FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August, 2011

Commission File Number: 001-12568

 

 

BBVA FRENCH BANK S.A.

(Translation of registrant’s name into English)

 

 

Reconquista 199, 1006

Buenos Aires, Argentina

(Address of principal executive offices)

 

 

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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ¨             No  x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ¨             No  x

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant 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

 

 

 

---

BBVA French Bank S.A.

TABLE OF CONTENTS

Item

 

1.	Financial Statements as of June 30, 2011 together with Independent Auditors´ Limited Review Report

---

 

 

		FINANCIAL STATEMENTS AS OF JUNE 30, 2011 TOGETHER WITH INDEPENDENT AUDITORS’ LIMITED REVIEW REPORT

 

 

---

 

BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

-Stated in thousands of pesos-

 

		06-30-2011				12-31-2010
ASSETS:
A. CASH AND DUE FROM BANKS:
Cash			2,125,847				1,456.799
Due from banks and correspondents			4,839,709				4,226,003
Argentine Central Bank (BCRA)			4,652,698				4,096,805
Other local			2,458				2,463
Foreign			184,553				126,735
			6,965,556				5,682,802
B. GOVERNMENT AND PRIVATE SECURITIES:
Holdings booked at fair value (Exhibit A)			2,424,085				2,755,562
Holdings booked at amortized cost (Exhibit A)			164				175
Instruments issued by the BCRA (Exhibit A)			2,376,293				2,768,844
Investments in listed private securities (Exhibit A)			302				269
Less: Allowances (Exhibit J)			186				185
			4,800,658				5,524,665
C. LOANS:
To government sector (Exhibits B, C and D)			121,492				197,778
To financial sector (Exhibits B, C and D)			1,319,811				954,746
Interfinancial – (Calls granted)			38,000				30,000
Other financing to local financial institutions			1,146,924				814,393
Interest and listed-price differences accrued and pending collection			134,887				110,353
To non financial private sector and residents abroad (Exhibits B, C and D)			16,999,097				14,285,015
Overdraft			2,884,498				2,366,957
Discounted instruments			2,452,570				2,086,979
Real estate mortgage			844,538				840,841
Collateral Loans			253,348				159,300
Consumer			3,014,344				2,473,244
Credit cards			2,877,488				2,457,922
Other (Note 5 a.)			4,538,134				3,756,482
Interest and listed-price differences accrued and pending collection			168,452				171,582
Less: Interest documented together with main obligation			34,275				28,292
Less: Allowances (Exhibit J)			375,604				383,899
			18,064,796				15,053,640
D. OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS:
Argentine Central Bank (BCRA)			353,126				346,396
Amounts receivable for spot and forward sales to be settled			341,155				225,470
Instruments to be received for spot and forward purchases to be settled			73,002				232,152
Premiums for options bought			2,805				5,582
Unlisted corporate bonds (Exhibits B, C and D)			1,684				78,688
Non-deliverable forward transactions balances to be settled			15,735				24,881
Other receivables not covered by debtor classification regulations			119				119
Other receivables covered by debtor classification regulations (Exhibits B, C and D)			79,604				80,883
Less: Allowances (Exhibit J)			1,069				3,721
			866,161				990,450
E. RECEIVABLES FROM FINANCIAL LEASES:
Receivables from financial leases (Exhibits B, C and D)			657,189				525,766
Interest accrued pending collection (Exhibits B, C and D)			8,321				6,785
Less: Allowances (Exhibit J)			9,527				7,961
			655,983				524,590
F. INVESTMENTS IN OTHER COMPANIES:
In financial institutions (Exhibit E)			108,971				115,995
Other (Note 5.b.) (Exhibit E)			125,199				302,532
Less: Allowances (Exhibit J)			—				4
			234,170				418,523
G. OTHER RECEIVABLES:
Other (Note 5.c.)			567,865				397,261
Other interest accrued and pending collection			1,469				2,695
Less: Allowances (Exhibit J)			156,494				88,594
			412,840				311,362
H. PREMISES AND EQUIPMENT (Exhibit F):			543,932				520,053
I. OTHER ASSETS (Exhibit F):			23,604				23,890
J. INTANGIBLE ASSETS (Exhibit G):
Organization and development expenses			76,292				63,688
			76,292				63,688
K. SUSPENSE ITEMS:			5,825				5,026
TOTAL ASSETS:			32,649,817				29,118,689

 

-1-

---

 

(Contd.)

BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

-Stated in thousands of pesos-

 

		06-30-2011				12-31-2010
LIABILITIES:
L. DEPOSITS (Exhibits H and I):
Government sector			1,055,830				785,956
Financial sector			48,860				10,406
Non financial private sector and residents abroad			25,065,667				21,746,648
Checking accounts			5,908,709				5,070,921
Savings deposits			8,851,318				7,548,744
Time deposits			9,576,451				8,600,142
Investments accounts			83,027				78,009
Other			580,404				389,346
Interest and listed-price differences accrued payable			65,758				59,486
			26,170,357				22,543,010
M. OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS:
Argentine Central Bank (Exhibit I)			2,641				2,747
Other			2,641				2,747
Banks and International Institutions (Exhibit I)			245,952				88,536
Amounts payable for spot and forward purchases to be settled			3,446				218,075
Instruments to be delivered for spot and forward sales to be settled (Exhibit O)			472,385				239,497
Premiums for options written			860				2,348
Financing received from Argentine financial institutions (Exhibit I)			26,863				7,293
Interfinancial – (Calls granted)			25,000				5,100
Other financing from local financial institutions			1,857				2,189
Interest accrued payable			6				4
Non-deliverable forward transactions balances to be settled			983				8
Other (note 5.d.) (Exhibit I)			1,459,479				1,219,281
Interest and listed-price differences accrued payable (Exhibit I)			757				601
			2,213,366				1,778,386
N. OTHER LIABILITIES:
Other (note 5.e.)			647,463				707,289
			647,463				707,289
O. ALLOWANCES (Exhibit J):			354,254				325,728
P. SUSPENSE ITEMS:			17,107				17,361
TOTAL LIABILITIES:			29,402,547				25,371,774
STOCKHOLDERS’ EQUITY: (as per the related statements of changes in stockholders’ equity)			3,247,270				3,746,915
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY:			32,649,817				29,118,689

 

-2-

---

 

MEMORANDUM ACCOUNTS

(Translation of financial statements originally issued in Spanish - See note 18)

-Stated in thousands of pesos-

 

		06-30-2011				12-31-2010
DEBIT ACCOUNTS
Contingent
Guaranties received			3,447,861				2,894,539
Contra contingent debit accounts			862,223				678,731
			4,310,084				3,573,270
Control
Receivables classified as irrecoverable			305,529				329,243
Other (note 5.f.)			56,959,309				56,115,744
Contra control debit accounts			825,169				593,304
			58,090,007				57,038,291
Derivatives (Exhibit O)
“Notional” amount of call options bought			58,280				52,702
“Notional” amount of put options bought			—				27,402
“Notional” amount of non-deliverable forward transactions			2,500,237				2,469,931
Interest rate SWAP			475,001				263,967
Contra derivatives debit accounts			2,476,854				2,236,418
			5,510,372				5,050,420
For trustee activities
Funds in trust			6,916				12,653
			6,916				12,653
TOTAL			67,917,379				65,674,634
CREDIT ACCOUNTS
Contingent
Credit lines granted (unused portion) covered by debtor classification regulations (Exhibits B, C and D)			66,696				70,538
Guaranties provided to the BCRA			95,805				101,609
Other guaranties given covered by debtor classification regulations (Exhibits B, C and D)			504,748				363,828
Other guaranties given non covered by debtor classification regulations			75,402				75,403
Other covered by debtor classification regulations (Exhibits B, C and D)			119,572				67,353
Contra contingent credit accounts			3,447,861				2,894,539
			4,310,084				3,573,270
Control
Items to be credited			739,096				510,436
Other			86,073				82,868
Contra control credit accounts			57,264,838				56,444,987
			58,090,007				57,038,291
Derivatives (Exhibit O)
“Notional” amount of call options written			67,022				60,082
“Notional” amount of put options written			—				24,662
“Notional” amount of non-deliverable forward transactions			2,409,832				2,151,674
Contra derivatives credit accounts			3,033,518				2,814,002
			5,510,372				5,050,420
For trustee activities
Contra credit accounts for trustee activities			6,916				12,653
			6,916				12,653
TOTAL			67,917,379				65,674,634

The accompanying notes 1 through 18 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.

 

-3-

---

 

STATEMENTS OF INCOME FOR THE SIX MONTH PERIODS

ENDED JUNE 30, 2011 AND 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		06-30-2011				06-30-2010
A. FINANCIAL INCOME
Interest on cash and due from banks			1				—
Interest on loans to the financial sector			87,347				57,943
Interest on overdraft			172,602				137,713
Interest on discounted instruments			118,140				74,332
Interest on real estate mortgage			59,936				54,545
Interest on collateral loans			19,727				11,557
Interest on credit card loans			160,393				99,133
Interest on other loans			453,036				321,696
Interest on other receivables from financial transactions			12,940				747
Interest on financial leases			49,260				25,656
Income from secured loans - Decree 1387/01			25,130				43,171
Net income from government and private securities			186,349				291,125
Net income from options			87				—
Indexation by benchmark stabilization coefficient (CER)			39,894				541
Gold and foreign currency exchange difference			99,774				82,605
Other			52,301				53,283
			1,536,917				1,254,047
B. FINANCIAL EXPENSE
Interest on checking accounts			4				5,296
Interest on savings deposits			4,016				3,342
Interest on time deposits			415,626				280,133
Interest on interfinancial financing (calls received)			392				93
Interest on other financing of financial institutions			2				47
Interest on other liabilities from financial transactions			2,750				2,458
Other interest			1,924				1,232
Net income from options			—				395
Indexation by CER			89				146
Contribution to the deposit guarantee fund			20,469				16,336
Other			68,507				45,235
			513,779				354,713
GROSS INTERMEDIATION MARGIN – GAIN			1,023,138				899,334
C. ALLOWANCES FOR LOAN LOSSES			27,568				66,680
D. SERVICE CHARGE INCOME
Related to lending transactions			243,027				176,031
Related to liability transactions			341,575				286,125
Other commissions			42,112				32,562
Other (note 5.g.)			195,714				154,389
			822,428				649,107
E. SERVICE CHARGE EXPENSE
Commissions			163,192				126,164
Other (note 5.h.)			65,169				44,377
			228,361				170,541

 

-4-

---

 

(Contd.)

STATEMENTS OF INCOME FOR THE SIX MONTH PERIODS

ENDED JUNE 30, 2011 AND 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		06-30-2011				06-30-2010
F. ADMINISTRATIVE EXPENSES
Payroll expenses			609,780				547,291
Fees to Bank Directors and Statutory Auditors			804				318
Other professional fees			14,118				15,432
Advertising and publicity			53,528				44,779
Taxes			85,843				61,591
Fixed assets depreciation			30,840				27,280
Organizational expenses amortization			13,522				10,613
Other operating expenses			150,311				115,412
Other			98,068				73,165
			1,056,814				895,881
NET GAIN FROM FINANCIAL TRANSACTIONS			532,823				415,339
G. OTHER INCOME
Income from long-term investments			90,825				33,431
Punitive interests			1,833				1,518
Loans recovered and reversals of allowances			53,170				33,273
Other (note 5.i.)			119,825				40,901
			265,653				109,123
H. OTHER EXPENSE
Punitive interests and charges paid to BCRA			313				192
Charge for uncollectibility of other receivables and other allowances			116,322				65,581
Amortization of difference arising from judicial resolutions			9,215				17,176
Depreciation and losses from miscellaneous assets			186				542
Other			14,054				11,924
			140,090				95,415
NET GAIN BEFORE INCOME TAX			658,386				429,047
I. INCOME TAX (note 4.1)			265,900				66,000
NET INCOME FOR THE PERIOD			392,486				363,047

The accompanying notes 1 through 18 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.

 

-5-

---

 

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

2011																														2010
						Non capitalized contributions								Retained earnings
Movements		Capital Stock				Issuance premiums				Adjustments to stockholders’ equity (1)				Legal				Unrealized valuation difference				Unappropriated earnings				Total				Total
1.      Balance at beginning of fiscal year			536,361				175,132				312,979				802,385				88,131				1,831,927				3,746,915				2,926,472
2.      Stockholders’ Meeting held on March 30, 2011 and April 30, 2010
- Dividends paid in cash			—				—				—				—				—				(804,000	)(2)			(804,000	)			(480,000	)
- Legal reserve			—				—				—				239,636				—				(239,636	)			—				—
3.      Unrealized valuation difference			—				—				—				—				(88,131	)			—				(88,131	)			(27,963	)
4.      Net income for the period			—				—				—				—				—				392,486				392,486				363,047
5.      Balance at the end of the period			536,361				175,132				312,979				1,042,021				—				1,180,777				3,247,270				2,781,556

 

(1)	Adjustments to stockholders’equity refers to Adjustment to Capital Stock.

(2)	Approved by the B.C.R.A. through its Resolution No 312/04/11 dated March 18, 2011 and paid on April 26, 2011.

The accompanying notes 1 through 18 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.

 

-6-

---

 

STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW FOR THE

SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

(Translation of financial statements originally issued in Spanish - See note 18)

-Stated in thousands of pesos-

 

		06-30-2011				06-30-2010
CHANGES IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the fiscal year			5,835,595	(1)			5,273,542	(1)
Cash and cash equivalents at the end of the period			7,347,857	(1)			6,479,150	(1)
Net increase in cash and cash equivalents			1,512,262				1,205,608
REASONS FOR CHANGES IN CASH AND CASH EQUIVALENTS
Operating activities
Net collections/ (payments) from:
- Government and private securities			1,113,889				1,085,281
- Loans			(1,675,122	)			(320,908	)
to financial sector			(314,556	)			(58,325	)
to non-financial public sector			25,808				28,285
to non-financial private sector and residents abroad			(1,386,374	)			(290,868	)
- Other receivables from financial transactions			97,516				30,425
- Receivables from financial leases			(131,393	)			1,065
- Deposits			3,116,483				1,426,739
to financial sector			38,454				9,802
to non-financial public sector			259,810				450,285
to non-financial private sector and residents abroad			2,818,219				966,652
- Other liabilities from financial transactions			319,648				186,204
Financing from financial or interfinancial sector (calls received)			19,900				15,000
Others (except liabilities included in Financing Activities)			299,748				171,204
Collections related to service charge income			818,676				647,744
Payments related to service charge expense			(226,700	)			(170,502	)
Administrative expenses paid			(1,047,681	)			(920,685	)
Organizational and development expenses paid			(14,024	)			(11,436	)
Net collections from punitive interest			1,520				1,326
Differences from judicial resolutions paid			(9,215	)			(17,176	)
Collections of dividends from other companies			6,263				2,400
Other collections related to other income and expenses			146,257				46,410
Net cash flows provided by operating activities			2,516,117				1,986,887
Investment activities
Net payments from premises and equipment			(54,719	)			(61,015	)
Net collections from other assets			100				451
Other collections / (payments) from investment activities			83,113				(25,993	)
Net cash flows provided by / (used in) investment activities			28,494				(86,557	)
Financing activities
Net collections/ (payments) from:
- Argentine Central Bank			(113	)			(136	)
Other			(113	)			(136	)
- Banks and international agencies			157,416				(41,197	)
- Financing received from local financial institutions			(332	)			(271	)
Cash dividends paid			(804,000	)			(480,000	)
Other payments related to financing activities			(385,321	)			(173,118	)
Net cash flows used in financing activities			(1,032,350	)			(694,722	)
Financial results and results from holdings of cash and cash equivalents (including interest)			1				—
Net increase in cash and cash equivalents			1,512,262				1,205,608

 

(1)	See note 16 “Statements of cash and cash equivalents flow”

The accompanying notes 1 through 18 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.

 

-7-

---

 

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2011, PRESENTED IN COMPARATIVE FORM WITH THE BALANCE SHEET AS OF DECEMBER 31, 2010, AND THE STATEMENTS OF INCOME, CHANGES IN STOCKHOLDERS’ EQUITY AND CASH AND CASH EQUIVALENTS FLOW AS OF JUNE 30, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

(Stated in thousands of pesos)

 

1.	CORPORATE SITUATION AND BANK’S ACTIVITIES

 

1.1

Corporate situation

BBVA Banco Francés S.A. (hereinafter indistinctly referred to as either “BBVA Francés” or the “Bank”) has its main place of business in Buenos Aires, Argentina, and operates a 240-branch network.

As from December, 1996, BBVA Francés is part of Banco Bilbao Vizcaya Argentaria S.A. (BBVA) global strategy, which controls the Bank, direct and indirectly, with 75.97% of the corporate stock as of June 30, 2011.

Part of the Bank’s corporate stock is publicly traded and has been registered with the Buenos Aires Stock Exchange, New York Stock Exchange and Madrid Stock Exchange.

 

1.2

Capital stock

Changes in the Bank’s capital stock during the last five fiscal years are as follows:

 

Date of
Stockholders’ Meeting deciding on the issuance		Registration with the Public Registry of Commerce		Form of placement				Amount		Total
Capital Stock as of December 31, 2006:											471,361
03-27-2009		10-05-2009			(1	)		65,000			536,361	(2)

 

(1)	For payment of share dividend.

(2)	The amount of Capital Stock is fully paid in and authorized for public offering by National Securities Commission (CNV).

 

1.3

Consolidar Comercializadora S.A. merged by absorption into BBVA Banco Francés S.A.

On February 10, 2011, the Board of Directors of BBVA Francés and Consolidar Comercializadora S.A. entered into a “Preliminary merger agreement”, whereby BBVA Francés will incorporate Consolidar Comercializadora S.A. on the basis of these companies’ financial statements as of December 31, 2010 and Consolidar Comercializadora S.A. will go through a dissolution without liquidation process.

On March 30, 2011, the Ordinary and Extraordinary Shareholders’ Meeting of BBVA Francés and the Extraordinary Shareholders’ Meeting of Consolidar Comercializadora S.A., approved said preliminary merger agreement, as well as the consolidated merging balance sheet as of December 31, 2010 and the shares’ exchange ratio.

