As filed with the Securities and Exchange Commission on March 20, 2006

Registration No. 333-130901

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pre-effective Amendment No. 4

Form F-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

BANCO MACRO BANSUD S.A.

(Exact name of Registrant as specified in its charter)

MACRO BANSUD BANK INC.

(Translation of Registrant’s name into English)

Republic of Argentina	6029	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

Banco Macro Bansud S.A.

Sarmiento 447

1041 Buenos Aires

Republic of Argentina

(+ 54-11-5222-6500)

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

CT Corporation System

111 Eighth Avenue

New York, New York 10011

(1-800-223-7564)

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Antonia E. Stolper, Esq.
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022 S. Todd Crider, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box.     o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.     o

     The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS Subject to Completion March 6, 2006

106,682,810 Shares

Banco Macro Bansud S.A.

Class B Common Stock (including in the form of American

depositary shares)

We, Banco Macro Bansud S.A., a sociedad anónima organized under the laws of Argentina, and the selling shareholders named in this prospectus, are offering 136,600,000 shares of our Class B common stock in a global offering. Of the Class B shares being offered, Banco Macro Bansud S.A. is selling 75,000,000 Class B shares and the selling shareholders are selling 61,600,000 Class B shares. Banco Macro Bansud S.A. will not receive any proceeds from the sale of Class B shares by the selling shareholders.

We and the selling shareholders are offering 94,182,810 Class B shares in the form of 9,418,281 American depositary shares, or ADSs, in the United States and other countries outside Argentina through the international underwriters named in this prospectus. Each ADS represents ten Class B shares. We are concurrently offering 12,500,000 Class B shares in Argentina through the Argentine underwriters under a Spanish language prospectus. The total number of Class B shares in the international and Argentine underwritten offerings is subject to reallocation between these offerings. The closings of the international and Argentine underwritten offerings will be conditioned upon each other.

All of our existing shareholders have a preferential right to subscribe to our capital increase. The selling shareholders will assign their preferential rights to the underwriters to exercise for the shares to be sold by Banco Macro Bansud S.A. in the international and Argentine underwritten offerings. The remaining 29,917,190 Class B shares are available for subscription by our minority shareholders in Argentina. The preferential subscription period will expire on or about March 31, 2006. Subject to certain conditions, the Class B shares that have not been subscribed by minority shareholders pursuant to their preferential rights will be purchased by the selling shareholders.

No public market currently exists for our Class B shares or ADSs outside of Argentina. We have applied to list the ADSs for trading on the New York Stock Exchange under the symbol “BMA.” Our Class B shares currently trade on the Bolsa de Comercio de Buenos Aires, or the Buenos Aires Stock Exchange, under the symbol “BSUD.” On March 16, 2006, the last reported sale price of our Class B shares on the Buenos Aires Stock Exchange was Ps.6.09 per share, which is equivalent to US$19.83 per ADS at the exchange rate in effect on that date.

Investing in our Class B shares and ADSs involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our Class B shares or ADSs in “Risk factors” beginning on page 21 of this prospectus.

Neither the U.S. Securities and Exchange Commission nor any U.S. state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per
	Class B
	share	Per ADS	Total
Public offering price	US$	US$	US$
Underwriting discounts and commissions	US$	US$	US$
Proceeds, before expenses, to us	US$	US$	US$
Proceeds, before expenses, to the selling shareholders	US$	US$	US$

The selling shareholders have granted the international underwriters the right for a period of 30 days to purchase up to an additional 1,412,742 ADSs, representing 14,127,420 Class B shares, at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any.

The international underwriters are offering the ADSs as set forth under “Underwriting.” Delivery of the ADSs will be made on or about                     , 2006.

UBS Investment Bank Raymond James

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with information that is different from the information contained in this prospectus. This document may only be used where it is legal to sell these securities. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or when any sale of the ADSs occurs.

TABLE OF CONTENTS

Special note regarding forward-looking statements	vi
Prospectus summary	1
The crisis and recovery in Argentina	14
Risk factors	21
Use of proceeds	30
Exchange rates and exchange controls	31
Market information	32
Capitalization	37
Dividends and dividend policy	38
Selected financial and operating data	40
Pro forma financial data	46
Management’s discussion and analysis of financial condition and results of operations	49
The Argentine banking industry	90
Business	96
Selected statistical information	111
Argentine banking regulation	133
Management and corporate governance	149
Principal and selling shareholders	158
Related party transactions	160
Description of capital stock	161
Description of American depositary shares	166
Taxation	173
Underwriting	180
Expenses of the global offering	184
Validity of the securities	185
Experts	185
Enforcement of judgments against foreign persons	185
Where you can find more information	186
Index to consolidated financial statements	187
EX-3.2: AMENDED AND RESTATED BYLAWS
EX-23.1: CONSENT OF BRUCHOU, FERNANDEZ MADERO ET AL

Definitions. In this prospectus, we use the terms “the registrant,” “we,” “us,” “our” and the “bank” to refer to Banco Macro Bansud S.A. and its subsidiaries, including Nuevo Banco Suquía S.A., on a consolidated basis. References to “Class B shares” refer to shares of our Class B common stock and references to “ADSs” refer to American depositary shares representing our Class B shares, except where the context requires otherwise.

The term “Argentina” refers to the Republic of Argentina. The terms “Argentine government” or the “government” refers to the federal government of Argentina and the term “Central Bank” refers to the Banco Central de la República Argentina, or the Argentine Central Bank. The terms “U.S. dollar” and “U.S. dollars” and the symbol “US$” refer to the legal currency of the United States. The terms “peso” and “pesos” and the symbol “Ps.” refer to the legal currency of Argentina. “U.S. GAAP” refers to generally accepted accounting principles in the United States, “Argentine GAAP” refers to generally accepted accounting principles in Argentina and “Central Bank Rules” refers to the accounting rules of the Central Bank. The term “GDP” refers to gross domestic product and all references in this prospectus to GDP growth are to real GDP growth.

Market position. We make statements in this prospectus about our competitive position and market share in, and the market size of, the Argentine banking industry. We have made these statements on the basis of statistics and other information from third-party sources that we believe are reliable. Although we have no reason to believe any of this information or these reports are inaccurate in any material respect, neither we, the selling shareholders or the underwriters have independently verified the competitive position, market share and market size or market growth data provided by third parties or by industry or general publications.

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

Accounting practices. We maintain our financial books and records in Argentine pesos and prepare and publish our consolidated financial statements in Argentina in conformity with the Central Bank Rules, which differ in certain significant respects from U.S. GAAP and, to a certain extent, from Argentine GAAP. Our consolidated financial statements contain a description of the principal differences between Central Bank Rules and Argentine GAAP. The consolidated financial statements for the year ended December 31, 2004 and for the six-month period ended June 30, 2005 included in this prospectus have been reconciled to U.S. GAAP. See note 35 to our audited consolidated financial statements as of and for the year ended December 31, 2004 and note 25 to our condensed interim consolidated statements as of and for the six months ended June 30, 2004 and 2005 for a reconciliation of our financial statements to U.S. GAAP. The consolidated financial statements as of and for the year ended December 31, 2005 have not been reconciled to U.S. GAAP. Under Central Bank Rules, our results of operations for 2002 and for the two-month period ended February 28, 2003 were adjusted to account for the effects of wholesale price inflation in Argentina during those periods. For 2002, these inflation adjustments had a dramatic effect on our results of operations. For the periods subsequent to February 28, 2003, the inflation adjustments were no longer applied to our financial statements under Central Bank Rules, as inflation returned to normalized levels during 2003. In addition, in December 2004, we acquired Nuevo Banco Suquía, which significantly enhanced the size and scope of our business. As a result of our acquisition of Nuevo Banco Suquía, our results of operations for the six-month period ended June 30, 2005 and for the year ended December 31, 2005 differ significantly from our results of operations for the six-month period ended June 30, 2004 and the year ended December 31, 2004, respectively. We have also included in this prospectus financial statements of Nuevo Banco Suquía as of and for the years ended December 31, 2004, which were prepared in pesos and in conformity with Central Bank Rules. See note 20 for a reconciliation to U.S. GAAP of the Nuevo Banco Suquía financial statements. Given the instability and regulatory and economic changes that Argentina has experienced since the beginning of the economic crisis in 2001, the financial information set forth in this prospectus may not be fully indicative of our anticipated results of operations or business prospects after the dates indicated. These factors also affect comparability among periods.

Exchange rates and translation into U.S. dollars. We have translated some of the peso amounts contained in this prospectus into U.S. dollars for convenience purposes only. The rate used to translate such amounts was Ps.3.0315 to US$1.00, which was the Tipo de Cambio Referencia, or reference exchange rate, reported by the Central Bank for U.S. dollars for December 30, 2005. The Federal Reserve Bank of New York does not report a noon buying rate for pesos. The U.S. dollar equivalent information presented in this prospectus is provided solely for the convenience of investors and should not be construed as implying that the peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. See “Exchange rates” for more detailed information regarding the translation of pesos into U.S. dollars.

Adjustments. All “as adjusted” amounts contained in this prospectus have been adjusted to reflect the receipt by us of the estimated net proceeds at an assumed public offering price of Ps.6.09 (or US$1.98) per Class B share (or US$19.83 per ADS), the closing price of our Class B shares on the Buenos Aires Stock Exchange on March 16, 2006.

Global offering. This offering is being made in the United States and elsewhere outside Argentina solely on the basis of the information contained in this prospectus. The concurrent offering of our Class B shares is being made in Argentina by a prospectus in Spanish that has been filed with the Comisión Nacional de Valores, or Argentina’s National Securities Commission, or CNV. The prospectus for the Argentine offering, although in a different format in accordance with CNV regulations, contains substantially the same information as this prospectus. The Argentine public offering of the Class B shares was approved by the CNV on November 10, 2005 by Resolution No. 15,237.

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Notice to investors

EUROPEAN ECONOMIC AREA

With respect to each Member State of the European Economic Area which has implemented Prospectus Directive 2003/71/EC, including any applicable implementing measures, from and including the date on which the Prospectus Directive is implemented in that Member State, the offering of our ADSs in this offering is only being made:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

UNITED KINGDOM

Our ADSs may not be offered or sold and will not be offered or sold to any persons in the United Kingdom other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses and in compliance with all applicable provisions of the FSMA with respect to anything done in relation to our ADSs in, from or otherwise involving the United Kingdom. In addition, any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of our ADSs may only be communicated in circumstances in which Section 21(1) of the FSMA does not apply to us. Without limitation to the other restrictions referred to herein, this offering circular is directed only at (1) persons outside the United Kingdom, (2) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets act 2000 (Financial Promotion) Order 2005; or (3) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Financial Services and Markets act 2000 (Financial Promotion) Order 2005. Without limitation to the other restrictions referred to herein, any investment or investment activity to which this offering circular relates is available only to, and will be engaged in only with, such persons, and persons within the United Kingdom who receive this communication (other than persons who fall within (2) or (3) above) should not rely or act upon this communication.

SWITZERLAND

Our ADSs may be offered in Switzerland only on the basis of a non-public offering. This prospectus does not constitute an issuance prospectus according to articles 652a or 1156 of the Swiss Federal Code of Obligations or a listing prospectus according to article 32 of the Listing Rules of the Swiss exchange. Our ADSs may not be offered or distributed on a professional basis in or from Switzerland and neither this prospectus nor any other offering material relating to our ADSs may be publicly issued in connection with any such offer or distribution. The ADSs have not been and will not be approved by any Swiss regulatory authority. In particular, the ADSs are not and will not be registered with or supervised by the Swiss Federal Banking Commission, and investors may not claim protection under the Swiss Investment Fund Act.

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FRANCE

No ADSs have been offered or sold and will be offered or sold, directly or indirectly, to the public in France except to permitted investors, or Permitted Investors, consisting of persons licensed to provide the investment service of portfolio management for the account of third parties, qualified investors (investisseurs qualifiés) acting for their own account and/or corporate investors meeting one of the four criteria provided in Article 1 of Decree No. 2004-1019 of September 28, 2004 and belonging to a “limited circle of investors” (cercle restreint d’investisseurs) acting for their own account with “qualified investors” and “limited circle of investors” having the meaning ascribed to them in Article L. 411-2 of the French Code Monétaire et Financier and applicable regulations thereunder; and the direct or indirect resale to the public in France of any ADSs acquired by any Permitted Investors may be made only as provided by Articles L. 412-1 and L. 621-8 of the French Code Monétaire et Financier and applicable regulations thereunder.

None of this prospectus or any other materials related to the global offering or information contained therein relating to the ADSs has been released, issued or distributed to the public in France except to qualified investors (investisseurs qualifiés) and/or to a limited circle of investors (cercle restreint d’investisseurs) mentioned above.

ITALY

The offering of the ADSs has not been cleared by the Italian Securities Exchange Commission (Commissione Nazionale per le Societá e la Borsa), or CONSOB, pursuant to Italian securities legislation and, accordingly, the ADSs may not and will not be offered, sold or delivered, nor may or will copies of the prospectus or any other documents relating to the ADSs or the global offering be distributed in Italy other than to professional investors (operatori qualificati), as defined in Article 31, paragraph 2 of CONSOB Regulation No. 11522 of July 1, 1998, as amended, or Regulation No. 11522.

Any offer, sale or delivery of the ADSs or distribution of copies of the prospectus or any other document relating to ADSs or the global offering in Italy may and will be effected in accordance with all Italian securities, tax, exchange control and other applicable laws and regulations, and, in particular, will be: (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Legislative Decree No. 385 of September 1, 1993, as amended, or the Italian Banking Law, Legislative Decree No. 58 of February 24, 1998, as amended, Regulation No. 11522, and any other applicable laws and regulations; (ii) in compliance with Article 129 of the Italian Banking Law and the implementing guidelines of the Bank of Italy; and (iii) in compliance with any other applicable notification requirement or limitation which may be imposed by CONSOB or the Bank of Italy.

Any investor purchasing the ADSs in the global offering is solely responsible for ensuring that any offer or resale of ADSs it purchased in the global offering occurs in compliance with applicable laws and regulations.

This prospectus and the information contained herein are intended only for the use of its recipient and are not to be distributed to any third party resident or located in Italy for any reason. No person resident or located in Italy other than the original recipients of this document may rely on it or its content.

In addition to the above (which shall continue to apply to the extent not inconsistent with the implementing measures of the Prospective Directive in Italy), after the implementation of the Prospectus Directive in Italy, the restrictions set out under the heading “European Economic Area” above shall apply to Italy.

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THE NETHERLANDS

Our ADSs may not be offered, sold, transferred or delivered in or from The Netherlands, as part of their initial distribution or as part of any re-offering, and neither this prospectus nor any other document in respect of the offering may be distributed or circulated in The Netherlands, other than to individuals or legal entities which include, but are not limited to, banks, brokers, dealers, institutional investors and undertakings with a treasury department, who or which trade or invest in securities in the conduct of a business or profession.

SPAIN

Our ADSs have not been offered or sold in Spain except in accordance with the requirements of the Spanish Securities Market Law (Ley 24/ 1998 de 28 del mercado de valores), as amended, and Royal Decree 291/ 1992, on Issues and Public Offerings of Securities (Real Decreto 291/ 1992, de 27 de marzo, sobre emisiones y ofertas públicas de valores), as amended (hereinafter “R.D. 291/ 92”). This prospectus has not been verified nor registered in the administrative registries of The National Stock Exchange Commission in Spain, and therefore no public offerings of our ADSs shall be made in Spain. Notwithstanding that, a private placement of our ADSs addressed exclusively to institutional investors may be carried out in Spain in accordance with the requirements set forth in R.D. 291/ 92.

v

Special note regarding forward-looking statements

This prospectus includes forward-looking statements, principally under the captions “Prospectus summary,” “Risk factors,” “Management’s discussion and analysis of financial condition and results of operations” and “Business.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this prospectus, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things:

†	inflation;
†	changes in interest rates and the cost of deposits;
†	government regulation;
†	adverse legal or regulatory disputes or proceedings;
†	credit and other risks of lending, such as increases in defaults by borrowers;
†	fluctuations and declines in the value of Argentine public debt;
†	competition in banking, financial services and related industries;
†	deterioration in regional and national business and economic conditions in Argentina;
†	fluctuations in the exchange rate of the peso; and
†	the risk factors discussed under “Risk factors” beginning on page 21.

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

vi

Prospectus summary

This summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we consider to be the most important information about us, you should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our Class B shares and ADSs, including “Risk factors,” “Management’s discussion and analysis of financial condition and results of operations” and our financial statements and related notes beginning on page F-1.

BANCO MACRO BANSUD S.A.

We are one of the leading banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and by our focus on low-and middle-income individuals and small- and medium-sized businesses, generally located outside of the Buenos Aires metropolitan area, which we believe offer significant opportunity for continued growth in our banking business. According to the Central Bank, as of December 31, 2005, we were ranked fourth in terms of deposits and third in terms of equity among private-sector banks. As of December 31, 2005, on a consolidated basis, we had:

†	Ps.9,488 million (US$3,130 million) in total assets;
†	Ps.2,949 million (US$973 million) in gross private sector loans;
†	Ps.6,565 million (US$2,166 million) in total deposits;
†	Ps.1,490 million (US$492 million) in shareholders’ equity;
†	approximately 880,000 households and 3,600 corporate customers that provide us with approximately 1.2 million clients; and
†	approximately 440,000 employee payroll accounts for corporate customers and three provincial governments.

Our consolidated net income for 2004 was Ps.193.0 million (US$64 million), representing a return on average equity of 16.4% and a return on average assets of 3.4%. Our consolidated net income for the year ended December 31, 2005 was Ps.262.7 million (US$87 million), representing a return on average equity of 19.7% and a return on average assets of 2.8%.

In general, given the relatively low level of banking intermediation in Argentina currently, there are limited products and services being offered. We are focusing on the overall growth of our loan portfolio by expanding our customer base and encouraging them to make use of our lending products. We have a holistic approach to our banking business; we do not manage the bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources and assessing profitability. We have savings and checking accounts, credit and debit cards, consumer finance loans and other credit-related products and transactional services available to our individual customers and small- and medium-sized businesses through our branch network. We also offer Plan Sueldo payroll services, lending, corporate credit cards, mortgage finance, transaction processing and foreign exchange. In addition, our Plan Sueldo payroll processing services for private companies and the public sector give us a large and stable customer deposit base.

We emerged from the economic crisis of 2001 and 2002 as a stronger and larger bank. In January 2002, in the midst of the crisis, Banco Macro S.A., our predecessor, acquired a controlling interest in Banco Bansud S.A. The acquisition tripled the size of our bank, as measured by assets, and expanded our geographic presence from the northern provinces of Argentina to the southern provinces. In December 2004, during the recovery period of the Argentine economy, we completed the acquisition of Nuevo Banco Suquía S.A., the leading bank in the central provinces of Argentina, thereby becoming the private sector bank with the country’s most extensive branch network. The Nuevo Banco Suquía

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transaction increased our assets by 41% and our number of branches by 67%. Beginning at the end of 2002 and during the recovery years, we also experienced organic growth as our business in the provinces of Argentina suffered lower levels of volatility than our principal competitors in the Buenos Aires metropolitan area.

The Argentine economic recovery

We believe that the ongoing recovery of the Argentine economy from the severe crisis of 2001 and 2002, together with the stabilizing business environment, presents a growth opportunity for the banking industry. We believe that Argentine banks in a comparatively stronger financial condition should have a competitive advantage in benefiting from this recovery. Argentina’s gross domestic product, or GDP, grew 8.8% in 2003 and 9.0% in 2004 after declines of 4.4% in 2001 and 10.9% in 2002. For the twelve months ended September 30, 2005 GDP growth was 9.2%. Although there are numerous risks that may result in lower than expected economic performance, the Central Bank’s survey of independent forecasting firms as of January 2006 indicates a consensus GDP growth estimate of 9.0% for 2005 and 6.8% for 2006. In June 2005, the government partially restructured its public debt, further improving the Argentine business environment. In addition, following completion of its debt restructuring, Argentina’s risk profile has improved substantially. For example, based on its U.S. dollar-denominated BODEN 2012 bond spread over the comparable U.S. treasury note, Argentina’s country risk premium decreased from 662 basis points as of September 30, 2004 to 471 basis points as of December 31, 2005. Finally, on January 3, 2006, Argentina paid off all outstanding amounts owing to the International Monetary Fund, or IMF.

In this context, the financial system is regaining depositors’ and borrowers’ confidence, while benefiting from improved conditions and favorable growth opportunities and increasing demand for financial services and products. For example, the ratio of 12-month average total deposits as a percentage of annual average GDP was 30.3% for 2000. This ratio reached its lowest level of 22.8% in 2003, before recovering to 24.1% in 2005. The annual average nominal interest rates on 30-day time deposits of less than Ps.100,000 was 3.4% for 2005, compared to 8.7% in 2001. In 2005, average loans by Argentine banks to the private sector, as a percentage of GDP, were only 9.1%, compared to 24.3% in 1999 and 28% for Brazil, 61% for Chile, 19% for Colombia and 14% for Mexico in 2004. We believe this low ratio demonstrates an opportunity for credit expansion if credit demand resumes.

Our competitive strengths

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

† Strong financial position and consistent profitability. We believe we have emerged from the economic crisis as one of the strongest banks in Argentina, as measured by profitability and balance sheet strength.

†	As of December 31, 2005, we have achieved profitability for the last 16 consecutive quarters, the only bank in Argentina to do so, with a return on average equity of 21.1%, 16.4% and 19.7% for 2003, 2004 and 2005, compared to -23.6%, -3.0% and 7.5%, respectively, for the Argentine banking system as a whole.
†	Our shareholders’ equity at December 31, 2004 and June 30, 2005, as calculated under Central Bank Rules, was Ps.1,257.3 million and Ps.1,348.7 million, respectively, and our shareholders’ equity under U.S. GAAP was Ps.857.7 million and Ps.947.1 million, respectively. Our shareholders’ equity at December 31, 2005 under Central Bank Rules was Ps.1,490 million.

† Strong presence in fast-growing target customer market. We have achieved a leading position with low- and middle-income individuals and among small- and medium-sized businesses, generally located outside of the Buenos Aires metropolitan area, which have been relatively underserved by the banking system. As of December 31, 2005, loans for less than Ps.20,000 accounted for 31% of total private sector loans, almost double the corresponding percentage for the financial system as a

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whole (18%). Based on our experience, this target market offers significant growth opportunities and a stable base of depositors.

†	High exposure to export-led growth. Given the geographical location of the customers we target, we have acquired banks with a large number of branches outside of the Buenos Aires metropolitan area with the aim of completing our national coverage. Therefore, we are currently the leading bank in the Argentine provinces of Salta, Jujuy and Misiones and one of the leading banks in Córdoba, Santa Fe, Mendoza, Entre Ríos, Río Negro, Chubut and Neuquén, based on the number of branches. Most of these provinces engage in economic activities primarily concentrated in areas such as agriculture, mining, cargo transportation, edible oils, ranching and tourism, which have been benefiting from the export-driven growth in the Argentine economy as a result of the devaluation of the peso.
†	Largest private-sector branch network in Argentina. With 254 branches, we have the most extensive branch network among private-sector banks in Argentina. We consider our branch network to be our key distribution channel for marketing our products and services to our entire customer base with a personalized approach. In line with our strategy, approximately 85% of these branches are located outside of the Buenos Aires metropolitan area, whereas 65% of the total branches for the Argentine financial system as a whole are located outside this area, which we believe better positions us to focus on our target market. We expect to add 25 branches and the headquarters upon successful completion of our pending acquisition of Banco del Tucumán S.A. in the northern province of Tucumán.
†	Loyal customer base. We have a loyal customer base, as evidenced in part by the quick recovery of our deposit base after the crisis. While our total deposits increased 51% during the twelve months up to April 2003, the end of the freeze on deposits, or corralón, deposits in the Argentine banking system as a whole grew by only 11% during that period. We believe that our customers are loyal to us due to our presence in traditionally underserved markets and to our Plan Sueldo payroll services. We have benefited from Argentine regulations that require all employees to maintain Plan Sueldo accounts for the direct deposit of their wages. In addition, we emphasize face-to-face relationships with our customers and offer them personalized advice.
†	Exclusive financial agent for three Argentine provinces. We perform financial agency services for the governments of the provinces of Salta, Jujuy and Misiones in northern Argentina. As a result, each provincial government’s bank accounts are held in our bank and we provide all their employees with Plan Sueldo accounts, giving us access to substantial low cost funding and a large number of loyal customers.
†	Strong and experienced management team and committed shareholders. We are led by a committed group of shareholders who have transformed our bank from a small wholesale bank to one of the strongest and largest banks in Argentina. Jorge Horacio Brito, Ezequiel Carballo and Fernando Sansuste, our controlling shareholders, have active senior executive roles in our management and each possesses more than 20 years of experience in the banking industry.

Our strategy

We believe that the ongoing recovery of the Argentine economy, increasing penetration of banking services and a return of bank lending to the private sector, offer a significant opportunity for us to further expand our business. In particular, we believe that the increase in fixed asset investment in 2005 is setting the stage for the recovery of the long-term loan market, following the growth of the short-term credit market. As the economy has grown, we are offering new products, such as floating rate loans and leasing, designed to meet the needs of a growing economy emerging from crisis and moving towards stability. Our strengths position us to better participate in this growth, which we believe will be stronger in our target market of low- and middle-income individuals and small- and

3

medium-sized businesses and in the provinces outside the Buenos Aires Metropolitan area, where we have a leading presence.

Our goal is to promote the overall growth of the bank by increasing our customer base, expanding our loan portfolio and generating more fee income from transactional services. We achieve this goal by managing the bank on a holistic basis, focusing our growth strategy on the marketing and promotion of our standard banking products and services. We have pursued our growth strategy by acquiring banks throughout Argentina, which has enabled us to significantly expand our branch network and customer base. We make acquisition decisions in the context of our long-term strategy of focusing on low- and middle-income individuals and small- and medium-sized businesses and to complete our national coverage of Argentina, especially in provinces outside of the Buenos Aires metropolitan area. We have taken advantage of the opportunities presented by the Argentine financial system after the crisis, in particular its consolidation, to move into new locations by acquiring banks or absorbing branches from banks liquidated by the Central Bank. Since the crisis, our growth has been fueled by these acquisitions as well as organic growth, without the need to open or move branches.

We intend to continue enhancing our position as a leading Argentine bank by taking advantage of the ongoing recovery of Argentina and its financial system, which we believe will increase value to our shareholders and our competitiveness. The key elements of our strategy include:

†

Focus on underserved markets with strong growth potential. We intend to continue focusing on both low- and middle-income individuals and small- and medium-sized businesses, most of which have traditionally been underserved by the Argentine banking system and are generally located outside of the Buenos Aires metropolitan area, where competition is relatively weaker and where we have achieved a leading presence. We believe that these markets offer attractive opportunities given the low penetration of banking services and limited competition. We believe the provinces outside of the Buenos Aires metropolitan area that we serve are likely to grow faster than the Argentine economy as a whole because their export-driven economies have benefited from the devaluation of the peso and higher prices for agricultural products and commodities.

†

Further expand our customer base. We intend to continue growing our customer base, which is essential to increasing interest and fee-based revenues. To attract new customers we intend to:

†	Utilize our extensive branch network. We intend to utilize our extensive branch network, which we consider our key distribution channel, to market our products and services to our entire customer base. We utilize a personalized approach to attract new customers by providing convenient and personalized banking services close to their homes and facilities.
†	Offer medium- and long-term credit. We intend to use our strong liquidity and our capital base to offer a more readily available range of medium- and long-term credit products than our competitors.
†	Expand Plan Sueldo payroll services. We will continue to actively market our Plan Sueldo payroll services, emphasizing the benefits of our extensive network for companies with nationwide or regional needs.
†	Expand our financial agency services to new provinces. We intend to take advantage of our experience as financial agent to three provincial governments in Argentina to expand these services into new provinces. For example, we signed an agreement to acquire Banco del Tucumán S.A., which is currently the fiscal agent for the province of Tucumán, with 140,000 clients.
†	Offer personalized service. We offer our clients a menu of products and personalized, face-to-face advice to help them select the banking services that best respond to their needs.

† Extend existing corporate relationships to their distributors and suppliers. We have established relationships with major corporations in Argentina and will focus our marketing efforts on

4

providing services to their distributors, suppliers, customers and employees, including providing working capital financing and Plan Sueldo payroll services.

†	Increase cross-selling. We plan to increase cross-selling of products and services to our existing clients. Since almost all of our clients have a checking and savings account, we have a significant opportunity to expand our relationships with them through other products such as credit cards, loans and insurance. For example, strong cross-selling opportunities lie with our Plan Sueldo clients, of whom only 25% currently have personal loans from us.
†	Focus on efficiency and cost control. We intend to increase our efficiency by taking advantage of our economies of scale, and reducing costs in connection with the integration of Nuevo Banco Suquía. We are upgrading our information systems to reduce further our operating costs and to support larger transaction volumes nationally.
†	Strategically explore acquisition opportunities. While we focus our managerial resources on growing our existing businesses, we will continue to consider attractive acquisition opportunities that offer additional value and are consistent with or complementary to our business strategy. For example, we recently acquired assets and liabilities of a small bank, and are in the process of acquiring a second bank, both in Tucumán, and we intend to evaluate participating in the auctions for Banco de la Provincia de Córdoba and Nuevo Banco Bisel.
†	Access the international capital markets. We believe that access to the international capital markets will give us a competitive advantage in funding the expansion of credit demand in Argentina that we believe will develop in the near future.

Our challenges

There are several risks and uncertainties that may impact Argentina’s economy and consequently our ability to implement successfully our strategy, including:

†	The sustainability of Argentina’s current growth and stabilization is uncertain. Although the economy has recovered significantly over the past three years, investment in the economy remains low. As a result there is uncertainty as to whether the current growth and stability is sustainable in the long-term.
†	The risk that inflation may rise again. In the past, high inflation has undermined the Argentine economy. A return to high inflation would adversely affect the expansion of lending activities, as well as the economy in general.
†	The slow return of the long-term credit market. Although the short-term credit market has grown substantially since the 2001 and 2002 crisis, long-term lending has lagged. The success of our strategy to increase lending will suffer if demand for long-term credit does not expand, including for products that we are developing to deal with a growing economy emerging from crisis.
†	Exposure to economic recessions. Our target market is sensitive to economic recessions. Uncertainty in the ability of our target market to sustain its current growth makes it difficult to predict whether our business strategy can be implemented successfully.

For a further discussion of the risks facing our business, see “Risk factors” beginning on page 21.

Our Class B shares trade on the Buenos Aires Stock Exchange. As of March 16, 2006, we had a total equity market value of Ps. 3,708.5 million (US$1,207.4 million), calculated on the basis of the closing price of our Class B shares. We are one of three Argentine banks included in the MERVAL Index, which is an index of the shares of the largest companies trading on the Buenos Aires Stock Exchange.

Our principal executive offices are located at Sarmiento 447, Buenos Aires, Argentina, and our telephone number is (+ 54-11-5222-6500). Our website address is www.macrobansud.com.ar. Information contained on our website is not incorporated by reference in, and is not a part of, this prospectus.

5

The offering

Issuer	Banco Macro Bansud S.A.
Selling shareholders	Together, Messrs. Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Fernando Andrés Sansuste and Juan Pablo Brito Devoto.
Shares offered in the global offering	136,600,000 Class B shares of common stock. Of the total Class B shares offered in the global offering, Banco Macro Bansud is selling 75,000,000 Class B shares and the selling shareholders are selling 61,600,000 Class B shares.
Global offering	The global offering consists of the international offering and the Argentine offering, which includes the Argentine underwritten offering and the preferential subscription and standby purchase.
International offering	9,418,281 ADSs, representing 94,182,810 Class B shares, are being offered through the international underwriters in the United States and in other countries outside Argentina.
Argentine offering:
Argentine underwritten                offering	Concurrently with the international offering, 12,500,000 Class B shares are being offered in an underwritten public offering in Argentina.
Preferential subscription                and standby purchase	All of our existing shareholders have a preferential right (including an accretion right) to subscribe for our capital increase. The selling shareholders will assign their preferential rights to the underwriters to exercise for 45,082,810 Class B shares to be sold in the international offering (in the form of ADSs) and the Argentine underwritten offering. The remaining 29,917,190 Class B shares are available for subscription by our minority shareholders. Subject to certain conditions, the Class B shares that are not subscribed by minority shareholders will be purchased by the selling shareholders.
Over-allotment option	The selling shareholders have granted the international underwriters the right for a period of 30 days to purchase up to an additional 1,412,742 ADSs, representing 14,127,420 Class B shares, at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any.
The ADSs	Each ADS will represent ten Class B shares. The ADSs will be evidenced by American Depositary Receipts, or ADRs. The ADSs will be issued under a deposit agreement among us, The Bank of New York, as depositary, and the registered holders and beneficial owners from time to time of ADSs issued thereunder.

6

Listing	We have applied to list the ADSs on the New York Stock Exchange, or NYSE, under the symbol “BMA.” Our Class B shares are currently listed on the Buenos Aires Stock Exchange under the symbol “BSUD.” We have applied to list the newly issued Class B shares on the Buenos Aires Stock Exchange.
Share capital before and after global offering	Our share capital is divided into Class A shares of common stock and Class B shares of common stock. Each share of our share capital represents the same economic interests, except that holders of our Class A shares are entitled to five votes per share and holders of our Class B shares are entitled to one vote per share.
	Immediately after the global offering, we will have 11,235,670 Class A shares and 672,707,767 Class B shares outstanding.
Use of proceeds	The net proceeds to us from the global offering are expected to be approximately US$138.5 million assuming full exercise of the preferential subscription. We intend to use the net proceeds for general corporate purposes. Specifically, we want to be in a position to fund the expansion of credit demand in Argentina that we believe has begun to develop, and to take advantage of potential acquisitions.
	Excluding proceeds from any Class B shares sold by the selling shareholders pursuant to the over-allotment option, the net proceeds to the selling shareholders are expected to be between approximately US$114.4 million and US$58.9 million depending on whether the standby purchase is exercised.
Voting rights	All holders of Class B shares are entitled to one vote per share. Subject to Argentine corporate law, our bylaws and the terms of the deposit agreement, holders of ADSs will have voting rights with respect to the underlying shares to the same extent as direct owners of Class B shares and will be entitled to instruct the depositary to vote or cause to be voted the number of shares represented by such ADSs. Non- Argentine companies that own Class B shares directly are required to register in Argentina in order to exercise their voting rights. See “Description of capital stock” and “Description of American depositary shares.”
Dividends	Prior authorization of the Central Bank is required for the distribution of dividends. Owners of the ADSs will be entitled to receive dividends, if any, declared and paid on the Class B shares represented by such ADSs to the same extent as holders of the Class B shares. Cash dividends will be paid in pesos and will be converted by the depositary into U.S. dollars and paid to the holders of ADSs, net of any fees, currency conversion expenses, taxes or governmental charges. See “Dividends and dividend policy.” The Central Bank, during an early phase of the crisis in Argentina, imposed exchange controls and transfer restrictions limiting the ability to make dividend payments abroad. However, these restrictions have

7

	been lifted. See “Risk factors— Holders of our Class B shares and the ADSs may not receive any dividends.”
Taxation	For a discussion of the material U.S. and Argentine tax considerations relating to an investment in our Class B shares or the ADSs, see “Taxation— Material United States Federal Income Tax Considerations” and “Taxation— Material Argentine Tax Considerations”.
Lock-up	We, our directors, including the selling shareholders, and certain members of senior management, have agreed with the international underwriters, subject to certain exceptions, not to offer, sell, contract to sell or otherwise dispose of or hedge our shares of capital stock or ADSs or securities convertible into or exercisable or exchangeable for shares of capital stock or ADSs during the 180-day period following the date of this prospectus without the prior written consent of UBS Securities LLC and Raymond James & Associates, Inc. on behalf of the international underwriters.
Risk factors	See “Risk factors” beginning on page 21 and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our Class B shares or the ADSs.
Timing of global offering	The following is a tentative timetable of key events in the global offering:

Commencement of marketing of the international offering and the Argentine underwritten offering	March 7, 2006
Commencement of the preferential subscription period	March 22, 2006
Announcement of the offer price and allocations of ADSs and Class B shares	March 23, 2006
Settlement and delivery of ADSs and Class B shares pursuant to the international offering and the Argentine underwritten offering and pursuant to any preferential rights exercised prior to such date	March 29, 2006
Expiration of the preferential subscription period	March 31, 2006
Settlement and delivery of Class B shares pursuant to the remaining preferential rights and any standby purchase	March 31 to April 7, 2006

8

Summary consolidated financial data

The following tables present summary historical consolidated financial data for us and for Nuevo Banco Suquía for each of the periods indicated. You should read this information in conjunction with our consolidated financial statements and related notes, the consolidated financial statements of Nuevo Banco Suquía and related notes, and the information under “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus.

We have derived our summary consolidated financial data for the years ended December 31, 2002, 2003 and 2004 from our audited consolidated financial statements included in this prospectus. We have derived our summary consolidated financial data for the year ended December 31, 2005 from our audited consolidated financial statements prepared in accordance with Central Bank Rules included in this prospectus. We have derived our summary financial data for the years ended December 31, 2000 and 2001 from our audited consolidated financial statements not included in this prospectus. We have derived the summary consolidated financial data of Nuevo Banco Suquía for the year ended December 31, 2004 from its audited financial statements included in this prospectus. We have derived our unaudited summary financial data for the six months ended June 30, 2004 and 2005 from our condensed interim consolidated financial statements included in this prospectus. The condensed interim consolidated financial statements include, in our opinion, all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of our financial position and results of operations for these periods.

Due to the acquisitions we have made, our results of operations are not necessarily comparable between the periods presented; in particular, we acquired Banco Bansud in January 2002 and Nuevo Banco Suquía on December 22, 2004. The results of operations of Nuevo Banco Suquía are consolidated with Banco Macro Bansud from December 22, 2004.

Due to the economic crisis, Argentina experienced very high rates of inflation in 2002. Central Bank Rules reinstated inflation accounting at the beginning of 2002 until February 28, 2003. Therefore, all the financial statement data in this prospectus for periods prior to February 28, 2003 have been restated in constant pesos by applying the adjustment rate derived from the domestic wholesale price index published by Instituto Nacional de Estadística y Censos, Argentina’s national statistics and census agency, or INDEC, as of such date, which we refer to in this prospectus as constant pesos as of February 28, 2003.

Solely for the convenience of the reader, peso amounts as of and for the years ended December 31, 2004 and 2005 have been translated into U.S. dollars. The rate used to translate such amounts was Ps.3.0315 to US$1.00, which was the reference exchange rate for U.S. dollars for December 30, 2005, as reported by the Central Bank.

9

BANCO MACRO BANSUD

																			Six Months
	Year Ended December 31,																		Ended June 30,						Year Ended December 31,
	2000(1)			2001(1)			2002(1)			2003(1)			2004(2)			2004(3)			2004			2005(2)			2005			2005(3)
	(in thousands of pesos or U.S. dollars, as indicated, except for shares,
	earnings per share and dividends per share)
Consolidated Income Statement
Central Bank Rules:
Financial income		Ps.219,494			Ps.218,897			Ps.1,623,349			Ps.419,900			Ps.427,900			US$141,151			Ps.235,850			Ps.338,221			Ps.749,850			US$247,353
Financial expense		(87,596	)		(94,904	)		(515,184	)		(241,152	)		(133,204	)		(43,940	)		(71,769	)		(155,977	)		(303,176	)		(100,009	)
Gross intermediation margin		131,898			123,993			1,108,165			178,748			294,696			97,211			164,081			182,244			446,674			147,344
Provision for loan losses		(25,907	)		(21,968	)		(117,767	)		(35,009	)		(36,467	)		(12,029	)		(13,236	)		(34,479	)		(70,309	)		(23,193	)
Service charge income		120,208			118,512			137,756			125,722			154,425			50,940			72,033			140,536			303,141			99,997
Service charge expense		(16,812	)		(18,834	)		(30,649	)		(20,005	)		(24,963	)		(8,235	)		(11,199	)		(27,874	)		(59,510	)		(19,631	)
Administrative expense		(179,383	)		(183,277	)		(260,175	)		(221,796	)		(254,980	)		(84,110	)		(123,715	)		(205,062	)		(443,026	)		(146,141	)
Other income		26,078			13,174			166,542			240,622			109,589			36,150			48,587			113,478			218,501			72,077
Other expense		(11,660	)		(13,271	)		(136,921	)		(63,257	)		(48,651	)		(16,048	)		(27,144	)		(46,319	)		(98,683	)		(32,553	)
Income tax		(209	)		(770	)		(3,601	)		(833	)		(672	)		(222	)		(367	)		(630	)		(34,042	)		(11,229	)
Monetary loss		—			—			(291,238	)		(4,343	)		—			—			—			—			—			—
Minority interest		—			—			2			—			—			—			—			(8	)		(27	)		(9	)
Net income		44,213			17,559			572,114			199,849			192,977			63,657			109,040			121,886			262,719			86,663
Net income per share		2.12			0.49			1.78			0.33			0.32			0.10			0.18			0.20			0.43			0.14
Dividends per share		0.31			0.31			—			—			0.10			0.03			—			—			0.05			0.02
Number of shares outstanding (in thousands)		35,500			35,500			608,943			608,943			608,943			608,943			608,943			608,943			608,943			608,943
U.S. GAAP:(4)
Net income											313,371			94,229			31,083			65,695			99,553
Net income per share											0.59			0.15			0.05			0.11			0.16
Weighted average number of shares outstanding (in thousands)											526,750			608,943			608,943			608,943			608,943

(1)	In constant pesos as of February 28, 2003.
(2)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(3)	Translated at the rate of Ps.3.0315 per US$1.00, the reference exchange rate reported by the Central Bank for December 30, 2005.
(4)	See note 35 to our audited consolidated financial statements for the year ended December 31, 2004 and note 25 to our condensed interim consolidated financial statements as of June 30, 2005 for a summary of significant differences between Central Bank Rules and U.S. GAAP.

10

BANCO MACRO BANSUD

		As of December 31,																		As of June 30,						As of December 31,
		2000(1)			2001(1)			2002(1)			2003(1)			2004(2)			2004(3)			2004			2005(2)			2005			2005(3)
		(in thousands of pesos or U.S. dollars, as indicated)
Consolidated Balance Sheet
Central Bank Rules:
Assets
Cash and due from banks			Ps.122,426			Ps.113,635			Ps.325,953			Ps.674,300			Ps.1,372,258			US$452,666			Ps.714,443			Ps.1,143,588			Ps.1,189,129			US$392,258
Government and private securities			487,212			285,664			868,033			2,155,766			2,106,737			694,949			1,696,060			2,810,030			2,991,764			986,892
Loans
	to the non-financial government sector		90,133			104,485			462,440			365,549			809,577			267,055			367,262			701,957			645,342			212,879
	to the financial sector		121,942			23,093			1,593			17,835			81,812			26,987			106,383			158,644			80,511			26,558
	to the non-financial private sector and residents abroad		656,289			472,135			514,695			723,619			2,208,996			728,681			1,365,904			2,451,218			2,948,799			972,719
Allowances for loan losses			(55,689	)		(40,311	)		(116,125	)		(56,279	)		(225,340	)		(74,333	)		(78,363	)		(173,676	)		(247,532	)		(81,653	)
Other assets			749,769			416,490			1,761,485			1,144,237			2,443,715			806,108			1,386,183			2,337,465			1,879,809			620,092
Total assets			2,172,082			1,375,191			3,818,074			5,025,027			8,797,755			2,902,113			5,557,872			9,429,226			9,487,822			3,129,745
Average assets			1,948,780			1,663,367			3,804,446			4,356,792			5,705,542			1,882,085			5,473,772			9,413,937			9,357,401			3,086,723
Liabilities and shareholders’ equity
Deposits:
	from the non-financial government sector		247,568			224,872			218,264			382,195			809,764			267,117			743,059			956,319			822,687			271,380
	from the financial sector		4,388			2,673			7,552			11,909			4,445			1,466			6,353			5,815			5,208			1,718
	from the non-financial private sector		1,048,051			708,480			1,534,926			2,633,140			4,504,788			1,485,993			2,646,758			5,217,987			5,737,431			1,892,605
Other liabilities from financial intermediation and other liabilities			561,180			124,840			663,341			559,450			1,974,784			651,421			681,452			1,672,154			1,241,791			409,629
Subordinated corporate bond			60,162			56,955			71,101			24,200			16,416			5,415			24,043			17,589			12,047			3,974
Items pending allocation			4,392			4,025			5,939			3,783			4,554			1,502			1,005			10,661			854			282
Provisions			525			971			391,578			285,128			225,699			74,451			208,063			199,900			178,150			58,766
Minority interest in subsidiaries			4			0			3			3			3			1			3			60			80			26
Total liabilities			1,926,270			1,122,816			2,892,704			3,899,808			7,540,453			2,487,367			4,310,736			8,080,485			7,998,248			2,638,380
Shareholders’ equity			245,812			252,375			925,370			1,125,219			1,257,302			414,746			1,247,136			1,348,741			1,489,574			491,365
Average shareholders’ equity			228,041			252,634			730,955			949,023			1,179,611			389,118			1,225,156			1,278,668			1,333,163			439,770
U.S. GAAP:(4)
Shareholders’ equity												735,386			857,666			282,918			802,382			947,194

(1)	In constant pesos as of February 28, 2003.
(2)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(3)	Translated at the rate of Ps.3.0315 per US$1.00, the reference exchange rate reported by the Central Bank for December 30, 2005.
(4)	See note 35 to our audited consolidated financial statements for the year ended December 31, 2004 and note 25 to our condensed interim consolidated financial statements as of June 30, 2005 for a summary of significant differences between Central Bank Rules and U.S. GAAP.

11

BANCO MACRO BANSUD

	As of and For the Year Ended December 31,
	2000(1)		2001(1)			2002(1)			2003(1)			2004(2)			2005(2)
Selected consolidated ratios:
Central Bank Rules
Profitability and performance
Net interest margin(3)				9.92	%		8.87	%		6.84	%		6.37	%		5.23	%
Fee income ratio(4)		47.68		48.87			11.06			41.29			34.38			40.43
Efficiency ratio(5)		71.15		75.58			20.88			72.85			56.77			59.08
Fee income as a percentage of administrative expense		67.01		64.66			52.95			56.68			60.56			68.43
Return on average equity		19.39		6.95			78.27			21.06			16.36			19.71
Return on average assets		2.27		1.06			15.04			4.59			3.39			2.81
Liquidity
Loans as a percentage of total deposits		66.80		64.07			55.59			36.57			58.29			55.97
Liquid assets as a percentage of total deposits(6)		—		32.11			47.05			65.12			53.69			58.65
Capital
Total equity as a percentage of total assets		11.32		18.35			24.24			22.39			14.29			15.70
Regulatory capital as a percentage risk-weighted assets		21.26		20.28			27.36			43.79			35.71			31.03
Asset quality
Non-performing loans as a percentage of total loans(7)		14.31		18.68			16.94			8.91			6.50			5.34
Allowances as a percentage of total loans		6.41		6.72			11.86			5.08			7.27			6.74
Allowances as a percentage of non-performing loans(7)		44.83		35.99			70.04			57.07			111.75			126.20
Amparos as a percentage of equity		—		—			—			4.0			4.0			2.9
Operations
Number of branches							163			150			256			254	(8)
Number of employees		1,417		1,401			2,881			2,814			4,772			5,054

(1)	Calculated on the basis of amounts expressed in constant pesos as of February 28, 2003.
(2)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(3)	Net interest income divided by average interest earning assets.
(4)	Service charge income divided by the sum of gross intermediation margin and service charge income.
(5)	Administrative expenses divided by the sum of gross intermediation margin and service charge income.
(6)	Liquid assets include cash, cash collateral, LEBACs and NOBACs, and interbanking loans. Since 2004, we include overnight loans to highly rated companies.
(7)	Non-performing loans includes all loans to borrowers classified as “3-nonperforming/deficit compliance”, “4-high risk of uncollectibility/unlikely to be collected”, “5-uncollectible” and “6- uncollectible, classified as such under regulatory requirements” under the Central Bank loan classification system.
(8)	Includes the seven branches and the headquarters we acquired in November 2005 from the restructuring of Banco Empresario de Tucumán. The number does not include the 25 branches and the headquarters included in the pending acquisition of Banco del Tucumán S.A.

12

NUEVO BANCO SUQUÍA

	Year Ended
	December 31, 2004
	(in thousands of pesos
	or U.S. dollars,
	as indicated)(1)
Selected Income Statement Data
Central Bank Rules:
Gross intermediation margin		Ps.79,163		US$	26,113
Provision for loan losses		124,682			41,129
Service charge income		93,732			30,919
Administrative expense		113,212			37,345
Net loss		(62,821	)		(20,723	)
U.S. GAAP:(2)
Net income		41,106			13,560

Selected Balance Sheet Data
Central Bank Rules:
Assets
Loans	Ps.981,552	US$	323,784
Total assets	2,679,740		883,965
Liabilities and shareholders’ equity
Deposits	1,543,710		509,223
Total liabilities	2,372,442		782,597
Shareholders’ equity	307,298		101,368
U.S. GAAP:(2)
Shareholders’ equity	306,718		101,177

(1)	U.S. dollar amounts translated at a rate of 3.0315 per US$1.00, the reference exchange rate reported by the Central Bank for December 30, 2005.
(2)	See note 20 to Nuevo Banco Suquía’s audited financial statements for a summary of significant differences between Central Bank Rules and U.S. GAAP.

13

The crisis and recovery in Argentina

OVERVIEW

From December 2001 through most of 2002, Argentina experienced an unprecedented crisis that virtually paralyzed the country’s economy and led to radical changes in government policies. Over the past three years, the Argentine economy has recovered significantly from the crisis and the business environment has largely stabilized. Argentina’s banking sector in particular was severely affected by the crisis and regulatory changes, as described below. However, the current recovery has led to improvements in the performance of the banking sector, and we believe sets the stage for growth opportunities in the industry. See “The Argentine banking industry.” The table below sets forth information about certain economic indicators in Argentina for the years ended:

	2000			2001			2002			2003			2004			2005
GDP growth		(0.8	)%		(4.4	)%		(10.9	)%		8.8	%		9.0	%		9.0	%(1)
Primary balance(2) (as % of GDP)		0.4			(1.0	)		0.7			3.2			5.7			4.5
Total public debt (as % of GDP)		45.7			53.7			164.6			139.5			127.0			72.5	(3)
Net exports (US$ millions)		1,166.5			6,277.1			16,719.8			15,731.5			12,103.0			11,321.2
Total deposits (as % of GDP)(4)		30.3			29.4			24.2			22.8			24.2			24.1
Private sector loans (as % of GDP)(4)		23.3			21.6			14.8			9.1			8.2			9.1
Unemployment rate		15.4			17.4			19.7			17.3			13.6			10.1	%
Poverty index		29.3			34.1			52.0			50.9			42.3			38.5	(5)
Consumer price inflation		(0.7	)		(1.5	)		41.0			3.7			6.1			12.3	%
Average nominal exchange rate (in pesos versus US$)		1.00			1.00			3.20			2.95			2.95			2.92

Source:    INDEC and Central Bank

(1)	Central Bank survey as of January 2006.
(2)	Fiscal balances of federal and provincial governments (before debt service).
(3)	Total public debt at June 30, 2005 divided by GDP for the 12 months ended June 30, 2005.
(4)	Twelve-month average.
(5)	At June 30, 2005.

Notwithstanding the recent improvements to the Argentine economy and the banking sector, and their current prospects for growth, conditions in Argentina and its banking sector remain subject to significant uncertainties and risks. For more information, see “Risk factors.”

HOW THE ECONOMIC CRISIS DEVELOPED

From the last quarter of 1998 through the first six months of 2002, Argentina suffered a severe economic recession. Structural barriers, including Argentina’s trade and fiscal deficits and the rigidity of its fixed exchange rate system (known as the convertibility regime), limited the Argentine government’s ability to stimulate the economy. Furthermore, the country’s excessive reliance on foreign

14

The crisis and recovery in Argentina

capital, combined with its mounting external debt, resulted in a deep contraction of the economy and banking and fiscal crises when capital started to leave the country.

In 2001 in particular, economic conditions deteriorated significantly, as capital flight totaled US$14 billion and approximately 20% of the government’s budget was directed to servicing the public debt. The financial needs of the government crowded out private borrowers and resulted in increased public sector exposure on banks’ balance sheets. Depositors clearly perceived that their savings were placed in Argentine government debt and therefore, to the extent country risk went up, they started withdrawing their deposits. In the second half of 2001, the growing perception that a devaluation of the peso was imminent triggered a massive run on bank deposits and a significant acceleration of capital flight from the Argentine economy. The impact on the financial system was severe; during the first phase of the crisis (from December 2000 to November 2001) total deposits fell by 21.0%.

In a last bid to safeguard the convertibility regime and avert the collapse of the banking sector, during the second phase of the crisis, during December 2001, the Argentine government imposed strict per-person limits on bank withdrawals (known as the corralito), limiting withdrawals from demand accounts to Ps.250 per week and from payroll accounts to Ps.1,000 per month. This action fueled panic, and as a consequence, depositors seeking a way out of the corralito transferred their funds from matured time deposits to demand deposits. The total amount of private sector time deposits fell by 36% (Ps.16.4 billion), while private sector demand deposits increased by 75.6% (Ps.12.3 billion) during December 2001.

The economic crisis and the restrictions on bank withdrawals caused massive social unrest, which led to a political crisis that resulted in the resignation of President Fernando de la Rúa in December 2001. Several interim presidents followed until the appointment of Eduardo Duhalde in January 2002. During 2001, the Central Bank’s international reserves fell by 14.6% and it provided US$4.0 billion of liquidity assistance to the financial sector.

In response to the political and economic crisis, the Argentine government undertook a number of far-reaching initiatives that radically changed the monetary and foreign exchange regime and the regulatory environment for conducting business in Argentina, creating even greater financial uncertainty and virtually paralyzing all commercial and financial activities in Argentina in 2002.

THE ARGENTINE GOVERNMENT’S RESPONSE TO THE CRISIS AND ITS IMPACT ON THE FINANCIAL SYSTEM

Sovereign default

As a consequence of the government’s declining revenues, substantial debt service obligations, growing deficit and diminishing access to the international capital markets, Argentina suspended payment on a significant portion of its public debt in December 2001. The government’s default both closed Argentina’s access to foreign financings and lowered the market value of government bonds.

Peso devaluation and inflation

In January 2002, the Argentine government passed the Public Emergency and Reform Law, which abolished the fixed parity between the peso and the U.S. dollar, bringing to an end the convertibility regime that had been in effect for ten years. The peso devalued dramatically, reaching its lowest level on June 26, 2002, when it had devalued by 74% from Ps.1.00 to Ps.3.87 per dollar. The devaluation of the peso had a substantial and negative effect on the Argentine economy and on the financial condition of individuals and businesses. The devaluation resulted in many Argentine businesses defaulting on their foreign currency debt obligations, significantly reduced real wages and crippled businesses that depended on domestic demand, such as utilities and the financial services industry. The

15

The crisis and recovery in Argentina

devaluation of the peso created pressure on the domestic pricing system and triggered very high rates of inflation. During 2002, wholesale inflation reached a rate of approximately 118% and consumer prices rose 41%. As a result of the devaluation of the peso and the high level of inflation, combined with economic uncertainty, banks virtually suspended all origination of credit products in 2002.

