aires Stock Exchange, New York Stock
Exchange and Madrid Stock Exchange.
- 16 -
2.2. Sale of interest in Banco Bilbao Vizcaya Argentaria Uruguay S.A.
On May 13, 2002, the Bank entered into an agreement with BBVA for the
sale of its 60.87% interest in BBVA Uruguay. This transaction was
approved by the Bank's Board of Directors at their meeting held on
May 13, 2002, and Banco Central de la Republica Oriental del Uruguay
on May 10, 2002. The total selling price for the shares amounted to
USD 55 million, which was collected on the date the transaction was
carried out.
2.3. Capital increase
At the Regular and Special Meetings held on August 7, 2002, the
stockholders approved the Bank's capital increase in the amount of up
to 1,250,000 nominal value for the subscription of common, book-entry
shares, entitled to one vote per share. Those shares may be paid up
in cash and/or with subordinated corporate bonds in foreign currency
issued by the Bank, maturing on March 31, 2005, and/or loans granted
by BBVA to the Bank. At the referred meeting the stockholders
delegated to the Board of Directors the powers to establish the
remaining conditions.
As of the issuance date of these financial statements, the Bank has
filed an IPO with the Argentine Securities Commission (CNV) and the
Buenos Aires Stock Exchange.
2.4. Banco Frances (Cayman) Limited
On August 15, 2002, the Bank made a capital irrevocable contribution
in kind (Federal Government Guaranteed Loans GL 08) with original
nominal values of USD 185,043,841, which were dedollarized under the
Executive Orders mentioned in 1.1.4, representing a book value in
pesos of 305,409. Such contribution was authorized by Resolution No.
360 of BCRA's Board of Trustees dated May 30, 2002, mean while is
pending the Cayman Islands Monetary Authority resolution, authorizing
the contribution capitalization.
In addition, the Bank has requested from the BCRA the authorization
to make the contribution of the Federal Government Libor 2012 bonds
in US dollars received as compensation, as disclosed in 1.1.3.e)
derived from the dedollarization effect of the Federal Government
Guaranteed Loans portfolio held by such subsidiary. Through Board
Resolution No. 645 of October 17, 2002, the BCRA authorized the Bank
to make the contribution in kind in the mentioned subsidiary for the
minor resulting of the amount of USD 386 million of BODEN 2012
(amount resulting of the Guaranteed Loans holdings in that subsidiary
as of December 31, 2001) or the required amount to comply the capital
relations requirements, according to the regulations of such country
monetary authority.
Up to date, the Bank informed of this Resolution to the Cayman
Islands Monetary Authority, waiting for its autorization to proceed
to the capitalization.
As of June 30, 2002, such contribution commitment for USD 386,000
thousands is booked in "Other liabilities - Miscellaneous payables."
3. SIGNIFICANT ACCOUNTING POLICIES
3.1. COMPARATIVE INFORMATION
a) As required by FACPCE Technical Resolution No. 8 (Argentine
Federation of Professional Councils of Economic Sciences),
CPCECABA Resolution No. 89/88 (Professional Council of Economic
Sciences of the City of Buenos Aires) and BCRA regulations, the
financial statements for the six-month period ended June 30,
2002, are presented comparatively with those of the same period
of prior year. For that purpose, the financial statements for
the period ended June 30, 2001, were restated in the June 30,
2002 currency by applying the adjustment rate derived from the
Internal Wholesale Price Index published by INDEC (Federal
Institute of Statistics and Census), considering that the
accounting measurements prior to January 1, 2002, are stated in
December 31, 2001 currency.
- 17 -
b) Through Communique "A" 3345, as supplemented, BCRA introduced
some changes to the rules related to the presentation and
disclosure of financial institution financial statements
effective as from December 31, 2001. Therefore, the financial
statements as of June 30, 2001, were reclassified, due to the
application of such rules, only for comparison with the
financial statements for the six-month period ended June 30,
2002.
c) The financial statements, notes and exhibits for the six-month
period ended June 30, 2001, include certain changes originated
in adjustments to prior years' losses of 138,876 booked in the
year ended December 31, 2001, as a result of the change in the
criterion followed by the Bank to estimate the income tax
charge, applying the deferred tax method as from that date.
3.2. RESTATEMENT OF THE HEAD OFFICE'S AND LOCAL BRANCHES FINANCIAL STATEMENTS
IN EQUIVALENT PURCHASING POWER
The financial statements have been taken from the Bank's books of account
in conformity with the standards of the BCRA.
The Bank presents its financial statements in constant currency, following
the restatement method established by FACPCE Technical Resolution No. 6,
using adjustment rate derived from the Internal Wholesale Price Index
published by the INDEC and under the provisions set forth by General
Resolution No. 415 of the CNV and BCRA's Communique "A" 3702.
Accordingly to the above mentioned method, the accounting measurements
were restated by the purchasing power changes through August 31, 1995. As
of that date, based in the prevailing economic stability conditions and
accordingly with CNV General Resolution No. 272 and BCRA Communique "A"
2365, accepted by the professional accounting standards, the accounting
measures were not restated through December 31, 2001. In view of CNV
General Resolution No. 415 and BCRA Communique "A" 3702, the method was
reinstated effective as from January 1(degree), 2002, considering the
previous accounting measures restated as of December 31, 2001.
3.3. VALUATION METHODS
The main valuation methods used in the preparation of the financial
statements have been as follows:
a) Foreign currency assets and liabilities:
They were converted at the Banco Nacion selling rate effective for
each currency as of the last working day of each period end. Exchange
differences were credited/charged to income of each period.
b) Government and private securities:
Government securities:
- Holdings in investment accounts: as provided by Communique "A"
3278 by the BCRA, they were valued at acquisition cost,
increased by compound interest formula due to the accrual
generated on the internal rate of return and the time elapsed
from the acquisition date. For the case of predating holdings
recorded in investment accounts as of May 31, 2001, the
acquisition cost was considered to be their respective book
values as of the same date.
The book value for each security is decreased in the amount of
the positive difference resulting from the book value less 120%
of the market value. As established by Communiques "A" 3269 and
3303 of the BCRA, this treatment was suspended from April to
December 2001, reinstated from January 2002, according to
Communique "A" 3785 of the BCRA.
The differences existing between acquisition values and those
mentioned in the preceding paragraphs were credited/charged to
income for the six-month periods ended June 30, 2002 and 2001
(see note 5).
- 18 -
- Holdings for trading or financial transactions: they were valued
based on current listed prices for each security as of June 30,
2002 and 2001. Differences in listed prices were
credited/charged to income for the six-month periods then ended.
- Unlisted Government Securities: they were valued at residual
nominal value plus income accrued as of June 30, 2002 and 2001.
Investments in listed private securities:
- Equity and debt instruments: they were valued based on current
listed prices as of June 30, 2002 and 2001. Differences in
listed prices were credited/charged to income for the six-month
periods then ended.
c) Guaranteed Loans - Decree No. 1387/2001:
As mentioned in Note 1, as of June 30, 2002, guaranteed loans are
stated at the swap values established by the Ministry of Economy as
of November 6, 2001, plus the related interest accrued through
period-end, translated into pesos at the ARS 1.40 = USD 1 exchange
rate and adjusted to the CER (Benchmark Stabilization Coefficient).
These guaranteed loans are booked in "Loans - To the nonfinancial
public sector" totaling ARS 5,246,093, net of discounts, in the
consolidated financial statements.
As set forth by BCRA Communique "A" 3366 and "A" 3385, the initial
value of guaranteed loans matched the previous book value of Federal
government bonds (classified and valued as "Investment accounts" or
"For trading or intermediation", under the BCRA's accounting
standards) and/or loans as of the swap date, without giving rise to
any income (loss) for the swap recognition, since the positive
difference generated between the swap values established by the
Ministry of Economy and the book value of the swapped bonds was
reflected in a balancing account. The balance of that account will be
charged to income on a monthly basis in proportion to the term of
each of the guaranteed loans.
As mentioned in note 1.1 (4), and considering Decree No. 1579/02 and
Resolutions Nos. 539/02 and 611/02, to the issuance date of these
financial statements, the Bank and its subsidiaries had not expressed
their will to withdraw the bids to convert provincial debt under
Section No. 25, Decree No. 1387/01, as supplemented.
d) Interest accrual:
Interest has been accrued according to a compound interest formula in
the periods in which it was generated, except interest on
transactions in foreign currency and those whose maturity does not
exceed 92 days, on which interest has been accrued by the straight
line method.
e) CER accrual
As mentioned in Note 1, as of June 30, 2002, receivables and payables
have been adjusted to the CER as follows:
- Guaranteed loans: they have been adjusted under Resolution
50/2002 of the Ministry of Economy, which resolved that the CER
effective 10 (ten) business days prior to the maturity date of
the related service will be considered for yield and repayments
of these loans.
- Other loans and receivables from sale of assets: they have been
adjusted under Communique "A" 3507 and supplementary
regulations, which resolved that the payments through September
30, 2002, will be made under the original terms of each
transaction and will be booked as prepayments, where as from
February 3, 2002, the principal was adjusted to the CER
prevailing on June 30, 2002, deducting the prepayments mentioned
above as from the payment date, except those subject to the
provisions of Decrees 762/02 and 1242/02, which excluded the
application of that coefficient from some mortgage, pledge,
personal and other lines of credit.
- Deposits and other assets and liabilities: the CER prevailing on
June 30, 2002 was applied.
- 19 -
f) Allowance for loan losses and contingent commitments:
For loans, other receivables from financial transactions and
contingent commitments: this allowance has been calculated based on
the Bank's estimated loan loss risk in light of debtor compliance and
the guarantee/security supporting the respective transactions, as
provided by Communique "A" 2729 as supplemented of the BCRA.
BCRA Communique "A" 3418 of January 3, 2002, provided that, for the
purposes of classificating debtors as of January 2002, the overdue
term admitted for debtors under normal situation classifications and
special procedures / inadequate compliance should be increased by 31
days.
BCRA Communique "A" 3463 of February 7, 2002, extended by 31 days the
overdue term admitted in addition to the term referred to above. Such
Communique also established that by February 2002, the overdue term
admitted for such classifications would be 62 days and 121 days,
respectively.
BCRA Communique "A" 3630 of June 10, 2002, provided that, for the
purposes of assessing the bad debt allowances for March and June
2002, the allowance percentages applicable to categories 1 and 2,
respectively (debtors in normal situation and inadequate compliance),
should be admitted for debtors classified as 2 and 3 (debtors in
inadequate compliance and nonperforming/deficient compliance) who are
62 and 121 days in arrears, respectively.
g) Loans and deposits in government securities:
They were valued at current listed price for each security as of June
30, 2002 and 2001, plus related accrued interest. Differences in
listed prices were credited/charged to income for the six-month
periods then ended.
h) Instruments to be received and to be delivered for spot and forward
transactions:
- Of foreign currency: they were valued based on the exchange rate
(seller's price) of Banco Nacion for each currency determined on
the last business day of the each period end.
- Of securities, associated with repurchase agreements:
o Holding in investment accounts (government securities): as
provided by Communique "A" 3278 by the BCRA, they were
valued at acquisition cost, increased by compound interest
formula due to the accrual generated on the internal rate
of return and the time elapsed from the acquisition date.
For the case of predating holdings recorded in investment
accounts as of May 31, 2001, the acquisition cost was
considered to be their respective book values as of the
same date.
The book value for each security is decreased in the amount
of the positive difference resulting from the book value
less 120% of the market value. As established by
Communiques "A" 3269 and 3303 of the BCRA, this treatment
was suspended from April to December 2001, reinstated from
January 2002, according to Communique "A" 3785 of the BCRA.
The differences existing between acquisition values and
those mentioned in the preceding paragraphs were
credited/charged to the income of the six-month period
ended June 30, 2002 and 2001 (see note 5).
o Holdings for trading or financial transactions (government
and private securities): they were valued based on current
listed prices for each security as of June 30, 2002 and
2001. Differences in listed prices were credited/charged to
income for the six-month periods then ended.
- 20 -
i) Amounts receivable and payable from spot and forward transactions
pending settlement:
They were valued based on the prices agreed upon for each
transaction, plus related premiums accrued as of June 30, 2002 and
2001.
j) Unlisted Corporate Bonds:
They were valued at acquisition cost plus income accrued but not
received as of June 30, 2002 and 2001.
k) Compensation to be received from the Federal Government:
As mentioned in note 1, the Bank assessed the amount of the
compensation to be received for the negative effect of stockholders'
equity as a result of the switch into Argentine pesos of foreign
currency payables and receivables, according to the method mentioned
in such note. Pursuant to the provisions of Decree No. 905/2002, the
Bank decided to apply the amount of the compensation to be received
to subscribe bonds for covering the foreign currency negative equity
position, which amounts to USD 600,922,400. Moreover, since such
position exceeded the amount of the compensation to be received, the
Bank decided to accept a payment in advance from the BCRA in the
amount of 24,888 to subscribe the bonds necessary for compensating
such position.
As of June 30, 2002, the compensation to be received by the Bank has
been booked as "Other receivables from financial intermediation -
Other receivables not covered by debtor classification regulations",
and was valued as follows:
- Compensation to be received from the Federal Government in US
dollars: at its residual nominal value plus the interest accrued
according to the conditions of issuance, switched into pesos
according to the provisions of note 3.3.a).
Additionally, Communique "A" 3785 settled that the Federal Government
Bonds to be received for the mentioned compensation, may be booked at
its technical valuation, and established a limitation for the
dividends distribution in cash up to the income exceeding the
difference among the book value of the bonds, and its listed price.
l) Assets out on financing lease:
As of June 30, 2002 and 2001, they have been valued at the net cost
value of the accumulated amortization through the end of the
six-month periods then ended. Such amortization was calculated, on a
monthly basis, considering the cost value less the current value of
unaccrued installments plus the net book value calculated as per the
conditions agreed upon in the respective contracts applying the
imputed interest rate thereto.
m) Investments in other companies:
- Investments in controlled financial institutions, supplementary
activities and authorized: they were valued based on the
following methods:
o Credilogros Compania Financiera S.A., Frances Valores
Sociedad de Bolsa S.A., Consolidar Administradora de Fondos
de Jubilaciones y Pensiones S.A., Consolidar Cia. de
Seguros de Vida S.A., Consolidar Cia. de Seguros de Retiro
S.A. and Atuel Fideicomisos S.A.: were valued by the equity
method.
o Banco Frances (Cayman) Ltd. and BBVA Uruguay SA: valued by
the equity method, converted into pesos following to the
following criteria:
The financial statements were adapted to the professional
accounting standards effective in Argentina and the rules
of the Central Bank of Argentina. Such financial
statements, which were originally stated in foreign
currency, were converted into Argentine pesos as detailed
below:
- Assets and liabilities were converted based on the
criterion described in 3.3.a).
- 21 -
- The assigned capital was calculated at the ARS amounts
remitted by the Bank.
- Unappropiated earnings were determined by the
difference between assets, liabilities and assigned
capital, converted into pesos as indicated above.
- Income (loss) for the period was determined by the
difference between unappropiated earnings at
beginning, less earnings distributed in cash and
unappropiated earnings at period-end, and was
allocated to "Income (loss) from long-term
investments".
- Investments in noncontrolled financial institutions,
supplementary activities and authorized: they were valued
according to the following methods:
o Rombo Cia. Financiera S.A., Visa Argentina S.A., Banelco
S.A. and Interbanking S.A.: were valued by the equity
method.
o Bladex S.A.: was valued at acquisition cost in foreign
currency plus the nominal value of stock dividends
received, converted into pesos based on the method
described in 3.3.a).
o Other: valued at acquisition cost, without exceeding their
recoverable value.