In addition, the Shareholders’ Meeting of BBVA Francés above mentioned, approved the increase in capital stock of BBVA Francés by issuing 516,544 book-entry, ordinary shares with a par value of $ 1 each and 1 vote per share, to be listed for public offering at the Buenos Aires Stock Exchange in order to be delivered to the shareholders of Consolidar Comercializadora S.A.

 

-8-

---

 

The exchange ratio agreed upon is 0.01114391 ordinary shares of BBVA Francés for each ordinary share of Consolidar Comercializadora S.A. Therefore, the shareholders of Consolidar Comercializadora S.A. will be entitled to receive 0.01114391 ordinary shares of BBVA Francés for each ordinary share that they hold in Consolidar Comercializadora S.A.’s capital stock.

The parties have agreed on July 1, 2011 as the merger effective date, with that being the date as of which all the assets and liabilities of the target company have been transferred. On July 5, 2011, the CNV approved the merger and the listing of the shares pertaining to the capital increase. As of the date of issuance of these financial statements, the merger was pending registration with the Public Registry of Commerce.

 

1.4

Sale of Consolidar Compañía de Seguros de Retiro S.A.

On March 31, 2011, a purchase and sale agreement was executed for the aggregate shares held by Consolidar Compañía de Seguros de Retiro S.A. (Consolidar Retiro) between BBVA Francés, holder of 66.21% of the capital stock, and Banco Bilbao Vizcaya Argentaria S.A., holder of 33.79% of the capital stock, in their capacities as selling shareholders, and Orígenes Compañía de Seguros de Retiro S.A., C.M.S. de Argentina S.A. and Grupo Dolphin Holding S.A., in their capacities as buying shareholders.

Pursuant to said agreement, a price was established for the shares, at 380,000, adjustable on the basis of the proceeds resulting from the sale of the interest held by Consolidar Retiro in the real estate for own use where it has its offices. The price will be paid pro rata of the shareholding of each one of the sellers in Consolidar Retiro. In addition, the closing of the transaction was subject to the satisfactory fulfillment of certain conditions precedent, which included the authorization of the National Superintendence of Insurance (S.S.N.).

On May 13, 2011, the transaction was approved by the National Superintendence of Insurance, with the stock purchase agreement having been closed and the transfer of shares consummated on June 10, 2011.

 

1.5

Responsibility of stockholders

BBVA Francés is a corporation established under the laws of the Argentine Republic, and the responsibility of its stockholders is limited to the value of the paid - in shares, in accordance with Law No. 19,550. As a result, in compliance with Law No. 25,738, it is hereby informed that neither the foreign capital majority stockholders nor the local or foreign stockholders will respond, in excess of the mentioned paid-in stockholding, for the liabilities arising out of the transactions performed by the financial institution.

 

2.	SIGNIFICANT ACCOUNTING POLICIES

 

2.1

Restatement of the 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 Argentine Central Bank (BCRA).

These financial statements recognize the effects of the changes in the purchasing power of the currency through February 28, 2003, following the restatement method established by Argentine Federation of Professional Council in Economic Sciences (FACPCE) Technical Pronouncement No. 6 (modified by Technical Pronouncement No.19), using adjustment rates derived from the Internal Wholesale Price Index published by the National Institute of Statistics and Census (I.N.D.E.C.).

Accordingly to the above mentioned method, the accounting figures were restated due to the purchasing power changes through August 31, 1995. As from that date, based in the prevailing economic stability conditions and accordingly with CNV General Resolution No. 272 and BCRA Communication “A” 2365, the accounting figures were not restated through December 31, 2001. In view of CNV General Resolution No. 415 and BCRA Communication “A” 3702, the method was reinstated effective as from January 1, 2002, considering the previous accounting figures as restated as of December 31, 2001.

 

-9-

---

 

By Communication “A” 3921 of the BCRA and General Resolution No. 441/03 of the CNV, in compliance with Decree 664/03 of the Federal Executive, application of the restatement method on financial statements in equivalent purchasing power has been suspended as from March 1, 2003. Accordingly, BBVA Francés applied the mentioned restatement until February 28, 2003.

 

2.2

Comparative information

In accordance with BCRA Communication “A” 4265, the Balance Sheet and the Exhibits that so specify include the comparative information as of December 31, 2010, while the Statements of Income, Changes in Stockholders’ Equity and Cash and cash equivalents flow show comparative information as of June 30, 2010.

Pursuant to Communication “A” 5047, dated March 4, 2010, effective as from July 1, 2010, BCRA modified the requirements concerning the manner of presenting transactions whereby the bank grants financial leases. As a result, and for comparative purposes, the Bank modified the balances in the Statement of Income and in the Statement of Cash and cash equivalent flow as of June 30, 2010.

On February 11, 2011, pursuant to Communication “A” 5180 and supplementary rules, BCRA has incorporated certain changes into its rules concerning the valuation and presentation of debt instruments issued by the non-financial public sector and of debt instruments used as monetary regulation tools that shall come into force on March 1, 2011. As a result, for comparative purposes, the Bank has adapted the presentation of the balances of such assets in the Balance Sheet as of December 31, 2010.

It must be clarified that these changes do not have a significant impact on the presentation of the financial statements as of such dates considered as a whole.

 

2.3

Valuation methods

 

The

main valuation methods used in the preparation of the financial statements have been as follows:

 

a)

Foreign currency assets and liabilities:

As of June 30, 2011 and the end of the previous fiscal year, such amounts were converted at the benchmark exchange rate of the BCRA as of the closing date of transactions on the last business day of the period or fiscal year. The exchange differences were charged to income (loss) for the period or fiscal year.

 

b)

Government and private securities:

 

I.

As of June 30, 2011:

 

•

Holdings booked at fair value and instruments issued by the BCRA at fair value: they were valued based on current listed prices or the prevailing present value for each security as of the close of the period. Differences in listed prices were credited/charged to income for the period.

 

•

Holdings booked at amortized cost and instruments issued by the BCRA at amortized cost: these were valued using the amount of initial recognition, rose on the basis of the interest accrued as per the internal rate of return.

 

•

Investments in listed private securities, equity and debt instruments: they were valued based on current listed prices as of the close of the period. Differences in listed prices were charged to income for the period.

 

II.

As of December 31, 2010:

As stated in Note 2.2., for comparative purposes, the Bank adapted the presentation of the balances of these assets in the Balance Sheet.

 

•

Holdings booked at fair value and instruments issued by the BCRA at fair value:

 

-10-

---

 

•

Holdings for trading or financial transactions and instruments issued by the BCRA (except Holdings available for sale) for 4,813 and 65,962, respectively: they were valued based on current listed prices for each security as of the close of the fiscal year. Differences in listed prices were credited/charged to income for the fiscal year.

 

•

Holdings available for sale (Government Securities) for 695,479: according to Communication “A” 4702, the Government securities expressly included in the list of volatilities published by the BCRA on a monthly basis, were classified as “Available for sale”.

 

•

They were valued in accordance with the quotations prevailing for each security as of the close of the fiscal year. Differences, if any, between the cost of addition of these holdings increased by the accrual of the internal rate of return and the value of the quotation were charged to Unrealized valuation difference in the stockholders’ equity. As of December 31, 2010, the amount recorded was 87,877 (income).

 

•

Unlisted government securities for 2,055,270: they were valued at the highest amount resulting from a comparison between the present value as estimated by BCRA and the book value (net of its balancing account), following the instructions in BCRA’s Communication “A” 4898.

 

•

Holdings available for sale (Instruments issued by the BCRA) for 532,818: according to Communication “A” 4702, the instruments issued by the BCRA expressly included in the list of volatilities published by the BCRA on a monthly basis, were classified as “Available for sale”.

 

•

They were valued in accordance with the quotations prevailing for each security as of the close of the fiscal year. Differences, if any, between the cost of addition of these holdings increased by the accrual of the internal rate of return and the value of the quotation were charged to Unrealized valuation difference in the stockholders’ equity. As of December 31, 2010, the amount recorded was 254 (income).

 

•

Holdings booked at amortized cost and instruments issued by the BCRA at amortized cost:

 

•

Unlisted government securities for 175: they were valued at the highest amount resulting from a comparison between the present value as estimated by BCRA and the book value (net of its balancing account), following the instructions in BCRA’s Communication “A” 4898.

 

•

Unlisted instruments issued by the BCRA for 2,170,064: in accordance with the regulations issued by the BCRA, this portfolio now reflects holdings that do not show the volatility reported by the BCRA. As of December 31, 2010, the value of the holdings in accordance with the most recent quotation informed rose on the basis of the interest accrued as per the internal rate of return.

 

•

Investments in listed private securities, equity and debt instruments for 269: they were valued based on current listed prices as of the close of the fiscal year. Differences in listed prices were charged to income for the fiscal year.

 

c)

Loans to Government Sector:

Federal Government secured loans – Decree No. 1387/2001:

As of June 30, 2011 and the end of the previous fiscal year, the secured loans were valued at the highest amount resulting from a comparison between the present value as estimated by BCRA and the book value in accordance with the provisions under BCRA’s Communication “A” 5180 and “A” 4898, respectively. An amount has been added to said balancing account to match their book values to fair values.

 

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, those whose maturity does not exceed 92 days, and adjustable assets and liabilities and loans to financial sector which were apportioned on a linear basis.

 

-11-

---

 

e)

Benchmark stabilization coefficient (CER):

As of June 30, 2011 and the end of the previous fiscal year, receivables and payables have been adjusted to the CER as follows:

 

•

Federal government secured loans have been adjusted under Resolution 50/2002 of the Ministry of Economy, which resolved that the CER business 10 (ten) days prior to the maturity date of the related service will be considered for yield and repayments of the loans.

 

•

Federal Government Secured Bonds due in 2020: have been adjusted under Resolution 539/2002 of the Ministry of Economy, which resolved that the CER business 5 (five) days prior to the maturity date of the related service will be considered for yield and repayment of the bonds.

 

•

Deposits and other assets and liabilities: have been adjusted considering the CER prevailing as of June 30, 2011 and the end of the previous fiscal year.

 

f)

Allowance for loan losses and contingent commitments:

For loans, other receivables from financial transactions, receivables from financial leases, receivables from sale of property assets and contingent commitments: the allowances have been calculated based on the Bank’s estimated loan loss risk in light of debtor compliance and the collaterals supporting the respective transactions, as provided by Communication “A” 2950 and supplemented of the BCRA.

 

g)

Instruments to be received and to be delivered for spot and forward transactions pending settlement:

 

•

In foreign currency: they were valued according to the benchmark exchange rate of the BCRA for each currency determined on the last business day of the end of the period or fiscal year.

 

•

Securities: with Holdings booked at fair value and Instruments issued by B.C.R.A at fair value: according to the method described in 2.3.b).

 

h)

Amounts receivable and payable for 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, 2011 and the end of the previous fiscal year.

 

i)

Unlisted Corporate Bonds:

They were valued at acquisition cost plus income accrued but not collected as of June 30, 2011 and the end of the previous fiscal year.

 

j)

Receivables from financial leases:

As of June 30, 2011 and the end of the previous fiscal year, they were valued at the present value of the sum of the periodical installments and the agreed-upon residual value, calculated as per the conditions agreed upon in the respective leases, applying the imputed interest rate thereto.

 

k)

Investments in other companies:

 

•

Investments in controlled financial institutions, supplementary activities and authorized were valued based on the following methods:

 

•

Francés Valores Sociedad de Bolsa S.A., Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings), PSA Finance Argentina Compañía Financiera S.A. and Francés Administradora de Inversiones S.A: were valued by the equity method at the end of the period or fiscal year.

 

•

Consolidar Cía. de Seguros de Retiro S.A.: was valued by the equity method as of December 31, 2010.

 

-12-

---

 

•

Investments in non controlled financial institutions, supplementary activities and authorized were valued according to the following methods:

 

•

Rombo Cía. Financiera S.A., Banelco S.A. and Interbanking S.A.: were valued by applying the equity method at the end of the period or fiscal year.

 

•

Visa Argentina S.A.: was valued by applying the equity method on the basis of the financial statements of the issuer company as of May 31, 2010, plus new capital contributions and dividend distribution until June 30, 2011 and December 31, 2010, as appropriate.

 

•

Bladex S.A. (included in Other - Foreign): 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 2.3.a).

 

•

Other: valued at acquisition cost, without exceeding their recoverable value.

 

•

Other non controlled affiliates were valued based on the following methods:

 

•

Consolidar A.R.T. S.A. and BBVA Consolidar Seguros S.A.: were valued by applying the equity method at the end of the period or fiscal year.

 

•

Other: were valued at acquisition cost, without exceeding their recoverable value.

 

l)

Premises and equipment and Other assets:

They have been valued at acquisition cost plus increases from prior-year appraisal revaluations, restated as explained in note 2.1, less related accumulated depreciation calculated in proportion to the months of estimated useful life of items concerned (see Exhibit F).

 

m)

Intangible assets:

They have been valued at acquisition cost less related accumulated amortization calculated in proportion to the months of estimated useful life of the items concerned (see useful life assigned in Exhibit G).

This caption included the differences arising from compliance with court-ordered measures arising from cases challenging the current rules and regulations applicable to deposits with the financial system in the framework of the provisions of Law No. 25,561, Decree No. 214/02 and supplementary provisions. The assets mentioned (calculated on the basis of the nominal difference between the exchange rate freely determined in the market and applied to the value of the deposit recorded in the books at that date) was amortized within the 60 monthly installments starting in April 2003 in accordance with Communication “A” 3916 of the BCRA.

As of June 30, 2011 and the end of the previous fiscal year these assets have been fully amortized, with the total accumulated amortization as of those dates amounting to 1,340,056 and 1,330,841, respectively.

The Bank, however, notifies that such amortization was solely calculated to comply with the regulations of the BCRA and that by no means does it imply a waiver to possible compensation or recovery of the exchange difference resulting from compliance with court orders corresponding to petitions for protection of civil rights or other court action derived from the mandatory conversion of bank deposits into pesos.

In the decision in re “Massa, Juan Agustín versus National Executive Branch - Decree 1570/ and others following petitions for protection of civil rights under Law No. 16.986” dated December 27, 2006, the Supreme Court of Justice of Argentina confirmed by the majority vote of its members the validity of the emergency legislation enacted from 2001 and until the date of that pronouncement; i.e., the Supreme Court accepted the re-denomination into Pesos of deposits as well as the calculation methodology for the reimbursement of the bank deposits subject to the emergency regime imposed by the Argentine Government which unconstitutionality was claimed in the case mentioned. This decision by the Supreme Court of Justice establishes a calculation modality different from the modality decreed by the Executive

 

-13-

---

 

Branch, establishing in this particular case the following criteria: each depositor is entitled to receive from the banking institution a reimbursement of the amount deposited converted into Pesos a the US$1 = AR$ 1.40 exchange rate, adjusted by CER until the date of effective payment, plus compensatory interest at the annual, non compoundable 4% interest rate accruing as from the establishment of restrictions upon the availability of bank deposits or as from the date of maturity of the deposit if it was subsequent to February 28, 2002 subject to the monetary limit resulting from the decision handed down by the Court of Appeals, in so far as its judgment has not been appealed by the plaintiff. This criterion remains in a more recent judgment, “Kujarchuk versus the Argentine Executive Branch”, in which The Supreme Court of Justice lays down the methodology consisting in calculating the amount to be reimbursed in Pesified deposits in the event there had been partial reimbursements or deliveries through a comparison to the amounts withdrawn by the bank as a result of decisions handed down by a court or resulting from out-of-court arrangements. Those payments shall be deemed to be partial payments and that a deduction is to be performed out of the original deposit denominated in foreign currency of the percentage that, when converted into such currency, is represented by such payments converted into US Dollars at the exchange rate quoted in the floating foreign exchange market prevailing on each date. The amounts withdrawned on such concepts are to be consolidated and deducted according to the rules there established and always according to the guidelines of the Massa judgment. Come this instance, costs are borne in equal parts by the plaintiff and defendant and as regards previous instances, they are borne as decided by the Court of Appeals. Additionally, the Court has placed a cap on the amount pending reimbursement equivalent to the limit established by the Court of Appeals, and if applicable, the value in US Dollars of the original deposit.

As of June 30, 2011 and the end of the previous fiscal year, the Bank has estimated this contingency and it has raised allowances for the total amount.

The Bank’s Board of Directors expects that the Argentine State remedies the significant damage resulting from compliance with court-ordered measures on petitions for protection of civil rights and actions for relief, particularly due to the impact of differences in compensation or recovery as per the rulings in the abovementioned actions and according to the law in relation to pesification of the underlying deposits. In this regard, the Bank has informed of such financial damages to the relevant authorities, with reservation of rights.

 

n)

Derivative transactions (see note 12):

 

•

Interest rate swaps and Forward transactions:

 

1.

Interest rate swaps are recorded at the value resulting from the application of rates differences to residual notional amounts at the end of the period or fiscal year.

 

2.

Forward transactions receivable/payable in Pesos without delivery of the underlying asset are recorded for the amount receivable or payable, as appropriate, arising from the difference between the agreed exchange rate and the exchange rate at the end of the period or fiscal year as applied to stated notional amounts.

 

•

Call and put options bought and written:

As of June 30, 2011 and the end of the previous fiscal year, these were valued based on their intrinsic value, which represents the difference between the market value of the underlying asset and the strike price. The exchange differences were charged to income (loss) for the period or fiscal year.

 

•

Repo transactions

As of June 30, 2011, they were valued on the basis of the quotations prevailing for each security at the end of the period. Quotation differences were charged to income (loss) for the period.

 

o)

Term investments yielding variable income - Communication “A” 2482 and supplemented:

As of June 30, 2011 and the end of the previous fiscal year, the variable income yielded by these investments, agreed for terms equal to or in excess of 180 days, was accrued on the basis of the change in the price of the assets or the indicators contained in the provision and the terms and conditions of the respective transactions were also considered. Any said change was restricted to a given range of contractually agreed values.

 

-14-

---

 

p)

Employee termination pay:

The Bank expenses employee termination pay as disbursed.