Rescheduling of deposits and asymmetric pesification

From January 30, 2002 to April 30, 2002, as part of the Public Emergency and Reform Law, the government converted dollar-denominated deposits and dollar-denominated obligations that were governed by Argentine law into pesos, in a process known as pesification. The pesification converted U.S. dollar-denominated obligations and U.S. dollar-denominated deposits into pesos at different exchange rates (the so called “asymmetric pesification”). In addition, stronger restrictions were imposed on bank withdrawals (known as the corralón), which effectively froze and rescheduled all time deposits, including a significant portion that had matured during the time the corralito was in effect and had been converted into demand deposits. These rescheduled deposits were represented by certificates called CEDROs that were issued by each bank.

Asymmetric pesification consisted of two basic elements. First, all foreign currency-denominated, Argentine law governed obligations were converted into pesos at a rate of Ps.1.00 per US$1.00. The affected debts were also made subject to adjustment by a Coeficiente de Variación de Salarios, or CVS, a wage inflation coefficient, in the case of certain types of loans to individuals (i.e., mortgages, personal loans, etc., in amounts of less than Ps.100,000), and all other debts were subject to Coeficiente de Estabilización de Referencia, or CER, a consumer price inflation coefficient. The second element of pesification required that all foreign currency-denominated deposits be converted into peso-denominated deposits at an exchange rate of Ps.1.40 per US$1.00, subject to CER indexation. Asymmetric pesification had dramatic effects on the composition of banks’ balance sheets. Bank assets (i.e., loans) and liabilities (i.e., deposits) were converted at different exchange rates. In addition, in some instances, bank assets and liabilities were subject to different price indexes, the so-called “asymmetric indexation”.

Deterioration of loan portfolio

Both the government and the banks created mechanisms to facilitate the repayment of loans, such as pesification and the possibility to repay loans by returning CEDROs of corresponding face value to the bank issuing the loan, which generated a significant reduction in the volume of outstanding credit and deposits. Some borrowers who did not or could not avail themselves of these repayment mechanisms began to default on their loans, increasing the ratio of non-performing lending of the financial system to 18.1% by December 2002 and 20% for private banks.

Limitation on creditor rights

As a measure to protect debtors affected by the economic crisis, the Argentine government adopted measures suspending proceedings to enforce security interests on loans, including mortgage foreclosures, bankruptcy petitions and other means of collections, for extended periods of time. These measures restricted creditors, including banks, from collecting on secured non-performing loans. Most of these measures are no longer in effect.

Compensation to financial institutions

The asymmetric conversion of loans and deposits into pesos, the increase in banks’ non-performing loans and the decline in value of bank holdings of government debt, left much of the financial sector virtually insolvent. To help prevent widespread bank insolvencies, the Argentine government pledged to

16

The crisis and recovery in Argentina

provide offsetting compensation to banks. The general principles of the compensation scheme were to (1) maintain the peso value of each bank’s net worth, and (2) leave the banks hedged in terms of currency. To that end, the Argentine government issued two types of bonds to banks:

†

a bond denominated in pesos (BODEN 2007) to compensate for losses linked to asymmetric pesification; and

†

a bond denominated in dollars (BODEN 2012) that the Central Bank offered to affected banks at a discounted price of Ps.1.40 plus CER indexation, to US$1.00, to compensate for the consequences of creating a mismatch between a bank’s dollar and peso position as a result of pesification. Banks could purchase the BODEN 2012 with either BODEN 2007 or by borrowing the applicable amount from the Central Bank.

Amparos

In response to pesification and the forced rescheduling of their deposits and other measures, many depositors sued banks, primarily through the use of an action to enforce constitutional rights known as amparos. By December 31, 2005, there were approximately 322,500 amparos filed against financial institutions, totaling Ps.22.4 billion. In some of these cases, lower court judges issued injunctions and ordered banks to return deposits in U.S. dollars or in pesos, but at the prevailing market exchange rate, resulting in significant losses for banks. Many amparos remain pending and the Argentine Supreme Court has not yet made a final determination as to the constitutionality of the measures adopted by the Argentine government.

Liquidity assistance

The Argentine government modified the Central Bank’s charter so as to facilitate liquidity assistance to the financial sector. During 2002, the Central Bank provided Ps.18.5 billion of liquidity assistance to the financial system. Despite this assistance, the financial system experienced losses and consolidation after the crisis, with 17 entities being liquidated and closed, and the loss of nearly 17,000 jobs. The capital outflow continued depleting international reserves, which ended the year at Ps.22.5 billion.

Special accounting rules for the financial system

In order to give the financial system time to recover from the extreme negative effects of the Argentine government’s response to the crisis, the Central Bank issued rules that provided for the deferral of losses incurred. The Central Bank allowed banks to register most government bonds and loans held before the devaluation and those received as compensation at higher than fair values. The carrying values of these government bonds and loans are being gradually marked to market until June 2008. The Central Bank is also allowing banks to register the amount that banks have paid under amparos as an intangible asset, to be amortized over five years, as a form of loss deferment. By the end of 2008, substantially all of the amparo-related losses will have been fully amortized.

THE PATH TO STABILIZATION

The economy started its path to stabilization in April 2002 with a clear improvement of economic variables during the second half of the year, mainly as a result of expanding exports and decreasing imports. While the devaluation of the peso had significant adverse consequences, it did result in a positive balance for Argentina’s current account, which in turn fostered a reactivation of domestic production. The sharp decline in the peso’s value against foreign currencies, together with a decline in production costs in U.S. dollar terms, made Argentine products relatively inexpensive in the export markets. At the same time, the costs of imported goods increased significantly due to the devaluation

17

The crisis and recovery in Argentina

of the peso, forcing Argentine consumers to substitute their purchase of foreign goods with domestic products, substantially boosting domestic demand for domestic products.

Using a new short-term financial instrument known as a LEBAC (Letras del Banco Central) or Central Bank external bills, the Central Bank was able to absorb the excess liquidity generated through its temporary advances to the financial sector. As a result, volatility in the peso-U.S. dollar exchange rate was reduced, inflationary pressures declined and interest rates gradually stabilized, after having increased sharply following the end of the convertibility regime.

During the second half of 2002, Argentina’s GDP increased 4.4%, and the consumer price index inflation was 8.0% for the six-month period ended December 31, 2002, compared to 30.5% for the six-month period ended June 30, 2002. The improving economic conditions, particularly the reduction of capital outflows from the Argentine economy and the banking system, allowed the government to begin lifting restrictions on bank withdrawals in November 2002.

However, despite the improvement in economic conditions during the second half of 2002, Argentina’s overall GDP contracted 10.9% for the full year, receding to 1993 values, investment collapsed (with, for example, negative growth of 43% in the second quarter as compared to the second quarter of 2001), and inflation increased sharply. The main impact of the crisis was the tremendous social hardship. Unemployment rose from 12.9% to 19.7% between 1998 and 2002, real wages declined 24% in 2002, and the poverty index increased from 29% of the population in 2000 to 52% in 2002.

Economic recovery and improvements in the banking sector

In May 2003, Argentina’s political environment was reorganized when Dr. Néstor Kirchner took office as president. The economy continued to show indications of recovery, as GDP grew 8.8% in 2003. A combination of sound fiscal and monetary policies kept consumer price inflation under control at 3.5% in 2003. During 2003, Argentina moved towards normalizing its relationship with the IMF, withdrew all the national and provincial governments’ quasi-money securities from circulation (amounting to Ps.7.8 billion), and eliminated all deposit restrictions. The trade balance experienced a sustained surplus, aided by the rise in commodity prices and export volumes. Meanwhile, social indicators improved. The unemployment rate decreased to 17.3% in 2003 and real wages began to recover.

The financial system also began to gradually regain the public’s trust. Total deposits grew 26% in nominal terms during 2003. However, by mid-2003 the composition of deposits had changed, shifting from time deposits to mostly demand deposits. The recovery also improved the profitability of the financial system. Only 25 banks recorded profits in 2002, totaling Ps.1,144 million, while 75 banks lost a combined total of nearly Ps.20.4 billion. In 2003, the number of unprofitable banks declined to 53. This positive trend was partially a result of Central Bank regulations allowing banks to defer losses generated by amparos and the deferring of the marking to market of the value of government debt.

A rebound in private sector time deposits was interrupted towards the end of the first half of 2003, due to a series of interest rate reductions by the Central Bank. Annual rates on 180-day LEBACs plunged from 46% at the end of 2002 to 3.7% by the end of 2003. These reductions, combined with a market characterized by high liquidity and no rebound in the demand for credit, led banks to cut interest rates on time deposits. Annual rates on 30-day deposits dropped from 21% at the end of 2002 to 4% at the end of 2003. This abrupt decrease in interest rates on time deposits drove depositors to move their savings to demand accounts while awaiting more profitable investment opportunities.

Expectations regarding peso appreciation and low inflation discouraged investments in other currencies and, except for the stock exchange and real estate markets, which saw significant price increases, no worthwhile investment options emerged. As a result, savings moved back into time deposits, now at a

18

The crisis and recovery in Argentina

very low annual interest rate (generally in the 4-5% range), leading to the current environment, which is characterized by high liquidity and low interest rates.

Growth consolidation

During 2004 and 2005, the Argentine economy continued to grow. GDP grew 9.0% in 2004 and is expected to have grown 9.0% in 2005 according to the Central Bank’s survey of independent forecasting firms. Inflation remained relatively low in 2004 although it almost doubled to 6.1% from 2003, and it increased to 12.3% during 2005.

The increase in total deposits continued in 2004, growing Ps.22 billion, or 23%, as Argentina’s deposits to GDP ratio again approached its pre-crisis level. The growth in deposits during 2004 was due primarily to government sector deposits, which rose dramatically by Ps.15.6 billion, or 97%, in the year to represent 27% of total deposits, fueled by a record fiscal surplus, while private sector deposits rose 11%.

This trend changed during 2005, with the private sector driving total deposit growth with a 21% increase during the period, while public sector deposits increased by 2%. There was also a resurgence of time deposits, which grew by 22% during 2005. This increase was mostly attributable to institutional investors (investors with more than Ps.1 million in deposits), who made deposits of over Ps.14.6 billion, or a 22% increase, during 2005. More specifically, CER-adjusted deposits, used for the most part by institutional investors, reached Ps.6.6 billion at the end of 2005, much higher than the Ps.4.8 billion registered in the corresponding period in 2004. The Central Bank extended the minimum term of CER-adjusted deposits to 365 days in January 2005.

Meanwhile, a resurgence of loan volume began in the second half of 2004, reversing the downward trend for the first time since early 2000, which had bottomed out at approximately 7.7% of GDP in June 2004, and rose to 8.7% by December 2004 (a significant increase taking into account the accompanying high rate of GDP growth). This growth is mostly due to the active participation of domestic private banks in this market. Although the nominal stock of private sector loans decreased 13% in 2003, a positive trend began in the fourth quarter and strengthened during 2004. The volume of loans to the private sector has grown primarily through short-term products. The expansion in 2004 was driven by commercial credit (advances, discounted documents, leasing and other products) which, for the financial system as a whole, increased by Ps.5.6 billion, or 35%. Nevertheless, the expansion of the long-term loan market has lagged other economic indicators. Commercial and consumer loans have grown at a rate of 55% and 69%, respectively, for 2005.

Public sector exposure (without LEBAC) in the balances of banks, which came to represent over 50% of assets in the financial system at its highest point, declined to 32.7% by the end of 2005. This decrease is explained by the gradual marking to market of public sector securities, as well as the increase in the private sector loan portfolio. At the same time, the intangible asset in respect of amparos has decreased as the intangible asset began to be amortized over five years. We estimate that if the entire portfolio of public sector exposure of the financial system were marked to market, based on December 31, 2005 figures, approximately Ps.7 billion of assets would be written down, and assuming the intangible asset recorded in respect of amparos has no value, an approximately Ps.5 billion writedown, the adjusted net worth of the financial system would be approximately Ps.15 billion.

Restructuring of Argentina’s public debt

In June 2005, the government completed a restructuring of the federal government’s public debt, which had been in default since December 2001. Argentina reduced its outstanding principal amount of public debt from US$191.3 billion to US$126.6 billion and negotiated lower interest rates and

19

The crisis and recovery in Argentina

extended payment terms. Approximately US$19.5 billion of defaulted bonds held by creditors who did not participate in the exchange offer remain outstanding. Argentina’s risk profile has improved substantially. For example, based on its U.S. dollar-denominated BODEN 2012 bond spread over the comparable U.S. treasury note, Argentina’s country risk premium decreased from 662 basis points as of September 30, 2004 to 471 basis points as of December 31, 2005.

On January 3, 2006, Argentina repaid to the IMF all amounts owing under outstanding credit lines.

20

Risk factors

Investing in our Class B shares or the ADSs involves a high degree of risk. You should carefully consider the risks described below with all of the other information included in the prospectus before deciding to invest in our Class B shares or the ADSs. If any of the following risks actually occur, they may materially harm our business and our financial condition and results of operations. In this event, the market price of our Class B shares or the ADSs could decline and you could lose part or all of your investment.

RISKS RELATING TO ARGENTINA

Argentina’s current growth and stabilization may not be sustainable

During 2001 and 2002, Argentina went through a period of severe political, economic and social crisis. Although the economy has recovered significantly over the past three years, uncertainty remains as to whether the current growth and relative stability is sustainable. The Argentine economy remains fragile, including for the following reasons:

†	unemployment remains high;
†	the availability of long-term fixed rate credit is scarce;
†	investment as a percentage of GDP remains low;
†	the current fiscal surplus could reverse into a fiscal deficit;
†	inflation has risen recently and threatens to accelerate;
†	the regulatory environment continues to be uncertain;
†	the country’s public debt remains high and international financing is limited; and
†	the recovery has depended to some extent on:

†	high commodity prices, which are volatile and outside the control of the country; and
†	excess capacity, which has been reduced considerably.

Substantially all our operations, properties and customers are located in Argentina. As a result, our business is to a very large extent dependent upon the economic conditions prevailing in Argentina.

Inflation may rise again, causing adverse effects on the Argentine long-term credit markets as well as the Argentine economy generally

The devaluation of the peso in January 2002 created pressures on the domestic price system that generated high inflation in 2002, after several years of price stability, before substantially stabilizing in 2003. However, consumer prices almost doubled to 6.1% during 2004 and increased to 12.3% in 2005. Moreover, uncertainty surrounding future inflation could slow the rebound in the long-term credit market.

In the past, inflation has materially undermined the Argentine economy and the government’s ability to create conditions that would permit growth. A return to a high inflation environment would also undermine Argentina’s foreign competitiveness by diluting the effects of the peso devaluation, with the same negative effects on the level of economic activity and employment. In addition, a return to high inflation would undermine the very fragile confidence in Argentina’s banking system in general, which would negatively and materially affect our business volumes and potentially preclude us from fully resuming lending activities.

21

Risk factors

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

In the first half of 2005, Argentina restructured part of its sovereign debt that had been in default since the end of 2001. The Argentine government announced that as a result of the restructuring, it had approximately US$126.6 billion in total outstanding debt remaining. Of this amount, approximately US$19.5 billion are defaulted bonds owned by creditors who did not participate in the restructuring.

Some bondholders in the United States, Italy and Germany have filed legal actions against Argentina, and holdout creditors may initiate new suits in the future. Additionally, foreign shareholders of certain Argentine companies have filed claims in excess of US$17 billion before the International Center for the Settlement of Investment Disputes, or ICSID, alleging that certain government measures are inconsistent with the fair and equitable treatment standards set forth in various bilateral treaties to which Argentina is a party.

Argentina’s past default and its failure to restructure completely its remaining sovereign debt and fully negotiate with the holdout creditors may prevent Argentina from reentering the international capital markets. Litigation initiated by holdout creditors as well as ICSID claims may result in material judgments against the Argentine government and could result in attachments of or injunctions relating to assets of Argentina that the government intended for other uses. As a result, the government may not have the financial resources necessary to implement reforms and foster growth, which could have a material adverse effect on the country’s economy and, consequently, our business.

Significant devaluation of the peso against the U.S. dollar may adversely affect the Argentine economy as well as our financial performance

Despite the positive effects of the real depreciation of the peso in 2002 on the competitiveness of certain sectors of the Argentine economy, it has also had a far-reaching negative impact on the Argentine economy and on businesses and individuals’ financial condition. The devaluation of the peso has had a negative impact on the ability of Argentine businesses to honor their foreign currency-denominated debt, led to very high inflation initially, significantly reduced real wages, had a negative impact on businesses whose success is dependent on domestic market demand, such as utilities and the financial industry, and adversely affected the government’s ability to honor its foreign debt obligations.

If the peso devalues significantly, all of the negative effects on the Argentine economy related to such devaluation could recur, with adverse consequences to our business. Moreover, it would likely result in a decline in the value of our Class B shares and the ADSs as measured in U.S. dollars.

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

A substantial increase in the value of the peso against the U.S. dollar also presents risks for the Argentine economy. The appreciation of the peso against the U.S. dollar negatively impacts the financial condition of entities whose foreign currency-denominated assets exceed their foreign currency-denominated liabilities, such as us. In addition, in the short term, a significant real appreciation of the peso would adversely affect exports. This could have a negative effect on GDP growth and employment as well as reduce the Argentine public sector’s revenues by reducing tax collection in real terms, given its current heavy reliance on taxes on exports.

22

Risk factors

Government measures to preempt or in response to social unrest may adversely affect the Argentine economy

During its crisis in 2001 and 2002, Argentina experienced social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Despite Argentina’s ongoing economic recovery and relative stabilization, the social and political tensions and high levels of poverty and unemployment continue. Future government policies to preempt or in response to social unrest may include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment. Such policies could destabilize the country and adversely and materially affect the economy, and thereby our business.

Exchange controls and restrictions on transfers abroad and capital inflow restrictions have limited and can be expected to continue to limit the availability of international credit

In 2001 and 2002, Argentina imposed exchange controls and transfer restrictions substantially limiting the ability of companies to retain foreign currency or make payments abroad. These restrictions have been substantially eased, including those requiring the Central Bank’s prior authorization for the transfer of funds abroad in order to pay principal and interest on debt obligations. However, Argentina may re-impose exchange control or transfer restrictions in the future, among other things, in response to capital flight or a significant depreciation of the peso. In addition, the government issued a decree in June 2005 that established new controls on capital inflows that could result in less availability of international credit. Additional controls could have a negative effect on the economy and our business if imposed in an economic environment where access to local capital is substantially constrained. Moreover, in such event, restrictions on the transfers of funds abroad may impede your ability to receive dividend payments as a holder of ADSs.

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

Financial and securities markets in Argentina are influenced, to varying degrees, by economic and market conditions in other global markets. Although economic conditions vary from country to country, investors’ perception of the events occurring in one country may substantially affect capital flows into and securities from issuers in other countries, including Argentina. The Argentine economy was adversely impacted by the political and economic events that occurred in several emerging economies in the 1990s, including Mexico in 1994, the collapse of several Asian economies between 1997 and 1998, the economic crisis in Russia in 1998 and the Brazilian devaluation in January 1999. In addition, Argentina continues to be affected by events in the economies of its major regional partners. Furthermore, the Argentine economy may be affected by events in developed economies which are trading partners or that impact the global economy.

Shocks of a similar magnitude to the international markets in the future can be expected to affect adversely the Argentine economy and the financial system and therefore us.

RISKS RELATING TO THE ARGENTINE FINANCIAL SYSTEM

The health of Argentina’s financial system depends on a return of the long-term credit market, which has not yet happened

As a result of the 2001 and 2002 crisis, the volume of financial intermediation activity in Argentina fell drastically: credit fell from 23.1% of GDP in March 2001 to just 7.7% in June 2004, while

23

Risk factors

deposits as a percentage of GDP fell from 31.5% to 23.2% during the same period. During this period our financial intermediation activities also declined. The depth of the crisis and the effect of the crisis on depositors’ confidence in the financial system created significant uncertainties as to the likelihood that the financial system will fully recover its ability to act as an intermediary between savings and credit. Despite the ongoing recovery of Argentina’s short-term credit market (approximately 92% of loan growth in 2004 was in the form of overdrafts, consumer loans and advances), long-term lending has lagged.

If longer-term financial intermediation activity fails to resume at substantial levels, the ability of financial institutions, including us, to generate profits will be negatively affected. Even though deposits in the financial system and with us resumed growth in mid-2002, most of these new deposits are either sight or very short-term time deposits, creating a liquidity risk for banks engaged in long-term lending and increasing their need to depend on the Central Bank as a potential liquidity backstop.

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

The massive withdrawal of deposits experienced by all Argentine financial institutions, including us, during 2001 and the first half of 2002 was largely due to the loss of confidence of depositors in the Argentine government’s ability to repay its debts, including its debts within the financial system, and to maintain peso-dollar parity in the context of its solvency crisis. In addition, the measures taken by the government to protect the solvency of the banking system, most significantly the limitation on the right of depositors to freely withdraw their money and the pesification of their dollar deposits, generated significant opposition directly against banks from depositors frustrated by losses of their savings.

Although short-term deposits have substantially recovered since 2002, the deposit base of the Argentine financial system, including ours, may be affected in the future by adverse economic, social and political events. If depositors once again withdraw significant holdings from banks, there will be a substantial negative impact on the manner in which financial institutions, including us, conduct their business and on their ability to operate as financial intermediaries.

The asset quality of financial institutions, including us, is fragile due to high exposure to public sector debt

Financial institutions, including us, have a significant portfolio of bonds of, and loans to, the Argentine federal and provincial governments as a result of the crisis and compensation measures undertaken by the government in conjunction with the pesification. To a large extent, the value of a large portion of the assets held by Argentine banks, as well as their income generation capacity, is dependent on the Argentine public sector’s creditworthiness, which is in turn dependent on the government’s ability to promote sustainable economic growth in the long run, generate tax revenues and control public spending.

As of December 31, 2005, our exposure to public sector debt (net of LEBAC) totaled approximately Ps.543 million, representing 15% of our total assets. Because of this high level of exposure, any new restructuring of the sovereign debt that is unfavorable to us or any failure by the federal or provincial governments to meet their debt obligations in accordance with their terms would have a material adverse effect on our financial condition.

Our asset quality and that of other financial institutions may deteriorate if the Argentine private sector does not fully recover

The capacity of many Argentine private sector debtors to repay their loans deteriorated significantly as a result of the economic crisis, materially affecting the asset quality of financial institutions, including us. We established large allowances for loan losses in 2002 to cover the risks inherent to our portfolio

24

Risk factors

of loans to the private sector. In 2004, the quality of our loan portfolio improved from 2003 levels as a result of high GDP growth and a better overall economic environment. However, this improvement did not fully offset the deterioration caused by the crisis in the quality of our assets. Moreover, the current improvement may not continue, and we will likely not succeed in recovering substantial portions of loans that were written off. Our business strategy includes substituting a large portion of our current portfolio of government securities for loans to the private sector. As a result, we expect that our credit risk exposure to the private sector will increase in the near term. If the recovery of financial health of Argentina’s private sector reverses, we may experience an increase in our incidence of non-performing loans.

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

To protect debtors affected by the economic crisis, beginning in 2002 the Argentine government adopted measures that temporarily suspended proceedings to enforce creditors’ rights, including mortgage foreclosures and bankruptcy petitions. Most of these measures have been rescinded, however, on March 8, 2006 the Argentine government established a new 90-day suspension period for mortgage foreclosure proceedings involving debtors’ dwellings and original loan amounts no higher than Ps.100,000. We cannot assure you that in an adverse economic environment the government will not adopt additional measures in the future, which could have a material adverse effect on the financial system and our business.

RISKS RELATING TO US

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

Our business strategy is to increase fee income and loan origination in our target market, low- and middle-income individuals and small- and medium-sized businesses. The current economic situation favors this target market and they are experiencing solid growth. However, this target market is particularly vulnerable to economic recessions and, in the event of such a recession, growth in our target market may slow and consequently adversely affect our business. The Argentine economy as a whole and our target market has not stabilized enough for us to be certain that demand will continue to grow. Therefore, we cannot assure you that our business strategy will in fact be successful.

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

Our controlling shareholders beneficially own 10,204,066 Class A shares and 355,834,364 Class B shares. Upon completion of the global offering (excluding any sales of Class B shares pursuant to the over-allotment option), they will have between approximately 47.3% and 51.4% of the total voting power, depending upon the number of shares, if any, that they are required to purchase pursuant to the standby subscription obligation. Although there currently is no formal agreement among them, together our controlling shareholders control virtually all decisions with respect to our company made by shareholders. They may, without the concurrence of the remaining shareholders, elect a majority of our directors, amend our bylaws, effect or prevent a merger, sale of assets or other business acquisition or disposition, cause us to issue additional equity securities, effect a related party transaction and determine the timing and amounts of dividends, if any. Their interests may conflict with your interests as a holder of our Class B shares or the ADSs, and they may take actions that might be desirable to the controlling shareholders but not to other shareholders.

25

Risk factors

Our management has discretion in how we allocate our use of the net proceeds we receive from the global offering

We will have flexibility in applying the net proceeds we receive from the global offering, as described in “Use of proceeds”. You may not agree with how we use the net proceeds of the global offering. If we use the net proceeds for corporate purposes that do not yield a significant return or any return at all for our shareholders, our stock price could decline.

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

We have expanded our business primarily through acquisitions. We will continue to consider attractive acquisition opportunities that we believe offer additional value and are consistent with our business strategy. We cannot assure you, however, that we will be able to identify suitable acquisition candidates or that we will be able to acquire promising target financial institutions on favorable terms. Additionally, our ability to obtain the desired effects of such acquisitions will depend in part on our ability to successfully complete the integration of those businesses. The integration of acquired businesses entails significant risks, including:

†	unforeseen difficulties in integrating operations and systems;
†	problems assimilating or retaining the employees of acquired businesses;
†	challenges retaining customers of acquired businesses;
†	unexpected liabilities or contingencies relating to the acquired businesses; and
†	the possibility that management may be distracted from day-to-day business concerns by integration activities and related problem solving.

We depend on key personnel for our current and future performance

Our current and future performance depends to a significant degree on the continued contributions of our senior management team and other key personnel, in particular Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo and Fernando Andrés Sansuste. Our performance could be significantly harmed if we lose their services. Should their services no longer be available to us, we may not be able to locate or employ qualified replacements on acceptable terms.

Increased competition and consolidation in the banking industry may adversely affect our operations

We expect trends of increased competition in the banking sector, as banks continue to recover from the recent economic crisis. Additionally, if the trend towards decreasing spreads is not offset by increases in lending volumes, then resulting losses could lead to consolidation in the industry. We expect trends of increased consolidation to continue. Consolidation can result in the creation of larger and stronger banks, which may have greater resources than we do.

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

Reduced spreads without corresponding increases in lending volumes could adversely affect our profitability

The spread for Argentina’s financial system between the interest rates on loans and deposits decreased from a high of 39.9% in March 2003 to 15.2% in December 2005 as a result of increased competition in the banking sector and the government’s tightening of monetary policy in response to

26

Risk factors

inflation concerns. In comparison, our interest rate spread (average lending rates not including those related to liquidity management operations) decreased from 42% to 16.6% during the same period. We and other financial institutions have largely responded by lowering operating costs. However, if spreads continue to decrease without a corresponding increase in lending or additional cost-cutting, our profitability may be adversely affected.

Differences in the accounting standards between Argentina and certain countries with highly developed capital markets, such as the United States, may make it difficult to compare our financial statements and reported earnings with companies in other countries and the United States

Publicly available corporate information about us in Argentina is different from, and may be more difficult to obtain than, the information available for registered public companies in certain countries with highly developed capital markets, such as the United States. Except as otherwise described herein, we prepare our financial statements in accordance with Central Bank Rules, which differ in certain significant respects from U.S. GAAP and, to a certain extent, from Argentine GAAP. As a result, our financial statements and reported earnings are not directly comparable to those of banks in the United States in this and other respects.

The protections afforded to minority shareholders in Argentina are not as comprehensive as those in the United States

Under Argentine law, the protections afforded to minority shareholders and the fiduciary duties of officers and directors are, in some respects, less than, or different from, those in the United States and certain other jurisdictions. In particular, the Argentine legal regime concerning fiduciary duties of directors is not as comprehensive as in the United States, where the criteria to ascertain the independence of corporate directors are different from the criteria applicable under corresponding Argentine laws and regulations. Furthermore, in Argentina, there are no procedures for class action suits or shareholder derivative actions, and different procedural requirements exist for bringing shareholder lawsuits. As a result, in practice it may be more difficult for our minority shareholders to enforce their rights against us and our directors, officers or controlling shareholders than it would be for shareholders of a U.S. company.

RISKS RELATING TO OUR CLASS B SHARES AND THE ADSs

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

In 2003, the Central Bank prohibited financial institutions from distributing dividends. In 2004, the Central Bank amended the restriction to require the Central Bank’s prior authorization for the distribution of dividends. On July 20, 2004, we were authorized by the Central Bank to distribute dividends corresponding to fiscal year 2003 and on April 18, 2005 to distribute dividends corresponding to fiscal year 2004, and in each case the dividends were distributed. Notwithstanding the foregoing, no assurance can be given that the Central Bank will continue to grant us the authorization to distribute dividends approved by our shareholders at the annual ordinary shareholders’ meeting.

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

Under Argentine corporations law, if we issue new shares as part of a capital increase, our shareholders may have the right to subscribe to a proportional number of shares to maintain their existing ownership percentage. Rights to subscribe for shares in these circumstances are known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed shares remaining at the end of a preemptive rights offering on a pro rata basis, known as accretion rights. Upon the occurrence of any future increase in our capital stock, United States holders of

27

Risk factors

Class B shares or ADSs will not be able to exercise the preemptive and related accretion rights for such Class B shares or ADSs unless a registration statement under the Securities Act is effective with respect to such Class B shares or ADSs or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to those Class B shares or ADSs. We cannot assure you that we will file such a registration statement or that an exemption from registration will be available. Unless those Class B shares or ADSs are registered or an exemption from registration applies, a U.S. holder of our Class B shares or ADSs may receive only the net proceeds from those preemptive rights and accretion rights if those rights can be sold by the depositary; if they cannot be sold, they will be allowed to lapse. Furthermore, the equity interest of holders of Class B shares or ADSs located in the United States may be diluted proportionately upon future capital increases.

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

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

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

Prior to this offering, there has not been a public market for the ADSs or, in the case of our Class B shares, a market outside of Argentina. We have applied to list the ADSs on the NYSE. We cannot assure you as to the liquidity of any markets that may develop for our Class B shares or for the ADSs or the price at which the Class B shares or the ADSs may be sold.

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

Investing in securities that trade in emerging markets, such as Argentina, often involves greater risk than investing in securities of issuers in the United States, and such investments are generally considered to be more speculative in nature. The Argentine securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets in the United States, and is not as highly regulated or supervised as some of these other markets. There is also significantly greater concentration in the Argentine securities market than in major securities markets in the United States. The ten largest companies in terms of market capitalization (which includes us) represented approximately 81.7% of the aggregate market capitalization of the Buenos Aires Stock Exchange as of December 31, 2005. Accordingly, although you are entitled to withdraw the Class B shares underlying the ADSs from the depositary at any time, your ability to sell such shares at a price and time at which you wish to do so may be substantially limited. Furthermore, new capital controls imposed by the Central Bank could have the effect of further impairing the liquidity of the Buenos Aires Stock Exchange by making it unattractive for non-Argentines to buy shares in the secondary market in Argentina.

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Risk factors

Substantial sales of our Class B shares or the ADSs after this offering could cause the price of the Class B shares or of the ADSs to decrease

After the global offering the selling shareholders will continue to hold a large number of shares. We, our directors, including the selling shareholders, and certain members of senior management, have agreed with the international underwriters, subject to certain exceptions, not to offer, sell, contract to sell or otherwise dispose of or hedge our shares of capital stock or ADSs or securities convertible into or exercisable or exchangeable for shares of capital stock or ADSs during the 180-day period following the date of this prospectus. After these lock-up agreements expire, their securities will be eligible for sale in the public market. The market price of our Class B shares or the ADSs could drop significantly if they sell our Class B shares or the ADSs or the market perceives that they intend to sell them.

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

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

Our Class B shares or the ADSs might be characterized as stock in a “passive foreign investment company” for U.S. federal income tax purposes

The application of the “passive foreign investment company” rules to equity interests in banks such as us is unclear under current U.S. federal income tax law. It is therefore possible that our Class B shares or the ADSs could be characterized as stock in a “passive foreign investment company” for U.S. federal income tax purposes, which could have adverse tax consequences upon U.S. holders in some circumstances. In particular, U.S. holders of our Class B shares or the ADSs would generally be subject to special rules and adverse tax consequences with respect to certain distributions made by us and on any gain realized on the sale or other disposition of our Class B shares or the ADSs. Such U.S. holders might be subject to a greater U.S. tax liability than might otherwise apply and incur tax on amounts in advance of when U.S. federal income tax would otherwise be imposed. A U.S. holder of our Class B shares or the ADSs might be able to avoid these rules and consequences by making an election to mark such shares to market (although it is not clear if this election is available for the Class B shares). U.S. holders should consult their tax advisors regarding the “passive foreign investment company” rules. See “Taxation — Material United States Federal Income Tax Considerations.”

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Use of proceeds

We estimate that our net proceeds from the sale of Class B shares in the global offering, assuming full exercise of the preferential subscription and no exercise of the standby purchase and including the ADSs offered by this prospectus, will be approximately US$138.5 million, after deducting estimated underwriting discounts and commissions and offering expenses payable by us. We intend to use the net proceeds from the global offering for general corporate purposes. Specifically, we want to be in a position to fund the expansion of credit demand in Argentina that we believe has begun to develop, and to take advantage of potential acquisitions. We will not receive any proceeds from the sale of Class B shares by the selling shareholders, nor will we receive any proceeds pursuant to the exercise of the over-allotment option by the underwriters, since the option has been granted by the selling shareholders and not by us.

For every US$1.00 increase or decrease in the price per ADS in the global offering, the amount of proceeds will increase or decrease by approximately US$7.3 million.

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Exchange rates and exchange controls

Exchange rates

On January 7, 2002, the Argentine congress enacted the Public Emergency Law, abandoning over ten years of fixed peso-U.S. dollar parity at Ps.1.00 per US$1.00. After devaluing the peso and setting the official exchange rate at Ps.1.40 per US$1.00, on February 11, 2002, the government allowed the peso to float. The shortage of U.S. dollars and their heightened demand caused the peso to further devalue significantly in the first half of 2002. Since June 30, 2002, the peso has appreciated versus the U.S. dollar from an exchange rate of Ps.3.80 per US$1.00 to an exchange rate of Ps.3.0715 per US$1.00 at March 16, 2006.

The following table sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in pesos per U.S. dollar and not adjusted for inflation. There can be no assurance that the peso will not depreciate again in the future, particularly while the restructuring of a substantial portion of Argentina’s foreign debt remains unresolved. The Federal Reserve Bank of New York does not report a noon buying rate for pesos.

	Exchange Rates(1)
	High		Low		Average(2)		Period-end
2000		1.0000		1.0000		1.0000		1.0000
2001		1.0000		1.0000		1.0000		1.0000
2002		3.8675		1.0000		2.9785		3.3630
2003		3.3625		2.7485		2.9493		2.9330
2004		3.0718		2.8037		2.9424		2.9738
2005		3.0523		2.8592		2.9230		3.0315
September 2005		2.9195		2.9043		2.9117		2.9125
October 2005		3.0125		2.9082		2.9660		3.0097
November 2005		2.9952		2.9405		2.9672		2.9735
December 2005		3.0523		2.9700		3.0145		3.0315
January 2006		3.0337		3.0305		3.0459		3.0637
February 2006		3.0757		3.0625		3.0689		3.0728

(1)	Until June 2002, asked closing quotations as quoted by Banco de la Nación Argentina. Since July 2002, the reference exchange rate as published by the Central Bank.
(2)	Based on daily averages.

Exchange controls

In 2001 and 2002 and until February 7, 2003, the Central Bank, among other restrictive measures, restricted the transfer of U.S. dollars abroad without its prior approval. In 2003 and 2004, the government substantially eased these restrictions.

However, on June 26, 2003, the government set restrictions on capital flows into Argentina, which mainly consisted of a prohibition against the transfer abroad of any funds until 180 days after their entry into the country. Furthermore, on June 10, 2005 the government established further restrictions on capital flows into Argentina, including increasing the period that certain incoming funds, including capital contributions, must remain in Argentina to 365 calendar days and requiring that 30% of incoming funds be deposited with a bank in Argentina in a non-interest bearing account for 365 calendar days. These restrictions do not apply to the proceeds received by us from the global offering.

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Market information

MARKET PRICE OF OUR SHARES

Prior to the international offering, there has been no public market for our Class B shares or the ADSs outside of Argentina. We have applied to list the ADSs for trading on the NYSE under the symbol “BMA.”

Our Class B shares are currently traded on the Buenos Aires Stock Exchange under the symbol “BSUD”. The table below shows the high and low closing prices in pesos, the U.S. dollars equivalent per ADS and the average daily trading volume for our Class B shares on the Buenos Aires Stock Exchange for the periods indicated:

	Ps. per				US$ equivalent
	Class B Share				per ADS (1)				Average daily trading
									of Class B shares in
Banco Macro Bansud	High		Low		High		Low		thousands of pesos
2006:
January		5.86		5.32		19.13		17.36		1,951.1
February		5.94		5.64		19.33		18.35		1,910.8
2005:
September		5.31		4.60		18.23		15.80		5,513.1
October		5.22		4.65		17.34		15.45		3,751.8
November		5.30		4.71		17.82		15.84		2,796.6
December		5.45		4.66		17.98		15.37		2,858.8
2005:
1st quarter		4.35		3.47		14.88		11.87		6,149.0
2nd quarter		4.28		3.58		14.81		12.38		3,195.4
3rd quarter		5.31		3.60		18.23		12.36		4,119.2
4th quarter		5.45		4.65		17.98		15.34		3,124.8
2004:
1st quarter		3.69		2.51		12.92		8.79		4,651.3
2nd quarter		3.48		2.19		11.76		7.40		2,979.3
3rd quarter		3.33		2.68		11.17		8.99		3,293.6
4th quarter		3.76		3.12		12.64		10.49		4,995.9

Source: Buenos Aires Stock Exchange Bulletin.

(1) Based on a ratio of ten Class B shares for each ADS and the exchange reference rate quoted by the Central Bank of pesos to U.S. dollars at the close of the last day of each period presented.

Banco Macro and Banco Bansud merged in December 2003 and began trading on December 24, 2003 under the symbol “BSUD.” In January 2002, we acquired a controlling interest in the former Banco Bansud, but the shares of the two banks traded separately until their merger.

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Market information

The table below sets forth the high and low closing prices in pesos and the average daily trading volumes for the common shares of Banco Macro on the Buenos Aires Stock Exchange for the periods indicated:

Banco Macro

	Ps. per Share				Average daily trading
					of common shares in
	High		Low		thousands of pesos
2003:
1st quarter		17.20		16.00		19,450.4
2nd quarter		28.70		20.00		41,781.9
3rd quarter		30.50		26.00		42,765.5
4th quarter		41.30		30.00		88,190.6
2002:
1st quarter		—		—		—
2nd quarter		4.10		3.40		9,963.8
3rd quarter		—		—		—
4th quarter		17.60		10.00		9,955.4
2001:
1st quarter		4.25		4.50		12,089.8
2nd quarter		4.00		4.00		6,391.2
3rd quarter		4.00		3.40		19,671.0
4th quarter		3.40		3.40		6,052.0

Source: Buenos Aires Stock Exchange Bulletin.

33

Market information

The table below sets forth the high and low closing prices in pesos and the average daily trading volumes for the Class B shares of Banco Bansud on the Buenos Aires Stock Exchange for the periods indicated:

Banco Bansud

	Ps. per
	Class B Share				Average daily trading of
					Class B common shares
	High		Low		in thousands of pesos
2003:
1st quarter		1.65		1.04		2,291.7
2nd quarter		2.20		1.45		3,447.1
3rd quarter		2.16		1.80		2,353.0
4th quarter		2.99		2.05		2,785.9
2002:
1st quarter		0.70		0.33		58.5
2nd quarter		0.55		0.30		34.5
3rd quarter		1.06		0.46		185.4
4th quarter		1.74		0.90		509.5
2001:
1st quarter		1.74		0.90		145.1
2nd quarter		1.31		0.80		105.4
3rd quarter		1.07		0.30		32.2
4th quarter		0.54		0.30		31.8

Source: Buenos Aires Stock Exchange Bulletin.

On March 16, 2006, the closing price for our Class B shares on the Buenos Aires Stock Exchange was Ps.6.09 per share, or US$19.83 per ADS, based on a ratio of ten Class B shares to one ADS, and translating pesos to U.S. dollars at the exchange rate of Ps.3.0715 for US$1.00, the reference exchange rate reported by the Central Bank for that date.

THE ARGENTINE SECURITIES MARKET

There are 11 stock exchanges in Argentina: Buenos Aires, Bahía Blanca, Corrientes, Córdoba, La Plata, La Rioja, Mendoza, Rosario, Santa Fe, Mar del Plata and Tucumán. Six stock exchanges in Argentina have affiliated stock markets and, accordingly, are authorized to quote publicly offered securities: Buenos Aires, Rosario, Córdoba, Mendoza, Santa Fe, and La Rioja. Securities listed on these exchanges include both corporate equity and bonds and government securities.

The principal and oldest exchange for the Argentine securities market is the Buenos Aires Stock Exchange. Currently, the Buenos Aires Stock Exchange is the fourth largest exchange in Latin America in terms of market capitalization. The Buenos Aires Stock Exchange started operating in 1854 and handles approximately 95% of all equity trading in Argentina. Bonds listed on the Buenos Aires Stock Exchange may also be listed on the Mercado Abierto Electrónico, the Argentine over-the-counter market, or MAE. As a result of an agreement between the Buenos Aires Stock Exchange and the MAE, equity securities are traded exclusively on the Buenos Aires Stock Exchange and debt securities (both public and private) are traded on both the MAE and the Buenos Aires Stock Exchange.

In addition, through an agreement with the Buenos Aires Stock Exchange, all of the securities listed on the Buenos Aires Stock Exchange are authorized to be listed and subsequently traded on the exchanges located in Córdoba, Rosario, Mendoza, La Plata and Santa Fe. As a result, many transactions that

34

Market information

originate on these exchanges relate to companies listed on the Buenos Aires Stock Exchange and these trades are subsequently settled in Buenos Aires.

Although companies may list all of their capital stock on the Buenos Aires Stock Exchange, in most cases the controlling shareholders retain the majority of a company’s capital stock. This results in only a relatively small percentage of most companies’ stock being available for active trading by the public on the Buenos Aires Stock Exchange. Even though individuals have historically constituted the largest group of investors in Argentina’s equity markets, in recent years, banks and insurance companies have shown an interest in these markets. Although Argentine pension funds represent an increasing percentage of the Buenos Aires Stock Exchange, trading activity, fondos comunes de inversion, or Argentine mutual funds, by contrast, continue to have very low participation in the market. Although 91 companies had equity securities listed on the Buenos Aires Stock Exchange as of December 31, 2005, the ten most traded companies on the Buenos Aires Stock Exchange accounted for approximately 81.6% of the total trading value during 2005.

The Buenos Aires Stock Market, or Mercado de Valores de Buenos Aires, or MERVAL, is affiliated with the Buenos Aires Stock Exchange, and is the largest stock market in Argentina. The MERVAL is a corporation whose 133 shareholder members are the only individuals and entities authorized to trade, either as principal or as agent, in the securities listed on the Buenos Aires Stock Exchange. Trading on the Buenos Aires Stock Exchange is conducted by continuous open outcry, or the traditional auction system, from 11:00 a.m. to 5:00 p.m. each trading business day of the year. Trading on the Buenos Aires Stock Exchange is also conducted through a Sistema Integrado de Negociación Asistida por Computación or SINAC. SINAC is a computer trading system that permits trading in debt securities and equity securities. SINAC is accessed by brokers directly from workstations located at their offices. Currently, all transactions relating to listed negotiable obligations and listed government securities can be effected through SINAC. In addition, a substantial over-the-counter market exists for private trading in listed debt securities. These trades are reported on the MAE.

In order to control price volatility, the MERVAL operates a system pursuant to which the negotiation of a particular stock or debt security is suspended for a 15-minute period when the price of the security registers a variation on its price between 10% and 15% and between 15% and 20%. Any additional 5% variation on the price of the security after that results in additional 10-minute successive suspension periods. MAE operates a similar system that suspends the negotiation of debt securities of a particular issuer for 30 minutes when the price of the debt security registers a 10% price variation against the closing price on the previous day. If after the 30-minute suspension the price of the debt security increases or decreases an additional 5% against the closing price on the previous day (totaling a 15% variation against the closing price on the previous day), the trading of the debt security is suspended for the rest of the day. Trading on the issuer’s debt securities is resumed on the following day.

REGULATION OF THE ARGENTINE SECURITIES MARKET

The CNV is a governmental entity that oversees the regulation of the Argentine securities markets and is responsible for authorizing public offerings of securities and supervising brokers, public companies, mutual funds and clearinghouses. Public offerings and the trading of futures and options are also under the jurisdiction of the CNV. Argentine pension funds and insurance companies are regulated by separate government agencies, while financial institutions are regulated mainly by the Central Bank. The Argentine securities markets are governed generally by Law No. 17,811, as amended, which created the CNV and regulates securities exchanges, stockbrokers, market operations and public offerings of securities.

35

Market information

Most debt and equity securities traded on the exchanges and the over-the-counter market must, unless otherwise instructed by the shareholders, be deposited by shareholders with Caja de Valores S.A., which is a corporation owned by the Buenos Aires Stock Exchange, the MERVAL and certain provincial exchanges. Caja de Valores is the central securities depositary of Argentina, which provides central depository facilities for securities, acts as a clearinghouse for securities trading and acts as a transfer and paying agent. Caja de Valores also handles settlement of securities transactions carried out by the Buenos Aires Stock Exchange and operates the computerized exchange information system.

Although in the first half of the 1990s changes to the legal framework were introduced permitting the issuance and trading of new financial products in the Argentine capital markets, including commercial paper, new types of corporate bonds and futures and options, there is a relatively low level of regulation of the market for Argentine securities and investors’ activities in that market, and enforcement of existing regulatory provisions has been extremely limited. Furthermore, there may be less publicly available information about Argentine companies than is regularly published by or about companies in the Untied States and certain other countries. However, the CNV has taken steps to strengthen disclosure and regulatory standards for the Argentine securities market, including the issuance of regulations prohibiting insider trading and requiring insiders to report on their ownership of securities, with associated penalties for noncompliance.

In order to improve Argentine securities market regulation, the Argentine government issued Decree No. 677/01, which provided certain guidelines and provisions relating to capital markets transparency and best practices. Decree No. 677/01 took effect on June 1, 2001. The decree applies to individuals and entities that participate in the public offering of securities, as well as to stock exchanges. Among its key provisions, the decree broadens the definition of “security”; governs the treatment of negotiable securities; obligates publicly listed companies to form audit committees comprised of three or more members of the board of directors, the majority of whom must be independent under CNV regulations; authorizes market stabilization transactions under certain circumstances; governs insider trading, market manipulation and securities fraud; and regulates going private transactions and acquisitions of voting shares, including controlling stakes in public companies.

In order to offer securities to the public in Argentina, an issuer must meet certain requirements established by the CNV regarding assets, operating history, management and other matters, and only securities for which an application for a public offering has been approved by the CNV may be listed on corresponding stock exchange. This approval does not imply any kind of certification of assurance related to the merits of the quality of the securities or the solvency of the issuer. Issuers of listed securities are required to file unaudited quarterly financial statements and audited annual financial statements, as well as various other periodic reports, with the CNV and the corresponding stock exchange.

36

Capitalization

The following table sets forth our capitalization in accordance with Central Bank Rules as of December 31, 2005 in pesos and dollars on an actual basis and as adjusted to reflect the receipt by us of approximately US$138.5 million in net proceeds assuming full exercise of the preferential subscription, from the issuance and sale of 75,000,000 Class B shares in the global offering by us. You should read this table in conjunction with “Selected financial and operating data,” “Management’s discussion and analysis of financial condition and results of operations,” “Selected statistical information” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

		As of December 31, 2005
		Actual		As Adjusted		Actual		As Adjusted
		(in thousands of pesos)				(in thousands of
						U.S. dollars)
Deposits from customers:
Demand deposits			Ps.1,332,969		1,332,969	US$	439,706		439,706
Time deposits			3,303,498		3,303,498		1,089,724		1,089,724
Savings deposits			1,100,964		1,100,964		363,175		363,175
Deposits from banks			5,208		5,208		1,718		1,718
Deposits from the government sector			822,687		822,687		271,380		271,380
	Total deposits		6,565,326		6,565,326		2,165,703		2,165,703
Federal funds purchased and securities sold under repurchase agreements			538,396		538,396		177,601		177,601
Central Bank			217,481		217,481		71,740		71,740
Short-term borrowings			171,323		171,323		56,514		56,514
Long-term debt			41,526		41,526		13,698		13,698
Other liabilities			285,112		285,112		94,050		94,050
Minority interest in consolidated subsidiaries			80		80		26		26
Shareholders’ equity			1,489,574		1,914,445		491,365		629,824
Total capitalization			9,308,818		9,733,689		3,070,697		3,209,156

For every US$1.00 increase or decrease in the price per ADS in the global offering, shareholders’ equity will increase or decrease by approximately U.S.$7.3 million.

37

Dividends and dividend policy

DIVIDEND POLICY AND PAYMENT OF DIVIDENDS

Although we do not have, and have no current plans to adopt, a formal dividend policy governing the amount and payment of dividends, we currently intend to pay dividends subject to approval by a majority vote of our shareholders. All shares of our capital stock rank pari passu with respect to the payment of dividends.

The following table sets forth the cash dividends paid to our shareholders in 2004 and 2005. All banks were prohibited by the Central Bank from paying dividends in respect of the results of 2001 and 2002.

Based on financial statements	Payment
for year ended December 31,	Dates		Dividends per Share		Aggregate Dividend Payment
			(in pesos)		(in millions of pesos)
2003		July 2004		.10		60.9
2004		April 2005		.05		30.4

Our Board of Directors has recommended a distribution of dividends in the amount of Ps.68,394,344 for 2005. This amount represents, based on par value, 11.2% of our total capital stock and 10% of total capital stock following the capital increase of 75 million shares of our Class B shares. This declaration of dividends is subject to approval at the ordinary shareholders meeting, which will be held prior to May 15, 2006, and to the approval of the Central Bank before the shareholders meeting.

Holders of the ADSs will be entitled to receive any dividends payable in respect of the underlying Class B shares. We intend to pay cash dividends to the depositary in pesos, although we reserve the right to pay cash dividends in any other currency, including U.S. dollars. The deposit agreement provides that the depositary will convert cash dividends received by the depositary in pesos to U.S. dollars and, after a deduction or upon payment of fees and expenses of the depositary, will make payment to holders of the ADSs in U.S. dollars.

CENTRAL BANK AND CONTRACTUAL LIMITATIONS ON DISTRIBUTION OF DIVIDENDS

Central Bank Communication A4152 requires the prior authorization of the Central Bank for the distribution of dividends by banks. In order to calculate the amount available for distribution, the Central Bank requires banks to subtract from retained earnings the difference between the technical value of holdings of BODEN 2007, BODEN 2012 and BODEN 2013 in the financial statements and their market value. In addition, the Central Bank requires banks to subtract from unappropriated retained earnings amounts related to minimum presumed income tax that are carried as an asset.

By means of an authorization dated July 20, 2004, the Central Bank approved the distribution of dividends corresponding to our fiscal year ended December 31, 2003. Through another authorization dated April 18, 2005, the Central Bank approved the distribution of dividends corresponding to our fiscal year ended December 31, 2004.

As a result of an agreement executed between us and the Fondo Fiduciario de Asistencia a Entidades Financieras y Seguros with respect to a subordinated bond with Ps.16 million outstanding, we are not allowed to distribute dividends in cash in an amount higher than 50% of our net income. Additionally, if we distribute more than 25% of our net income, we are required to prepay our subordinated bond in an amount equal to 50% of the total amount to be distributed as cash dividends.

38

Dividends and dividend policy

AMOUNTS AVAILABLE FOR DISTRIBUTION AND DISTRIBUTION APPROVAL PROCESS

Under Argentine corporate law, declaration and payment of annual dividends, to the extent funds are legally available, is determined by our shareholders at the annual ordinary shareholders’ meeting. Generally, but not necessarily, the board of directors makes a recommendation with respect to the payment of dividends.

Dividends may be lawfully declared and paid only out of our retained earnings stated in our yearly financial statements according to Central Bank Rules and approved by a shareholders’ meeting as described below.

The board of directors submits our financial statements for the preceding fiscal year, together with reports thereon by the supervisory committee, at the annual ordinary shareholders’ meeting for approval. Within four months of the end of each fiscal year, an ordinary shareholders’ meeting must be held to approve the financial statements and determine the allocation of our net income for such year.

Under applicable CNV regulations, cash dividends must be paid to shareholders within 30 days of the shareholders’ meeting approving such dividends. In the case of stock dividends, shares are required to be delivered within three months of our receipt of notice of the authorization of the CNV for the public offering of the shares arising from such dividends.

LEGAL RESERVE REQUIREMENT

According to Law N^o. 21,526, Ley de Entidades Financieras, Argentine Financial Institutions Law, and Central Bank regulations, we are required to maintain a legal reserve of 20% of our yearly income plus or minus the results of prior years. The legal reserve is not available for distribution to shareholders. Under Argentine corporate law and our bylaws, our yearly net income (as adjusted to reflect changes in prior results) is allocated in the following order: (i) to comply with the legal reserve requirement, (ii) to pay the accrued fees of the members of the board of directors and statutory supervisory committee; (iii) to pay fixed dividends, which shall be applied first to pending and unpaid dividends and holders of preferred stock (if applicable); (iv) for voluntary or contingent reserves, as may be resolved from time to time by our shareholders at the annual ordinary shareholders’ meeting; and (v) the remainder of the net income for the year may be distributed as dividends on common stock or as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting.

39

Selected financial and operating data

The following tables present selected historical financial data for us and Nuevo Banco Suquía for each of the periods indicated. You should read this information in conjunction with our consolidated financial statements and related notes, the financial statements of Nuevo Banco Suquía and related notes and the information under “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus.

We have derived our selected consolidated financial data for the years ended December 31, 2002, 2003 and 2004 from our audited consolidated financial statements included in this prospectus. We have derived our selected consolidated financial data for the year ended December 31, 2005 from our audited consolidated financial statements prepared in accordance with Central Bank Rules included in this prospectus. We have derived our selected financial data for the years ended December 31, 2000 and 2001 from our audited consolidated financial statements not included in this prospectus. We have derived the selected financial data of Nuevo Banco Suquía for the years ended December 31, 2003 and 2004 from its audited financial statements included in this prospectus. We have derived our unaudited selected financial data for the six months ended June 30, 2004 and 2005 from our condensed interim consolidated financial statements included in this prospectus. The condensed interim financial statements include, in our opinion, all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of our financial position and results of operations for these periods.

Due to the acquisitions we have made, our results of operations are not necessarily comparable between the periods presented; in particular, we acquired Banco Bansud in January 2002 and Nuevo Banco Suquía on December 22, 2004. The results of operations of Nuevo Banco Suquía are consolidated with Banco Macro Bansud from December 22, 2004.

During the economic crisis, Argentina experienced very high rates of inflation in 2002. As a result, Central Bank Rules reinstated inflation accounting at the beginning of 2002 until February 28, 2003. Therefore, all the financial statement data in this prospectus for periods prior to February 28, 2003 have been restated in constant pesos as of February 28, 2003.

Solely for the convenience of the reader, peso amounts as of and for the years ended December 31, 2004 and 2005 have been translated into U.S. dollars. The rate used to translate such amounts was Ps.3.0315 to US$1.00, which was the reference exchange rate for U.S. dollars for December 30, 2005, as reported by the Central Bank.