- Other noncontrolled affiliates: they were valued based on the
following methods:
o Consolidar A.R.T. S.A.: was valued by the equity method.
o Other: were valued at acquisition cost, without exceeding
their recoverable value.
As from the effectiveness date of Law No. 25,063, dividends in cash
or in kind received by the Bank from investments in other companies
in excess of accumulated taxable income of such companies at the time
of distribution thereof shall be subject to a 35% income tax
withholding, which shall be a single and final payment.
The Bank has not accrued this tax as it believes dividends from
profits recorded applying the equity method would not be subject to
this tax.
n) Bank premises and equipment and other assets:
They have been valued at acquisition cost plus increased from
prior-year appraisal revaluations, restated as explained in note
3.2., less related accumulated depreciation calculated in proportion
to the months of estimated useful life of items concerned. The net
book value of Bank premises and equipment and other assets taken as a
whole does not exceed the recoverable value of these items.
o) Intangible assets:
They have been valued at acquisition cost restated as explained in
note 3.2., less related accumulated depreciation calculated in
proportion to the months of estimated useful life of the items
concerned (see useful life assigned in Exhibit G).
p) Valuation of options:
Options purchased and sold, recorded under memorandum accounts, have
been valued at the exercise and market values, respectively, of the
asset or underlying index.
q) Employee termination pay:
The Entity expenses employee termination pay disbursed.
r) Reserve for other contingencies:
Includes the estimated amounts to meet contingencies of probable
occurrence that, if occurred, would give rise to a loss for the Bank.
- 22 -
s) Stockholders' equity accounts:
They are restated as explained in note 3.2., except for the "Capital
Stock" and "Noncapitalized contributions" accounts which has been
kept at original value. The adjustment resulting from its restatement
is included in the "Adjustment to Stockholders' Equity - Adjustment
to Capital Stock" account.
Additionally, through Communique "A" 3800 dated November 12, 2002,
the BCRA granted financial institutions an option to absorb in
advance the losses posed during the current year, equal to the
amounts booked in Unappropriated earnings and Unrealized valuation
difference, with the prior Board of Directors' approval and adding
the decision to be made by the Stockholders' Meeting, when
appropriate. When there are accumulated losses, they should be
absorbed firstly. This absorption should be disclosed following the
net income (loss) for the period in the Statement of Income and the
balance at period-end in the Statement of Changes in Stockholders'
Equity. As of the issuance date of these financial statements, the
Bank has not made use of that option.
t) Income tax:
The Bank determined the charge for income tax applying the effective
35% rate to taxable income estimated for each period considering the
effect of temporary differences between book and taxable income. The
bank considered as temporary differences those that have a definitive
reversal date in subsequent years. Therefore, as of June 30, 2002, it
determined a net operating loss (NOL).
Tax on minimum presumed income (TOMPI) was established by Law No.
25,063 in the year ended December 31, 1998, for a ten-year term. This
tax is supplementary to income tax: while the latter is levied on the
taxable income for the year, TOMPI is a minimum levy determined by
applying the current 1% rate on the potential income of certain
productive assets. Therefore, the Bank's tax obligation for each year
will coincide with the highest of these taxes. The above Law provides
that institutions governed by Financial Institutions Law must
consider as tax base 20% of their taxable assets, after deducting
non-computable ones. However, if TOMPI exceeds income tax in a given
year, the excess thereof may be computed as a payment on account of
any income tax in excess of TOMPI that may occur in any of the
following ten years.
In every year that net operating losses are offset, the tax benefit
(the benefit of the effective rate on the NOL used) will be realized
to the extent that income tax (net of the offsetting) equals or
exceeds tax on minimum presumed income, but will reduced by any
excess of the latter over former.
The AFIP (Argentine Public Revenue Administration) inspected open tax
periods and the Bank received ex officio assessments, which were
appealed before the Argentine Administrative Tax Court. Such agency,
to the issuance date of these financial statements, issued an opinion
on the ex officio assessment made in 1992, partially admitting the
claim of tax authorities. This ruling will be appealed before the
courts. Bank Management and tax and legal counsel estimate that the
Bank made a reasonable interpretation of effective regulations
regarding the periods in question.
In addition, on June 23, 2000, the Bank adhered to the system
provided by Decree No. 93/2000, relating to the taxes included
therein.
u) Statement of Income Accounts:
- The accounts accumulating monetary transactions (financial
expense and income, service charge expense and income, provision
for loan losses, operating expenses, etc.) were restated by
applying the adjustment coefficients to the historical amounts
accrued on a monthly basis.
- Accounts reflecting the effect on income resulting from the
sale, write-off, or usage of nonmonetary assets were computed
based on the value of such assets, as mentioned in note 3.2.
- Income from investments in subsidiaries was computed based on
such companies' income adjusted as explained in note 3.2.
- The effect derived from inflation for maintaining monetary
assets and liabilities has been recorded in three accounts:
"Monetary income (loss) on financial intermediation", "Monetary
income (loss) on operating expenses" and "Monetary income (loss)
on other operations".
- 23 -
4. CREDIT ASSISTANCE
4.1. CREDIT ASSISTANCE TO THE NONFINANCIAL GOVERNMENTAL SECTOR
As a result of Public Emergency and Exchange System Reform Law and
the public debt default, meeting such obligations is based on scant
Argentine Treasury resources and the persistent fiscal deficit of the
Federal, Provincial and Municipal Governments, which inevitably led
to a significant public indebtedness. Therefore, the Ministry of
Economy was empowered to take the actions and deal with the
formalities needed to reschedule the Federal Government's debt.
Thus, on February 27, 2002, the Federal and Provincial Governments
signed an agreement on the financial relationship and bases of a
federal tax revenue sharing system which, among other issues,
established that the Provincial Governments may request from Federal
Government to renegotiate provincial public debts; such debts could
thus be reprogrammed under the guidelines to which the federal public
debt is subject.
Subsequently, Decrees No. 471/2002 and 644/2002 established the
treatment applicable to debts originally assumed in US dollars or
other foreign currencies by the federal, provincial, and municipal
governmental sectors when such obligations are subject to Argentine
law regarding the regulatory framework provided for in Law No. 25,561
and Decree No. 214/2002.
As of June 30, 2002 and December 31, 2002, the Bank carried the
following receivables from the non financial governmental sector:
I. Securities:
06-30-02 12-31-01
----------------------------- -------------
BBVA Banco Consolidated Consolidated
Frances position position (1)
---------- ------------ -------------
Argentine Federal Government 9% Bonds - 2002 374,627 374,627 212,076
Argentine Republic External Bills 736,809 736,809 204,497
Tucuman Provincial Treasury Bonds 58,791 58,791 48,917
CCF (Tax credit certificates) 84,006 84,006 46,356
Treasury Bills 54,889 66,681 13,043
LECOP Bonds Treasury Bills 2,300 2,300 -
Other 19,157 74,643 22,683
--------- --------- ---------
Total 1,330,579 1,397,857 547,572
========= ========= =========
(1) Stated in December 31, 2001 currency.
II. Credit assistance to the governmental sector classified by
origin as follows:
06-30-02 12-31-01
----------------------------- -------------
BBVA Banco Consolidated Consolidated
Frances position position (1)
---------- ------------ -------------
o Argentine Government guaranteed loans
- Decree No. 1387/01 (net of discounts) 3,464,916 5,246,093 2,933,211
o Loans to the provincial governmental sector
- Buenos Aires 91,555 91,555 51,254
- Cordoba 287,014 287,014 160,508
- Entre Rios 87,949 87,949 49,235
- Chaco 163,720 163,720 91,653
- Formosa 86,715 86,715 48,545
- Santa Fe 111,383 111,383 61,791
- Misiones 60,143 60,143 33,669
- Other 99,813 99,813 73,259
o Loans to other governmental sector agencies 749,467 749,467 416,047
--------- --------- ---------
Total 5,202,675 6,983,852 3,919,172
========= ========= =========
(1) Stated in December 31, 2001 currency.
- 24 -
As to guaranteed loans, under Decree No. 1387/2001, during the
months of April to November, the Bank collected 109,105 in
interest on such loans.
III. Compensation to be received from the Federal Government: as
detailed in notes 1.1.3. and 1.2.a), the Bank and its
subsidiaries booked as "Other receivables from financial
intermediation - Other receivables not covered by debtor
classification regulations" in 2,384,141 , which reflects the
compensation to be received from the Federal Government, as
established by Decree No. 905/2002.
Considering that BCRA regulations related to minimum allowances for
loan loss risk do not entail setting an allowance for the credit
assistance granted to this sector and that, as of the date of
issuance of these financial statements, it is impossible to assess
the future effects which the ongoing economic crisis could have on
the recoverability of the book values of such holding and financing,
these financial statements do not include any adjustments which could
result from the resolution of these uncertainties.
4.2. CREDIT ASSISTANCE TO NONFINANCIAL PRIVATE SECTOR DEBTORS
The effects resulting from the crisis that Argentina is currently
enmeshed by and the difficulties evidenced in the payment chain have
had a negative impact on the Bank's credit assistance of debtors from
the commercial and consumer portfolios generating ever increasing
deterioration added to a highly uncertain environment in which it is
difficult to establish objective criteria to reach an agreement on
the refinancing of the loans granted.
BCRA Communique "A" 3630 of June 10, 2002, provided that, for the
purposes of assessing the bad debt allowances for March to June 2002,
the allowance percentages applicable to categories 1 and 2,
respectively (debtors in normal situation and inadequate compliance)
should be admitted for the debtors classified as 2 and 3 (debtors in
inadequate compliance and nonperforming/deficient compliance) who are
62 and 121 days in arrears, respectively.
Considering that the basic criterion to measure uncollectibility risk
is the ability to pay debts or commitments in the future emphasizing
cash flow analysis, the current situation does not allow for
uncollectibility risk to be objectively assessed.
On February 14, 2002, Law No. 25,563 was enacted. Such Law provides
that through December 10, 2003, Argentina is undergoing a productive
and loan emergency resulting from the current crisis. Such regulation
amended bankruptcy and insolvency proceedings laws and other related
regulations mainly aimed at debtors who have the possibility of
rescheduling their payables to the financial system as well as
suspending for a 180-day term all court or administrative foreclosure
proceedings, including mortgages and security interest.
After that, as mentioned in such note, Law No. 25,589 enacted on May
15, 2002, incorporated new amendments to the Bankruptcy Procedures
Law (under Law No. 25,563) and established limitations to the
suspension of judicial foreclosures, establishing a new 180-calendar
day term as from the enactment of such law, which was later extended
in 90 additional days.
As of June 30, 2002 and December 31, 2001, the Bank carried the
following principal and interest receivable from the non-financial
private sector:
06-30-02 12-31-01
----------------------------- -------------
BBVA Banco Consolidated Consolidated
Frances position position (1)
---------- ------------ -------------
Commercial loans portfolio 4,217,331 4,304,047 3,122,665
Consumer loans portfolio 1,275,286 1,361,751 1,868,976
Debt securities 200,445 274,724 96,168
(Allowances on loan portfolio) (989,687) (1,273,876) (582,929)
(Allowances on debt securities) (17,458) (35,039) (2,912)
--------- --------- ---------
TOTAL 4,685,917 4,631,607 4,501,968
========= ========= =========
(1) Stated in December 31, 2001 currency.
- 25 -
The final credit assistance recoverability depends on the evolution
of the Argentine economy and the effects of the above restructuring.
To the approval date of these financial statements, the future
effects that the continuous economic crisis may have on the
recoverability of the financing book value could not be determined.
These financial statements do not include any adjustments that may
arise from the solution of these uncertainties. Nevertheless, the
Bank is analyzing its loan portfolio in order to determine necessary
additional allowances. These situation may have a significant effect
on the year income (loss).
5. DIFFERENCES BETWEEN CENTRAL BANK OF THE ARGENTINE REPUBLIC STANDARDS AND
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES EFFECTIVE IN ARGENTINA
a) BCRA standards allow valuation of certain assets such as "holdings in
investment accounts" for the purposes of avoiding significant
alterations of financial entity income (loss) upon temporary listing
value oscillations of Government securities which are not earmarked
for trading transactions. In this sense and as disclosed in notes
3.3.b) and 3.3.h), as of June 30, 2002 and 2001, the Bank and its
subsidiaries classified part of its Government securities and certain
assets in Government securities under repurchase agreements (bank
borrows) as "holdings in investment accounts" in a total amount of
870,106 and 5,398,731, respectively. The amounts of 38,152 and
505,248 will be held until maturity of the related issues. As of June
30, 2002 and 2001, the listed price of such assets amounted to
760,822 and 5,005,403, respectively. The amounts of 38,152 and
501,821 will be held until maturity of the related issues.
Under professional accounting standards effective in Argentina, the
above listed Govermment Securities should have been valued at the
respective listed price, net of the estimated selling expenses, and
charging listed price differences to income for each period.
b) As mentioned in note 3.3.c), during the fiscal year ended December
31, 2001, and as a result of Decree No. 1387/2001 provisions, the
Bank and its subsidiaries swapped, on November 6, 2001, Federal State
securities, bonds, T-bills and unsecured loans at face value
3,291,795 with contra to guarateed loans in the amount of 3,360,403.
As of June 30, 2002, such loans were booked in the consolidated
financial statements under the account "Loans" net of the related
allowance in the amount of 5,246,093.
Under Argentine professional accounting standards, as of June 30,
2002, the valuation of the loans mentioned above should have been
carried out considering the related listed prices as of November 6,
2001, of the securities swapped which, as from such date are
considered as part of the transaction cost plus the related interest
accrued through fiscal year-end, which have been amounted to
3,936,270.
c) As disclosed in note 1.2.a), as of June 30, 2002, the Bank allocated
to stockholders' equity the amount of 418,706 from the "Unrealized
valuation difference" account related to the portion of the
compensation received under sections 28 and 29 of Decree No. 905/2002
of the Federal Executive. Such amount relates to the recognition of
40% of the net position in foreign currency as of December 31, 2001.
Under the professional accounting standards effective in Argentina,
as of June 30, 2002, such amount should have been charged to income
for the period.
d) As disclosed in notes 1.2.a) and 3.3.k), as of June 30, 2002, the
Bank and its subsidiaries booked as "Other receivables from financial
intermediation - Other receivables not covered by debtor
classification regulations" the bonds to be received for compensating
the negative equity effect derived from converting into pesos the
receivables and payables stated in foreign currency in the amount of
2,384,141. As mentioned in note 1.2.a), the Bank requested the
compensation en "Optative Bonds of the National Government (BODEN) in
US dollars 2012" in the amount of US dollars 618.699.800, meanwhile
the subsidiaries requested the compensation in "BODEN in Argentine
pesos 2007" in the amount of 9,441. At the approval date of the
Bank's financial statements the possible applications of the BODEN
have not been ruled.
- 26 -
Under professional accounting standards effective in Argentina, the
assets mentioned in the paragraph above should be valued at its
current value. At the approval date of the Bank's financial
statements, the market values are limited to the listed prices of
the BODEN 2012, which have been traded since September 25, 2002 in
the Stock Market and in the over-the counter market, with prices
between 40% and 48% of its US dollares face value, and the prices
published by the Ministry of Economy since October 7, 2002 for the
application of BODEN to settlement of certain financial loans, as
established by Decree N(degree) 905/02. Notwithstanding, at the
approval date of the Bank's financial statements, the traded volume
of BODEN has not been significant. Therefore, the market values may
not be representative of the effective value at which the mentioned
bonds will be traded.
Consequently, if the accounting standards effective in Argentina
mentioned in the paragraphs a), b) and c) above had been applied,
stockholders' equity as of June 30, 2002, and 2001, would have decreased
by 1,419,107 and 389,901, respectively. Moreover, the loss for the
six-month period ended June 30, 2002 would have decreased in 494,131,
mean while the income for the six-month period ended June 30, 2001 would
have decreased in 361,663.