 

q)

Other liabilities

They include the debit balances non arising out of transactions relating to the supply and demand of financial resources, plus the adjustments and interest payable accrued as of June 30, 2011 and the end of the previous fiscal year.

 

r)

Allowance for other contingencies:

It includes the estimated amounts to meet contingencies of probable occurrence that, if occurred, would give rise to a loss for the Bank.

 

s)

Stockholders’ equity accounts:

They are restated as explained in note 2.1, except for the “Capital Stock” and “Non capitalized contributions” accounts which have been kept at original value. The adjustment resulting from the restatement is included in the “Adjustment to Stockholders´ Equity – Adjustment to Capital Stock” account.

 

t)

Statement of Income Accounts:

 

•

As of June 30, 2011 and 2010, accounts accruing monetary transactions [(financial income (expense), service charge income (expense), provision for loan losses, administrative expenses, etc.)] were computed on the basis of their monthly accrual at historical rates.

 

•

Accounts reflecting the effect on income resulting from the sale, write-off, or use of non-monetary assets were computed based on the value of such assets, as mentioned in note 2.1.

 

•

Income from investments in subsidiaries was computed based on such companies’ income adjusted as explained in note 2.1.

 

u)

Earning per share:

As of June 30, 2011 and 2010, the Bank calculated the earning per share on the basis of 536,361,306 ordinary shares of $ 1 par value each. The net income for each period on those dates is as follows:

 

		06-30-2011				06-30-2010
Net income for the period			392,486				363,047
Earning per share for the six-month period – (stated in pesos)			0.73				0.68

 

v)

Use of accounting estimates:

The preparation of the financial statements in accordance with the standards set forth by the BCRA require the Bank’s Board of Directors to use assumptions and estimates that affect certain assets such as allowances for doubtful loan and certain liabilities such as provisions for other contingencies as well as the income/loss generated during the fiscal years being reported. Final income/loss may differ from such estimates.

 

3.	DIFFERENCES BETWEEN BCRA ACCOUNTING STANDARDS AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN ARGENTINA

The Bank has prepared these financial statements by applying the regulations of the BCRA, which do not contemplate some of the valuation and disclosure criteria incorporated to the generally accepted accounting principles in Argentina.

 

-15-

---

 

The main differences between the regulations of the BCRA and the generally accepted accounting principles in Argentina are detailed below:

 

I.

Valuation criteria

 

a)

Tax effects

As already indicated in note 4.1., the Bank has received various communications from the BCRA pursuant to which that BCRA indicates that the capitalization of items arising from the application of the deferred tax method is not allowed. In accordance with professional accounting standards currently in force in Argentina, a deferred tax asset should be recognized to the extent the reversal of temporary differences generates a future decrease in the tax effectively determined. As a result, the allowances set up by the Bank in this respect, for 130,100 and 62,300 as of June 30, 2011 and the end of the previous fiscal year, respectively, should be recovered.

 

b)

Derivative financial instruments

As explained in notes 2.3.n) and 12, as of June 30, 2011 and the end of the previous fiscal year, the Bank recorded the effects of interest rate swap agreements as established by the BCRA. Should the Bank have applied the professional accounting standards currently applicable, the stockholders’ equity would have increased in 1,856 and 3,729, respectively. By contrast, the effect of the application of the professional accounting standards on the income statement for the periods ended June 30, 2011 and 2010 would have been 1,873 (loss) and 919 (income), respectively.

 

c)

Consolidar A.F.J.P. S.A. building acquisition

On September 25, 2009, the Bank acquired from Consolidar A.F.J.P. S.A. the latter’s undivided interest in the piece of real estate located in Avenida Independencia 169. The Bank booked a 20,109 write-down for the real estate in its stand-alone and consolidated balance sheet as of June 30, 2011 and the end of the previous fiscal year to reflect the result from the transaction attributable to the Bank’s ownership interest in the company. The professional accounting standards currently in force in Argentina do not require the mentioned adjustment.

 

d)

Consolidar Retiro. S.A. building acquisition

On June 7, 2011, the Bank acquired from Consolidar Retiro the latter’s undivided interest in the piece of real estate located in Avenida Independencia 169. The Bank booked a 7,062 write-down for the real estate in its stand-alone and consolidated balance sheet as of June 30, 2011 to reflect the result from the transaction attributable to the Bank’s ownership interest in the company as of that date. The professional accounting standards currently in force in Argentina do not require the mentioned adjustment.

 

II.

Valuation criteria and aspects related to disclosure of information

 

a)

Holdings available for sale

As of December 31, 2010, the Bank charged to the account “Unrealized valuation difference” in stockholders’ equity an income of 88,131, which reflects the difference between the cost of addition of these holdings and increased by the accrual of the internal rate of return and the value as quoted of Government securities and instruments issued by the BCRA, classified as Holdings available for sale. The professional accounting standards in force in Argentina do not endorse this accounting treatment. As of December 31, 2010 and June 30, 2010, 102,264 (income), and 27,963 (loss), respectively, should have been charged to income for the fiscal year or period, respectively.

 

4.	TAX MATTERS

 

4.1.

Income tax

The Bank determined the charge for income tax by applying the effective 35% rate to taxable income estimated for fiscal year considering the effect of temporary differences between valuation of assets and liabilities for accounting purposes and their taxable bases. The Bank considered as temporary differences those that have a definitive reversal date in subsequent years.

 

-16-

---

 

As of June 30, 2011 and 2010, the Bank recorded 265,900 and 66,000, respectively, in the Income tax caption as the estimate of the income tax charge payable to the tax authorities for the relevant fiscal years.

As of June 30, 2011 and the end of the previous fiscal year, the Bank has booked 200,101 and 177,757, respectively, in the caption Other liabilities – Other – Accrued Taxes as a result of having netted the income tax withholdings applied to the Bank until such dates.

Besides, on June 19, 2003, the Bank received a note from the BCRA indicating that the capitalization of items arising from the application of the deferred tax method is not allowed.

On June 26, 2003, the Bank’s Board of Directors, based on the opinion of its legal counsel, responded the above mentioned note, indicating that in their opinion the rules of the BCRA do not prohibit the application of the deferred tax method generated by the recognition of temporary differences between the accounting and tax result. Subsequently, Resolution 118/03 of the Superintendent of Financial and Exchange Institutions received on October 7, 2003 confirmed the terms of the note dated June 19, 2003. Consequently, as from that date the Bank has set up an allowance for the net balance between the deferred tax assets and liabilities.

As of June 30, 2011 and the end of the previous fiscal year, the Bank records under Other Receivables (in the line Tax Prepayments) a taxable deferred asset amounting 130,100 and 62,300, respectively. Such amounts are made up as follows:

 

		06-30-2011				12-31-2010
Deferred tax assets			353,300				473,900
Deferred tax liabilities			(223,200	)			(411,600	)
Net deferred assets			130,100				62,300
Allowance			(130,100	)			(62,300	)

 

4.2.

Tax on minimum presumed income

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. On December 19, 2008 Law No. 26,426 established a one-year extension in TOMPI until December 30, 2009. In turn, Law No. 26,545, published in the Official Gazette on December 2, 2009 extended TOMPI for a further ten years. 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 a 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 net operating loss 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.

On February 11, 2005, the Argentine Central Bank issued Communication “A” 4295 whereby it enabled, under certain rules, the accounting record of credits on Tax on Minimum Presumed Income.

As of June 30, 2011 and 2010, the Income tax assessed was higher than the TOMPI. Therefore, a provision was raised for Income tax.

 

4.3.

Other tax issues

 

a)

In the year 1998 through 2000, the Bank was notified of three tax assessments performed at the initiative of the Federal Administration of Public Revenue (AFIP), concerning income tax for the fiscal years 1992, 1993 and 1994 through 1998 plus minimum presumed income tax for the fiscal year 1999.

 

-17-

---

 

An appeal against said assessments was lodged with the Argentine Tax Court: although the petitions asserted by the Bank in connection with periods 1992 and 1993 were partially dismissed, those concerning the periods 1994 through 1999 were admitted by the Tax Court. In all these cases, appeals against the resolutions were lodged with the Appellate Court with Federal Jurisdiction over Contentious Administrative Matters. On September 4, 2009 the Bank was notified of the judgment rendered by the Appellate Court in connection with the case file for fiscal period 1992. The judgment annuls the judgment entered in due time by one of the Argentine Tax Court panels and remands the case file to the Tax Court for it to have another panel render a decision. In addition, the resolution related to the fiscal period 1993 was confirmed by the Appellate Court and an appeal against it has been lodged with the Supreme Court of Justice of Argentina in the form of an ordinary appeal.

As concerns the proceedings for the fiscal periods 1994 through 1999, on December 2, 2008, the Supreme Court of Justice of Argentina confirmed the judgment favorable to the Bank.

On November 18, 2010, the Bank was notified by the Supreme Court of Justice of Argentina that the favorable judgment had been confirmed in connection with the proceedings for the fiscal period 1993.

The Bank’s Management and tax and legal counsel estimate that the Bank made a reasonable interpretation of effective regulations regarding the observed periods.

 

b)

On October 24, 2007, the Bank was notified by the Tax Bureau of the City of Buenos Aires of the commencement of a sua sponte tax assessment on a certain basis and partial in nature of the taxable income as regards turnover tax for the fiscal years 2002 and 2003.

On November 14, 2007, the Bank filed its defenses to the notice mentioned.

Then, on October 6, 2008, the Bank was given notice of Resolution N° 3631-DGR 2008 containing the sua sponte tax assessment for the fiscal years 2002 and 2003. On October 28, 2008, the Bank filed an appeal for review against this resolution, which was rejected on November 7, 2008.

In response to said rejection, on November 28, 2008 an appeal was lodged with a higher administrative authority by the Ministry of Economy of the Government of the City of Buenos Aires, which was also dismissed on April 24, 2009.

On April 28, 2009, the Appellate Court with Federal Jurisdiction over Contentious Administrative Matters, Panel 3 handed down a judgment favorable to a petition filed by the Bank for the judge to suspend the effect of the decision made by administrative authorities until the appeal is decided. The judgment thus ordered that “….subject to a sworn promise to comply … a) the Tax Bureau of the City of Buenos Aires must suspend the sua sponte assessment that has objected to the treatment afforded by BBVA Francés to the bonds received from the National Government in the terms of Decree No. 905-02 and the related foreign exchange gains/losses in all matters related to taxation for turnover tax purposes for the fiscal period 2002; b) therefore, the Tax Bureau of the City of Buenos Aires must abstain from demanding that the Bank should pay any amount due that may have arisen from the items above detailed”.

Also in this respect, on May 13, 2009, an action for a declaratory judgment was commenced by the Bank against the Tax Bureau of the City of Buenos Aires, currently being heard by the court with original Federal Jurisdiction over Contentious Administrative Matters No. 1, to procure a judgment ascertaining that a) the bonds received by the Bank from the National Government as compensation for the asymmetric re-denomination into Pesos of assets and liabilities imposed by the Executive Order No. 905/2002 may not be levied with Turnover Tax in the Autonomous City of Buenos Aires; b) the foreign exchange gains/losses are a direct effect of the modification of the monetary system and therefore should not be levied with Turnover Tax in the Autonomous City of Buenos Aires. On December 29, 2010, the Judge presiding over the court with original Federal Jurisdiction over Contentious Administrative Matters No. 1 handed down a new precautionary measure ordering the Tax Bureau of the City of Buenos Aires to refrain from demanding that BBVA Francés should pay any debt originating in the tax treatment that should be afforded to the bonds received from the National Government as compensation for the asymmetric re-denomination into Pesos under Executive Order No. 905/02 and the foreign exchange gains/losses for purposes of Turnover Tax for the fiscal period 2002 in issue until a final judgment has been rendered on the proceedings whereby the action for a declaratory judgment is still pending.

 

-18-

---

 

The Bank’s Management and tax and legal counsel estimate that the Bank made a reasonable interpretation of effective regulations regarding the observed periods.

As regards the rest of the debt claimed, the above agency established a plan of payment in installments to which the Bank has adhered acknowledging that said adhesion does not entail a recognition of rights or the abandonment of further actions before the courts. Therefore, on May 26, 2009 the Bank made an advance payment that corresponds to 35% of the total debt, on June 25, 2009 the Bank paid the first of the remaining 120 monthly installments and since then, the Bank has been paying the monthly installments as they accrue. On October 9, 2009, the Bank filed with the Tax Bureau of the City of Buenos Aires a request for the refund of the taxes paid with the prepayment above mentioned and the installments already paid. This petition included a reserve that the Bank may include in the complaint filed with the administrative authorities all the installments that had not yet accrued to the extent they are paid by the Bank. However, on October 4, 2010, the Bank cancelled all the outstanding moratorium balances in the framework of the plan of payment in installments set out by Law No. 3461/2010.

The Bank’s Management does not expect an adverse financial impact in these respects.

 

5.	BREAKDOWN OF MAIN ITEMS AND ACCOUNTS

The breakdown of the items included under Other accounts which exceed 20% of the total amount of each item is as follows:

 

a)

LOANS

 

		06-30-2011				12-31-2010
Loans granted to pre-finance and finance exports			2,690,930				2,329,504
Fixed-rate financial loans			1,805,408				1,392,175
Other			41,796				34,803
Total			4,538,134				3,756,482

 

b)

INVESTMENTS IN OTHER COMPANIES

 

In controlled companies -supplementary activities			68,751				249,788
In other non-controlled companies- unlisted			41,066				37,321
In non-controlled companies-supplementary activities			15,382				15,423
Total			125,199				302,532

 

c)

OTHER RECEIVABLES

 

Miscellaneous receivables			187,879				125,229
Tax prepayments (1)			135,266				71,304
Guarantee deposits			134,456				102,105
Prepayments			109,147				94,396
Other			1,117				4,227
Total			567,865				397,261

 

(1)	As of June 30, 2011 and the end of the previous fiscal year, it includes the deferred tax asset for 130,100 and 62,300, respectively (see note 4.1.).

 

-19-

---

 

d)

OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS

 

		06-30-2011				12-31-2010
Collections and other operations for the account of third parties			529,453				290,211
Accounts payable for consumption			391,061				394,705
Other withholdings and collections at source			220,451				202,429
Money orders payable			166,013				179,820
Social security payment orders pending settlement			44,765				3,852
Loans received from Argentine Technological Fund (FONTAR)			35,261				38,391
Pending Banelco debit transactions			20,395				28,493
Loans received from Interamerican Development Bank (BID)			17,527				18,420
Other			34,553				62,960
Total			1,459,479				1,219,281

 

e)

OTHER LIABILITIES

 

Accrued taxes			264,279				232,037
Miscellaneous payables			169,103				223,193
Accrued salaries and payroll taxes			149,779				185,008
Amounts collected in advance			63,668				65,126
Other			634				1,925
Total			647,463				707,289

 

f)

MEMORANDUM ACCOUNTS – DEBIT – CONTROL

 

Securities representative of investments in escrow on behalf of the Guarantee Fund for the Sustainability of the Pay-as-you-go System managed by the Argentine State			37,730,865				36,645,801
Items in safekeeping			16,309,938				17,016,419
Checks not yet credited			1,993,383				1,697,519
Collections items			488,436				430,819
Checks drawn on the Bank pending clearing			341,035				245,783
Other			95,652				79,403
Total			56,959,309				56,115,744

 

g)

SERVICE CHARGE INCOME

 

		06-30-2011				06-30-2010
Commissions for hiring of insurances			83,211				60,489
Rental of safe-deposit boxes			36,313				25,497
Commissions for loans and guaranties			26,329				15,172
Commissions for transportations of values			7,288				5,979
Commissions for capital market transactions			6,794				10,701
Commissions for salary payment			4,261				3,744
Commissions for trust management			481				823
Other			31,037				31,984
Total			195,714				154,389

 

-20-

---

 

h)

SERVICE CHARGE EXPENSE

 

		06-30-2011				06-30-2010
Turn-over tax			48,620				33,660
Insurance paid on lease transactions			9,550				7,559
Other			6,999				3,158
Total			65,169				44,377

 

i)

OTHER INCOME

 

Deferred income tax (1)			67,800				30,800
Related parties expenses recovery			6,338				4,139
Tax recovery			18,166				—
Other			27,521				5,962
Total			119,825				40,901

 

(1)	Offset with a charge for the same amount in “Charge for uncollectibility of other receivables and other allowances” account, under Other expense item.

 

6.	FINANCIAL INFORMATION UNIT: SUMMARY PROCEEDINGS

In March 2010, the Bank was notified of the commencement of two summary proceedings instituted by the Financial Information Unit (UIF) against BBVA Francés and its Regulatory Compliance Officer arising from two wire transfers received by two customers in their respective sight accounts on November 22, 2007 and respectively amounting to 39,393 and 9,174.

It has been the UIF’s understanding that the profile of the customers, as defined, and the supporting documentation submitted by the Bank do not coincide with the possibility of receiving such wire transfers.

In due time, the Bank filed its defenses, offered evidence and petitioned for an acquittal. In addition, the Bank called for the enforcement in this case of the same guarantees available in court proceedings, argued that the statute of limitations applicable to punishable offenses had run out and further claimed that Law No. 25,246 is unconstitutional when it comes to the scale of penalties imposed.

As regards the Regulatory Compliance Officer, the Bank focused on the nature of the penalties that could be imposed on him and petitioned for the enforcement of the general principles of the law in his respect as these prescribe that this officer should not be deemed liable on grounds of occupying the position of regulatory compliance officer at the Bank.

In September and October 2010, the Bank was served with the resolutions adopted by the UIF whereby BBVA Francés and the Regulatory Compliance Officer were each ordered to pay a fine for an amount equivalent to one time the transactions objected.

On the basis of its legal advisors’ opinion, on October 28 and November 25, 2010, the Bank lodged with the Appellate Court with Federal Jurisdiction over Contentious Administrative Matters a direct appeal against the UIF’s Resolutions in connection with the wire transfers for 9,174 and 39,393, respectively, in accordance with the provisions under Section 25 of Law No. 25,246.

Both the Bank’s Management and its legal advisors understand that the Bank has assessed these cases on the basis of a duly timed analysis, following the internal procedures in place for these situations. Further, they understand that the Bank has duly applied in these two cases all current rules and regulations and that no adverse impact on the Bank’s financial position is expected in this respect.