40

Selected financial and operating data

BANCO MACRO BANSUD

																			Six-Months Ended						Year Ended
	Year Ended December 31,																		June 30,						December 31,
	2000(1)			2001(1)			2002(1)			2003(1)			2004(2)			2004(3)			2004			2005(2)			2005(2)			2005(3)
	(in thousands of pesos or U.S. dollars, as indicated, except for shares,
	earnings per share and dividends per share)
Consolidated Income Statement
Central Bank Rules:
Financial income		Ps.219,494			Ps.218,897			Ps.1,623,349			Ps.419,900			Ps.427,900			US$141,151			Ps.235,850			Ps.338,221			Ps.749,850			US$247,353
Financial expense		(87,596	)		(94,904	)		(515,184	)		(241,152	)		(133,204	)		(43,940	)		(71,769	)		(155,977	)		(303,176	)		(100,009	)
Gross intermediation margin		131,898			123,993			1,108,165			178,748			294,696			97,211			164,081			182,244			446,674			147,344
Provision for loan losses		(25,907	)		(21,968	)		(117,767	)		(35,009	)		(36,467	)		(12,029	)		(13,236	)		(34,479	)		(70,309	)		(23,193	)
Service charge income		120,208			118,512			137,756			125,722			154,425			50,940			72,033			140,536			303,141			99,997
Service charge expense		(16,812	)		(18,834	)		(30,649	)		(20,005	)		(24,963	)		(8,235	)		(11,199	)		(27,874	)		(59,510	)		(19,631	)
Administrative expense		(179,383	)		(183,277	)		(260,175	)		(221,796	)		(254,980	)		(84,110	)		(123,715	)		(205,062	)		(443,026	)		(146,141	)
Other income		26,078			13,174			166,542			240,622			109,589			36,150			48,587			113,478			218,501			72,077
Other expense		(11,660	)		(13,271	)		(136,921	)		(63,257	)		(48,651	)		(16,048	)		(27,144	)		(46,319	)		(98,683	)		(32,553	)
Income Tax		(209	)		(770	)		(3,601	)		(833	)		(672	)		(222	)		(367	)		(630	)		(34,042	)		(11,229	)
Monetary Loss		—			—			(291,238	)		(4,343	)		—			—			—			—			—			—
Minority Interest		—			—			2			—			—			—			—			(8	)		(27	)		(9	)
Net income		44,213			17,559			572,114			199,849			192,977			63,657			109,040			121,886			262,719			86,663
Net income per share		2.12			0.49			1.78			0.33			0.32			0.10			0.18			0.20			0.43			0.14
Dividends per share		0.31			0.31			—			—			0.10			0.03									0.05			0.02
Number of shares outstanding (in thousands)		35,500	(4)		35,500	(4)		680,943			608,943			608,943			608,943			608,943			608,943			608,943			608,943
U.S. GAAP:(4)
Net income											313,371			94,229			31,083			65,695			99,553
Net income per share											0.59			0.15			0.05			0.11			0.16
Weighted average number of shares outstanding (in thousands)											526,750			608,943			608,943			608,943			608,943

(1)	In constant pesos as of February 28, 2003.
(2)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(3)	Translated at the rate of Ps.3.0315 per US$1.00 the reference exchange rate reported by the Central Bank for December 30, 2005.
(4)	See note 35 to our audited consolidated financial statements for the year ended December 31, 2004 and note 25 to our condensed interim consolidated financial statements as of June 30, 2005 for a summary of significant differences between Central Bank Rules and U.S. GAAP.

41

Selected financial and operating data

BANCO MACRO BANSUD

		As of December 31,																		As of June 30,						As of December 31,
		2000(1)			2001(1)			2002(1)			2003(1)			2004(2)			2004(3)			2004			2005(2)			2005(2)			2005(3)
		(in thousands of pesos or U.S. dollars, as indicated)
Consolidated Balance sheet
Central Bank Rules:
Assets
Cash and due from banks			Ps.122,426			Ps.113,635			Ps.325,953			Ps.674,300			Ps.1,372,258			US$452,666			Ps.714,443			Ps.1,143,588			Ps.1,189,129			US$392,258
Government and private securities			487,212			285,664			868,033			2,155,766			2,106,737			694,949			1,696,060			2,810,030			2,991,764			986,892
Loans:
	to the non-financial government sector		90,133			104,485			462,440			365,549			809,577			267,055			367,262			701,957			645,342			212,879
	to the financial sector		121,942			23,093			1,593			17,835			81,812			26,987			106,383			158,644			80,511			26,558
	to the non-financial private sector and residents abroad		656,289			472,135			514,695			723,619			2,208,996			728,681			1,365,904			2,451,218			2,948,799			972,719
Allowances for loan losses			(55,689	)		(40,311	)		(116,125	)		(56,279	)		(225,340	)		(74,333	)		(78,363	)		(173,676	)		(247,532	)		(81,653	)
Other assets			749,769			416,490			1,761,485			1,144,237			2,443,715			806,108			1,386,183			2,337,465			1,879,809			620,092
Total assets			2,172,082			1,375,191			3,818,074			5,025,027			8,797,755			2,902,113			5,557,872			9,429,226			9,487,822			3,129,745
Average assets			1,948,780			1,663,367			3,804,445			4,356,792			5,705,542			1,882,085			5,473,772			9,413,937			9,357,401			3,086,723
Liabilities and shareholders’ equity
Deposits:
	from the non-financial government sector		247,568			224,872			218,264			382,195			809,764			267,117			743,059			956,319			822,687			271,380
	from the financial sector		4,388			2,673			7,552			11,909			4,445			1,466			6,353			5,815			5,208			1,718
	from the non-financial private sector		1,048,051			708,480			1,534,926			2,633,140			4,504,788			1,485,993			2,646,758			5,217,987			5,737,431			1,892,605
Other liabilities from financial intermediation and other liabilities			561,180			124,840			663,341			559,450			1,974,784			651,421			681,452			1,672,154			1,241,791			409,629
Subordinated corporate bond			60,162			56,955			71,101			24,200			16,416			5,415			24,043			17,589			12,047			3,974
Items pending allocation			4,392			4,025			5,939			3,783			4,554			1,502			1,005			10,661			854			282
Provisions			525			971			391,578			285,128			225,699			74,451			208,063			199,900			178,150			58,766
Minority interest in subsidiaries			4			0			3			3			3			1			3			60			80			26
Total liabilities			1,926,270			1,122,816			2,892,704			3,899,808			7,540,453			2,487,367			4,310,736			8,080,485			7,998,248			2,638,380
Shareholders’ equity			245,812			252,375			925,370			1,125,219			1,257,302			414,746			1,247,136			1,348,741			1,489,574			491,365
Average shareholders’ equity			228,041			252,634			730,955			949,023			1,179,611			389,118			1,225,156			1,278,668			1,333,163			439,770
U.S. GAAP:(4)
Shareholders’ equity												735,386			857,666			282,918			802,382			947,194

(1)	In constant pesos as of February 28, 2003.
(2)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(3)	Translated at the rate of Ps.3.0315 per US$1.00, the reference exchange rate reported by the Central Bank for December 30, 2005.
(4)	See note 35 to our audited consolidated financial statements and note 25 to our condensed interim consolidated financial statements as of June 30, 2005 for a summary of significant differences between Central Bank Rules and U.S. GAAP.

42

Selected financial and operating data

BANCO MACRO BANSUD

	As of and for the year ended December 31,
	2000(1)		2001(1)			2002(1)			2003(1)			2004(2)			2005
Selected consolidated ratios:
Profitability and performance
Net interest margin(%)(3)				9.92	%		8.87	%		6.84	%		6.37	%		5.23	%
Fee income ratio(%)(4)		47.68		48.87			11.06			41.29			34.38			40.43
Efficiency ratio(%)(5)		71.15		75.58			20.88			72.85			56.77			59.08
Fee income as a percentage of administrative expense(%)		67.01		64.66			52.95			56.68			60.56			68.43
Return on average equity(%)		19.39		6.95			78.27			21.06			16.36			19.71
Return on average assets(%)		2.27		1.06			15.04			4.59			3.39			2.81
Liquidity
Loans as a percentage of total deposits(%)		66.80		64.07			55.59			36.57			58.29			55.97
Liquid assets as a percentage of total deposits(%)(6)		—		32.11			47.05			65.12			53.69			58.65
Capital
Total equity as a percentage of total assets(%)		11.32		18.35			24.24			22.39			14.29			15.70
Regulatory capital as a percentage of risk-weighted assets(%)		21.26		20.28			27.36			43.79			35.71			31.03
Asset Quality
Non-performing loans as a percentage of total loans(%)(7)		14.31		18.68			16.94			8.91			6.50			5.34
Allowances as a percentage of total loans		6.41		6.72			11.86			5.08			7.27			6.74
Allowances as a percentage of non-performing loans(%)(7)		44.83		35.99			70.04			57.07			111.75			126.20
Amparos as a percentage of equity(%)		—		—			—			4.0			4.0			2.9
Operations
Number of branches							163			150			256			254	(8)
Number of employees		1,417		1,401			2,881			2,814			4,772			5,054

(1)	Calculated on the basis of amounts expressed in constant pesos as of February 23, 2003.
(2)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(3)	Net interest income divided by average interest earning assets.
(4)	Service charge income divided by the sum of gross intermediation margin and service charge income.
(5)	Administrative expenses divided by the sum of gross intermediation margin and service charge income.
(6)	Liquid assets include cash, cash collateral, LEBACs and NOBACs, and interbanking loans. Since 2004, we include overnight loans to highly rated companies.
(7)	Non-performing loans includes all loans to borrowers classified as “3-nonperforming/deficient compliance”, “4-high risk of uncollectibility/unlikely to be collected”, “5-uncollectible” and “6-uncollectible, classified as such under regulatory requirements” under the Central Bank loan classification system.
(8)	Includes the seven branches and the headquarters we acquired in November 2005 from the restructuring of Banco Empresario de Tucumán. This number does not include the 25 branches and the headquarters included in the pending acquisition of Banco del Tucumán S.A.

43

Selected financial and operating data

NUEVO BANCO SUQUÍA

		As of December 31,
		2003(1)			2004			2004(2)
		(in thousands of pesos or
		U.S. dollars, as indicated)
Income Statement
Central Bank Rules:
Financial income			Ps.224,099			Ps.186,361		US$	61,475
Financial expense			(137,932	)		(107,198	)		(35,361	)
Gross intermediation margin			86,167			79,163			26,113
Provision for loan losses			(800	)		(124,682	)		(41,129	)
Service charge income			68,402			93,732			30,919
Service charge expense			(19,971	)		(24,848	)		(8,197	)
Administration expense			(103,244	)		(113,212	)		(37,345	)
Other income			10,567			47,127			15,546
Other expense			(39,691	)		(20,101	)		(6,631	)
Monetary loss			(479	)		—			—
Net income (loss)			951			(62,821	)		(20,723	)
Number of common shares outstanding			15,000			303,750			303,750
Earnings per share			0.06			(0.21	)		(0.07	)
U.S. GAAP:(3)
	Net income		(253,794	)		41,106			13,560

(1)	In constant pesos as of February 28, 2003.
(2)	Translated at the rate of Ps.3.0315 per US$1.00, the reference exchange rate reported by the Central Bank for December 30, 2005.
(3)	See note 20 to Nuevo Banco Suquía’s audited financial statements for a summary of significant differences between Central Bank Rules and U.S. GAAP.

44

Selected financial and operating data

NUEVO BANCO SUQUÍA

		As of December 31,
		2003(1)			2004			2004(2)
		(in thousands of pesos or
		U.S. dollars, as indicated)
Balance sheet
Central Bank Rules:
Assets
Cash and due from banks			Ps.351,381			Ps.310,501		US$	102,425
Government and private securities			420,667			672,782			221,930
Loans
	to the non-financial government sector		280,044			303,990			100,277
	to the financial sector		0			47,504			15,670
	to the non-financial private sector and residents abroad		365,771			773,553			255,172
Allowances for loan losses			(31,606	)		(143,495	)		(47,335	)
Other assets			646,769			714,905			235,825
Total assets			2,033,026			2,679,740			883,965
Liabilities and shareholders’ equity
Deposits
	from the non-financial government sector		419			1,447			477
	from the financial sector		636			605			200
	from the non-financial private sector		1,340,702			1,541,658			508,546
Other liabilities from financial intermediation and other liabilities			564,162			807,405			266,339
Provisions			37,902			16,996			5,606
Other liabilities			7,836			4,331			1,429
Total liabilities			1,951,657			2,372,442			782,597
Shareholders’ equity			81,369			307,298			101,368
U.S. GAAP:(3)
Shareholders’ equity			(189,124	)		306,718			101,177

(1)	In constant pesos as of February 28, 2003.
(2)	Translated at the rate of Ps.3.0315 per US$1.00, the reference exchange rate reported by the Central Bank for December 30, 2005.
(3)	See note 20 to Nuevo Banco Suquía’s audited financial statements for a summary of significant differences between Central Bank Rules and U.S. GAAP.

45

Pro forma financial data

The following unaudited pro forma information is based on the financial statements of Banco Macro Bansud and Nuevo Banco Suquía and is presented to show the results of operations for the year ended December 31, 2004 as if Banco Macro Bansud and Nuevo Banco Suquía had operated on a consolidated basis from January 1, 2004. The pro forma information takes into account the results of the year ended December 31, 2004 for Banco Macro Bansud, which consolidates the results of operations of Nuevo Banco Suquía from December 22, 2004, and the results of Nuevo Banco Suquía for the period from January 1, 2004 to December 21, 2004, and eliminates intercompany transactions. As a result, the consolidated balance sheet of Banco Macro Bansud consolidates the balance sheet of Nuevo Banco Suquía at December 31, 2004. These pro forma results are not necessarily indicative of the results of the consolidated entity may have in the future or would have had if the acquisition by Banco Macro Bansud of Nuevo Banco Suquía had actually taken place on January 1, 2004.

Under Central Bank Rules, business combinations are accounted for at carryover value. We recognized the difference between the net equity book value at the acquisition date and the purchase price as negative goodwill. The negative goodwill is being amortized under the straight-line method over five years. As Nuevo Banco Suquía’s shareholders’ equity (book value) amounted to Ps.16.9 million, the bank recorded negative goodwill of Ps.483,000.

Under U.S. GAAP, SFAS 141 requires the acquisition of the controlling interest of Nuevo Banco Suquía to be accounted for as a business combination applying purchase accounting. The purchase price has been allocated to the identifiable tangible and intangible assets with finite lives acquired and liabilities assumed based upon their fair value as of the acquisition date, with the excess of the fair value over the cost resulting in negative goodwill.

Under U.S. GAAP, the pro forma condensed income statement shall disclose income (loss) from continuing operations before nonrecurring charges or credits directly attributable to the transaction. Material nonrecurring charges or credits and related tax effects shall be disclosed in a footnote. In addition, the pro forma condensed income statement only shall include adjustments which give effect to events that are (i) directly attributable to the transaction, (ii) expected to have a continuing impact on the registrant, and (iii) factually supportable.

Therefore, the Banco Macro Bansud column below includes consolidated results of operations for the fiscal year ended December 31, 2004 in accordance with Central Bank Rules. The Nuevo Banco Suquía column includes results of operations from January 1, 2004 through December 21, 2004 (prior to the acquisition date), in accordance with Central Bank Rules. The “U.S. GAAP adjustments” column includes differences between Central Bank Rules followed in the preparation of the financial statements of Banco Macro Bansud and Nuevo Banco Suquía (January 1, to December 21, 2004) and those applicable in the United States under U.S. GAAP, as further detailed in notes 35 and 20 to the financial statements as of December 31, 2004 of Banco Macro Bansud and Nuevo Banco Suquía, respectively).

46

Pro forma financial data

				NUEVO
				BANCO
				SUQUÍA
	BANCO			(January 1 to
	MACRO			December 21,			Pro Forma
	BANSUD			2004)			Central
	Central			Central			Bank			US GAAP			Total			Pro Forma			Pro Forma
	Bank Rules(1)			Bank Rules			Rules			Adjustments			US GAAP			Adjustments			US GAAP
	(pesos in thousands
Central Bank Rules:
Interest and fees on loans		144,833			105,847			250,680			18,983			269,663						269,663
Government securities and other trading gains, net		216,937			36,562			253,499			30,242			283,741						283,741
Other interest income		30,201			24,778			54,979			—			54,979						54,979
Total interest income		391,971			167,187			559,158			49,225			608,383						608,383
Interest on deposits		73,899			38,657			112,556			—			112,556						112,556
Other interest expense		22,701			53,521			76,222			89,905			166,127						166,127
Total interest expense		96,600			92,178			188,778			89,905			278,683			—			278,683
Net interest income		295,371			75,009			370,380			(40,680	)		329,700						329,700
Provision for loan losses, net		(25,107	)		(47,096	)		(72,203	)		(901	)		(73,104	)		—			(73,104	)
Net interest income after provision for loan losses		270,264			27,913			298,177			(41,581	)		256,596						256,596
Service charges on deposit accounts		81,503			69,243			150,746			—			150,746						150,746
Credit-card service charges and fees		41,310			—			41,310			—			41,310						41,310
Other non-interest income		43,704			25,315			69,019			—			69,019						69,019
Total non-interest income		166,517			94,558			261,075			—			261,075			—			261,075
Salaries and payroll taxes		132,910			74,512			207,422			1,169			208,591						208,591
Depreciation and bank premises and equipment		18,881			4,058			22,939			(5,939	)		17,000						17,000
Amortization of organization and development expenses		26,106			333			26,439			(93	)		26,346						26,346
Amortization of customer related intangible assets																	1,975	a		1,975
Negative goodwill		(73,112	)		—			(73,112	)		73,112			0			(3,336	)b		(3,336	)
Other non-interest expense		138,347			107,973			246,320			(58,632	)		187,688						187,688
Total non-interest expense		243,132			186,876			430,008			9,617			439,625			(1,361	)		438,264
Minority interest income from subsidiaries		—			(74	)		(74	)		—			(74	)					(74	)
Income before income tax expense		193,649			(64,479	)		129,170			(51,198	)		77,972			1,361			79,333
Income tax expense		(672	)		—			(672	)		59,134			58,462			176	c		58,638
Income from continuing operations		192,977			(64,479	)		128,498			7,936			136,434			1,537			137,971
Net income (loss)		192,977			(64,479	)		128,498			7,936			136,434			1,537			137,971
Basic earnings per share (stated in pesos)(3)		0.32	(2)																	0.23
Weighted average number of shares Outstanding (in thousands)		608,943																		608,943

(1) Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.

47

Pro forma financial data

(2) As of December 31, 2004, the basic earnings per share of Banco Macro Bansud in accordance with U.S. GAAP is the following:

Net income under U.S. GAAP (in thousands)	94,229
Weighted average number of shares outstanding (in thousands)	608,943
Basic earnings per share under U.S. GAAP (stated in Ps.)	0.15

(3) There is no diluted earnings per share disclosure as no potential common shares exist.

The Pro Forma Adjustments column includes:

a)  Purchase price adjustment related to core deposit intangible assets which is being amortized under the straight line method over five years. This adjustment decreased income by Ps.1.98 million.

b)  Reversal of recorded depreciation generated by the effect of allocating the negative goodwill to reduce the amount of non-monetary assets. This adjustment increased income by Ps.3.34 million.

c)  Income tax effects related to these pro-forma adjustments. These adjustments increased income by Ps.176,000.

48

Management’s discussion and analysis of financial condition and results of operations

This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Special note regarding forward-looking statements,” “Risk factors,” “The crisis and recovery in Argentina” and the matters set forth in this prospectus generally.

The following discussion is based on, and should be read in conjunction with, our consolidated financial statements and related notes contained elsewhere in this prospectus, as well as “Prospectus summary—Summary financial and operating data,” “Selected financial and operating data” and the other financial information appearing elsewhere in this prospectus.

FINANCIAL PRESENTATION

The audited financial statements as of December 31, 2004 and 2003 and for the three years ended December 31, 2004, the audited consolidated financial statements as of December 31, 2005, and the unaudited financial statements for the six months ended June 30, 2005 and 2004 included elsewhere in this prospectus have been prepared in accordance with Central Bank Rules. Central Bank Rules differ in certain significant respects from U.S. GAAP. See note 35 to the audited financial statements for the years ended December 31, 2004 and 2003 and note 25 to our condensed interim consolidated financial statements for June 30, 2005. As a result of the economic crisis, Argentina experienced very high rates of inflation in 2002. During that year, inflation, as measured by the wholesale price index, reached approximately 118%. During 2003 and 2004, inflation levels returned to much lower levels. As a result, Central Bank Rules reinstated inflation accounting at the beginning of 2002 until February 28, 2003. Therefore, all the financial statement data in this prospectus for periods prior to February 28, 2003 have been restated in constant pesos as of such date by applying the adjustment rate derived from the internal wholesale price index published by INDEC. We do not report our results by accounting segments.

COMPARABILITY

During the fiscal year ended December 31, 2002, there were many changes in Argentina’s economic and financial situation, which deteriorated markedly beginning in late 2001. The measures taken included restrictions on deposit withdrawals, the pesification of certain debts originally denominated in U.S. dollars, the issuance of compensation bonds to cover the financial system imbalance, and the devaluation of the Argentine peso. These measures had significant effects on our results of operations for the year ended December 31, 2002, which, despite the restatement of financial information in constant pesos, are not comparable with our results of operations for the years ended December 31, 2003 and 2004.

In addition, in December 2004, we acquired Nuevo Banco Suquía, which significantly enhanced the size and scope of our business. As a result of our acquisition of Nuevo Banco Suquía, our results of operations for the six-month period ended June 30, 2005 and the year ended December 31, 2005 differ significantly from our results of operations for the six-month period ended June 30, 2004 and the year ended December 31, 2004. Given the instability, and regulatory and economic changes that Argentina has experienced since the beginning of the economic crisis in 2001, the financial information set forth in this prospectus may not be fully indicative of our anticipated results of operations or business prospects after the dates indicated.

49

Management’s discussion and analysis of financial condition and results of operations

OVERVIEW

We are one of the leading banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and by our focus on low-and middle-income individuals and small- and medium-sized businesses, generally located outside of the Buenos Aires metropolitan area, which we believe offer significant opportunity for continued growth in our banking business. According to the Central Bank, as of December 31, 2005, we were ranked fourth in terms of assets and third in terms of equity among private-sector banks.

Our consolidated net income for 2004 was Ps.193.0 million (US$64 million), representing a return on average equity of 16.4% and a return on average assets of 3.4%. Our consolidated net income for the year ended December 31, 2005 was Ps.262.7 million (US$87 million), representing a return on average equity of 19.7% and a return on average assets of 2.8%.

In general, given the relatively low level of banking intermediation in Argentina currently, there are limited products and services being offered. We are focusing on the overall growth of our loan portfolio by expanding our customer base and encouraging them to make use of our lending products. We have a holistic approach to our banking business; we do not manage the bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources and assessing profitability. We have savings and checking accounts, credit and debit cards, consumer finance loans and other credit-related products and transactional services available to our individual customers and small- and medium-sized businesses through our branch network. We also offer Plan Sueldo payroll services, lending, corporate credit cards, mortgage finance, transaction processing, and foreign exchange. In addition, our Plan Sueldo payroll processing services for private companies and three provincial governments give us a large and stable customer deposit base.

We emerged from the Argentine economic crisis of 2001 and 2002 as a stronger and larger bank. In January 2002, in the midst of the crisis, Banco Macro S.A., our predecessor, acquired a controlling interest in Banco Bansud S.A. This acquisition tripled the size of our bank as measured by assets, and expanded our geographic presence from the northern provinces of Argentina to the southern provinces. In December 2004, during the recovery period of the Argentine economy, we completed the acquisition of Nuevo Banco Suquía S.A., the leading private bank in the central provinces of Argentina, thereby becoming the private sector bank with the country’s most extensive branch network. The Nuevo Banco Suquía transaction increased our assets by 41% and our number of branches by 67%. In November 2005, the Central Bank, in the context of the restructuring of Banco Empresario de Tucumán, transferred to us a portion of its assets (including its seven branches and the headquarters) and liabilities. We also signed an agreement for the acquisition of Banco Tucumán, which has 25 branches and the headquarters in Tucumán. These acquisitions will increase our assets by 10% and our branches by 14%. Beginning at the end of 2002 and during the recovery years, we also experienced organic growth as our business in the provinces of Argentina suffered lower levels of volatility than our principal competitors in the Buenos Aires metropolitan area.

IMPACT OF THE 2001-2002 ECONOMIC CRISIS ON US

The economic crisis and the Argentine government’s response to the economic crisis, described elsewhere in this prospectus under the caption “The crisis and recovery in Argentina”, had dramatic effects on the business and financial results of Argentine banks, including us, as substantially all of our operations and customers are located in Argentina. As described below, the run on bank deposits, government measures to counteract the effects of the crisis (such as the corralito, corralón and asymmetric pesification), the devaluation of the peso, the high inflation environment that accompanied the crisis, the virtual suspension of banking activity and government compensation measures to offset the effects of

50

Management’s discussion and analysis of financial condition and results of operations

asymmetric pesification, all had significant negative effects on our business and results of operations. However, as discussed in “—Our response to the crisis” we believe we have managed to address these challenges successfully. Moreover, as the Argentine economy continues to recover and the business environment stabilizes, we have emerged from the crisis as a larger and we believe stronger bank.

The run on bank deposits and restrictions on withdrawals

Beginning in the first quarter of 2001, in response to growing and widespread concern about the solvency of the Argentine banking system, private depositors began to withdraw funds. As a result, we experienced a decrease in the overall level of our deposits. In addition, depositors that kept their funds in the bank shifted their funds out of time deposits into demand deposit accounts in anticipation of a further deterioration in the Argentine banking system.

† Corralito

The Argentine government’s initial response to the run on bank deposits, the corralito, limited the amount of cash that could be withdrawn from banks within specified time periods. However, this measure amplified public concern about the solvency of the banking system and contributed to a further decrease in deposit levels, as many depositors withdrew funds up to the permitted limit.

† Corralón

Under the corralón, another government measure to address the run on bank deposits, the maturity for time deposits denominated in pesos and substantially all deposits denominated in U.S. dollars was mandatorily extended. In connection with the corralón, we were required to issue CEDROs to affected customers, representing the interest in the underlying, rescheduled deposits.

Below is a table that shows the impact of the crisis and recovery on our and the financial system’s deposit base. For more information on our response, see “—Our Response to the Crisis—Loyal client base” and “—Acquisitions.” The information detailed below is based on unconsolidated information reported monthly to the Central Bank and has not been adjusted for intercompany eliminations or adjusted for inflation.

Phase 1. Bank run:	December 31, 2000 to November 30, 2001
Phase 2. Corralito:	November 30, 2001 to December 31, 2001
Phase 3. Corralón:	January 31, 2002 to April 30, 2002
Phase 4. Stabilization:	April 30, 2002 to April 30, 2003
Phase 5. Recovery:	April 30, 2003 to December 31, 2005

Change in	Phase 1:			Phase 2:			Phase 3:			Phase 4:		Phase 5:
total deposits	Bank Run(1)			Corralito			Corralón(2)			Stabilization		Recovery
	(in millions of pesos
Banco Macro		(171	)		8			(21	)		295
Banco Bansud		(354	)		(29	)		(183	)		337
Banco Macro and Banco Bansud		(525	)		(21	)		(204	)		632		2,469
Financial system		(18,205	)		(1,918	)		(10,010	)		7,646		55,359

(1)	We excluded the month of January 2002 because of the impact on nominal changes caused by the pesification of U.S. dollar-denominated deposits.
(2)	Banco Macro acquired Banco Bansud in January 2002; however, the information in the table above has not been consolidated for the corralón phase as we were just beginning to manage Banco Bansud during that period.

51

Management’s discussion and analysis of financial condition and results of operations

Source: Central Bank

(1)	We excluded the month of January 2002 because of the impact on nominal changes caused by the pesification of U.S. dollar-denominated deposits.
(2)	Banco Macro acquired Banco Bansud in January 2002; however, the information in the table above has not been consolidated for the corralón phase as we were just beginning to manage Banco Bansud during that period.

Asymmetric pesification and the Argentine government’s compensation measures

The asymmetric conversion of loans and deposits into pesos, the increase in banks’ non-performing loans and the decline in value of bank holdings of government debt, left much of the financial sector virtually insolvent. To help prevent widespread insolvencies, the Argentine government pledged to provide offsetting compensation to banks. The general principles of the compensation scheme were to: (1) maintain the peso value of each bank’s net worth, and (2) leave the banks hedged in terms of currency. To that end, the Argentine government issued two types of bonds to banks:

†

a bond denominated in pesos (BODEN 2007) to compensate for losses linked to asymmetric pesification; and

†

a bond denominated in dollars (BODEN 2012) that the Central Bank offered to affected banks at a discounted price of Ps.1.40 plus CER indexation to US$1.00, to compensate for the consequences of creating a mismatch between a bank’s dollar and peso position as a result of pesification. Banks could purchase the BODEN 2012 with either BODEN 2007 or by borrowing the applicable amount from the Central Bank.

52

Management’s discussion and analysis of financial condition and results of operations

Our cumulative compensation completely received from the Argentine government was as follows:

					Total
	BODEN 2007		BODEN 2012		Compensation
	(in millions of pesos
Banco Macro		49.7		—		49.7
Banco Bansud		—		392		392
Nuevo Banco Suquía		209.3		142.6		351.9
Total		259.0		534.6		793.6

At December 31, 2005, we recorded on our balance sheet BODEN 2007 and BODEN 2012 for a total of Ps. 188 million, reflecting the current position of compensation bonds, including Ps. 11 million received from Banco Empresario de Tucumán, net of amounts that have been traded.

Amparos

The corralón, corralito and pesification led to numerous amparos by depositors seeking court orders to have their deposits returned (in U.S. dollars in the case of U.S. dollar-denominated deposits). Additionally, Central Bank Rules permit the losses related to amparos to be accounted for as an intangible asset and amortized over five years. We took affirmative steps to reduce our exposure to amparos by agreeing to exchange depositors’ CEDROs with time deposits plus BODEN 2012 and our guarantee on the BODEN 2012 in the event of a sovereign default. On December 31, 2005, we had approximately Ps.42.6 million in amparos. The table below demonstrates our success in negotiating with our depositors, which has allowed us to maintain a low ratio of amparos as a percentage of equity, compared to the financial system as a whole:

	Amparos/Equity
	As of
	December 31,
	2003		2004		2005
Banco Macro Bansud		4.0%		4.0%		3.0%
Financial system		29.8%		24.7%		19.0%

Source:     Central Bank

Disappearance of market for private loans and increase in non-performing loans

Amid the inflationary fears, peso devaluation, GDP contraction, consumption collapse and rising unemployment accompanying the economic crisis, the level of private loans in the financial system dropped dramatically, loan origination virtually ceased for most of 2002 and the incidence of non-performing loans increased. The following table shows the evolution of net loan origination of Banco Macro, Banco Bansud and, as of 2002, Banco Macro Bansud, defined as the year over year variation in the twelve-month average of private sector loans:

	2000 (1)		2001 (1)		2002 (1)		2003 (1)		2004		2005
Net loan origination (in millions of pesos)		(944.3)		(1,322.3)		(867.9)		(58.6)		584.0		565.8

(1) In constant pesos as of February 28, 2003.

In addition, holders of CEDROs issued by us in connection with the corralón could return the CEDROs to us to satisfy their loan payment obligations, which further contributed to lowering the level of private loans outstanding during the crisis. In our case, the impact was magnified by the writeoff of bad loans and by collections of outstanding loan amounts from borrowers. The following

53

Management’s discussion and analysis of financial condition and results of operations

table shows the improving quality of our loan portfolio as compared to the financial system. The definition of non-performing lending in the table comes from the Central Bank and is not comparable to the non-performing loans definition in “Selected statistical information.”

	Year Ended December 31,
	2002			2003			2004			2005
Banco Macro Bansud
Allowances/lending(1)		11.9	%		5.2	%		8.8	%		6.5	%
Non-performing lending ratio(2)		15.4			9.0			8.0			5.0	(3)
Financial System
Allowances/lending(1)		12.7	%		13.0	%		9.8	%		5.6	%
Non-performing lending ratio(2)		18.0			17.2			10.3			5.4

Source:     Central Bank

(1)	Includes loans, other receivables from financial transactions, financial leases, memorandum accounts—other guarantees provided (included in Debtors Rating Standards) and memorandum accounts—loans classified as irrecoverable.
(2)	Non-performing lending includes all lending to borrowers classified as “3 – nonperforming/ deficit compliance,” “4 – high risk of uncollectibility/ unlikely to be collected,” “5 – uncollectible” and “6 – uncollectible,” under the Central Bank loan classification system.
(3)	This ratio calculated without the loan portfolio of the Banco Empresario de Tucumán (64% of non-performing lending) is 3.2%.

Devaluation and inflation

The economic crisis was accompanied by a sharp decrease in the value of the peso and severe inflation in 2002. The steep devaluation of the peso triggered private sector and government defaults on foreign currency-denominated indebtedness and also resulted in the pesification of foreign-currency denominated indebtedness governed by Argentine law at an exchange rate of one peso for each U.S. dollar. While the devaluation did not have a significant effect on our net income due to our low level of U.S. dollar-denominated liabilities, the introduction of asymmetric pesification as a measure to counter the effects of the devaluation did affect us. See “—Asymmetric pesification and the Argentine government’s compensation measures” above.

Under Central Bank Rules, our results of operations for the year ended December 31, 2002 and for the two-month period ended February 28, 2003 were adjusted to account for the effects of inflation in Argentina during those periods. For the periods subsequent to February 28, 2003, the inflation adjustments were no longer applied to our financial statements or the financial statements of Nuevo Banco Suquía under Central Bank Rules, as inflation returned to normalized levels during 2003 and 2004, as illustrated in the table below.

	December 31,
	2001			2002			2003			2004			2005
Wholesale price inflation		(5.30	)%		117.96	%		1.95	%		7.87	%		10.74	%
Inflation rate adjustment to our financial statements		0.00			117.96			0.86			0.00			0.00
CER		—			40.53			3.65			5.48			11.75

Source:     INDEC

(1) CER beginning on February 2, 2002.

54

Management’s discussion and analysis of financial condition and results of operations

As a result of pesification, certain of our assets and liabilities are adjusted primarily for CER. In particular, CEDROs, and pesified government debt are adjusted for CER. In addition, a portion of our pesified private sector loan portfolio is adjusted for CER.

OUR RESPONSE TO THE CRISIS

The effect of the crisis on the Argentine banking system presented challenges that we promptly took measures to address and created attractive opportunities that we acted upon. Despite the magnitude of the economic crisis and its impact on the banking sector, we managed to deal successfully with the turmoil and remained profitable. At the beginning of the crisis, we had high liquidity, which we maintained throughout the crisis. That high liquidity, combined with our loyal base of retail deposits, as well as deposits from provincial governments for whom we serve as financial agent, all a result of our response to the crisis and strategic vision for our business, helped us restore our deposit base faster than the financial system as a whole. We also were able to resume lending to the private sector before the rest of the financial system.

We believe that our strengths at the time and our response measures described below were important elements of our ability to withstand the effects of the crisis and helped to position us to benefit significantly from a recovery of the banking system. Furthermore, our comparatively strong financial condition during the economic crisis made it possible for us to become a leading nationwide bank by acquiring Banco Bansud and Nuevo Banco Suquía.

Commercial and balance sheet strategies

Throughout the economic crisis, we maintained a strong position with respect to excess capital, our portfolio and the level of our provisions. To counteract the effects of the run on deposits, one of our main priorities was to give depositors confidence that we would be able to absorb losses and fulfill our obligations to them.

Our practice of maintaining high liquidity levels throughout the business cycles helped us to withstand the economic crisis by serving two key purposes. First, we had funds available in the face of adverse systemic events. Second, we gave our depositors confidence that they would be able to have access to their deposits at any time, even during the depth of a crisis. Our emphasis on maintaining high liquidity helped us to emerge from the crisis without any assistance from the Central Bank. We also minimized excess cash deposited in the Central Bank, without harming our overall liquidity position. In this way, we maximized the return on our liquidity stock by keeping funds in more profitable assets, such as Central Bank-issued LEBACs and overdrafts to highly rated large corporations.

In light of the potential exposure to amparos, we proactively offered several alternatives to our depositors, exchanging CEDROs for a combination of time deposits and government bonds. This response proved to be very successful; the stock of CEDROs on our balance sheet, which corresponded to approximately 55% of our total deposits in March 2002 (as compared to 24% for the financial system), fell to 8% just one year later, well below the 19% average for the financial system at that time.

Loyal client base

We also benefited from a loyal client base, as evidenced in part by the quick recovery of our deposit base after the crisis, due to our long-standing relationships, primarily through our Plan Sueldo payroll services. As a result, our source of funding regained volume faster as compared to the banking sector as a whole, as shown in “—Impact of the 2001-2002 economic crisis on us—The run on bank deposits and restrictions on withdrawals.”

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Management’s discussion and analysis of financial condition and results of operations

Acquisitions

The crisis had a severe adverse impact upon the market value of Argentine banks. Our high level of liquidity and solvency throughout the crisis provided us with the resources to capitalize upon attractive acquisition opportunities and to expand our reach within Argentina. See “Business— Our history.” The following table sets forth our assets, private sector loans, private sector deposits and branches before and after the acquisitions of Banco Bansud and Nuevo Banco Suquía:

									December 31,
									2005
									Banco Macro
									Bansud
					September 30, 2004				(including Nuevo
									Banco Suquía		December 31,
	September 30, 2001								and Banco		2005
					Banco Macro		Nuevo Banco		Empresario de
	Banco Macro(1)(2)		Banco Bansud(1)(2)		Bansud(2)		Suquía(2)		Tucumán)		Banco del Tucumán S.A.(3)
	(in thousands of pesos, except branches
Assets		Ps.1,424.0		Ps.3,357.1		Ps.5,312.6		Ps.2,162.8		Ps.9,487.8		Ps.827.0
Private sector loans (Gross)		590.8		899.8		1,187.1		711.0		2,948.8		215.3
Private sector deposits		790.6		2,301.5		2,236.0		1,443.5		5,737.4		260.7
Branches		73		72		154		102		254		26

Source:     Central Bank

(1)     In constant pesos as of February 28, 2003.

(2)     Last quarter prior to acquisition.

(3)     Acquisition pending approval of the Central Bank and the Argentine anti-trust authorities.

Banco Bansud. In January 2002, we acquired a controlling interest in former Banco Bansud from Banco Nacional de Mexico S.A., or Banamex. As part of the transaction, Banamex made an irrevocable capital contribution to Banco Bansud of US$305 million (of which US$60 million was a cash capital contribution). In addition, before the sale, Banamex purchased for cash certain assets from Banco Bansud for US$151 million. We agreed to pay Banamex US$65 million, to be adjusted in accordance with the amount of collections on certain loans. In 2003, the total amount of the liability in respect of the purchase price was determined to be zero as a result of this adjustment mechanism and no cash payment was made to Banamex. In 2003, Banco Macro and Banco Bansud were merged. Financial statements prepared according to Central Bank Rules require the historical financial statements to be restated to treat the merger as being effective from the time that Banco Macro acquired a controlling interest in Banco Bansud.

Scotiabank Quilmes S.A. We also purchased the assets and liabilities, including 36 branches, of Scotiabank Quilmes S.A. in August 2002.

Nuevo Banco Suquía. Our strong liquidity and solvency also enabled us to acquire Nuevo Banco Suquía in a public auction in December 2004 at a fixed price of Ps.15 million plus a commitment to make a capital contribution of Ps.289 million. This acquisition further enhanced our financial intermediation volume, completed our geographic coverage and complemented our existing base of clients. Upon the acquisition of Nuevo Banco Suquía, we became Argentina’s fourth largest private bank in terms of net worth, the fourth in deposits, and the fifth in private sector loans. In addition, we now have the largest and most extensive private bank network in Argentina. As we acquired Nuevo Banco Suquía in December 2004, its results of operations are only reflected in our financial statements

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Management’s discussion and analysis of financial condition and results of operations

for ten days of 2004, and for all periods in 2005. See “Pro forma financial information” contained elsewhere in this prospectus.

Acquisitions in the Province of Tucumán.

Consistent with our strategy, we are increasing our presence in the northern province of Tucumán, where we previously had only two branches. In November 2005, the Central Bank, in the context of the restructuring of Banco Empresario de Tucumán, transferred to us a portion of its assets amounting to approximately Ps.107 million, including its seven branches and the headquarters, liabilities, consisting of deposits of approximately Ps.138 million, and obligations to the Central Bank for liquidity assistance of Ps.31 million. The liability of Banco Empresario de Tucumán with the Central Bank for liquidity assistance was cancelled after the acquisition.

We also have received approval from the Executive Authority of the province of Tucumán and the Central Bank for the acquisition of Banco del Tucumán S.A. Authorization from the Argentine antitrust authorities is pending. Upon completion of the acquisition, we will add 25 branches and a headquarters to our branch network in Tucumán and will become the financial agent for the provincial government of Tucumán. We will own 54.5% of the branches in the province and our total number of branches will increase to 280 nationwide, with 36 branches in the province of Tucumán, and we will have a 7.2% market share of the total number of branches in Argentina.

Cost management

Since the crisis, we have focused on controlling our costs and improving our efficiency. In addition, we have focused on carefully integrating the operations of our acquisitions. To this end, we have centralized, among other things, the treasury operations of all our acquisitions. We have also had a period of organic growth with a small reduction in the number of our employees. See “Business—Employees.” We also improved our ratio of service income to administrative expenses from 53.0% in 2002 to 68.4% in 2005. Finally, we implemented centralized purchasing practices to take advantage of our economies of scale.

Implementation of improved credit policies

After the crisis, when we resumed lending in 2002, we restricted our lending activities to only low risk credit products, such as loans to individuals with Plan Sueldo accounts and overdrafts to highly rated companies. Prior to expanding the scope of our lending activities, we modified our credit policies to take into account the new economic reality. For example, we established new factors to determine whether a potential debtor was an acceptable credit risk because old policies, such as credit history, were no longer useful due to the high levels of default during the crisis. We began focusing more closely on potential lenders’ ability to pay based on the quality of their business, their willingness to meet their obligations, and their access to alternative sources of funding. In addition, we established a policy of seeking personal guarantees from owners for loans to most companies. Finally, we reduced the lending limit of our branches and established a senior committee to approve all loans in excess of Ps.1 million.

Restoring lending to the private sector

We believe that we were among the first banks to make new loans in the aftermath of the economic crisis, beginning in the fourth quarter of 2002. In 2003, we increased our private sector loans by Ps.209 million, or 41%, as compared to 2002. The expansion of our private sector loans accelerated in 2004, increasing by 205% to Ps.2,209 million when we added Ps.1,485.4 million to our loan portfolio, of which Ps.721.8 million was organic growth and the rest came through the acquisition of Nuevo Banco Suquía. The organic growth of our loan portfolio was the highest among the ten largest

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Management’s discussion and analysis of financial condition and results of operations

Argentine banks during 2004. During 2005 we continued to exhibit high rates of organic growth as loans to the private sector (net of liquidity management and securitizations) increased 68%.

PRINCIPAL TRENDS AFFECTING OUR BUSINESS

We believe that the following trends in the Argentine economy, the banking sector and our business have affected and will, for the foreseeable future, continue to affect our results of operations and profitability. Our continued success and ability to increase our value to our shareholders will depend, among other factors, upon the continued economic recovery in Argentina and the reemergence of the market for long-term private sector lending.

Argentine economic recovery and continued growth

Argentina’s overall economic performance will continue to have a substantial effect on our financial results. During 2003 and 2004, GDP growth was 8.8% and 9.0%, respectively, and for the twelve month period ended September 30, 2005, GDP growth was 9.2%. The Central Bank’s survey of independent forecasting firms as of January 2006 indicates a consensus GDP growth estimate of 9.0% for 2005 and 6.8% in 2006. We expect demand for private sector loans to grow in line with GDP growth as investment and consumption in the private sector increases. Due to our focus on the low- and middle-income individuals and small- and medium-sized businesses, generally located outside of the Buenos Aires metropolitan area, of particular significance to us are:

†	Export-led growth in the economy. The recovery of Argentina’s post-crisis economy has been led by export growth and import substitution. This economic model is likely to favor provinces outside of the Buenos Aires metropolitan area that are heavily focused on primary sectors of the economy, such as agriculture, cattle ranching, mining, basic industries and tourism. Our extensive branch network outside of the Buenos Aires metropolitan area (85% of our branches, as compared to 65% for Argentina’s financial system) provides us with an opportunity to take advantage of growth in these provinces to increase our credit portfolio faster than our competitors and to increase our market share.
†	Gradual recovery of proportion of national income held by lower income segments. After decades of widening, the income distribution gap between rich and poor in Argentina began to narrow during 2003 and 2004, when the crisis resulted in a collapse of income of all population segments. The real income of the poorer half of Argentina’s population has fallen over the last decades, from 32% of the income of the richer half in the late 1970s to less than 20% of the income of the richer half in the aftermath of the crisis. Since that time, the gap has narrowed and now the real income of the poorer half is 22% of the income of the richer half. We believe that the long-term trend of increasing income inequality has stopped and that the recent improvement in income distribution will continue. Given our focus on the low- to medium-income individuals, we believe that we are well-positioned to benefit from an increase in credit demand by these population segments.
†	Transitional inflation. The inflation rate for 2005 was 12.3%. We believe that this increase in inflation is a result of the government’s policy of keeping the value of the peso to the dollar at the relatively low level of approximately Ps.3 to US$1. We believe that to the extent that the market views this exchange rate as being stable, they will be in a better position to forecast future inflation. Furthermore, as the real exchange rate reaches its new equilibrium, inflation will converge with international levels. As a result, the current inflation forecasts, assuming a stable nominal exchange rate, show a declining inflation rate.

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Management’s discussion and analysis of financial condition and results of operations

Reduction in public sector exposure

Since the crisis of 2001 and 2002, Argentine government securities and other public sector obligations have represented a substantial portion of our balance sheet. We are managing our assets to gradually reduce the proportion of our balance sheet represented by such securities and other public sector obligations and to increase the proportion of our balance sheet represented by private sector lending. We expect our income from holding government obligations to continue to decline and to be offset by income resulting from the continued recovery of private sector lending in Argentina.

The increase in our position in government securities and other public sector obligations is mainly attributable to:

†	the forms of compensation received by the banking system in the context of asymmetric pesification, which, as described in greater detail in “The crisis and recovery in Argentina,” included BODEN 2007 and BODEN 2012;
†	the stock of public securities and other public sector obligations that we inherited upon our acquisition of Banco Bansud in January 2002 and Banco Nuevo Suquía in December 2004;
†	the purchases of treasury bills, principally in the form of LEBACs and NOBACs (Notas del Banco Central, or Central Bank notes), made by our treasury desk as the preferred investment vehicle for our excess liquidity; and
†	the slow recovery of private sector lending, which continues at low levels due to concerns about increased inflation, which has delayed the development of long-term lending.

Although generally government debt would be expected to yield lower levels of returns, the appreciation of the market value of the securities acquired by us over this time frame and the high risk premiums offered on the securities made these holdings highly profitable for us over the 2002 to 2004 period. See “Selected statistical information—Average Balance Sheets, Interest Earned on Interest-Earning Assets and Interest-Bearing Liabilities.”

As described in note 6 to our consolidated financial statements for the year ended December 31, 2005, the impact of marking to market our government bond portfolio would have been Ps.29.6 million. In 2006, we have begun to mark to market our government bond portfolio in our primary financial statements.

Recovery of private sector lending

Our private sector loans increased to Ps.723.6 million as of December 31, 2003 from Ps.514.6 million as of December 31, 2002 to Ps.2,209.0 million in 2004, including the effect of the acquisition of Nuevo Banco Suquía in December 2004. As of December 31, 2005, our private sector loans increased to Ps.2,701.3 million. This increased lending reflects both our higher market share resulting from our earlier return to the lending market than our competitors and the improvement of private sector lending after the crisis of 2001 and 2002, which had caused a collapse in both demand for and supply of new loans. We see the following trends in this important area of our business:

†	Low cost of funds; high levels of liquidity. As a result of our low cost of funds and our high level of liquidity, a key driver of our results is our ability to increase our lending within the scope of our credit policy, as such lending is always at a positive margin. Therefore, we have seen increases in our gross intermediation margin as our private sector lending has increased.
†	Demand from large corporations has preceded demand from small- and medium-sized companies and consumers. New lending in Argentina has been primarily fueled by commercial lending, which for the Argentine banking system, represented approximately two-thirds of new lending in

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Management’s discussion and analysis of financial condition and results of operations

	2004, which we believe to be generated by large corporations. Over the medium term we expect small- and medium-sized companies, which lack access to the securities markets, to represent a larger component of new lending. Consumer lending has not yet fully recovered and remains at 5% of GDP as of December 2005, despite having achieved levels as high as 10% before the crisis.
†	Growth prospects subject to development of inflation and long-term fixed rate lending. We believe that the main obstacle preventing a faster recovery of Argentina’s private sector lending has been the uncertain outlook on long-term inflation, which has a significant impact on both the supply of and demand for long-term loans as borrowers try to hedge against inflation risk by borrowing at fixed rates while lenders hedge against inflation risk by offering loans at floating rates. As a result, most of the increase in the volume of private loans in the financial system until December 31, 2005 was concentrated in short-term products for example the ratio of personal loans, overdrafts and documents to GDP has increased from 3% in June 2003 to more than 5% as of December 31, 2005, while long- term loans represented by mortgages and secured loans have remained at 2% of GDP during the same period (in the face of substantial GDP growth during the period). We believe that, given the government’s exchange rate policy, Argentina’s inflationary outlook has become more predictable, with a current expectation of inflation will decline towards international levels. Therefore, the market is better able to factor in an expected rate of inflation into its long-term business decisions. As a result, both borrowers and lenders are gradually entering the long-term lending market, including with products such as floating rate loans and leasing, designed to meet the needs of a growing economy emerging from crisis and moving towards stability.
†	Reduced spreads. We expect the high intermediation spreads that prevailed after the economic crisis to continue to decline due to increasing competition in the banking sector. The reduction of private sector credit volume has prompted Argentine banks to lend at lower interest rates in an effort to capture a larger portion of the contracted loan market, largely accounting for the current low spreads. Additionally, if the Central Bank increases interest rates to combat inflation, funding costs may increase. The expansionary monetary policy being undertaken by the Central Bank has resulted in unusually low funding costs. Since the end of 2003, the 30-day time deposit interest rate has remained below 5% in the retail market (even with current inflation forecasts of 13% for 2006). Inflation pressures may push these rates upward in the medium-term. If the spread reduction continues without a significant increase in volumes, profitability will be negatively affected. This trend will be partially offset for us by our stable depositor base, which provides a low cost source of funding.

Organic growth complemented by strategic acquisitions

Our bank has grown through a combination of organic growth and well executed acquisitions. We have pursued organic growth with a holistic approach to the management of our day-to-day operations through the marketing and promotion of our standard banking products and services to our customers. We have made acquisition decisions in the context our long-term strategy of focusing on low- and middle-income individuals and small- and medium-sized businesses to complete our national coverage of Argentina, especially in provinces outside of the Buenos Aires metropolitan area. Prior to the crisis of 2001 and 2002 and since the crisis, we have maintained a position of strong solvency and liquidity relative to the Argentine banking industry. As a result, we were able to acquire Banco Bansud in January 2002 and Nuevo Banco Suquía in December 2004. These acquisitions were each managed successfully and have had favorable effects on our results of operations and financial condition. In November 2005 we acquired a portion of the assets (including seven branches and the headquarters) and liabilities of Banco Empresario de Tucumán. We also signed an agreement for the acquisition of Banco del Tucumán S.A., which has 25 branches and the headquarters in Tucumán.

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Management’s discussion and analysis of financial condition and results of operations

We will continue to consider strategic acquisition opportunities that complement our branch network and are consistent with our strategy. To date, other Argentine banks have responded to reduced lending volumes primarily by reducing their operating costs in real terms and sometimes by downsizing their operations. Even with an increase in loan volume, if spreads continue to decline, many Argentine banks are likely to need additional capital. In this scenario, we have the opportunity, because of our significant excess of liquidity and capital, to continue to complement our organic growth with strategic acquisitions.

We evaluate the effectiveness of our acquisition strategy by how it complements our organic growth strategy and whether we have succeeded in increasing our customer base, expanding our loan portfolio and generating more fee income from transactional services.

Recovery of private sector loan portfolio credit quality

Our private sector loan portfolio credit quality has improved from 2002 to 2005, in line with the Argentine economic recovery. Our non-performing loans as a percentage of total loans declined from 16.94% as of December 31, 2002 to 5.34% as of December 31, 2005. During the same period, allowances as a percentage of non-performing loans went from 70.04% as of December 31, 2002 to 126.20% as of December 31, 2005, reflecting our policy to have adequate allowances.

RESULTS OF OPERATIONS

The following discussion of our results of operations is for the bank as whole and without reference to any operating segments. We do not manage the bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources or assessing profitability.

We consider total loans to the private sector and the level of our average total deposits to be key measures of our core business. Total loans to the private sector grew by 179% from Ps.515 million as of December 31, 2002 to Ps.1,435 million as of December 31, 2004 (without including Nuevo Banco Suquía). As of December 31, 2005 our private sector loans increased to Ps.2,948.8 million compared to Ps.2,209.0 million as of December 31, 2004, a 33% increase. The level of our private sector deposits grew by 93.0% from Ps.1,534.9 million as of December 31, 2002 to Ps.2,963.1 million as of December 31, 2004 (without including Nuevo Banco Suquía), due to the return of deposits to the financial system and to organic growth. As of December 31, 2005 the level of our private sector deposits (including Nuevo Banco Suquía) reached Ps.5,737.4 million compared to Ps.4,504.8 million for December 31, 2004, a 27% increase. In addition, we experienced a dramatic increase in our public sector deposits as a result of the substantial fiscal surpluses experienced by the three provincial governments for whom we act as financial agent. Including our acquisition of Nuevo Banco Suquía, average loans to the private sector grew 207% between December 31, 2002 and December 31, 2005 and average deposits from the private sector grew 357% during the same period.

Even during the depths of the economic crisis in 2002, we generated Ps.572 million of net income, driven primarily by our strong gross intermediation margin. Our results of operations for 2002 were strongly affected by the inflation adjustment for the year, as the wholesale price index increased by almost 118%. Our results of operations for 2002 were also strongly affected by the devaluation of the peso. The underlying trend during the period between 2002 and 2005 was lower intermediation spreads, accompanied by an increase in intermediation volumes. The main driver of the intermediation spread reduction was the fall in interest rates. Lending rates to the private sector dropped from an average of 31.2% in 2002 to 12.5% in 2005. This interest rate decrease was largely matched by a reduction in deposit interest rates, as the weighted average interest rate of our borrowing base, in the form of deposits, fell from 24.7% in 2002 to 3.7% in 2005. Between 2002 and 2004 we experienced a steady decline in our financial expenses, which decreased by 53% in 2003 and a further 45% in

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Management’s discussion and analysis of financial condition and results of operations

2004, followed by a small increase in 2005 of 5.5%. Borrowing costs dropped not only due to the interest rate reduction but also because the composition of our liabilities changed, largely switching to demand deposits. This migration to demand deposits helped us to maintain an attractive intermediation spread.

RECENT DEVELOPMENTS—YEAR ENDED DECEMBER 31, 2005 COMPARED TO DECEMBER 31, 2004

The discussion of recent developments includes consolidated comparisons and, in some cases, also standalone comparisons of Banco Macro Bansud without Nuevo Banco Suquía in order to permit period-to-period comparisons, considering that Nuevo Banco Suquía was acquired in December 2004.