6. BREAKDOWN OF MAIN ITEMS AND ACCOUNTS
As of June 30, 2002 and 2001, the breakdown of the items included under
Other accounts which exceed 20% of the total amount of each item is as
follows:
2002 2001
---------- ----------
- LOANS
Loans to foreign financial institutions - 123,811
Corporate loans 953,370 1,848,110
Other 508,256 212,963
---------- ----------
Total 1,461,626 2,184,884
========== ==========
- OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS
Other receivables not covered by debtor classification regulations
Compensation receivable from Federal Government 2,374,700 -
Other 120,504 175,966
---------- ----------
Total 2,495,204 175,966
========== ==========
- INVESTMENTS IN OTHER COMPANIES
In controlled-supplementary activities 170,384 205,834
In non-controlled-supplementary activities 5,513 8,389
In other non-controlled companies 35,066 28,258
---------- ----------
Total 210,963 242,481
========== ==========
- 27 -
2002 2001
---------- ----------
- OTHER RECEIVABLES
Prepayments 3,405 12,661
Balances from losses to be recovered 1,877 6,107
Guarantee deposits 17,136 167,053
Miscellaneous receivables (1) 409,436 53,316
Tax prepayments 88,459 1,886
Other 1,819 157
---------- ----------
Total 522,132 241,180
========== ==========
(1) Includes for the difference between the amount of the
constitutional protection actions for deposits paid at
floating exchange rate and the rescheduled deposits balance
(swichted into pesos at the USD = 1 - ARS = 1,40 rate and
adjusted by CER). Following a conservative accounting
criterion, the Bank booked the allowances it considered
necessary to cover the future recoverability of such assets.
As of June 30, 2002, such balance, net of allowances, was
187,479.
- OTHER LIABILITIES
Accrued salaries and payroll taxes 17,447 33,938
Accrued taxes 13,792 203,983
Miscellaneous payables (1) 1,513,517 50,532
Other 5,450 1,143
---------- ----------
Total 1,550,206 289,596
========== ==========
(1) Includes 1,466,800 as of June 30, 2002, for the capital
irrevocable contribution to Banco Frances (Cayman) Ltd. (Note
2.4).
- MEMORANDUM ACCOUNTS - DEBIT - CONTROL
Items in safekeeping 20,521,227 28,593,591
Collections items 801,996 437,061
Checks drawn on the Bank pending clearing 71,206 136,534
Other 3,810 11,479
---------- ----------
Total 21,398,239 29,178,665
========== ==========
- FINANCIAL INCOME
Gold and foreign currency exchange difference 1,348,300 29,072
Premiums on sales of foreign currency 2,369 23,610
Other 2,223 2,028
---------- ----------
Total 1,352,892 54,710
========== ==========
- FINANCIAL EXPENSE
Contribution to the Deposit Guarantee Fund 17,328 12,741
Taxes on financial income 10,141 19,969
Charges on loans impairment value 188,600 -
Other 7,074 24,353
---------- ----------
Total 223,143 57,063
========== ==========
- 28 -
2002 2001
---------- ----------
- SERVICE CHARGE INCOME
Rent of safe deposit boxes 3,025 3,849
Commissions for the activity of the depositary company of mutual
funds 474 2,893
Commissions for Capital Market transactions 1,529 27,047
Commissions for salary - payment services 1,077 1,629
Commissions for managing trust 1,467 3,863
Commissions on loans 6,719 3,221
Commissions on sales of insurance 3,312 7,055
Other 16,995 26,301
---------- ----------
Total 34,598 75,858
========== ==========
- SERVICE CHARGE EXPENSE
Taxes on service charge income 5,477 12,853
Other 207 259
---------- ----------
Total 5,684 13,112
========== ==========
- OPERATING EXPENSES
Rent 9,781 13,191
Depreciations of bank premises and equipment 18,257 22,436
Amortizations of organization and development expenses 32,811 37,740
Electric power and communications 12,406 17,240
Maintenance, conservation and repair expenses 11,467 17,146
Security services 10,085 13,002
Other 7,440 6,367
---------- ----------
Total 102,247 127,122
========== ==========
- OTHER INCOME
Income from sale of bank premises and equipment and other assets 2,565 5,504
Rent 481 1,042
Adjustment and interest on other receivables 5,720 463
Other 3,129 4,631
---------- ----------
Total 11,895 11,640
========== ==========
- OTHER EXPENSE
Loss from operations of bank premises and equipment and other assets 464 548
Amortization of goodwill 50,676 9,553
Depreciation of other assets 895 1,040
Uninsured losses 2,020 6,474
Other 13,926 18,197
---------- ----------
Total 67,981 35,812
========== ==========
- 29 -
7. RESTRICTIONS ON ASSETS
As of June 30, 2002, there are Bank assets which are restricted as
follows:
a) The "Loans to the non financial governmental sector" account includes
71,383 in guaranteed loans under Decree No. 1387/01, allocated to the
guarantee required to act as custodian of investment securities
related to pension funds.
b) Out of the Bank's active loan portfolio, 19,944 is allocated to the
guarantee securing payables to the BCRA and 1,734 is pledged to
secure the payable to the International Finance Corporation.
c) The "Loans to the non financial governmental sector" account includes
2,272,624 and 294,375 in guaranteed loans under Decree No. 1387/01,
which were pledged as security for the payments in advance received
by the BCRA and the assistance received from BBVA Madrid,
respectively. (see note 1.2.f).
8. CONTINGENTS
8.1 EXPORT TAX REBATES
In January 1993, ex-BCA found out that a group of companies
presumably related among them had used fake documentation to collect
export tax rebates, under current legislation through certain of its
branches.
Immediately upon becoming aware of such events, the ex-BCA reported
this situation to the Federal Police Banking Division pressing
criminal charges before the Federal Criminal Court N(degree) 2,
Clerk's Office N(degree) 5 of the City of Buenos Aires.
The BCRA has made certain observations to the procedure followed by
the ex-BCA in paying tax rebates. The ex-BCA has based its reply to
the BCRA on the fact that the aforesaid payments had been made
complying strictly with current regulations for the aforesaid
transactions.
On October 14, 1994, the General Director for Legal Affairs of the
Ministry of Economy and Public Works and Utilities (MEOSP) ordered
the ex-BCA to reimburse the amount which may be applicable to tax
rebate payments which, in his opinion, were considered inapplicable.
On October 26, 1994, the ex-BCA filed a notice with the MEOSP by
which it fully and emphatically rejected the aforesaid order for
containing untrue, erroneous and legally unfounded representations
since the ex-BCA acted in strict compliance with current regulations
when carrying out each and every transaction related to the payment
of export tax rebates.
On December 17, 1996, the ex-BCA was notified of the lawsuit filed by
the Federal State in the action styled MEOSP, Federal State vs. BCA
in regard of "Request for Opinion", at the Federal Administrative
Tribunal of Original Jurisdiction, Clerk's Office No. 1 of the City
of Buenos Aires.
The lawsuit has been filed for an undetermined amount in November
1995 even when it was first notified by the Federal State on the
aforesaid date.
In February, 1997, the ex-BCA put forth a defense to stop the
progress of the lawsuit filed by the Federal Government suspending
the term until the complaint is answered. In that filing the
Bank's Legal Counsel alleged that the ex-BCA acted in compliance
with the standards in force, and after a background analysis, it
became abundantly clear that it was the responsibility of the
governmental agencies that had not met the express control standards
under their exclusive charge.
The abovementioned exception was dismissed on December 1997 by the
judge hearing the case, therefore, in February 1998, the Bank decided
to file an appeal with the Court of Appeals.
- 30 -
The Court of Appeals ruled in favor of the bank's appeal, that is to
say, it upheld the bank's defense based on a legal defect and its
request that the Banco de la Nacion Argentina, the Customs Service
and the BCRA be summoned as parties to the suit. Both such requests
were rejected by the court of original jurisdiction and have now
deserved a favorable ruling from the appellate court.
At present, the proceedings are awaiting that the Federal State will
amend the vices of its action, hence once this has been complied
with, notifications will be resumed. Irrespective of the above, it
has been agreed to suspend the legal proceedings with a view to a
possible out-of-court transactions formulated by sellers, since this
out-of-court settlement was dropped by sellers, the abovementioned
legal proceedings were resumed. Despite the suspension of terms, the
parties agreed to a pre-trial stage for the production of evidence.
In any event, the eventual contingency resulting from such situation
will be assumed by the sellers of the ex-BCA under the terms of the
shares sales contracts.
9. TRANSACTIONS WITH SUBSIDIARIES AND AFFILIATES (ART. 33 OF LAW No. 19,550)
The balances as of June 30, 2002 and 2001, for transactions performed with
parents, subsidiaries and affiliates are as follows:
Balance Sheet Memorandum Accounts (1)
--------------------------------------------- ------------------------
Assets Liabilities
--------------------- ----------------------
Company 2002 2001 2002 2001 2002 2001
---------------------------------------------- -----------------------------------------------------------------------
BBVA Madrid - 49,100 604,200 - 20,748 -
Frances Valores Sociedad de Bolsa S.A. - 349 596 1,633 - 257
Banco Frances (Cayman) Limited 72 96,016 377,636 359,957 29,500 39,676
Consolidar A.R.T. S.A. - - 36,051 30,454 159,215 176,824
Consolidar Administradora de Fondos de
Jubilaciones y Pensiones S.A. - - 15,156 11,754 71,231 79,909
Consolidar Cia. de Seguros de Retiro S.A. 88 - 80,625 8,593 669,012 660,476
Consolidar Cia. de Seguros de Vida S.A. 98 - 38,534 9,147 293,908 241,792
Banco Bilbao Vizcaya Argentaria Uruguay S.A. - 26 - - - 7,359
Credilogros Compania Financiera S.A. 45,434 88,540 1,949 11,322 - -
Atuel Fideicomisos S.A. 17 - 1,062 795 - -
BBV Seguros S.A. - - - 26,375 - 35,410
Consolidar Comercializadora S.A. - - 183 357 - -
Rombo Cia. Financiera S.A. 1,207 21,325 180 1,670 - -
Frances Administradora de Inversiones S.A. - - 4,955 - - -
Inversora Otar S.A. - - 2,303 - - -
(1) Includes Items in safekeeping, Credit lines granted (unused portion)
covered by debtor classification regulations and Guaranties given
covered by debtor classification regulations.
10. BANK DEPOSITS GUARANTEE INSURANCE SYSTEM AND BANK LIQUIDITY FUND
10.1. Bank deposits guarantee insurance system
Law No. 24,485, published on April 18, 1995, and Decree No. 540/95 of
the same date provided for the organization of a Bank Deposit
Guarantee Insurance System, characterized as being limited,
mandatory, and for valuable consideration, designed to provide
coverage for risks inherent in bank deposits, as a subsidiary and
supplementary protection to the one offered by the system of bank
deposit privileges and protection created by the Financial
Institutions Law.
Such Law provided for the organization of the company "Seguros de
Depositos Sociedad Anonima" (SEDESA) to manage the Deposit Guarantee
Fund (FGD), whose shareholders, as amended by Decree N(degree)
1292/96, will be the BCRA with one share, as a minimum, and the trust
made up of the financial institutions is such proportion as may be
determined by the BCRA for each one, based on their contributions to
the FGD.
- 31 -
This guarantee system does not include deposits made by other
financial institutions (including certificates of deposits acquired
by secondary trading), deposits made by persons directly or
indirectly related to the financial institution, the deposits
procured through systems offering additional incentives to the
interest rate (among which, the deposits obtained through the
"Libreton" product are contemplated), certificates of deposits of
securities, acceptances or guarantees and, lastly, those deposits
made after July 1, 1995 and to September 17, 1998, at a rate
exceeding by two percentage points per annum or more that paid by the
Banco Nacion Argentina for similar terms and, after such date, at a
rate exceeding by two percentage points per annum the rolling average
for the last five banking days of the deposit rates found by the
survey performed by the BCRA. Communique "A" 2399 issued on December
15, 1995, includes within the exemptions those certificates of
deposit transferable whose ownership has been acquired by way of
endorsement and deposits gathered through systems offering additional
incentives to the agreed-upon interest rate.
By Communique "A" 2337 of May 19, 1995, the BCRA notified the
financial institutions about the approval of the regulations on the
application of the guarantee system as from April 18, 1995.
In August 1995, such company was organized. The Bank holds a 9,8512%
equity interest therein.
Decree N(degree) 1127/98 of the Federal Executive of September 24,
1998, modified the amount covered by the deposit guarantee system
established by Decree N(degree) 540/95, increasing such amount to
thirty thousand, irrespective of the term. In the case of
transactions in the name of two or more persons, the guarantee will
be prorated among the respective holders. The total guarantee amount
by person may not exceed the abovementioned amount, regardless of the
number of accounts and/or deposits.
The deposits for amounts over thirty thousand are also included in
the guarantee system up to such maximum limit. The BCRA may decide at
any time and in general terms the amendment of such guarantee system
cover amount based on the development of the consolidation process of
the Argentine Financial System and other indicator that may be
considered appropriate.
On January 21, 2000, the BCRA established by Communique "A" 3064
that, as from the irrevocable contributions for January 2000, the
contribution percentage will be reduced from 0.03% to 0.015% provided
that for the remaining 0.015%, the financial institutions and SEDESA
execute a loan agreement to fund the FGD. Such agreement will have a
36-month term and will expire on the 12th day of the applicable month
and will accrue a rate equivalent to the income to be generated from
the placements of resources of the abovementioned fund made in
similar instruments to those elected for the investment of BCRA
international currency reserves. Such loan to the FGD is not subject
to Minimum Capital Requirements. On February 8, 2000, the Bank
executed the abovementioned loan agreement. In accordance with BCRA
regulations, such financing is recorded under the "Other Receivables
from Financial Transactions" account.
According to Communique "A" 3153 of the BCRA, from September 2000,
contributions decreased from 0.03% to 0.015% and the obligation to
take the loans mentioned in the prior paragraph was abrogated.
However, effective loans agreed prior to that date will remain
effective until their cancellation.
Finally, on November 9, 2001, through Communique A 3358, the BCRA
decided to reestablish the ordinary contribution to the deposit
guarantee fund at 0.03% as from the date upon which the contributions
for December 2001 are made.
As of June 30, 2002, the Bank had granted loans to SEDESA in the
amount of 7,667 that mature from January through August, 2003.
10.2. FLB (Bank Liquidity Fund)
On December 26, 2001, the Federal Executive issued Decree No. 32/2001
whereby it created the FLB to provide the financial system with
adequate liquidity levels. The FLB will be effective during five
years as from the date on which the decree is published and it will
be managed by SEDESA, which will act as trustee thereof.
- 32 -
In addition, the Decree provided that the FLB be set by financial
institutions by subscribing Class A Certificates of Participation for
up to 5% of the average daily private sector deposits balances in
pesos and foreign currency in each institutions as of November 2001
and by the Federal Government by annually subscribing Class B
Certificates of Participation. Class B Certificate of Participation
redemption will depend on the total settlement of Class A
Certificates of Participation.
BCRA issued a Communique on December 28, 2001, whereby it increased
such contribution to 6% of the average of the abovementioned
balances.
Subsequently, Communique "A" 3487 from the BCRA, dated February 22,
2002, set the contribution to the FLB at 1.9% effective as from March
1, 2002, on the average daily balances of private sector deposits in
pesos and foreign currency for November 2001, and provided that the
amounts contributed would be deductible from the minimum cash
requirement.