 

-21-

---

 

7.	RESTRICTIONS ON ASSETS

As of June 30, 2011 and the end of the previous fiscal year, there are Bank assets, which are restricted as follows:

 

a)

The Government and Private Securities account includes 84,247 and 100,005, respectively, in Guaranteed Bonds maturing in 2018 and as of June 30, 2011, 9,900 in bonds issued by the Argentine Government maturing in 2014, allocated to the guarantee required to act as custodian of investment securities related to Guarantee Fund for the Sustainability of the Pay-as-you-go System managed by the Argentine State.

 

b)

The Bank appropriated 34,353 in bonds issued by the Argentine Government maturing in 2014 and 32,988 in Guaranteed Bonds maturing in 2020 as of June 30, 2010 and BCRA Bills (Badlar), in an amount of 67,341, as of the end of the previous fiscal year, to secure loans arranged under the Credit Global Program given by the Interamerican Development Bank (B.I.D.).

 

c)

The Bank appropriated loan funds of its active portfolio in an amount of 1,645 and 1,591, respectively, to secure debts with the BCRA.

 

d)

The Bank has also appropriated accounts, deposits and trusts for 343,512 and 280,014, respectively, as security for activities related to credit card operations, automated clearing houses, non-deliverable forwards and lawsuits.

 

8.	TRANSACTIONS WITH SUBSIDIARIES AND PARENT COMPANIES (ART. 33 OF LAW No. 19,550)

The balances as of June 30, 2011 and the end of the previous fiscal year, for transactions performed with subsidiaries and parents companies are as follows:

 

		Balance Sheet																Memorandum Accounts (1)
		Assets								Liabilities
Company		2011				2010				2011				2010				2011				2010
BBVA S.A.			50,534				24,495				8,108				8,723				151,068				188,713
Francés Valores Sociedad de Bolsa S.A.			999				726				3,061				2,118				2,596				2,845
Consolidar A.R.T. S.A.			100				96				60,599				88,713				15,345				6,772
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings)			1				1				85,445				61,765				91,362				77,515
Consolidar Cía. de Seguros de Retiro S.A.			—				3,738				—				585				—				57,505
Francés Administradora de Inversiones S.A.			245				174				23,011				19,254				14,576				12,592
BBVA Consolidar Seguros S.A.			10,788				8,462				2,583				2,328				9,986				943
PSA Finance Argentina Cía. Financiera S.A.			589,852				399,888				172				1,608				50,000				50,000
Rombo Cía. Financiera S.A.			367,340				269,288				4,036				5,194				169,000				109,000
Consolidar Comercializadora S.A.			—				52				55,520				19,808				—				42,335
Inversora Otar S.A.			—				—				616				360				725,907				773,796

 

(1)	Includes Items in safekeeping, Credit lines granted (unused portion) covered by debtor classification regulations, Guaranties given covered by debtor classification regulations and Derivatives.

 

9.	BANK DEPOSITS GUARANTEE INSURANCE SYSTEM

The Bank is included in the Deposit Guarantee System established by Law 24,485, Regulatory Decrees No. 540/95, No. 1,292/96 and 1,127/98 and Communication “A” 2337 and BCRA’s complementary regulations.

Such law provided for the creation of the Company Seguros de Depósitos Sociedad Anónima (SEDESA) for purposes of managing the Deposit Guarantee Fund (DGF), whose shareholders, in accordance with the changes introduced by Decree No. 1,292/96, shall be the BCRA with one share as a minimum and the trustees of the trust created by the financial institutions in the proportion to be determined for each by the BCRA according to their contributions to the DGF.

 

-22-

---

 

That Company was incorporated in August 1995 and the Bank has a 11.1030% interest in its capital stock.

The Deposit Guarantee System, which is limited, compulsory and onerous, has been created for purposes of covering the bank deposit risks subsidiarily and complementarily to the deposit protection and privilege system established by the Financial Institutions Law.

The guarantee shall cover the repayment of principal disbursed plus interest accrued through the date of revoking of the authorization to operate or through the date of suspension of the institution through application of section 49 of the BCRA’s Charter provided that the latter had been adopted earlier than the former without exceeding the amount of pesos a hundred and twenty thousand. Regarding operations in the name of two or more people, the guarantee shall be prorated between the holders. In no event shall the total guarantee per person exceed the abovementioned amount, whatever the number of accounts and/or deposits.

 

10.	TRUST ACTIVITIES

 

10.1.

Financial Trusts

On January 5, 2001, the BCRA’s Board of Directors issued Resolution No. 19/01, providing for the exclusion of Mercobank S.A.’s senior liabilities under the terms of Section 35 bis of the Financial Institutions Law, the authorization to transfer the excluded assets to the Bank as trustee of the Diagonal Trust, and the authorization to transfer the excluded liabilities to beneficiary banks. Also, on the mentioned date, the agreement to set up the Diagonal Trust was subscribed by Mercobank S.A. as settle and the Bank as trustee in relation to the exclusion of assets as provided in the resolution abovementioned. The Bank had entrusted Atuel Fideicomisos S.A. the management of collections and the realization of the corpus assets. As of June 30, 2011 and the previous fiscal year, the assets of Diagonal Trust amount to 2,414 and 2,405, respectively, considering its recoverable value.

Besides, as of June 30, 2011 and the end of the previous fiscal year the Bank has recorded the assets of Maginot Trust, whose book value amounts to 341 and 338, respectively. In addition, the Bank recorded the Fideicomiso Corp Banca assets for 5,371 as of the end of the previous fiscal year as well as the selected assets on account of the redemptions in kind of the Fideicomiso Corp Banca participation certificates for 4,161 and 4,539 as of June 30, 2011 and the end of the previous fiscal year, respectively.

Such amounts are recorded in memorandum debit accounts “For trustee activities – Funds in trust”.

10.2. Non Financial Trusts

The Bank acts as trustee in 25 non financial 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 non financial 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 (settler) vis-à-vis the creditors (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 settler, or (ii) all contract terms and conditions are complied with, in which case all the corpus assets will be returned to the settler or to whom it may indicate. The trust assets represent about 228,306 and 207,628 as of June 30, 2011 and the end of the previous fiscal year, respectively, consist of cash, creditors’ rights, real estate and shares.

 

11.	CORPORATE BONDS

On July 15, 2003, an Extraordinary Stockholders’ Meeting approved the setting up of a Program for the issuance and re-issuance of ordinary non-convertible Negotiable Obligations with ordinary guarantee, or such guarantees as may be decided by the Board of Directors, and unsecured Subordinated Negotiable Obligations, convertible or not into shares. During the life of the Program, which will be 5 (five) years, it shall be possible to issue and re-issue any number of series and/or classes of Negotiable Obligations as long as at all times the maximum amount in circulation after adding together all series and/or classes outstanding under the Program pending redemption does not exceed at any time US$ 300,000,000.

 

-23-

---

 

On April 26, 2007, the Ordinary and Extraordinary Stockholders’ Meeting delegated to the Board of Directors the authority to make certain amendments to the existing Negotiable Obligations Global Program such as: i) updating the Program so that it is governed by international terms and conditions, ii) existence of an international trustee in respect of one or more series representing the interests of investors, iii) drafting and execution of documentation in the English language and under foreign laws, including global and final securities, and payment agency, registrar, trust and underwriting agreements, as may be necessary, as well as the preparation of information documents for purposes of placement in international markets, including offering circulars and financial statements prepared in a foreign language.

As provided in the Negotiable Obligations Law and BCRA regulations, the proceeds could be applied to: (i) extension of mortgage loans for the purchase and renovation of housing and personal loans in Argentina; (ii) extension of corporate loans in Argentina for purposes of payment of working capital, investment in physical assets located in Argentina or refinancing of liabilities; and (iii) capital contributions in the Bank’s subsidiaries or related companies.

In turn, the Ordinary and Extraordinary Stockholders’ Meeting held on March 28, 2008 decided to extend (i) for the term of 5 years the life of the Negotiable Obligations Global Program approved by the Extraordinary Stockholders’ Meeting held on July 15, 2003 and by Resolution No. 14967 of the CNV issued on November 29, 2004 in accordance with the changes introduced by the Ordinary and Extraordinary Stockholders’ Meeting held on April 26, 2007 and (ii) for the term of 2 years the delegation to the Board of Directors and the authority to sub-delegate the delegated powers in accordance with the applicable regulations approved by Ordinary and Extraordinary Stockholders’ Meeting held on April 26, 2007.

The Ordinary and Extraordinary Shareholders’ Meeting of BBVA Francés dated March 30, 2011 resolved that, considering the country’s favorable context in terms of national macroeconomics, as well as the conditions prevailing in international markets, and in particular, given the good growth prospects foreseen for the banking and financial industry, it would be advisable to raise the maximum amount of the global note program from US$ 300,000,000 (or its equivalent in other currencies) to US$ 500,000,000 (or its equivalent in other currencies) outstanding at any time and to renew the delegation to the Board of all of the powers related to the Program and to the Corporate Bonds allowed to be issued under the Program.

On June 23, 2011, the Board of BBVA Francés approved the issuance of a class of Corporate Bonds under the Program for a principal amount of up to $250,000,000.

On July 21, 2011, the CNV approved the increase in the maximum amount of the Negotiable Obligations Global Program pursuant to its Resolution No. 16611.

As of the date of issuance of these financial statements, the Bank has not issued Corporate Bonds related to this Program.

 

12.	DERIVATIVE FINANCIAL INSTRUMENTS

 

I.

Transactions as of June 30, 2011:

 

a)

Interest rate swaps for 343,150 (Fixed Rate versus Badlar), maturing within a period not exceeding 3 years for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts; and interest rate swaps for 73,500 (Badlar versus Fixed Rate), maturing within a period not exceeding 2 years for which the Bank pays a fixed amount, and receives a variable amount in accordance with changes in the Badlar.

These transactions have been valued in accordance with the mechanism described in note 2.3.n.1.) generating an income as of the end of the period for 3,425.

The estimated market value of said instruments amounts to 3,007 (Assets). For market value estimation purposes, the variable and fixed as yet not matured future flows are discounted, with the swap value being the difference between the current value of the future flows receivable and the current value of the future flows payable.

As of the end of the period, the above transactions were recorded under “Memorandum Accounts - Debit Accounts – Derivatives – Interest rate swap” for 416,650.

 

-24-

---

 

b)

Interest rate swap for 58,351 (Fixed Rate versus Badlar), with final maturity in September 2019, for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts.

Said transaction was consummated as hedge for potential volatility in the cash flows arising from certain financing deals attributable to changes in the designated benchmark interest rates and it has proven to be effective hedge for the risk mentioned.

The aim pursued by risk management consists in reducing exposure to changes in cash flows arising from financing deals. Thanks to the hedge established, changes in the cash flows arising from the underlying instrument caused by changes in the benchmark interest rate would decrease as a result of having been offset with the changes in the cash flows arising from the hedge instrument.

As of the end of the period the above transaction was recorded under “Memorandum Accounts - Debit Accounts –Derivatives – Interest rate SWAP” for 58,351.

 

c)

Non-deliverable forward purchase and sale transactions in foreign currency and ratios payable in Pesos, maturing within a period not exceeding 1 year, for 2,500,237 and 2,409,832, which are recorded under “Memorandum Accounts - Debit Accounts – Derivatives – “Notional” amount of non-deliverable forward transactions”, and “Memorandum Accounts - Credit Accounts – Derivatives – “Notional” amount of non-deliverable forward transactions”, respectively.

These transactions have been valued in accordance with the mechanism described in note 2.3.n.2.), generating income as of the end of the period for 3,921.

 

d)

Call options bought for 58,280 and call options written for 67,022 agreed as hedging for the Bank’s borrowing position in connection with term investments yielding variable income conducted by customers. Said transactions were recorded under “Memorandum Accounts - Debit Accounts – Derivatives – “Notional” amount of call options bought” for 58,280 and under “Memorandum Accounts - Credit Accounts – Derivatives – “Notional” amount of call options written” for 67,022.

These transactions have been valued in accordance with the description in note 2.3.n) generating 141 income as of the end of the period.

The Bank does not carry balances from put options in force as of June 30, 2011. This notwithstanding, the transactions conducted as of June 30, 2011 have yielded 54 in loss at the end of the period.

 

e)

Forward sales due to BCRA Bills repurchase agreements for 371,936, which are recorded under “Other liabilities from financial transactions – Instruments to be delivered for spot and forward sales to be settled”.

These transactions have been valued in accordance with the description in note 2.3.g) generating 20,105 income as of the end of the period.

The Bank does not carry balances from reverse repos in force as of June 30, 2011. This notwithstanding, the transactions conducted as of June 30, 2011 have yielded 124 in loss at the end of the period.

 

II.

Transactions as of December 31, 2010:

 

a)

Interest rate swaps for 202,500 (Fixed Rate versus Badlar), maturing within a period not exceeding 2 years for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts.

These transactions have been valued in accordance with the mechanism described in note 2.3.n.1.) generating an income as of the end of the fiscal year for 3,533.

The estimated market value of said instruments amounts to 4,602 (Assets). For market value estimation purposes, the variable and fixed as yet not matured future flows are discounted, with the swap value being the difference between the current value of the future flows receivable and the current value of the future flows payable.

 

-25-

---

 

As of the end of the fiscal year, the above transactions were recorded under “Memorandum Accounts - Debit Accounts – Derivatives – Interest rate swap” for 202,500.

 

b)

Interest rate swap for 61,467 (Fixed Rate versus Badlar), with final maturity in September 2019, for which the Bank pays a variable amount in accordance with changes in the Badlar, “Encuesta rate”, and receives a fixed amount based on stated notional amounts.

Said transaction was consummated as hedge for potential volatility in the cash flows arising from certain financing deals attributable to changes in the designated benchmark interest rates and it has proven to be effective hedge for the risk mentioned.

The aim pursued by risk management consists in reducing exposure to changes in cash flows arising from financing deals. Thanks to the hedge established, changes in the cash flows arising from the underlying instrument caused by changes in the benchmark interest rate would decrease as a result of having been offset with the changes in the cash flows arising from the hedge instrument.

As of the end of the fiscal year the above transaction was recorded under “Memorandum Accounts - Debit Accounts –Derivatives – Interest rate SWAP” for 61,467.

 

c)

Non-deliverable forward purchase and sale transactions in foreign currency payable in Pesos, maturing within a period not exceeding 1 year, for 2,469,931 and 2,151,674, which are recorded under “Memorandum Accounts - Debit Accounts - Derivatives – “Notional” amount of non-deliverable forward transactions”, and “Memorandum Accounts - Credit Accounts - Derivatives – “Notional” amount of non-deliverable forward transactions”, respectively.

These transactions have been valued in accordance with the mechanism described in note 2.3.n.2.), generating loss as of the end of the fiscal year for 19,051.

 

d)

Call options bought for 52,702 and call options written for 60,082 agreed as hedging for the Bank’s borrowing position in connection with term investments yielding variable income conducted by customers. Said transactions were recorded under “Memorandum Accounts - Debit Accounts – Derivatives – “Notional” amount of call options bought” for 52,702 and under “Memorandum Accounts - Credit Accounts – Derivatives – “Notional” amount of call options written” for 60,082.

Put options bought for 27,402 and put options written for 24,662 agreed as hedging for the Bank’s borrowing position in connection with term investments yielding variable income conducted by customers. Said transactions were recorded under “Memorandum Accounts - Debit Accounts – Derivatives – “Notional” amount of put options bought” for 27,402 and under “Memorandum Accounts - Credit Accounts – Derivatives – “Notional” amount of put options written” for 24,662.

These transactions have been valued in accordance with the description in note 2.3.n) generating 4,494 income as of the end of the fiscal year.

 

e)

The Bank does not carry balances from repos and/or reverse repos in force as of December 31, 2010. This notwithstanding, the transactions conducted during fiscal 2010 have yielded 27,127 in income at the end of the fiscal year.

 

13.	COMPLIANCE WITH CNV REQUIREMENTS

 

13.1

Compliance with the requirements to act as agent in the Over-the-counter Market

As of June 30, 2011, the Bank’s Stockholders’ Equity exceeds the minimum requested to act as agent in the over-the-counter market, according to Resolutions No. 368/01 and 489/06 of the CNV.

 

-26-

---

 

13.2

Investment Funds custodian

As of June 30, 2011 and the end of the previous fiscal year, in its capacity of Investment Funds custodian of “FBA Acciones Globales”, “FBA Total”, “FBA Renta”, “FBA Renta Pesos”, “FBA Europa”, “FBA Renta Dólares”, “FBA Bonos Latinoamericanos”, “FBA Calificado”, “FBA Ahorro Dólares”, “FBA Renta Fija”, “FBA Ahorro Pesos”, “FBA Renta Corto Plazo”, “FBA Horizonte”, “FBA Internacional”, “FBA EEUU”, “FBA Renta Premium”, “FBA Acciones Latinoamericanas”, “FBA Bonos Argentina”, “FBA Brasil”, “FBA México”, “FBA Commodities”, “FBA Acciones Argentinas” and “FBA Bonos Globales” administrated by Francés Administradora de Inversiones S.A. Fund Manager, the Bank holds certificates of deposits, deferred payment checks, shares, corporate bonds, government securities, indexes, tax-credit certificates, securities issued by the Argentine Central Bank, investments financial trust certificates, Cedears and ADRS in safekeeping in the amount of 1,228,035 and 1,199,165, respectively, all of which making up the Fund’s portfolio and booked in “Memorandum Accounts - Debit Accounts -Control - Other”.