Net financial income

Our net financial income increased 52% to Ps.447 million during 2005 compared to Ps.295 million for 2004 on a consolidated basis.

Financial income

Our financial income increased 75% on a consolidated basis and 18% on a standalone basis. Interest income increased 147% on a consolidated basis and 55% on a standalone basis due to a higher volume of loans to the private sector. We continue to exhibit high rates of organic growth as loans to the private sector (other than overnight loans to highly rated companies that we use for liquidity management) increased 68% as of December 31, 2005 as compared to December 31, 2004. Thus, the share of our total financial income from private sector loans increased from 27% to 38% on a consolidated basis and to 35% on a standalone basis. The main driver of this growth has been medium-term loans structured for our corporate customers recorded in “Other”, which grew 89% during 2005 and consumer loans, which grew 86%.

On the other hand, income from government and private securities fell 0.4% on a consolidated basis and 15% on a standalone basis mainly driven by LEBAC results, which dropped 27% as a result of decreasing maturities and interest rates, which fell from an average of 16% in 2004 to 7% in 2005. In addition, we recorded a loss of Ps.20 million as a result of marking to market those BODEN 2012 received in 2005.

Interest on other receivables from financial intermediation increased 169% on a consolidated basis as the interest rate paid by the Central Bank for liquidity requirements for deposits rose from an average of 0.8% in 2004 to 2.5% in 2005.

Indexation by CER increased 104% on a consolidated basis and 3% on a standalone basis due to higher inflation of 11.75% during 2005 compared to 5.48% in 2004.

Finally, income from guaranteed loans increased 96% on a consolidated basis and 36% on a standalone basis as a result of increasing volumes mainly during the first six months of 2005, which averaged Ps.472 million during the first six months of 2005 compared to Ps.341 million during the same period of 2004.

Financial expense

Financial expense increased 128% on a consolidated basis and 66% on a standalone basis. On a standalone basis, the growth of financial expense is mainly explained by indexation by CER and by interest on time deposits. Indexation by CER grew both due to increasing CER-adjusted deposits, mostly owned by institutional investors (which averaged Ps.135 million in December 2004 and Ps.528 million in December 2005), and also to higher inflation during 2005.

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Management’s discussion and analysis of financial condition and results of operations

Interest on time deposits increased because of higher prevailing interest rates (for time deposits in pesos the interest rate was 3.98% in December 2004 and more than 6% in December 2005) and the increasing volume of time deposits, which grew 24% during 2005.

Provision for loan losses

Provision for loan losses increased 93% on a consolidated basis and 66% on a standalone basis for 2005 compared to 2004. The consolidated total increase of Ps.34 million is a result primarily of the expansion of our private sector lending, Ps.24 million for Banco Macro Bansud and Ps.10 million for the incorporation of Nuevo Banco Suquía.

Service charge income

Service charge income increased 96% on a consolidated basis and 25% on a standalone basis primarily due to the increase in the volume of our operations. Fees related to deposits represent 66% (Ps.200 million) of total service charge income for both 2004 and 2005 and they include provincial government agent fees (Ps.19 million), insurance fees (Ps.11 million), credit card fees (Ps.18 million), among others.

Service charge expense

Service charge expense increased 138% on a consolidated basis and 36% on a standalone basis, mainly due to higher revenues from fees for the use of credit and debit cards, ATMs, foreign trade and exchange operations and leasing services.

Net service charge income grew 88% on a consolidated basis and 23% on a standalone basis.

Administrative expenses

Administrative expenses increased 74% on a consolidated basis and 22% on a standalone basis mainly due to personnel expenses. In the case of Banco Macro Bansud, salary increases were partially offset by a small decrease in personnel. The acquisition of Nuevo Banco Suquía increased the number of personnel by approximately 70%, partially offset by lower average salaries. We maintain a policy of controlling expenses while consolidating the operations of Banco Macro Bansud and Nuevo Banco Suquía.

Net other income

Net other income increased 97% (Ps.59 million) on a consolidated basis. During 2005, we reached a final settlement with the Central Bank as to the total amount of BODEN 2012 we received. Since the final amount of compensation was Ps.11 million higher than the estimates we had recorded on December 31, 2004, we recorded Ps.11 million as a gain. Additionally we reached several agreements with past due debtors, mainly of Nuevo Banco Suquía (some of whom were regular clients of Banco Macro Bansud), and we improved its collections. All of this resulted in a reversal of Ps.12 million of provisions. In addition, Nuevo Banco Suquía had a gain of Ps.20 million on reversal of a provision in respect of an exchange for secured bonds from the city of Córdoba. Until December 2004, this loan was highly provisioned in accordance with the Central Bank’s requirements in the pre-privatization period and our initial estimates.

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Management’s discussion and analysis of financial condition and results of operations

Income tax

We accrued income tax of Ps.34 million.

Net income

Our consolidated net income for 2005 increased 36% to Ps.262.7 million from Ps.193.0 million for 2004.

SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO SIX MONTHS ENDED JUNE 30, 2004

We have also included consolidated information for Banco Macro Bansud without a line-by-line consolidation with Nuevo Banco Suquía in this discussion to permit period-to-period comparisons of Banco Macro Bansud’s results of operations without taking into account the Nuevo Banco Suquía acquisition, which we call on a standalone basis.

The following table sets forth certain components of our income statement for the six-month periods ended June 30, 2004 and 2005:

		Six Months Ended June 30,
								Banco Macro
								Bansud
					Banco Macro			(Consolidated
					Bansud without			with Nuevo
		Banco Macro			Nuevo Banco			Banco
		Bansud			Suquía(1)			Suquía)
Amounts in accordance with Central Bank Rules		2004			2005			2005
		(in thousands of pesos) (unaudited)
Financial income			235,850			239,992			338,221
Financial expenses			(71,769	)		(112,081	)		(155,977	)
Gross intermediation margin			164,081			127,911			182,244
Provision for loan losses			(13,236	)		(16,428	)		(34,479	)
Service charge income			72,033			87,518			140,536
Service charge expenses			(11,199	)		(15,582	)		(27,874	)
Administrative expenses			(123,715	)		(142,944	)		(205,062	)
Subtotal			87,964			40,475			55,365
Net other income			21,443			82,041	(2)		67,159
Income before income tax			109,407			122,516			122,524
Income tax			(367	)		(630	)		(630	)
Minority interest			—						(8	)
	Net income		109,040			121,886			121,886

(1)     Banco Macro Bansud consolidated without line-by-line consolidation of Nuevo Banco Suquía.

(2)     Includes Nuevo Banco Suquía’s net income of Ps.47,677 thousand.

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Management’s discussion and analysis of financial condition and results of operations

Selected financial and operating data

		As of June 30,
								Banco Macro
								Bansud
					Banco Macro			(Consolidated
					Bansud without			with Nuevo
		Banco Macro			Nuevo Banco			Banco
		Bansud			Suquía			Suquía)
		2004			2005			2005
		(in thousands of pesos)
		(unaudited)
Consolidated balance sheet
Central Bank Rules:
Assets
Cash and due from banks			714,443			858,920			1,143,588
Government and private securities			1,696,060			2,097,663			2,810,030
Loans
	to the non-financial government sector		367,262			419,410			701,957
	to the financial sector		106,383			103,873			158,644
	to the non-financial private sector and residents abroad		1,365,904			1,664,323			2,451,218
Allowances for loan losses			(78,363	)		(93,847	)		(173,676	)
Total assets			5,557,872			7,178,585			9,429,226
Liabilities and shareholders’ equity
Deposits
	from the non-financial government sector		743,059			952,836			956,319
	from the financial sector		6,353			4,346			5,815
	from the non-financial private sector		2,646,758			3,476,566			5,217,987
Other liabilities from financial intermediation and other liabilities			681,452			1,197,519			1,672,154
Provisions			208,063			180,765			199,900
Total liabilities			4,310,736			5,829,844			8,080,485
Shareholders’ equity			1,247,136			1,348,741			1,348,741

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Financial income

Our financial income increased 43% on a consolidated basis and remained stable on a standalone basis during the six months ended June 30, 2005 as compared to the corresponding period ended in 2004. The components of our financial income during the six months ended June 30, 2005 and 2004 were as follows:

	Six Months Ended June 30,
					Banco Macro
					Bansud
			Banco Macro		(Consolidated
			Bansud without		with Nuevo
	Banco Macro		Nuevo Banco		Banco
	Bansud		Suquía		Suquía)
	2004		2005		2005
	(in thousands of pesos) (unaudited)
Interest on cash and due from banks		246		1,378		3,356
Interest on loans to the financial sector		499		2,224		2,767
Interest on overdrafts		11,625		13,118		25,023
Interest on mortgage loans		2,827		4,092		12,544
Interest on pledge loans(1)		306		2,614		11,789
Interest on credit card loans		2,565		4,997		8,204
Interest on documents(2)		5,041		8,394		14,412
Interest on other loans(3)		24,384		46,047		55,068
Interest on other receivables from financial intermediation		1,981		6,955		6,955
Income from government and private securities, net		113,727		54,353		49,123
Indexation by CER(4)		48,932		61,658		106,043
Indexation by salary variation coefficient (C.V.S.)		141		347		590
Income from guaranteed loans(5)		6,313		11,112		15,612
Other(6)		17,263		22,703		26,735
Total financial income		235,850		239,992		338,221

(1)	Includes primarily secured car loans.
(2)	Includes factoring, check cashing advances and loans with promissory notes.
(3)	Includes interest primarily on commercial loans not classified under prior headings.
(4)	Includes CER accrued for all assets subject to adjustment by CER.
(5)	Includes loans to the Argentine government that were issued in exchange for federal and provincial government bonds.
(6)	Principally foreign exchange gains from our net asset position in U.S. dollars.

While our financial income remained stable on a standalone basis, its composition changed, primarily due to an increase in interest income derived from a higher amount of loans to the private sector. Our gross private sector loan portfolio grew from Ps.2,209.0 million at December 31, 2004 to Ps.2,451.2 million at June 30, 2005, reflecting both organic growth and the acquisition of Nuevo Banco Suquía. In addition, the amount of financial income from CER increased on a standalone basis due to inflation of 5.9% for the six months ended June 30, 2005 as compared to inflation of 2.9% for the corresponding period in 2004. These increases were offset by a decrease in the interest earned on our portfolio of LEBACs between the two periods.

The increase in our financial income on a consolidated basis reflected primarily increases in interest from private sector loans and CER, partially offset by lower interest earned on our portfolio of LEBACs.

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Financial expenses

Financial expenses increased 117% on a consolidated basis and 49% on a standalone basis during the six months ended June 30, 2005 as compared to the corresponding period in 2004. The components of our financial expenses for the six months ended June 30, 2005 and 2004 were as follows:

	Six Months Ended June 30,
					Banco Macro
			Banco Macro		Bansud
			Bansud without		(Consolidated
	Banco Macro		Nuevo Banco		with Nuevo
	Bansud		Suquía		Banco Suquía)
	2004		2005		2005
	(in thousands of pesos)(unaudited)
Interest on checking accounts		1,013		742		1,284
Interest on savings accounts		1,527		1,060		1,949
Interest on time deposits		25,816		30,899		44,428
Interest on financing from the financial sector		29		245		273
Interest on other liabilities from financial intermediation(1)		4,901		8,263		8,265
Other interest(2)		4,828		2,916		6,586
Net income from options		—		374		374
Indexation by CER(3)		15,915		45,796		67,044
Other(4)		17,740		21,786		25,774
Total financial expenses		71,769		112,081		155,977

(1)	Includes lines of credit from other banks, repurchase agreements and liquidity assistance from the Central Bank.
(2)	Includes subordinated corporate bonds issued by us.
(3)	Includes CER accrued for all the liabilities subject to adjustment by CER.
(4)	Includes deposits in the form of government securities and CEDROs.

Financial expenses on a standalone basis increased primarily as a result of indexation by CER. This increase reflects three effects: (1) a substantial increase in time deposits during the period, (2) a switch from fixed-rate time deposits to CER-adjusted time deposits; and (3) higher inflation reflected in higher CER. The acquisition of Nuevo Banco Suquía further increased our time deposit base, without significantly changing its composition.

Provision for loan losses

Our provisioning policy follows in general the principles stated in Central Bank Rules, as described in “Argentine banking regulation”. The Central Bank imposes strict regulations and controls regarding credit portfolio provisioning. The Superintendancy of Financial Institutions closely supervises the bank’s compliance with these regulations, for example by requiring periodic reports that must be reviewed by the external auditors. In accordance with these rules, we classify borrowers according to the following procedure:

     •  Consumer borrowers: They are classified automatically according to the time they have been non-performing.

     •  Commercial borrowers: Their rating is reviewed at least annually or every time the credit line is renewed.

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Our review consists of analyzing the changes in the financial or economic situation of the borrower, and we also consider the outlook of the borrower’s economic sector to assess the impact of economic developments. In each review we evaluate how the borrower has performed its obligations with us and with the rest of its creditors.

The Central Bank defines the percentage of credits to be provisioned based on the borrower’s classification as determined pursuant to the process described above, taking also into consideration the quality and quantity of any guarantees. The recovery of provisions when there are settlements or rating improvements is carried out in the same way.

Generally, we do not record provisions in excess of the minimum required by current Central Bank Rules. However, the Central Bank requires provisions in excess of the minimum when the bank has specific facts with respect to a borrower to assign the borrower a higher credit risk. Generally the factors considered are related to customers’ financial position, past due status, lack of ability to pay, adjustments to the fair value of the underlying collateral or the expected future cash flows to be received, among others.

Provision for loan losses increased 160.5% on a consolidated basis and 24.1% on a standalone for the six months ended June 30, 2005 as compared to the corresponding period in 2004. The increase in the Provision for loan losses was due primarily to our acquisition of Nuevo Banco Suquía. Of the Ps.34 million of the total provision for loan losses for the six months ended June 30, 2005, Ps.18 million was attributable to the inclusion of Nuevo Banco Suquía in our consolidated financial statements. The increase for Banco Macro Bansud on a standalone basis is primarily as a result of the expansion of our private sector lending.

Service charge income

The following table provides a breakdown of our service charge income by category for the six months ended June 30, 2005 and 2004:

	Six Months Ended June 30,
					Banco Macro
			Banco Macro		Bansud
			Bansud without		(Consolidated
	Banco Macro		Nuevo Banco		with Nuevo
	Bansud		Suquía		Banco Suquía)
	2004		2005		2005
	(in thousands of pesos) (unaudited)
Related to lending transactions		3,328		5,019		8,218
Related to deposits		46,713		54,063		93,484
Other fees		3,185		3,084		6,340
Other(1)		18,807		25,352		32,494
Total service charge income		72,033		87,518		140,536

(1)     Primarily credit card and debit card fees.

Service charge income on a standalone basis increased 23%, while on a consolidated basis it increased 95%, primarily due to an increase in the volume of our operations. Nuevo Banco Suquía has four times the number of fee-generating checking accounts as Banco Macro Bansud, while Banco Macro Bansud has a high percentage of no fee Plan Sueldo savings accounts. In addition, Nuevo Banco Suquía has a larger volume of commissions related to sales of insurance policies.

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Service charge expenses

	Six Months Ended June 30,
					Banco Macro
			Banco Macro		Bansud
			Bansud without		(Consolidated
	Banco Macro		Nuevo Banco		with Nuevo
	Bansud		Suquía		Banco Suquía)
	2004		2005		2005
	(in thousands of pesos) (unaudited)
Fees		1,968		4,917		14,553
Other		9,231		10,665		13,321
Total service charge expenses		11,199		15,582		27,874

Total service charge expenses on a standalone basis increased 39%, while on a consolidated basis they increased 149%. The primary component of service charge expense is credit and debit card processing fees and increases reflect increased credit card lending. More recently, we have negotiated more favorable credit card terms with providers as we have benefited from our increased scale. In addition, Nuevo Banco Suquía has a higher sales of insurance policies and the commissions paid are recorded in service charge expense.

Administrative expenses

	Six Months Ended June 30,
					Banco Macro
			Banco Macro		Bansud
			Bansud without		(Consolidated
	Banco Macro		Nuevo Banco		with Nuevo
	Bansud		Suquía		Banco Suquía)
	2004		2005		2005
	(in thousands of pesos) (unaudited)
Personnel expenses		65,058		74,015		116,750
Directors’ and statutory auditors fees		3,977		10,117		10,627
Other professional fees		8,062		8,853		10,028
Advertising and publicity		3,451		5,666		6,852
Taxes		1,663		3,386		3,705
Other operating expenses(1)		36,781		36,993		50,637
Other		4,723		3,914		6,463
Total administrative expenses		123,715		142,944		205,062

(1) Depreciation and amortization and other general expenses.

Increases in administrative expenses primarily reflect increases in personnel expenses. In the case of Banco Macro Bansud, salary increases were partially offset by a small decrease in personnel. The acquisition of Nuevo Banco Suquía increased the number of personnel by approximately 70%, partially offset by lower average salaries. See “Business— Employees.”

Net other income

During the first six months of 2005, we reached a final settlement with the Central Bank as to the total amount of BODEN 2012 we are to receive. Since the final amount of compensation was

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Management’s discussion and analysis of financial condition and results of operations

Ps.11 million higher than the estimates we had recorded on December 31, 2004, we recorded Ps.11 million as a gain.

Nuevo Banco Suquía recorded additional provisions as a result of preparations for its privatization, which started with the public auction. The Central Bank had permanent supervision of Nuevo Banco Suquía and required several valuation adjustments before transferring the shares to us in December 2004. At that time, several extraordinary factors affected the recovery estimates, including:

†	the poor performance of Nuevo Banco Suquía’s debtors due to its special situation (Nuevo Banco Suquía was temporarily managed by Banco de la Nación Argentina) and the flexible recovery policy applied after the crisis; and
†	the lack of detailed information on the status of loans and their guarantees.

During the first six months of 2005 we made several agreements with past due debtors, mainly of Nuevo Banco Suquía (some of whom were regular clients of Banco Macro Bansud), and we improved collections from the bank. All of this resulted in a reversal of Ps.11 million of provisions.

In addition, Nuevo Banco Suquía had a gain of Ps.20 million on reversal of a provision in respect of an exchange for secured bonds (BOGARs) from the city of Córdoba. Until December 2004, this loan was highly provisioned in accordance with the Central Bank’s requirements in the pre-privatization period and our initial estimates. During the first half of 2005, we settled with the city of Córdoba by which they canceled the loan with BOGARs.

Under Central Bank Rules, reversals of loan loss provisions are recorded as income instead of being netted against loan loss provision expense, and thus the provision and any reversals are grossed up. Under U.S. GAAP, these reversals would be considered in the overall evaluation of the adequacy of the total allowance for loan losses (balance sheet) and thus would be netted against the loan loss provision expense recorded for the period.

The reversals recorded by us took into account the economic conditions of the debtor and the probable losses estimated as of December 31, 2004. During the six-month period ended June 30, 2005, as a consequence of the changes in the economic situation of such clients and the negotiations we had with these clients, lower levels of allowances were determined to be necessary. Therefore, taking into account that these are new events, the reversals were considered in results of operations for the six-month period ended June 30, 2005.

Finally, in both periods there is amortization of negative goodwill of Ps.36.6 million for each of the six-month periods ended June 30, 2004 and 2005, stemming from the acquisition of Banco Bansud.

Income tax

During the two periods, we recorded losses for income tax purposes. As a result, only income taxes for our subsidiaries were recorded, primarily because Argentine income tax law takes into account losses from marking to market the value of the government securities portfolio, while Central Bank Rules do not.

Net income

Our consolidated net income increased 11.8%. Our volumes of financial intermediation increased while gross intermediation margins in Banco Macro Bansud on a standalone basis declined, reflecting the decline in financial intermediation margins for the financial system as a whole, partially offset by an increase in net service charge income reflecting volume increases and the acquisition of Nuevo Banco Suquía.

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Management’s discussion and analysis of financial condition and results of operations

YEAR ENDED DECEMBER 31, 2004 COMPARED TO DECEMBER 31, 2003 AND YEAR ENDED DECEMBER 31, 2003 COMPARED TO DECEMBER 31, 2002

The following table sets forth certain components of our income statement for the years ended December 31, 2002, 2003 and 2004. Our results of operations in 2004 include results from Nuevo Banco Suquía only from December 22, 2004 to year-end.

		Year ended December 31,
		2002(1)			2003(1)			2004
		(in thousands of pesos)
Financial income			1,623,349			419,900			427,900
Financial expenses			(515,184	)		(241,152	)		(133,204	)
Gross intermediation margin			1,108,165			178,748			294,696
Provision for loan losses			(117,767	)		(35,009	)		(36,467	)
Service charge income			137,756			125,722			154,425
Service charge expenses			(30,649	)		(20,005	)		(24,963	)
Administrative expenses			(260,175	)		(221,796	)		(254,980	)
Net other income			29,621			177,365			60,938
Income before income tax			866,951			205,025			193,649
Income tax			(3,601	)		(833	)		(672	)
Monetary loss			(291,238	)		(4,343	)		—
Minority interest			2			—			—
	Net income		572,114			199,849			192,977

(1) In constant pesos as of February 28, 2003.

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Management’s discussion and analysis of financial condition and results of operations

The following table sets forth certain components of our balance sheet for the years ended December 31, 2002, 2003 and 2004 average interest rates for the same period.

	2002					2003					2004
			Average					Average					Average
	Average		nominal			Average		nominal			Average		nominal
	balance		rate			balance		rate			balance		rate
	(in millions of pesos)
Government securities		513		27.56	%		1,302		21.36	%		1,819		10.41	%
Private Sector Loans		801		31.18	%		606		14.34	%		1,272		9.96	%
Public Sector Loans		513		29.47	%		468		3.87	%		381		9.11	%
Deposits with the Central Bank		146		2.38	%		321		0.64	%		81		4.60	%
Other assets		1,287		18.33	%		993		3.28	%		836		3.17	%
Total interest-earning assets		3,261		23.97	%		3,691		11.32	%		4,390		8.68	%
Total non interest-earning assets		544		—			666		—			1,316		—
Total assets		3,804		—			4,357		—			5,706		—
Savings accounts		257		2.42	%		179		1.83	%		299		1.06	%
Certificates of deposits		661		41.69	%		1,363		8.27	%		1,929		3.27	%
Borrowing from the Central Bank		1		35.82	%		0.427		3.04	%		10		9.11	%
Borrowings from other financial institutions		203		3.80	%		128		20.07	%		103		4.37	%
Liability for future acquisitions of BODEN		119		80.81	%		227		4.17	%		215		6.65	%
Other liabilities		311		34.37	%		336		4.20	%		555		2.85	%
Total interest-bearing liabilities		1,551		31.76	%		2,233		7.40	%		3,111		3.27	%
Demand deposits		222		—			318		—			767		—
Other liabilities		1,301		—			857		—			648		—
Minority interest		—		—			—		—			—		—
Total non-interest-bearing liabilities		1,523		—			1,175		—			1,415
Total liabilities		3,074		—			3,408		—			4,526
Shareholders’ equity		730		—			949		—			1,180		—

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Management’s discussion and analysis of financial condition and results of operations

Financial Income

Our financial income increased 2% in 2004 as compared to 2003 and decreased 74% in 2003 as compared to 2002. The components of our financial income for the years ended December 31, 2004, 2003 and 2002 were as follows:

	Year ended December 31,
	2002(1)		2003(1)		2004
	(in thousands of pesos)
Interest on cash and due from banks		3,658		1,892		1,570
Interest on loans to the financial sector		15,927		1,819		3,327
Interest on overdrafts		75,767		21,731		25,970
Interest on mortgage loans		14,001		6,794		6,887
Interest on pledge loans(2)		3,501		1,727		1,641
Interest on credit card loans		22,425		7,832		6,011
Interest on documents(3)		10,007		9,804		11,523
Interest on other loans(4)		32,638		29,383		61,763
Interest on other receivables from financial intermediation		8,804		1,971		5,611
Income from government and private securities, net		298,347		303,500		156,794
Indexation by benchmark stabilization coefficient (CER)(5)		254,718		19,118		91,435
Indexation by salary variation coefficient (CVS)		—		24		508
Income from guaranteed loans(6)		24,820		4,183		14,600
Other(7)		858,736		10,122		40,260
Total financial income		1,623,349		419,900		427,900

(1)	In constant pesos as of February 28, 2003.
(2)	Includes primarily secured car loans.
(3)	Includes factoring, check cashing advances and loans with promissory notes.
(4)	Includes interest on loans not classified under prior headings.
(5)	Includes CER accrued for all the assets subject to adjustment by CER.
(6)	Includes loans to the Argentine government that were issued in exchange for federal and provincial government bonds.
(7)	Principally foreign exchange gains from our net asset position in U.S. dollars.

2004 and 2003. Our financial income in 2004 remained stable as compared to 2003; however, its composition changed. Income from government securities decreased by almost Ps.147 million due to less trading in and lower returns on LEBACs. The increase in financial income resulting from CER indexation was due to our increased stock of government securities indexed by CER (mainly guaranteed loans and Central Bank bills and notes) and an increase in the CER by 5.5% in 2004. Government securities (LEBACs, NOBACs, and BOGARs) and guaranteed loans accounted for more than 90% of our financial income resulting from CER indexation. Interest on “other loans” (commercial loans not included in other categories) increased by Ps.32 million, reflecting a 110% increase. The increase in “Other” financial income was principally due to exchange rate differences arising from our long position in U.S. dollars and the higher volume of trading in U.S. dollars. We believe that the quality of the composition of our financial income improved during 2004 because of the increased share of our financial income deriving from private sector loans (increasing from 20% in 2003 to 29% in 2004) and a corresponding reduction in the proportion of our income derived from government and private securities (which decreased from 72% in 2003 to 37% in 2004).

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Management’s discussion and analysis of financial condition and results of operations

2003 and 2002. Our financial income in 2003 was substantially lower than our financial income in 2002 reflecting primarily the impact of the inflation adjustment on our 2002 results. Government and private securities accounted for 72% of total financial income in 2003 due to the very high interest rates on government securities, in particular LEBACs (the average interest rate of which was 25.5%) and trading gains. Private credit demand remained moderate. We invested our excess liquidity in LEBACs as a result of low credit demand in the private sector, increasing our stock of LEBACs by Ps.1,359 million during 2003, for a total stock of Ps.1,925 million at the end of 2003. The high level of financial income in 2002 was the result of our net position in U.S. dollars at the end of 2002 and the mark to market at the high U.S. dollar to peso exchange rate. In addition, we realized trading gains in U.S. dollars. Our strong U.S. dollar position in 2002 was due to our acquisition of Banco Bansud. See “— Principal Trends Affecting Our Business— Acquisitions.” In addition, in 2002 we registered in “financial income from government and private securities— net,” amounts related to the compensation given by the government for the effects of the asymmetric pesification. In 2003, the value of the U.S. dollar declined and is reflected in financial expense. We generated lower trading gains in 2003 compared to 2002 as the demand for U.S. dollars decreased. Indexation by CER decreased in 2003 by Ps.235 million as the CER index increased only 3.7% in 2003 as compared to 40.5% in 2002. Finally, inflation adjustments did not materially affect our financial income during 2003, as inflation adjustments ended on February 28, 2003.

Financial expenses

Financial expenses decreased 45% in 2004 as compared to 2003 and 53.2% in 2003 as compared to 2002. The components of our financial expenses for the years ended December 31, 2004, 2003 and 2002 were as follows:

	Year ended December 31,
	2002(1)		2003(1)		2004
	(in thousands of pesos)
Interest on checking accounts		3,524		2,759		2,335
Interest on savings accounts		6,214		3,269		3,161
Interest on time deposits		62,796		84,979		49,253
Interest on financing from the financial sector		4,258		3,342		79
Interest on other liabilities from financial intermediation(2)		18,022		2,528		9,959
Other interest(3)		34,819		20,598		9,646
Net loss from options		—		803		5
Indexation by CER(4)		355,898		41,551		25,336
Other(5)		29,653		81,323		33,430
Total financial expenses		515,184		241,152		133,204

(1)	In constant pesos as of February 28, 2003.
(2)	Includes lines of credit from other banks, repurchase agreements and liquidity assistance from the Central Bank.
(3)	Includes subordinated corporate bonds issued by us.
(4)	Includes CER accrued for all the liabilities subject to adjustment by CER.
(5)	Includes deposits in the form of government securities and CEDROs.

2004 and 2003. Our financial expenses decreased in 2004 as compared to 2003 primarily as a result of a decline in average interest rates on time deposits from 8.3% in 2003 to 3.3% in 2004, the

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continued decrease in our stock of CEDROs, which reduced CER indexation expense by Ps.6 million, and the lower exchange rate loss recorded under “Other” financial expenses in 2003 due to a rise in the value of the peso.

2003 and 2002. In 2003, our financial expenses decreased primarily due to the elimination of inflation adjustments beginning in February 2003 and a lower CER adjustment due to a lower stock of CEDROs (the stock of which had decreased to Ps.88 million at the end of 2003). “Other” financial expenses for 2003 included the exchange rate loss described above and an additional adjustment of Ps.11.5 million relating to a liability with Argentina’s export credit agency. Financial expenses in 2003 were also affected by an Ps.85 million increase in interest paid on time deposits as a result of the increase in time deposits from an average of Ps.661 million during 2002 to an average of Ps.1,363 million in 2003, offset by a significant decline in average interest rates from 41.7% to 8.3%.

Our financial expenses of Ps.515.2 million in 2002 were very high due primarily to the inflation adjustment. The CER indexation (which increased by 40.5% in 2002) was further adjusted by inflation and, as a result, accounted for 69% of our total financial expenses. The increase in our CER adjustment was due to an increase in our stock of CEDROs, and the liability to the Central Bank to acquire BODEN 2012 from the government.

Provision for loan losses

We increased our provisions for loan losses in 2002, reflecting our concern about the quality of our loan portfolio during the crisis. In 2003 and 2004, our provisions returned to lower levels, reflecting adequate provisions in the prior year, as well as the beginning of a new credit cycle. For a description of our loan loss provisioning policy, see “—Six months ended June 30, 2005 compared to six months ended June 30, 2004—Provision for loan losses”.

Service charge income

The following table provides a breakdown of our service charge income by category for the years ended December 31, 2004, 2003 and 2002:

	Year ended December 31,
	2002(1)		2003(1)		2004
	(in thousands of pesos)
Service charges on deposit accounts		97,960		82,529		99,537
Debit and credit card income		10,793		18,552		23,277
Other fees related to foreign trade		6,327		4,926		5,789
Credit-related fees		933		3,978		7,867
Capital markets and securities activities		847		727		788
Lease of safe-deposit boxes		1,612		2,643		2,816
Fees related to guarantees		991		655		675
Other(2)		18,293		11,712		13,676
Total service charge income		137,756		125,722		154,425

(1)	In constant pesos as of February 28, 2003.
(2)	Includes insurance income.

The primary component of our service income is our charge on deposits accounts, which represented 64% of our total service charge income in 2004. In 2004, service charge income increased primarily due to an increase in overall deposits and, to a lesser degree, to an increase in debit and credit card

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income and our financial agency services to three Argentine provincial governments (revenues from which increased from Ps.23 million in 2003 to Ps.27 million in 2004) and credit-related fees, which increased from Ps.4 million in 2003 to Ps.8 million in 2004. The inflation adjustment affected our level of service income during 2002, limiting a direct comparison with our service income in 2003 and 2004.

Service charge expenses

Service charge expenses include gross receipts tax levied by the City of Buenos Aires and certain Argentine provinces and credit card companies’ fees. In 2004, service charges increased by 24.8%, reflecting an increase in the volume of our operations. The elimination of inflation indexation in February 2003 explains the decrease in service charge expenses in 2003 as compared to 2002. Setting aside the effects of inflation indexation, service charge expenses declined from approximately Ps.23 million in 2002 to Ps.20 million in 2003 because of lower gross taxes.

Administrative expenses

The components of our operating expenses for the years ended December 31, 2004, 2003 and 2002 are reflected in the following table:

		Year ended December 31,
		2002(1)		2003(1)		2004
		(in thousands of pesos)
Personnel expenses			144,116		112,493		132,910
Directors and statutory auditors fees			7,126		5,608		5,861
Other professional fees			14,257		15,560		16,729
Advertising and publicity			2,891		5,991		12,048
Taxes			3,480		3,175		3,353
Bank premises and equipment depreciation			21,126		16,619		16,442
Amortization of organization and development expenses			15,921		15,131		13,595
Maintenance, conservation and repair expenses			7,937		9,124		11,504
Security services			8,078		8,473		10,086
Electric power and communications			11,161		9,388		9,206
Lease payments			5,344		4,255		4,514
Insurance			3,146		4,195		4,079
Stationery and office supplies			4,705		3,806		3,837
Other			10,887		7,978		10,816
	Total administrative expenses		260,175		221,796		254,980

(1) In constant pesos of February 28, 2003.

Personnel expenses account for the majority of our total operating expenses. Our operating expenses increased in 2004 as compared to 2003 due to salary increases and increased severance payments, partially offset by a reduction in our average work force. Our personnel expenses in 2003 decreased as compared to 2002 due to the end of the inflation adjustment. Following our merger with Banco Bansud in 2002 and the acquisition of Nuevo Banco Suquía in 2004, our operating expenses were also affected by increased advertising expenses, which rose from Ps.3 million in 2002 to Ps.6 million in 2003 and to Ps.12 million in 2004.

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Net other income

Our net other income has included since 2002 the amortization over a five-year period, at a rate of Ps.73 million per year, of Ps.366 million of negative goodwill relating to our acquisition of Banco Bansud to reflect the difference between the purchase price and the book value of the net assets acquired. The amortization of this liability gave rise to income. In 2004, we recorded a provision of Ps.42 million to reflect the possibility that we will have to make a payment in respect of a liability that we contended was pesified. In 2003, we reversed an obligation to Banamex for Ps.65 million relating to our acquisition of Banco Bansud from Banamex.

Additionally, in 2003 we reviewed our loan and contingent liabilities portfolio, and, as a result, we reversed provisions by Ps.47 million, which is recorded in net other income.

Income tax

During the period between 2002 and 2004, we recorded losses for purposes of income tax. As a result, only income taxes for our subsidiaries, primarily Macro Securities S.A. Sociedad de Balsa, formerly Sud Valores, have been recorded. In 2002, Banco Bansud’s income tax totaled Ps.3.2 million.

Monetary loss

Our monetary loss during 2002 and the first two months of 2003 related to losses generated by inflation on our net monetary position during those periods. From March 1, 2003, this calculation was no longer made due to the end of inflation accounting.

Net income

Our net income declined 3.5% from 2003 to 2004, reflecting primarily an increase in gross intermediation margin more than offset by a decline in net other income. Our net income declined 65.1% from 2002 to 2003 reflecting the effect of the substantial devaluation of the peso on our net asset position in U.S. dollars, partially offset by the impact of inflation on our net monetary position.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital resources

Our main source of liquidity consists of deposits, which totaled Ps.6,565 million as of December 31, 2005. These deposits include deposits generated by our branch network, from institutional and very large corporate clients and from provincial governments for whom we act as financial agent. We consider the deposits generated by our branch network and the provincial deposits to be stable.

Additionally, in January 2005, we obtained a US$50 million loan from Credit Suisse First Boston with an 18-month term at LIBOR plus 2.7%. We have also drawn down freely available lines of credit with eight foreign banks totaling US$42 million and additional lines for the issuance of letters of credit for unspecified amounts with 20 additional banks worldwide.

Funding kept increasing at a fast pace during 2005 mainly driven by the increase in total deposits, which grew 23% during the year. These deposits were used primarily for financing the growth in credit for the private sector, with the remainder being invested in profitable liquid assets, such as LEBACs and NOBACs, short term loans to highly rated companies, Central Bank repurchase obligations and cash. This approach has enabled us to maintain a high liquidity to deposits ratio of 60% as of December 31, 2005 while awaiting a return to stronger demand for private sector loans.

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In September 2005, the government delivered the remaining BODEN that were pending settlement. We have taken advantage of higher market prices of Argentine public debt to sell a significant share of our holdings of government bonds (mainly BOGAR) and the resulting additional liquidity has been invested in LEBAC. Due to the continued attractiveness of LEBAC returns during 2005, we have shifted our liquidity to these instruments, increasing our holdings from Ps.519 million at December 31, 2004 to Ps.2,240 million at December 31, 2005. Thus our exposure to the public sector net of Central Bank bills decreased to 15% of total assets by the end of December 2005, well below the financial system’s average of 33%.

The CFO manages the excess liquidity by analyzing interest rates from a limited number of liquid and short-term assets including Central Bank Bills, deposits with the Central Bank and overnight loans to highly rated companies. The amount allocated to overnight loans is determined by the amount of deposits received from institutional investors, and as such, there is a high degree of volatility in our overnight allocations.

We have developed a program to manage our liquidity by securitizing personal loans, most recently through the Macro Personal Financial Trust V, which was created in May 2005. We sold personal loans to the trust totaling Ps.70 million and sold trust certificates totaling Ps.51 million prior to December 31, 2005.

We believe that we have adequate working capital to meet our current and reasonably foreseeable needs. At December 31, 2005, we had excess capital of Ps.1,126 million (208% of minimum capital requirement). Nevertheless, we believe that as the demand for credit grows and our loan portfolio expands, we will need to continue to expand our capital resources. In addition, we would expect to need additional capital resources to take advantage of strategic acquisitions.

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Minimum capital requirements

Our excess capital (representing the amount in excess of minimum reserve requirements of the Central Bank) is as set forth in the table below:

		As of December 31,
		2003(1)			2004			2005
		(in thousands of pesos, except
		ratios and percentages)
Calculation of excess capital:
	Allocated to assets at risk		78,554			165,757			251,394
	Allocated to Bank premises and equipment, intangible assets and equity investment assets		60,482			47,309			64,247
	Market risk		43,241			19,607			21,011
	Interest rate risk		20,449			7,034			15,136
	Public sector and securities in investment account		7,262			11,073			14,296
	Required minimum capital under Central Bank Rules		209,988			250,780			366,084
	Basic net worth		1,026,205			1,064,325			1,226,908
	Complementary net worth		128,032			186,093			243,124
	Deductions		179,548			110,819			21,638
	Total capital under Central Bank Rules		1,333,785			1,361,237			1,491,670
	Excess capital		1,123,797			1,110,457			1,125,586
Selected capital and liquidity ratios:
	Regulatory capital/risk weighted assets		43.79	%		35.71	%		31.03	%
	Average shareholders’ equity as a percentage of average total assets		21.78	%		20.67	%		14.25	%
	Total liabilities as a multiple of total stockholders’ equity		3.47	x		6.00	x		5.37	x
	Cash as a percentage of total deposits		22.27	%		25.80	%		18.11	%
	Liquid assets as a percentage of total deposits(2)		65.12	%		53.69	%		63.68	%
	Loans as a percentage of total assets		20.91	%		32.68	%		36.12	%

(1)	In constant pesos as of February 28, 2003.
(2)	Liquid assets include cash, cash collateral, LEBACs, NOBACs, and interbanking loans. Since 2004, we include overnight loans to highly rated companies.

We believe that our capital resources are sufficient for our present requirements on an individual and a consolidated basis.

MARKET RISK

Market risk is the risk of loss arising from fluctuations in financial markets variables, such as interest rates, foreign exchange rates and other rates or prices. This risk is a consequence of our lending, trading and investments businesses and mainly consists of interest rate risk and foreign exchange risk.

We evaluate, upgrade and improve market risks measurements and controls on a daily basis. In order to measure significant market risks (whether they arise in trading or non-trading portfolios), we use the value at risk methodology, or VaR. This methodology is based on statistical methods that take into account many variables that may cause a change in the value of our portfolios, including interest rates, foreign exchange rates, securities prices, volatility and any correlation among them. VaR is an estimation of potential losses that could arise from reasonably likely adverse changes in market conditions. It expresses the maximum amount of loss expected (given a confidence interval) over a specified time period, or “time horizon,” if that portfolio were held unchanged over that time period.

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All VaR models, while forward-looking, are based on past events and are dependent upon the quality of available market data. The quality of our VaR models is therefore continuously monitored. As calculated, VaR is an estimate of the expected maximum loss in the market value of a given portfolio over a five-day time horizon at a one-tailed 99% confidence interval. We assume a five-day holding period and adverse market movements of 2.32 standard deviations as the standard for risk measurement and comparison.

The following table and graph shows the five-day 99% confidence VaR for our combined trading portfolios for 2004 (in millions of pesos):

Minimum	8.5
Maximum	40.4
Average	19.8
As of December 31, 2004	33.8

Daily Evolution of VaR—2004

Over the course of 2004 we had an average VaR of 19.8.

In order to take advantage of good trading opportunities, we have sometimes increased risk; however during periods of uncertainty, we have also reduced it. The main source of our VaR is our fixed rate securities portfolio.

In December 2004, we acquired Nuevo Banco Suquía and this acquisition had an impact on VaR levels, as the graph above indicates.

Interest rate risk

Interest rate risk is the effect on our net interest income of fluctuations of market interest rates. Sensitivity to interest rates arises in our normal course of business as the repricing characteristics of our interest-earning assets do not necessarily match those of our interest-bearing deposits and other borrowings. The repricing structure of assets and liabilities is matched when an equal amount of assets and liabilities are repriced for any given period. Any excess of assets or liabilities over these matched items results in a gap or mismatch.

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Management’s discussion and analysis of financial condition and results of operations

Our interest rate sensitivity analysis measures the risk arising from the different sensitivities of assets and liabilities when interest rate changes occur. It covers all the assets and liabilities, excluding tradeable portfolios. In this case, our VaR model or maximum potential loss in the net economic value of the portfolio of assets and liabilities due to interest rate risk increases, considering a three-month time horizon and a confidence level of 99%.

Our methodology also captures the real interest rate risk, that is the risk arising from the mismatch produced as a consequence of an imperfect correlation between inflation rate movements and financing interest rate variations.

The following chart shows the three-month 99% confidence VaR for our combined trading portfolios for 2004 (in millions of pesos):

Minimum	2.9
Maximum	16.5
Average	8.4
As of December 31, 2004	3.4

Our gap position refers to the mismatch of interest-earning assets and interest-bearing liabilities and is described in the table below.

The negative gap of Ps.511 million in the 1-year term is mainly explained by the maturity of certificates of deposits, which are our most significant liability. Even though in contractual terms their maturities are less than one year, 78% of certificates of deposits consist of retail deposits (50% of total deposits) and public sector deposits (28% of total deposits) that represent a very stable funding base. Hence, in practice their actual maturity is longer.

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The following table shows our exposure to a positive interest rate gap:

	Remaining Maturity at December 31, 2004
	0-1 Year			1-5 Years			5-10 Years			Over 10 Years			Total(2)
	(In thousands of pesos, except percentages)
Interest-earning assets
Interest-bearing deposits in Central Bank		625,915			0			0			0			625,915
Interest-bearing deposits in other banks		418,279			0			0			0			418,279
Government Securities		856,636			527,532			358,427			336,964			2,079,559
Goods in financial leasing		0			47,033			13,830			59			60,922
Loans to the Public Sector(1)		52,090			116,220			410,873			230,394			809,577
Loans to the Private and Financial Sector(1)		1,720,034			510,589			54,747			5,438			2,290,808
Other Assets		49,868			15,864			340			86,518			152,590
Total Interest-Earning Assets		3,722,822			1,217,238			838,217			659,373			6,437,650
Interest-bearing liabilities
Savings		(842,270	)		0			0			0			(842,270	)
Certificates of Deposits		(2,849,620	)		(417	)		(10	)		(2	)		(2,850,049	)
Investments Accounts		(48,858	)		(126	)		0			0			(48,984	)
Subordinated corporate bonds		(7,810	)		(7,991	)		(615	)		0			(16,416	)
Liabilities with Central Bank		(172,806	)		(276,128	)		(53,433	)		0			(502,367	)
Liabilities with local financial companies		(32,730	)		(8,400	)		(14,945	)		(14,187	)		(70,262	)
Liabilities with Banks and international organizations		(13,248	)		(1,650	)		0			0			(14,898	)
Other Liabilities		(266,754	)		(96,686	)		(72,514	)		0			(435,954	)
Total Interest-Bearing Liabilities		(4,234,096	)		(391,398	)		(141,517	)		(14,189	)		(4,781,200	)
Asset/ Liability Gap		(511,274	)		825,840			696,700			645,184			1,656,450
Cumulative Asset/ Liability Gap		(511,274	)		315,566			1,011,266			1,656,450
Cumulative sensitivity gap as a percentage of total interest-earning assets		(7.94	)%		4.89	%		15.71	%		25.73	%

Additionally, the following tables detail our exposure to an interest rate gap, including CER-adjusted securities, which may differ from ordinary interest rate securities behavior. We maintain a positive gap in CER-adjusted securities represented mainly by public sector loans and bonds. Therefore, we benefit from increases in the inflation rate.

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The table below shows our exposure to a interest rate gap in pesos:

	Remaining Maturity at December 31, 2004
	0-1 Year			1-5 Years			5-10 Years			Over 10 Years			Total(2)
	(in thousands of pesos, except percentages)
Interest-earning assets in national currency
Interest-bearing deposits in Central Bank		369,624			0			0			0			369,624
Interest-bearing deposits in other banks		35,035			0			0			0			35,035
Government Securities		831,991			476,561			332,733			329,584			1,970,869
Goods in financial leasing		0			47,033			13,830			59			60,922
Loans to the Public Sector(1)		52,090			116,220			410,873			230,394			809,577
Loans to the Private and Financial Sector(1)		1,396,069			480,598			48,698			5,438			1,930,803
Other Assets		48,706			15,849			245			76,632			141,432
Total Interest-Earning Assets		2,733,515			1,136,261			806,379			642,107			5,318,262
Interest-bearing liabilities in national currency
Savings		(753,400	)		0			0			0			(753,400	)
Certificates of Deposits		(2,075,873	)		(186	)		(10	)		(2	)		(2,076,071	)
Investments Accounts		(48,688	)		(126	)		0			0			(48,814	)
Subordinated corporate bonds		(7,810	)		(7,991	)		(615	)		0			(16,416	)
Liabilities with Central Bank		(172,806	)		(276,128	)		(53,433	)		0			(502,367	)
Liabilities with local financial companies		(2,958	)		(8,400	)		(14,945	)		(14,187	)		(40,490	)
Other Liabilities		(216,677	)		(96,686	)		(72,514	)		0			(385,877	)
Total Interest-Bearing Liabilities		(3,278,212	)		(389,517	)		(141,517	)		(14,189	)		(3,823,435	)
Asset/ Liability Gap		(544,697	)		746,744			664,862			627,918			1,494,827
Cumulative Asset/ Liability Gap		(544,697	)		202,047			866,909			1,494,827
Cumulative sensitivity gap as a percentage of total interest-earning assets		(10.24	)%		3.80	%		16.30	%		28.11	%

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Management’s discussion and analysis of financial condition and results of operations

The table below shows our exposure to an interest rate gap in foreign currency:

	Remaining Maturity at December 31, 2004
	0-1 Year			1-5 Years			5-10 Years			Over 10 Years			Total(2)
	(In thousands of pesos, except percentages)
Interest-earning assets in foreign currency
Interest bearing deposits in Central Bank		256,291			0			0			0			256,291
Interest bearing deposits in other banks		383,244			0			0			0			383,244
Government Securities		24,645			50,971			25,694			7,380			108,690
Loans to the Private and Financial Sector(1)		323,965			29,991			6,049			0			360,005
Other Assets		1,162			15			95			9,886			11,158
Total Interest-Earning Assets		989,307			80,977			31,838			17,266			1,119,388
Interest-bearing liabilities in foreign currency
Savings		(88,870	)		0			0			0			(88,870	)
Certificates of Deposits		(773,747	)		(231	)		0			0			(773,978	)
Investments Accounts		(170	)		0			0			0			(170	)
Liabilities with local financial companies		(29,772	)		0			0			0			(29,772	)
Liabilities with Banks and international organizations		(13,248	)		(1,650	)		0			0			(14,898	)
Other liabilities		(50,077	)		0			0			0			(50,077	)
Total Interest-Bearing Liabilities		(955,884	)		(1,881	)		0			0			(957,765	)
Asset/ Liability Gap		33,423			79,096			31,838			17,266			161,623
Cumulative Asset/ Liability Gap		33,423			112,519			144,357			161,623
Cumulative sensitivity gap as a percentage of total interest-earning assets		2.99%			10.05	%		12.90	%		14.44	%

(1)	Loan amounts are stated before deducting the allowance for loan losses. Non-accrual loans are included with loans as interest-earning assets.
(2)	Includes instruments issued by the Central Bank.

Foreign exchange risk

At December 31, 2004, our total net asset foreign currency position was US$208.6 million. This position is to a large extent the result of the asymmetric pesification of certain assets and liabilities, which changed the currency denomination of certain of our assets and liabilities and the compensation for the effects of the asymmetric pesification, through U.S. dollar-denominated bonds (BODEN 2012). See “Selected statistical data.”

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Equity and commodity price risk

Equity and commodity price risks are the risks associated with adverse movements in the value of equity securities and commodities or related indexes. We do not have any material exposure to either of them.

CONTRACTUAL OBLIGATIONS

The following table represents our contractual obligations and commercial commitments as of December 31, 2004:

	Payments due by period
				Less than						After
	Total			1 year		1-3 years		3-5 years		5 years
	(in thousands of pesos)
Central Bank		502,367			172,806		123,693		152,435		53,433
Banks and international organizations		14,898			13,248		1,650		—		—
Financing received from Argentine financial institutions		70,262			32,730		4,758		3,642		29,132
Other		204,634	(1)		35,434		48,343		48,343		72,514
Subordinated corporate bonds		16,416			7,810		6,762		1,229		615
Total contractual cash obligations		808,577			262,028		185,206		205,649		155,694
Commercial commitments
Lines of credit		22,702			22,702		—		—		—
Guarantees		92,620			63,533		13,053		1,537		14,497
Standby letters of credit		38,617			38,291		326		—		—
Total commercial commitments		153,939			124,526		13,379		1,537		14,497

(1) Includes Ps.204.6 million of a liability that we have assumed to the Central Bank, reflecting the face value of the BODEN 2012 to be purchased at a discounted price of Ps.1.40 to US$1.00, plus CER.

CRITICAL ACCOUNTING POLICIES

Our accounting and reporting policies comply with Central Bank Rules, which differ in certain significant respects from U.S. GAAP. See note 35 to the financial statements for the year ended December 31, 2004 included in this prospectus for a reconciliation of our audited financial statements to U.S. GAAP. The preparation of our financial statements requires management to make estimates and assumptions. Our financial position and results of operations can be affected by these estimates and assumptions, which are integral to understanding our financial position.

Critical accounting policies are those policies that management believes are the most important to the portrayal of our financial condition and results of operations, and require management to make estimates that are subjective or complex. Most accounting policies are not considered by management to be critical accounting. Several factors are considered in determining whether or not a policy is critical in the preparation of our financial statements. These factors include, among others, whether the estimates are material to our financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including information from third-parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under Central Bank Rules. Significant accounting policies are discussed in note 4 to our audited consolidated financial statements.

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Loan loss reserve

The loan loss reserve represents the estimate of probable losses in the loan portfolio. Determining the loan loss reserve requires significant management judgments and estimates including, among others, identifying impaired loans, determining customers’ ability to pay and estimating the fair value of underlying collateral or the expected future cash flows to be received. Actual events will likely differ from the estimates and assumptions used in determining the loan loss reserve. Additional loan loss reserve could be required in the future.

The loan loss reserve is maintained in accordance with the Central Bank’s applicable regulatory requirements. This results from evaluating the degree of debtors’ compliance and the guarantees and collateral supporting the respective transactions.

Increases in the reserve are based on the deterioration of the quality of existing loans, while decreases in the reserve are based on regulations requiring the write-off of non-performing loans classified as “non-recoverable” after a certain period of time and on management’s decisions to write off non-performing loans evidencing a very low probability of recovery.

Under the Central Bank Rules, a minimum loan loss reserve is calculated primarily based upon the classification of commercial loan borrowers and upon delinquency aging (or the number of days the loan is past due) for consumer and housing loan borrowers. Although we are required to follow the methodology and guidelines for determining the minimum loan loss reserve, as set forth by the Central Bank, we are allowed to establish additional loan loss reserve.

For commercial loans, we are required to classify all commercial loan borrowers. In order to classify them, we must consider different parameters related to each of those customers. In addition, based on the overall risk of the portfolio, we consider whether or not additional loan loss reserves in excess of the minimum required are warranted.

For the consumer loan portfolio, we classify loans based upon delinquency aging, consistent with the requirements of the Central Bank. Minimum loss percentages required by the Central Bank are also applied to the totals in each loan classification.

We register provisions after evaluating the loan portfolio in terms of delay (for consumer loans) or constant surveillance (for commercial loans). This process determines whether an increase or decrease in charges for non-performing loans is required based on our estimate of whether the credit is worsening or improving, or whether the loan is repaid. Our loan loss charges have been historically stable (absent the impact of the Argentine crisis), accommodating qualitative and quantitative changes in the composition of our loan portfolio. We believe that, as a result of the stabilization of the macroeconomic environment, there will not be substantial changes in the assumptions we will make to determine the allowances for loan losses. As a result, we do not believe that more current information will result in our actual results being materially different from our estimates, and therefore, we do not expect the provisions for loan losses to have a significant impact on our net income.

In addition, we have applied the following methods to reconcile Central Bank Rules to U.S. GAAP:

Credit card loans

We establish a reserve for credit card loans based on the past due status of the loan. All loans without preferred guarantees past due over 180 days have been reserved at 50%, in accordance with Central Bank Rules. Under U.S. GAAP, the Bank adopted a policy to charge off loans which are 180 days past due.

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Impaired loans—nonfinancial private sector and residents abroad

The Bank apply SFAS No. 114, “Accounting by Creditors for Impairment of a Loan” and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan—Income Recognition and Disclosures” for computing U.S. GAAP adjustments. SFAS No. 114, as amended by SFAS No. 118, requires a creditor to measure impairment of a loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. SFAS No. 114 is applicable to all loans (including those restructured in a troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogenous loans that are collectively evaluated for impairment. Loans are considered impaired when, based on management’s evaluation, a borrower will not be able to fulfill its obligation under the original loan terms.

Interest recognition—non-accrual loans

The method applied to recognize income on loans is described in note 4.4.e of our audited consolidated financial statements. Additionally, the accrual of interest is discontinued generally when the related loan is non-performing and the collection of interest and principal is in doubt, generally after 90 days of being past due. Accrued interest remains on our books and is considered a part of the loan balance when determining the loan loss reserve.

Under U.S. GAAP, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan is currently performing. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the provision for loan losses.

Certain assets receivable from the government sector

In accordance with Central Bank Rules, we classify our portfolio of government securities into trading and investment securities, unlisted government securities and securities issued by the Central Bank.

Realized and unrealized gains and losses and interest income on government securities are included as “Net Income/(Loss) from Government Securities” in our financial statements.

Guaranteed loans

We acquired additional guaranteed loans in the market and also through the business combinations described in note 35 of our audited consolidated financial statements for the years ended December 31, 2004. The difference between the cost of each acquired loan and its expected future cash flows is accounted for in accordance with PB 6—Amortization of Discounts on Acquired Loans.

Secured bonds

We have a significant amount of outstanding secured bonds to the Argentine government. Pursuant to Central Bank Rules, these loans do not require a loan loss reserve. However, beginning March 2003, Communiqué “A” 3,911 required these loans to be valued at the lower of their book value or their net present value calculated using an increasing discount rate specified by such Communiqué and supplementary rules. For more information, see note 4 to our audited consolidated financial statements.