BCRA Communique "A" 3513 dated March 15, 2002, established the amount
at 3.5% of the average fixed by Communique "A" 3487 above effective
as from March 15, 2002. Finally, BCRA Communique "A" 3582 of April
26, 2002, established such contribution at 0%.
In December 2001, the Bank made a contribution to the FLB in the
amount of USD 54,436 thousands. In April 2002, the contribution to
FLB was reimbursed to the Bank, after its translation into pesos at
the ARS 1.40 = USD 1 exchange rate.
11. TRUST ACTIVITIES
11.1. Financial Trusts
BF acts as trustee in the Fideicomiso Financiero RT Finance II Trust,
program to securitize credit instruments by issuing securities
representing the debt for a face value of up to US$ 500,000,000 (the
1st. series of US$ 100,000,000 was issued on September 30, 1999), in
no case being personally liable for the liabilities assumed in the
performance of the contract obligations; such liabilities will be
satisfied with and up to the full amount of the corpus assets or the
proceeds therefrom. As of June 30, 2002, all principal and interest
installments had been paid, thereby terminating the commitments
towards the security holders and de-listing all the securities
involved, and a residual amount has been kept to meet any tax issues.
BF acts as financial trustee of the Noblex Argentina S.A. Trust, as
successor of the ex-BCA and is under no circumstances liable with its
own assets for liabilities undertaken in the performance of the
trust; such liabilities shall only be satisfied with and up to the
amount of the trust assets and the proceeds therefrom. The trust was
set up for the purpose of cancelling the receivables claimed by
unsecured creditors in the insolvency proceedings of "Noblex
Argentina S.A." which have been allowed and/or declared admissible
through the delivery of real property owned by the company in lieu of
payment and the full payment of its debts, and determine the way of
selling and allowing for the sale of the real property, to distribute
the proceeds (net of expenses) among all unsecured creditors pro-rata
according to the unsecured claims allowed and/or declared admissible
and/or for which proof of claim is filed after the trust was set up.
The main obligations assumed by the Bank for acting as trustee are
the following: attend the execution of the deeds transferring legal
title to the real property and accept or receive possession thereof,
execute the leases for the leased premises and deliver to Noblex such
real property under the lease; manage, protect, preserve, keep in
custody and insure the real property as long as legal title to the
real property continues to vest in the trustee and hire, at the
trust's expense, the services of real estate or other brokers and/or
auctioneers to sell such property. As of June 30, 2002 and 2001, all
the real estate has been sold and the proceeds from such sale have
been distributed among the beneficiaries, the formal termination of
the agreement being pending.
On January 5, 2001, the BCRA's Board of Director issued Resolution
No. 19/2001, providing for the exclusion of Mercobank S.A.'s (a bank
organized under Argentine legislation) senior liabilities under the
terms of Section 35 bis of the Financial Institutions Law, the
authorization to transfer the excluded assets to BF as trustee of the
Diagonal Trust, and the authorization to transfer the excluded
liabilities to
- 33 -
beneficiary banks. Also, on the mentioned date, the agreement to set
up the Diagonal Trust was subscribed by Mercobank S.A. as settle and
BF as trustee in relation to the exclusion of assets as provided in
the resolution abovementioned. BF entrusted Atuel Fideicomisos S.A.
the management of collections and the realization of the corpus
assets. As of June 30, 2002, total estimated corpus assets amount to
48,194.
11.2. Non Financial Trust
BF acts as trustee in 70 nonfinancial trusts, and in no case being
personally liable for the liabilities assumed in the performance of
the contract obligations; such liabilities will be satisfied with and
up to the full amount of the corpus assets and the proceeds
therefrom. The nonfinancial trusts concerned were set up to secure
the receivables of several creditors (beneficiaries) and the trustee
was entrusted the management, care, preservation and custody of the
corpus assets until (i) the requirements to show the noncompliance
with the obligations by the debtor (settlor) vis-a-vis the
beneficiaries are met, moment at which such assets will be sold and
the proceeds therefrom will be distributed (net of expenses) among
all beneficiaries, the remainder (if any) being delivered to the
settlor, or (ii) all contract terms and conditions are complied with,
in which case all the corpus assets will be returned to the settlor
or to whom it may indicate. The trust assets represent about $ 6,582
million and are of different kinds, because even though the majority
of them consist of cash or creditors' rights, BF is also trustee of
real estate and shares.
12. CORPORATE BONDS
12.1. Corporate Bonds issued by BF
The Regular Stockholders' Meeting of ex- Banco Frances del Rio de la
Plata (ex-BFRP) held on September 30, 1994, authorized the creation
of a five-year program for issuance and reissuance of corporate
bonds, nonconvertible into shares, for an amount of up to US$
500,000,000.
On October 6, 1997, the Regular and Special Stockholders' Meeting
ratified for the whole program effective period the delegation to the
Board of Directors, approved by the Regular Stockholders' Meeting
held on September 30, 1994, of the necessary powers to determine all
the issuance conditions of the corporate bonds (including collection
subordination) to be issued under the company's corporate bonds
issuance program for an outstanding amount of up to US$ 500,000,000,
authorized by CNV's Certificate No. 87 of December 16, 1994.
On April 27, 1999, the Regular and Special Stockholders' Meeting
decided to extend the term of the abovementioned program for five
years, authorizing the Board of Directors to take the necessary steps
for issuance thereof. In addition, it authorized the issuance of
corporate bonds convertible into share of commons stock in the amount
of up to US$ 200,000,000 either under the Bank's program or
otherwise, grating the Board of Directors the necessary authority to
carry out the issuance, establish the conversion value, determine the
terms of the securities and modify the current program.
On April 27, 2000, the Regular and Special Stockholders' Meeting
approved to increase the outstanding amount under the abovementioned
program for up to US$ 1,000,000,000 and delegated onto the Board of
Directors the performance of proceedings to obtain approval before
CNV and Buenos Aires Stock Exchange (BCBA) and such other stock
exchanges as may be chosen to be listed. The increase was authorized
by CNV's Certificate No. 268 of July 18, 2000.
In addition, the abovementioned Stockholders' Meeting approved the
creation of a program for the issuance of non-subordinated short-term
corporate notes to be issued under several classes and series up to a
total amount outstanding at any given time of US$ 300,000,000; the
term of the program is five years, during which corporate notes
nonconvertible into shares and unsecured or guaranteed by third
parties may be issued for a term of up to one year in accordance with
the conditions stipulated by the Board of Directors.
- 34 -
The following chart reflects corporate bonds in force as of June
30, 2002:
Book
Nominal Payment balance Capital
Global program Date Face Price annual of (in expiration
amount of issue Features value Currency of Issue rate interest thousands) date
-------------- -------- -------- ----- -------- -------- ------- -------- ---------- ----------
USD 1,000,000,000 03/31/1998 Subordinated 150,000,000 USD 100% (1) Semiannual 578,182 03/31/2005(3)
USD 1,000,000,000 10/31/2000 Non-subordinated 150,000,000 USD 100% (2) Semiannual 573,557 10/31/2002(4)
(1) Libor plus 330 basis points.
(2) Libor plus 145 basis points.
(3) Principal is fully repayable upon maturity.
(4) At the issuance date of these financial statements this bonds have
been refinanced through the issuance of a new bond. Such refinancing
included the interest payment and a five percent of capital as of
October 31, 2002, the payment of a 5,26 percent of capital of the new
bond in 180 days, while the remaining capital will be paid in a year.
According to the provisions of the Corporate Bond Law and to the
rules of the BCRA, the proceeds from the issuance of corporate bonds
are allocated to (i) granting mortgage loans to purchase and repair
housing and personal loans in Argentina; (ii) granting corporate
loans in Argentina earmarked for contributions to working capital;
investment in physical assets located in Argentina or refinancing
liabilities, or (iii) contributing to working capital, investing in
physical assets located in Argentina or refinancing liabilities.
12.2. Corporate bonds issued by CB
As regards the agreement executed by CB with the Fondo Fiduciario de
Asistencia a Entidades Financieras y de Seguros (FFAEFS) (see note
14), as of June 30, 2002, there is a series of common, subordinate
corporate bonds nonconvertible into shares for a face value of US$
30,000,000 issued on December 18, 1998, at LIBOR plus 4% per annum in
the first period and then, LIBOR plus 3% or 8.07% per annum in case
the abovementioned interest rate were, for this period, less than
8.07% per annum, due on December 29, 2004. The principal is amortized
in five annual, equal and consecutive installments, having the first
matured on December 29, 2000, and the next maturing every December 29
through the final maturity date. The interest will be payable in
arrears on an annual basis on same payment date of the principal's
amortization.
As of June 30, 2002, the accounting value of such payables amounted
to 23,414, after conversion into Argentine pesos at the USD 1 = ARS 1
exchange rate.
13. DERIVATIVES
As of June 30, 2002, the Bank has entered into sale forward
transactions in foreign currency as hedging against resources in
Argentine pesos. These transactions have been cancelled during
August, 2002.
Such transactions have been booked under "Other receivables from
financial transactions" in the amount of 5,000, and under "Other
liabilities from financial transactions" in the amount of 7,000.
Income (loss) from these transactions in the six-month period ended
June 30, 2002, amount to 2,369 and are booked under "Financial Income
- Premiums on foreign currency sales".
- 35 -
14. FUNDING OF THE FFAEFS
14.1. On November 22, 1996, the ex-BCA requested the Board of the FFAEFS
for a US$ 60,000,000 loan to finance the purchase of certain assets
and liabilities to be excluded from ex - Banco Caseros S.A. Such
request was granted and the respective agreement was signed on
December 18, 1996.
By means of such agreement, the Bank undertook to repay the loan
seven years after disbursement by the FFAEFS on December 20, 1996,
accruing compensatory interest at the rate fixed by the International
Bank for Reconstruction and Development for the Argentine National
State for the second tranche of the loan called "Bank Reform Loan
3926-AR" plus 1% p.a.
Due to this agreement, the Bank may not distribute cash dividends in
amounts exceeding 50% of liquid and realized income related to each
balance sheet normally prepared.
The Bank may issue subordinate corporate bonds with authorization of
the public offering by the CNV and the authorization to trade on the
BCBA under the conditions established in the aforesaid agreement and
up to the amount actually loaned. In this sense, the BCRA authorized
to compute the financial assistance from its granting as subordinated
debt to calculate the minimum capital requirement under BCRA
regulations.
On July 22, 1997, the ex-BCA Regular Stockholders' Meeting approved
issuing subordinated corporate bonds in the amount of US$ 60,000,000
and granted the Board of Directors the power to determine the
issuance terms and conditions not expressly determined by such
Stockholders' Meeting. To date, the mentioned corporate bonds were
not issued.
14.2. On December 22, 1997, CB executed with the FFAEFS a loan for
consumption agreement in the amount of US$ 30,000,000 which will be
reimbursed in five annual, equal and consecutive installments
starting as from the disbursement date. The first one will be paid
three years after such date. The loan will accrue LIBOR plus 4%.
Due to this agreement, the BF may not distribute cash dividends in
amounts exceeding 50% of liquid and realized income related to each
balance sheet normally prepared.
As per this agreement, CB issued subordinate corporate bonds with the
authorization for public offering by the CNV and the authorization to
trade on the BCBA in the terms and conditions established in the loan
for consumption agreement and under Communique "A" 2264 of the BCRA
for the amount equivalent to that effectively loaned under the loan
for consumption agreement referred to above. By Resolution No. 12,384
of August 28, 1998, the CNV authorized the issuance of common,
subordinate corporate bonds nonconvertible into shares for a nominal
value of US$ 30,000,000. Such issuance took place on December 18,
1998 (see note 12.2).
As of June 30, 2002, by Resolution No. 321 of the BCRA, the Bank
recorded the above mentioned financing in the "Subordinated Corporate
Bonds" account.
15. CHANGES IN CAPITAL STOCK
Changes in the Bank's capital stock are as follows:
- 36 -
Total
(in thousands)
---------------------
Capital Stock as of June 30, 1986: 1
Date of
----------------------------------------------------
Stockholders' Registration with the
Meeting deciding on Public Registry of Form of Amount Total
the issuance Commerce placement (in thousands) (in thousands)
---------------------- ----------------------------- ------------------ ----------------- ---------------------
10-29-1987 03-16-1988 (1) 1 2
09-09-1988 01-18-1989 (1) 14 16
10-19-1989 04-25-1990 (1) 608 624
09-20-1990 05-31-1991 (1) 26,027 26,651
08-23-1991 07-13-1992 (1) 31,448 58,099
09-02-1993 11-09-1993 (1) 34,860 92,959
09-02-1993 02-18-1994 (2) 18,540 111,499
09-28-1995 02-01-1996 (1) 16,725 128,224
10-10-1996 12-13-1996 (1) 19,233 147,457
10-06-1997 03-05-1998 (2) 25,000 172,457
10-06-1997 03-05-1998 (3) 14,174 186,631
04-27-1999 08-20-1999 (2) 23,000 209,631 (4)
(1) Dividends in shares and/or partial capitalization of the Adjustment
to Capital.
(2) Through public subscription of shares.
(3) Shares issued and given in exchange to ex-BCA minority stockholders
under the merger with ex BFRP.
(4) The amount of Capital Stock is fully paid in and authorized for
public offering by CNV.
16. COMPLIANCE WITH CNV REQUIREMENTS
16.1. Compliance with the requirements to act as agent in the
over-the-counter market
As of June 30, 2002, the Bank's Stockholders' Equity exceeds the
minimum requested to act as agent in the over-the-counter market,
according to Resolution No. 368/01 of the CNV.
16.2. Mutual Fund custodian
As of June 30, 2002, in its capacity of custodian of "FBA Acciones
Globales", "FBA Total", "FBA Renta", "FBA Renta Pesos", "FBA Renta
Dolares", "FBA Bonos", "FBA Calificado", "FBA Ahorro Dolares", "FBA
Ahorro Pesos", "FBA Renta Fija", "FBA Total 50", "FBA Renta Premium",
"FBA Horizonte", "FBA Futuro" and "FBA Renta Corto Plazo", the Bank
holds certificates of deposits, shares, corporate bonds, government
securities, index and options in custody in the amount of 61,090, all
of which making up the Fund's portfolio and booked in memorandum
accounts "Debit-Control - Other".
As of June 30, 2001, in its capacity of custodian of "FBA Acciones
Globales", "FBA Total", "FBA Renta", "FBA Renta Pesos", "FBA Renta
Dolares", "FBA Bonos", "FBA Calificado", "FBA Internacional", "FBA
Ahorro Dolares", "FBA Ahorro Pesos", "FBA Renta Fija", "FBA Total
50", "FBA Penta Premium", "FBA Financiero", "FBA Europa", "FBA
Tecnologico", "FBA Biotecnologico", "FBA Japon", "FBA Horizonte",
"FBA Futuro", "FBA Renta Corto Plazo" and "FBA EE.UU", the Bank held
certificates of deposits, shares, corporate bonds, options and
Government securities in custody in the amount of 1,598,028, all of
which making up the Funds' portfolio and booked in memorandum
accounts "Debit-Control-Other".
- 37 -
17. CONTRIBUTION TO THE INSTITUTO DE SERVICIOS SOCIALES BANCARIOS (BANKING
HEALTH SERVICES INSTITUTE)
The contribution provided in Section 17, point (f) of Law No. 19,322 -
originally 2% on interest and commissions charged by banks - was reduced
to 1% as from July 1, 1996 through July 1, 1997; as from the latter date,
the abovementioned contribution was repealed (Decrees No. 263, dated March
20, 1996 and No. 915, dated August 7, 1996).