The Investment Funds´ equities are as follows:

 

		EQUITIES AS OF
INVESTMENT FUND		06-30-2011				12-31-2010
FBA Acciones Globales			67,817				70,827
FBA Total			16,471				15,998
FBA Renta			16,399				15,731
FBA Renta Pesos			839,338				942,439
FBA Renta Dólares			4,497				4,388
FBA Bonos Latinoamericanos			13,428				14,904
FBA Calificado			118,240				120,387
FBA Internacional			622				588
FBA Ahorro Dólares			11,010				11,011
FBA Renta Fija			18,725				21,358
FBA Ahorro Pesos			314,347				280,034
FBA Renta Premium			9,772				10,672
FBA Europa			4,427				2,604
FBA Horizonte			47,197				49,081
FBA EEUU			7,376				3,447
FBA Renta Corto Plazo			483				608
FBA Acciones Latinoamericanas			25,438				25,861
FBA Bonos Argentina			6,202				4,894
FBA Brasil			35,758				35,886
FBA México			1,231				1,187
FBA Commodities			64				60
FBA Acciones Argentinas			649				704
FBA Bonos Globales			77				76
Total			1,559,568				1,632,745

 

14.	EARNINGS DISTRIBUTIONS

The Bank has in place an earnings distribution policy in line with the Bank’s vocation for sustained stockholder value, that at the same time allows the Bank’s financial condition to perform favorably so as to strive for business growth and the maintenance of consistently high liquidity and solvency standards in compliance with currently applicable rules and regulations.

In accordance with Communication “A” 5072, issued on May 6, 2010, as amended and supplemented, of “Distribution of Income” of the BCRA, for purposes of calculating the earnings subject to distribution, off-balance sheet deductions must be performed from the Unappropriated retained earnings as set forth in point 2.1 of such Communication. In addition, the authorization of the Superintendent of Financial and Exchange Institutions shall be required in order to verify that the procedure established in said resolution for earnings distribution has been properly applied.

 

-27-

---

 

15.	ACCOUNTS REFLECTING COMPLIANCE WITH MINIMUM CASH

The following are the items computed for Compliance with Minimum Cash Requirements according to the regulations of the BCRA, with their corresponding balances as of June 30, 2011:

 

COMPUTABLE COMPLIANCE IN PESOS
Cash			817,627
Special Guarantee Accounts			132,000
BCRA Checking Account			1,886,242
Cash in transit			244
Cash in valuables’ transportation			681,802
Special Social Security accounts			38,265
Franchises			159,675
TOTAL			3,715,855
COMPUTABLE COMPLIANCE IN US DOLLARS (Stated in thousands of Pesos)
Cash			420,298
Special Guarantee Accounts			12,333
BCRA Checking Account			2,655,745
Cash in transit			111
Cash in valuables’ transportation			128,925
TOTAL			3,217,412

COMPUTABLE COMPLIANCE IN EUROS (Stated in thousands of Pesos)

Cash			55,129
BCRA Checking Account			49,833
Cash in transit			23
Cash in valuables’ transportation			12,954
TOTAL			117,939

 

16.	STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW

The Statements of Cash and cash equivalents flow explains the changes in cash and cash equivalents. For such purpose, a detail is supplied of the items that the Bank considers to be cash and cash equivalents:

 

		06-30-11				12-31-10				06-30-10				12-31-09
a) Cash and due from banks			6,965,556				5,682,802				6,361,063				5,160,260
b) Goverment securities			208,346				4,813				4,127				8,352
c) Loans to financial sectors, calls granted maturity date less than three months as from the end of the period or fiscal year			173,955				147,980				113,960				104,930
CASH AND CASH EQUIVALENTS			7,347,857				5,835,595				6,479,150				5,273,542

 

-28-

---

 

Items b) and c) are considered to be cash equivalents because they are held in order to meet short-term commitments, they are easily convertible in known cash amounts, they are subject to negligible changes in value and their maturity is less than three months as from the period or fiscal year date.

 

17.	PUBLICATION OF THE FINANCIAL STATEMENTS

As provided by Communication “A” 760, the previous intervention of the BCRA is not required for the publication of these financial statements.

 

18.	ACCOUNTING PRINCIPLES – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are presented on the basis of the accounting standards of the BCRA and, except for the effect of the matters mentioned in note 3 to the stand – alone financial statements and note 2 to the consolidated financial statements, 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.

 

-29-

---

 

EXHIBIT A

DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

						Holding
Description		ID Caja  de Valores				Market value or present value				Book balance as of 06-30-2011				Book balance as of 12-31-2010				Position without options				Final position
GOVERNMENT SECURITIES
Government securities at fair value
Local
In pesos
Federal Government Bonds in Pesos Badlar + 275 pb due 2014 (1)			5439								1,083,895								1,083,895				1,083,895
Secured Bonds due 2020			2423								826,533								826,533				826,533
Federal Government Bond in Pesos due 2015			5441								259,840								259,840				259,840
Secured Bonds due 2018			2405								175,670								175,670				175,670
Federal Government Bocon PRO12			2449								41,640								41,640				41,640
Federal Government Bonds in Pesos Badlar + 350 pb due 2013			5438								12,849								12,849				12,849
Other											11,462								11,462				11,462
Subtotal in pesos											2,411,889				2,609,390				2,411,889				2,411,889
In foreign currency
Other											12,196								14,371				14,371
Subtotal in foreign currency											12,196				146,172				14,371				14,371
Subtotal Government securities at fair value											2,424,085				2,755,562				2,426,260				2,426,260
Government securities at amortized cost
Local
In pesos
Other							164				164								164				164
Subtotal in pesos											164				164				164				164
In foreign currency
Other											—								—				—
Subtotal in foreign currency											—				11				—				—
Subtotal Government securities at amortized cost											164				175				164				164

 

(1)	It includes 988,098 from holdings received in exchange for secured loans and 59,454 from the cancellation of Fideicomiso Nues trust participation certificates.

 

-30-

---

 

EXHIBIT A

(Contd.)

DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

						Holding
Description		ID Caja de Valores				Market value to present value				Book balance as of 06-30-2011				Book balance as of 12-31-2010				Position without options				Final position
Instruments issued by the BCRA
BCRA Bills
At fair value
Argentine Central Bank Internal Bills due 11-02-11			46054								5,775								3,850				3,850
Argentine Central Bank Internal Bills due 09-07-11			46123								2,772								2,772				2,772
Subtotal at fair value											8,547				598,780				6,622				6,622
Repurchase transactions
Argentine Central Bank Internal Bills due 02-08-12			46125				371,936				371,936								—				—
Subtotal repurchase transactions											371,936				—				—				—
At amortized cost
Argentine Central Bank Internal Bills due 09-14-11			46194								293,365								293,365				293,365
Argentine Central Bank Internal Bills due 09-21-11			46195								195,172								195,172				195,172
Argentine Central Bank Internal Bills due 07-27-11			46188								99,792								99,792				99,792
Argentine Central Bank Internal Bills due 10-12-11			46197								96,959								96,959				96,959
Argentine Central Bank Internal Bills due 10-26-11			46185								96,519								96,519				96,519
Argentine Central Bank Internal Bills due 04-04-12			46140								41,161								41,161				41,161
Other											77,612								77,892				77,892
Subtotal at amortized cost											900,580				935,615				900,860				900,860
BCRA Notes
At fair value
Argentine Central Bank Internal Bills (Badlar) due 07-27-11			46112								209,203								209,203				209,203
Argentine Central Bank Internal Bills (Badlar) due 07-20-11			46148								155,417								155,417				155,417
Argentine Central Bank Internal Bills (Badlar) due 11-23-11			46162								105,649								105,649				105,649
Argentine Central Bank Internal Bills (Badlar) due 08-31-11			46145								101,540								101,540				101,540
Other											10,225								10,225				10,225
Subtotal at fair value											582,034				—				582,034				582,034
At amortized cost
Argentine Central Bank Internal Bills (Badlar) due 10-19-11			46136								191,163								191,163				191,163
Argentine Central Bank Internal Bills (Badlar) due 08-03-11			46150								103,979								103,979				103,979
Argentine Central Bank Internal Bills (Badlar) due 10-12-11			46177								103,888								103,888				103,888
Argentine Central Bank Internal Bills (Badlar) due 08-24-11			46161								102,133								102,133				102,133
Other											12,033								12,033				12,033
Subtotal at amortized cost											513,196				1,234,449				513,196				513,196
Subtotal instruments issued by the BCRA											2,376,293				2,768,844				2,002,712				2,002,712
TOTAL GOVERNMENT SECURITIES											4,800,542				5,524,581				4,429,136				4,429,136

 

-31-

---

 

EXHIBIT A

(Contd.)

DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

						Holding
Description		ID Caja de Valores				Market value		Book balance as of 06-30-2011				Book balance as of 12-31-2010				Position without options				Final position
INVESTMENTS IN LISTED PRIVATE SECURITIES
Other debt instruments
Local
In foreign currency
Telefónica de Argentina Corporate Bonds			40146						129								129				129
Petrobrás Energía Corporate Bonds			40668						80								80				80
Subtotal in foreign currency									209				213				209				209
Subtotal Other debt instruments									209				213				209				209
Other Equity instruments
Local
In pesos
Other									—								(16	)			(16	)
Subtotal in pesos									—				—				(16	)			(16	)
From abroad
In foreign currency
Silicon Graphics Inc.									71								71				71
Other									22								22				22
Subtotal in foreign currency									93				56				93				93
Subtotal Equity instruments									93				56				77				77
TOTAL INVESTMENTS IN LISTED PRIVATE SECURITIES									302				269				286				286
TOTAL GOVERNMENT AND PRIVATE SECURITIES									4,800,844				5,524,850				4,429,422				4,429,422

 

-32-

---

 

EXHIBIT B

CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES

AND GUARANTIES RECEIVED AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish-See note 18)

-Stated in thousands of pesos-

 

		06-30-2011				12-31-2010
COMMERCIAL PORTFOLIO
Normal performance			12,034,150				9,883,361
Preferred collaterals and counter guaranty “A”			427,730				213,568
Preferred collaterals and counter guaranty “B”			200,250				170,857
Without senior security or counter guaranty			11,406,170				9,498,936
With special follow-up			17,488				21,955
Under observation
Without senior security or counter guaranty			17,488				21,955
With high risk of uncollectibility			3,466				3,927
Without senior security or counter guaranty			3,466				3,927
Uncollectible			2,114				2,010
Without senior security or counter guaranty			2,114				2,010
Total			12,057,218				9,911,253

 

-33-

---

 

EXHIBIT B

(Contd.)

CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES

AND GUARANTIES RECEIVED AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		06-30-2011				12-31-2010
CONSUMER AND HOUSING PORTFOLIO
Normal performance			7,698,546				6,611,369
Preferred collaterals and counter guaranty “A”			10,127				12,019
Preferred collaterals and counter guaranty “B”			796,809				774,812
Without senior security or counter guaranty			6,891,610				5,824,538
Low risk			46,674				43,353
Preferred collaterals and counter guaranty “B”			4,763				5,046
Without senior security or counter guaranty			41,911				38,307
Medium risk			39,815				31,442
Preferred collaterals and counter guaranty “B”			1,538				1,229
Without senior security or counter guaranty			38,277				30,213
High risk			32,108				30,097
Preferred collaterals and counter guaranty “B”			1,091				833
Without senior security or counter guaranty			31,017				29,264
Uncollectible			3,808				3,779
Preferred collaterals and counter guaranty “B”			1,796				1,637
Without senior security or counter guaranty			2,012				2,142
Uncollectible, classified as such under regulatory requirements			45				87
Without senior security or counter guaranty			45				87
Total			7,820,996				6,720,127
General Total (1)			19,878,214				16,631,380

 

(1)

Items included: Loans (before allowances); Other receivables from financial transactions: Unlisted corporate bonds, Other receivables covered by debtor classification regulations; Receivables from financial leases (before allowances); Memorandum accounts - Credit - Contingent: 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.

 

-34-

---

 

EXHIBIT C

FINANCING FACILITIES CONCENTRATION

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		06-30-2011								12-31-2010
Number of clients		Outstanding balance				% of total portfolio				Outstanding balance				% of total portfolio
10 largest clients			3,351,502				16.86	%			2,921,405				17.57	%
50 next largest clients			3,733,255				18.78	%			2,883,984				17.34	%
100 following clients			1,792,860				9.02	%			1,494,913				8.99	%
Remaining clients			11,000,597				55.34	%			9,331,078				56.10	%
Total (1)			19,878,214				100.00	%			16,631,380				100.00	%

 

(1)	See (1) in Exhibit B.

 

-35-

---

 

EXHIBIT D

BREAKDOWN BY FINANCING TERMS AS OF JUNE 30, 2011

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

						Term remaining to maturity
Description		Past-due portfolio				1 month				3 months				6 months				12 months				24 months				More than 24 months				Total
Government sector			—				1,278				—				85,313				—				—				34,901				121,492
Financial sector			—				208,942				108,362				101,800				265,423				369,787				265,497				1,319,811
Non financial private sector and residents abroad			24,664				7,034,288				2,072,596				2,313,634				2,512,145				1,764,291				2,715,293				18,436,911
TOTAL			24,664				7,244,508				2,180,958				2,500,747				2,777,568				2,134,078				3,015,691				19,878,214	(1)

 

(1)	See (1) in Exhibit B.

 

-36-

---

 

EXHIBIT E

DETAIL OF INVESTMENTS IN OTHER COMPANIES

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

																										Information about the issuer
Concept				Shares														Amount										Data from last published financial statements
Identification		Description		Class		Unit face value				Votes per share				Number				06-30-2011				12-31-2010				Main business		Period /Fiscal year end		Capital stock				Stockholders’ equity				Income/ (Loss) for the period / fiscal year
		FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND AUTHORIZED
		Controlled
		Local																																	thousand of pesos
33642192049		Francés Valores Sociedad de Bolsa S.A.		Common			500$				1				12,137				12,294				11,745			Stockholder		06-30-2011			6,390				12,945				578
30663323926		Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings)		Common			1$				1				35,425,947				14,446				22,076			Pensions fund manager		06-30-2011			65,739				26,805				(20,273	)
30678574097		Consolidar Cía. de Seguros de Retiro S.A.(1)																	—				178,875			Insurance company
30707847367		PSA Finance Arg. Cía Financiera S.A.		Common			1,000$				1				26,089				62,129				68,295			Financial institution		06-30-2011			52,178				124,259				16,184
30548590163		Francés Administradora de Inversiones S.A.		Common			1$				1				230.398				42,011				37,092			Sociedad Gerente de FCI		06-30-2011			243				44,222				5,177
				Subtotal controlled															130,880				318,083
		Non controlled
		Local
33707124909		Rombo Cía. Financiera S.A.		Common			1,000$				1				24,000				45,807				46,699			Financial Institution		06-30-2011			60,000				114,516				12,769
30598910045		Visa Argentina S.A		Common			1$				1				1,420,496				5,808				5,808			Services to companies		05-31-2010			15,000				151,461				91,332
30604796357		Banelco S.A.		Common			1$				1				2,574,907				7,100				7,266			Information services		12-31-2010			23,599				66,210				19,034
		Other																	2,474				2,349
		Foreign
		Other																	1,035				1,001
				Subtotal noncontrolled															62,224				63,123
				Total in financial institutions, supplementary and authorized															193,104				381,206
		IN OTHER COMPANIES
		Non controlled
		Local
30685228501		Consolidar ART S.A.		Common			1$				1				9,710,451				28,735				26,241			Workers compensation		06-30-2011			77,684				229,880				33,882
30500064230		BBVA Consolidar Seguros S.A.		Common			1$				1				1,301,847				12,279				11,027			Insurance		06-30-2011			10,651				114,548				15,494
		Foreign
		Other																	52				53
				Subtotal non controlled															41,066				37,321
				Total in other companies															41,066				37,321
				Total investments in other companies															234,170				418,527

 

(1)	See note 1.4

 

-37-

---

 

EXHIBIT F

MOVEMENT OF PREMISES AND EQUIPMENT AND OTHER ASSETS

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2011 AND

THE FISCAL YEAR ENDED DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		Net book value at beginning of fiscal year																Depreciation for the period
Description						Additions				Transfers				Decreases				Years of useful  life				Amount				Net book value at 06-30-2011				Net book value at 12-31-2010
PREMISES AND EQUIPMENT
Real Estate			358,657				23,784				(24	)			580				50				8,638				373,199				358,657
Furniture and Facilities			85,258				21,703				24				68				10				6,297				100,620				85,258
Machinery and Equipment			73,550				9,809				—				—				5				15,524				67,835				73,550
Automobiles			2,588				201				—				130				5				381				2,278				2,588
Total			520,053				55,497				—				778								30,840				543,932				520,053
OTHER ASSETS
Advances to suppliers of goods			461				3,066				—				1,430				—				—				2,097				461
Works of Art			983				—				—				—				—				—				983				983
Leased assets			3,986				—				—				—				50				44				3,942				3,986
Property taken as security for loans			4,673				137				—				1,350				50				30				3,430				4,673
Stationery and office supplies			4,193				4,832				—				4,602				—				—				4,423				4,193
Other			9,594				—				—				765				50				100				8,729				9,594
Total			23,890				8,035				—				8,147								174				23,604				23,890

 

-38-

---

 

EXHIBIT G

MOVEMENT OF INTANGIBLE ASSETS FOR THE SIX MONTH PERIOD

ENDED JUNE 30, 2011 AND THE FISCAL YEAR ENDED DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

														Amortization for the period
Description		Net book value at beginning of fiscal year				Additions				Decreases				Years of useful life				Amount				Net book value at 06-30-2011				Net book value at 12-31-2010
Organization and Development expenses			63,688				26,134				8				1 & 5				13,522				76,292				63,688
Organization and development non-deductible expenses			—				9,215				—				—				9,215				—				—
Total			63,688				35,349				8								22,737				76,292				63,688

 

-39-

---

 

EXHIBIT H

CONCENTRATION OF DEPOSITS

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		06-30-2011								12-31-2010
Number of clients		Outstanding balance				% of total portfolio				Outstanding balance				% of total portfolio
10 largest clients			2,034,189				7.77	%			1,490,570				6.61	%
50 next largest clients			1,932,219				7.38	%			1,516,098				6.73	%
100 following clients			1,478,693				5.65	%			1,385,201				6.14	%
Remaining clients			20,725,256				79.2	%			18,151,141				80.52	%
TOTAL			26,170,357				100.00	%			22,543,010				100.00	%

 

-40-

---

 

EXHIBIT I

BREAKDOWN OF MATURITY TERMS OF DEPOSITS,

OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS AND

SUBORDINATED CORPORATE BONDS

AS OF JUNE 30, 2011

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		Terms remaining to maturity
Description		1 month				3 months				6 months				12 months				24 months				More than 24 months				Total
Deposits			22,263,442				3,031,861				565,363				196,751				112,940				—				26,170,357
Other liabilities from financial transactions
Argentine Central Bank			2,641				—				—				—				—				—				2,641
Banks and International Institutions			22,706				136,657				49,638				34,277				3,063				—				246,341
Financing received from Argentine financial institutions			25,374				—				502				504				851				—				27,231
Other			1,414,957				5,135				8,830				13,585				12,564				4,408				1,459,479
Total			1,465,678				141,792				58,970				48,366				16,478				4,408				1,735,692
TOTAL			23,729,120				3,173,653				624,333				245,117				129,428				4,408				27,906,049

 

-41-

---

 

EXHIBIT J

MOVEMENT OF ALLOWANCES FOR THE SIX MONTH PERIOD ENDED

JUNE 30, 2011 AND THE FISCAL YEAR ENDED DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

										Decreases								Book value
Description		Book value at beginning of fiscal year				Increases (6)				Reversals				Applications				06-30-2011				12-31-2010
DEDUCTED FROM ASSETS
Government securities
For impairment value			185				65,155	(5)			—				65,154				186				185
Loans
Allowance for doubtful loans			383,899				28,885	(1)			—				37,180				375,604				383,899
Other receivables from financial transactions
Allowance for doubtful receivables			3,721				543	(1)			2,147				1,048				1,069				3,721
Receivables from financial leases
Allowance for doubtful receivables			7,961				1,566	(1)			—				—				9,527				7,961
Investments in other companies
For impairment value (3)			4				—				4				—				—				4
Other receivables
Allowance for doubtful receivables (2)			88,594				68,861				27				934				156,494				88,594
Total			484,364				165,010				2,178				104,316				542,880				484,364
LIABILITIES-ALLOWANCES
Contingents commitments (1)			438				1				1				—				438				438
Other contingencies			325,290				46,124	(4)			12,772				4,826				353,816				325,290
Total			325,728				46,125				12,773				4,826				354,254				325,728

 

(1)	Recorded in compliance with the provisions of Communication “A” 3918, as supplemented, of the BCRA, taking into account note 2.3.f).