Under U.S. GAAP, as mentioned above, and in light of the characteristics of the transaction, we considered this transaction to be in line with SFAS No. 15 “Accounting by Debtors and Creditors for Troubled Debt Restructurings.”

87

Management’s discussion and analysis of financial condition and results of operations

According to SFAS No. 15, a creditor in a troubled debt restructuring involving only a modification of terms of a receivable-that is, not involving receipt of assets (including an equity interest in the debtor)-shall account for the troubled debt restructuring in accordance with the provisions of Statement No. 114.

As of December 31, 2002, considering that such assets were presented but not documented or finally accepted, as established by such exchange regulations, they were not considered as government securities.

In accordance with SFAS No. 114 “Accounting by Creditors for Impairment of a Loan”, as of December 31, 2001, and 2002, we measured impairment based on the present value of expected future cash flows discounted at the asset’s effective interest rate, with a corresponding charge to bad-debt expense or by adjusting an existing valuation allowance for the impaired assets with a corresponding charge or credit to bad-debt expense.

During 2003, we received government securities known as Secured Bonds (BOGAR), which are securities available for sale and accounted for in accordance with SFAS No. 115.

As of December 31, 2004, and 2003, these BOGAR are classified by us for U.S. GAAP purposes as available-for-sale securities and carried at fair value with the unrealized gain or loss, net of income tax, recognized as a charge or credit to equity through other comprehensive income. We used quoted market values to estimate the fair value of the BOGAR.

Income tax

In estimating accrued taxes, we assess the relative merits and risks of the appropriate tax treatment considering statutory, judicial and regulatory guidance in the context of the tax position.

Because of the complexity of tax laws and regulations, interpretation can be difficult and subject to legal judgment and given specific facts and circumstances. It is possible that, others, given the same information, may at any point reach different reasonable conclusions regarding the estimated amounts of accrued taxes.

Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of the status of examinations being conducted by various taxing authorities, and newly-enacted statutory and regulatory guidance that impact the relative merits and risks of tax positions. These changes, when they affect accrued taxes, can be material to our operating results.

As explained in note 5 to our audited consolidated financial statements, Central Bank Rules do not require the recognition of deferred tax assets and liabilities and, therefore, income tax is recognized on the basis of amounts due in accordance with Argentine tax regulations and no deferred tax and liabilities are recognized.

For purposes of U.S. GAAP reporting, the Bank applies SFAS No. 109 “Accounting for income taxes”. Under this method, income tax is recognized based on the liability method whereby deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax basis of assets and liabilities at each reporting date. A valuation allowance is provided for the deferred tax assets to the extent that it is more likely than not that they will not be realized.

The carrying amounts of those deferred tax assets are subject to management’s judgment based on available evidence that realization is more likely than not and they are reduced, if necessary, by a valuation reserve.

88

Management’s discussion and analysis of financial condition and results of operations

In the event that all or part of our net deferred tax assets in the future become realizable under U.S. GAAP, an adjustment to our deferred tax assets would be credited to income tax expense in the period when the determination was made.

Business combination

We acquire financial institutions and, in some circumstances, acquire the assets and liabilities or branches of other financial institutions. According to Central Bank Rules, such transactions are recorded considering the values of the assets acquired, which are valued according to such rules and the price paid. In the process of these acquisitions, the Bank may record intangibles.

Negative goodwill, if any, is being amortized under the straight-line method over 5 years or charged to income depending on the reasons therefor.

The Central Bank established the methods for disclosure and amortization of negative goodwill, as well as the treatment thereof in the merger process. Such amortization methods depend on the reasons that originated such negative goodwill and are summarized: (a) for differences between book and fair values of government securities and guaranteed loans over the period of convergence of these values; (b) for differences between book and current values of the loan portfolio during the effective period thereof; (c) for expected future losses, upon occurrence thereof; or (d) for differences between book and current values of nonmonetary assets, during the amortization term of these assets. Positive goodwill, if any, is amortized based on the estimated useful life.

Under U.S. GAAP a business combination occurs when an entity acquires net assets that constitute a business or acquires equity interests of one or more entities and obtains control over that entity or entities. The acquisition of all or part of a financial institution that meets the definition of a business combination shall be accounted for by the purchase method.

The cost of an acquired entity shall be allocated to the assets acquired and liabilities assumed based on their estimated fair values at date of acquisition. Prior to that allocation, the acquiring entity shall (a) review the purchase consideration if other than cash to ensure that it has been valued in accordance with the requirements; and (b) identify all of the assets acquired and liabilities assumed, including intangible assets that meet the recognition criteria, regardless of whether they had been recorded in the financial statements of the acquired entity.

The difference between the purchase price and the fair value of the net assets acquired resulted in a negative goodwill or positive goodwill. The negative goodwill can be applied to reduce on a pro rata basis the amounts assigned to the noncurrent assets acquired and the surplus, if any, is charged to income for the year. Positive goodwill, if any, should be analyzed to determine whether it is amortizable and in which periods it is amortized, or if it continues not to be amortized its recoverability is tested every year.

89

The Argentine banking industry

The Argentine banking industry was severely impacted by the recent crisis. See “The Crisis and recovery in Argentina.” However, the current recovery has led to positive trends in the sector in terms of scale, profitability, solvency and asset quality.

CRISIS AND RECOVERY IN THE BANKING INDUSTRY

Scale

Assets and deposits have experienced an important recovery since 2001. We believe the public in general has regained confidence in the financial system, as evidenced by the growth in deposits. Total deposits increased to Ps.134,574 million as of December 2005 after declining from Ps.180,134 million as of December 2000 to Ps.75,609 million as of December 2002. However, the rebound of credit activity has been slower, with levels of private credit-to-GDP of 9.9% (and 9.1% for the year), as of December 2005, well below the 23.3% for 2000. Average annual deposit interest rates (30-day time deposits less than Ps.100,000) declined substantially from 12.2% in 2001 to 4.2% for the year ended December 31, 2005. At the same time, the average net worth of the financial system was reduced from Ps.37,533 million in 2001 to Ps.25,945 million in December 2005, while earnings, which began to fall in 1998 (Ps.1,146 million) as a consequence of the economic recession, collapsed to a system-wide loss of Ps.588 million in 2001 and Ps.19,287 million in 2002.

	2000(1)		2001(1)		2002(1)		2003(1)		2004		2005
	(in millions of pesos)
Total Assets(2)		361,847		325,720		234,860		185,740		200,179		218,453
Total Deposits(2)		189,405		173,414		97,111		85,758		108,151		127,382
Gross Private Sector Loans(2)		145,232		127,504		60,274		34,205		36,917		47,972

Source: Central Bank

(1) In constant pesos as of February 28, 2003.

(2) Twelve-month average.

Profitability

In 2002, the Argentine banking system lost Ps.19,287 million in total. Out of then 100 banks in existence, only 25 recorded profits, totaling Ps.1,144 million, while the remaining 75 lost approximately Ps.20,431 million in total. Although the number of profitable banks increased to 45 and 58 in 2003 and 2004, respectively, the financial system continued having losses of Ps.5,487 million and Ps.657 million, respectively.

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The Argentine banking industry

In 2005, the Argentine banking system has shown accumulated profits of Ps.1,932 million, representing a return on equity of 7.5% and a return on assets of 0.9%.

	2000(1)			2001(1)			2002(1)			2003(1)			2004			2005
Net (loss) income (1) (in millions of pesos)		(109	)		(588	)		(19,287	)		(5,487	)		(657	)		1,932
Return on average equity		(0.3	)%		(1.6	)%		(57.4	)%		(23.6	)%		(3	)%		7.5	%
Return on average assets		(0.0	)%		(0.2	)%		(8.2	)%		(3.0	)%		(0.3	)%		0.9	%

Source:     Central Bank

(1) In millions of constant pesos as of February 28, 2003.

Competitive landscape

There are six institutions that consistently rank in the top ten based on private sector loans, equity and private sector deposits: Banco de la Nación Argentina and Banco de la Provincia de Buenos Aires, which are both public banks, Banco Macro Bansud and Banco de Galicia y Buenos Aires, which are both domestic banks, and Banco Río de la Plata and BBVA Banco Francés, which are both foreign-owned banks. Only three of these (Banco de la Nación Argentina, Banco de la Provincia de Buenos Aires and Banco Macro Bansud) also ranked among the ten banks with the largest net income during 2005. Below are the rankings of these banks across these metrics:

					Market Share
					(% share of total
					private sector
					loans for the
Private Sector Loans			Ps.		Argentine
(As of December 31, 2005)			Million		financial system)
	1	BANCO DE LA NACION ARGENTINA(1)		6,656		11.9	%
	2	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		5,170		9.3	%
	3	BANCO RIO DE LA PLATA S.A.		5,046		9.1	%
	4	BANCO DE GALICIA Y BUENOS AIRES S.A.		4,041		7.3	%
	5	BBVA BANCO FRANCES S.A.		3,772		6.8	%
	6	BANKBOSTON, NATIONAL ASSOCIATION		3,190		5.7	%
	7	BANCO MACRO BANSUD S.A.(2)		2,701		4.8	%
	8	CITIBANK N.A.		2,280		4.1	%
	9	HSBC BANK ARGENTINA S.A.		2,277		4.1	%
	10	BANCO HIPOTECARIO S.A.		2,078		3.7	%
		OTHER		18,501		33.2	%
		TOTAL		55,713		100.0	%

					Market Share
					(% share of
					equity for the
Equity			Ps.		Argentine
(As of December 31, 2005)			Million		financial system)
	1	BANCO DE LA NACION ARGENTINA(1)		5,000		18.2	%
	2	BANCO HIPOTECARIO S.A.		2,217		8.1	%
	3	BBVA BANCO FRANCES S.A.		1,802		6.6	%
	4	BANCO MACRO BANSUD S.A.		1,490		5.4	%
	5	BANCO DE GALICIA Y BUENOS AIRES S.A.		1,389		5.1	%
	6	BANCO RIO DE LA PLATA S.A.		1,292		4.7	%
	7	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		1,282		4.7	%
	8	BANCO DE LA CIUDAD DE BUENOS AIRES(1)		1,180		4.3	%
	9	BANKBOSTON, NATIONAL ASSOCIATION		970		3.5	%
	10	BANCO DE INVERSION Y COMERCIO EXTERIOR S.A.(1)		954		3.5	%
		OTHER		9,833		35.9	%
		TOTAL		27,409		100.0	%

Source:     Central Bank

(1)	Public sector banks.
(2)	Includes the sum of Banco Macro Bansud’s plus Nuevo Banco Suquía’s financial statements from the Central Bank.

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The Argentine banking industry

					Market Share
					(% share of
					tangible assets
					for the
Tangible Assets(3)			Ps.		Argentine
(As of December 31, 2005)			Million		financial system)
	1	BANCO DE LA NACION ARGENTINA(1)		44,720		20.9	%
	2	BANCO DE GALICIA Y BUENOS AIRES S.A.		23,525		11.0	%
	3	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		20,827		9.7	%
	4	BBVA BANCO FRANCES S.A.		13,564		6.3	%
	5	BANCO RIO DE LA PLATA S.A.		12,619		5.9	%
	6	BANCO MACRO BANSUD S.A.(2)		9,418		4.4	%
	7	BANCO DE LA CIUDAD DE BUENOS AIRES(1)		8,942		4.2	%
	8	BANCO HIPOTECARIO S.A.		8,027		3.7	%
	9	BANKBOSTON, NATIONAL ASSOCIATION		6,836		3.2	%
	10	CITIBANK N.A.		5,599		2.6	%
		OTHER		60,295		28.1	%
		TOTAL		214,371		100.0	%

					Market Share
					(% share of
					tangible equity
					for the
Tangible Equity(4)			Ps.		Argentine
(As of December 31, 2005)			Million		financial system)
	1	BANCO DE LA NACION ARGENTINA(1)		3,688		16.8	%
	2	BANCO HIPOTECARIO S.A.		2,212		10.0	%
	3	BANCO MACRO BANSUD S.A.		1,419		6.4	%
	4	BBVA BANCO FRANCES S.A.		1,200		5.4	%
	5	BANCO DE LA CIUDAD DE BUENOS AIRES(1)		1,150		5.2	%
	6	BANCO DE INVERSION Y COMERCIO EXTERIOR S.A.		952		4.3	%
	7	BANCO DE GALICIA Y BUENOS AIRES S.A.		938		4.3	%
	8	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		831		3.8	%
	9	BANCO PATAGONIA S.A.		827		3.8	%
	10	BANCO RIO DE LA PLATA S.A.		781		3.5	%
		OTHER		8,019		36.4	%
		TOTAL		22,017		100.0	%

Source:     Central Bank

(1)	Public sector banks.
(2)	Includes the sum of Banco Macro Bansud’s plus Nuevo Banco Suquía’s financial statements from the Central Bank.
(3)	Tangible equity is defined as total shareholders’ equity minus intangible assets.
(4)	Tangible assets is defined as total assets minus intangible assets.

92

The Argentine banking industry

					Market Share
					(% share of total
					private sector
					deposits for the
Private Sector Deposits			Ps.		Argentine
(As of December 31, 2005)			Million		financial system)
	1	BANCO DE LA NACION ARGENTINA(1)		15,290		15.0	%
	2	BBVA BANCO FRANCES S.A.		10,606		10.4
	3	BANCO RIO DE LA PLATA S.A.		9,484		9.3
	4	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		8,286		8.1
	5	BANCO DE GALICIA Y BUENOS AIRES S.A.		8,007		7.9
	6	BANCO MACRO BANSUD S.A.(2)		5,737		5.6
	7	BANCO DE LA CIUDAD DE BUENOS AIRES(1)		5,296		5.2
	8	BANKBOSTON, NATIONAL ASSOCIATION		4,895		4.8
	9	CITIBANK N.A.		4,385		4.3
	10	HSBC BANK ARGENTINA S.A.		3,818		3.8
		OTHER		25,889		25.5
		TOTAL		101,692		100.0

Net Income			Ps.
(12 months ended December 31, 2005)			Milion
	1	BANCO DE LA CIUDAD DE BUENOS AIRES(1)		311
	2	BANCO MACRO BANSUD S.A.(2)		263
	3	BANCO HIPOTECARIO S.A.		253
	4	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		250
	5	BANCO DE LA NACION ARGENTINA(1)		244
	6	BANCO PATAGONIA S.A.		235
	7	BANCO DE GALICIA Y BUENOS AIRES S.A.		191
	8	NUEVO BANCO SUQUIA S.A.		166
	9	BANCO DE SAN JUAN S.A.		146
	10	BBVA BANCO FRANCES S.A.		117
		OTHER		(244	)
		TOTAL		1,932

Source:     Central Bank

(1)	Public sector banks.
(2)	Includes the sum of Banco Macro Bansud’s plus Nuevo Banco Suquía’s financial statements from the Central Bank.

We were the second most profitable bank and the first most profitable among the private sector banks, measured by net income. In 2005, our return on average equity (calculated on a daily basis) was 19.7%, compared the 5.4% for private-sector banks and 7.5% of the banking system as a whole. Furthermore we had the fastest organic growth among our peers in 2004.

There is a large concentration of branches in the Buenos Aires metropolitan area, as the following table shows. We have the most extensive private-sector branch network in Argentina, and a leading regional presence in ten Provinces including Santa Fe, Córdoba, Mendoza, Entre Ríos, Río Negro,

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The Argentine banking industry

Chubut and Neuquén, in addition to Misiones, Salta and Jujuy where we are the largest bank in terms of branches.

	As of December 31, 2005
	Banking System					Banco Macro Bansud
												Market Share
												(% share of
												total number of
												branches in
Province	Branches		% of Total			Branches			% of Total			each province)
Buenos Aires metropolitan area		1,376		35.5	%		36			14.1	%		2.8	%
Buenos Aires (rest)		604		15.6	%		16			6.3	%		2.2	%
Santa Fe		425		11.0	%		40			16.6	%		9.4	%
Córdoba		386		10.0	%		37			14.6	%		9.6	%
Mendoza		133		3.4	%		12			4.7	%		9.2	%
Entre Ríos		118		3.0	%		6			2.4	%		5.1	%
La Pampa		106		2.7	%		2			0.8	%		1.9	%
Chubut		72		1.9	%		4			1.6	%		5.6	%
Tucumán		66		1.7	%		10	(1)		3.8	%		3.1	%
Chaco		61		1.6	%		1			0.4	%		1.6	%
Corrientes		61		1.6	%		3			1.2	%		4.9	%
Misiones		60		1.5	%		29			11.4	%		48.3	%
Río Negro		56		1.4	%		7			2.8	%		12.5	%
Neuquén		51		1.3	%		4			1.6	%		7.8	%
Salta		49		1.3	%		23			9.1	%		46.9	%
Santiago del Estero		41		1.1	%		1			0.4	%		2.5	%
San Luis		39		1.0	%		1			0.4	%		2.6	%
Santa Cruz		37		1.0	%		2			0.8	%		5.4	%
San Juan		34		0.9	%		1			0.4	%		2.9	%
Jujuy		28		0.7	%		15			5.9	%		53.6	%
La Rioja		24		0.6	%		1			0.4	%		4.2	%
Catamarca		20		0.5	%		1			0.4	%		5.0	%
Formosa		17		0.4	%		0			0.0	%		0.0	%
Tierra del Fuego		15		0.4	%		2			0.8	%		13.3	%
Total		3,872		100.0	%		254	(1)		100.0	%		6.4	%

Source: Central Bank

(1)  Includes the seven branches and the headquarters acquired from Banco Empresario de Tucumán but does not include the 25 branches and the headquarters included in the pending acquisition of Banco del Tucumán S.A.

Approximately 65% of the branches in the Argentine financial system are outside the Buenos Aires metropolitan areas while approximately 85% of our branches are outside the Buenos Aires metropolitan area. The ten largest banks, in terms of branches, account for 62.0% of the total amount of the system. Finally, we are second to Banco de la Nación Argentina in terms of market share outside the Buenos Aires metropolitan area, with a market share of 8.6%.

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The Argentine banking industry

																Market
											Market					Share			% of
				Total		Market			Branches in		Share of			Branches		of			Branches
		Number of		Number		Share			BA		Branches			in the		Branches			in the
		Provinces		of		of Branches			metropolitan		in			Rest of		in Rest of			Rest of
		Served		Branches		in Argentina			area		BAMA			Country		Country			Country
1	BANCO DE LA NACIÓN ARGENTINA(1)		24		623		16.1	%		119		8.6	%		504		20.1	%		80.9	%
2	BANCO MACRO BANSUD S.A.(2)		23		254		6.5	%		38		2.8	%		216		8.6	%		85.0	%
3	BANCO DE LA PROVINCIA DE BUENOS AIRES(1)		2		340		8.8	%		141		10.2	%		199		8.0	%		58.5	%
4	NUEVO BANCO BISEL S.A.		8		158		4.1	%		1		0.1	%		157		6.3	%		99.4	%
5	BANCO CREDICOOP COOPERATIVO LIMITADO		17		228		5.9	%		76		5.5	%		152		6.1	%		66.7	%
6	BANCO DE LA PROVINCIA DE CORDOBA S.A.(1)		3		150		3.9	%		1		0.1	%		149		6.0	%		99.3	%
7	NUEVO BANCO DE SANTA FE SOCIEDAD ANONIMA		3		107		2.8	%		1		0.1	%		106		4.2	%		99.1	%
8	BANCO DE LA PAMPA SOCIEDAD DE ECONOMÍA MIXTA		5		101		2.6	%		2		0.1	%		99		4.0	%		98.0	%
9	BANCO RIO DE LA PLATA S.A.		21		215		5.5	%		117		8.5	%		98		3.9	%		45.6	%
10	BBVA BANCO FRANCES S.A.		24		232		6.0	%		135		9.8	%		97		3.9	%		41.8	%
	OTHER		24		1,471		37.9	%		745		54.1	%		726		29.0	%		49.4	%
	TOTAL		24		3,879		100.0	%		1,376		100.0	%		2,503		100.0	%		64.5	%

Source: Central Bank.

(1)	Public sector banks.
(2)	Includes the sum of Banco Macro Bansud plus Nuevo Banco Suquía.

95

Business

OVERVIEW

We are one of the leading banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and by our focus on low-and middle-income individuals and small- and medium-sized businesses, generally located outside of the Buenos Aires metropolitan area, which we believe offer significant opportunity for continued growth in our banking business. According to the Central Bank, as of December 31, 2005, we were ranked fourth in terms of deposits and third in terms of equity among private-sector banks. As of December 31, 2005, on a consolidated basis, we had:

†	Ps.9,488 million (US$3,130 million) in total assets;
†	Ps.2,949 million (US$973 million) in gross private sector loans;
†	Ps.6,565 million (US$2,166 million) in total deposits;
†	Ps.1,490 million (US$492 million) in shareholders’ equity;
†	approximately 880,000 households and 3,600 corporate customers that provide us with approximately 1.2 million clients; and
†	approximately 440,000 employee payroll accounts for corporate customers and three provincial governments.

Our consolidated net income for 2004 was Ps.193.0 million (US$64 million), representing a return on average equity of 16.4% and a return on average assets of 3.4%. Our consolidated net income for 2005 was Ps.262.7 million (US$87 million), representing a return on average equity of 19.7% and a return on average assets of 2.8%.

In general, given the relatively low level of banking intermediation in Argentina currently, there are limited products and services being offered. We are focusing on the overall growth of our loan portfolio by expanding our customer base and encouraging them to make use of our lending products. We have a holistic approach to our banking business; we do not manage the bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources and assessing profitability. We have savings and checking accounts, credit and debit cards, consumer finance loans and other credit-related products and transactional services available to our individual customers and small- and medium-sized businesses through our branch network. We also offer Plan Sueldo payroll services, lending, corporate credit cards, mortgage finance, transaction processing, and foreign exchange. In addition, our Plan Sueldo payroll processing services for private companies and the public sector give us a large and stable customer deposit base.

We emerged from the economic crisis of 2001 and 2002 as one of the strongest and largest banks in Argentina. In January 2002, in the midst of the crisis, Banco Macro S.A., our predecessor, acquired a controlling interest in Banco Bansud S.A. This acquisition tripled the size of our bank as measured by assets and expanded our geographic presence from the northern provinces of Argentina to the southern provinces. In December 2004, during the recovery period of the Argentine economy recovery, we completed the acquisition of Nuevo Banco Suquía S.A., the leading bank in the central provinces of Argentina, thereby becoming the private sector bank with the country’s most extensive branch network. The Nuevo Banco Suquía transaction increased our assets by 41% and our number of branches by 67%. Beginning at the end of 2002 and during the recovery years, we also experienced

96

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organic growth as our business in the provinces of Argentina suffered lower levels of volatility than our principal competitors in the Buenos Aires metropolitan area.

Our Class B shares trade on the Buenos Aires Stock Exchange. As of December 31, 2005, we had a total equity market value of Ps.3,263.9 million (US$1,076.7 million), calculated on the basis of the closing price of our Class B shares. We are one of three Argentine banks included in the MERVAL Index, which is an index of the shares of the largest companies trading on the Buenos Aires Stock Exchange.

Our competitive strengths

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

† Strong financial position and consistent profitability. We believe we have emerged from the economic crisis as one of the strongest banks in Argentina, as measured by profitability and balance sheet strength.

†	As of December 31, 2005, we have achieved profitability for the last 16 consecutive quarters, the only bank in Argentina to do so, with a return on average equity of 21.1%, 16.4% and 19.7% for 2003, 2004 and 2005, compared to -23.6%, -3.0% and 7.5%, respectively, for the Argentine banking system as a whole.
†	Our shareholders’ equity at December 31, 2004 and June 30, 2005, as calculated under Central Bank Rules, was Ps.1,257.3 million and Ps.1,348.7 million, respectively and our shareholders’ equity under U.S. GAAP was Ps.857.7 million and Ps.947.1 million, respectively. Our shareholders’ equity at December 31, 2005 under Central Bank Rules was Ps.1,490 million.

†	Strong presence in fast-growing target customer market. We have achieved a leading position with low- and middle-income individuals and among small- and medium-sized businesses, generally located outside of the Buenos Aires metropolitan area, which have been relatively underserved by the banking system. As of December 31, 2005, loans for less than Ps.20,000 accounted for 31% of total private sector loans, almost double the corresponding receivable for the financial system as a whole (18%). Based on our experience, this target market offers significant growth opportunities and a stable base of depositors.
†	High exposure to export-led growth. Given the geographical location of the customers we target, we have acquired banks with a large number of branches outside of the Buenos Aires metropolitan area with the aim of completing our national coverage. As a result, we are currently the leading bank in the Argentine provinces of Salta, Jujuy and Misiones and one of the leading banks in Córdoba, Santa Fe, Mendoza, Entre Ríos, Río Negro, Chubut and Neuquén, based on the number of branches. Most of these provinces engage in economic activities primarily concentrated in areas, such as agriculture, mining, cargo transportation, edible oils, ranching and tourism, which have been benefiting from export-driven growth in the Argentine economy as a result of the devaluation of the peso.
†	Largest private-sector branch network in Argentina. With 254 branches, we have the most extensive branch network among private-sector banks in Argentina. We consider our branch network to be our key distribution channel for marketing our products and services to our entire customer base with a personalized approach. In line with our strategy, approximately 85% of these branches are located outside of the Buenos Aires metropolitan area whereas only 65% of the total branches for the financial system as a whole are located outside this area, which we believe better positions us to focus on our target market. We expect to add 25 branches and the headquarters upon successful completion of our pending acquisition of Banco del Tucumán S.A. in the northern province of Tucumán.

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†	Loyal customer base. We have a loyal customer base, as evidenced in part by the quick recovery of our deposit base after the crisis. While our total deposits increased 51% during the twelve months after April 2003, the end of the corralón, deposits in the Argentine banking system as a whole grew by only 11% during that period. We believe that our customers are loyal to us due to our presence in traditionally underserved markets and to our Plan Sueldo payroll services. We have benefited from Argentine regulations that require all employees to maintain Plan Sueldo accounts for the direct deposit of their wages. In addition, we emphasize face-to-face relationships with our customers and offer them personalized advice.
†	Exclusive financial agent for three Argentine provinces. We perform financial agency services for the governments of the provinces of Salta, Jujuy and Misiones in northern Argentina. As a result, each provincial government’s bank accounts are held in our bank and we provide all their employee Plan Sueldo accounts. Together, this gives us access to substantial low cost funding and a large number of loyal customers.
†	Strong and experienced management team and committed shareholders. We are led by a committed group of shareholders who have transformed our bank from a small wholesale bank to one of the strongest and largest banks in Argentina. Jorge Horacio Brito, Ezequiel Carballo and Fernando Sansuste, our controlling shareholders, have active senior executive roles in our management and each possesses more than 20 years of experience in the banking industry.

Our strategy

We believe that the ongoing recovery of the Argentine economy, increasing penetration of banking services and a return of bank lending to the private sector, offer a significant opportunity for us to further expand our business. In particular, we believe that the increase in fixed asset investment in 2005 is setting the stage for the recovery of the long-term loan market, following the growth of the short-term credit market. As the economy has grown, we are offering new products, such as floating rate loans and leasing, designed to meet the needs of a growing economy emerging from crisis and moving towards stability. Our strengths position us to better participate in this growth, which we believe will be stronger in our target market of low- and middle-income individuals and small- and medium-sized businesses and in the provinces outside the Buenos Aires Metropolitan area, where we have a leading presence.

Our goal is to promote the overall growth of the bank by increasing our customer base, expanding our loan portfolio and generating more fee income from transactional services. We achieve this goal by managing the bank on a holistic basis, focusing our growth strategy on the marketing and promotion of our standard banking products and services. We have pursued our growth strategy by acquiring banks throughout Argentina, which has enabled us to significantly expand our branch network and customer base. We make acquisition decisions in the context of our long-term strategy of focusing on low- and middle-income individuals and small- and medium-sized businesses and to complete our national coverage of Argentina, especially in provinces outside of the Buenos Aires metropolitan area. We have taken advantage of the opportunities presented by the Argentine financial system after the crisis, in particular its consolidation, to move into new locations by acquiring banks or absorbing branches from banks liquidated by the Central Bank. Since the crisis, our growth has been fueled by these acquisitions as well as organic growth, without the need to open or move branches.

We intend to continue enhancing our position as a leading Argentine bank by taking advantage of the ongoing recovery of Argentina and its financial system, which we believe will increase value to our shareholders and our competitiveness. The key elements of our strategy include:

†  Focus on underserved markets with strong growth potential. We intend to continue focusing on both low- and middle-income individuals and small- and medium-sized businesses, most of which

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have traditionally been underserved by the Argentine banking system and are generally located outside of the Buenos Aires metropolitan area, where competition is relatively weaker and where we have achieved a leading presence. We believe that these markets offer attractive opportunities given the low penetration of banking services and limited competition. We believe the provinces outside of the Buenos Aires metropolitan area that we serve are likely to grow faster than the Argentine economy as a whole because their export-driven economies have benefited from the devaluation of the peso and higher prices for agricultural products and commodities.

† Further expand our customer base. We intend to continue growing our customer base, which is essential to increasing interest and fee-based revenues. To attract new customers we will intend to:

†	Utilize our extensive branch network. We intend to utilize our extensive branch network, which we consider our key distribution channel, to market our products and services to our entire customer base. We utilize a personalized approach to attract new customers by providing convenient and personalized banking services close to their homes and facilities.
†	Offer medium- and long-term credit. We intend to use our strong liquidity and our capital base to offer a more readily available range of medium- and long-term credit products than our competitors.
†	Expand Plan Sueldo payroll services. We will continue to actively market our Plan Sueldo payroll services, emphasizing the benefits of our extensive network for companies with nationwide or regional needs.
†	Expand our financial agency services to new provinces. We intend to take advantage of our experience as financial agent to three provincial governments in Argentina to expand these services into new provinces. For example, we signed an agreement to acquire Banco del Tucumán S.A., which is currently the fiscal agent for the province of Tucumán with 140,000 clients.
†	Offer personalized service. We offer our clients a menu of products and personalized, face-to-face advice to help them select the banking services that best respond to their needs.

†	Extend existing corporate relationships to their distributors and suppliers. We have established relationships with major corporations in Argentina and will focus our marketing efforts on providing services to their distributors, suppliers, customers and employees, including providing working capital financing and Plan Sueldo payroll services.
†	Increase cross-selling. We plan to increase cross-selling of products and services to our existing clients. Since almost all of our clients have a checking and savings account, we have a significant opportunity to expand our relationships with them through other products such as credit cards, loans and insurance. For example, strong cross-selling opportunities lie with our Plan Sueldo clients, of whom only 25% currently have personal loans from us.
†	Focus on efficiency and cost control. We intend to increase our efficiency by taking advantage of our economies of scale, and reducing costs in connection with the integration of Nuevo Banco Suquía. We are upgrading our information systems to reduce further our operating costs and to support larger transaction volumes nationally.
†	Strategically explore acquisition opportunities. While we focus our managerial resources on growing our existing businesses, we will continue to consider attractive acquisition opportunities that offer additional value and are consistent with or complementary to our business strategy. For example, we recently acquired assets and liabilities of a small bank, and are in the process of acquiring a second bank, both in Tucumán, and we intend to evaluate participating in the auctions for Banco de la Provincia de Córdoba and Nuevo Banco Bisel.

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† Access the international capital markets. We believe that access to the international capital markets will give us a competitive advantage in funding the expansion of credit demand in Argentina that we believe will develop in the near future.

OUR HISTORY

Banco Macro

Our predecessor, Macro Compañía Financiera S.A., was authorized in 1977 to operate as a non-banking financial institution. In May 1988, it was granted the authorization to operate as a commercial bank and changed its name to Banco Macro S.A., or Banco Macro. Banco Macro’s shares traded on the Buenos Aires Stock Exchange since November 1994.

After a banking crisis in Argentina caused by the Mexican economic crisis in 1994, Banco Macro changed its business strategy, focusing on retail banking in underserved markets with high growth potential. Following this strategy, in 1996, Banco Macro began buying privatized provincial banks in Argentina’s northern provinces (including Banco de la Provincia de Salta, Banco de la Provincia de Misiones and Banco de la Provincia de Jujuy), which enabled it to expand the scope of its consumer finance banking services and establish a strong footprint in developing local economies. Banco Macro also participated in the restructuring of several banks (including Banco del Noroeste and Banco Israelita de Córdoba), thereby incorporating branches in the northern and central provinces of Argentina into its network.

Since the end of 2001, while in the process of becoming today’s Banco Marco Bansud, Banco Macro has acquired additional bank assets and merged with or acquired other banks (including, as described below, Banco Bansud and Nuevo Banco Suquía), thereby increasing its assets from Ps.1,375 million at December 31, 2001 to Ps.9,488 million as of December 31, 2005.

Banco Macro Bansud

In January 2002, Banco Macro acquired a majority of the capital stock of Banco Bansud, an Argentine bank founded in 1924. Banco Bansud’s shares traded on the Buenos Aires Stock Exchange from 1993 to the date of its merger. Prior to this acquisition, throughout its history, Banco Bansud had itself either acquired or merged with a number of other banks, including Banco Shaw S.A., and Banco Federal S.A. In June 2003, our shareholders decided to merge Banco Macro and Banco Bansud in order to create a financial institution with a presence extending throughout Argentina. The merger was completed in December 2003 and the combined entity was renamed Banco Macro Bansud S.A. The acquisition of Banco Bansud expanded the scope of our operations to southern Argentina.

Scotiabank Quilmes

In August 2002, in connection with the restructuring of Scotiabank Quilmes S.A., Banco Bansud purchased assets and acquired liabilities and 36 branches from Scotiabank Quilmes located throughout Argentina.

Nuevo Banco Suquía

Nuevo Banco Suquía was created in May 2002 from certain assets and liabilities originally belonging to Banco del Suquía S.A., which was founded in 1962 in the city of Córdoba as a savings and loan company focused on housing mortgage lending to individuals.

The run on bank deposits as a result of the economic crisis caused a liquidity crisis for the former Banco Suquía S.A. and its controlling shareholder at the time decided not to make additional contributions. As a result, the Central Bank suspended and then restructured Banco Suquía’s

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operations, creating the Nuevo Banco Suquía with certain of Banco Suquía’s assets and liabilities. The Central Bank then passed a resolution providing for the sale of Nuevo Banco Suquía and requiring that the purchaser commit to capitalize the bank. In December 2004, the Central Bank approved our acquisition of 100% of the capital stock of Nuevo Banco Suquía. Upon the acquisition of Nuevo Banco Suquía, we added a significant presence in the central provinces of Argentina, reinforcing the national scope of our operations, and we became the private sector bank with the largest branch network in Argentina.

OUR PRODUCTS AND SERVICES

We provide our customers with a combination of standard products and services that is designed specifically to suit individual needs. We have two broad categories of customers: retail customers, which include individuals and very small companies, and corporate customers, which include small, medium and large companies and major corporations. In addition, we provide services to three provincial governments. We offer a relatively narrow range of standard products, which are generally available to both our retail and corporate customers. We have a holistic approach to our banking business with a single commercial division responsible for all of our customers and our branch network; we do not manage the bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources or assessing profitability. Our strategy is to grow our business, as demand for credit in Argentina increases, by focusing on cross-selling opportunities among our broad customer base. The following discussion of our business follows the broad customer categories of retail and corporate as a way to understand who our customers are and the products and services that we provide.

Retail Customers

Overview

Retail customers are individuals, entrepreneurs and very small companies (as companies with less than Ps.1 million in sales per year). We provide services to them throughout Argentina, in particular outside of the Buenos Aires metropolitan area, which has higher concentrations of low- and middle-income individuals who are traditionally underserved by large private banks. We serve our retail customers through our extensive, nationwide branch network. Approximately 85% of our branches are located, and 90% of our customers live, outside of the Buenos Aires metropolitan area.

Our retail customers provide us with a key source of funding as well as a significant interest and fee income. We believe that our large retail customer client base provides us with an excellent opportunity to expand the volume of our lending business. For example, of approximately 880,000 households that are customers, only 21% currently have a personal loan from us and only 33% currently have a credit card, and we believe there is strong potential to increase these percentages. In addition, we have approximately 8,700 very small companies as customers. As of December 31, 2005, we had 330,000 households and very small companies with an aggregate loan portfolio of Ps.1,292.9 million. Loans of Ps.20,000 or less accounted for 71.3% of this loan portfolio.

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

During 2004 and 2005, our efforts were aimed at strengthening relations with our customers by offering them the products that are best suited to their needs and circumstances, based on our individualized, professional advice, which we believe is an important feature that distinguishes us in

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serving our target markets. As a result, during that period, we succeeded in increasing our portfolio of small time deposits (less than Ps.100,000) by 158%.

     Savings and checking accounts and time deposits

We generate fees from providing savings and checking account maintenance, account statements, check processing and other direct banking transactions, direct debits, fund transfers, payment orders and bank debit cards. In addition, our time deposits provide us with a strong and stable funding base. For information on average interest rates, please see “Selected statistical information.”

		Approximate number
		of retail accounts
Product		(as of December 31, 2005)
Savings
Total savings accounts			724,000
	Plan Sueldo (private sector)		174,000
	Plan Sueldo (public sector)		268,000
	Retirees		79,000
	Open market		203,000
Checking
Checking accounts			42,000
Electronic account access
Debit cards			697,000

     Lending products and services

We offer personal loans, advances, document discounts, mortgages (housing), overdrafts and car loans and credit card loans to our retail customers. At December 31, 2005, we had a 6.7% market share for personal loans, which ranked us fourth in the Argentine banking system in the provision of consumer loans and first among private sector banks. We intend to continue to increase our retail lending by focusing our marketing efforts on underserved target markets such as the low-and middle-income individuals and to cross-sell our retail lending products to our existing customers, particularly those who have savings and checking accounts with us because we provide payroll and pension services to their employers. Financings granted by us to these customers through consumer loans and Macroadelantos, which are advances on salaries, have a delinquency rate under 1% since the receipt of the borrower’s salary ensures the payment of the applicable loan installment prior to the release of the wages to the borrower. We are also a major credit card issuer, with approximately 471,000 cards in circulation as of December 31, 2005. One of our initiatives to expand lending is by encouraging low- and middle-income customers to use credit cards for larger purchases. The table below sets forth

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information about loans to retail customers (which we define here as loans to individuals and loans to very small companies in an amount up to Ps.20,000) as of December 31, 2005:

	Loans to retail customers
	(as of December 31, 2005)
	Personal						Mortgage						Pledged			Credit card
	loans			Documents(1)			loans			Overdrafts			loans(2)			loans			Others
Percentage of gross retail private sector loan portfolio		37.2	%		7.6	%		13.9	%		6.5	%		10.9	%		18.5	%		5.4	%
Total customers with outstanding loans		160,600			5,000			6,000			82,800			6,500			201,500			1,900
Average gross loan amount		2,600			4,800			28,700			700			20,300			1,100			33,900

(1)	Factoring, check cashing advances and loans with promissory notes.
(2)	Primarily secured auto loans.

Interest rates and maturities vary across products. For example, personal loans for Plan Sueldo customers carry an average interest rate of 21.7% and an average maturity of 23 months.

Corporate Customers

     Overview

We provide our corporate customers with traditional banking products and services such as deposits, lending (including overdraft facilities), check cashing advances and factoring, guaranteed loans and credit lines for financing foreign trade and cash management services. We also provide them trust, payroll and financial agency services, corporate credit cards and other specialty products. We have four categories for our corporate customers: small companies, which have between Ps.1 million and Ps.6 million in sales per year, medium companies, which have between Ps.6 million and Ps.30 million in sales per year, large companies, which have between Ps.30 million and Ps.100 million in sales per year, and major companies, which have more than Ps.100 million in sales per year. Approximately 91% of our corporate customers are small businesses. Important sectors within our corporate customer base include the agro-industrial, transportation and food and beverage. Our corporate customer base also acts as a source of demand for our excess liquidity through overnight and short-term loans to major corporate customers. See “Management’s discussion and analysis of financial condition and results of operations— liquidity and capital resources.”

     Plan Sueldo payroll services

Since 2001, Argentine labor law has provided for the mandatory payment of wages through accounts opened by employers in the name of each employee with financial institutions within two kilometers of the workplace, in the case of urban areas, and ten kilometers of the workplace, in the case of rural areas. There are similar requirements in place for pension payments. We handle payroll processing for private sector companies and the public sector, or Macrosueldos, which requires employers to maintain an account with us for the direct deposit of employee wages. We administer the payroll services for the governments of the Argentine provinces of Misiones, Salta and Jujuy and for a total of 259,000 private sector clients (including retirees). Our payroll services provide us with a large and

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diversified depositor base with significant cross-selling potential. See “—Our Products and Services—Retail Customers.”

     Lending products and services

Our lending activities to the corporate sector (defined here as firms with loans outstanding in excess of Ps.20,000) totaled Ps.1,830 million. Most of our current lending activity consists of working capital loans to small- and medium-sized businesses. Our historic focus on small- and medium-sized businesses has enabled us to diversify our credit risk exposure, by granting smaller-sized loans to clients in diverse business sectors. As of December 31, 2005, the average principal amount of our corporate loans were Ps.280,000 and our 20 largest private sector loans accounted for 34.2% of our total corporate loans.

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

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

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

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

As of December 31, 2005, our loans to corporate customers were as follows:

	Loans to companies in excess of
	Ps.20,000, (as of December 31, 2005)
			Percentage of
			corporate loan
	(in millions of pesos)		portfolio
Overdrafts		351.4		19.2	%
Documents(1)		333.3		18.2
Leasing		147.9		8.1
Pledged loans(2)		95.5		5.2
Mortgage loans		146.1		8.0
Other(3)		754.9		41.2
Corporate credit cards		0.9		0.1
Total		1,830.0		100.0

(1)	Factoring, check cashing advances and promissory notes.
(2)	Primarily securing cargo transportation equipment.
(3)	Mostly structured loans (medium- and long-term).

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     Transaction services

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

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

Collection services. Our collection services include cash or check deposits at our 254 branches, automatic and direct debits from checking or savings accounts and the transportation of funds collected from corporate customers to our branches for deposit. Our extensive branch network enables us to offer fast and efficient collection services throughout Argentina, which is of critical importance to both regional and nationwide companies.

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

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

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

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OUR DISTRIBUTION NETWORK

We have a unique distribution network of 254 branches spread throughout Argentina, the largest private sector branch network in the country. In particular, in line with our strategy of expanding nationally, we have extensive coverage of the provinces of Argentina with 85% of our branches located outside of the Buenos Aires metropolitan area. Furthermore, we have 27 service points used for social security benefit payments and servicing of checking and savings accounts; 475 ATMs; 21 “Metrobanks” (which are small banking kiosks located in subway stations); 2 customer service centers located on the premises of corporate clients; a telemarketing center; telephone banking; and an internet banking service. The distribution of our branches is shown in the following map and the following table breaks down the current distribution of our branches per province and sets forth our market share for all banks in those provinces:

	As of December 31, 2005
	Banco Macro Bansud
							Market Share of
				% of			Total Branches in
Province	Branches			Total(1)			Each Province(1)
Buenos Aires metropolitan area		36			14.2	%		2.6	%
Buenos Aires (rest)		16			6.3	%		2.6	%
Santa Fe		40			15.7	%		9.4	%
Córdoba		37			14.6	%		9.6	%
Misiones		29			11.4	%		48.3	%
Salta		23			9.1	%		46.9	%
Jujuy		15			5.9	%		53.6	%
Mendoza		12			4.7	%		9.0	%
Tucumán		10(1	) (36) (2)		3.9	%		15.2(54.5) (2)	%
Río Negro		7			2.8	%		12.5	%
Entre Ríos		6			2.4	%		5.1	%
Chubut		4			1.6	%		5.6	%
Neuquén		4			1.6	%		7.8	%
Corrientes		3			1.2	%		4.9	%
La Pampa		2			0.8	%		1.9	%
Santa Cruz		2			0.8	%		5.4	%
Tierra del Fuego		2			0.8	%		13.3	%
Catamarca		1			0.4	%		5.0	%
Chaco		1			0.4	%		1.6	%
La Rioja		1			0.4	%		4.2	%
San Juan		1			0.4	%		2.9	%
San Luis		1			0.4	%		2.6	%
Santiago del Estero		1			0.4	%		2.4	%
TOTAL		254(1	) (280) (2)		100.0	%		6.5(7.2) (2)	%

(1)	Includes the seven branches and the headquarters of Banco Empresario de Tucumán.
(2)	Includes both the seven branches and the headquarters of Banco Empresario de Tucumán and the 25 branches and the headquarters of Banco del Tucumán S.A.

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Consistent with our strategy to focus our operations on low- and middle-income individuals and small- and medium-sized businesses, we are increasing our presence in the northern province of Tucumán. In November 2005, we signed an agreement for the acquisition of Banco del Tucumán S.A., which has 59 ATM’s, 25 branches and a headquarters in Tucumán. We also have received approval for the acquisition from the Executive Authority of the province of Tucumán and the Central Bank and authorization from the Argentine antitrust authorities is pending. Upon completion of the acquisition, we will become the financial agent for the provincial government of Tucumán and we will own 54.5% of the branches in the province and our total number of branches will increase to 280 nationwide.

CREDIT RISK MANAGEMENT

Credit policy

Our board of directors approves our credit policy and credit analysis based on the following guidelines:

†	we seek to maintain a high quality portfolio that is diversified among customers;
†	decisions regarding loan amounts are made following conservative parameters based upon the customer’s capital, cash flow and profitability, in the case of companies, and the customer’s income and asset base, in the case of individuals;
†	the term of the loans offered to meet the customer’s needs must be appropriate for the purpose of the loan and the customer’s ability to repay the loan.
†	transactions must be appropriately secured according to the loan’s term and the level of risk involved, and in the case of lending to small- and medium-sized companies, we request personal guarantees from the company’s owners; and
†	we continuously monitor credit portfolios and customer payment performance.

Loan application process

We establish contact with loan applicants through a business unit officer, who is in charge of gathering the applicant’s information and documentation, visiting the applicant, obtaining the reasons for the loan request and making an initial assessment of the application. The loan proposal is then reviewed by the applicable banking manager and, if it complies with our credit policy, it is referred to our credit risk assessment management division, which prepares a risk report. The risk report is then provided to a committee in charge of reviewing and granting the loan. Depending upon the amount and type of loan involved, the responsible committee will be one of three committees acting under the supervision of our board of directors and responsible for reviewing and determining whether to approve the loan: a senior committee, a junior committee or a regional committee. The senior committee consists of members of senior management, including our chairman and vice chairman, and considers loan proposals in excess of Ps.1,000,000.

Our credit policies for individuals are based upon the applicable product lines, including credit cards, current account overdrafts, Macroadelantos, personal loans, chattel and real estate mortgage loans, and stipulate the permitted terms, maximum amounts available and interest rates. The amount of the customer’s indebtedness, loan repayment capability based on current income, and credit history are key tools used in assessing each application.

Credit risk rating

In order to determine the credit risk, our risk management division qualifies each company by means of a risk rating model, assigning to a debtor a rating that ranges from 1 to 10, 1 being the highest risk and 10 the lowest. The risk rating model takes into consideration quantitative as well as qualitative concepts. Our lending policy establishes that companies with debtor ratings of 1, 2, 3 and 4 are outside of our business scope, while middle market companies, our main target group, usually have ratings of 5 to 7.

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In addition to the debtor rating, a transaction rating is determined which, based on the former, takes into account credit enhancements or mitigations derived from the particular product profile (longer terms than those stated for the debtor rating, guarantees, currency, etc.).

Credit monitoring and review process

Credit monitoring involves carefully monitoring the use of the loan proceeds by the customer, as well as the customer’s loan repayment performance with the objective of preempting problems relating to the timely repayment of the loan. The credit monitoring and review process also aims to take all steps necessary to keep delinquent loans within the parameters established by our credit policy for curing the delinquency. If this objective is not accomplished, our credit management division will direct the collection of the loan to our pre-legal or legal collection unit. We standardize the early stages of the collection process by different measures (including contact by telephone and letter), beginning five days after maturity.

FUNDING

Our principal source of funding is deposits from individuals and businesses located in Argentina. Deposits include checking accounts, savings accounts and time deposits. The following table sets forth our sources of funding as of December 31, 2002, 2003, 2004 and 2005.

			As of December 31,
			2002(1)		2003(1)		2004			2005
			(in thousands of pesos)
Deposits
	From the non-financial public sector			218,264		382,195		809,764			822,687
	From the financial sector			7,552		11,909		4,445			5,208
	From the non-financial private sector and residents abroad
		Checking accounts		237,638		421,467		844,969			1,036,175
		Savings accounts		135,773		237,469		729,234			1,100,633
		Time deposits		588,457		1,583,920		2,588,546			3,222,011
		Investment accounts(2)		20		51,627		48,598			29,826
		Other(3)(4)		424,267		233,811		225,891			292,767
	Accrued interest, adjustments and foreign exchange differences payable			148,771		104,847		67,550			56,019
Borrowing from Central Bank and financial institutions
	Central Bank
		for liquidity support(5)		—		—		266,746			—
	Other(6)			10,355		2,353		235,621	(5)		217,481
	Banks and international institutions			117,940		54,889		14,898			158,544
	Financing received from Argentine financial institutions			36,186		64,026		70,262			42,259
	Other— liability for future subscription of BODEN 2012			180,053		190,318		204,634
Subordinated corporate bonds				71,101		24,200		16,416			12,047
Shareholders’ equity				925,370		1,125,219		1,257,302			1,489,574
Total funding				3,101,747		4,488,249		7,384,876			8,485,231

(1)	Constant pesos as of February 28, 2003.
(2)	Time deposits prepayable at the option of the depositor.
(3)	As of December 31, 2002, 2003 and 2004 deposits include Ps.476.2 million, Ps.245.7 million and Ps.88.1 million, respectively, for CEDROs.
(4)	Primarily includes CEDROs, expired time deposits, and judicial deposits.
(5)	On February 2, 2005, Nuevo Banco Suquía repaid the credit lines.
(6)	Represents amounts borrowed by Nuevo Banco Suquía from the Central Bank to purchase bonds to deliver to depositors in exchange for their CEDROs.

108

Business

TECHNOLOGY

We invest substantially in the development of technology so as to enable us to respond promptly to market requirements, reduce costs and increase revenues. We updated our core systems during 2004 and 2005, acquired a workflow system and enhanced our data warehouse system. Most of our technology investments during the last three years have related to the integration of operating platforms as a result of our acquisitions of other banks. Our primary technology-related goal for 2005 is to complete the integration of Nuevo Banco Suquía’s operating platform with our existing operating platform. We expect to invest approximately US$13.8 million in technology improvements during the next two years.

We are dedicated to improving our systems to provide our branch network with enhanced operating capacity. In addition, we are analyzing, developing and implementing the following technology initiatives:

†	defining long-term data processing solutions to ensure consolidation of data processing centers, particularly in light of our acquisition of Nuevo Banco Suquía;
†	unifying policies (operations, data-processing systems and security), technological standards, working operational models and metrics; and
†	upgrading our technology to maintain market level security standards.

SUBSIDIARIES

We have six subsidiaries (i) Nuevo Banco Suquía, our retail and commercial banking subsidiary in the central provinces of Argentina; (ii) Sud Bank & Trust, our subsidiary in the Bahamas through which we provide primarily private banking services; (iii) Macro Securities S.A. Sociedad de Bolsa, which is a member of the Buenos Aires Stock Exchange, and through which we provide investment research, securities trading and custodial services to our customers; (iv) Sud Inversiones & Análisis S.A., our subsidiary that acts as trustee and provides financial advisory and analysis services; (v) Sud Valores S.G.F.C.I. S.A. our asset management subsidiary; and (vi) Macro Valores S.A., which we plan to liquidate.

PROPERTY

We own 17,109 square meters of office space at Sarmiento 447 and 731-735, in Buenos Aires, Argentina, the headquarters for our management, accounting, administrative and investor relations personnel. Our branch network consisted of 254 branches in Argentina, 110 of which are leased by us and the remainder of which are owned by us. We expect to add 25 branches and the headquarters upon successful completion of our pending acquisition of Banco del Tucumán S.A. in the northern province of Tucumán.

COMPETITION

We believe that we have an important advantage over our competitors in providing banking products and services to small communities in the provinces of Argentina as a result of the close community relationships and strong loyalty we have developed over time with our customers in these areas. We consider Banco Río de la Plata S.A., Banco de Galicia y Buenos Aires S.A., Banco Patagonia S.A. and HSBC Argentina S.A. to be our main competitors. We also compete with regional banks. In the future, we expect competition to increase in corporate transactions products and long-term lending, mortgage lending and other secured financings, credit cards, specialized credit packages, salary payment services and investment management services. See “The Argentine banking industry.”

109

Business

LEGAL PROCEEDINGS

We are involved in normal collection proceedings and other legal proceedings in the ordinary course of business. We are not involved in any litigation or other legal proceedings that, if adversely determined, would individually or in the aggregate have a material adverse effect on our operations.

EMPLOYEES

As of December 31, 2005, we had 5,054 employees, 1,782 of whom worked at our headquarters and the remaining 3,272 at our branches. At June 30, 2005, approximately 97% of our employees were represented by a national bank union, which negotiates a collective bargaining agreement setting minimum wages for all of its members. We maintain good relations with our union and non-union employees and have never experienced a work stoppage. In connection with our offer in the public auction for Nuevo Banco Suquía we agreed not to lay off Nuevo Banco Suquía employees, however after the end of the fiscal year, unplanned layoffs occurred, not related to severance plans but to the normal course of business and the bank’s personnel policies. The payments related to the layoffs were immaterial.

	As of December 31,
Employees	2002		2003		2004		2005
Headquarters		1,055		1,052		1,594		1,782
Branches		1,826		1,762		3,178		3,272
Total		2,881		2,814		4,772		5,054

110

Selected statistical information

AVERAGE BALANCE SHEETS, INTEREST EARNED ON INTEREST-EARNING ASSETS AND INTEREST PAID ON INTEREST-BEARING LIABILITIES

The following tables show average balances, interest amounts and nominal rates for our interest-earning assets and interest-bearing liabilities for the fiscal years ended December 31, 2004, 2003 and 2002.