The Argentine Bank Employees' Association (ABA) filed a constitutional
protection action seeking that the abovementioned decrees be declared
unconstitutional. The Federal Administrative-Contentious Court of Appeals
ruled in favor of the constitutional protection action, reversing the
original decision, and declared both decrees illegal. Subsequently, on
November 4, 1997, the Supreme Court of Justice of the Nation declared an
extraordinary appeal brought before the Federal Administrative-Contentious
Court of Appeals by the Federal Executive Branch (PEN) against the
abovementioned ruling to be inadmissible on formal grounds (that is to
say, the Supreme Court did not rule on the substance of the matter).
On December 19, 1997, the Administrator of the Argentine Bank Employees'
Health Plan (OSBA) sent to the ex-BFRP and the ex-BCA a letter, in light
of the abovementioned developments, stating that the contribution provided
in Section 17, point (f) of Law No. 19,322 is in full effect and
requesting that steps be taken to have the abovementioned contributions
deposited to the order of the abovementioned Health Care Organization.
In another turn of events, by Decree No. 336/98 dated March 26, 1998, the
PEN confirmed the total elimination of the Banking Health Services
Institute (ISSB) and set up a new entity (OSBA) which is not a
continuation of the ISSB.
Upon an action against the Federal State for protection of a right
guaranteed by the Constitution started by the enrollees of the ABA and
OSBA to annul Decree No.336/98, on April 3, 1998, the Judiciary decided to
issue an official letter to the Ministry of Economy and Public Works and
Utilities, as a restraining order and without rendering an opinion on the
substance of the matter, notifying that the abovementioned Ministry of
Economy will have to abstain from enforcing Decree No. 336/98,
specifically as far as the elimination of the contributions established by
Section No.17, point (f) of Law No. 19,322 in favor of the ISSB and any
other measure modifying the situation prior to the issuance of the Decree
objected to are concerned.
In the opinion of the Bank's Management, OSBA's request is illegitimate
and ungrounded since, to the date of issuance of these financial
statements, the court of last resource with jurisdiction on the merits of
the case has not ruled on the illegality of the Decrees. Therefore, in the
opinion of the Bank's Management, the contribution named has been
abrogated and the Bank has complied with all obligations arising out of
the abovementioned Decrees. No provision was recorded to cover the
contributions that may be claimed.
Notwithstanding with standing the above, on October 25, 2000, the BCRA
notified the bank, that OSBA requested and obtained an attachment over the
account held by the bank with the BCRA in the amount of 5,696 plus 1,709
for estimated interest, court costs and attorneys fees, while on October
31, 2000, the Bank receive service of process of the execution proceedings
file by OSBA. On March 6, 2001, the trial court ruled against the
execution sought against the Bank and ordered that the attachment be
lifted. The plaintiff appealed the trial court's judgment. In the opinion
of the Bank's Management, the plaintiff has no right of action and the
claim is illegitimate and inappropriate.
- 38 -
18. RESTRICTION ON EARNINGS DISTRIBUTIONS
18.1. As stated in Note 14, the Bank may not distribute as dividends in
cash an amount exceeding 50% of liquid and realized income related to
each one of the financial statements regularly prepared.
18.2. Under BCRA Communication "A" 3574, the distribution of profits is
suspended for the period established by such institution.
19. PUBLICATION OF THE FINANCIAL STATEMENTS
As provided by Communique "A" 760, the previous intervention of the BCRA
is not required for the publication of these financial statements.
20. ACCOUNTING PRINCIPLES - EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH
This financial statements are presented on the basis of the standards of
the BCRA and, except for the effect of the matter mentioned in Note 5, in
accordance with generally accepted accounting principles in Argentina.
Certain accounting practices applied by the Bank that conform with the
standards of the BCRA and with generally accepted accounting principles in
Argentina may not conform with the generally accepted accounting
principles in other countries.
The effects of the differences, if any, between generally accepted
accounting principles in Argentina and the generally accepted accounting
principles in the countries in which the financial statements are to be
used have not been quantified. Accordingly, they are not intended to
present financial position, results of operations and cash flows in
accordance with generally accepted accounting principles in the countries
of the users of the financial statements, other than Argentina (taking
into account the effect of the matter mentioned in Note 5).
EXHIBIT A
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Holding
----------------------------
Book Book
balance balance Position
Market as of as of without Final
Description Serie Identification value 2002 2001 options Options position
------------------------------------------- ----- -------------- ------- -------- --------- --------- ------- --------
GOVERNMENT SECURITIES
Holdings in investment accounts
Local
In pesos
Treasury bills 90 ARLE901=BA 42,000 52,069 - 42,000 - 42,000
-------- --------- --------- ---- --------
Subtotal in pesos 52,069 - 42,000 - 42,000
-------- --------- --------- ---- --------
In foreign currency
Argentine Republic External Bills ARVEY4D3= BA 643.076 736,809 - 680,670 - 680,670
Subtotal in foreign currency 736,809 2,906,483 680,670 - 680,670
-------- --------- --------- ---- --------
Subtotal in Holdings in investment accounts 788,878 2,906,483 722,670 - 722,670
======== ========= ======== ==== ========
Holdings for trading or financial
transactions
Local
In pesos
Treasury Bills 90 ARLE901=BA 2,820 2,820 (15,504) - (15,504)
Treasury Bonds 2002 13,316 13,316 13,316 - 13,316
Other 1,683 1,683 1,686 1,686
-------- --------- --------- ---- --------
Subtotal in pesos 17,819 856 (502) - (502)
-------- --------- --------- ---- --------
In foreign currency
Discounts Bonds 351 351 351 - 351
Other 1,653 1,653 1,653 - 1,653
--------- --------- --------- ---- ---------
Subtotal in foreign currency 2,004 231,224 2,004 - 2,004
--------- --------- --------- ---- ---------
Foreign
Other 197 197 197 - 197
--------- --------- --------- ---- ---------
Subtotal in foreign 197 10,491 197 - 197
--------- --------- --------- ---- ---------
Subtotal in Holdings for trading or
financial transactions 20,020 242,571 1,699 - 1,699
========= ========= ======== ==== ========
EXHIBIT A
(Contd.)
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Holding
----------------------------
Book Book
balance balance Position
Market as of as of without Final
Description Serie Identification value 2002 2001 options Options position
------------------------------------------- ----- -------------- ------- -------- --------- --------- ------- --------
Unlisted government securities
Local
In pesos
Argentine T-bills with which provincial
and federal governments settle
payables to vendors and employees and
which circulate in lieu of currency 2,300 - 2,300 - 2,300
Argentine Federal Government 9%
Bonds 2002 ARBGA23=BA 374,627 - 374,627 - 374,627
Tax credit certificates due in
2003/2004 84,006 - 84,006 - 84,006
Tucuman Provincial Treasury Bonds ARTUCU13=BA 58,791 - 58,791 - 58,791
Argentine T-bills with which the
Province of Buenos Aires
settles payables to vendors and
employees and which circulate
in lieu of currency 2,110 - 2,110 - 2,110
Other 44 - 44 - 44
--------- --------- --------- ---- ---------
Subtotal en pesos 521,878 - 521,878 - 521,878
--------- --------- --------- ---- ---------
In foreign currency
--------- --------- --------- ---- ---------
Subtotal in foreign currency - 519,349 - - -
--------- --------- --------- ---- ---------
Subtotal Unlisted government
securities 521,878 519,349 521,878 - 521,878
========= ========= ========= ==== =========
TOTAL GOVERNMENT SECURITIES 1,330,776 3,668,403 1,246,247 - 1,246,247
========= ========= ========= ==== =========
EXHIBIT A
(Contd.)
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Holding
----------------------------
Book Book
balance balance Position
Market as of as of without Final
Description Serie Identification value 2002 2001 options Options position
------------------------------------------- ----- -------------- ------- -------- --------- --------- ------- --------
INVESTMENTS IN LISTED PRIVATE
SECURITIES
Other debt instruments
Local
In foreign currency
Metrogas 2003 Corporate Bonds 38 38 38 - 38
--------- --------- --------- ---- ---------
Subtotal in foreign currency 38 202 38 - 38
--------- --------- --------- ---- ---------
Subtotal Other debt instruments 38 202 38 - 38
========= ========= ========= ==== =========
Other Equity instruments
Local
Sniafa S.A. SNI.BA 23 23 23 - 23
Indupa S.A. INU.BA 580 580 290 - 290
Perez Companc 20 20 20 - 20
--------- --------- --------- ---- ---------
Subtotal in pesos 623 2,977 333 - 333
--------- --------- --------- ---- ---------
In foreign currency
--------- --------- --------- ---- ---------
Subtotal in foreign currency - 797 - - -
--------- --------- --------- ---- ---------
Foreign
ADR Repsol 1,520 1,520 1 - 1
Other - 2,561 - 2,561
--------- --------- --------- ---- ---------
Subtotal in foreign 1,520 1,914 2,562 - 2,562
--------- --------- --------- ---- ---------
Subtotal Equity instruments 2,143 5,688 2,895 - 2,895
========= ========= ========= ==== =========
TOTAL INVESTMENTS IN LISTED PRIVATE
SECURITIES 2,181 5,890 2,933 - 2,933
========= ========= ========= ==== =========
TOTAL GOVERNMENT AND PRIVATE
SECURITIES 1,332,957 3,674,293 1,249,180 - 1,249,180
========= ========= ========= ==== =========
EXHIBIT B
CLASSIFICATION OF FINANCING FACILITIES BY STATUS
AND GUARANTIES RECEIVED AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
-Stated in thousands of pesos-
2002 2001
---------- ----------
COMMERCIAL PORTFOLIO
In normal situation
With senior or first - degree security and counter guaranty "A" 5,584,994 2,306,221
With senior of first - degree security and counter guaranty "B" 25,732 202,204
Without senior security or counter guaranty 2,231,976 5,688,443
In potential risk
With senior or first - degree security and counter guaranty "A" 4,724 353
With senior of first - degree security and counter guaranty "B" 14,754 18,473
Without senior security or counter guaranty 1,496,615 57,371
Nonperforming
With senior or first - degree security and counter guaranty "A" - -
With senior of first - degree security and counter guaranty "B" 36,095 13,717
Without senior security or counter guaranty 148,616 4,866
With high risk of uncollectibility
With senior or first - degree security and counter guaranty "A" 107 -
With senior of first - degree security and counter guaranty "B" 11,026 33,137
Without senior security or counter guaranty 71,978 118,397
Uncollectible
With senior or first - degree security and counter guaranty "A" - 177
With senior of first - degree security and counter guaranty "B" 10,808 18,090
Without senior security or counter guaranty 32,893 20,724
---------- ----------
Total 9,670,318 8,482,173
========== ==========
EXHIBIT B
(Contd.)
CLASSIFICATION OF FINANCING FACILITIES BY STATUS
AND GUARANTIES RECEIVED AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
-Stated in thousands of pesos-
2002 2001
---------- ----------
CONSUMER AND HOUSING PORTFOLIO
Normal compliance
With senior or first - degree security and counter guaranty "A" 1,691 33,012
With senior of first - degree security and counter guaranty "B" 506,027 1,334,270
Without senior security or counter guaranty 531,334 1,878,012
Inadequate compliance
With senior or first - degree security and counter guaranty "A" - -
With senior of first - degree security and counter guaranty "B" 19,541 24,746
Without senior security or counter guaranty 25,194 41,452
Deficient compliance
With senior or first - degree security and counter guaranty "A" - -
With senior of first - degree security and counter guaranty "B" 11,887 9,392
Without senior security or counter guaranty 39,377 33,862
Unlikely to be collected
With senior or first - degree security and counter guaranty "A" 164 55
With senior of first - degree security and counter guaranty "B" 23,134 11,919
Without senior security or counter guaranty 67,275 55,292
Uncollectible
With senior or first - degree security and counter guaranty "A" 31 43
With senior of first - degree security and counter guaranty "B" 18,036 36,496
Without senior security or counter guaranty 31,229 62,997
Uncollectible, classified as such under regulatory requirements
With senior or first - degree security and counter guaranty "A" - -
With senior of first - degree security and counter guaranty "B" 7 98
Without senior security or counter guaranty 402 762
---------- ----------
Total 1,275,329 3,522,408
---------- ----------
General Total (1) 10,945,647 12,004,581
========== ==========
(1) Items included: Loans (before allowances); Other receivables from
financial transactions: Unlisted corporate bonds, Other receivables
covered by debtor classification regulations, Interest accrued and
pending collection covered by debtor classification regulations; Assets
out on financing lease (before allowances); Other receivables:
Receivables from sale of goods; Contingent credit - balance memorandum
accounts: Credit lines granted (unused portion) covered by debtor
classification regulations, Other guaranties given covered by debtor
classification regulations and Other covered by debtor classification
regulations.
EXHIBIT C
FINANCING FACILITIES CONCENTRATION
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
FINANCING
-----------------------------------------------------------------
2002 2001
---------------------------------- ------------------------------
Number of customers Outstanding % of total Outstanding % of total
balance portfolio balance portfolio
------------------------------------------------- ---------------- ----------------- ------------------------------
10 largest customers 5,742,874 52.47% 2,155,933 17.96%
50 next largest customers 2,653,806 24.25% 2,593,734 21.61%
100 following customers 821,046 7.50% 1,505,611 12.54%
Remaining customers 1,727,921 15.78% 5,749,303 47.89%
------------ -------- ---------- -------
Total (1) 10,945,647 100.00% 12,004,581 100.00%
========== ======= ========== =======
(1) See (1) in Exhibit B.
EXHIBIT D
BREAKDOWN BY FINANCING TERMS AS OF JUNE 30, 2002
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Term remaining to maturity
---------------------------------------------------------------------
Past-due More than
Description portfolio 1 month 3 months 6 months 12 months 24 months 24 months Total
--------------------------- --------- --------- --------- -------- --------- -------- --------- ----------
Non financial governmental
sector - 65,617 26,540 28,424 54,765 223,913 4,803,416 5,202,675
Financial sector - 45,892 82 82 283 851 2,758 49,948
Non financial private
sector and residents abroad 387,533 3,382,901 289,246 128,048 368,905 421,042 715,349 5,693,024
------- --------- ------- ------- ------- ------- --------- ----------
TOTAL 387,533 3,494,410 315,868 156,554 423,953 645,806 5,521,523 10,945,647 (1)
======= ======== ======= ======= ======= ======= ======== ==========
(1) See (1) in Exhibit B.
EXHIBIT E
DETAIL OF INVESTMENTS IN OTHER COMPANIES AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Concept Shares Amount
----------------------------------------------------------- ---------------------------------------------------- ----------------
Unit face Votes
Identification Description Class value per share Number 2002 2001
----------------------------------------------------------- ----------------------------- --------- -------- --------- ------
FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND
AUTHORIZED
Controlled
Local
33642192049 o Frances Valores Sociedad de Bolsa S.A. Common $ 500 1 3,199 4,539 1,509
30663323926 o Consolidar Administradora de Fondos
de Jubilaciones y Pensiones S.A. Common $ 1 1 1,899,600 97,437 158,200
33678564139 o Consolidar Cia. de Seguros de Vida S.A. Common $ 10 1 197,875 29,408 21,931
30678574097 o Consolidar Cia. de Seguros de Retiro S.A. Common $ 10 1 200,000 38,257 23,953
30704936016 o Credilogros Compania Financiera S.A. Common $ 1 1 39,700,000 49,265 93,629
o Other 743 241
Foreign
17000963 o Banco Frances (Cayman) Ltd. Common US$ 1 - 82,283,621 935,529 387,163
17000952 o BBVA Uruguay S.A. - 112,206
--------- -------
Subtotal controlled 1,155,178 798,832
--------- -------
Noncontrolled
Local
33707124909 o Rombo Cia. Financiera S.A. Common $ 1 1 8,000,000 10,654 14,470
30604796357 o Banelco S.A. Common $ 1 1 12,014 3,628 4,057
o Other 1,885 4,332
Foreign
o Bladex S.A. Com. B US$ 6,67 - 17,646 741 383
Pref. US$ 10 - 2,498 216 112
--------- -------
Subtotal noncontrolled 17,124 23,354
--------- -------
Total in financial institutions, supplementary
and authorized 1,172,302 822,186
========= =======
IN OTHER COMPANIES
Noncontrolled
Local
30685228501 o Consolidar ART S.A. Common $ 1 1 375,000 10,132 11,090
o Other 4,434 4,513
Foreign
17000524 o A.I.G. Latin American Fund 20,442 11,045
o Other 58 1,610
--------- -------
Subtotal noncontrolled 35,066 28,258
--------- -------
Total in other companies 35,066 28,258
========= =======
TOTAL INVESTMENTS IN OTHER COMPANIES 1,207,368 850,444
========= =======
EXHIBIT E
(Contd.)