(2)	Includes mainly the potential loan loss risk arising from the amounts booked as Miscellaneous receivables relating to the petitions for the protection of constitutional rights (Amparos) paid and the deferred tax asset (See note 4.1).

(3)	Recorded, to recognize the estimated impairment in AIG Latin American Fund’s equity as of December 31, 2010. The proceeds related to the Bank’s interest in the above-mentioned company were received on March 28, 2011 due to the company’s liquidation.

(4)	Recorded to cover possible contingencies that were not considered in other accounts (court orders corresponding to petitions for protection of civil rights, labor, commercial and other lawsuits). (See note 2.3.r).

(5)	Recorded in compliance with the provisions of Communication “A” 4084 of the BCRA.

(6)	Includes exchange differences generated as allowances in foreign currency, booked in the “Financial income—Gold and foreign currency exchange difference” account, as follow:

 

Government Securities			1
Loans			1,317
Other receivables from financial transactions			31
Other receivables			230

 

-42-

---

 

EXHIBIT K

CAPITAL STRUCTURE AS OF JUNE 30, 2011

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

SHARES

CAPITAL STOCK

Class

Quantity

Votes per share

Issued

Pending issuance or distribution

Paid in

Outstanding

In portfolio

Common

536,361,306

1

536,316

—

45(1)

536,361(2)

 

(1)	Shares issued and available to stockholders but not as yet withdrawn.

(2)	Fully registered with the Public Registry of Commerce (See note 1.2.).

 

-43-

---

 

EXHIBIT L

FOREIGN CURRENCY BALANCES AS OF

JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

-Stated in thousands of pesos

 

Accounts		06-30-2011																								12-31-2010
						Total of the period (per type of currency)
		Total of the period				Euro				US Dollars				Pounds Sterling				Yen				Other				Total of the fiscal year
ASSETS
Cash and due from banks			3,516,304				163,297				3,340,518				756				451				11,282				2,941,844
Government and private securities			12,498				—				12,498				—				—				—				146,452
Loans			3,195,828				98				3,195,730				—				—				—				2,634,361
Other receivables from financial transactions			88,940				41,751				43,185				3,966				—				38				528,540
Receivables from financial leases			1,750				—				1,750				—				—				—				2,148
Investments in other companies			1,087				—				1,087				—				—				—				1,055
Other receivables			62,505				732				61,773				—				—				—				61,307
Suspense items			810				—				810				—				—				—				614
TOTAL			6,879,722				205,878				6,657,351				4,722				451				11,320				6,316,321
LIABILITIES
Deposits			5,582,588				83,243				5,499,345				—				—				—				4,880,242
Other liabilities from financial transactions			1,025,193				117,936				893,459				7,843				—				5,955				1,028,837
Other liabilities			17,310				7,757				9,553				—				—				—				18,284
Suspense items			1,857				—				1,857				—				—				—				363
TOTAL			6,626,948				208,936				6,404,214				7,843				—				5,955				5,927,726
MEMORANDUM ACCOUNTS
Debit accounts (except contra debit accounts)
Contingent			500,649				—				500,649				—				—				—				163,713
Control			15,385,329				—				15,384,102				—				—				1,227				15,555,915
Derivatives			58,280				—				58,280				—				—				—				80,104
TOTAL			15,944,258				—				15,943,031				—				—				1,227				15,799,732
Credit accounts (except contra credit accounts)
Contingent			442,533				—				442,533				—				—				—				264,583
Control			62,593				—				62,593				—				—				—				49,775
Derivatives			67,022				—				67,022				—				—				—				84,744
TOTAL			572,148				—				572,148				—				—				—				399,102

 

-44-

---

 

EXHIBIT N

ASSISTANCE TO RELATED CLIENTS AND AFFILIATES

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

		Status
Concept		Normal				With special follow-up / Low risk				With problems / Medium risk								With high risk of uncollectibility / High risk								Uncollectible				Classified uncollectible as such under regulatory requirements				Total (1)
										Not yet matured				Past-due				Not yet matured				Past-due												06-30-2011				12-31-2010
1. Loans			943,194				—				—				—				—				—				—				—				943,194				851,332
- Overdraft			2,453				—				—				—				—				—				—				—				2,453				3,710
Without senior security or counter guaranty			2,453				—				—				—				—				—				—				—				2,453				3,710
- Discounted Instruments			1,799				—				—				—				—				—				—				—				1,799				10,271
Without senior security or counter guaranty			1,799				—				—				—				—				—				—				—				1,799				10,271
- Real Estate Mortgage and Collateral Loans			3,700				—				—				—				—				—				—				—				3,700				5,122
Other collaterals and counter guaranty “B”			3,700				—				—				—				—				—				—				—				3,700				5,122
- Consumer			483				—				—				—				—				—				—				—				483				206
Without senior security or counter guaranty			483				—				—				—				—				—				—				—				483				206
- Credit Cards			1,450				—				—				—				—				—				—				—				1,450				1,530
Without senior security or counter guaranty			1,450				—				—				—				—				—				—				—				1,450				1,530
- Other			933,309				—				—				—				—				—				—				—				933,309				830,493
Without senior security or counter guaranty			933,309				—				—				—				—				—				—				—				933,309				830,493
2. Other receivables from financial transactions			14,791				—				—				—				—				—				—				—				14,791				11,176
3. Receivables from financial leases			263				—				—				—				—				—				—				—				263				104
4. Contingent commitments			101,944				—				—				—				—				—				—				—				101,944				59,803
5. Investments in other companies and private securities			201,715				—				—				—				—				—				—				—				201,715				201,418
Total			1,261,907				—				—				—				—				—				—				—				1,261,907				1,123,833
Total Allowances			9,182				—				—				—				—				—				—				—				9,182				8,486

 

(1)	Maximum amount granted to related clients during June 2011 and December 2010, respectively, according to BCRA rules.

 

-45-

---

 

EXHIBIT O

FINANCIAL DERIVATIVES INSTRUMENTS

AS OF JUNE 30, 2011

(Translation of financial statements originally issued in Spanish - See note 18)

- Stated in thousands of pesos -

 

Type of contract		Purpose of transactions		Underlying asset		Type of Settlement		Traded at / Counterparty		Weighted average term as originally agreed (months)				Weighted average residual term (months)				Weighted average term for difference settlements (days)				Amount
Swaps		Financial transactions–own account		—		Upon expiration of differences		Residents in Argentina – Financial sector			18				12				42				416,650
Swaps		Interest rate hedge		—		Upon expiration of differences		Residentes in Argentina – Non - financial sector			122				100				10				58,351
Futures		Financial transactions–own account		Foreign currency		Upon expiration of differences		ROFEX			7				5				1				1,886,990
Futures		Financial transactions–own account		Foreign currency		Upon expiration of differences		MAE			4				3				1				3,022,274
Futures		Financial transactions–own account		Other		Upon expiration of differences		MAE			5				3				1				805
Options		Other hedges		Other		Upon expiration of differences		Residents abroad			1				1				1				125,302
Repo transactions		Financial transactions–own account		Other		Upon expiration of differences		Residents in Argentina – Financial sector			1				1				1				371,936
TOTAL																							5,882,308

 

-46-

---

 

CONSOLIDATED BALANCE SHEETS AS OF

JUNE 30, 2011 AND DECEMBER 31, 2010

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				12-31-2010
ASSETS:
A. CASH AND DUE FROM BANKS:
Cash			2,125,868				1,456,822
Due from banks and correspondents			4,848,155				4,234,984
Argentine Central Bank (BCRA)			4,655,336				4,098,792
Other local			2,492				2,574
Foreign			190,327				133,618
			6,974,023				5,691,806
B. GOVERNMENT AND PRIVATE SECURITIES (note 9.a):
Holdings booked at fair value			2,430,353				4,309,767
Holdings booked at amortized cost			170				181
Instruments issued by the BCRA			2,376,293				3,082,019
Investments in listed private securities			15,134				103,604
Less: Allowances			190				189
			4,821,760				7,495,382
C. LOANS:
To government sector (Exhibit 1)			121,492				1,297,642
To financial sector (Exhibit 1)			750,727				578,878
Interfinancial – (Calls granted)			38,000				30,000
Other financing to local financial institutions			650,227				504,636
Interest and listed-price differences accrued and pending collection			62,500				44,242
To non financial private sector and residents abroad (Exhibit 1)			18,027,204				15,219,559
Overdraft			2,884,498				2,366,957
Discounted instruments			2,452,570				2,086,979
Real estate mortgage			844,538				840,841
Collateral Loans			1,171,505				831,981
Consumer			3,014,398				2,473,299
Credit cards			2,877,488				2,457,922
Other (Note 9.b)			4,638,296				4,010,249
Interest and listed-price differences accrued and pending collection			178,186				179,623
Less: Interest documented together with main obligation			34,275				28,292
Less: Allowances			391,820				396,227
			18,507,603				16,699,852
D. OTHER RECEIVABLES FROM FINANCIAL TRANSACTIONS:
Argentine Central Bank (BCRA)			353,126				346,396
Amounts receivable for spot and forward sales to be settled			341,155				251,773
Instruments to be received for spot and forward purchases to be settled			73,002				232,152
Premiums for options bought			2,805				5,582
Unlisted corporate bonds (Exhibit 1)			1,684				102,368
Non-deliverable forward transactions balances to be settled			15,594				20,992
Other receivables not covered by debtor classification regulations			119				119
Other receivables covered by debtor classification regulations (Exhibit 1)			90,927				91,109
Less: Allowances			4,240				6,632
			874,172				1,043,859
E. RECEIVABLES FROM FINANCIAL LEASES:
Receivables from financial leases (Exhibit 1)			672,298				535,619
Interest accrued pending collection (Exhibit 1)			8,534				6,936
Less: Allowances			9,738				8,098
			671,094				534,457
F. INVESTMENTS IN OTHER COMPANIES:
In financial institutions			46,842				47,700
Other (note 9.c)			66,159				62,442
Less: Allowances			—				4
			113,001				110,138
G. OTHER RECEIVABLES:
Other (note 9.d)			594,221				480,972
Other interest accrued and pending collection			1,469				2,695
Less: Allowances			170,472				102,303
			425,218				381,364
H. PREMISES AND EQUIPMENT:			544,158				523,608
I. OTHER ASSETS:			29,129				27,753
J. INTANGIBLE ASSETS:
Organization and development expenses			76,303				66,547
			76,303				66,547
K. SUSPENSE ITEMS:			5,853				5,030
L. OTHER SUBSIDIARIES´ ASSETS (note 9.e):			450				450
TOTAL ASSETS:			33,042,764				32,580,246

 

-47-

---

 

(Contd.)

CONSOLIDATED BALANCE SHEETS AS OF

JUNE 30, 2011 AND DECEMBER 31, 2010

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

-Stated in thousands of pesos-

 

		06-30-2011				12-31-2010
LIABILITIES:
M. DEPOSITS:
Government sector			1,055,830				785,956
Financial sector			48,860				10,406
Non financial private sector and residents abroad			24,962,085				21,664,945
Checking accounts			5,903,604				5,063,665
Savings deposits			8,830,834				7,533,275
Time deposits			9,498,806				8,541,279
Investments accounts			83,027				78,009
Other			580,404				389,346
Interest and listed-price differences accrued payable			65,410				59,371
			26,066,775				22,461,307
N. OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS:
Argentine Central Bank			2,641				2,747
Other			2,641				2,747
Banks and International Institutions			245,952				88,536
Unsubordinated corporate bonds			60,000				70,000
Amounts payable for spot and forward purchases to be settled			3,446				218,075
Instruments to be delivered for spot and forward sales to be settled			472,385				241,915
Premiums for options written			860				2,348
Financing received from Argentine financial institutions			233,443				121,347
Interfinancial (calls received)			25,000				5,100
Other financings from local financial institutions			208,437				116,243
Interest accrued payable			6				4
Non-deliverable forward transactions balances to be settled			983				530
Other (note 9.f)			1,485,572				1,240,802
Interest and listed–price differences accrued payable			12,051				6,501
			2,517,333				1,992,801
O. OTHER LIABILITIES:
Dividends payable			14,257				—
Fees payable			442				62
Other (note 9.g)			662,162				817,722
			676,861				817,784
P. ALLOWANCES:			441,827				528,274
Q. SUSPENSE ITEMS:			17,107				17,411
R. OTHER SUBSIDIARIES’ LIABILITIES (note 9.h):			338				2,836,562
TOTAL LIABILITIES:			29,720,241				28,654,139
S. MINORITY INTEREST IN SUBSIDIARIES (note 6):			75,253				179,192
STOCKHOLDERS’ EQUITY:			3,247,270				3,746,915
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY:			33,042,764				32,580,246

 

-48-

---

 

MEMORANDUM ACCOUNTS

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				12-31-2010
DEBIT ACCOUNTS
Contingent
Guaranties received			4,386,120				3,581,622
Contra contingent debit accounts			862,223				678,731
			5,248,343				4,260,353
Control
Receivables classified as irrecoverable			307,320				330,149
Other (note 9.i)			56,968,684				56,127,912
Contra control debit accounts			828,570				598,431
			58,104,574				57,056,492
Derivatives
“Notional” amount of call options bought			58,280				52,702
“Notional” amount of put options bought			—				27,402
“Notional” amount of non-deliverable forward transactions			2,500,237				2,478,406
Interest rate SWAP			425,001				213,967
Contra debit derivatives accounts			2,476,854				2,184,969
			5,460.372				4,957,446
For trustee activities
Funds in trust			6,916				12,653
			6,916				12,653
TOTAL			68,820,205				66,286,944
CREDIT ACCOUNTS
Contingent
Credit lines granted (unused portion) covered by debtor classification regulations (Exhibit 1)			66,696				70,538
Guaranties provided to the BCRA			95,805				101,609
Other guaranties given covered by debtor classification regulations (Exhibit 1)			504,748				363,828
Other guaranties given non covered by debtor classification regulations			75,402				75,403
Other covered by debtor classification regulations (Exhibit 1)			119,572				67,353
Contra contingent credit accounts			4,386,120				3,581,622
			5,248,343				4,260,353
Control
Items to be credited			739,096				510,436
Other			89,474				87,995
Contra control credit accounts			57,276,004				56,458,061
			58,104,574				57,056,492
Derivatives
“Notional” amount of call options written			67,022				60,082
“Notional” amount of put options written			—				24,662
“Notional” amount of non-deliverable forward transactions			2,409,832				2,100,225
Contra credit derivatives accounts			2,983,518				2,772,477
			5,460,372				4,957,446
For trustee activities
Contra credit accounts for trustee activities			6,916				12,653
			6,916				12,653
TOTAL			68,820,205				66,286,944

The accompanying notes 1 through to 9 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 stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.

 

 

-49-

---

 

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				06-30-2010
A. FINANCIAL INCOME
Interest on cash and due from banks			1				9
Interest on loans to the financial sector			48,007				52,513
Interest on overdraft			172,602				137,702
Interest on discounted instruments			118,140				74,332
Interest on real estate mortgage			59,936				54,545
Interest on collateral loans			75,840				47,512
Interest on credit card loans			160,393				99,133
Interest on other loans			457,531				323,375
Interest from other receivables from financial transactions			12,940				747
Interest on financial leases			50,626				26,633
Income from secured loans - Decree 1387/01			25,130				142,831
Net income from government and private securities			187,482				398,518
Net income from options			87				—
Indexation by CER			39,894				541
Gold and foreign currency exchange difference			100,931				110,497
Other			51,784				51,673
			1,561,324				1,520,561
B. FINANCIAL EXPENSE
Interest on checking accounts			3				5,289
Interest on savings deposits			4,016				3,342
Interest on time deposits			411,526				279,939
Interest on interfinancial financing (calls received)			392				492
Interest on other financing from financial institutions			11,640				1,416
Interest on other liabilities from financial transactions			7,634				2,470
Other interest			1,924				1,232
Net income from options			—				395
Indexation by CER			89				146
Contribution to the deposit guarantee fund			20,472				16,341
Other			71,835				47,953
			529,531				359,015
GROSS INTERMEDIATION MARGIN – GAIN			1,031,793				1,161,546
C. ALLOWANCES FOR LOAN LOSSES			32,955				69,719
D. SERVICE CHARGE INCOME
Related to lending transactions			299,953				210,745
Related to liability transactions			341,575				286,125
Other commissions			51,741				38,532
Other (note 9.j)			195,714				154,389
			888,983				689,791
E. SERVICE CHARGE EXPENSE
Commissions			173,001				130,515
Other (note 9.k)			68,995				46,542
			241,996				177,057

 

-50-

---

 

(Contd.)