		Fiscal Years Ended December 31,
		2002(2)								2003(2)							2004(1)
				Interest			Average					Interest		Average					Interest			Average
		Average		Earned/			Nominal			Average		Earned/		Nominal			Average		Earned/			Nominal
		Balance		(Paid)			Rate			Balance		(Paid)		Rate			Balance		(Paid)			Rate
		(In thousands of pesos, except percentages)
ASSETS
Interest-earning assets
Government securities(3)
	Pesos		286,074		175,600			61.38	%		1,068,617		271,072		25.37	%		1,656,910		193,247			11.66	%
	Dollars		227,122		(34,184	)		(15.05	)%		232,952		6,955		2.99	%		161,791		(3,833	)		(2.37	)%
	Total		513,196		141,416			27.56	%		1,301,569		278,027		21.36	%		1,818,701		189,414			10.41	%
Loans
Private Sector
	Pesos		527,188		232,448			44.09	%		484,494		77,030		15.90	%		1,045,151		115,465			11.05	%
	Dollars		273,604		17,202			6.29	%		121,346		9,854		8.12	%		227,031		11,238			4.95	%
	Euros		—		—			—			2		—		—			116		—			—
	Total		800,792		249,650			31.18	%		605,842		86,884		14.34	%		1,272,298		126,703			9.96	%
Public Sector
	Pesos		513,383		151,313			29.47	%		468,494		18,110		3.87	%		381,186		34,713			9.11	%
	Total		513,383		151,313			29.47	%		468,494		18,110		3.87	%		381,186		34,713			9.11	%
Deposits with the Central Bank
	Pesos		122,810		2,198			1.79	%		215,873		1,018		0.47	%		78,588		3,711			4.72	%
	Dollars		23,658		1,293			5.47	%		105,460		1,050		1.00	%		2,569		25			0.97	%
	Total		146,468		3,491			2.38	%		321,333		2,068		0.64	%		81,157		3,736			4.60	%
Other assets
	Pesos		795,188		224,262			28.20	%		706,661		32,496		4.60	%		415,575		25,062			6.03	%
	Dollars		491,819		11,620			2.36	%		286,757		99		0.03	%		420,641		1,484			0.35	%
	Total		1,287,007		235,882			18.33	%		993,418		32,595		3.28	%		836,216		26,546			3.17	%
Total interest-earning assets
	Pesos		2,244,643		785,821			35.01	%		2,944,139		399,726		13.58	%		3,577,410		372,198			10.40	%
	Dollars		1,016,203		(4,069	)		(0.40	)%		746,515		17,958		2.41	%		812,032		8,914			1.10	%
	Euros		—		—			—			2		—		—			116		—			—
	Total		3,260,846		781,752			23.97	%		3,690,656		417,684		11.32	%		4,389,558		381,112			8.68	%
Non interest-earning assets
Cash and due from banks
	Pesos		77,661		—			—			85,787		—		—			376,922		—			—
	Dollars		190,095		—			—			130,656		—		—			438,169		—			—
	Other		—		—			—			1,907		—		—			2,343		—			—
	Total		267,756		—			—			218,350		—		—			817,434		—			—

111

Selected statistical information

		Fiscal Years Ended December 31,
		2002(2)								2003(2)								2004(1)
					Interest		Average						Interest		Average						Interest		Average
		Average			Earned/		Nominal			Average			Earned/		Nominal			Average			Earned/		Nominal
		Balance			(Paid)		Rate			Balance			(Paid)		Rate			Balance			(Paid)		Rate
		(In thousands of pesos, except percentages)
Investments in other companies
	Pesos		2,797			—		—			10,785			—		—			12,734			—		—
	Dollars		369			—		—			327			—		—			270			—		—
	Total		3,166			—		—			11,112			—		—			13,004			—		—
Property and equipment and miscellaneous and intangible assets and items pending collection
	Pesos		298,817			—		—			347,071			—		—			375,323			—		—
	Dollars		6,053			—		—			7,904			—		—			—			—		—
	Euros		—			—		—			(1	)		—		—			7			—		—
	Total		304,870			—		—			354,974			—		—			375,330			—		—
Allowance for loan losses
	Pesos		(175,925	)		—		—			(219,363	)		—		—			(150,212	)		—		—
	Dollars		(29,878	)		—		—			(4,606	)		—		—			(13,727	)		—		—
	Total		(205,803	)		—		—			(223,969	)		—		—			(163,939	)		—		—
Other assets
	Pesos		149,472			—		—			185,457			—		—			149,855			—		—
	Dollars		24,139			—		—			120,202			—		—			123,785			—		—
	Other		—			—		—			10			—		—			515			—		—
	Total		173,611			—		—			305,669			—		—			274,155			—		—
Total non interest-earning assets
	Pesos		352,822			—		—			409,737			—		—			764,622			—		—
	Dollars		190,778			—		—			254,483			—		—			548,497			—		—
	Other		—			—		—			1,916			—		—			2,586			—		—
	Total		543,600			—		—			666,136			—		—			1,315,984			—		—
TOTAL ASSETS
	Pesos		2,597,465			—		—			3,353,876			—		—			4,342,032			—		—
	Dollars		1,206,981			—		—			1,000,998			—		—			1,360,529			—		—
	Other		—			—		—			1,918			—		—			2,981			—		—
	Total		3,804,446			—		—			4,356,792			—		—			5,705,542			—		—
LIABILITIES
Interest-bearing liabilities
Savings accounts
	Pesos		190,915			5,296		2.77	%		158,292			3,244		2.05	%		267,988			3,157		1.18	%
	Dollars		65,700			917		1.40	%		20,312			24		0.12	%		30,577			4		0.01	%
	Total		256,615			6,213		2.42	%		178,604			3,268		1.83	%		298,565			3,161		1.06	%
Certificates of Deposits
	Pesos		488,945			264,436		54.08	%		996,643			102,863		10.32	%		1,359,659			55,001		4.05	%
	Dollars		172,463			11,336		6.57	%		366,153			9,789		2.67	%		569,183			8,149		1.43	%
	Total		661,408			275,772		41.69	%		1,362,796			112,652		8.27	%		1,928,842			63,150		3.27	%
Borrowing from the Central Bank
	Pesos		776			278		35.82	%		427			13		3.04	%		9,844			897		9.11	%
	Total		776			278		35.82	%		427			13		3.04	%		9,844			897		9.11	%

112

Selected statistical information

		Fiscal Years Ended December 31,
		2002(2)							2003(2)							2004(1)
				Interest		Average					Interest		Average					Interest		Average
		Average		Earned/		Nominal			Average		Earned/		Nominal			Average		Earned/		Nominal
		Balance		(Paid)		Rate			Balance		(Paid)		Rate			Balance		(Paid)		Rate
		(In thousands of pesos, except percentages)
Borrowings from other financial institutions
	Pesos		31,928		2,381		7.46	%		30,126		25,570		84.88	%		42,298		2,585		6.11	%
	Dollars		171,005		5,324		3.11	%		97,813		108		0.11	%		61,178		1,938		3.17	%
	Total		202,933		7,705		3.80	%		127,939		25,678		20.07	%		103,476		4,523		4.37	%
Liabilities for future acquisitions of bonds
	Pesos		118,640		95,872		80.81	%		226,869		9,452		4.17	%		215,050		14,310		6.65	%
	Total		118,640		95,872		80.81	%		226,869		9,452		4.17	%		215,050		14,310		6.65	%
Other liabilities
	Pesos		222,994		91,903		41.21	%		305,729		9,096		2.98	%		379,519		5,277		1.39	%
	Dollars		87,533		14,820		16.93	%		30,215		5,027		16.64	%		175,468		10,532		6.00	%
	Pounds		—		—		—			1		—		—			—		—		—
	Euros		—		—		—			15		1		6.67	%		—		—		—
	Total		310,527		106,723		34.37	%		335,960		14,124		4.20	%		554,987		15,809		2.85	%
Total Interest-bearing liabilities
	Pesos		1,054,198		460,166		43.65	%		1,718,086		150,238		8.74	%		2,274,358		81,227		3.57	%
	Dollars		496,701		32,397		6.52	%		514,493		14,948		2.91	%		836,406		20,623		2.47	%
	Pounds		—		—		—			1		—		—			—		—		—
	Euros		—		—		—			15		1		6.67	%		—		—		—
	Total		1,550,899		492,563		31.76	%		2,232,595		165,187		7.40	%		3,110,764		101,850		3.27	%
Non interest-bearing liabilities and stockholders’ equity
	Demand deposits
	Pesos		221,933							317,547							765,741		—		—
	Dollars		127		—		—			150		—		—			1,192		—		—
	Total		222,060		—		—			317,697		—		—			766,933		—		—
	Other liabilities
	Pesos		1,130,654		—		—			749,856		—		—			564,262		—		—
	Dollars		169,877		—		—			107,596		—		—			83,189		—		—
	Other		1		—		—			25		—		—			783		—		—
	Total		1,300,532		—		—			857,477		—		—			648,234		—		—
	Stockholders equity
	Pesos		730,955		—		—			949,023		—		—			1,179,611		—		—
	Total		730,955		—		—			949,023		—		—			1,179,611		—		—
Total non-interest-bearing liabilities and stockholders equity
	Pesos		2,083,542		—		—			2,016,426		—		—			2,509,614		—		—
	Dollars		170,004		—		—			107,746		—		—			84,381		—		—
	Other		1		—		—			25		—		—			783		—		—
	Total		2,253,547		—		—			2,124,197		—		—			2,594,778		—		—

113

Selected statistical information

		Fiscal Years Ended December 31,
		2002(2)						2003(2)						2004(1)
				Interest		Average				Interest		Average				Interest		Average
		Average		Earned/		Nominal		Average		Earned/		Nominal		Average		Earned/		Nominal
		Balance		(Paid)		Rate		Balance		(Paid)		Rate		Balance		(Paid)		Rate
		(In thousands of pesos, except percentages)
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
	Pesos		3,137,740		—		—		3,734,512		—		—		4,783,972		—		—
	Dollars		666,705		—		—		622,239		—		—		920,787		—		—
	Other		1		—		—		41		—		—		783		—		—
	Total		3,804,446		—		—		4,356,792		—		—		5,705,542		—		—

(1)	Nuevo Banco Suquía consolidated with Banco Macro Bansud from December 22, 2004.
(2)	In constant pesos as of February 28, 2003.
(3)	Includes instruments issued by the Central Bank.

114

Selected statistical information

CHANGES IN INTEREST INCOME AND INTEREST EXPENSE; VOLUME AND RATE ANALYSIS

The following tables allocate, by currency of denomination, changes in our interest income and interest expense between changes in the average volume of interest-earning assets and interest-bearing liabilities and changes in their respective nominal interest rates for the fiscal year ended December 31, 2004 compared to the fiscal year ended December 31, 2003; for the fiscal year ended December 31, 2003 compared to the fiscal year ended December 31, 2002; and for the fiscal year ended December 31, 2002 compared to the fiscal year ended December 31, 2001.

		December 2002/December 2001									December 2003/December 2002									December 2004/December 2003
		Increase (Decrease) Due to									Increase (Decrease) Due to									Increase (Decrease) Due to
		Changes in									Changes in									Changes in
		Volume			Rate			Net Change			Volume			Rate			Net Change			Volume			Rate			Net Change
		(in thousands of pesos)
ASSETS
Interest-earning assets
Government securities
	Pesos		166,453			4,976			171,429			198,505			(103,033	)		95,472			68,613			(146,438	)		(77,825	)
	Dollars		(16,472	)		(25,250	)		(41,722	)		174			40,965			41,139			1,686			(12,474	)		(10,788	)
	Total		149,981			(20,274	)		129,707			198,679			(62,068	)		136,611			70,299			(158,912	)		(88,613	)
Loans
Private sector
	Pesos		67,142			77,353			144,495			(6,788	)		(148,630	)		(155,418	)		61,940			(23,505	)		38,435
	Dollars		(1,083	)		(14,780	)		(15,863	)		(12,364	)		5,616			(7,348	)		5,231			(3,847	)		1,384
	Total		66,059			62,573			128,632			(19,152	)		(143,614	)		(162,766	)		67,171			(27,352	)		39,819
Public sector
	Pesos		144,746			770			145,516			(1,735	)		(131,468	)		(133,203	)		(7,951	)		24,554			16,603
	Dollars		—			(9,344	)		(9,344	)		—			—			—			—			—			—
	Total		144,746			(8,574	)		136,172			(1,735	)		(131,468	)		(133,203	)		(7,951	)		24,554			16,603
Deposits with the Central
	Bank
	Pesos		2,055			(103	)		1,952			439			(1,619	)		(1,180	)		(6,483	)		9,176			2,693
	Dollars		(2,054	)		2,398			344			814			(1,057	)		(243	)		(1,001	)		(24	)		(1,025	)
	Total		1			2,295			2,296			1,253			(2,676	)		(1,423	)		(7,484	)		9,152			1,668
Other assets
	Pesos		170,684			(6,359	)		164,325			(4,071	)		(187,695	)		(191,766	)		(17,554	)		10,120			(7,434	)
	Dollars		8,580			(4,747	)		3,833			(71	)		(11,450	)		(11,521	)		472			913			1,385
	Total		179,264			(11,106	)		168,158			(4,142	)		(199,145	)		(203,287	)		(17,082	)		11,033			(6,049	)
Total interest-earning assets
	Pesos		551,080			76,637			627,717			186,350			(572,445	)		(386,095	)		98,565			(126,093	)		(27,528	)
	Dollars		(11,029	)		(51,723	)		(62,752	)		(11,447	)		33,474			22,027			6,388			(15,432	)		(9,044	)
	Total		540,051			(24,914	)		564,965			174,903			(538,971	)		(364,068	)		104,953			(141,525	)		(36,572	)

115

Selected statistical information

		December 2002/December 2001									December 2003/December 2002									December 2004/December 2003
		Increase (Decrease) Due to									Increase (Decrease) Due to									Increase (Decrease) Due to
		Changes in									Changes in									Changes in
		Volume			Rate			Net Change			Volume			Rate			Net Change			Volume			Rate			Net Change
		(in thousands of pesos)
LIABILITIES
Interest-bearing liabilities
Savings accounts
	Pesos		2,099			(470	)		1,629			(669	)		(1,383	)		(2,052	)		1,292			(1,379	)		(87	)
	Dollars		777			(140	)		637			(54	)		(839	)		(893	)		1			(21	)		(20	)
	Total		2,876			(610	)		2,266			(723	)		(2,222	)		(2,945	)		1,293			(1,400	)		(107	)
Certificates of deposits
	Pesos		76,870			164,454			241,324			66,528			(228,101	)		(161,573	)		14,652			(62,514	)		(47,862	)
	Dollars		(22,694	)		(18,330	)		(41,024	)		5,137			(6,684	)		(1,547	)		2,857			(4,497	)		(1,640	)
	Total		54,176			146,124			200,300			71,665			(234,785	)		(163,120	)		17,509			(67,011	)		(49,502	)
Borrowings from the Central Bank
	Pesos		278			—			278			(11	)		(254	)		(265	)		858			26			884
	Total		278			—			278			(11	)		(254	)		(265	)		858			26			884
Borrowings from other financial institutions
	Pesos		2,301			(156	)		2,145			(1,529	)		24,718			23,189			744			(23,729	)		(22,985	)
	Dollars		4,899			(467	)		4,432			(81	)		(5,135	)		(5,216	)		(1,161	)		2,991			1,830
	Total		7,200			(623	)		6,577			(1,610	)		19,583			17,973			(417	)		(20,738	)		(21,155	)
Liabilities for future acquisitions of bonds
	Pesos		95,872			—			95,872			4,509			(90,929	)		(86,420	)		(786	)		5,644			4,858
	Total		95,872			—			95,872			4,509			(90,929	)		(86,420	)		(786	)		5,644			4,858
Other liabilities
	Pesos		42,229			49,115			91,344			2,462			(85,269	)		(82,807	)		1,026			(4,845	)		(3,819	)
	Euros		—			—			—			1			—			1			—			(1	)		(1	)
	Dollars		(11,905	)		21,020			9,115			(9,536	)		(257	)		(9,793	)		8,718			(3,213	)		5,505
	Total		30,324			70,135			100,459			(7,073	)		(85,526	)		(92,599	)		9,744			(8,059	)		1,685
Total interest-bearing liabilities
	Pesos		219,649			212,943			432,592			71,290			(381,218	)		(309,928	)		17,786			(86,797	)		(69,011	)
	Euros		—			—			—			1			—			1			—			(1	)		(1	)
	Dollars		(28,923	)		2,083			(26,840	)		(4,534	)		(12,915	)		(17,449	)		10,415			(4,740	)		5,675
	Total		190,726			215,026			405,752			66,757			(394,133	)		(327,376	)		28,201			(91,538	)		(63,337	)

116

Selected statistical information

INTEREST-EARNING ASSETS: NET INTEREST MARGIN AND SPREAD

The following table analyzes, by currency of denomination, our levels of average interest-earning assets and net interest income, and illustrates the comparative margins and spreads for each of the fiscal years indicated.

		Year Ended December 31,
		2002(1)			2003(1)			2004
		(in thousands of pesos, except percentages)
Average interest-earning assets
	Pesos		2,244,643			2,944,139			3,577,410
	Dollars		1,016,203			746,515			812,032
	Euros		—			2			116
	Total		3,260,846			3,690,656			4,389,558
Net interest income(2)
	Pesos		325,655			249,488			290,971
	Dollars		(36,466	)		3,010			(11,709	)
	Euros		—			(1	)		—
	Total		289,189			252,497			279,262
Net interest margin(3)
	Pesos		14.51	%		8.47	%		8.13	%
	Dollars		(3.59	)%		0.40	%		(1.44	)%
	Euros		—			(50.00	)%		—
Weighted average rate			8.87	%		6.84	%		6.36	%
Yield spread, nominal basis(4)
	Pesos		(8.64	)%		4.83	%		6.83	%
	Dollars		(6.92	)%		(0.50	)%		(1.37	)%
	Euros		—			(6.67	)%		—
Weighted average rate			(7.79	)%		3.92	%		5.41	%

(1)	In constant pesos as of February 28, 2003.
(2)	Defined as interest earned less interest paid. Trading results from our portfolio of government securities are included in interest.
(3)	Net interest income stated as a percentage of average interest-earning assets.
(4)	Defined as the difference between the average nominal rate on interest-earning assets and the average nominal rate on interest-bearing liabilities.

117

Selected statistical information

INVESTMENT PORTFOLIO: GOVERNMENT AND PRIVATE SECURITIES

We own, manage and trade a portfolio of securities issued by the Argentine and other governments and private issuers. The following table sets out our investments in Argentine and other governments and private securities as of December 31, 2004, 2003 and 2002 by type and currency of denomination. Securities are stated before deduction of allowances.

			Year Ended December 31,
			2002(1)		2003(1)		2004
			(in thousands of pesos)
Government securities
Holdings for trading or intermediation
	Province of Salta Consolidation Bonds in pesos			25,696		13,261		17
	Social Security Consolidation Bonds payables in pesos			—		6,407		11,557
	Federal Government Bonds (maturity 2007 and 2008) (BODEN 2007 and BODEN 2008)			3,673		98,218		1,277
	Secured Bonds in pesos			6,485		4,020		5,649
	Argentine Republic External Bills			979		2,089		—
	Guaranteed Bonds Decree 1,579/02 (BOGAR)			—		3,348		18,351
	Medium-term T-Bonds 8.75%— maturity 2002(2)			6,226		—		—
	Tax Credit Certificates Decree 2217/02			—		2,003		—
	Other			1,064		1,471		852
Subtotal holdings for trading or intermediation				44,123		130,817		37,703
Unlisted government securities
	Secured Bonds Decree 1,579/02(3) (BOGAR)			—		685,314		819,498
	Tax Credit Certificates under Decree 2,217/02AM, maturity 04/09/2002			5,980		3,077		11,441
	Argentine Republic External Bills			—		—		2,089
	Bonds issued by the Municipality of Bahía Blanca at 13.75%			4,195		3,636		2,257
	Federal government bonds in pesos at 9%, maturity 2002(2)			12		4,312		—
	Misiones Provincial T-Bills in U.S. dollars(2)			10,668		39		—
	Argentine T-Bills with which provincial and federal governments settle payables to vendors and employees and which circulate in lieu of currency			3,058		—		—
	Buenos Aires T-Bills under Provincial Law 12,727			4,738		—		—
	Other			1,942		597		301
Subtotal unlisted government securities				30,593		696,975		835,586
Instruments issued by the Central Bank
	Listed Central Bank External Bills (LEBACs)			—		—		994,944
	Unlisted Central Bank External Bills (LEBACs)			491,076		1,097,022		102,636	(3)
Subtotal instruments issued by the Central Bank				491,076		1,097,022		1,097,580
		Total government securities in pesos		565,792		1,924,814		1,970,869
In foreign currency:
Holdings in investment accounts
	Federal government bonds in U.S. dollars at LIBOR, maturity 2012—Compensation (BODEN 2012)			170,368		143,976		53,856
Subtotal holdings in investment accounts				170,368		143,976		53,856

(footnotes on following page)

118

Selected statistical information

			Year Ended December 31,
			2002(1)		2003(1)		2004
			(in thousands of pesos)
Holding for trading or intermediation
	Argentine Republic External Bonds (BONEX)			393		162		1,271
	Argentine Republic External Bills (LETRAS EXTERNAS)			10,569		5,312		—
	Federal government bonds— (maturity 2005, 2006, 2012 and 2013) (BODEN 2005, BODEN 2006, BODEN 2012 and BODEN 2013)			71,712		64,756		47,415
	Consolidation bonds			4,385		—		1,298
	Other			860		2,384		1,253
Subtotal holding for trading or intermediation				87,919		72,614		51,237
Unlisted government securities
	Argentine Republic External Bills Coupons			—		—		3,597
	Federal government bonds in U.S. dollars at LIBOR, maturity 2013 (BODEN 2013)			3,960		—		—
Subtotal unlisted government securities				3,960		—		3,597
		Total government securities in foreign currency		262,247		216,590		108,690
		Total government securities		828,039		2,141,404		2,079,559
Investments in listed private securities
	Shares			1,496		8,285		3,951
	Corporate bonds			—		—		14,872
	Debt securities in financial trusts			—		—		10,069
	Certificates of participation in financial trusts			42,342		9,214		757
	Total private securities			43,838		17,499		29,649
Total government and private securities				871,877		2,158,903		2,109,208
Investments in unlisted private securities
	Corporate bonds— unlisted			75,943		445		928
	Debt securities in financial trusts— unlisted			—		—		33,106
	Certificates of participation in financial trusts— unlisted			810,731		277,555		88,907
Total investments in unlisted private securities				886,674		278,000		122,941
Total				1,758,551		2,436,903		2,232,149

(1)	In constant pesos as of February 28, 2003.
(2)	Related to government securities originally denominated in U.S. dollars and pesified under Federal Executive Decree No. 471/02.
(3)	As of December 31, 2004, these securities are shown as “Unlisted government securities”, although they are listed, because they are valued according to the Central Bank Rules.

119

Selected statistical information

REMAINING MATURITY OF GOVERNMENT AND CORPORATE SECURITIES

The following table analyzes the remaining maturities of our investment portfolio as of December 31, 2004 in accordance with issuance terms (before allowances). We assume that those securities in default will expire after the coming ten years.

		Maturing
				After 1 Year		After 5 Years
		Within		but Within		but Within		After
		1 Year		5 Years		10 Years		10 Years		Total
		Book Value
		(in thousands of pesos)
Government securities
In pesos:
Holding for trading or intermediation
	Consolidation bonds of Social Security payables in pesos (BOCON PREVISIONAL)		—		11,283		259		15		11,557
	Federal government bonds (maturity 2007 and 2008) (BODEN 2007 and BODEN 2008)		—		335		942		—		1,277
	Consolidation bonds in pesos (BOCON)		86		1,662		1,770		2,131		5,649
	Guaranteed Bonds Decree 1,579/02 (BOGAR)		734		3,524		7,231		6,862		18,351
	Other debt bonds		19		46		3		801		869
Unlisted government securities
	Guaranteed Bonds Decree 1,579/02 (BOGAR)		33,644		157,171		322,528		306,155		819,498
	Tax Credit Certificates under Decree 2,217/02AM, maturity 04/09/2002 (CCF)		—		—		—		11,441		11,441
	Argentine Republic External Bills (LETRAS EXTERNAS)		—		—		—		2,089		2,089
	Bonds issued by the Municipality of Bahía Blanca at 13.75%		1,509		748		—		—		2,257
	Other debt bonds		124		87		—		90		301
Instruments issued by the Central Bank
	Listed Central Bank External Bills(1)		722,695		272,249		—		—		994,944
	Unlisted Central Bank External Bills(1)		73,180		29,456		—		—		102,636
	Total government securities in pesos		831,991		476,561		332,733		329,584		1,970,869
In foreign currency:
Investment account
	Federal government bonds in U.S. dollars at LIBOR, maturity 2012— BODEN compensation (2012)		8,712		25,796		19,348		—		53,856

(footnotes on following page)

120

Selected statistical information

		Maturing
					After 1 Year			After 5 Years
		Within			but Within			but Within			After
		1 Year			5 Years			10 Years			10 Years			Total
		Book Value
		(in thousands of pesos)
Holding for trading or intermediation
	Argentine Republic External Bonds		—			—			—			1,271			1,271
	Federal government bonds— (maturity 2005, 2006, 2012 and 2013) (BODEN 2005, BODEN 2006, BODEN 2012, and BODEN 2013)		15,915			25,154			6,346			—			47,415
	Consolidation Bonds		—			—			—			1,298			1,298
	Other debt bonds (BOCON)		18			21			—			1,214			1,253
Unlisted government securities
	Argentine Republic External Bills Coupons (LETRAS EXTERNAS)		—			—			—			3,597			3,597
	Total government securities in foreign currency		24,645			50,971			25,694			7,380			108,690
	Total government securities		856,636			527,532			358,427			336,964			2,079,559
Corporate bonds			—			4,891			95			9,886			14,872
Debt securities in financial trusts			9,667			402			—			—			10,069
Certificates of participation in financial trusts			757			—			—			—			757
Shares			3,951			—			—			—			3,951
Corporate bonds— unlisted			113			570			245						928
Debt securities in financial trusts— unlisted			23,106			10,000			—			—			33,106
Certificates of participation in financial trusts— unlisted			12,275			—			—			76,632			88,907
Total private securities			49,869			15,863			340			86,518			152,590
Weighted average IRR			4.30	%		2.34	%		2.07	%		2.08	%

(1) As of December 31, 2004, “Instruments Issued by the Central Bank” includes Ps.57,854 thousands to fall due in 30 days, Ps.215,026 thousands to fall due in 60 days, Ps.89,881 thousands to fall due in 90 days, Ps.94,274 thousands to fall due in 180 days, and Ps.338,840 thousands to fall due from 181 to 365 days.

121

Selected statistical information

LOAN PORTFOLIO

The following table analyzes our loan portfolio (without considering leasing agreements) by type as of December 31, 2004, 2003 and 2002. Loans are stated before deduction of the allowance for loan losses.

	Year Ended December 31,
	2002(1)			2003(1)			2004
	(in thousands of pesos)
To the non-financial public sector		462,440			365,549			809,577
To the financial sector(2)		1,593			17,835			81,812
To the non-financial private sector and residents abroad
Advances(3)		166,032			196,300			513,390
Notes discounted and purchased(4)		49,846			148,745			429,654
Secured with mortgages		69,478			49,853			231,603
Security agreements(5)		37,114			25,500			180,831
Consumer loans(6)		75,375			168,357			360,670
Other loans		106,532			120,041			412,079
Less: Interest documented		(2,021	)		(6,069	)		(6,759	)
Less: Unapplied collections		(655	)
Plus: Interest, adjustments and listed price differences accrued pending collection		12,994			20,892			87,528
Less: Allowance for loan losses		(116,125	)		(56,279	)		(225,340	)
Total loans		862,603			1,050,724			2,875,045

(1)	In constant pesos as of February 28, 2003.
(2)	Financial loans are defined as loans to financial institutions.
(3)	Advances include overdraft lines of credit resulting from checking accounts.
(4)	Includes the face values of drafts, promissory notes and other bills transferred to us by endorsement for which the assignor is liable, whenever the latter is an Argentine resident within the financial sector. The difference between the face value of the bill and the amount effectively disbursed will be credited to “Loans— In Argentine pesos— Argentine residents— Financial sector— Principals— (Unearned discount).”
(5)	Includes the principal amounts actually lent of automobile and other collateral loans granted, for which the obligor is part of the non-financial private sector.
(6)	Consumer loans include credit card loans and other consumer loans. Overdrafts to individuals are included under “Advances.”

122

Selected statistical information

MATURITY COMPOSITION OF THE LOAN PORTFOLIO

The following table analyzes our loan portfolio as of December 31, 2004 by type and by the time remaining to maturity. Loans are stated before deduction of the allowance for loan losses. We expect most loans to be repaid at maturity in cash or through refinancing at market terms.

					Maturing
								After
		Amount as of						1 Year but
		December 31,			Within			Within			After
		2004			1 Year			5 Years			5 Years
		(in thousands of pesos, except percentages)
To the non-financial public sector			809,577			52,090			116,220			641,267
To the financial sector			81,812			74,648			7,164			—
To the non-financial private sector and residents abroad
	Advances		516,436			515,640			223			573
	Notes discounted and purchased(1)		436,625			424,338			11,629			658
	Secured with mortgages		258,722			74,207			138,947			45,568
	Security agreements(2)		187,799			104,144			83,575			80
	Consumer loans(3)		362,856			262,682			100,106			68
	Other loans		446,558			264,375			168,945			13,238
	Total loans		3,100,385			1,772,124			626,809			701,452
	Percentage of total loan portfolio		100.0	%		57.2	%		20.2	%		22.6	%

(1)	Includes the face values in Argentine pesos of drafts, promissory notes and other bills transferred to us by endorsement for which the assignor is liable, whenever the latter is an Argentine resident within the financial sector.
	The difference between the face value of the bill and the amount effectively disbursed will be credited to “Loans— In Argentine pesos— Argentine residents— Financial sector— Principals— (Unearned discount).”
(2)	Includes the principal amount actually lent of automobile and other collateral loans granted, for which the obligors are part of the non-financial private sector.
(3)	Includes credit card loans and other consumer loans.

123

Selected statistical information

LOANS— PORTFOLIO CLASSIFICATION

The following table presents our loan portfolio, before the deduction for the allowance for loan losses, using the classification system of the Central Bank in effect at the end of each fiscal year:

	Year Ended December 31,
	2002(1)		%			2003(1)		%			2004		%
	(in thousands of pesos, except percentages)
Loan Portfolio
Categories
Normal compliance/ in normal situations		783,196		80.02	%		999,691		90.31	%		2,870,768		92.59	%
Inadequate compliance/ subject to special monitoring— under observation— in negotiation or subject to refinancing agreements		29,726		3.04	%		8,695		0.78	%		27,967		0.90	%
Deficient compliance/nonperforming		15,094		1.54	%		27,385		2.47	%		38,401		1.24	%
Unlikely to be collected/ with high risk of uncollectibility		100,739		10.29	%		39,150		3.54	%		38,698		1.25	%
Uncollectible		42,762		4.37	%		28,920		2.61	%		120,619		3.89	%
Uncollectible, classified as such under regulatory requirements		7,211		0.74	%		3,162		0.29	%		3,932		0.13	%
Total loans		978,728		100	%		1,107,003		100	%		3,100,385		100	%

(1) In constant pesos as of February 28, 2003.

124

Selected statistical information

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

The table below sets forth the activity in the allowance for loan losses for the fiscal years ended December 31, 2004, 2003, 2002, 2001 and 2000.

		Year Ended December 31,
		2000(3)			2001(3)			2002(3)			2003(3)			2004
		(in thousands of pesos, except percentages)
Balance at the beginning of the year			76,590			55,689			40,312			116,125			56,279
Provisions for loan losses			22,765			21,363			116,756	(2)		35,504			201,253	(1)
Applications and reversals			(43,666	)		(36,740	)		(40,943	)		(95,350	)		(32,192	)
	Advances		(1,422	)		(1,354	)		(1,470	)		(24,709	)		(4,374	)
	Consumer		(1,821	)		(1,629	)		(844	)		(3,765	)		(3,181	)
	Credit Cards		(475	)		(298	)		(455	)		(7,436	)		(865	)
	Mortgage		(659	)		(174	)		(732	)		(4,331	)		(1,252	)
	Security Agreements		(4,409	)		(1,516	)		(2,056	)		(8,298	)		(7,185	)
	Notes discounted and purchased		(559	)		(481	)		(1,729	)		(5,020	)		(8,696	)
	Other		(34,321	)		(31,288	)		(33,657	)		(41,791	)		(6,639	)
	Balance at the end of year		55,689			40,312			116,125			56,279			225,340
	Charge-off/ average loans(4)		2.90	%		2.78	%		8.97	%		3.26	%		2.22	%
	Net charge-off/average loans(5)		2.08	%		2.45	%		4.56	%		(4.58	)%		1.29	%

(1)	Includes Ps.143,495 thousand of Nuevo Banco Suquía and Ps.154 thousand of Sud Bank & Trust.
(2)	Includes Ps.52,796 thousand of Banco Bansud.
(3)	In constant pesos as of February 28, 2003.
(4)	Defined as charge-offs plus direct charge-offs.
(5)	Defined as charge-offs plus direct charge-offs minus bad debts recovered.

125

Selected statistical information

ALLOCATION OF THE ALLOWANCES FOR LOAN LOSSES

		2002				2003				2004
		(in thousands of pesos, except percentages)
Overdrafts			24,107	21	%		9,738	18	%		17,383	8	%
Notes			22,446	19	%		17,499	31	%		56,448	25	%
Mortgage loans			9,526	8	%		7,104	13	%		55,201	25	%
Collateral Loans			15,185	13	%		10,525	19	%		32,598	14	%
Personal loans			3,896	3	%		1,778	3	%		7,414	3	%
Credit cards			4,561	4	%		1,626	3	%		2,885	1	%
Other			36,404	32	%		8,009	13	%		53,411	24	%
	TOTAL		116,125	100	%		56,279	100	%		225,340	100	%

126

Selected statistical information

LOANS BY ECONOMIC ACTIVITY

The table below analyzes our loan portfolio according to the borrowers’ main economic activity as of December 31, 2004, 2003 and 2002.

	Year Ended December 31,
	2002					2003					2004
	Loan		% of Loan			Loan		% of Loan			Loan		% of Loan
	Portfolio		Portfolio			Portfolio		Portfolio			Portfolio		Portfolio
	(in thousands of pesos, except percentages)
Agriculture, cattle raising, hunting and forestry		29,022		2.97	%		0		0.00	%		71,670		2.31	%
Animals keeping, cattle services (except veterinary and trading)		2,420		0.25	%		18,687		1.69	%		69,467		2.24	%
Construction		18,197		1.86	%		16,685		1.51	%		92,413		2.98	%
Crops, agricultural services and trading		11,475		1.17	%		85,218		7.70	%		114,184		3.68	%
Elaboration and trading of chemical substances and products		2,240		0.23	%		6,742		0.61	%		32,503		1.05	%
Elaboration and trading of foodstuff and beverages		68,323		6.98	%		71,591		6.47	%		190,586		6.15	%
Electricity, gas, steam and hot water		479		0.05	%		2,845		0.26	%		7,550		0.24	%
Extraction, exploitation and trading of petroleum’s related products		28,822		2.94	%		21,497		1.94	%		56,098		1.81	%
Financial trading and other financial services		18,864		1.93	%		68,545		6.19	%		326,924		10.54	%
Fishing, related services, elaboration and trading		14		0.00	%		33		0.00	%		327		0.01	%
Given to persons not included in the other categories		107,686		11.00	%		177,681		16.05	%		409,221		13.20	%
Hotels and restaurants		1,630		0.17	%		4,435		0.40	%		11,772		0.38	%
Hunting and seizure of live animals, resettlement of hunting animals and related services, forestry, wood extraction and related services		512		0.05	%		13		0.00	%		1,037		0.03	%
Manufacturing Industry		6,158		0.64	%		0		0.00	%		0		0.00	%
Mass and retail trading, reparation of automotive vehicles, motorbikes, personal effects and domestic chattels		2,830		0.29	%		0		0.00	%		0		0.00	%
Mass elaboration and production of machinery and equipment (all), electrical devices, radio equipment and devices, television and communications, medical, optical and pinpoint devices, watches		3,098		0.32	%		3,685		0.33	%		60,773		1.96	%
Mass elaboration and production of automotive vehicles, trailers and semi- trailers and transportation		885		0.09	%		1,125		0.10	%		24,915		0.80	%

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		Year Ended December 31,
		2002					2003					2004
		Loan		% of Loan			Loan		% of Loan			Loan		% of Loan
		Portfolio		Portfolio			Portfolio		Portfolio			Portfolio		Portfolio
		(in thousands of pesos, except percentages)
Mass elaboration and production of textile products and dresses, finishing and staining of skins, leathering and finishing of leathers, elaboration of footwear and saddlery articles and their parts			11,566		1.18	%		24,438		2.21	%		34,130		1.10	%
Mass trading and/or on commission or consignment except automotive vehicles and motorbikes trading			2,836		0.29	%		9,653		0.87	%		60,007		1.94	%
Mines and quarries exploitation and selling and making of extracted products (except petroleum and gas)			13		0.00	%		1,516		0.14	%		1,951		0.06	%
Selling and making of extracted products			473		0.05	%		829		0.07	%		2,443		0.08	%
Other			38,096		3.89	%		68,036		6.15	%		131,022		4.23	%
Other services			90,519		9.25	%		58,095		5.25	%		87,357		2.82	%
Public administration, compulsory guard and social security			461,138		47.10	%		366,673		33.12	%		825,962		26.65	%
Real estate, owners and leasing			1,500		0.15	%		13,996		1.26	%		93,750		3.02	%
Retail trading except automotive vehicles, motorbikes, personal effects and domestic chattels trading			13,914		1.42	%		38,541		3.48	%		203,282		6.56	%
Teaching, social and healthcare			2,150		0.22	%		1,433		0.13	%		34,076		1.10	%
Trading, maintenance and reparation of automotive vehicles, motorbikes, personal effects and domestic chattels			951		0.10	%		2,219		0.20	%		33,014		1.06	%
Transportation, storage and communications			50,269		5.14	%		40,158		3.63	%		114,755		3.70	%
Water catchment, purifying and distribution			2,648		0.27	%		2,634		0.24	%		9,196		0.30	%
	Total		978,728		100.00	%		1,107,003		100.00	%		3,100,385		100.00	%

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COMPOSITION OF DEPOSITS

The following table sets out the composition of each category of deposits that exceeded 10% of average total deposits in each of the years ended December 31, 2004, 2003, and 2002.

			Year Ended December 31,
			2002(1)		2003(1)		2004
			(in thousands of pesos)
Deposits in domestic bank offices
Non-interest-bearing demand deposits(2)
	Average
		Pesos		221,933		317,466		718,783
		Dollars		58		—		809
		Total		221,991		317,466		719,592
Savings accounts
	Average
		Pesos		190,915		158,292		267,988
		Dollars		65,700		20,312		30,577
		Total		256,615		178,604		298,565
Certificates of deposits
	Average
		Pesos		488,945		996,643		1,359,659
		Dollars		141,311		318,150		421,292
		Total		630,256		1,314,793		1,780,951
Deposits in foreign banking offices
Non-interest-bearing demand deposits
	Average
		Pesos		—		81		46,958
		Dollars		69		150		383
		Total		69		231		47,341
Certificates of deposits
	Average
		Dollars		31,152		48,003		147,891
		Total		31,152		48,003		147,891

(1)	In constant pesos as of February 28, 2003.
(2)	Non-interest-bearing demand deposits consist of checking accounts.

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MATURITY OF DEPOSITS AT DECEMBER 31, 2004

The following table sets forth information regarding the maturity of our deposits at December 31, 2004.

	Maturing
					After 3		After 6
			Within 3		but Within		but Within		After 12
	Total		Months		6 Months		12 Months		Months
	(in thousands of pesos)
Checking		1,256,793		1,256,793		—		—		—
Savings		842,270		842,270		—		—		—
Time deposits		2,850,049		2,449,693		250,116		149,811		429
Investment accounts		48,984		26,195		16,603		6,060		126
Other		320,901		256,637		5,677		44,105		14,482
Total		5,318,997		4,831,588		272,396		199,976		15,037

MATURITY OF DEPOSITS AT DECEMBER 31, 2004 OF OUTSTANDING TIME DEPOSITS

The following table sets forth information regarding the maturity of our time deposits and investment accounts in denominations of Ps.100,000 or more at December 31, 2004.

	Maturing
					After 3		After 6
			Within 3		but Within		but Within		After 12
	Total		Months		6 Months		12 Months		Months
	(in thousands of pesos)
Domestic offices		1,685,257		1,336,131		232,674		115,959		493
Foreign offices		234,867		214,773		19,927		167		—
Total		1,920,124		1,550,904		252,601		116,126		493

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SHORT-TERM BORROWINGS

Our short-term borrowings totaled approximately Ps.213,000,000, Ps.133,100,000 and Ps.242,500,000 for the years ended December 31, 2004, 2003 and 2002, respectively. The table below shows those amounts at the end of each fiscal year.

	At December 31,
	2002(1)					2003(1)					2004
			Annualized					Annualized					Annualized
	Amount		Rate			Amount		Rate			Amount		Rate
	(in thousands of pesos, except percentages
Central Bank of the Argentine Republic(2):
Total amount outstanding at the end of the reported period		9,981		6.0	%		2,097		5.3	%		85,676		6.0	%
Average during year(3)		10,284		5.9	%		2,323		5.4	%		22,741		6.4	%
Maximum month-end balance		12,080					3,366					85,676
Banks and international organizations:
Total amount outstanding at the end of the reported period		110,995		3.8	%		53,374		4.8	%		13,247		3.4	%
Average during year(3)		133,657		6.2	%		80,685		8.3	%		46,534		3.1	%
Maximum month-end balance		167,259					96,890					66,634
Financing received from Argentine financial institutions:
Total amount outstanding at the end of the reported period		28,425		7.6	%		24,960		1.6	%		32,694		2.5	%
Average during year(3)		29,687		7.6	%		6,589		2.8	%		9,863		2.7	%
Maximum month-end balance		44,639					32,704					32,694
Other(4)
Total amount outstanding at the end of the reported period		44,100		1.9	%		43,943		1.7	%		73,597		2.0	%
Average during year(3)		48,848		2.0	%		41,983		1.8	%		59,168		1.8	%
Maximum month-end balance		55,004					43,943					73,597
Subordinated corporate bonds:
Total amount outstanding at the end of the reported period		49,017		7.6	%		8,758		7.8	%		7,810		7.7	%
Average during year(3)		41,675		7.5	%		14,353		7.5	%		8,126		7.8	%
Maximum month-end balance		49,017					26,301					8,461

(1)	In constant pesos as of February 28, 2003.
(2)	On February 2, 2005, Nuevo Banco Suquía made the early repayment of the remainder of such credit lines.
(3)	Average balances are calculated from quarterly-end balances.
(4)	Includes liability to the Central Bank to acquire BODEN 2012.

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RETURN ON EQUITY AND ASSETS

The following table presents certain selected financial information and ratios for the years indicated.

		Year Ended December 31,
		2002(1) 200			3(1) 2004
		(in thousands of pesos, except percentages)
Net (loss)/ income			572,114			199,849		192,977
Average total assets			3,804,446			4,356,792		5,705,542
Average shareholders’ equity			730,955			949,023		1,179,611
Shareholders’ equity at the end of the fiscal year			925,370			1,125,219		1,257,302
Net income as a percentage of:
	Average total assets		15.04	%		4.59	%	3.38	%
	Average shareholders’ equity		78.27	%		21.06	%	16.36	%
Declared cash dividends(2)			—			—		60,894
Dividend payout ratio(2)			—			—		31.56	%
Average shareholders’ equity as a percentage of Average Total Assets			19.21	%		21.78	%	20.67	%

(1)	In constant pesos as of February 28, 2003.
(2)	Declared cash dividends stated as percentage of net income. No cash dividend was declared for 2002 and 2001. In April 2002, the Central Bank suspended the payment of dividends. As of June 2, 2004, Communication A 4152 allows financial institutions to make distributions provided certain conditions are met.

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OVERVIEW

Founded in 1935, the Central Bank is the principal monetary and financial authority in Argentina. It is responsible for maintaining stability in the value of the domestic currency, establishing and implementing monetary policy and regulating the financial sector. It operates pursuant to its charter and the provisions of the Argentine Financial Institutions Law. Under the terms of its charter, the Central Bank must operate independently from the Argentine government.

Since 1977, banking activities in Argentina have been regulated primarily by the Argentine Financial Institutions Law, which empowers the Central Bank to regulate the financial sector. The Central Bank regulates and supervises the Argentine banking system through the Superintendencia de Entidades Financieras y Cambiarias, or the Superintendency of Financial and Exchange Entities, or the Superintendency. The Superintendency is responsible for enforcing Argentina’s banking laws, establishing accounting and financial reporting requirements for the banking sector, monitoring and regulating the lending practices of financial institutions and establishing rules for participation of financial institutions in the foreign exchange market and the issuance of bonds and other securities, among other functions. These powers of the Central Bank include the authority to fix minimum capital, liquidity and solvency requirements, approve bank mergers, approve certain capital increases and transfers of stock, grant and revoke banking licenses, and to authorize the establishment of branches of foreign financial institutions in Argentina and the extension of financial assistance to financial institutions in cases of temporary liquidity problems.

The Central Bank also establishes different “technical ratios” that must be observed by financial entities with respect to levels of solvency, liquidity, the maximum credits that may be granted per customer and foreign exchange assets and liability positions.

In addition, financial entities need the authorization of the Central Bank for the disposition of their assets, such as opening or changing branches or ATMs, acquiring share interests in other financial or non-financial corporations and establishing liens over their assets, among others.

As supervisor of the financial system, the Central Bank requires financial institutions to submit information on a daily, monthly, quarterly, semiannual and annual basis. These reports, which include balance sheets and income statements, information relating to reserve funds, use of deposits, classifications of portfolio quality (including details on principal debtors and any allowances for loan losses), compliance with capital requirements and any other relevant information, allow the Central Bank to monitor the business practices of financial entities. In order to confirm the accuracy of the information provided, the Central Bank is authorized to carry out inspections.

If the Central Bank’s rules are not complied with, various sanctions may be imposed by the Superintendency, depending on the level of infringement. These sanctions range from a notice of noncompliance to the imposition of fines or even the revocation of the financial entity’s operating license. Additionally, noncompliance with certain rules may result in the compulsory filing of specific adequacy or restructuring plans with the Central Bank. These plans must be approved by the Central Bank in order to permit the financial institution to remain in business.

The Central Bank is allowed to provide financial assistance to financial institutions with liquidity and/or solvency problems.

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BANKING REGULATION AND SUPERVISION

Central Bank supervision

Since 1994, the Central Bank has supervised the Argentine financial entities on a consolidated basis. Such entities must file periodic consolidated financial statements that reflect the operations of head offices or headquarters as well as those of their branches in Argentina and abroad, and of their significant subsidiaries, whether domestic or foreign. Accordingly, requirements in relation to liquidity and solvency, minimum capital, risk concentration and loan loss provisions, among others, should be calculated on a consolidated basis.

Permitted activities and investments

The Argentine Financial Institutions Law governs any individuals and entities that are part of the financial system, including commercial banks, investment banks, mortgage banks, financial companies, savings and loan companies for residential purposes and credit unions. Except for commercial banks, which are authorized to conduct all financial activities and services that are specifically established by law or by regulations of the Central Bank, the activities that may be carried out by Argentine financial entities are set forth in the Argentine Financial Institutions Law and related Central Bank regulations. Some of the activities permitted for commercial banks include the ability to (i) receive deposits from the public in both local and foreign currency; (ii) underwrite, acquire, place or negotiate debt securities, including government securities, in the over-the-counter market; (iii) make and receive loans; (iv) guarantee customers’ debts; (v) act as custodians of pension funds, or Administradoras de Fondos de Jubilaciones y Pensiones; (vi) conduct transactions in foreign currency; (vii) issue credit cards; (viii) act, subject to certain conditions, as brokers in real estate transactions; (ix) carry out commercial financing transactions; and (x) act as registrars of mortgage bonds. In addition, pursuant to the Argentine Financial Institutions Law, and Central Bank Communication A 3086, commercial banks are authorized to operate commercial, industrial, agricultural and other types of companies that do not provide supplemental services to the banking services (as defined by applicable Central Bank regulations) to the extent that the commercial bank’s interest in such companies does not exceed 12.5% of its voting stock or 12.5% of its capital stock. However, even when commercial banks’ interests do not reach such percentages, they are not allowed to operate such companies if (i) such interest allows them to control a majority of votes at a shareholders’ meeting, or (ii) the Central Bank does not authorize the acquisition.

Under Central Bank regulations, the total amount of the investments of a commercial bank in the capital stock of third parties, including interests in Argentine mutual funds, may not exceed 50% of such bank’s regulatory capital, or Responsabilidad Patrimonial Computable or RPC. In addition, the total amount of a commercial bank’s investments in the following: (i) unlisted stock, excluding interests in companies that provide services that are supplementary to the finance business and interests in state-owned companies that provide public services, (ii) listed stock and interests in mutual funds that do not give rise to minimum capital requirements on the basis of market risk, and (iii) listed stock that does not have a “largely publicly available market price,” taken as a whole, is limited to 15% of such bank’s RPC. To this effect, a given stock’s market price is considered to be “largely publicly available” when daily quotations of relevant transactions are available, which quotations would not be significantly affected by a disposition of the bank’s holdings of such stock.

Operations and activities that banks are not permitted to perform

The Argentine Financial Institutions Law prohibits commercial banks from: (a) creating liens on their assets without prior approval from the Central Bank, (b) accepting their own shares as security, (c) conducting transactions with their own directors or managers and with companies or persons

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related thereto under terms that are more favorable than those regularly offered to other customers, and (d) carrying out commercial or industrial activities without prior approval of the Central Bank, except those considered financially related activities under Central Bank regulations. Notwithstanding the foregoing, banks may own shares in other financial institutions with the prior approval of the Central Bank, and in public services companies, if necessary to obtain those services.

Liquidity and solvency requirements

Minimum capital requirements

The Central Bank requires that financial entities maintain minimum capital requirements, which are computed as a function of counterparty risk, interest rate risk and market risk of a financial entity’s assets.

Basic minimum capital

Pursuant to Central Bank Communication A 4368, dated June 17, 2005, the Central Bank classified by type and category the minimum capital requirements for financial entities. The categories were established in accordance with the jurisdiction in which the respective financial entity is located:

			Other
Category	Jurisdiction	Banks	Entities
I	City of Buenos Aires	Ps.25 million	Ps.10 million
II	Cities of Bahía Blanca, Mar del Plata, Neuquén and Río Cuarto. Greater Buenos Aires, Greater Córdoba, Greater Mendoza and Greater Rosario.	Ps.14 million	Ps.8 million
	Provinces of Chubut and Tierra del Fuego.
III	Cities of Corrientes, Salta, Santiago del Estero and Posadas. Greater Resistencia, Greater San Juan and Greater Tucumán. Provinces of Catamarca, Entre Ríos, La Pampa, La Rioja, Río Negro, San Luis and Santa Cruz. Cities and towns of the provinces of Buenos Aires, Córdoba, Mendoza, Neuquén and Santa Fe that are not included in any other category.	Ps.12.5 million	Ps.6.5 million
IV	The rest of Argentina	Ps.10 million	Ps.5 million

For commercial banks acting as custodians of securities that represent investments in pension funds or as registrars of registered mortgage bonds, the regulatory capital shall be equal to the higher of:

(i)	Ps.50 million; or
(ii)	five percent of the amount of the securities held in custody or of the amount of registered mortgage bonds, as appropriate.

Financial entities that were operating on June 30, 2005 must meet the minimum capital requirement of their respective category provided that such requirement shall not be higher than Ps.15 million.

Counterpart risk

The capital requirement for counterpart risk is defined as:

Cer = k* [a* Ais + c* (Ci + Fspn) + r* (Vrf + Vrani)] + INC

The required capital to assets-at-risk ratio is 10% (“a”) for fixed assets (Ais) and 8% (“r”) for loans (Vrf), other claims from financial intermediation and other financing (Vrani). The same ratio (“c”) is

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applied to claims on the public sector-securities held in investment accounts (Ci) and loans (Fspn). The “INC” variable refers to incremental minimum capital requirements originated in excesses in other regulations (fixed assets, credit risk diversification and rating and limitations on transactions with related clients).

Each type of asset is weighted according to the level of risk assumed to be associated with it. The weights assigned to the different types of assets are:

Type of Asset			Weighting
Government Bonds
	With market risk capital requirements		0%
	Other domestic bonds (without collateral)		100%
	OECD Central bonds— rated AA or investment grade		20%
Loans
	To the non-financial private sector
		With preferred collateral under the form of:
		Cash, term deposit certificates issued by the creditor entity and given as security	0%
		A guarantee by Reciprocal Guarantee Companies authorized by the BCRA, export credit insurance, documentary credits	50%
		Mortgages/ Pledges	50%-100%
	To the non-financial public sector		100%
	To the financial sector
		Public financial entities with the collection of federal taxes as collateral	50%
	To foreign financial entities or to financial entities backed by them (rated AA or investment grade)		0%-20%
Other credits from financial intermediation			0%-100%
Guarantees and contingent liabilities			0%-100%

Minimum capital requirements also depend on the CAMELS rating (1 strongest, 5 weakest) assigned by the Superintendency, which also determines the “k” value. This rating system complies with international standards and provides a broad definition of the performance, risks and perspectives of financial entities. Financial entities have to adjust their capital requirements according to the following “k” factors:

CAMEL L Rating	K Factor
1	0.97
2	1.00
3	1.05
4	1.10
5	1.15

Interest rate risk

Financial entities must comply with minimum capital requirements regarding interest rate risk. These minimum capital requirements capture the various levels of risk arising from the different sensitivity of assets and liabilities affected by adverse or unexpected changes in interest rates. This regulation governs all the assets and liabilities not subject to the minimum capital requirements covering market risk.

When calculating the requirements, the cash flows of the financial entity’s transactions are assigned to different time bands taking into account their maturity. Financial entities with 1-3 CAMELS ratings

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may treat 50% of sight deposits as long term maturities (in the case of financial entities with a 3 rating, the assigned maturity cannot exceed 3 years).

Contracts with variable interest rates based on a foreign index are treated as if they had fixed interest rates. The risk arising from liability contracts with variable rates based on a domestic index are considered up to the first rate adjustment date.

Market risk

Minimum capital requirements for market risks are added to previously measured requirements. Minimum capital requirements are computed as a function of the market risk of financial entities’ portfolios, measured as their value at risk (VaR). The regulation covers only those assets usually traded in open markets and excludes those assets in investment accounts.

There are five categories of assets. Domestic assets are divided into equity and public bonds, the latter being classified according to whether their modified duration is less than or more than 2.5. Foreign equity and foreign bonds make up another two categories, which are also classified according to their duration. The fifth category is comprised of foreign exchange positions, differentiated according to currency involved.

Overall capital requirements in relation to market risk is the sum of the five amounts of capital necessary to cover the risks arising from each category.

Market risk minimum capital requirements must be met daily. Information must be reported to the BCRA on a monthly basis. As from May 2003, the US dollar has been included as a risk factor for the calculation of the market risk requirement, considering all assets and liabilities in that currency.

Temporary regulations

Minimum capital requirements have been temporarily reduced (via “Alpha coefficients”) for non-financial public sector financing granted before May 31, 2003. Minimum capital requirements for interest rate risk have also been temporarily diminished. The reduction coefficients to be applied converge to the unit according to an established schedule. These allowances have been introduced in order to reduce the impact on minimum capital requirements of those components that: (i) showed the biggest growth as a consequence of the 2002 crisis and (ii) are not present in international standards.

Period	Alpha1 (applied to public sector financing)		Alpha2 (applied to interest rate risk)
January/ December 2004		0.05		0.20
January/ December 2005		0.15		0.40
January/ December 2006		0.30		0.70
January/ December 2007		0.50		1.00
January/ December 2008		0.75		—
As from January 2009		1.00		—

Consequences of a failure to meet minimum capital requirements

In the event of noncompliance with Capital requirements by an existing financial institution, Central Bank Communication A 3171 provides the following:

(i) noncompliance reported by the institutions: the institution must meet the required capital no later than in the second month after noncompliance was incurred or submit a restructuring plan within 30 calendar days following the last day of the month in which such noncompliance occurred; and

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(ii) noncompliance detected by the Superintendency: the institution must file its defense within 30 calendar days after being served notice by the Superintendency. If no defense is filed, or if the defense is disallowed, the noncompliance will be deemed to be final, and the procedure described in item (i) will apply.

In addition, noncompliance with minimum capital requirements will entail a number of consequences for the financial institution, including prohibition from opening branches in Argentina or in other countries, establishing representative offices abroad, or owning equity in foreign financial institutions, as well as a prohibition from paying cash dividends.

Minimum cash reserve

The minimum cash reserve requirement requires that a financial institution keep a portion of its deposits or obligations readily available and not allocated to lending transactions.