DETAIL OF INVESTMENTS IN OTHER COMPANIES AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Information about the issuer
----------------------------------------------------------------------------
Data from last published financial statements
------------------------------------------------------
Description Main business Fiscal Net income
year/ Capital Stockholders' for the fiscal
period-end stock equity year/ period
---------------------------------------------------- ---------------------- ---------- --------- --------------------------------
FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND AUTHORIZED
Controlled
Local Thousands of $
o Frances Valores Sociedad de Bolsa S.A. Stock broker 06/30/02 1,600 4,541 2,353
o Consolidar Administradora de Fondos de
Jubilaciones y Pensiones S.A. Pensions fund manager 06/30/02 3,525 189,945 (28,694)
o Consolidar Cia. de Seguros de Vida S.A. Insurance company 06/30/20 3,000 32,709 (4,584)
o Consolidar Cia. de Seguros de Retiro S.A. Insurance company 06/30/02 3,000 40,840 (6,759)
o Credilogros Compania Financiera S.A. Financial institution 06/30/20 57,100 68,124 (61,529)
o Other
Foreign Thousands of US$
o Banco Frances (Cayman) Ltd. Banking 06/30/02 82,284 935,529 (987,730)
o BBVA Uruguay S.A. Banking 03/31/02 94,315 270,020 1,963
Noncontrolled
Local Thousands of $
o Rombo Cia. Financiera S.A. Financial Institution 06/30/02 20,000 3,653 (19,781)
o Banelco S.A. Information services 06/30/02 9,755 28,005 7,818
o Other
Foreign Thousands of US$
o Bladex S.A. Banking 12/31/00 132,851 699,205 97,055
IN OTHER COMPANIES
Noncontrolled
Local Thousand of $
o Consolidar ART S.A. Workers compensation 06/30/02 3,000 81,192 (7,568)
o Other
Foreign Thousand of US$
o A.I.G. Latin American Fund Investing 12/31/00 37,048 27,615 (9,433)
o Other
EXHIBIT F
MOVEMENT OF BANK PREMISES AND EQUIPMENT
AND OTHER ASSETS FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Restated net book Additions Transfers Decreases
value at beginning in constant in constant in constant
Description of fiscal year currency currency currency
---------------------------------------------------------------------------------------------------------------------
BANK PREMISES AND EQUIPMENT
Real Estate 343,928 4,272 343 2,555
Furniture and Facilities 37,448 1,577 - -
Machinery and Equipment 58,871 7,399 - -
Automobiles 506 125 - -
------- ------ ----- -----
Total 440,753 13,373 343 2,555
======= ====== ===== =====
OTHER ASSETS
Works of Art 877 1 - -
Rent assets 6,525 - - 880
Assets acquired to secure loans 17,262 2,488 (8,538) 2,082
Stationery and office supplies 1,939 2,270 - 3,104
Other assets 111,780 19 8,195 6,947
------- ------ ------ ------
Total 138,383 4,778 (343) 13,013
======= ====== ====== ======
EXHIBIT F
(Contd.)
MOVEMENT OF BANK PREMISES AND EQUIPMENT
AND OTHER ASSETS FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Depreciation for the period
in constant currency
-------------------------------------
Description Years of Amount Net book value at Net book value at
useful life 2002 2001
------------------------------------------------------------------------------------------------------------------------------
BANK PREMISES AND EQUIPMENT
Real Estate 50 4,321 341,667 344,745
Furniture and Facilities 10 2,951 36,074 37,589
Machinery and Equipment 5 10,914 55,356 66,636
Automobiles 5 71 560 625
------ ------- -------
Total 18,257 433,657 449,595
====== ======= =======
OTHER ASSETS
Works of Art - - 878 877
Rent assets 50 45 5,600 6,589
Assets acquired to secure loans 50 93 9,037 7,457
Stationery and office supplies - - 1,105 1,800
Other assets 50 757 112,290 104,626
------ ------- -------
Total 895 128,910 121,349
====== ======= =======
EXHIBIT G
MOVEMENT OF INTANGIBLE ASSETS FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Restated net book
value at Additions Decreases
beginning of in constant in constant
Description fiscal year currency currency
------------------------------------------------------- ------------------ -------------------
- Goodwill 99,824 - -
- Organization and development
expenses (1) 124,470 47,502 -
------- ------ ------
Total 224,294 47,502 -
======= ====== ======
Amortization for the period
in constant currency
--------------------------------------
Description Years of Amount Net book value at Net book value at
useful life 2002 2001
---------------------------------- ------------------- ------------------ ----------------- -------------------
- Goodwill 10 50,676 49,148 109,380
- Organization and development
expenses (1) 5 32,811 139,161 145,175
------ ------- -------
Total 83,487 188,309 254,555
====== ======= =======
(1) This mainly includes costs from information technology projects contracted
from independent parties and leasehold improvements.
EXHIBIT H
CONCENTRATION OF DEPOSITS
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
2002 2001
---------------------------------- ----------------------------------
Number of customers Outstanding % of total Outstanding % of total
balance portfolio balance portfolio
------------------------------------------------- ---------------- ----------------- ----------------------------------
10 largest customers 484,574 7.73% 1,486,406 10.25%
50 next largest customers 438,590 6.99% 1,302,733 8.99%
100 following customers 221,535 3.53% 529,430 3.65%
Remaining customers 5,125,622 81.75% 11,178,758 77.11%
--------- ------ ------------ --------
TOTAL 6,270,321 100.00% 14,497,327 100.00%
======== ====== ========== ========
EXHIBIT I
BREAKDOWN OF MATURITY TERMS OF DEPOSITS,
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS AND
SUBORDINATED CORPORATE BONDS
AS OF JUNE 30, 2002
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Term remaining to maturity
-------------------------------------------------------------------------
More than
Description 1 month 3 months 6 months 12 months 24 months 24 months Total
-------------------------------- ---------- ---------- -------- ----------- ---------- ---------- -------------
Deposits 2,743,016 52,563 28,328 242,293 1,752,799 1,451,322 6,270,321
--------- ---------- -------- ----------- --------- ----------- -------------
Other liabilities from financial
transactions
Central Bank of the Argentine
Republic (1) 1,519,289 2,987 6,196 5,968 710 40 1,535,190
Banks and International
Organizations 1,315,343 69,852 2,050 428 571 - 1,388,244
Non-subordinated corporate bonds - - 573,557 - - - 573,557
Financing received from Argentine
financial institutions 32,164 - - - 74,970 - 107,134
Other 310,828 - - - - - 310,828
--------- ---------- -------- ----------- --------- ----------- ---------------
TOTAL 3,177,624 72,839 581,803 6,396 76,251 40 3,914,953
--------- ---------- -------- ----------- --------- ----------- ---------------
Subordinated corporate bonds - 8,182 8,420 - 7,497 577,497 601,596
--------- ---------- -------- ----------- --------- ----------- ---------------
TOTAL 5,920,640 133,584 618,551 248,689 1,836,547 2,028,859 10,786,870
========= ========== ======== =========== ========= =========== ===============
(1) Under Communique "A" 3748 of the BCRA dated September 27, 2002, the
maturity date of financing granted by BCRA to assist lack of liquidity of
the financial institutions, in force as of that date, was rescheduled to
January 2, 2003. This extension has not been considered in the present
breakdown of maturity terms.
EXHIBIT J
MOVEMENT OF ALLOWANCES FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Decrease Net book value
-------------------------- --------------
Restated net Increase
book value at in Reversals Applications Monetary gain
beginning constant in constant in constant generated on
Description of fiscal year currency(6) currency currency allowances 2002 2 2001
----------- -------------- ----------- -------- -------- ---------- ---- - ----
ALLOWANCES QUALIFYING ASSETS
Loans
- Doubtful accounts
and impairment value 897,261 886,574(1)(5) - 98,140 (696,008) 989,687 356,467
Other receivables from
financial transactions
- Doubtful accounts
and impairment value 8,184 21,756(1) - - (8,423) 21,517 6,379
Assets out on Financing
Lease
- Doubtful accounts
and impairment value 654 56(1) - - (330) 380 532
Investments in other
companies
- Impairment value 10,558 21,875(3) - - (11,991) 20,442 -
Other receivables
- Doubtful accounts 2,753 235,303(2) - 1,027 (46,039) 190,990 5,178
------- --------- ------- -------- --------- --------- -------
Total 919,410 1,165,564 - 99,167 (762,791) 1,223,016 368,556
======= ========= ======= ======== ========= ========= =======
LIABILITIES-ALLOWANCES
- Contingents
commitments 1,130 45,067(1) - - (4,585) 41,612 661
- Other contingencies 101,246 37,249(4) - 43,708 (44,151) 50,636 48,519
------- --------- ------- -------- --------- --------- -------
Total 102,376 82,316 - 43,708 (48,736) 92,248 49,180
======= ========= ======= ======== ========= ========= =======
(1) Recorded in compliance with the provisions of Communique "A" 2729, as
supplemented, of the BCRA, taking into account note 3.3.f).
(2) Recorded to cover possible uncollectibility risks arising out of payments
under protection actions booked in other receivables (see note 6).
(3) Recorded, mainly, to recognize the estimated impairment in AIG Latin
American Fund's equity as of June 30, 2002.
(4) Recorded to cover possible contingencies that were not considered in other
accounts (civil, labor, commercial and other lawsuits). See note 3.3.q).
(5) Includes 188,600 of charge on loans impairment, booked in "Financial
expense - Other".
(6) Includes exchange differences generated as allowances in foreign currency,
booked in the "Gold and foreign currency exchange difference" account, as
follows:
- Loans 281,817
- Other receivables from financial transactions 4,725
- Assets out on financing lease 245
- Investments in other companies 21,875
- Other receivables 4,500
EXHIBIT K
CAPITAL STRUCTURE AS OF JUNE 30, 2002
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
SHARES CAPITAL STOCK
------------------------------------------ -------------------------------------
Issued Pending
Votes per ---------------------------------- issuance of
Class Number share Outstanding In portfolio distribution Paid in
------------ --------------- ------------- ----------------- ---------------- --------------- ---------------
Common 209,631,892 1 209,576 - 55 209,631
(1) (2)
(1) Shares issued and available to stockholders' but not as yet withdrawn.
(2) Capital registered with the Public Registry of Commerce (see note 15).
EXHIBIT L
FOREIGN CURRENCY ACCOUNTS AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
-Stated in thousands of pesos-
Accounts 2002 2001
----------------------- ---------------------------------------------------------------------------------------------- ------------
Total of period (per type of currency)
---------------------------------------------------------------------------------
Total of Deutsche Pounds French Swiss Total of
period Euro US Dollars Marks Sterling Franc Franc Yen Other period
----------- ------- ---------- -------- --------- -------- ------- ---- ------- ----------
ASSETS
Cash and due from
banks 29,277 818 28,034 - 38 - - 27 360 2,764,191
Government and
private securities 740,568 740,568 - - - - - - 3,670,460
Loans 1,317,044 235 1,316,809 - - - - - - 6,805,540
Other receivables
from financial
transactions 2,679,354 - 2,679,354 - - - - - - 1,485,648
Assets out on
financing lease - - - - - - - - - 39,240
Investments in other
companies 956,986 - 956,986 - - - - - - 512,519
Other receivables 22,098 - 22,098 - - - - - - 163,938
Suspense items 588 - 588 - - - - - - 2,322
---------- ----- ---------- ------- --- ----- ------ ----- ----- ----------
TOTAL 5,745,915 1,053 5,744,437 - 38 - - 27 360 15,443,858
========== ===== ========= ======= === ===== ====== ===== ===== ==========
LIABILITIES
Deposits 227,385 - 227,385 - - - - - - 11,254,734
Other liabilities
from financial
transactions 2,216,181 1,011 2,215,101 - 4 - - - 65 3,295,871
Other liabilities 1,484,467 15 1,484,443 - 8 - - 1 - 14,386
Subordinated
corporate bonds 578,182 - 578,182 - - - - - - 349,733
Suspense items 189 - 189 - - - - - - 844
---------- ----- ---------- ------- --- ----- ------ ----- ----- ----------
TOTAL 4,506,404 1,026 4,505,300 - 12 - - 1 65 14,915,568
========== ===== ========= ======= === ===== ====== ===== ===== ==========
MEMORANDUM ACCOUNTS
Debit accounts
(except contra debit
accounts)
Contingent 6,161,278 - 6,161,278 - - - - - - 4,093,341
Control 17,185,908 9,090 17,165,335 - 48 - - 9,695 1,740 17,455,927
For derivatives - - - - - - - - - 21,311
For trust
activities 1 - 1 - - - - - - 238,471
---------- ----- ---------- ------- --- ----- ------ ----- ----- ----------
TOTAL 23,347,187 9,090 23,326,614 - 48 - - 9,695 1,740 21,809,050
========== ===== ========= ======= === ===== ====== ===== ===== ==========
Credit accounts
(except contra
credit accounts)
Contingent 1,791,637 - 1,791,637 - - - - - - 1,427,897
Control 304 - 304 - - - - - - 11,061
For derivatives - - - - - - - - - 21,311
---------- ----- ---------- ------- --- ----- ------ ----- ----- ----------
TOTAL 1,791,941 - 1,791,941 - - - - - - 1,460,269
========== ===== ========= ======= === ===== ====== ===== ===== ==========
EXHIBIT N
ASSISTANCE TO AFFILIATES AS JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Status
--------------------------------------------------------------------------
With high risk of
Nonperforming/ uncollectibility/
Deficient Unlikely to be
In Potential Compliance collected
Risk/ ------------------------------------------------
Concept Normal Inadequate Not yet Not yet
Compliance matured Past-due matured Past-due
-----------------------------------------------------------------------------------------------------------------------------
1. Loans 56,196 - - - - -
- Overdraft 1,822 - - - - -
With senior or first - degree security and
counter guaranty "A" - - - - - -
With senior or first - degree security and
counter guaranty "B" - - - - - -
Without senior security or counter guaranty 1,822 - - - - -
- Discounted Instruments 95 - - - - -
With senior or first - degree security and
counter guaranty "A" - - - - - -
With senior or first - degree security and
counter guaranty "B" - - - - - -
Without senior security or counter guaranty 95 - - - - -
- Real Estate Mortgage and Security
Agreements 287 - - - - -
With senior or first - degree security and
counter guaranty "A" - - - - - -
With senior or first - degree security and
counter guaranty "B" 287 - - - - -
Without senior security or counter guaranty - - - - - -
- Consumer 27 - - - - -
With senior or first - degree security and
counter guaranty "A" - - - - - -
With senior or first - degree security and
counter guaranty "B" - - - - - -
Without senior security or counter guaranty 27 - - - - -
- Credit Cards 38 - - - - -
With senior or first - degree security and
counter guaranty "A" - - - - - -
With senior or first - degree security and
counter guaranty "B" - - - - - -
Without senior security or counter guaranty 38 - - - - -
- Other 53,927 - - - - -
With senior or first - degree security and
counter guaranty "A" - - - - - -
With senior or first - degree security and
counter guaranty "B" - - - - - -
Without senior security or counter guaranty 53,927 - - - - -
2. Other receivables from financial
transactions 18,744 - - - - -
3. Assets out on financing lease and other - - - - - -
4. Contingent commitments 42,289 - - - - -
5. Investments in other companies and
private securities 1,069,835 - - - - -
--------- --------- --------- --------- --------- ---------
Total 1,187,064 - - - - -
--------- --------- --------- --------- --------- ---------
Total Allowances 283 - - - - -
--------- --------- --------- --------- --------- ---------
EXHIBIT N
(Contd.)