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				06-30-2010
F. ADMINISTRATIVE EXPENSES
Payroll expenses			640,663				569,055
Fees to Bank Directors and Statutory Auditors			863				353
Other professional fees			18,011				20,444
Advertising and publicity			54,125				45,436
Taxes			86,954				65,008
Fixed assets depreciation			30,868				27,580
Organizational expenses amortization			13,523				11,610
Other operating expenses			151,743				116,664
Other			98,928				75,611
			1,095,678				931,761
NET GAIN FROM FINANCIAL TRANSACTIONS			550,147				672,800
RESULTS OF MINORITY INTEREST IN SUBSIDIARIES			(1,606	)			(13,810	)
G. OTHER INCOME
Income from long-term investments			84,908				6,454
Punitive interests			2,039				1,701
Loans recovered and reversals of allowances			53,382				33,744
Other (note 9.l)			126,943				48,844
			267,272				90,743
H. OTHER EXPENSE
Punitive interests and charges paid to BCRA			313				192
Charge for uncollectibility of other receivables and other allowances			116,502				68,147
Amortization of difference arising from judicial resolutions			9,215				17,176
Depreciation and losses from miscellaneous assets			186				542
Other (note 9.m)			16,064				219,780
			142,280				305,837
NET GAIN BEFORE INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME			673,533				443,896
I. INCOME TAX AND TAX ON MINIMUM PRESUMED INCOME			281,047				80,849
NET INCOME FOR THE PERIOD			392,486				363,047

The accompanying notes 1 through 9 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 stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.

 

-51-

---

 

CONSOLIDATED STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

(ART. 33 OF LAW No. 19,550)

(Translation of financial statements originally issued in Spanish - See note 18 to the stand - alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				06-30-2010
CHANGES IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the fiscal year			6,251,784	(1)			5,818,088	(1)
Cash and cash equivalents at the end of the period			7,332,082	(1)			7,129,112	(1)
Net increase in cash and cash equivalents			1,080,298				1,311,024
REASONS FOR CHANGES IN CASH AND CASH EQUIVALENTS
Operating activities
Net collections/ (payments) from:
-Government and private securities			2,633,240				1,346,817
-Loans			(453,860	)			(316,702	)
to financial sector			(127,646	)			(26,956	)
to non-financial public sector			603,873				21,610
to non-financial private sector and residents abroad			(930,087	)			(311,356	)
-Other receivables from financial transactions			116,950				46,535
-Receivables from financial leases			(136,637	)			2,911
-Deposits			3,089,130				1,402,944
to financial sector			38,454				9,802
to non-financial public sector			259,810				447,285
to non-financial private sector and residents abroad			2,790,866				945,857
- Other liabilities from financial transactions			347,583				194,708
Financing from financial or interfinancial sector (calls received)			19,900				15,000
Others (except liabilities included in Financing Activities)			327,683				179,708
Collections related to service charge income			884,892				689,298
Payments related to service charge expense			(240,335	)			(177,018	)
Administrative expenses paid			(1,087,945	)			(958,720	)
Organizational and development expenses paid			(14,024	)			(11,436	)
Net collections from punitive interest			1,520				1,326
Differences from judicial resolutions paid			(9,215	)			(17,176	)
Collections of dividends from other companies			6,263				8,854
Other collections / (payments) related to other income and expenses			236,479				(153,320	)
Net cash flows provided by operating activities			5,374,041				2,059,021
Investment activities
Net payments from premises and equipment			(51,418	)			(61,012	)
Net payments from other assets			(1,562	)			(1,005	)
Other payments from investment activities			(134,481	)			(81,818	)
Net cash flows used in investment activities			(187,461	)			(143,835	)
Financing activities
Net collections/ (payments) from:
-Obligaciones negociables no subordinadas			(10,000	)			—
-Argentine Central Bank			(113	)			(136	)
Other			(113	)			(136	)
-Banks and international agencies			157,416				(41,197	)
-Financing received from local financial institutions			92,194				16,410
Cash dividends paid			(804,000	)			(480,000	)
Other collections from financing activities			(3,541,780	)			(99,248	)
Net cash flows used in financing activities			(4,106,283	)			(604,171	)
Financial results and results from holdings of cash and cash equivalents (including interest)			1				9
Net increase in cash and cash equivalents			1,080,298				1,311,024

 

(1)	See note 8 “Statement of cash and cash equivalents flow”.

The accompanying notes 1 through to 9 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 stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.

 

-52-

---

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

WITH SUBSIDIARIES AS OF JUNE 30, 2011, PRESENTED IN COMPARATIVE FORM WITH

THE BALANCE SHEET AS OF DECEMBER 31, 2010, AND THE STATEMENTS OF INCOME

AND CASH AND CASH EQUIVALENTS FLOW

AS OF JUNE 30, 2010

(Art. 33 of Law No. 19,550)

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

- 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 Pronouncement No. 21 of the Argentine Federation of Professional Councils in Economic Sciences, BBVA Banco Francés S.A. (hereinafter indistinctly referred to as either “BBVA Francés” or the “Bank”) has consolidated - line by line - its balance sheets as of June 30, 2011 and the end of the previous fiscal year, and the statements of income and cash and cash equivalents flow for the six month periods ended June 30, 2011 and 2010, as per the following detail:

As of June 30, 2011:

 

a)

With the financial statements of Francés Valores Sociedad de Bolsa S.A., PSA Finance Argentina Cía. Financiera S.A. for the six month periods ended June 30, 2011 and 2010, with the financial statements of Francés Administradora de Inversiones S.A. for the six month period ended June 30, 2011 and with the financial statements of Atuel Fideicomisos S.A. for the six month period ended June 30, 2010.

 

b)

With the financial statements of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) for the fiscal years ended June 30, 2011 and 2010 and with the financial statements of Consolidar Cía. de Seguros de Retiro S.A., for the fiscal year ended June 30, 2010.

As of December 31, 2010:

 

a)

With the financial statements of Francés Valores Sociedad de Bolsa S.A., PSA Finance Argentina Cía. Financiera S.A. and Francés Administradora de Inversiones S.A., for the fiscal years ended December 31, 2010.

 

b)

With the financial statements of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) and Consolidar Cía. de Seguros de Retiro S.A., for the six month periods ended December 31, 2010.

The results and cash and cash equivalents flow of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) have been adjusted for purposes of comparison of the fiscal years of companies consolidating on the basis of a six month period ended on June 30, 2011 and 2010. The results and cash and cash equivalents flow of Consolidar Cía. de Seguros de Retiro S.A. have been adjusted for purposes of comparison of the fiscal years of companies consolidating on the basis of a six month period ended on June 30, 2010.

 

-53-

---

 

Interests in subsidiaries as of June 30, 2011 and the end of the previous fiscal year are listed below:

 

		Shares												Interest percentage in
		Type				Quantity								Total Capital								Possible Votes
Companies						06-30-2011				12-31-2010				06-30-2011				12-31-2010				06-30-2011				12-31-2010
Francés Valores Soc. de Bolsa S.A.			Common				12,137				12,137				94.9687				94.9687				94.9687				94.9687
Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings)			Common				35,425,947				35,425,947				53.8892				53.8892				53.8892				53.8892
Consolidar Cía. de Seguros de Retiro S.A.			Common				—				32,274,350				—				66.2101				—				66.2101
PSA Finance Argentina Cía Financiera S.A.			Common				26,089				26,089				50.0000				50.0000				50.0000				50.0000
Francés Administradora de Inversiones S.A.			Common				230,398				230,398				95.0000				95.0000				95.0000				95.0000

Total assets, liabilities and stockholders´ equity in accordance with the criteria defined in note 2 below, as of June 30, 2011 and the end of the previous fiscal year and net income balances for the periods ended June 30, 2011 and 2010, are listed below:

 

		Assets								Liabilities								Stockholders’ Equity								Net income/ gain-(loss)
Companies		06-30-2011				12-31-2010				06-30-2011				12-31-2010				06-30-2011				12-31-2010				06-30-2011				06-30-2010
Francés Valores Soc. de Bolsa S.A.			20,816				20,017				7,871				7,650				12,945				12,367				578				1,868
Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings)			118,333				107,329				91,526				66,365				26,807				40,964				(14,157	)			(11,062	)
Atuel Fideicomisos S.A. and its subsidiary (see note 5)			—				—				—				—				—				—				—				1,759
Consolidar Cía. de Seguros de Retiro S.A. (see note 1.4 to the stand-alone financial statements)			—				3,341,186				—				3,071,023				—				270,163				—				32,192
PSA Finance Argentina Cía Financiera S.A.			1,044,069				753,418				919,810				616,828				124,259				136,590				16,184				15,878
Francés Administradora de Inversiones S.A.			47,329				41,894				3,107				2,849				44,222				39,045				5,177				—

 

2.	VALUATION METHODS

The financial statements of the subsidiaries have been prepared based on similar methods to those applied by the Bank for preparing its own financial statements, in connection with assets and liabilities valuation, income measurement and restatement procedure as explained in note 2 to the stand-alone financial statements of the Bank. The following are the main differences with the professional accounting standards:

 

a)

Arising from the application of the accounting standards laid down by the National Superintendence of Insurance (S.S.N.) and the main differences with the professional accounting standards in force in Argentina:

 

•

Loans secured by the National Government - Decree 1387/01 held by Consolidar Cía. de Seguros de Retiro S.A amounting to 693,449 as of December 31, 2010 were valued in accordance with the regulations of the S.S.N.

 

•

On January 28 and on February 25, 2009, the Board of Directors of Consolidar Cía de Seguros de Retiro S.A. exercised the exchange option provided by Resolution No. 5 of the Secretariat of Finance in connection with its holdings of secured bonds Bonte 2006 and Global 2008 and those received from the financial trusts made up by said loans. Their face values were 131,017 and 3,233 respectively, receiving in exchange 413,653 in face value of Argentine Government notes in Pesos, accruing the Private Badlar rate + 275 basis points and maturing in 2014 (“Pagaré de la Nación Argentina en Pesos Badlar Privada + 275 pbs Vto 2014”).

 

•

Besides, on September 10, 2009, Consolidar Cía de Seguros de Retiro S.A.’s Board of Directors exercised the exchange options provided by Resolutions No. 52 and 57 of the Secretariat of Finance in connection with its holdings of Bonds for the consolidation of social security debts - Fourth series - In Pesos (PRE 9) (“Bonos de consolidación de deudas previsionales cuarta serie en pesos”), Bonds for the consolidation of suppliers - Fourth series - In Pesos (PR 12) (“Bonos de consolidación proveedores cuarta serie en pesos”) and Argentine Government Bonds in Pesos - 2%, maturing in 2014 (BODEN) (“Bonos del Gobierno Nacional en pesos 2% 2014”)

 

-54-

---

 

whose nominal values amounted to 7,938, 2,000 and 42,900, respectively, and it received in exchange 11,882 in par value of Argentine Government notes in Pesos, accruing the Private Badlar rate + 275 basis points and maturing in 2014 (“Pagaré de la Nación Argentina en Pesos Badlar Privada + 275 pbs Vto 2014”) and 57,272 in par value of Argentine Government notes in Pesos, accruing the Private Badlar rate + 300 basis points and maturing in 2015 (“Pagaré de la Nación Argentina en Pesos Badlar Privada + 300 pbs Vto 2015”). These promissory notes have been valued in accordance with the rules laid down by the National Superintendence of Insurance, which does not give rise to differences with the professional accounting standards in force in Argentina.

 

•

Consolidar Cía. de Seguros de Retiro S.A.: as of the end of the previous fiscal year, the portfolio of Government securities in investment accounts was booked in accordance with the standards of the S.S.N.

 

•

The items included under the captions Subsidiaries’ other assets and Subsidiaries’ other liabilities were valued in accordance with the regulations of the S.S.N.

 

•

Consolidar Cía. de Seguros de Retiro S.A.: as of December 31, 2010, the Company included the balance from the technical commitments incurred with the insured in the Other Liabilities caption. The abovementioned caption included 7,913, corresponding to the regularizing account called “Unaccrued secured loans valuation difference” which, as established by the S.S.N., would be settled through subsequent accrual of the regularizing accounts of secured loans. In accordance with professional accounting standards currently in force in Argentina, such amount should have been recorded as a loss for the year ended December 31, 2003.

 

b)

Arising from the application of the accounting standards laid down by B.C.R.A. and the professional accounting standards in force in Argentina:

 

•

Consolidar Cía. de Seguros de Retiro S.A.: as of December 31, 2010, a part of its portfolio of instruments issued by the BCRA has been recorded in investment accounts, and they have been valued as per Communication “A” 4698 of the BCRA. The net difference with the market values at that date amounted to 1,728 (income).

 

•

The commissions paid by PSA Finance Argentina Cía. Financiera S.A. to dealers for granting financing to companies and to the public in general in connection with purchases and sales of automobiles, which in accordance with the rules established by the BCRA are charged to the Income Statement, should be accrued throughout the duration of the loans generated by said dealers in accordance with currently applicable professional accounting standards. Had this criterion been applied, shareholders’ equity would have been increased by 8,282 and 5,972 as of June 30, 2011 and the end of the previous fiscal year, respectively.

 

•

The Bank has not made disclosures required by professional accounting standards in force in Argentina on discontinued operations or discontinuation in relation to the process of liquidating its subsidiary Consolidar A.F.J.P.

 

3.	REFORM OF THE INTEGRATED RETIREMENT AND PENSION SYSTEM

Law N° 26.425- Dissolution and liquidation of Consolidar A.F.J.P. S.A.:

Law No. 26,425, which came into force on December 4, 2008, mandated that the capitalization system that used to be an integral part of the Integrated Retirement and Pension System was to be suppressed and replaced by a single pay-as-you-go system that is now known as the Argentine Integrated Social Security System (SIPA in Spanish). As a consequence, Consolidar A.F.J.P. S.A. ceased to manage the funds held in the individual capitalization accounts opened by the members and beneficiaries of the Integrated Retirement and Pension System. Said funds were transferred to the Fund to Guarantee the Sustainability of the State-run Social Security System exactly as they had been invested and it is now the Argentine Social Security Authority (ANSES) the only and sole holder of said assets and funds.

 

-55-

---

 

Besides, on October 29, 2009, ANSES issued its Resolution No. 290/2009 whereby it granted a term of 30 working days to the pension fund managers that could be interested in re-converting their corporate purpose in order to manage the funds held as voluntary term deposits and as agreed-upon deposits in capitalization accounts for them to express their decision to do so.

Given the above situation and the inability of Consolidar A.F.J.P. S.A. to attain the corporate purpose and conduct the business for which it had been formed, on December 28, 2009, its Extraordinary General Unanimous Shareholders’ Meeting adopted the resolution to dissolve and subsequently liquidate Consolidar A.F.J.P. S.A. effective as of December 31, 2009 on the understanding that such will be the best alternative to safeguard the interests of both the creditors and the shareholders of the Company. In addition, as set forth in the Argentine Companies Law, the Shareholders’ Meeting decided to appoint Accountant Mr. Gabriel Orden and Mr. Rubén Lamandia to act as liquidators for of Consolidar A.F.J.P. S.A. As of December 31, 2009 these gentlemen have been designated as the Company’s legal representatives. As of the date of issuance of these financial statements, they are moving forward with all the actions necessary to proceed with the liquidation of Consolidar A.F.J.P. S.A.

On January 28, 2010, the dissolution of Consolidar A.F.J.P. S.A. as well as the list of designated liquidators were registered with the I.G.J.

In addition, the Extraordinary General Shareholders’ Meeting of Consolidar A.F.J.P. S.A. approved a voluntary reduction in capital stock for 75,000 on October 19, 2009. In turn, the I.G.J. conferred its approval to the capital reduction mentioned on January 11, 2010. In this respect, on January 19, 2010 the shareholders were transferred their capital contributions in conformity with the above-mentioned reduction.

BBVA Francés, in its capacity as shareholder requested that Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings) should file a note with the Argentine Ministry of Economy and Public Finance and with the Argentine Social Security Authority to commence discussions within the framework of Law No. 26,425 in order to identify one or more resolution alternatives in connection with the consequences resulting from the events caused by the enactment of that Law. This note was filed by Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings) on June 11, 2010.

In turn, on December 7, 2010, Consolidar A.F.J.P. (undergoing liquidation proceedings) filed an action for damages against the National State and the Ministry of Labor, Employment and Social Security with the court of original Federal Jurisdiction over Contentious Administrative Matters No. 4, Clerk of Court’s Office No. 7, case file No. 40.437/2010. The complaint was ratified by BBVA Francés in its capacity as majority shareholder in that Company. On July 15, 2011, Consolidar A.F.J.P. and BBVA Francés filed with the same court an enhanced complaint for determining the amounts claimed as damages.

In addition, on April 12, 2011, the Supreme Court of Justice of Argentina affirmed the judgment passed by the court of original Federal Jurisdiction over Contentious Administrative Matters in favor of Consolidar A.F.J.P. in connection with the claim for recovery asserted against the tax authorities (AFIP) for the 12,475 in excess of the income tax charge for fiscal 2002 paid by the plaintiff by reason of not having applied the inflation adjustment for tax purposes. As Consolidar A.F.J.P. is undergoing liquidation proceedings, in order to advance the collection of the receivable arising from the judgment, on June 29, 2011 Consolidar A.F.J.P. executed an assignment for valuable consideration of all of the rights to which Consolidar A.F.J.P. was entitled in the framework of this legal action to BBVA Francés.