Pursuant to Central Bank Communication A 3498, as from March 1, 2002, the liquidity system based on the minimum cash reserve applies not only to demand transactions, but also to fixed-term transactions.

Minimum cash reserve requirements are applicable to demand and time deposits and other brokerage liabilities denominated in pesos, foreign currency, or government and corporate securities, and any unused balances of advances in checking accounts under formal agreements not containing any clauses that permit the bank to discretionally and unilaterally revoke the possibility of using such balances.

Minimum cash reserve obligations exclude amounts owed (i) to the Central Bank, domestic financial institutions, foreign banks (including their head offices, controlling domestic institutions and their branches), and (ii) under foreign trade financing facilities, cash purchases to be settled, forward purchases, (whether or not related to repurchase agreements) demand obligations for money orders and transfers from abroad pending payment and for overseas correspondent banking operations.

The liabilities subject to these requirements are computed on the basis of the effective principal amount of the transactions, excluding interest accrued, past due, or to become due on the liabilities, provided they were not credited to the account of, or made available to, third parties, and the amount accruing upon the adjustment rate known as CER is applied.

The basis on which the minimum cash reserve requirement is computed is the monthly average of the daily balances of the liabilities at the end of each day during each calendar month.

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The table below shows the percentage rates that should be applied to determine the required minimum cash reserve:

					Rate (%)
			Rate (%)		(Foreign
Item			(Pesos)		Currency)
Checking account deposits				17
Savings account deposits				17		30
Legal custody accounts, special accounts for savings clubs, “Unemployment Fund for construction industry workers” and “Salary payment,” special checking accounts for legal entities and social security savings accounts				17		30
Other demand deposits and liabilities, including with foreign banks and correspondents, pension and social security benefits credited by ANSES (Government Social Security Agency) pending collection and immobilized reserve funds for liabilities covered by these regulations				17		30
Unused balances of advances in checking accounts under formal agreements				17
Deposits in checking accounts of non-bank financial institutions, computed for purposes of meeting their required minimum cash reserve				100
Time deposits, liabilities under acceptances, repurchase agreements, stock-exchange repos (cauciones y pases bursátiles pasivos), constant-term investments, with an option for early termination or for renewal for a specified term and variable income, and other fixed-term liabilities, except rescheduled deposits included in the following items 11 and 13 and 15 of this table:
		(i)   Up to 29 days		14		35
		(ii)   From 30 days to 59 days		11		28
		(iii)  From 60 days to 89 days		7		20
		(iv)  From 90 days to 179 days		2		10
		(v)   From 180 days to 365 days		1		6
		(vi)  More than 365 days		0		0
Liabilities owed due to foreign finances				0
Securities (including Negotiable Obligations)
	a- Debt issued from 01/01/02, including restructured liabilities
		(i)   Up to 29 days		14		35
		(ii)   From 30 days to 59 days		11		28
		(iii)  From 60 days to 89 days		7		20
		(iv)  From 90 days to 179 days		2		10
		(v)   From 180 days to 365 days		1		6
		(vi)  More than 365 days		0		0
	b- Others
Liabilities owing to the Trust Fund for Assistance to Financial and Insurance Institutions				0
Demand and time deposits made upon a court order with funds arising from cases pending before the court, and the related immobilized balances:				8		15
Special accounts denominated in dollars for the deposit of collateral required for futures and options consummated on markets subject to the CNV control						100
Time deposits in foreign currency						100
Deposits as assets of a mutual fund				18		40
Special deposits related to inflows of funds. Decree 616/2005						100
Deposits and other liabilities, which return is higher than the 75% of BADLAR rates average, corresponding to the preceding month				100

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The minimum cash reserve must be set up in the same currency to which the requirement applies, and eligible items include the following:

(i)	Cash (bills and coin held on the bank’s own premises and in custody at other financial institutions).
(ii)	Accounts maintained by financial institutions with the Central Bank in pesos.
(iii)	Accounts of minimum cash maintained by financial institutions with the Central Bank in U.S. dollars, or other foreign currency.
(iv)	Special guarantee accounts for the benefit of electronic clearing houses and to cover settlement of credit card and ATM transactions.
(v)	Checking accounts maintained by non-bank financial institutions with commercial banks for the purpose of meeting the minimum reserve requirement.
(vi)	Special guarantee accounts maintained with the Central Bank for transactions involving cheque cancelatorio (a check similar to a cashier’s check that may be purchased from a bank to pay a third party).
(vii)	Special accounts maintained with the Central Bank by the Administración Nacional de la Seguridad Social, or the National Administration of Social Security, or ANSES.

Compliance with the minimum cash reserve requirement will be measured on the basis of the monthly average of the daily balances of eligible items maintained during the month to which the minimum cash reserve refers by dividing the aggregate of such balances by the total number of days in the relevant period.

The aggregate balances of the eligible items referred to from (ii) to (vii) above, maintained as of each daily closing, may not, on any one day during the month, be less than 50% of the total required cash reserve, excluding the requirement for incremental deposits, determined for the next preceding month, recalculated on the basis of the requirements and items in force in the month to which the cash reserves relate. Such daily requirement must be 70%.

Any deficiencies in meeting the required minimum cash reserve and the daily minimum reserve are subject to a penalty equal to twice the nominal annual interest rate in arrears arising from the Central Bank’s bill auctions, in pesos or in U.S. dollars, for deficiencies in Argentine currency or in foreign currency, respectively.

Internal liquidity policies of financial institutions

The regulations designed to limit liquidity risk provide that financial institutions should adopt management and control policies that ensure the maintenance of reasonable liquidity levels to efficiently manage their deposits and other financial commitments. Such policies should establish procedures for evaluating the liquidity of the institutions in the framework of prevailing market conditions to allow them to revise projections, take steps to eliminate liquidity constraints and obtain sufficient funds, at market terms, to maintain a reasonable level of assets over the long term. Such policies should also address (i) the concentration of assets and liabilities in specific customers, (ii) the overall economic situation, likely trends and the impact on credit availability, and (iii) the ability to obtain funds by selling government debt securities and/or assets.

Diversification of credit risk

The regulations on credit risk diversification prescribe minimum risk diversification standards in order to reduce such risk without significantly eroding average profitability.

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There are three types of ratios that limit a lender’s risk exposure, namely: risk concentration limits, limits on transactions with customers on the basis of the institution’s capital and credit limits on the basis of the customer’s net worth.

Concentration of risk means the aggregate amount of relevant transactions consummated with companies, individuals or groups of companies— whether affiliated or not— where such transactions, measured for each one of such customers, are at any time equal to or higher than 10% of the institution’s RC on the last day of the month prior to the relevant month. Public bonds received by financial entities as compensation up until December 31, 2005 are excluded.

Limitations are provided for in the case of transactions with customers, which may not exceed certain percentages applied on the basis of the institution’s RC as of the last day of the month prior to the relevant month.

The regulation sets forth a number of transactions that are excluded from the credit risk diversification rules.

In the case of credit limits based on the customers’ net worth, as a general rule the financial assistance may not exceed 100% of the customer’s net worth, although this basic margin may be increased to 300% provided it does not exceed 2.5% of the financial institution’s RC and the increase is approved by the board of directors of the relevant financial institution.

Any excess over the ceilings established by these three ratios will cause the regulations set forth in the section above entitled “Consequences of a failure to meet minimum capital requirements” to become applicable.

Foreign exchange system

During the first quarter of 2002, the Argentine government established certain foreign exchange controls and restrictions.

On February 8, 2002, Decree No. 260 was issued, establishing as of February 11, 2002, a Single Free Exchange Market system, through which all transactions involving the exchange of foreign currency are to be traded at exchange rates to be freely agreed upon.

On such date, the Central Bank issued Communications A 3471 and A 3473, which stated that single and free exchange transactions can only be performed with entities authorized by the Central Bank to operate in foreign exchange. Item 4 of Central Bank Communication A 3471 stated that the exchange sale transactions in the single and free exchange market shall be performed using peso bills.

Since January 2, 2003, there have been further modifications to the restrictions imposed by the Central Bank. See “Exchange rates and exchange controls”.

Foreign currency loans

The Regulations on the allocation of deposits in foreign currencies establish that the lending capacity from foreign currency deposits, including U.S. dollar-denominated deposits to be settled in pesos, must fall under one of the following categories: (a) pre-financing and financing of exports to be made directly or through principals or other brokers; (b) financing to manufacturers or processors of goods, provided that such transactions were consummated by a purchase agreement with an exporter in foreign money and the goods are in compliance with all the standard market requirements; (c) financing to manufacturers of goods to be exported, as final products or as part of other goods, by third-party purchasers, provided that such transactions are secured or collateralized in foreign currency by said third-party purchasers; (d) debt securities or financial trust participation certificates whose underlying assets are loans made with the above-mentioned conditions and under the “Préstamos BID

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N° 1192/ OC-AR” program; (e) foreign currency debt securities or financial trust participation certificates offered by means of a public offering and authorized by the CNV, whose underlying assets are securities bought by the fiduciary and guaranteed by reciprocal guarantee companies in order to finance export transactions; (f) financings included under the “Préstamos BID N° 1192/ OC-AR” program, provided that such financings shall not be higher than 10% of the credit capacity; and (g) loans made from one financial entity to another.

General exchange position

The General Exchange Position, or GEP, is comprised of reserves in gold, foreign currency and bills in Argentina and abroad; deposits and investments of any term with foreign banks; investments in foreign corporate and government bonds; other liquid investments abroad; and correspondent debit and credit balances. It also includes purchases and sales of these assets already arranged and pending settlement involving foreign exchange purchases and sales performed with customers within a term not exceeding two business days. It does not include, however, third parties’ foreign assets held in custody, correspondent balances for third-party transfers pending settlement, term sales and purchases of foreign currency or securities nor direct investments abroad.

The GEP ceiling is calculated every month and, therefore, updated the first business day of the month. Pursuant to the relevant reporting system regulations this ceiling is set at 15% of the amount equivalent in U.S. dollars to the computable equity at the end of the month immediately preceding the last month when filing with the BCRA has already expired. It will be increased by an amount equivalent in U.S. dollars to 5% of the total amount traded by the institution on account of the purchases and sales of foreign currency in the calendar month prior to the immediately preceding month, and by 2% of the total demand and time deposits locally held and payable in foreign bills, excluding deposits held in custody, recorded by the institution at the end of the calendar month prior to the immediately preceding month. If the ceiling does not exceed US$1.5 million, this figure will be considered its floor.

Floors will be raised by US$5.0 million when the financial institution performs foreign exchange operations with 15 or more locations. In addition, they will be cumulatively raised by up to the amount equivalent to US$2.0 million on account of foreign currency holdings other than U.S. dollars and/or Euro; by up to US$1.0 million for checks issued against foreign banks and purchased from third parties to be credited in accounts held with correspondent banks; and by up to the amount equivalent to US$3 million for U.S. dollar or Euro balances sent to the United States Federal Reserve or the European Central Bank, still to be credited 72 hours after they are sent.

Institutions authorized to trade in foreign currency failing to comply with the GEP ceilings or the exchange reporting regulations should refrain from trading in foreign currency until they are in compliance with the above.

Although certain exceptions are admitted, institutions authorized to trade in foreign currency require the Central Bank’s prior consent to perform their own purchases when payment is made against delivery of foreign currency or other foreign assets comprising the GEP.

Debt classification and loan loss provisions

Credit portfolio

The regulations on debt classification are designed to establish clear guidelines for identifying and classifying the quality of assets, as well as evaluating the actual or potential risk of a lender sustaining losses on principal and/or interest, in order to determine, taking into account any loan security, whether the provisions against such contingencies are adequate. Banks must classify their loan portfolios into two different categories: (i) consumer or housing loans and (ii) commercial loans.

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Consumer and housing loans include housing loans, consumer loans, credit-card financings and other types of installment credits to individuals. All other loans are considered commercial loans. Consumer or housing loans in excess of Ps.500,000 the repayment of which is linked to its projected cash flows are classified as commercial loans. Central Bank regulations allow financial institutions to apply the consumer and housing loan classification criteria to commercial loans of up to Ps.500,000, given with or without guarantees. If a customer has both kinds of loans (commercial and consumer and housing loans), the consumer and housing loans will be added to the commercial portfolio to determine under which portfolio they should be classified based on the amount indicated. In these cases, the credit backed by preferred guarantees is considered to be at 50% of its face value.

Under the current debt classification system, each customer, as well as the customer’s outstanding debts, are included within one of six sub-categories. The debt classification criteria applied to the consumer loan portfolio are primarily based on objective factors related to customers’ performance on their obligations or their legal standing, while the key criterion for classifying the commercial loan portfolio is each borrower’s paying ability based on its future cash flow.

Commercial loans classification

The principal criterion to evaluate a loan pertaining to the commercial portfolio is its borrower’s ability to repay it, whose ability is mainly measured by such borrower’s future cash flow. Pursuant to Central Bank regulations, commercial loans are classified as follows:

Classification	Criteria
Normal	Borrowers for whom there is no doubt as to their ability to comply with their payment obligations.
Under special tracking/observation	Borrowers who, although considered to be able to meet all their financial obligations, are sensitive to changes that could compromise their ability to honor debts absent timely corrective measures.
Under special tracking/negotiation or refinancing agreement	Borrowers who are unable to comply with their obligations as agreed with the bank and, therefore, formally state, within 60 calendar days after the maturity date, their intention to refinance such debts. The borrower must enter into a refinancing agreement with the bank within 90 calendar days (if up to two lenders are involved) or 180 calendar days (if more than two lenders are involved) after the payment default date. If no agreement has been reached within the established deadline, the borrower must be classified under the next category according to the indicators established for each level.
With problems	Borrowers with difficulties honoring their financial obligations under the loan on a regular basis, which, if uncorrected, may result in losses to the bank.
With high risk of insolvency	Borrowers who are highly unlikely to honor their financial obligations under the loan.
Non-recoverable loans	Loans classified as unrecoverable at the time they are reviewed (although the possibility might exist that such loans might be collected in the future).

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Classification

Criteria

Technically non-recoverable

(a) Borrower has defaulted on its payment obligations under a loan for more than 180 calendar days according to the corresponding report provided by the Central Bank, which report includes (1) financial institutions liquidated by the Central Bank, (2) residual entities created as a result of the privatization of public financial institutions, or in the privatization or dissolution process, and (3) financial institutions whose licenses have been revoked by the Central Bank and find themselves subject to judicial liquidation or bankruptcy proceedings and (4) trusts in which Seguro de Depósitos S.A. (SEDESA) is a beneficiary, and/or (b) certain kinds of foreign borrowers (including banks or other financial institutions that are not subject to the supervision of the Central Bank or similar authority of the country in which they are incorporated) that are not classified as “investment grade” by any of the rating agencies approved by the Central Bank.

Consumer and housing loans classification

The principal criterion applied to loans in the consumer and housing portfolio is the length of its duration. Under the Central Bank regulations, consumer and housing borrowers are classified as follows:

Classification	Criteria
Normal	If all payments on loans are current or less than 31 calendar days overdue and, in the case of checking account overdrafts, less than 61 calendar days overdue.
Inadequate performance	Loans upon which payment obligations are overdue for a period of more than 31, but less than 90, calendar days.
Deficient performance	Loans upon which payment obligations are overdue for a period of more than 90, but less than 180, calendar days.
Difficult recovery	Loans in respect of which a legal action seeking collection has been filed or loans having payment obligations overdue for more than 180 calendar days, but less than 365 calendar days.
With high risk of insolvency	Borrowers who are highly unlikely to honor their financial obligations under the loan.
Non-recoverable loans	Loans in which the debtor is insolvent, and, therefore, have no, or at least very little, possibility of recovery, through legal actions or bankruptcy proceedings involving the debtor, or in which payment obligations are more than 365 calendar days overdue.
Technically non-recoverable	Same criteria as for commercial loans in the technically non-recoverable category.

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Minimum credit provisions

The following minimum credit provisions are required to be made by Argentine banks in relation to the credit portfolio category:

	With Preferred		Without Preferred
Category	Guarantees		Guarantees
“Normal” and “Normal Performance”		1%		1%
“Under observation” and “Inadequate performance”		3%		5%
“Under negotiation or refinancing agreement”		6%		12%
“With Problems” and “Deficient Performance”		12%		25%
“With high risk of insolvency” and “Difficult recovery”		25%		50%
“Non-recoverable”		50%		100%
“Technically non-recoverable”		100%		100%

Minimum frequency for classification review

We are required to classify loans at least once a year in accordance with the Central Bank Rules. Nevertheless, a quarterly review is required for credits that amount to 5% or more of our RC and mid-year review for credits that amount to the lower of: (i) Ps.1 million or (ii) range between 1% and 5% of our RC.

Allowances for loan losses

The allowance for loan losses is maintained in accordance with applicable regulatory requirements of the Central Bank. Increases in the allowance are based on the level of growth of the loan portfolio, as well as on the deterioration of the quality of existing loans, while decreases in the allowance are based on regulations requiring the write-off of non-performing loans classified as “non-recoverable” after a certain period of time and on decisions of the management to write off non-performing loans evidencing a very low probability of recovery.

Priority rights of depositors

Under Section 49 of the FIL, in the event of judicial liquidation or bankruptcy of a bank, depositors have a general and absolute priority right to collect their claims over all other creditors, except claims secured by pledges or mortgages and certain employee liens. Additionally, the holders of any type of deposit have a special priority right over all other creditors of the bank, except certain employee creditors, to be paid out of (i) any funds of the branch that may be in the possession of the Central Bank as Minimum Cash Reserve, (ii) any other funds of the bank existing as of the date on which the bank’s license is revoked, or (iii) any proceeds resulting from the mandatory transfer of certain assets of the financial institution to another as determined by the Central Bank pursuant to Section 35 of the Argentine Financial Institutions Law, according to the following order of priority: (a) deposits of up to Ps.50,000 per person (including all amounts such person deposited in one financial entity), or its equivalent in foreign currency, (b) all deposits of an amount higher than Ps.50,000, or its equivalent in foreign currency, and (c) all other deposits on a pro rata basis.

Mandatory deposit insurance system

Law No. 24,485, as amended by Law No. 25,089 and Decree No. 540, passed on April 12, 1995, created a Deposit Insurance System, or SSGD, which is mandatory for bank deposits, and delegated the responsibility for organizing and implementing the system to the Central Bank.

The SSGD has been implemented through the establishment of a Deposit Guarantee Fund, or FGD, managed by a private-sector corporation called Seguro de Depósitos Sociedad Anónima, or Deposit

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Insurance Corporation, or SEDESA. The shareholders of SEDESA are the federal government and a trust set up by the participating financial institutions. These institutions must pay into the FGD a monthly contribution determined by Central Bank regulations. The SSGD is financed through regular and additional contributions made by financial institutions, as provided for in Central Bank Communication A 3068, dated January 28, 2000.

The SSGD covers deposits made by individuals and legal entities in Argentine or foreign currency and maintained in accounts with the participating financial institutions, including checking accounts, savings accounts, and time deposits up to the amount of Ps.30,000.

Effective payment on this guarantee will be made within 30 business days after revocation of the license of the financial institution in which the funds are held; such payment is subsidiary, that is, not cumulative, to the exercise of the depositor’s priority rights.

In view of the circumstances affecting the financial system, Decree No. 214/2002 provided that SEDESA may issue registered securities for the purpose of offering them to depositors in payment of the guarantee in the event it should not have sufficient funds available.

The SSGD does not cover: (i) deposits maintained by financial institutions in other financial institutions, including certificates of deposit bought in the secondary market, (ii) deposits made by persons directly or indirectly affiliated with the institution, (iii) time deposits of securities, acceptances or guarantees, (iv) any transferable time deposits that have been transferred by endorsement, (v) any deposits benefiting from some incentive (e.g., car raffles) in addition to the agreed upon interest rate, and (vi) any deposits in which the agreed-upon interest rate is higher than the reference interest rates periodically released by the Central Bank for time deposits and demand deposit account balances.

Capital markets

Commercial banks are authorized to subscribe and sell debt securities. At present, there are no statutory limitations as to the amount of securities a bank may undertake to subscribe. However, under Central Bank regulations, underwriting of debt securities by a bank would be treated as “financial assistance” and, accordingly, until the securities are sold to third parties, such underwriting would be subject to limitations.

In 1990, the Buenos Aires securities market authorized firms organized as brokerage houses, or sociedades de bolsa, to operate as brokers on the Buenos Aires Stock Exchange in addition to individual stockbrokers. There are currently no restrictions on ownership of a sociedad de bolsa by a commercial bank, and, in fact, most of the principal commercial banks operating in Argentina have established their own sociedad de bolsa. All brokers, whether individuals or firms, are required to own at least one share of the MERVAL to be allowed to operate as a broker on the Buenos Aires Stock Exchange.

An agreement between the Buenos Aires Stock Exchange and representatives of the MAE dealers provides that trading in shares and other equity securities will be conducted exclusively on the Buenos Aires Stock Exchange and that all debt securities listed on the Buenos Aires Stock Exchange may also be traded on the MAE. Trading in Argentine government securities, which are not covered by the agreement, is conducted mainly on the MAE. The agreement does not extend to other Argentine exchanges.

Commercial banks may operate as both managers and custodians of Argentine fondos comunes de inversión or mutual funds; provided, however, that a bank may not act simultaneously as manager and custodian for the same fund.

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Financial institutions in economic difficulties

The Argentine Financial Institutions Law provides that any financial institution, including a commercial bank, operating at less than certain required technical ratios and minimum net worth levels or, in the judgment of the Central Bank, with impaired solvency or liquidity, must prepare a plan de regularización y saneamiento, or a restructuring plan. The plan must be submitted to the Central Bank on a specified date, not later than 30 calendar days from the date on which a request to that effect is made by the Central Bank. The Central Bank can appoint an interventor, or trustee, to the financial institution and restrict the distribution of dividends. In addition, to help ensure the feasibility of the plan, the Central Bank is empowered to grant a temporary exemption from compliance with technical regulations and/or payment of any fines that may arise from such noncompliance. Upon the institution’s failure to submit, secure regulatory approval of, or comply with, a restructuring plan, the Central Bank will be empowered to revoke the institution’s license to operate as such.

Dissolution and liquidation of financial institutions

As provided in the Argentine Financial Institutions Law, the Central Bank must be notified of any decision adopted by a financial institution’s legal or corporate authorities concerning its dissolution. The Central Bank, in turn, must then notify such decision to a competent court, which would then determine who will liquidate the entity: the corporate authorities or an independent liquidator appointed for the purpose. The court’s decision will be based on whether or not there is sufficient assurance that the corporate authorities are capable of carrying out such liquidation properly.

Pursuant to the FIL, the Central Bank no longer acts as liquidator of financial institutions. However, if a restructuring plan has failed or is not deemed feasible, or violations of local laws and regulations have been incurred, or significant changes have occurred in the institution’s condition since the original authorization was granted, then the Central Bank may revoke a bank’s license to operate as a financial institution. In this event, the law allows for judicial or extrajudicial liquidation. During the liquidation process and once the license to operate as a financial institution has been revoked, a court of competent jurisdiction may adjudge the former financial institution in bankruptcy or a petition in bankruptcy may be filed by any creditor of the bank after a period of 60 calendar days has elapsed since the license was revoked.

Money laundering

The concept of money laundering is generally used to denote transactions intended to introduce criminal proceeds into the institutional system and thus to transform profits from illegal activities into assets of a seemingly legitimate origin.

On April 13, 2000, the Argentine congress passed Law No. 25,246, which defines money laundering as a type of crime. In addition, the law, which supersedes several sections of the Argentine criminal code, created the so-called Financial Information Unit, establishing an administrative criminal system.

Money laundering is defined as a crime under the criminal code, which states that a crime will be committed whenever a person converts, transfers, manages, sells, encumbers, or otherwise uses money, or any other assets, stemming from a crime in which that person has not participated, with the possible result that the original or substituted assets may appear to be of a legitimate origin, provided the value of the assets exceeds Ps.50,000 whether such amount results from one or more transactions.

The main purpose of Law 25,246 is to prevent money laundering. In line with internationally accepted practice, it does not attribute responsibility for controlling these criminal transactions only to government agencies, but also assigns certain duties to diverse private sector entities such as banks,

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stockbrokers, brokerage houses and insurance companies. These duties consist basically in information capturing functions. The Central Bank regulation requires banks to take certain minimum precautions to prevent money laundering.

Each institution must appoint a senior management officer as the person responsible for money laundering prevention in charge of centralizing any information the Central Bank may require on its own initiative or at the request of any competent authority. In addition, this officer, or other person reporting to the general manager, the board of directors, or equivalent authority, will be responsible for the implementation, tracking and control of internal procedures to ensure compliance with the regulations.

In addition, financial institutions are required to report to the Superintendency any transaction that looks suspicious or unusual, or lacks economic or legal justification, or is unnecessarily complex, whether performed on isolated occasions or repeatedly. In July 2001, the Central Bank released a list of “non cooperative” jurisdictions so that financial institutions would pay special attention to transactions to and from those areas. Those jurisdictions are Myanmar, Nauru and Nigeria.

We comply with all applicable money laundering regulations as provided for by the Central Bank and the Financial Information Unit; in particular with Resolution N° 2 of the Financial Information Unit, dated October 25, 2002, which regulates Section 21 paragraphs a) and b) of Law 25,246 that provides for the gathering of information regarding suspicious operations and its report to the authorities.

Merger, consolidation and transfer of goodwill

Merger, consolidation and transfer of goodwill may be arranged between entities of the same or different type and will be subject to the prior approval of the Central Bank. The new entity must submit a financial-economic structure profile supporting the project in order to obtain authorization from the Central Bank.

Financial System Restructuring Unit

The Financial System Restructuring Unit was created to oversee the implementation of a strategic approach for those banks benefiting from assistance provided by the Central Bank. This unit is in charge of rescheduling maturities, determining restructuring strategies and action plans, approving transformation plans, and accelerating repayment of the facilities granted by the Central Bank.

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Management and corporate governance

GENERAL

We are managed by our board of directors, which is currently comprised of nine members and nine alternate members. For a description of the process for electing directors see “Description of Capital Stock — Election of directors.”

DUTIES AND LIABILITIES OF DIRECTORS

Under Argentine corporations law, directors have the obligation to perform their duties with the loyalty and the diligence of a prudent business person. Directors are jointly and severally liable to a corporation, the shareholders and third parties for the improper performance of their duties, for violating the law, the corporation’s bylaws or regulations, if any, and for any damage caused by fraud, abuse of authority or gross negligence. The following are considered integral to a director’s duty of loyalty: (i) the prohibition on using corporate assets and confidential information for private purposes; (ii) the prohibition on taking advantage, or to allow another to take advantage, by action or omission, of the business opportunities of the company; (iii) the obligation to exercise board powers only for the purposes for which the law, the corporation’s bylaws or the shareholders’ or the board of directors resolution have intended; and (iv) the obligation to take strict care so that acts of the board do not go, directly or indirectly, against the company’s interests. A director must inform the board of directors and the supervisory committee of any conflicting interest he may have in a proposed transaction and must abstain from voting thereon.

Under Argentine law, the board of directors is in charge of the management and administration of the Bank and, therefore, makes any and all decisions in connection therewith, as well as those decisions expressly provided for in the Argentine corporations law, the Bank’s bylaws and other applicable regulations. Furthermore, the board is generally responsible for the execution of the resolutions passed by shareholders meetings and for the performance of any particular task expressly delegated by the shareholders. In general, our board of directors is more involved in operating decision-making than might be customary in other jurisdictions.

BOARD OF DIRECTORS

The following table sets forth information about the members and alternate members of our board of directors, each of whom have terms that expire in April 2006:

				Year of
Name	Position	Age		Appointment
Jorge Horacio Brito	Chairman		53		2005
Delfín Jorge Ezequiel Carballo	Vice Chairman		53		2005
Fernando Andrés Sansuste	Director		53		2005
Juan Pablo Brito Devoto	Director		45		2005
Jorge Pablo Brito	Director		26		2005
Luis Carlos Cerolini	Director		52		2005
Roberto Julio Eilbaum	Director		61		2005
Alejandro Macfarlane	Director		40		2005
Carlos Enrique Videla	Director		60		2005
Mario Eduardo Bartolomé	Alternate director		60		2005

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				Year of
Name	Position	Age		Appointment
Julia Inés Carreras	Alternate director		55		2005
Alejandro Guillermo Henke	Alternate director		44		2005
Ana M. M. Marcet	Alternate director		45		2005
Ernesto Eduardo Medina	Alternate director		39		2005
Sergio B. Patrón Costas Uriburu	Alternate director		30		2005
María Begoña Pérez de Solay	Alternate director		34		2005
Santiago Mario Portais	Alternate director		44		2005
Daniel Hugo Violatti	Alternate director		43		2005

The following family relationships exist within the board of directors: (i) Chairman Jorge Horacio Brito and Vice Chairman D. J. Ezequiel Carballo are brothers-in-law; (ii) Director Jorge Pablo Brito is the son of Chairman Jorge Horacio Brito and the nephew of vice chairman D. J. Ezequiel Carballo; and (iii) Chairman Jorge Horacio Brito and Director Juan Pablo Brito are cousins.

SENIOR MANAGEMENT

Our senior management oversees our day-to-day operations to ensure that our overall strategic objectives are being implemented and reports to our chief executive officer and our chief financial officer. In addition, we have the following committees comprised of different directors and senior management: internal audit committee; senior credit committee and operations and systems.

The following table sets forth certain relevant information of our current executive officers and our senior management.

				Year of
Name	Position	Age		Appointment
Jorge Horacio Brito	Chief Executive Officer		53		2005
Delfín Jorge Ezequiel Carballo	Chief Financial Officer		53		2005
Fernando Andrés Sansuste	Chief comptroller		53		2005
Juan Pablo Brito Devoto	Chief accounting officer		45		2005
Guillermo Goldberg	Commercial general manager		49		2005
Julia Inés Carreras	Operations and technology general manager		54		2005
Alejandro Becka	Credit risk manager		35		2005
Mario Eduardo Bartolomé	Human resources manager		60		2005
Cármen Estévez	Internal audit manager		48		2005
Ana M. M. Marcet	Credit portfolio manager		45		2005
Ernesto Eduardo Medina	Finance manager		39		2005
Milagro Medrano	Planning and management control manager/ Institutional relations manager		29		2005
María Begoña Pérez de Solay	Retail banking manager		34		2005
Francisco Martín Sguera	Legal manager		33		2005
César Pablo Rossi	Tax and subsidiaries manager		39		2005
Daniel Hugo Violatti	Accountancy manager		43		2005

Set forth below are brief biographical descriptions of the members of our board of directors and our senior management. The business address of each of our current directors and management is Sarmiento 447, Buenos Aires, Republic of Argentina.

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Management and corporate governance

Jorge Horacio Brito was born on July 23, 1952. He is the chairman of our board of directors and the senior member of our credit committee. He has been with our bank since June 1988. Mr. Brito is the chairman of Asociación de Bancos Argentinos, or Argentine Bank Association, or ADEBA, and he was the vice-chairman of Asociación de Bancos Públicos y Privados de la Argentina, or Public and Private Banks Argentine Association, or ABAPPRA. He also serves as chairman of the board of directors of Nuevo Banco Suquía, Sud Inversiones y Análisis S.A. and of Macro Securities S.A. Sociedad de Bolsa, and Inversora Juramento S.A. and director of Repsol Y.P.F.

Delfín Jorge Ezequiel Carballo was born on November 21, 1952. He is the vice-chairman of our board of directors and a member of our service credit committee. Mr. Carballo holds a law degree from the Law School of the Catholic University in Argentina. He has been with our bank since June 1988. Mr. Carballo also serves as vice-chairman of the board of directors of Nuevo Banco Suquía, Inversora Juramento S.A., Sud Inversiones y Análisis S.A., Macro Securities S.A. Sociedad de Bolsa and as chairman of the board of directors of Agropecuaria Macume S.A.

Fernando Andrés Sansuste was born on July 5, 1952. He is a member of our board of directors and a non-independent member of our audit committee and our internal audit committee. He has been with our bank since December 1988. Mr. Sansuste holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Sansuste also serves as chairman of the board of directors of Macro Valores S.A., and director of Nuevo Banco Suquía, Sud Inversiones y Análisis S.A. and of Macro Securities S.A. Sociedad de Bolsa.

Juan Pablo Brito Devoto was born on March 25, 1960. He is a member of our board of directors, our internal audit committee and our operations and systems committee. He has been with our bank since December 1992. Mr. Brito Devoto holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Brito Devoto also serves as director of Nuevo Banco Suquía, Macro Valores S.A., Macro Securities S.A. Sociedad de Bolsa and Sud Inversiones y Análisis S.A.

Jorge Pablo Brito was born on June 29, 1979. He is a member of our board of directors, our senior credit committee and our operations and systems committee. He has been a member of the board since June 2002. Mr. Brito also serves as director of Nuevo Banco Suquía and Inversora Juramento S.A., Macro Valores S.A. and as chairman of Macro Warrants S.A.

Luis Carlos Cerolini was born on January 27, 1954. He is a member of our board of directors and has been a member of the board since April 2000. Mr. Cerolini holds a law degree and a master in legal foreign affairs from the Law School of the National University of Córdoba in Argentina. Mr. Cerolini also serves as director of Nuevo Banco Suquía, Macro Warrants S.A. and Sud Inversiones y Análisis S.A. and as alternate director of Macro Securities S.A. Sociedad de Bolsa.

Roberto Julio Eilbaum was born on December 23, 1944. He is a member of our board of directors, and has been a member of the board since June 2002. Mr. Eilbaum holds a law degree from the Law School of the University of Buenos Aires in Argentina. Mr. Eilbaum also serves as director of Nuevo Banco Suquía.

Alejandro Macfarlane was born on August 16, 1965. He is a director and an independent member of our audit committee. Mr. Macfarlane has been on the board of directors since April 2005.

Carlos Enrique Videla was born on March 21, 1945. He is a member of our board of directors and an independent member of our audit committee and our internal audit committee. He has been a member of the board since December 1999. Mr. Videla holds a law degree from the Law School of the Catholic University of Argentina. Mr. Videla also serves as director of Sud Inversiones y Análisis S.A. and alternate director of Nuevo Banco Suquía.

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Management and corporate governance

Mario Eduardo Bartolomé was born on August 12, 1945. He is an alternate member of our board of directors and our human resources manager. Mr. Bartolomé has served on the board of directors since July 2004.

Julia Inés Carreras was born on January 28, 1951. She is an alternate member of our board of directors and our operations and systems manager. She has been a member of our staff since September 2004. Ms. Carreras holds a scientific information technology engineering degree from the School of Science of the University of Buenos Aires in Argentina.

Alejandro Guillermo Henke was born on May 31, 1961. He is an alternate member of our board of directors, an alternate non-independent member of our audit committee. He has served on the board of directors since 2004. Mr. Henke holds an electronic engineering degree from the School of Science of the University of Buenos Aires in Argentina, a masters in finance, a business management masters and a PhD in economics (thesis pending) from the University of CEMA in Argentina.

Ana María Magdalena Marcet was born on February 24, 1961. She is an alternate member of our board of directors and is our credit manager, as well as the relations manager with the Central Bank. She has been a member of our staff since December 1996. Ms. Marcet holds a public accountant, economics and business administration degree from the School of Economics of the University of Buenos Aires and a master’s in banking management from the University of CEMA, both located in Argentina.

Ernesto Eduardo Medina was born on January 9, 1967. He is an alternate member of our board of directors, a member of our operations and systems committee and our finance manager. He has been a member of our staff since February 1989. Mr. Medina holds a public accountant and business administration degree from the School of Economics of the University of Buenos Aires in Argentina. In addition, Mr. Medina holds a degree in systems analysis from the University of Buenos Aires in Argentina. Mr. Medina also serves as director of Macro Securities S.A. Sociedad de Bolsa, MAE and as chairman of Sud Valores Sociedad Gerente de Fondos Comunes de Inversión S.A.

Sergio Benito Patrón Costas Uriburu was born on December 31, 1975. He is an alternate member of our board of directors and an alternate non-independent auditor of our audit committee. He has served on the board of directors since April 2004. Mr. Patrón Costas Uriburu holds a law degree from the School of Law of the University of Buenos Aires in Argentina.

María Begoña Pérez de Solay was born on March 28, 1971. She is an alternate member of our board of directors, a member of our operations and systems committee and our retail banking manager. She has served on the board of directors since July 2000. Ms. Pérez de Solay holds an architecture degree from the University of Belgrano in Argentina and a masters in business administration from the University of CEMA in Argentina.

Santiago Mario Portais was born on May 16, 1961. He is an alternate member of our board of directors and our financial entities manager. Mr. Portais has been a member of our staff since June 2002.

Daniel Hugo Violatti was born on May 27, 1962. He is an alternate member of our board of directors and our controller. He has been a member of our staff since December 1997. Mr. Violatti holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina.

Cármen Esther Estévez was born on April 28, 1957. She is our internal audit manager and a member of our internal audit committee. Ms. Estévez holds a public accountant degree and a masters degree in system audits from the School of Economics of the University of Buenos Aires in Argentina. She has served on the board of directors since October 1997.

152

Management and corporate governance

Milagro Medrano was born on October 27, 1976. She is our planning and management control manager, our institutional relations manager and a member of our operations and systems committee. Ms. Medrano holds a business management degree from the Catholic University of Salta in Argentina. She has served on the board of directors since April 1997.

César Pablo Rossi was born in November 29, 1966. He is our tax and subsidiaries manager. Mr. Rossi holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. He has served on the board of directors since January 2005.

Francisco Martín Sguera was born on July 14, 1972. He is our legal manager. Mr. Sguera holds a law degree from the School of Law of the University of Buenos Aires, as well as a masters in trusts and a masters in banking law from Austral University in Argentina. Mr. Sguera has been with us since December 1996.

Guillermo Goldberg was born on January 30, 1957. Mr. Goldberg holds an economics degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Goldberg has been with us since July 2005.

Alejandro Becka was born on April 23, 1970. He is our credit risk manager and a member of our credit committee. Mr. Becka holds a public accounting degree from the School of Economics of the University of Buenos Aires in Argentina. In addition, he holds a post-graduate degree in finance from the Torcuato Di Tella University also in Argentina. Mr. Becka has been with us since September 1994.

Independence of the members of the board of directors and the supervisory committee

The members of the board of directors and the supervisory committee of a public company such as us must inform the CNV within ten days from the date of their appointment whether such members of the board of directors or the supervisory committee are “independent.” A director shall not be considered independent in certain situations, including where a director (i) owns a 35% equity interest in a company, or a lesser interest if such director has the right to appoint one or more directors of a company (hereinafter “significant participation”) or has a significant participation in a corporation having a significant participation in the company or a significant influence in the company, (ii) depends on shareholders, or is otherwise related to shareholders, having a significant participation in the company or of other corporations in which these shareholders have directly or indirectly a significant participation or significant influence, (iii) is or has been in the previous three years an employee of the company; (iv) has a professional relationship or is a member of a corporation that maintains professional relationships with, or receives remuneration (other than the one received in consideration of his performance as a director) from, a company or its shareholders having a direct or indirect significant participation or significant influence on the same, or with corporations in which the shareholders also have a direct or indirect significant participation or a significance influence; (v) directly or indirectly sells or provides goods or services to the company or to the shareholders of the same who have a direct or indirect significant participation or significant influence, for higher amounts than his remuneration as a member of the administrative body; or (vi) is the spouse or parent (up to second grade of affinity or up to fourth grade of consanguinity) of persons who, if they were members of the administrative body, would not be independent, according to the above listed rules.

Carlos Enrique Videla and Alejandro Macfarlane qualify as independent members of the board of directors under these criteria.

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Management and corporate governance

Supervisory committee

Our bylaws provide for a supervisory committee, which consists of three syndics and three alternate syndics that serve for a term of one fiscal year. Pursuant to the Argentine corporate law, only lawyers and accountants admitted to practice in Argentina or civil partnerships composed of such persons may serve as syndics of an Argentine sociedad anónima, or limited liability corporation.

The primary responsibilities of the supervisory committee are to monitor the management’s compliance with Argentine corporate law, the bylaws, its regulations, if any, and the shareholders’ resolutions, and to perform other functions, including, but not limited to: (i) attending meetings of the board of directors, management committee and shareholders, (ii) calling extraordinary shareholders’ meetings when deemed necessary and ordinary and special shareholders’ meetings when not called by the board of directors and (iii) investigating written complaints of shareholders. In performing these functions, the supervisory committee does not control our operations or assess the merits of the decisions made by the directors.

The following table sets forth certain relevant information of the members of our supervisory committee, each who have terms that expire in April 2006.

				Year of		Current
Name	Position	Age		Appointment		Term Ends
Fernando Aner	Syndic		53		2005		April 2006
Santiago Marcelo Maidana	Syndic		76		2005		April 2006
Ladislao Szekely	Syndic		52		2005		April 2006
Alejandro Almarza	Alternate syndic		48		2005		April 2006
Horacio Della Rocca	Alternate syndic		52		2005		April 2006
Carlos Marcelo Szpunar	Alternate syndic		39		2005		April 2006

Set forth below are brief biographical descriptions of the members of our supervisory committee.

Herman Fernando Aner is a syndic on our supervisory committee. Mr. Aner holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Aner also serves as syndic of Nuevo Banco Suquía, Macro Securities S.A. Sociedad de Bolsa and Sud Inversiones y Análisis S.A. Mr. Aner was admitted to the Accountants Professional Association of the City of Buenos Aires in 1981.

Santiago Marcelo Maidana is a syndic on our supervisory committee. Mr. Maidana holds a law degree from the University of Buenos Aires in Argentina. Mr. Maidana was admitted to the Bar of the City of Buenos Aires in 1957.

Ladislao Szekely is a syndic on our supervisory committee. Mr. Szekely holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Szekely also serves as syndic of Nuevo Banco Suquía, Macro Securities S.A. Sociedad de Bolsa and Sud Inversiones y Análisis S.A. Mr. Szekely was admitted to the Accountants Professional Association of the City of Buenos Aires in 1979.

Alejandro Almarza is an alternate syndic on our supervisory committee. Mr. Almarza holds a public accountant degree from the University of Buenos Aires in Argentina. Mr. Almarza was admitted to the Accountants Professional Association of the City of Buenos Aires in 1983.

Horacio Della Rocca is an alternate syndic on our supervisory committee. Mr. Della Rocca holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Della Rocca was admitted to the Accountants Professional Association of the City of Buenos Aires in 1977.

154

Management and corporate governance

Carlos Marcelo Szpunar is an alternate syndic on our supervisory committee. Mr. Szpunar holds a public accountant degree from the School of Economics of the University of Buenos Aires in Argentina. Mr. Szpunar was admitted to the Accountants Professional Association of the City of Buenos Aires in 1989.

Audit committee

Our audit committee is comprised of three directors, two of whom have independent status according to CNV rules, and two alternate directors, both of whom are independent. The Argentine independence standards under CNV rules differ in many ways from the NYSE, NASDAQ or the U.S. federal securities law standards.

All of the members of our audit committee who were most recently appointed through a resolution of the board of directors dated May 2, 2005 were elected for one-fiscal year renewable terms.

The audit committee is responsible for the fulfillment of the duties within its powers, as set forth under the Argentine Decree No. 677/2001, including, among others, the following: (i) delivering an opinion regarding the board of director’s proposal of appointment of our external auditors and controlling their independent status, (ii) supervising the correct performance of our internal control and accounting systems, (iii) supervising the observance of the policies regarding information about our risk management, and (iv) delivering an opinion regarding transactions with related parties or transactions that may threaten any conflicts of interest. Furthermore, the audit committee has unlimited access to our books and registers and a right to request as much information as necessary for the performance of its duties.

The following table sets forth certain relevant information of the members of the audit committee, each of whom their current term ends in May 2006:

				Year of
Name	Position	Age		Appointment		Status
Fernando Andrés Sansuste	Chairman		53		2005	Non-independent
Carlos Enrique Videla	Vice-chairman		60		2005	Independent
Alejandro Macfarlane	Member		40		2005	Independent
Alejandro Guillermo Henke	Alternate member		44		2005	Non-independent
Sergio B. Patrón Costas Uriburu	Alternate member		30		2005	Independent

Committees reporting to the board of directors and to the CEO and the CFO

The following committees are under the supervision of our board of directors: the internal audit committee, the operations and the systems committee and the senior credit committee.

Internal audit committee. The internal audit committee is responsible for supervising the correct functioning of our internal control systems and procedures. Furthermore, this committee reviews our annual and quarterly financial statements, the external auditor’s reports, the relevant financial information and the audit committee’s reports.

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Management and corporate governance

The following table sets forth certain relevant information of the members of the internal audit committee.

Name	Position
Juan Pablo Brito Devoto	Director
Fernando Andrés Sansuste	Director
Carlos Enrique Videla	Director (Independent)
Carmen Estévez	Internal audit manager

Operations and systems committee. The operations and systems committee is responsible for the issuance of the operations and systems management policies. Furthermore, this committee verifies that the several management plans are in accordance with our business strategy and oversees the implementation of our strategic projects.

The following table sets forth certain relevant information of the members of the operations and systems committee.

Name	Position
Jorge Pablo Brito	Director
Juan Pablo Brito Devoto	Director
Julia Inés Carreras	Operations and systems manager
Ernesto Eduardo Medina	Finance manager
Milagro Medrano	Planning and management control manager
María Begoña Pérez de Solay	Retail banking manager
Daniel Hugo Violatti	Accountancy manager

Senior credit committee. The senior credit committee is responsible for the issuance of our credit policy and credit analysis guidelines. Furthermore, this committee reviews and approves credit transactions in excess of Ps.1,000,000 and examines periodic reports related to our loan portfolio.

The following table sets forth certain relevant information of the members of the senior credit committee.

Name	Position
Jorge Horacio Brito	Chairman
Delfín Jorge Ezequiel Carballo	Vice chairman
Jorge Pablo Brito	Director

Compensation

Argentine law provides that the compensation paid to all directors and syndics (including those directors who are also members of senior management) in a fiscal year may not exceed 5.0% of net income for such year, if the company is not paying dividends in respect of such net income. Argentine law increases the annual limitation on director compensation to up to 25.0% of net income based on the amount of such dividends, if any are paid. The board of directors determines the compensation of directors who are also members of senior management, with the affected directors abstaining. In the case of directors that perform duties at special commissions or perform administrative or technical tasks, the aforesaid limits may be exceeded if a shareholders’ meeting so approves and such issue is included in the agenda and is in accordance with the regulations of the CNV. In any case, the compensation of all directors and members of the supervisory committee requires shareholders’ ratification at an ordinary meeting.

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Management and corporate governance

The aggregate amount of compensation paid by us to all of our directors, alternate directors and senior management during fiscal year 2004 was Ps.7,073,486.

Neither we nor any of our subsidiaries have entered into any agreement that provides for any benefit or compensation to any director after the expiration of his term.

Share Ownership

The persons who are currently members of our board of directors, our supervisory committee or are our senior management held as a group 366,047,531 shares of our capital stock as of November 30, 2005, the most recent date for which this information is available. This represented approximately 60% of our outstanding capital stock as of January 31, 2006. Other than Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Fernando Andrés Sansuste, Juan Pablo Brito Devoto, Carlos Enrique Videla, and Alejandro Guillermo Henke, no member of our board of directors, the supervisory committee or any member of senior management beneficially owned shares as of January 31, 2006.

The following table sets forth the beneficial ownership of our shares by the members of our board of directors, our supervisory committee and members of senior management:

			Percentage of
	Number of		capital stock on a
Shareholder Name	shares owned		fully-diluted basis (%)
Jorge Horacio Brito		155,707,269		25.57%
Delfín Jorge Ezequiel Carballo		136,924,509		22.49%
Fernando Andrés Sansuste		62,442,843		10.25%
Juan Pablo Brito Devoto		10,963,809		1.80%
Carlos Enrique Videla		18,241		0.00%
Alejandro Guillermo Henke		17,860		0.00%

157

Principal and selling shareholders

As of January 31, 2006, we had 608,943,437 outstanding shares of common stock, consisting of 11,235,670 Class A shares and 597,707,767 Class B shares, all with a par value of Ps.1.00 per share. Following the global offering, we will have 683,943,437 outstanding shares of common stock, of which 11,235,670 will be Class A shares and 672,707,767 will be Class B shares. Each share of our common stock represents the same economic interests, except that holders of our Class A shares are entitled to five votes per share and holders of our Class B shares are entitled to one vote per share. As of January 31, 2006, we had 4,333 holders of record of our shares.

The table below sets forth information concerning the ownership of our Class A and Class B shares as of January 31, 2006, and after giving effect to the global offering, for each of our shareholders that beneficially own 5% or more of our common stock.

													Percentage of
					Percentage of				Percentage of
													Maximum		Maximum
					Voting		Capital		Minimum		Minimum		potential		potential
	Number of shares prior				power		stock		potential		potential		voting		capital
	to the offering				prior		prior		voting power		capital stock		power		stock
					to the		to the		after the		after the		after the		after the
	Class A		Class B		offering		offering		offering(1)		offering(1)		offering(1)		offering(1)
Jorge Horacio Brito(2)(3)		4,110,747		151,596,522		26.3		25.6		20.0		18.9		21.7		20.8
Delfín Jorge Ezequiel Carballo(2)		3,795,903		133,128,606		23.3		22.5		17.7		16.7		19.3		18.3
Fernando Andrés Sansuste		2,015,826		60,427,017		10.8		10.3		8.2		7.6		8.9		8.3
Juan Pablo Brito Devoto(3)		281,590		10,682,219		1.8		1.8		1.4		1.3		1.5		1.5
Other Shareholders		1,031,604		241,873,403		37.8		39.9		52.6		55.5		48.5		51.1
Total		11,235,670		597,707,767		100.0		100.0		100.0		100.0		100.0		100.0

(1)	Potential holdings after the global offering will depend upon the amount of shares sold in the preferential subscription or purchased pursuant to the standby agreement, as the case may be, and the exercise of the overallotment option. Amounts shown in this table exclude the exercise of the overallotment option.
(2)	Mssrs. Brito and Carballo are brothers-in-law.
(3)	Mssrs. Brito and Brito Devoto are cousins.

The table below sets forth information concerning our selling shareholders.

	Number of		Number of				Minimum potential				Maximum potential
	shares being		shares subject		Number of		holdings after				holdings after
	sold in		to the		shares subject		global offering(1)				global offering(1)
Selling	global		overallotment		to standby
Shareholder(2)	offering		option		purchase		Class A %		Class B %		Class A %		Class B %
Jorge Horacio Brito		26,488,000		6,074,791		12,864,392		36.6		18.6		36.6		20.5
Delfín Jorge Ezequiel Carballo		22,792,000		5,227,146		11,069,360		33.8		16.4		33.8		18.0
Fernando Andrés Sansuste		10,472,000		2,401,662		5,085,922		17.9		7.4		17.9		8.2
Juan Pablo Brito Devoto		1,848,000		423,823		897,516		2.5		1.3		2.5		1.4

(1) Potential holdings after the global offering will depend upon the amount of shares sold in the preferential subscription or purchased pursuant to the standby agreement, as the case may be, and the exercise of the overallotment option. Amounts shown in this table exclude the exercise of the overallotment option.

158

Principal and selling shareholders

(2) The address of each selling shareholder is Sarmiento 447, 1041 Buenos Aires, Argentina.

The table below represents the evolution of our capital stock and the material changes in equity participation of the controlling shareholders, in both cases, since June 30, 2002.

Date	Capital Stock (Ps.)		Event	Controlling Shareholders
June 30, 2002		64,410,357	Capital increase	Banco Macro S.A. 59.58%
January 31, 2003		455,242,646	Capitalization of irrevocable capital contributions	Banco Macro S.A. 81.23%
December 31, 2003		608,943,437	Merger with Banco Macro S.A.	Jorge H. Brito 30.93% Delfín Jorge Ezequiel Carballo 25.73% Fernando Andrés Sansuste 11.75% Juan Pablo Brito Devoto 2.12%

159

Related party transactions

We are not party to any transactions with, and have not made any loans to, any of our directors, key management personnel or other related persons, nor are there any proposed transactions with such persons, except for those permitted by applicable law. Some of our directors have been involved in certain credit transactions with us. The Argentine Corporations’ Law and Central Bank regulations allow directors of a corporation to enter into a transaction with such corporation if the transaction is in line with prevailing market practice. Additionally, lending to persons or entities affiliated with us is subject to the regulations of the Central Bank. These regulations set limits on the amount of credit that can be extended to affiliates based on, among other things, a percentage of our adjusted shareholders’ equity.

We are required by the Central Bank to present, on a monthly basis, a list of the outstanding amount of credit advanced to directors, controlling shareholders, officers and other related entities that is recorded in the minute book of the Board of Directors. Central Bank Rules establish that loans to directors, controlling shareholders, officers and other related entities must be granted on an equal basis with respect to rates, tenor and guarantees as loans granted to the general public.

For each of December 31, 2005, 2004, 2003 and 2002, an aggregate of Ps. 92.6 million, Ps. 66.8 million, Ps. 26.2 million and Ps. 17.0 million, respectively, in financial assistance granted by us (credit, including guarantees granted) was outstanding to related parties. “Related parties” is defined as our directors, our senior officers, our syndics, our controlling shareholders as well as individuals related to them and any entities directly or indirectly affiliated with any of these parties that are not required to be consolidated. The single largest amount of financial assistance outstanding as of December 31, 2005, was Ps. 42.21 million to Inversores Juramento S.A., a company owned by our controlling shareholders.

160

Description of capital stock

Set forth below is certain information relating to our capital stock, including brief summaries of certain provisions of our bylaws, the Argentine corporate law and certain related laws and regulations of Argentina, all as in effect as at the date hereof. The following summary description of our capital stock does not purport to be complete and is qualified in its entirety by reference to our bylaws, the Argentine corporate law and the provisions of other applicable Argentine laws and regulations, including the CNV and the Buenos Aires Stock Exchange rules.

GENERAL

We are a financial institution incorporated on November 21, 1966 as a sociedad anónima, a stock corporation, duly incorporated under the laws of Argentina for a 99-year period and registered on March 8, 1967 with the Public Registry of Commerce of the City of Buenos Aires under Nr. 1154 of Book 2, Volume 75 of Sociedades Anónimas.

Our capital stock prior to this offering consists of Ps.608,943,437, represented by 11,235,670 common, book-entry Class A shares, with a par value of one peso each and the right to five votes per share, and 597,707,767 common, book-entry Class B shares, with a par value of one peso each and the right to one vote per share. Under our bylaws, we may issue different classes of shares of common stock entitled with one to five votes per share. However, as long as we remain public we cannot issue additional shares of any class of capital stock that could entitle the holder thereof to more than one vote per share. All outstanding shares are fully paid and our shareholders have authorized a capital increase of 75,000,000 Class B shares. Our Class B shares have been listed on the Buenos Aires Stock Exchange since 1993. Holders of Class A shares are permitted to convert their shares into Class B shares on a one-for-one basis.

CORPORATE PURPOSE

Our bylaws sets forth that our corporate purpose is to engage within or outside of Argentina in any banking transaction contemplated and authorized under the FIL, and other laws, rules and regulations governing banking activities in the place of performance, under the guidelines and with prior authorization, if appropriate, of the Central Bank. In addition, we are capable of acting as an agent in connection with securities in the open market, and in any exchange transactions contemplated under the legal provisions in effect governing the activity, under the guidelines and with the prior authorization, if appropriate, of the CNV. To that effect, we have full legal capacity to develop rights, incur obligations, and execute any kind of act and transaction related thereto. Furthermore, we are capable of having interests in other domestic or foreign financial institutions with the prior authorization of the Central Bank.