ASSISTANCE TO AFFILIATES AS JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in Spanish - See Note 20)
- Stated in thousands of pesos -
Status
------------------------------------------
Uncollectible,
classified as such Total
under regulatory ---------------------------------
Concept Uncollectible requirements 2002 2001
-------------------------------------------------------------------------------------------- ----------- -------------------
1. Loans - - 56,196 112,426
- Overdraft - - 1,822 1,507
With senior or first - degree security and
counter guaranty "A" - - - -
With senior or first - degree security and
counter guaranty "B" - - - -
Without senior security or counter guaranty - - 1,822 1,507
- Discounted instruments - - 95 391
With senior or first - degree security and
counter guaranty "A" - - - -
With senior or first - degree security and
counter guaranty "B" - - - -
Without senior security or counter guaranty - - 95 391
- Real Estate Mortgage and Security
Agreements - - 287 795
With senior or first - degree security and
counter guaranty "A" - - - -
With senior or first - degree security and
counter guaranty "B" - - 287 795
Without senior security or counter guaranty - - - -
- Consumer - - 27 94
With senior or first - degree security and
counter guaranty "A" - - - -
With senior or first - degree security and
counter guaranty "B" - - - -
Without senior security or counter guaranty - - 27 94
- Credit cards - - 38 126
With senior or first - degree security and
counter guaranty "A" - - - -
With senior or first - degree security and
counter guaranty "B" - - - -
Without senior security or counter guaranty - - 38 126
- Other - - 53,927 109,513
With senior or first - degree security and
counter guaranty "A" - - - -
With senior or first - degree security and
counter guaranty "B" - - - -
Without senior security or counter guaranty - - 53,927 109,513
2. Other receivables from financial
transactions - - 18,744 15,893
3. Assets out on financing lease and other - - - 27,441
4. Contingent commitments - - 42,289 36,704
5. Investments in other companies and
private securities - - 1,069,835 741,165
--------- --------- ------------- -----------
Total - - 1,187,064 933,629
--------- --------- ------------- -----------
Total Allowances - - 283 1,284
--------- --------- ------------- -----------
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2002 AND 2001
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statements
of BBVA Banco Frances S.A.)
-Stated in thousands of pesos-
ASSETS 2002 2001
--------- ----------
CASH AND DUE FROM BANKS
Cash 160,614 459,888
Due from banks and correspondents 118,232 2,658,887
--------- ----------
278,846 3,118,775
--------- ----------
GOVERNMENT AND PRIVATE SECURITIES (Note 5)
Holdings in investment accounts 827,020 4,695,699
Holdings for trading or financial transactions 185,135 562,917
Unlisted Government Securities 526,360 547,132
Investments in listed private securities 52,260 225,506
Less: Allowances 35,753 -
--------- ----------
1,555,022 6,031,254
--------- ----------
LOANS
To the non financial governmental sector (Exhibit 1) 6,983,852 2,030,925
To the financial sector (Exhibit 1) 15,079 485,595
To the non financial private sector and residents abroad (Exhibit 1) 3,359,075 8,464,459
--------- ----------
Overdraft 232,216 709,232
Discounted instruments 450,296 2,268,357
Real estate mortgage 592,265 1,563,475
Security agreements 23,149 59,831
Consumer 274,037 887,717
Credit cards 153,053 501,552
Other 1,490,251 2,372,928
Interest, adjustments and listed-price differences accrued and pending collection 149,853 126,135
Less: Unused collections 1,328 4
Less: Interest documented together with main obligation 4,717 24,764
Less: Allowances 1,273,876 410,085
--------- ----------
9,084,130 10,570,894
--------- ----------
OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS
Central Bank of the Argentine Republic 321,550 146,588
Amounts receivable for spot and forward sales pending settlement 81,657 1,245,138
Instruments to be received for spot and forward purchases pending settlement 111,667 996,208
Premiums on options purchased - 2,995
Unlisted corporate bonds (Exhibit 1) 251,270 229,267
Other receivables not covered by debtor classification regulations 2,504,645 176,924
Other receivables covered by debtor classification regulations (Exhibit 1) 23,078 27,166
Interest and adjustments accrued and pending collection not covered by debtor
classification regulations 84 27
Interest and adjustments accrued and pending collection covered by debtor
classification regulations (Exhibit 1) 6,349 24
Less: unused collections 73 -
Less: Allowances 21,696 6,599
--------- ----------
3,278,531 2,817,738
--------- ----------
ASSETS OUT ON FINANCING LEASE
Assets out on financing lease (Exhibit 1) 21,054 46,660
Less: Allowances 402 548
--------- ----------
20,652 46,112
--------- ----------
INVESTMENTS IN OTHER COMPANIES
In financial institutions 11,611 17,252
Other 45,191 38,313
Less: Allowances 20,442 -
--------- ----------
36,360 55,565
--------- ----------
OTHER RECEIVABLES
Receivables from sale of goods (Exhibit 1) 150 720
Other 590,500 336,793
Other accrued interest and adjustments receivable 1 2
Less: Allowances 191,102 5,206
--------- ----------
399,549 332,309
--------- ----------
BANK PREMISES AND EQUIPMENT 467,724 487,282
--------- ----------
OTHER ASSETS 128,910 122,093
--------- ----------
INTANGIBLE ASSETS
Goodwill 49,148 109,380
Organization and development expenses 238,779 256,407
--------- ----------
287,927 365,787
--------- ----------
SUSPENSE ITEMS 2,946 3,932
--------- ----------
OTHER SUBSIDIARIES'ASSETS (Note 5) 6,024 18,520
--------- ----------
TOTAL ASSETS 15,546,621 23,970,261
========= ==========
(Contd.)
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2002 AND 2001
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statements
of BBVA Banco Frances S.A.)
-Stated in thousands of pesos-
LIABILITIES 2002 2001
---------- ----------
DEPOSITS
From the non financial government sector 54,585 5,967
From the financial sector 139,269 18,059
From the non financial private sector and residents abroad 6,818,071 15,954,937
---------- ----------
Checking accounts 1,123,856 1,104,661
Savings deposits 638,032 3,408,254
Certificates of deposit 4,220,290 11,215,315
Other 91,918 144,032
Interest, adjustments and listed-price differences accrued payable 743,975 82,675
---------- ----------
7,011,925 15,978,963
---------- ----------
OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS
Central Bank of the Argentine Republic 1,535,190 25,260
---------- ----------
Other 1,535,190 25,260
Banks and International Organizations 2,287,326 694,124
Non-subordinated corporate bonds 570,000 588,297
Amounts payable for spot and forward purchases pending settlement 94,670 869,084
Instruments to be delivered for spot and forward sales pending settlement 75,682 1,216,204
Premiums on options sold - 2,995
Financing received from Argentine financial institutions 73,167 247,580
Other 172,335 173,264
Interest, adjustments and listed-price differences accrued payable 34,476 18,734
---------- ----------
4,842,846 3,835,542
---------- ----------
OTHER LIABILITIES
Dividends pending payment 27 14
Fees payable 131 1,877
Other 148,096 442,106
Adjustments and interest accrued pending payment - 37
---------- ----------
148,254 444,034
---------- ----------
ALLOWANCES 103,738 58,005
---------- ----------
SUBORDINATED CORPORATE BONDS 601,596 349,733
---------- ----------
SUSPENSE ITEMS 2,044 1,406
---------- ----------
OTHER SUBSIDIARIES' LIABILITIES (Note 5) 727,970 981,626
---------- ----------
TOTAL LIABILITIES 13,438,373 21,649,309
---------- ----------
MINORITY INTEREST IN SUBSIDIARIES (Note 3) 148,941 268,728
---------- ----------
STOCKHOLDERS' EQUITY 1,959,307 2,052,224
---------- ----------
TOTAL LIABILITIES, STOCKHOLDERS' EQUITY AND MINORITY INTEREST 15,546,621 23,970,261
========== ==========
MEMORANDUM ACCOUNTS
2002 2001
---------- ----------
DEBIT ACCOUNTS
Contingent
- Guaranties received 6,555,443 6,304,092
- Contra contingent debit accounts 4,276,349 2,171,318
---------- ----------
10,831,792 8,475,410
---------- ----------
Control
- Receivables classified as irrecoverable 525,793 1,026,528
- Other 22,272,010 30,998,080
- Contra control debit accounts 76,982 139,465
---------- ----------
22,874,785 32,164,073
---------- ----------
For derivatives
- Notional value of call options purchased - 21,311
- Contra debit accounts for derivatives - 21,311
---------- ----------
- 42,622
---------- ----------
For trustee activities
- Funds received in trust 64,610 303,954
---------- ----------
64,610 303,954
---------- ----------
TOTAL 33,771,187 40,986,059
========== ==========
CREDIT ACCOUNTS
Contingent
- Credit lines granted (unused portion) covered by debtor classification
regulations (Exhibit 1) 152,687 538,228
- Guaranties provided to the BCRA 2,019,957 24,247
- Other guaranties given covered by debtor classification regulations
(Exhibit 1) 1,624,442 1,299,112
- Other guaranties given not covered by debtor classification regulations 1,734 6,468
- Other covered by debtor classification regulations (Exhibit 1) 477,529 303,263
- Contra contingent credit accounts 6,555,443 6,304,092
---------- ----------
10,831,792 8,475,410
---------- ----------
Control
- Items to be credited 76,830 139,386
- Other 152 79
- Contra control credit accounts 22,797,803 32,024,608
---------- ----------
22,874,785 32,164,073
---------- ----------
For derivatives
- Notional value of call options sold - 21,311
- Contra credit accounts for derivatives - 21,311
---------- ----------
- 42,622
---------- ----------
For trustee activities
- Contra credit accounts for trustee activities 64,610 303,954
---------- ----------
64,610 303,954
---------- ----------
TOTAL 33,771,187 40,986,059
========== ==========
The accompanying notes 1 through to 5 to the consolidated financial statements
with subsidiaries and the Exhibit 1 are an integral part of these statements,
which in turn are part of the individual Financial Statements of BBVA Banco
Frances S.A. and are to be read in conjunction therewith.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statements
of BBVA Banco Frances S.A.)
- Stated in thousands of pesos -
2002 2001
--------- ---------
FINANCIAL INCOME
Interest on cash and due from banks 3,139 27,441
Interest on loans to the financial sector 9,311 25,064
Interest on overdraft 101,330 69,985
Interest on discounted instruments 39,188 107,293
Interest on real estate mortgage 54,744 92,923
Interest on security agreement loans 2,512 4,330
Interest on credit card loans 33,189 49,859
Interest on other loans 199,027 532,724
Interest from other receivables from financial transactions 12,568 37,950
Income from guaranteed loans - Decree 1387/01 1,441,455 -
Net income from government and private securities - 333,341
Indexation by CER 624,293 -
Other 1,224,655 69,015
--------- ---------
3,745,411 1,349,925
--------- ---------
FINANCIAL EXPENSE
Interest on checking accounts 129,247 2,512
Interest on savings deposits 2,141 21,725
Interest on certificates of deposit 180,705 405,987
Interest on financing to the financial sector 4,546 889
Interest from other liabilities from financial transactions 81,201 64,349
Other interest 162,509 19,941
Net loss on government and private securities 92,008 27
Indexation by CER 959,153 -
Other 1,263,288 63,560
--------- ---------
2,874,798 578,990
--------- ---------
GROSS INTERMEDIATION MARGIN 870,613 770,935
--------- ---------
PROVISION FOR LOAN LOSSES 446,587 145,004
--------- ---------
SERVICE CHARGE INCOME
Related to lending transactions 56,622 74,860
Related to borrowing transactions 85,713 116,330
Other commissions 119,558 269,129
Other 36,636 80,139
--------- ---------
298,529 540,458
--------- ---------
SERVICE CHARGE EXPENSE
Commissions 16,796 31,822
Other 14,965 24,171
--------- ---------
31,761 55,993
--------- ---------
MONETARY LOSS ON FINANCIAL INTERMEDIATION (708,046) -
--------- ---------
(Contd.)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(Art. 33 of Law No. 19,550)
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statements
of BBVA Banco Frances S.A.)
- Stated in thousands of pesos -
2002 2001
---------- ---------
OPERATING EXPENSES
Payroll expenses 211,160 341,854
Fees to Bank Directors and Statutory Auditors 276 2,177
Other professional fees 8,660 12,668
Advertising and publicity 8,266 22,024
Taxes 15,013 29,341
Other operating expenses 124,412 155,967
Other 30,528 48,754
---------- ---------
398,315 612,785
---------- ---------
MONETARY LOSS ON OPERATING EXPENSES (21,376) -
---------- ---------
NET (LOSS) INCOME FROM FINANCIAL TRANSACTIONS (436,943) 497,611
---------- ---------
NET GAIN/(LOSS) ON MINORITY INTEREST IN SUBSIDIARIES 38,517 (22,632)
---------- ---------
OTHER INCOME
Income from long-term investments 156,777 3,433
Punitive interests 3,372 4,305
Loans recovered and reversals of allowances 17,351 40,506
Other 93,136 95,890
---------- ---------
270,636 144,134
---------- ---------
OTHER EXPENSE
Losses from long-term investments - 2,668
Punitive interests and charges paid to Central Bank of the Argentine
Republic 1,067 8
Charge for uncollectibility of other receivables and other allowances 313,214 29,153
Other 376,758 249,215
---------- ---------
691,039 281,044
---------- ---------
MONETARY GAIN ON OTHER OPERATIONS 508,260 -
---------- ---------
NET (LOSS) INCOME BEFORE INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME (310,569) 338,069
---------- ---------
INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME 16,880 114,882
---------- ---------
NET (LOSS) INCOME FOR THE PERIOD (327,449) 223,187
========== =========
The accompanying notes 1 through 5 to the consolidated financial
statements with subsidiaries and the Exhibit 1 are an integral part of these
statements, which in turn are part of the individual Financial Statements of
BBVA Banco Frances S.A. and are to be read in conjunction therewith.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(ART. 33 OF LAW No. 19,550)
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statements
of BBVA Banco Frances S.A.)