 

4.	PSA FINANCE ARGENTINA CÍA FINANCIERA S.A.

According to the provisions in Section Three of its By-laws and with the authorization granted by B.C.R.A., the Bank is authorized to carry out all the transactions and activities covered by Section 24 of the Law of Financial Institutions and other expressly authorized by B.C.R.A. On April 22, 2009, the Bank started to receive deposits and therefore, it participates in the Deposit Guarantee Fund created by Law No. 24,485.

 

-56-

---

 

5.	ATUEL FIDEICOMISOS S.A. – MERGER WITH BBVA FRANCÉS

As of December 31, 2009, under its line of business, Atuel Fideicomisos S.A. acted in its capacity as a trustee for certain trusts, in no case being personally liable for the liabilities assumed; such liabilities would be satisfied out of the proceeds of the underlying assets of each such trust.

On March 15, 2010, the Board of Directors of BBVA Francés and Atuel Fideicomisos S.A. entered into a “Preliminary Merger Agreement” whereby Atuel Fideicomisos S.A. was merged into BBVA Francés on the basis of the financial statements of both companies as of December 31, 2009. Said preliminary merger agreement, together with the special consolidated financial statements for merging purposes, were approved by BBVA Francés’s Shareholders’ Meeting held on April 30, 2010 and by Atuel Fideicomisos S.A.’s Shareholders’ Meeting held on May 3, 2010. The merger process stipulated in the above-mentioned Preliminary Merger Agreement consisted in the absorption by BBVA Banco Francés of Atuel’s entire equity, with Atuel S.A. being dissolved though not liquidated and BBVA Francés remaining as a legal entity.

On May 7, 2010, the B.C.R.A. sent a note stating that it is not within their purview to issue an opinion on the merger in the terms of Section 7 of the Law of Financial Institutions and/or the regulations applicable to the merger of financial institutions (namely, Circular Letter CREFI-2, Communication “A” 2241, Chapter I, Section 2) on grounds of Atuel Fideicomisos S.A. not being a party within the scope of said rules and regulations. This notwithstanding, the Bank proceeded with the publications required under Section 83, Sub-section 3 of the Argentine Companies Law, with no objections by creditors. Finally, on June 28, 2010 the parties filed with the C.N.V. the public deed that transcribes the resolutions adopted by their respective corporate governance bodies and approves the final merger agreement. On August 6, 2010, the C.N.V. approved the merger. On October 22, 2010, the I.G.J. registered Atuel Fideicomisos S.A.’s dissolution without liquidation due to a merger under Number 19,916, on Book 51 of Stock Corporations and the merger procedure was finalized.

 

6.	MINORITY INTEREST IN SUBSIDIARIES

The breakdown of balances in the “Minority interest in subsidiaries” account is as follows:

 

		06-30-2011				12-31-2010
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings)			12,361				18,889
Consolidar Cía. de Seguros de Retiro S.A.			—				91,287
Francés Valores Sociedad de Bolsa S.A.			651				622
PSA Finance Argentina Cía Financiera S.A.			62,130				68,295
Francés Administradora de Inversiones S.A.			111				99
Total			75,253				179,192

 

7.	RESTRICTIONS ON ASSETS

 

a)

Francés Valores Sociedad de Bolsa S.A. (stock broking company) holds shares of Mercado de Valores de Buenos Aires S.A, booked in the amount of 9,600 as of June 30, 2011 and the end of the previous fiscal year. These shares have been pledged in favor of “CHUBB 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 stock broking companies with their obligations.

 

b)

See note 7 to the stand-alone financial statements of the Bank.

 

-57-

---

 

8.	STATEMENT OF CASH AND CASH EQUIVALENTS FLOW

The Statements of Cash and cash equivalents flow explains the changes in cash and cash equivalents. For such purpose, a detail is supplied of the items that the Bank considers to be cash and cash equivalents:

 

		06-30-2011				12-31-2010				06-30-2010				12-31-2009
a) Cash and due from banks			6,974,023				5,691,806				6,567,669				5,255,412
b) Goverment securities			214,614				442,478				481,943				488,176
c) Loans to financial sectors, calls granted maturity date less than three months as from the end of the period or fiscal year			143,445				117,500				79,500				74,500
CASH AND CASH EQUIVALENTS			7,332,082				6,251,784				7,129,112				5,818,088

Items b) and c) are considered to be cash equivalents because they are held in order to meet short-term commitments, they are easily convertible in known cash amounts, they are subject to negligible changes in value and their maturity is less than three months as from the end of the period or fiscal year.

 

9.	BREAKDOWN OF MAIN ITEMS

The detail of the main ítems included in financial statements is as follows:

 

		06-30-2011				12-31-2010
a) GOVERNMENT AND PRIVATE SECURITIES
* Holdings booked at fair value
Federal Government Bonds in Pesos Badlar + 275 bp due in 2014			1,083,895				1,383,120
Secured Bonds due in 2020			826,533				988,036
Federal Government Bonds in Pesos Badlar + 300 bp due in 2015			259,840				419,487
Secured Bonds due in 2018			175,670				101,164
Federal Government Bocon PRO 12			41,640				183,003
Federal Government Bonds in Pesos Badlar + 350 bp due in 2013			12,849				44,850
Discount Bonds in pesos			7,850				425,016
Federal Government Bonds in US dollar 7% P.A. due 2015 (Boden 2015)			6,687				267,987
Treasury Notes			6,136				222,929
Cuasipar Bonds in pesos			3,612				—
Discount Bonds in US dollar			—				170,223
Bocon PRE9			—				29,673
Federal Government Bonds 7% due in 2017 (Bonar X)			—				4,686
Federal Government Bonds in Pesos 10.5 % due in 2012			—				26,186
Federal Government Bocon PRO 13			—				9,639
Peso-denominated GDP-related securities			—				4,141
Federal Government Bonds in US dollar 7% due in 2011			—				12,355
Other			5,641				17,272
Total			2,430,353				4,309,767
*Holdingsbooked at amortized cost
Other			170				181
Total			170				181

 

-58-

---

 

		06-30-2011				12-31-2010
* Instruments issued by the BCRA
BCRA Bills (LEBAC)			1,281,063				1,650,748
BCRA Notes (NOBAC)			1,095,230				1,431,271
Total			2,376,293				3,082,019
*Investmentsin listed private securities
FBA Ahorro Pesos Investment Fund			12,497				1,289
Corporate Bonds Petrobrás Energía S.A.			80				3,656
Corporate Bonds YPF			—				50,291
MBT Serie 1 Clase A Financial Trust			—				10,121
Corporate Bonds Gas Natural Ban			—				9,135
Corporate Bonds Grupo Concesionario del Oeste			—				5,453
Corporate Bonds Petroquímica Comodoro Rivadavia S.A.			—				2,273
FBA Renta Pesos Investment Fund			—				15,850
Other			2,557				5,536
Total			15,134				103,604
- Allowances			(190	)			(189	)
Total			4,821,760				7,495,382
b) LOANS – Other
Loans granted to pre-finance and finance exports			2,690,930				2,329,504
Fixed-rate financial loans			1,805,408				1,392,175
Other			141,958				288,570
Total			4,638,296				4,010,249
c) INVESTMENTS IN OTHER COMPANIES – Other
In other companies- unlisted			41,066				37,321
In companies-supplementary activities			25,093				25,121
Total			66,159				62,442
d) OTHER RECEIVABLES – Other
Miscellaneous receivables			205,975				154,010
Tax prepayments			135,266				71,304
Guarantee deposits			134,456				102,105
Prepayments			109,708				95,141
Other			8,816				58,412
Total			594,221				480,972

 

-59-

---

 

		06-30-2011				12-31-2010
e) OTHER SUBSIDIARIES’ ASSETS
Other related to insurance business			450				450
Total			450				450
f) OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS - Other
Collections and other operations for the account of third parties			529,453				290,211
Accounts payable for consumption			391,061				394,705
Other withholdings and collections at source			220,491				202,444
Money orders payable			166,013				179,820
Social security payment orders pending settlement			44,765				3,852
Loans received from Argentine Technological Fund (FONTAR)			35,261				38,391
Pending Banelco debit transactions			20,395				28,493
Loans received from Interamerican Development Bank (BID)			17,527				18,420
Other			60,606				84,466
Total			1,485,572				1,240,802

 

g) OTHER LIABILITIES – Other
Accrued taxes			279,015				320,546
Miscellaneous payables			166,767				241,339
Accrued salaries and payroll taxes			150,845				187,503
Amounts collected in advance			63,668				65,126
Other			1,867				3,208
Total			662,162				817,772
h) OTHER SUBSIDIARIES´ LIABILITIES
Insurance companies, mathematical reserve			—				2,450,173
Fluctuation fund – Consolidar Cía de Seguros de Retiro S.A.			—				309,208
Difference arising from secured loans accrued valuation – Consolidar Cía. de Seguros de Retiro S.A.			—				(7,913	)
Other related to insurance business			338				85,094
Total			338				2,836,562
i) MEMORANDUM ACCOUNTS – DEBIT – CONTROL – Other
Securities representative of investment in escrow on behalf of the Guarantee Fund for the Sustainability of the Pay-as-you-go System managed by the Argentine State			37,730,865				36,645,801
Items in safekeeping			16,319,313				17,028,587
Checks not yet credited			1,993,383				1,697,519
Collections items			488,436				430,819
Checks drawn on the Bank pending clearing			341,035				245,783
Other			95,652				79,403
Total			56,968,684				56,127,912

 

-60-

---

 

		06-30-2011				06-30-2010
j) SERVICE CHARGE INCOME - Other
Commissions for hiring of insurances			83,211				60,489
Rental of safe-deposit boxes			36,313				25,497
Commissions for loans and guaranties			26,329				15,172
Commissions for transportations of values			7,288				5,979
Commissions for capital market transactions			6,794				10,701
Commissions for salary payment			4,261				3,744
Commissions for trust management			481				823
Other			31,037				31,984
Total			195,714				154,389
k) SERVICE CHARGE EXPENSE – Other
Turn-over tax			52,396				35,775
Insurance paid on lease transactions			9,550				7,559
Other			7,049				3,208
Total			68,995				46,542
l) OTHER INCOME – Other
Deferred income tax (1)			67,800				30,800
Tax recovery			18,166				—
Related parties expenses recovery			6,338				4,139
Premiums – Insurance companies			—				8,018
Others			34,639				5,887
Total			126,943				48,844

 

(1)	Offset by a charge for the same amount in the line Charge for uncollectibility of other receivables and other allowances under the caption Other expense item.

 

m) OTHER EXPENSE – Other
Insurance companies, mathematical reserve			—				99,320
Life Annuities – Consolidar Cía. de Seguros de Retiro S.A.			—				86,004
Claims paid – Insurance companies			—				3,661
Other			16,064				30,795
Total			16,064				219,780

 

-61-

---

 

EXHIBIT 1

CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY

CATEGORIES AND GUARANTIES RECEIVED

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish - See note 18 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				12-31-2010
COMMERCIAL PORTFOLIO
Normal performance			11,479,700				10,836,794
Preferred collaterals and counter guaranty “A”			427,730				213,568
Other collaterals and counter guaranty “B”			206,994				176,354
Without senior security or counter guaranty			10,844,976				10,446,872
With special follow-up			17,488				21,955
Under to an observation
Without senior security or counter guaranty			17,488				21,955
With high risk of uncollectibility			3,466				3,927
Without senior security or counter guaranty			3,466				3,927
Uncollectible			2,114				2,010
Without senior security or counter guaranty			2,114				2,010
Total			11,502,768				10,864,686

 

-62-

---

 

EXHIBIT 1

(Contd.)

CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY

CATEGORIES AND GUARANTIES RECEIVED

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(Translation of financial statements originally issued in Spanish-See note 18 to the stand-alone Financial Statements)

- Stated in thousands of pesos -

 

		06-30-2011				12-31-2010
CONSUMER AND HOUSING PORTFOLIO
Normal performance			8,706,614				7,334,252
Preferred collaterals and counter guaranty “A”			10,127				12,019
Other collaterals and counter guaranty “B”			1,701,390				1,434,281
Without senior security or counter guaranty			6,995,097				5,887,952
Low risk			62,144				54,690
Other collaterals and counter guaranty “B”			19,209				15,886
Without senior security or counter guaranty			42,935				38,804
Medium risk			43,746				33,792
Other collaterals and counter guaranty “B”			4,985				3,353
Without senior security or counter guaranty			38,761				30,439
High risk			35,159				33,038
Other collaterals and counter guaranty “B”			3,715				3,312
Without senior security or counter guaranty			31,444				29,726
Uncollectible			13,337				13,188
Other collaterals and counter guaranty “B”			8,529				8,467
Without senior security or counter guaranty			4,808				4,721
Uncollectible, classified as such under regulatory requirements			114				184
Other collaterals and counter guaranty “B”			69				96
Without senior security or counter guaranty			45				88
Total			8,861,114				7,469,144
General Total (1)			20,363,882				18,333,830

 

(1)

Items included: Loans (before allowances); Other receivables from financial transactions: Unlisted corporate bonds, Other receivables covered by debtor classification regulations; Receivables from financial leases (before allowances); Memorandum accounts - Credit - Contingent: 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.

 

-63-

---

INDEPENDENT AUDITORS’ LIMITED REVIEW REPORT

To the President and the Board of Directors of

BBVA BANCO FRANCÉS S.A.

Reconquista 199

City of Buenos Aires

 

1.	Identification of the financial statements subject to our review

We have reviewed:

 

a)

the accompanying financial statements of BBVA BANCO FRANCÉS S.A. (“BBVA Francés” or the “Bank”), which comprise the balance sheet as of June 30, 2011 and the statement of income, statement of changes in stockholders´ equity and cash and cash equivalents flow for the six-month period then ended, with their notes 1 to 18 (notes 2 and 4 describe a summary of significant accounting policies), and supplemental Exhibits “A” through “L”, “N” and “O”; and

 

b)

the consolidated financial statements of BBVA Francés and its subsidiaries (listed in note 1 to the consolidated financial statements), which comprise the consolidated balance sheet as of June 30, 2011 and the consolidated statement of income and the consolidated cash and cash equivalents flow for the six-month period then ended, with their notes 1 to 9 and the supplemental Exhibit 1.

The balance sheet (both the stand-alone and the consolidated balance sheets) and certain related supplemental information referred to above are presented for comparative purposes with the balance sheets and supplemental information for the year ended December 31, 2010.

The statements of income, of changes in stockholders’ equity and cash and cash equivalents flow referred to above (the stand-alone and the consolidated statements) and certain related supplemental information are presented for comparative purposes with the statements and supplemental information for the six-month period ended June 30, 2010.

The Bank´s Board of Directors and Management are responsible for the preparation and fair presentation of such financial statements in conformity with applicable accounting standards. This responsibility includes (i) designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to errors or omissions or to irregularities; (ii) selecting and applying appropriate accounting policies, and (iii) making accounting estimates that are reasonable in the circumstances. Our responsibility is to issue a limited review report on such financial statements, based on our limited review performed in accordance with the scope described in caption 2 of this report.

 

2.	Scope of our review

Our review was limited to the application of the procedures established by the auditing standards generally accepted in Argentina and the “Minimum Standards applicable for External Audits” established by the Argentine Central Bank (“B.C.R.A.”) for the limited reviews of financial statements corresponding to interim periods. These standards determine a scope which is substantially less than the application of all the auditing procedures necessary to be able to issue an audit opinion on financial statements taken as a whole. Accordingly, we do not express an opinion on the balance sheet position of the Bank as of June 30, 2011, on the results of its operations, the changes in its stockholders’ equity and its cash and cash equivalents flow for the six-month period then ended.

---

3.	Explanatory paragraph

The stand-alone and the consolidated financial statements referred to in paragraphs a) and b) of caption 1 of this report have been prepared by the Bank in accordance with the accounting standards established by the B.C.R.A., which differ from the professional accounting standards currently in force in Argentina concerning the matters indicated in note 3 to the stand-alone financial statements and in note 2 to the consolidated financial statements.

 

4.	Limited review report

Based on our limited review procedures performed with the scope indicated in caption 2 of this report, which did not include all the auditing procedures necessary to enable us to express an opinion on the financial statements taken as a whole, we are in position to report that:

 

a)

the financial statements of BBVA Francés both individually and consolidated with its subsidiaries companies mentioned in paragraphs a) and b) of caption 1 of this report, give consideration to all the significant facts and circumstances of which we are aware of, and

 

b)

we have no observations to present on the referred financial statements, other than those indicated under caption 3.

In relation to the figures for the year ended December 31, 2010 and those for the six-month period ended June 30, 2010, which are presented for comparative purposes as indicated in caption 1 of this report which we have checked with those of the corresponding financial statements,

 

a)

our Independent Auditors´ Report on the financial statements for the year ended December 31, 2010 was issued on February 9, 2011 and was qualified due to certain departures from professional accounting standards currently in force in Argentina, described in note 3 to the stand-alone financial statements and in note 2 to the consolidated financial statements.

 

b)

our Independent Auditors´ Limited Review Report on the financial statements for the six-month period ended June 30, 2010 was issued on August 9, 2010, including an observation originated in certain departures from professional accounting standards in force in Argentina, described in note 3 to the stand-alone financial statements and in note 2 to the consolidated financial statements.

 

5.	English translation of statutory financial statements

This report and the financial statements referred to in caption 1 have been translated into English for the convenience of English-speaking readers. As further explained in note 18 to the accompanying stand-alone financial statements, the financial statements (both the stand-alone and the consolidated financial statements) are the English translation of those originally prepared by the Bank in Spanish and presented in accordance with the accounting standards of B.C.R.A. and except for the matters described in caption 3, with the professional accounting standards in force in Argentina. The effects of the differences between the accounting standards of B.C.R.A. and the professional accounting standards in force in Argentina, and the accounting principles generally accepted in the countries in which the financial statements are to be used have not been quantified. Accordingly, the accompanying financial statements are not intended to present the financial position, results of operations, stockholders’ equity or cash and cash equivalents flow in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.

---

City of Buenos Aires, August 9, 2011.

ROXANA M. FIASCHE

Partner

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

---

SIGNATURES

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 French Bank S.A.
Date: August 17, 2011				By:		/s/ José Carlos López Álvarez
						Name: José Carlos López Álvarez
						Title: Chief Financial Officer