-Stated in thousands of pesos-
2002 2001
-------------- --------------
CHANGES IN CASH FLOWS
Cash and due from banks at beginning of fiscal year restated 1,695,781 1,045,031
Increase/(decrease) in funds (1,416,935) 2,073,744
-------------- --------------
Cash and due from banks at end of the period 278,846 3,118,775
-------------- --------------
REASONS FOR CHANGES IN CASH FLOWS
Financial income collected 902,687 1,033,469
Service charge income collected 320,854 535,835
Less:
Financial expense paid 1,093,809 563,121
Services charge expense paid 31,761 56,237
Operating expenses paid 335,110 539,610
-------------- --------------
FUNDS PROVIDED/(USED IN) BY RECURRING OPERATIONS (237,139) 410,336
-------------- --------------
OTHER SOURCES OF FUNDS
Net increase in other liabilities from financial transactions 3,433,604 -
Net increase in deposits 525,261 269,712
Net increase in other liabilities 1,153,846 -
Net decrease in loans - 2,189,247
Net decrease in other receivables from financial transactions - 2,541,846
Other sources of funds 132,618 138,617
-------------- --------------
TOTAL OF SOURCES OF FUNDS 5,245,329 5,139,422
-------------- --------------
USE OF FUNDS
Net increase in government and private securities 1,276,885 2,794,062
Net increase in loans 1,011,809 -
Net increase in other receivables from financial transactions 2,870,234 -
Net increase in other assets 354,463 141,940
Net decrease in other liabilities from financial transactions - 104,135
Net decrease in other liabilities - 53,779
Cash dividends - 144,019
Other uses of funds 325,784 238,079
-------------- --------------
TOTAL FUNDS USED 5,839,175 3,476,014
-------------- --------------
MONETARY LOSS GENERATED ON CASH AND DUE FROM BANKS 585,950 -
-------------- --------------
INCREASE/(DECREASE) IN FUNDS (1,416,935) 2,073,744
============== ==============
The accompanying notes 1 through to 5 to the consolidated financial
statements with subsidiaries and the Exhibit 1 are an integral part of these
statements, which in turn are part of the individual Financial Statements of
BBVA Banco Frances S.A. and are to be read in conjunction therewith.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
WITH SUBSIDIARIES AS OF JUNE 30, 2002 AND 2001
(ART. 33 OF LAW No. 19,550)
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statements
of BBVA Banco Frances S.A.)
-Stated in thousands of pesos-
1. SIGNIFICANT ACCOUNTING POLICIES AND SUBSIDIARIES
General rule
In accordance with the procedures set forth in BCRA's regulations and
Technical Resolution N(degree) 4 of the Argentine Federation of
Professional Councils in Economic Sciences, BBVA Banco Frances S.A. (BF)
has consolidated - line by line - its balance sheets as of June 30, 2002
and 2001, and the statements of income and cash flows for the six-month
periods then ended, as per the following detail:
- As of June 30, 2002:
a) With the financial statements of Banco Frances (Cayman) Ltd. and
its subsidiary, Credilogros Cia. Financiera S.A. and its
subsidiary, Frances Valores Sociedad de Bolsa S.A. and Atuel
Fideicomisos S.A., for the six-month period ended June 30, 2002.
b) With the financial statements of Consolidar Administradora de
Fondos de Jubilaciones y Pensiones S.A., Consolidar Cia. de
Seguros de Vida S.A. and its subsidiary and Consolidar Cia. de
Seguros de Retiro S.A. and its subsidiary, for the fiscal year
ended June 30, 2002.
The income of Consolidar Administradora de Fondos de Jubilaciones y
Pensiones S.A., Consolidar Cia. de Seguros de Vida S.A. and its subsidiary
and Consolidar Cia. de Seguros de Retiro S.A. and its subsidiary, have
been adjusted to make the six-month period of the companies being
consolidated consistent.
- As of June 30, 2001:
a) With the financial statements of Banco Frances (Cayman) Ltd. and
its subsidiary, BBVA Uruguay S.A. and its subsidiary,
Credilogros Cia. Financiera S.A., Frances Valores Sociedad de
Bolsa S.A. and Atuel Fideicomisos S.A., for the six-month
periods ended June 30, 2001.
b) With the financial statements of Consolidar Administradora de
Fondos de Jubilaciones y Pensiones S.A., Consolidar Cia. de
Seguros de Vida S.A. and its subsidiary and Consolidar Cia. de
Seguros de Retiro S.A. and its subsidiary, for the fiscal year
ended June 30, 2001.
The income of Consolidar Administradora de Fondos de Jubilaciones y
Pensiones S.A., Consolidar Cia. de Seguros de Vida S.A. and its subsidiary
and Consolidar Cia. de Seguros de Retiro S.A. and its subsidiary, have
been adjusted to make the six-month period of the companies being
consolidated consistent.
Interests in subsidiaries as of June 30, 2002 and 2001 are listed
below:
Shares Interest percentage in
-------------------------------------------------------------------------------------
Type Number Total Capital Possible Votes
--------------------------------------------------------------------------------------
June, 30 June, 30,
----------------------- --------------------------------------------------
Companies 2002 2001 2002 2001 2002 2001
------------------------------- ---------- ----------- ----------- ----------- ---------- ------------
Banco Frances (Cayman) Ltd. Common 82,283,621 82,283,621 100,0000 100,0000 100,0000 100,0000
BBVA Uruguay S.A. (1) Common - 79,130 - 60,8787 - 60,8787
Frances Valores Soc. de Bolsa
S.A. Common 3,199 3,199 99,9700 99,9700 99,9700 99,9700
Atuel Fideicomisos S.A. Common 99,999 99,999 99,9999 99,9999 99,9999 99,9999
Consolidar A.F.J.P. S.A. Common 1,899,600 1,899,600 53,8892 53,8892 53,8892 53,8892
Consolidar Cia. de Seguros de
Vida S.A. Common 197,875 197,875 65,9582 65,9582 65,9582 65,9582
Consolidar Cia. de Seguros de
Retiro S.A. Common 200,000 200,000 66,6667 66,6667 66,6667 66,6667
Credilogros Cia. Financiera S.A. Common 39,700,000 39,700,000 69,5271 69,5271 69,5271 69,5271
(1) On May 13, 2002, these investment was sold to BBVA (see note 2.2. to
individual financial statements).
Assets, liabilities, stockholders' equity and subsidiaries' net income
balances as of June 30, 2002 and 2001 accordingly with BCRA regulations,
are listed below:
Assets Liabilities Stockholders' Net
Equity income/gain-(loss)
---------------------------------------------------------------------------------
June, 30 June, 30, June, 30 June, 30,
---------------------------------------------------------------------------------
Companies 2002 2001 2002 2001 2002 2001 2002 2001
----------------------------------- --------- ---------- ---------- ---------- ----------- ----------- --------- -----------
Banco Frances (Cayman) Ltd. and
subsidiary 3,062,086 1,944,608 2,126,557 1,557,445 935,529 387,163 (987,730) 70,656
BBVA Uruguay S.A. and subsidiary - 1,820,877 - 1,636,562 - 184,315 - 4,784
Frances Valores Soc. de Bolsa S.A. 4,792 3,205 251 1,696 4,541 1,509 2,353 (565)
Atuel Fideicomisos S.A. 2,721 3,060 1,979 2,819 742 241 486 80
Consolidar A.F.J.P. S.A. 257,577 466,031 76,768 162,420 180,809 303,611 (50,702) 40,261
Consolidar Cia. de Seguros de Vida
S.A. and subsidiary 244,309 340,992 199,724 306,382 44,585 34,610 (11,597) (2,705)
Consolidar Cia. de Seguros de
Retiro S.A. and subsidiary 622,129 728,899 564,748 689,716 57,381 39,183 (4,001) 4,536
Credilogros Cia. Financiera S.A.
and subsidiary 145,612 263,224 78,111 130,675 67,501 132,549 (62,152) 5,259
2. VALUATION METHODS
The financial statements of the subsidiaries have been prepared based on
similar methods to those applied by BF for preparing its own financial
statements, in connection with assets and liabilities valuation, income
measurement and restatement procedure as explained in note 3 to the
financial statements of BF, except for the financial statements of Banco
Frances (Cayman) Limited and its subsidiary. These financial statements
does not require restatement, since they are prepared in US Dollars.
The financial statements of Banco Frances (Cayman) Ltd. and its
subsidiary originally stated in US dollars were converted into Argentine
pesos based on the method described in Note 3.3.m) to the financial
statements of BF.
3. MINORITY INTEREST IN SUBSIDIARIES
The breakdown of balances in the "Minority interest in subsidiaries"
account is as follows:
2002 2001
------- -------
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. 83,371 135,360
Consolidar Cia. de Seguros de Vida S.A. 15,177 11,316
Consolidar Cia. de Seguros de Retiro S.A. 19,124 11,976
Credilogros Compania Financiera S.A. 31,269 37,970
BBVA Uruguay S.A. - 72,106
------- -------
148,941 268,728
======= =======
4. RESTRICTIONS ON ASSETS
a) Frances Valores Sociedad de Bolsa S.A. (stockbroking company) holds
three shares of Mercado de Valores de Buenos Aires S.A., booked in
the amount of 4,200. These shares have been pledged in favor of "HSBC
- La Buenos Aires Cia. Argentina de Seguros S.A." in security of the
contract this insurance company executed with Mercado de Valores de
Buenos Aires S.A. to cover the latter's guaranteeing any
noncompliance of stockbroking companies with their obligations.
b) See Note 7 to the financial statements of BF.
5. BREAKDOWN OF MAIN ITEMS
Detailed below are the balances of those accounts that show significant
variations in relation to the figures that arise from the financial
statements of BF:
2002 2001
------------ ---------
GOVERNMENT SECURITIES
Holdings in investment accounts
Global External Bonds of the Argentine Republic (ARG 2008) - 3,827,857
Global External Bonds of the Argentine Republic (ARG 2018) - 113,835
Global External Bonds of the Argentine Republic (ARG 2031) - 280,515
Medium - Term Treasury Bonds (BONTE 2002) - 3,861
Argentine Republic External Bills (VEY4D) 736,809 -
Floating Rate Bonds (FRB) - 151,003
Treasury bills 63,643 198,275
Other 26,568 120,353
--------- ---------
Total 827,020 4,695,699
======== =========
Holdings for trading or financial transactions
Argentine Republic Variable Coupon Bonds (BRVX1) - 1,920
Medium - Term Treasury Bonds (BONTE 2002) 14,175 -
Global External Bonds of the Argentine Republic (ARG 2008) 1,724 66,234
Floating Rate Bonds (FRB) - 3,804
Treasury bills 3,038 249,453
Argentine Republic External Bills (VEY4D) - 152,738
USA Treasury Notes 140,658 -
Other 25,540 88,768
--------- ---------
Total 185,135 562,917
========= =========
Unlisted government securities
Argentine Federal Government 9% Bonds (due in 2002) 375,535 415,890
Tucuman Provincial Treasury Bonds 58,791 104,457
Tax credit certificates due in 2003/2004 84,006 -
Brazilian Central Bank Note (NBC-E) - 25,706
Other 8,028 1,079
--------- --------
Total 526,360 547,132
======== ========
PRIVATE SECURITIES
Investments in listed private securities
Cointel S.A. Corporate Bonds 4,232 9,600
Transener S.A. Corporate Bonds 1,948 6,026
Acindar S.A. 2,440 6,246
Pecom S.A. Corporate Bonds 4,166 -
FBA Rent Pesos - 79,571
FBA Total - 9,858
FBA Rent Dolars - 17,572
Galtrust 1 Financial Trust 3,578 9,832
Siderca S.A. 4,990 -
Other 30,906 86,801
--------- ---------
Total 52,260 225,506
--------- ---------
Allowances (35,753) -
--------- ---------
Total 1,555,022 6,031,254
========= =========
2002 2001
------ ------
OTHER ASSETS
Premium receivables from insurance companies 4,606 17,325
Others related to insurance business 1,418 1,195
-------- --------
Total 6,024 18,520
======== ========
OTHER LIABILITIES
Insurance companies, claims in adjustment process 326,043 480,722
Insurance companies, mathematical reserve 392,932 615,558
Insurance companies, reinsurer reserve (179,893) (402,860)
Other related to insurance business 188,888 288,206
-------- --------
Total 727,970 981,626
======== ========
Exhibit 1
STATEMENT OF DEBTORS' STATUS CONSOLIDATED WITH SUBSIDIARIES AND
OTHER ENTITIES IN ARGENTINA AND ABROAD
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statement
of BBVA Banco Frances S.A.)
-Stated in thousands of pesos-
2002 2001
---------------------------------------------------------------------------------- ------------------ -------------------
COMMERCIAL PORTFOLIO
In normal situation
- With senior or first - degree security and counter guaranty "A" 7,426,858 2,521,793
- With senior or first - degree security and counter guaranty "B" 29,148 262,316
- Without senior security or counter guaranty 2,268,882 6,442,960
In potential risk
- With senior or first - degree security and counter guaranty "A" 4,724 707
- With senior or first - degree security and counter guaranty "B" 15,021 20,891
- Without senior security or counter guaranty 1,496,615 60,111
Nonperforming
- With senior or first - degree security and counter guaranty "A" - -
- With senior or first - degree security and counter guaranty "B" 36,095 14,641
- Without senior security or counter guaranty 148,616 5,382
With high risk of uncollectibility
- With senior or first - degree security and counter guaranty "A" 112 -
- With senior or first - degree security and counter guaranty "B" 11,021 41,077
- Without senior security or counter guaranty 71,978 122,164
Uncollectible
- With senior or first - degree security and counter guaranty "A" - 177
- With senior or first - degree security and counter guaranty "B" 10,808 27,610
- Without senior security or counter guaranty 32,893 24,169
Uncollectible, classified as such under regulatory requirements
- With senior or first - degree security and counter guaranty "A" - -
- With senior or first - degree security and counter guaranty "B" - -
- Without senior security or counter guaranty - -
------------ ----------
Total 11,552,771 9,543,998
========== ==========
Exhibit 1
(Contd.)
STATEMENT OF DEBTORS' STATUS CONSOLIDATED WITH SUBSIDIARIES AND
OTHER ENTITIES IN ARGENTINA AND ABROAD
AS OF JUNE 30, 2002 AND 2001
(Translation of financial statements originally issued in
Spanish - See Note 20 to the financial statement
of BBVA Banco Frances S.A.)
-Stated in thousands of pesos-
2002 2001
---------------------------------------------------------------------------------- ------------------ --------------
CONSUMER AND HOUSING PORTFOLIO
Normal compliance
- With senior or first - degree security and counter guaranty "A" 2,219 46,151
- With senior or first - degree security and counter guaranty "B" 507,040 1,374,261
- Without senior security or counter guaranty 585,008 2,114,138
Inadequate compliance
- With senior or first - degree security and counter guaranty "A" - 16
- With senior or first - degree security and counter guaranty "B" 19,682 28,095
- Without senior security or counter guaranty 29,116 53,657
Deficient compliance
- With senior or first - degree security and counter guaranty "A" - 20
- With senior or first - degree security and counter guaranty "B" 11,887 12,525
- Without senior security or counter guaranty 44,958 44,744
Unlikely to be collected
- With senior or first - degree security and counter guaranty "A" 164 55
- With senior or first - degree security and counter guaranty "B" 23,134 13,666
- Without senior security or counter guaranty 82,254 74,067
Uncollectible
- With senior or first - degree security and counter guaranty "A" 31 43
- With senior or first - degree security and counter guaranty "B" 18,036 40,235
- Without senior security or counter guaranty 37,562 78,066
Uncollectible, classified as such under regulatory requirements
- With senior or first - degree security and counter guaranty "A" - -
- With senior or first - degree security and counter guaranty "B" 7 98
- Without senior security or counter guaranty 696 1,584
--------------- --------------
Total 1,361,794 3,881,421
--------------- --------------
General Total (1) 12,914,565 13,425,419
============== ==============
(1) Items included: Loans (before allowances); Other receivables from
financial transactions: Unlisted corporate bonds, Other receivables
covered by debtor classification regulations, Interest accrued and pending
collection covered by debtor classification regulations; Assets out on
financing lease (before allowances); Other receivables: Receivables from
sale of goods; Contingent credit-balance memorandum accounts: Credit lines
granted (unused portion) covered by debtor classification regulations,
Other guaranties given covered by debtor classification regulations and
Other covered by debtor classification regulations.