SHAREHOLDERS’ LIABILITY

Shareholders’ liability for losses of a company is limited to the value of their shareholdings in the company. Under Argentine corporate law, however, shareholders who voted in favor of a resolution that is subsequently declared void by a court as contrary to Argentine laws or a company’s bylaws (or regulations, if any) may be held jointly and severally liable for damages to such company, other shareholders or third parties resulting from such resolution. See also “Risk Factors— Our shareholders may be subject to liability for certain votes of their securities”.

161

Description of capital stock

REDEMPTION AND RIGHTS OF WITHDRAWAL

Our shares are subject to redemption in connection with a reduction in capital by the vote of a majority of shareholders at an extraordinary shareholders’ meeting. Any shares so redeemed must be cancelled by us.

Whenever our shareholders approve a spin-off or merger in which we are not the surviving corporation, the change of our corporate legal status, a fundamental change in our corporate purpose, change of our domicile outside of Argentina, voluntary withdrawal from public offering or delisting, our continuation in the case of mandatory delisting or cancellation of the public offering authorization, or a total or partial recapitalization following a mandatory reduction of our capital or liquidation, any shareholder that voted against such action that was approved or did not attend the meeting at which the decision was taken, may withdraw and receive the book value of its shares, determined on the basis of our latest balance sheet prepared or that should have been prepared in accordance with Argentine laws and regulations, provided that such shareholder exercises its appraisal rights within a determined period. However, because of the absence of legal precedent directly on point, there is doubt as to whether holders of ADSs will be able to exercise appraisal rights either directly or through the depositary with respect to Class B shares represented by ADSs. Appraisal rights must be exercised within the five days following the adjournment of the meeting at which the resolution was adopted, in the event that the dissenting shareholder voted against such resolution, or within 15 days following such adjournment if the dissenting shareholder did not attend such meeting and can prove that he was a shareholder on the date of such meeting. In the case of merger or spin-off, appraisal rights may not be exercised if the shares to be received as a result of such transaction are authorized for public offering or listed. Appraisal rights are extinguished if the resolution giving rise to such rights is revoked at another shareholders’ meeting held within 75 days of the meeting at which the resolution was adopted.

Payment on the appraisal rights must be made within one year of the date of the shareholders’ meeting at which the resolution was adopted, except when the resolution was to delist our stock or to continue following a mandatory delisting, in which case the payment period is reduced to 60 days from the resolution date.

PREEMPTIVE AND ACCRETION RIGHTS

In the event of a capital increase, a holder of existing common shares of a given class has a preemptive right to subscribe for a number of shares of the same class sufficient to maintain the holder’s existing proportionate holdings of shares of that class.

In addition, shareholders are entitled to the right to subscribe on pro-rata basis for the unsubscribed shares remaining at the end of a preemptive rights offering, known as accretion rights.

Holders of ADSs may be restricted in their ability to exercise preemptive rights if a prospectus under the Securities Act relating thereto has not been filed or is not effective or an exemption is not available. Preemptive rights are exercisable during the 30 days following the last publication of notice to the shareholders in the Official Bulletin of the Republic of Argentina, or the Official Gazette and an Argentine newspaper of wide circulation. Pursuant to Argentine corporate law, in the case of public companies, such 30-day period may be reduced to a minimum of ten days if so approved by the company’s shareholders at an extraordinary shareholder’s meeting.

Shares not subscribed by the shareholders by virtue of their exercise of preemptive rights or accretion rights may be offered to third parties.

162

Description of capital stock

VOTING RIGHTS

Under our bylaws, each Class A share entitles the holder thereof to five votes at any meeting of our shareholders and Class B shares entitle the holders thereof to one vote per share. However, according to Argentine corporate law, shares entitle the holder to only one vote per share to vote the approval of: an early dissolution, a merger or spin-off when we are not the surviving entity, a reduction of capital stock and redemption of shares, a transformation from one type of entity to another, a limitation of shareholders’ preemptive rights, a transfer of our domicile outside Argentina, and a fundamental change of our corporate purpose set forth in our bylaws. In such cases Class A shares are entitled to only one vote per share and Class B shares are entitled to only one vote per share. In addition, pursuant to Argentine applicable law, as long as we remain public we cannot issue additional shares of any class of capital stock that could entitle the holder thereof to more than one vote per share.

REGISTRATION REQUIREMENTS OF FOREIGN COMPANIES THAT HOLD CLASS B SHARES DIRECTLY

Under Argentine regulations, foreign companies that hold shares directly (and not as ADSs) in an Argentine company must register with the IGJ to exercise certain shareholder rights, including voting rights. The registration requires the filing of corporate and accounting documents in order to demonstrate that the foreign shareholder’s main activity is conducted outside of Argentina.

LIQUIDATION RIGHTS

In the case of our liquidation or dissolution we are requested to communicate such event to the Central Bank, and our assets will be applied to satisfy our outstanding liabilities and proportionally distributed first among our holders of preferred stock as per the terms of the preferred stock, if any. If any surplus remains, it will be proportionally distributed among holders of our common stock.

ORDINARY AND EXTRAORDINARY MEETINGS

Shareholders’ meetings may be ordinary meetings or extraordinary meetings. We are required to convene and hold an ordinary meeting of shareholders within four months of the close of each fiscal year to consider the matters specified in the first two paragraphs of Section 234 of the Argentine Corporation Law, such as the approval of our financial statements, allocation of net income for such fiscal year, approval of the reports of the board of directors and the statutory audit committee and election and remuneration of directors and members of the statutory audit committee. In addition, pursuant to Decree 677/2001, at an ordinary shareholders’ meetings, our shareholders must consider (i) the disposition of, or creation of any lien over, our assets as long as such decision has not been performed under the ordinary course of business; (ii) the execution of administration or management agreements; and (iii) whether to approve the payment of any agreement providing assets or services to us as long as such payment is material when measured against the volume of the ordinary course of business and our shareholders’ equity. Other matters which may be considered at an ordinary meeting convened and held at any time include the responsibility of directors and members of the statutory audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the authority of an ordinary meeting, including amendment of the bylaws, issuance of debentures, early dissolution, merger, spin off, reduction of capital stock and redemption of shares, transformation from one type of entity to another and limitation of shareholders’ preemptive rights.

163

Description of capital stock

NOTICES OF MEETINGS

Notices of shareholders’ meetings are governed by the provisions of Argentine Corporations Law. Furthermore, notice of shareholders’ meetings must be published for five days in the Official Gazette, in an Argentine newspaper of wide circulation and in the publications of Argentine exchanges or securities markets in which our shares are traded, at least twenty (20) but not more than forty five (45) days prior to the date on which the meeting is to be held. Such notice must include information regarding the type of meeting to be held, the date, time and place of such meeting and the agenda. If a quorum is not available at such meeting, a notice for a second meeting, which must be held within 30 days of the date on which the first meeting was called, must be published for three days, at least eight days before the date of the second meeting. The above-described notices of shareholders’ meetings may be effected simultaneously for the second meeting to be held on the same day as the first meeting, only in the case of ordinary meetings. Shareholders’ meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote of such shares.

QUORUM AND VOTING REQUIREMENTS

The quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the shares present that are entitled to vote on such action. If a quorum is not available at the first meeting a second meeting may be held at which action may be taken by the holders of an absolute majority of the shares present, regardless of the number of such shares. The quorum for an extraordinary shareholders’ meeting on first call is 60% of the shares entitled to vote, and if such quorum is not available, a second meeting may be held, for which the quorum is 20% of the shares entitled to vote.

Action may be taken at extraordinary shareholders’ meetings by the affirmative vote of an absolute majority of shares present that are entitled to vote on such action, except that: the approval of a majority of shares with voting rights (for these purposes non-voting preferred shares shall have voting rights), without application of multiple votes, is required at both the first and second meeting for: (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in our bylaws, (iii) our anticipated dissolution, (iv) the total or partial redemption of shares, (v) our merger or spin-off, if we are not the surviving entity, or (vi) the transformation of our corporate legal status, in which cases resolutions shall be adopted by the affirmative vote of the majority of shares with the right to vote. Preferred shares will be entitled to one vote in this circumstances.

Shareholders’ meetings may be called by the board of directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of the statutory audit committee are required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our outstanding capital stock. If the board or the statutory audit committee fails to call a meeting following such a request, a meeting may be ordered by the CNV or by the courts. In order to attend a meeting, a shareholder must also deposit with us a certificate of book-entry shares registered in its name and issued by Caja de Valores S.A. at least three business days prior to the date on which the meeting is to be held. If so entitled to attend a meeting, a shareholder may be represented by proxy. Proxies may not be granted to our board, members of the statutory audit committee, officers or employees.

See also “Risk Factors— Our controlling shareholders have the ability to direct our business and their interests could conflict with yours”.

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Description of capital stock

ELECTION OF DIRECTORS

Currently, the shareholders present at any annual ordinary meeting may determine the size of the board of directors, provided that there shall be no less than three and no more than twelve directors. Any director so appointed will serve for one fiscal year. At the shareholders’ meeting on September 26, 2005, any director so appointed will serve for one fiscal year. At the shareholders’ meeting on September 26, 2005, our shareholders adopted an amendment to our bylaws that modifies the term for service and the process of election of directors. According to the amendment, each director’s term will be three fiscal years. If the shareholders elect more than eight board members, each director will be re-elected as a staggered board. At the time of the first annual meeting after the approval of the amendment in which the shareholders decide to elect more than eight board members, the shareholders will designate approximately one-third of the directors to be reelected one year later, one-third to be reelected two years later, and one-third to be reelected three years later. Each group must contain at least three directors. After the first term, directors shall be elected for three-year terms.

ANTI-TAKEOVER PROVISIONS

Our bylaws do not contain any provision that would (i) oblige us to disclose information regarding our shareholders; (ii) have the effect of delaying, deferring or preventing a change in control, the last of which may happen only in the event of a merger, acquisition or public offering for acquisition.

FORM AND TRANSFER

Our current capital stock is represented by book-entry shares. Our shareholders are required to hold their shares through book-entries directly made by Caja de Valores in the stock registry of the company carried by Caja de Valores or through book-entries with brokers, banks and other entities approved by the CNV that have accounts with Caja de Valores, or with the participants of the Caja de Valores. Caja de Valores is in charge of maintaining a stock registry on our behalf based on information received from shareholders that chose to hold their shares directly by registration on the stock registry of the company and from participants of the Caja de Valores, and in accordance with Argentine law only those holders listed in the stock registry either directly or through participants of the Caja de Valores will be recognized as shareholders. Shares held by participants of the Caja de Valores have the same rights as shares recorded in our shareholders’ register.

165

Description of American depositary shares

AMERICAN DEPOSITARY RECEIPTS

The Bank of New York, as depositary, will execute and deliver the ADRs. Each ADR is a certificate evidencing a specific number of American Depositary Shares, also referred to as ADSs. Each ADS will represent ten Class B shares (or a right to receive ten Class B shares) deposited with the principal Buenos Aires office of Banco Rio De La Plata S.A., as custodian for the depositary in Argentina. Each ADS will also represent any other securities, cash or other property which may be held by the depositary. The depositary’s office at which the ADRs will be administered is located at 101 Barclay Street, New York, New York 10286.

You may hold ADSs either directly (by having an ADR registered in your name) or indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADR holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

As an ADR holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Argentine law governs shareholder rights. The depositary will be the holder of the Class B shares underlying your ADSs. As a holder of ADRs, you will have ADR holder rights. A deposit agreement among us, the depositary and you, as an ADR holder, and the beneficial owners of ADRs sets out ADR holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADRs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR. See “Where You Can Find More Information” for directions on how to obtain copies of those documents.

HOW WILL YOU RECEIVE DIVIDENDS AND OTHER DISTRIBUTIONS ON THE SHARES?

The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class B shares or other deposited securities, after deducting its fees and expenses described below. You will receive these distributions in proportion to the number of Class B shares your ADSs represent.

Cash. The depositary will convert, as promptly as practicable, any cash dividend or other cash distribution we pay on the Class B shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADR holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

Before making a distribution, any withholding taxes that must be paid will be deducted. See “Taxation.” It will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.

Shares. The depositary may distribute additional ADSs representing any Class B shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADSs. It will sell Class B shares, which would require it to deliver a fractional ADS, and distribute the net proceeds in the same

166

Description of American depositary shares

way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new Class B shares.

Rights to purchase additional Class B shares. If we offer holders of our securities any rights to subscribe for additional Class B shares or any other rights, the depositary may make these rights available to you. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.

If the depositary makes rights to purchase Class B shares available to you, it will exercise the rights and purchase the shares on your behalf. The depositary will then deposit the shares and deliver ADSs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay.

U.S. securities laws may restrict transfers and cancellation of the ADSs representing Class B shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADRs described in this section except for changes needed to put the necessary restrictions in place.

Other Distributions. The depositary will send to you anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to you unless it receives satisfactory evidence from us that it is legal to make that distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders. We have no obligation to register ADSs, Class B shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADRs, Class B shares, rights or anything else to ADR holders. (See “Risk Factors— Risks Relating to our Class B shares and the ADSs”). This means that you may not receive the distributions we make on our Class B shares or any value for them if it is illegal or impractical for us to make them available to you.

DEPOSIT, WITHDRAWAL AND CANCELLATION

How are ADSs issued?

The depositary will deliver ADSs if you or your broker deposits Class B shares or evidence of rights to receive Class B shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADRs at its office to the persons you request.

How do ADS holders cancel ADSs and obtain shares?

If you surrender ADSs to the depositary, upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the Class B shares and any other deposited securities underlying the surrendered ADSs to you or a person you designate at the office of the custodian. At your request, risk and expense, the depositary will deliver the deposited securities at its office, if feasible.

167

Description of American depositary shares

VOTING RIGHTS

How do you vote?

You may instruct the depositary to vote the shares underlying your ADRs. If we ask for your instructions, the depositary will notify you of the upcoming vote and arrange to deliver our voting materials to you. Otherwise, you will not be able to exercise your right to vote unless you withdraw the shares. However, you may not know about the meeting far enough in advance to withdraw the shares. We will use our best efforts to request that the depositary notify you of upcoming votes and ask for your instructions. The voting materials will describe the matters to be voted on and explain how you may instruct the depositary to vote the shares or other deposited securities underlying your ADRs as you direct by a specified date. For instructions to be valid, the depositary must receive them on or before the date specified. The depositary will try, as far as practical, subject to Argentine law and the provisions of our bylaws, to vote or to have its agents vote the shares or other deposited securities as you instruct. If the depositary does not receive voting instructions from you by the specified date, it will consider you to have authorized it to give a discretionary proxy to a person designated by us. The depositary will give a discretionary proxy in those circumstances to vote on all questions to be voted upon provided, however, that if the depositary is advised that it is not permitted pursuant to Argentine law or regulations to issue more than one proxy, then the depositary shall vote or cause to be voted the deposited securities for which no instructions shall have been received in accordance with the written instructions of a person designated by us, unless we notify the depositary that:

†	we do not wish such proxy given,
†	we think there is substantial shareholder opposition to the particular question; or
†	we think the particular question would have an adverse impact on our shareholders.

The depositary will only vote or attempt to vote as you instruct or as described in the preceding sentence.

168

Description of American depositary shares

FEES AND EXPENSES

Persons depositing Class B shares or ADR holders will be required to pay certain fees as detailed in the following table:

Amount of Fees	Purpose of Fees
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	†  Issuance of ADSs, including issuances resulting from a      distribution of Class B shares, rights or other property
	†  Cancellation of ADSs for the purpose of withdrawal, including if      the deposit agreement terminates
$.02 (or less) per ADS (to the extent not prohibited by the rules of any stock exchange on which the ADSs are listed for trading)	†  Any cash distribution to you
A fee equivalent to the fee that would be payable if securities distributed to you had been Class B shares and the shares had been deposited for issuance of ADSs	†  Distribution of securities distributed to holders of deposited      securities which are distributed by the depositary to ADR holders
Registration or transfer fees	†  Transfer and registration of Class B shares on our share register      to or from the name of the depositary or its agent when you      deposit or withdraw Class B shares.

In addition, persons depositing Class B shares or ADR holders are required to pay the following expenses:

†	Expenses of the depositary including converting foreign currency to U.S. dollars, and cable, telex and facsimile transmissions (when expressly provided in the deposit agreement);
†	Taxes and other governmental charges the depositary or the custodian have to pay on any ADR or share of common stock underlying an ADR, for example, stock transfer taxes, stamp duty or withholding taxes; and
†	Any charges incurred by the depositary or its agents for servicing the deposited securities; however, no charges of this type are currently made in the Argentine market.

PAYMENT OF TAXES

The depositary may deduct the amount of any taxes owed from any payments to you. It may also sell deposited securities, by public or private sale, to pay any taxes owed. You will remain liable if the proceeds of the sale are not enough to pay the taxes. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes.

169

Description of American depositary shares

RECLASSIFICATIONS, RECAPITALIZATIONS AND MERGERS

If we:

Then:

†  Change the nominal or par value of our Class B shares; †   Reclassify, split up or consolidate any of the deposited securities; †   Distribute securities on the Class B shares that are not distributed to       you; or †   Recapitalize, reorganize, merge, liquidate, sell all or substantially       all of our assets, or take any similar action.

(1) The cash, shares or other securities received by the depositary will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities; and (2) The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADRs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities.

AMENDMENT AND TERMINATION

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADR holders, it will not become effective for outstanding ADRs until 30 days after the depositary notifies ADR holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADRs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

How may the deposit agreement be terminated?

The depositary will terminate the deposit agreement if we ask it to do so. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign and we have not appointed a new depositary bank within 30 days. In either case, the depositary must notify you at least 30 days before termination.

After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: (a) collect distributions on the deposited securities, (b) sell rights and other property, and (c) deliver Class B shares and other deposited securities upon cancellation of ADRs. Four months after termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADR holders that have not surrendered their ADRs. It will not invest the money and has no liability for interest. The depositary’s only obligations will be to account for the money and other cash. After termination, our only obligations will be to indemnify the depositary and to pay fees and expenses of the depositary that we agreed to pay.

170

Description of American depositary shares

LIMITS ON OUR OBLIGATIONS AND THE OBLIGATIONS OF THE DEPOSITARY; LIMITS ON LIABILITY TO HOLDERS OF ADRS

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

†	are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;
†	are not liable if either of us is prevented or delayed by law or circumstances beyond our control from performing our obligations under the deposit agreement;
†	are not liable if either of us exercises discretion permitted under the deposit agreement;
†	have no obligation to become involved in a lawsuit or other proceeding related to the ADRs or the deposit agreement on your behalf or on behalf of any other party; and
†	may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party.

In the deposit agreement, we agree to indemnify the depositary for acting as depositary, except for losses caused by the depositary’s own negligence or bad faith, and the depositary agrees to indemnify us for losses resulting from its negligence or bad faith.

REQUIREMENTS FOR DEPOSITARY ACTIONS

Before the depositary will deliver or register a transfer of an ADR, make a distribution on an ADR, or permit withdrawal of Class B shares, the depositary may require:

†	payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any Class B shares or other deposited securities;
†	satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
†	compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADSs generally when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

YOUR RIGHT TO RECEIVE THE CLASS B SHARES UNDERLYING YOUR ADRS

You have the right to surrender your ADSs and withdraw the underlying Class B shares at any time except:

†	When temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of Class B shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our Class B shares.
†	When you owe money to pay fees, taxes and similar charges.
†	When it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADRs or to the withdrawal of Class B shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

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Description of American depositary shares

PRE-RELEASE OF ADRS

The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying Class B shares. This is called a pre-release of the ADSs. The depositary may also deliver Class B shares upon cancellation of pre-released ADSs (even if the ADSs are surrendered before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying Class B shares are delivered to the depositary. The depositary may receive ADSs instead of Class B shares to close out a pre-release. The depositary may pre-release ADSs only under the following conditions: (a) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its customer (i) owns the Class B shares or ADSs to be deposited, (ii) assigns all beneficial right, title and interest in such and for the benefit of the owners, and (iii) will not take any action with respect to such Class B shares or ADSs, as the case may be, that is inconsistent with the transfer of beneficial ownership (including, without the consent of the depositary, disposing of such Class B shares or ADSs, as the case may be, other than in satisfaction of such pre-release); (b) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; and (c) the depositary must be able to close out the pre-release on not more than five business days’ notice. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of a pre-release, although the depositary may disregard the limit from time to time, if it thinks it is appropriate to do so.

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Taxation

The following discussion addresses the material Argentine and United States federal income tax consequences of acquiring, holding and disposing of our Class B shares or ADSs.

This discussion is not a comprehensive discussion of all the tax considerations that may be relevant to a decision to purchase our Class B shares or ADSs and is not applicable to all categories of investors, some of which may be subject to special rules, and does not specifically address all of the Argentine and United States federal income tax considerations applicable to any particular holder. It is based upon the tax laws of Argentina and the United States as in effect on the date of this prospectus, which are subject to change, possibly with retroactive effect, and to differing interpretations. Each prospective purchaser is urged to consult its own tax advisor about the particular Argentine and United States federal income tax consequences to it of an investment in our Class B shares or ADSs. This discussion is also based upon the representations of the depositary and on the assumption that each obligation in the deposit agreement among us, The Bank of New York, as depositary, and the registered holders and beneficial owners of our ADSs, and any related documents, will be performed in accordance with its terms.

Although there presently is no income tax treaty between Argentina and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. We cannot assure you, however, as to whether or when a treaty will enter into force or how it will affect holders of our Class B shares or ADSs.

MATERIAL ARGENTINE TAX CONSIDERATIONS

The following summary constitutes the opinion of our counsel as to Argentine tax matters, of the material Argentine tax considerations relating to the purchase, ownership and disposition of our Class B shares or ADSs.

Dividends tax

Dividends paid on our Class B shares or ADSs, whether in cash, property or other equity securities, are not subject to income tax withholding, except for dividends paid in excess of our taxable accumulated income at the previous fiscal period which are subject to withholding at the rate of 35% applicable on such excess and regarding both local and foreign shareholders.

Capital gains tax

Due to the amendments made to the Argentine Income Tax Law by Law 25,414, Decree 493/2001 (the “AITL”) and the abrogation of Law 25,414 by 25,556, it is not clear whether certain amendments are in effect. Although opinion No. 351 of the National Treasury General Attorney Office solved the most important matters related to capital gains, certain issues still remain unclear.

Resident individuals. Pursuant to a reasonable construction of the AITL: (i) income obtained from the sale, exchange or other disposition of our Class B shares or ADSs by resident individuals who do not sell or dispose of Argentine shares on a regular basis would not be subject to Argentine income tax; and (ii) although there still exists uncertainty regarding this issue, income obtained from the sale, exchange or other disposition of our Class B shares or ADSs by resident individuals who sell or dispose of Argentine shares on a regular basis should be exempt from Argentine income tax.

Foreign beneficiaries. Capital gains obtained by non-residents or foreign entities from the sale, exchange or other disposition of our Class B shares or ADSs are exempt from income tax. Pursuant to a reasonable construction of the AITL, and although the matter is not completely free from doubt, such treatment should also apply to those foreign beneficiaries that qualify as offshore entities.

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Local entities. Capital gains obtained by Argentine entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina) derived from the sale, exchange or other disposition of our Class B shares or ADSs are subject to income tax at the rate of 35%. Losses arising from the sale of our Class B shares or ADSs can be offset against the same type of income.

Personal assets tax

Argentine entities, such as us, have to pay the personal assets tax corresponding to Argentine and foreign individuals and foreign entities for the holding of our shares at December 31 of each year. The applicable tax rate is 0.5% and is levied on the valor patrimonial proporcional, or the book value, of the shares arising from the last balance sheet. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of such paid tax from the applicable Argentine individuals and/or foreign shareholders.

Value added tax

The sale, exchange or other disposition of our Class B shares or ADSs and the distribution of dividends are exempted from the value added tax.

Transfer taxes

The sale, exchange or other disposition of our Class B shares or ADSs is not subject to transfer taxes.

Stamp taxes

Argentine residents may be subject to stamp tax in certain Argentine provinces in case transfer of our Class B shares or ADSs is performed or executed in such jurisdiction by means of written agreements. No stamp taxes are levied in the City of Buenos Aires.

Other taxes

There are no Argentine inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class B shares or ADSs. In addition, neither the minimum presumed income tax nor any local gross turnover tax is applicable to the ownership, transfer or disposition of our Class B shares or ADSs.

Tax treaties

Argentina has signed tax treaties for the avoidance of double taxation with Australia, Austria, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. There is currently no tax treaty or convention in effect between Argentina and the United States. It is not clear when, if ever, a treaty will be ratified or entered into effect. As a result, the Argentine tax consequences described in this section will apply, without modification, to a holder of our Class B shares or ADSs that is a U.S. resident. Foreign shareholders located in certain jurisdictions with a tax treaty in force with Argentina may be exempted from the payment of the personal asset tax.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary constitutes the opinion of our U.S. counsel as to tax matters, of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our Class B shares or ADSs. This discussion applies only to beneficial owners of Class B shares or ADSs that are “U.S. holders” (as defined below) that hold Class B shares or ADSs as “capital assets” (generally, property held for investment). This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, final, temporary and proposed Treasury regulations, administrative

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pronouncements and judicial decisions, all as currently in effect and all of which are subject to change (possibly on a retroactive basis) and to different interpretations.

This discussion does not purport to address all U.S. federal income tax considerations that may be relevant to a particular holder, and you are urged to consult your own tax advisor regarding your specific tax situation. The discussion does not address the tax considerations that may be relevant to U.S. holders in special tax situations, such as:

†	dealers in securities or currencies;
†	insurance companies;
†	tax-exempt organizations;
†	traders in securities that elect to mark to market;
†	certain financial institutions;
†	partnerships or other pass-through entities;
†	holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
†	U.S. expatriates;
†	holders that hold Class B shares or ADSs as part of a hedge, straddle or conversion transaction; or
†	holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power of our shares.

This discussion does not address the alternative minimum tax consequences of holding Class B shares or ADSs or the indirect consequences to holders of equity interests in partnerships or other entities that own our Class B shares or ADSs, nor does this discussion does not address the state, local and foreign tax consequences of holding our Class B shares or ADSs.

You should consult your own tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences of purchasing, owning, and disposing of our Class B shares or ADSs in your particular circumstances.

You are a “U.S. holder” if you are a beneficial owner of Class B shares or ADSs and you are for U.S. federal income tax purposes:

†	an individual who is a citizen or resident of the United States;
†	a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; or
†	an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

If a partnership holds our Class B shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A prospective investor who is a partner of a partnership holding our shares should consult its own tax advisor.

In general, for U.S. federal income tax purposes, U.S. holders that are beneficial owners of ADSs will be treated as the beneficial owners of the Class B shares represented by those ADSs.

Taxation of Dividends. Distributions with respect to the Class B shares or ADSs (other than distributions in redemption of the Class B shares subject to Section 302(b) of the Code or in a liquidation of the bank) will, to the extent made from our current or accumulated earnings and profits as determined under U.S. federal income tax principles, constitute dividends for U.S. federal income tax purposes. Whether such current or accumulated earnings and profits will be sufficient for all such distributions on the Class B shares or ADSs to qualify as dividends for U.S. federal income tax

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purposes depends on our future profitability and other factors, many of which are beyond our control. We do not currently maintain calculations of our earnings and profits under U.S. federal income tax principles. Unless and until these calculations are made, distributions should be presumed to be taxable dividends for U.S. federal income tax purposes. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes. Subject to the passive foreign investment company (“PFIC”) rules discussed below, cash dividends (including amounts withheld in respect of Argentine taxes) paid with respect to:

†	the Class B shares generally will be includible in the gross income of a U.S. holder as ordinary income on the day on which the dividends are received by the U.S. holder; or
†	the Class B shares represented by ADSs generally will be includible in the gross income of a U.S. holder as ordinary income on the day on which the dividends are received by the depositary;

and, in either case, these dividends will not be eligible for the dividends received deduction allowed to corporations. To the extent that such a distribution exceeds the amount of our earnings and profits, it will be treated as a non-taxable return of capital to the extent of the U.S. holder’s adjusted tax basis in the Class B shares or ADSs, and thereafter as capital gain (provided that the Class B shares or ADSs are held as capital assets).

Subject to certain exceptions for short-term and hedged positions, the amount of dividends received by certain U.S. holders (including individuals) prior to January 1, 2009 with respect to the ADSs will be subject to taxation at a maximum rate of 15% if the dividends represent “qualified dividend income.” Dividends paid on the ADSs will be treated as qualified dividend income if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) we were not in the year prior to the year in which the dividend was paid, and are not in the year in which the dividend is paid, a PFIC. Under current guidance recently issued by the Internal Revenue Service (“IRS”), the ADSs should qualify as readily tradable on an established securities market in the United States once and so long as they are listed on the New York Stock Exchange, but no assurances can be given that the ADSs will be or remain readily tradable under future guidance. See below for a discussion of our potential PFIC classification.

Based on existing IRS guidance, it is not entirely clear whether dividends received with respect to the Class B shares will be treated as qualified dividends, because the Class B shares are not themselves listed on a United States exchange. In addition, the United States Treasury Department has announced its intention to promulgate additional procedures pursuant to which holders of ADSs or Class B stock and intermediaries through whom such securities are held will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividends. Because such procedures have not yet been issued, we are not certain that we will be able to comply with them. You should consult your own tax advisors regarding the availability of the preferential dividend tax rate in the light of your own particular circumstances.

Dividends paid in pesos will be includible in the gross income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day they are received by the U.S. holder, in the case of Class B shares, or the depositary, in the case of Class B shares represented by ADSs, regardless of whether the payment is in fact converted to U.S. dollars. If dividends paid in pesos are converted into U.S. dollars on the day they are received by the U.S. holder or the depositary, as the case may be, U.S. holders should not be required to recognize foreign currency gain or loss in respect of the dividend income. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included in the gross income of a U.S. holder through the date such payment is converted into dollars (or otherwise disposed of) will be treated as U.S. source ordinary income or loss. However, U.S. holders should consult their own tax advisors

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regarding the treatment of any foreign currency gain or loss if any pesos received by the U.S. holder or the depositary are not converted into U.S. dollars on the date of receipt.

Dividends received by most U.S. holders will constitute foreign source “passive income” or, in the case of some U.S. holders such as banks, “financial services income” for U.S. foreign tax credit purposes. U.S holders should note, however, that recently enacted legislation eliminates the “financial services income” category with respect to taxable years beginning after December 31, 2006. Under this legislation, the foreign tax credit limitation categories will be limited to “passive category income” and “general category income.” Subject to limitations under U.S. federal income tax law concerning credits or deductions for foreign taxes and certain exceptions for short-term and hedged positions, an Argentine withholding tax would be treated as a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability (or at a U.S. holder’s election, may be deducted in computing taxable income if the U.S. holder has elected to deduct all foreign income taxes). The rules with respect to foreign tax credits are complex and U.S. holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances. The IRS has expressed concern that intermediaries in connection with depositary arrangements may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. persons who are holders of depositary shares. Accordingly, investors should be aware that the discussion above regarding the availability of foreign tax credits for Argentine withholding tax on dividends paid with respect to Class B shares represented by ADSs could be affected by future action taken by the IRS.

Taxation of Capital Gains. Deposits and withdrawals of Class B shares by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

Subject to the discussion below under “—Passive Foreign Investment Companies,” gain or loss realized by a U.S. holder on the sale, redemption or other taxable disposition of Class B shares or ADSs will be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized (including the gross amount of the proceeds of the sale or other taxable disposition before the deduction of any Argentine tax) on the taxable disposition and such U.S. holder’s adjusted basis in the Class B shares or the ADSs. Capital gains of certain non-corporate U.S. holders, including individuals, derived with respect to capital assets held for more than one year may be eligible for various reduced rates of taxation. For example, for capital assets held for over one year and sold or exchanged in taxable years beginning before January 1, 2009, the maximum rate of tax generally will be 15% (rather than the higher rates of tax generally applicable to items of ordinary income). The deductibility of capital losses is subject to limitations. Any gain or loss realized by a U.S. holder will generally be treated as a U.S. source gain or loss for U.S. foreign tax credit purposes.

If Argentine withholding tax is imposed on the sale or disposition of Class B shares or ADSs, the amount realized by a U.S. holder will include the gross amount of the proceeds of such sale or disposition before deduction of the Argentine withholding tax. The availability of U.S. foreign tax credits for these Argentine taxes and any Argentine taxes imposed on distributions that do not constitute dividends for U.S. tax purposes is subject to various limitations and involves the application of rules that depend on a U.S. holder’s particular circumstances. U.S. holders are urged to consult their own tax advisors regarding the application of the U.S. foreign tax credit rules to their investment in, and disposition of, Class B shares or ADSs.

Passive Foreign Investment Companies. U.S. holders should carefully consider the discussion below regarding our potential treatment as a PFIC for U.S. federal income tax purposes.

In general, if during any taxable year of a non-U.S. corporation, 75% or more of the corporation’s gross income consists of certain types of “passive” income, or the average value during a taxable year of the “passive assets” of the corporation (generally assets that generate passive income) is 50% or more of the average value of all the corporation’s assets, the corporation will be treated as a PFIC under U.S. federal income tax law. Passive income for this purpose generally includes interest,

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dividends, royalties, rents and gains from commodities and securities transactions. Certain exceptions are provided, however, for passive income derived in the conduct of an active business.

We are unable to determine if we are a PFIC because the application of the PFIC rules to banks is unclear under present U.S. federal income tax law. Banks generally derive a substantial part of their income from assets that are interest bearing or that otherwise could be considered passive under the PFIC rules. The IRS has issued a notice and has proposed regulations that exclude from passive income any income derived in the active conduct of a banking business by a qualifying foreign bank (the “active bank exception”). The IRS notice and proposed regulations have different requirements for qualifying as a foreign bank, and for determining the banking income that may be excluded from passive income under the active bank exception. Moreover, the proposed regulations have been outstanding since 1994 and will not be effective unless finalized.

Because final regulations have not been issued and because the notice and the proposed regulations are inconsistent, our status under the PFIC rules is subject to considerable uncertainty. While we conduct, and intend to continue to conduct, a significant banking business, there can be no assurance that we will satisfy the specific requirements for the active bank exception under either the IRS notice or the proposed regulations. In this regard, we presently derive significant income from securities that may not constitute banking income for purposes of the active bank exception. Accordingly, U.S. holders could be subject to U.S. federal income tax under the rules described below. U.S. holders should consult their tax advisors regarding this issue.

If we are treated as a PFIC for any taxable year, a U.S. holder would be subject to special rules (and may be subject to increased tax liability and form filing requirements) with respect to (a) any gain realized on the sale or other disposition of Class B shares or ADSs, and (b) any “excess distribution” made by us to the U.S. holder (generally, any distribution during a taxable year in which distributions to the U.S. holder on the Class B shares or ADSs exceed 125% of the average annual distributions the U.S. holder received on the Class B shares or ADSs during the preceding three taxable years or, if shorter, the U.S. holder’s holding period for the Class B shares or ADSs). Under those rules, (a) the gain or excess distribution would be allocated ratably over the U.S. holder’s holding period for the Class B shares or ADSs, (b) the amount allocated to the taxable year in which the gain or excess distribution is realized and to taxable years before the first day on which we became a PFIC would be taxable as ordinary income, (c) the amount allocated to each prior year in which we were a PFIC would be subject to U.S. federal income tax at the highest tax rate in effect for that year and (d) the interest charge generally applicable to underpayments of U.S. federal income tax would be imposed in respect of the tax attributable to each prior year in which we were a PFIC. In addition, as discussed above, a U.S. holder would not be entitled to (if otherwise eligible for) the preferential reduced rate of tax payable on certain dividend income.

These effects may be mitigated if such U.S. holder makes an election to be taxed currently on its pro rata portion of the corporation’s income, whether or not such income is distributed in the form of dividends (a “QEF election”), or otherwise makes a “mark-to-market” election with respect to the corporation’s stock as permitted by the Code. A QEF election will probably not be available, however, because the information necessary to make this election will probably not be provided.

A U.S. holder may also mitigate these effects by electing mark-to-market treatment for its ADSs or Class B shares, provided the relevant shares constitute “marketable stock” as defined in Treasury regulations. Our ADSs and our Class B shares will be “marketable stock” if they are “regularly traded” on a “qualified exchange or other market”. The term “qualified exchange or other market” includes the New York Stock Exchange. Our ADSs will be “regularly traded” if they are traded on at least 15 days during each calendar quarter, other than in de minimis quantities. For the calendar year of our initial public offering, our ADSs will be regularly traded if they are regularly traded, other than in de minimis amounts, on ¹/6 of the days remaining in the quarter in which the offering occurs, and

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on at least 15 days during each remaining quarter of the calendar year. No assurance can be provided that our ADSs will be characterized as regularly traded on a qualified exchange or other market for this purpose. Our Class B shares will be treated as listed on a “qualified exchange or other market” for purposes of the relevant Treasury regulations if the exchange on which they are listed has sufficient trading volume, listing, financial disclosure and surveillance, is regulated or supervised by a governmental authority of the country in which the market is located, and meets certain other characteristics. It is unclear whether the Buenos Aires Stock Exchange would meet these requirements and whether there would be sufficient trading of the Class B shares for the Class B shares to be characterized as “regularly traded.” It is therefore unclear whether a U.S. holder would be able to elect mark-to-market treatment for the Class B shares.

A U.S. holder electing the mark-to-market regime generally would compute gain or loss at the end of each taxable year as if the Class B shares or ADSs had been sold at fair market value. Any gain recognized by the U.S. holder under mark-to-market treatment, or on an actual sale, would be treated as ordinary income, and the U.S. holder would be allowed an ordinary deduction for any decrease in the value of Class B shares or ADSs as of the end of any taxable year, and for any loss recognized on an actual sale, but only to the extent, in each case, of previously included market-to-market income not offset by previously deducted decreases in value. Any loss on an actual sale of Class B shares or ADSs would be a capital loss to the extent in excess of previously included mark-to-market income not offset by previously deducted decreases in value. A U.S. holder’s tax basis in Class B shares or ADSs would increase or decrease by gain or loss taken into account under the mark-to-market regime.

A mark-to-market election under the PFIC rules applies to all future years of an electing U.S. holder during which the Class B shares or ADSs are regularly traded on a qualifying exchange, unless revoked with the IRS’s consent.

If we are characterized as a PFIC and, at any time, we have non-U.S. subsidiaries that are classified as PFICs, U.S. holders generally will be deemed to own, and also would be subject to the PFIC rules with respect to, their indirect ownership interests in that lower-tier PFIC. If we are characterized as a PFIC, the U.S. holder could incur liability for the deferred tax and interest charge described above if either (1) we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or (2) the U.S. holder disposes of all or part of its Class B shares or ADSs. A mark-to-market election under the PFIC rules with respect to shares would not apply to a lower-tier PFIC, and a U.S. holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in that lower-tier PFIC. Consequently, U.S. holders of shares could be subject to the PFIC rules with respect to income of the lower-tier PFIC the value of which already had been taken into account indirectly via mark-to-market adjustments.

Information Reporting and Backup Withholding. Information reporting requirements will apply to dividends in respect of the Class B shares or ADSs or the proceeds from the sale, exchange, or redemption of the Class B shares or ADSs paid within the United States (and, in some cases, outside of the United States) to U.S. holders, unless, in either case, the U.S. holder is an exempt recipient (such as a corporation). A 28% backup withholding tax may apply to such amounts if the U.S. holder fails to provide an accurate taxpayer identification number or to report interest and dividends required to be shown on its federal income tax returns. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against the U.S. holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

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Underwriting

The global offering described in this prospectus consists of (i) an international offering of 94,182,810 Class B shares, in the form of 9,418,281 ADSs, in the United States and other jurisdictions outside Argentina, (ii) an underwritten offering in Argentina of 12,500,000 Class B shares and (iii) a preferential subscription to minority shareholders, and any standby purchase, in Argentina of 29,917,190 Class B shares.

We and the selling shareholders have entered into an international underwriting agreement with UBS Securities LLC and Raymond James & Associates, Inc., the representatives of the international underwriters and the joint book-running managers of the international offering. Subject to the terms and conditions of the international underwriting agreement, each of the international underwriters has severally agreed to purchase from us and the selling shareholders the number of the Class B shares (in the form of ADSs) listed next to its name in the following table:

	Number of
International underwriters	Class B shares
UBS Securities LLC
Raymond James & Associates, Inc.
Total

We have entered into an Argentine underwriting agreement with Raymond James Argentina Sociedad de Bolsa S.A. providing for the concurrent offer and sale of our Class B shares in Argentina. The closings of this international offering and the Argentine underwritten offering are conditioned upon each other.

Under Argentine law, our existing shareholders have preemptive rights and accretion rights in connection with any capital increase by us. Accordingly, we will grant our existing shareholders the opportunity to subscribe for 75,000,000 Class B shares at the peso equivalent of the public offering price per Class B share of the international and Argentine offerings. The subscription period will begin on or about March 22, 2006 and expire on or about March 31, 2006. In order to facilitate the international and Argentine offerings, the selling shareholders will, pursuant to an assignment of rights agreement, assign their preemptive rights to subscribe for 45,082,810 Class B shares with respect to the capital increase to the international and Argentine underwriters, and the international and Argentine underwriters, subject to closing conditions set forth in the international and Argentine underwriting agreements, respectively, will exercise such rights in order to acquire such Class B shares, to be offered in the international offering (in the form of ADSs) and the Argentine offering. Additionally, in order to ensure that we obtain the estimated net proceeds expected from the global offering, the selling shareholders, pursuant to a standby purchase agreement, have agreed, subject to closing conditions set forth in such agreement, to purchase from us at the public offering price per Class B share any of the 29,917,190 Class B shares not purchased by minority shareholders pursuant to their preferential subscription rights.

We intend to settle any preferential rights exercised prior to the settlement date of the offer price and allocations of the ADSs and Class B shares in the international and Argentine underwritten offerings on or about the closing of those offerings. We intend to settle any other preferential rights exercised after such settlement date on or about the expiration date of the preferential subscription period. We intend to settle any accretion rights exercised in the preferential subscription on or about three business days following the expiration of the preferential subscription period. We intend to settle any

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standby purchase on or about the fifth business day following the expiration of the preferential subscription period.

The international and Argentine underwriters have entered into an inter-syndicate agreement which governs matters relating to the global offering. Under this agreement, each international underwriter has agreed that, as part of its distribution of ADSs and subject to permitted exceptions, it has not offered or sold, and will not offer to sell, directly or indirectly, any Class B shares or ADSs or distribute any prospectus relating to the Class B shares or ADSs to any person in Argentina or to any other dealer who does not so agree. Each Argentine underwriter similarly has agreed that, as part of its distribution of our Class B shares and subject to permitted exceptions, it has not offered or sold, and will not offer to sell, directly or indirectly, any Class B shares or distribute any prospectus relating to our Class B shares to any person outside of Argentina or to any other dealer who does not so agree. These limitations do not apply to stabilization transactions or to transactions between the international and Argentine underwriters, who have agreed that they may sell Class B shares or ADSs, as the case may be, between respective underwriting syndicates. The number of Class B shares or ADSs, as the case may be, actually allocated to each offering may differ from the amount offered due to reallocation between the international and Argentine underwritten offerings.

CONDITIONS OF THE OFFERING

The international underwriting agreement provides that the international underwriters must buy all of the ADSs if they buy any of them. However, the international underwriters are not required to take or pay for the ADSs covered by the international underwriters’ over-allotment option described below.

The ADSs are offered subject to a number of conditions, including:

†	receipt and acceptance of the ADSs by the international underwriters; and
†	the international underwriters’ right to reject orders in whole or in part.

We have been advised by the representatives that the international underwriters intend to make a market in our ADSs but that they are not obligated to do so and may discontinue making a market at any time without notice.

In connection with this international offering, certain of the international underwriters or securities dealers may distribute prospectuses electronically.

OVER-ALLOTMENT OPTION

The selling shareholders have granted the international underwriters an option to buy up to an aggregate of 1,412,742 additional ADSs, representing 14,127,422 Class B shares. The international underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this international offering. The international underwriters have 30 days from the date of this prospectus to exercise this option. If the international underwriters exercise this option, they will each purchase additional ADSs approximately in proportion to the amounts specified in the table above.

COMMISSION AND DISCOUNTS

ADSs purchased in this international offering will be initially offered at the offering price for ADSs set forth on the cover of this prospectus. Any ADSs sold by the international underwriters to securities dealers may be sold at a discount of up to US$               per ADS from the public offering price. Any of these securities dealers may resell any ADSs purchased from the international underwriters to other brokers or dealers at a discount of up to US$               per ADS from the public offering price. Sales of

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ADSs made outside the United States may be made by affiliates of the international underwriters. If all ADSs are not sold at the public offering price, the representatives may change the offering price and the other selling terms. Upon execution of the international underwriting agreement, the international underwriters will be obligated to purchase the ADSs at the prices and upon the terms stated therein and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms. The representatives of the international underwriters has informed us that they do not expect to sell more than an aggregate                   ADSs to accounts over which it exercises discretionary authority.

The following tables show the per ADS and total underwriting discounts and commissions we and the selling shareholders will pay to the international underwriters assuming both no exercise and full exercise of the international underwriters’ option to purchase up to an additional 1,412,742 ADSs.

Paid by Us	No Exercise
Per ADS	US$
Total	US$

Paid by the Selling Shareholders	No Exercise	Full Exercise
Per ADS	US$	US$
Total	US$	US$

In the event that a payment made by us or the selling shareholders to the underwriters under the international underwriting agreement is subject to withholding or deduction for or on account of any Argentine taxes, duties or governmental charges, we and the selling shareholders have agreed to pay to the underwriters, on an after-tax basis, such additional amounts as may be necessary in order that the net amounts received after such withholding or deduction will equal the amounts that would have been received if no withholding or deduction had been made. Such additional amounts received by the underwriters will not in the aggregate exceed 9% of the amount of the global offering.

We estimate that the total expenses of this global offering, not including the underwriting discounts and commissions, will be approximately US$2,876,000.

NO SALES OF SIMILAR SECURITIES

We, our directors, including the selling shareholders, and certain members of senior management, have entered into lock-up agreements with the international underwriters. Under these agreements, subject to certain exceptions, we and each of these persons may not, without the prior written approval of UBS Securities LLC and Raymond James & Associates, Inc., offer, sell, contract to sell or otherwise dispose of or hedge shares of our capital stock or ADSs or securities convertible into or exercisable or exchangeable for shares of our capital stock or ADSs. These restrictions do not apply to the Class B shares to be sold in the concurrent Argentine offering. These restrictions will be in effect for a period of 180 days after the date of this prospectus. At any time and without public notice, UBS Securities LLC and Raymond James & Associates, Inc. may in their sole discretion release all or some of the securities from these lock-up arrangements.

INDEMNIFICATION AND CONTRIBUTION

We and the selling shareholders have agreed to indemnify the international underwriters and their controlling persons against certain liabilities, including liabilities under the Securities Act, or to contribute to payments which the international underwriters and their controlling persons may be required to make in respect of those liabilities.

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Underwriting

LISTING

Our Class B common stock is listed on the Buenos Aires Stock Exchange under the symbol “BSUD”. We have applied to list the ADSs for trading on the NYSE under the trading symbol “BMA”.

PRICE STABILIZATION, SHORT POSITIONS

In connection with this international offering, the international underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our Class B shares and ADSs, including:

†	stabilizing transactions;
†	short sales;
†	purchases to cover positions created by short sales;
†	imposition of penalty bids; and
†	syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our ADSs while this international offering is in progress. These transactions may also include making short sales of our ADSs, which involve the sale by the international underwriters of a greater number of ADSs than they are required to purchase in this international offering. Short sales may be “covered short sales,” which are short positions in an amount not greater than the international underwriters’ over-allotment option referred to above, or may be “naked short sales,” which are short positions in excess of that amount.

The international underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing ADSs in the open market. In making this determination, the international underwriters will consider, among other things, the price of ADSs available for purchase in the open market compared to the price at which they may purchase ADSs through the over-allotment option.

Naked short sales are in excess of the over-allotment option. The international underwriters must close out any naked short position by purchasing ADSs in the open market. A naked short position is more likely to be created if the international underwriters are concerned that there may be downward pressure on the price of the ADSs in the open market that could adversely affect investors who purchased in this international offering.

The international underwriters also may impose a penalty bid. This occurs when a particular international underwriter repays to the international underwriters a portion of the underwriting discount received by it because the representatives have repurchased ADSs sold by or for the account of that underwriter in stabilizing or short covering transactions.

As a result of these activities, the price of our Class B shares and ADSs may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the international underwriters at any time. The international underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.

AFFILIATIONS

The international underwriters and their affiliates may from time to time in the future engage in transactions with us and perform services for us in the ordinary course of their business.

One of our subsidiaries, Macro Securities Sociedad de Bolsa S.A., will be a dealer in the Argentine underwritten offering.

183

Expenses of the global offering

We estimate that our expenses in connection with the global offering, other than underwriting discounts and commissions, will be as follows:

				Percentage of Net
		Amount		Proceeds of This
Expenses		(in US$)		Offering (%)
Securities and Exchange Commission registration fee			30,643		—
NYSE listing fees			150,000		—
National Association of Securities Dealers filing fee			29,138		—
Printing and engraving expenses			290,000		—
Legal fees and expenses			1,250,000		—
Accountant fees and expenses			1,000,000		—
Miscellaneous costs			125,000		—
	Total	US$	2,874,781		1.0%

All amounts in the table are estimated except the Securities and Exchange Commission registration fee, the NYSE listing fee, the NASD filing fee and the Argentine CNV and Buenos Aires Stock Exchange fees. The depositary has agreed to pay some of these expenses on our behalf, subject to the closing of the global offering.

The total underwriting discounts and commissions that we are required to pay will be US$           million or     % of the gross proceeds of the global offering.

184

Validity of the securities

The validity of the ADSs and certain matters of U.S. law will be passed upon for us by Shearman & Sterling LLP, New York, New York. The validity of the Class B shares and other matters governed by Argentine law will be passed upon for us by Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, Buenos Aires, Argentina. The underwriters have been represented by Simpson Thacher & Bartlett LLP, New York, New York and Cabanellas, Etchebarne, Kelly & Dell’Oro Maini, Buenos Aires, Argentina.

Experts

The consolidated financial statements of Banco Macro Bansud S.A. at December 31, 2003 and 2004 and for each of the three years ended December 31, 2004, the financial statements of Nuevo Banco Suquía S.A. at December 31, 2003 and 2004 and for the two years ended December 31, 2004, and the consolidated financial statements as of December 31, 2005 and for each of the two years ended December 31, 2005 appearing in this prospectus and registration statement, have been audited by Pistrelli, Henry Martin y Asociados S.R.L., member firm of Ernst & Young Global, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere in this prospectus, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Enforcement of judgments against foreign persons

We are incorporated under the laws of Argentina. Substantially all of our assets are located outside the United States. The majority of our directors and all our officers and certain advisors named herein reside in Argentina or elsewhere outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons.

Enforcement of foreign judgments would be recognized and enforced by the courts in Argentina provided that the requirements of Article 517 of the Federal Civil and Commercial Procedure Code (if enforcement is sought before federal courts) are met, such as (i) the judgment, which must be final in the jurisdiction where rendered, was issued by a court competent in accordance with the Argentine principles regarding international jurisdiction and resulted from a personal action, or an in rem action with respect to personal property if such was transferred to Argentine territory during or after the prosecution of the foreign action, (ii) the defendant against whom enforcement of the judgment is sought was personally served with the summons and, in accordance with due process of law, was given an opportunity to defend against the foreign action, (iii) the judgment must be valid in the jurisdiction where rendered and its authenticity must be established in accordance with the requirements of Argentine law, (iv) the judgment does not violate the principles of public policy of Argentine law, and (v) the judgment is not contrary to a prior or simultaneous judgment of an Argentine court.

We have been advised by our Argentine counsel, Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, that judgments of United States courts for civil liabilities based upon the federal securities laws of the United States may be, subject to the requirements described above, enforced in Argentina. A judgment against us obtained outside Argentina would be enforceable in Argentina without reconsideration of the merits.

185

Where you can find more information

We have filed with the Commission a registration statement (including amendments and exhibits to the registration statement) on Form F-1 under the Securities Act. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further information, we refer you to the registration statement and the exhibits and schedules filed as part of the registration statement. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed.

Upon completion of this offering, we will become subject to the informational requirements of the U.S. Securities Exchange Act of 1934, or the Exchange Act. Accordingly, we will be required to file reports and other information with the Commission, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information to be filed with the Commission at the public reference facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549 and at the Commission’s regional offices at 175 W. Jackson Boulevard, Suite 900, Chicago, IL 60604 and 3 World Financial Center, Room 4-300, New York, NY 10281. Copies of the materials may be obtained from the Public Reference Room of the Commission at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the Commission’s Public Reference Room by calling the Commission in the United States at 1-800-SEC-0330. In addition, the Commission maintains an Internet website at http://www.sec.gov, from which you can electronically access the registration statement and its materials.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available to our shareholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year. We plan to file quarterly financial statements with the Commission within two months of the end of the first three quarters of our fiscal year, and we will file annual reports on Form 20-F within the time period required by the Commission, which is currently six months from December 31, the end of our fiscal year.

We will send the depositary a copy of all notices that we give relating to meetings of our shareholders or to distributions to shareholders or the offering of rights and a copy of any other report or communication that we make generally available to our shareholders. The depositary will make all these notices, reports and communications that it receives from us available for inspection by registered holders of ADSs at its office. The depositary will mail copies of those notices, reports and communications to you if we ask the depositary to do so and furnish sufficient copies of materials for that purpose.

We also file financial statements and other periodic reports with the CNV and the MERVAL in Argentina.

186

Banco Macro Bansud S.A.

Index to consolidated financial statements

Banco Macro Bansud S.A.
	Report of Independent Registered Public Accounting Firm	F-2
	Consolidated Balance Sheets as of December 31, 2003 and 2004	F-3
	Consolidated Statements of Income for the years ended December 2002, 2003 and 2004	F-8
	Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2002, 2003 and 2004	F-10
	Consolidated Statements of Cash Flows for the years ended December 2002, 2003 and 2004	F-11
	Notes to the Consolidated Financial Statements	F-12
	Condensed Consolidated Balance Sheets at December 31, 2004 and June 30, 2005	F-111
	Condensed Consolidated Statements of Income for the six months ended June 30, 2004 and 2005	F-116
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2004 and 2005	F-118
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2005	F-120
	Notes to Interim Consolidated Financial Statements	F-121
	Report of Independent Registered Public Accounting Firm	F-173
	Consolidated Balance Sheets at December 31, 2004 and December 31, 2005	F-174
	Consolidated Statements of Income for the two years ended December 31, 2005	F-178
	Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004 and 2005	F-180
	Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2005	F-181
	Notes to Consolidated Financial Statements	F-182
Banco Nuevo Banco Suquía S.A.
	Report of Independent Registered Public Accounting Firm	F-234
	Balance Sheets as of December 31, 2003 and 2004	F-235
	Statements of Income for the years ended December 31, 2003 and 2004	F-239
	Statements of Changes in Shareholders’ Equity for the years ended December 31, 2003 and 2004	F-241
	Statements of Cash Flows for the years ended December 31, 2003 and 2004	F-242
	Notes to Financial Statements	F-243

187

BANCO MACRO BANSUD S.A.

Consolidated financial statements as of and for the three years ended December 31, 2004, together with the report of independent registered public accounting firm

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors of

BANCO MACRO BANSUD S.A.

Sarmiento 447

City of Buenos Aires

We have audited the accompanying consolidated balance sheets of BANCO MACRO BANSUD S.A. (a bank organized under Argentine legislation) and its subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Bank’s Management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Bank’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Banco Macro Bansud S.A. and its subsidiaries as of December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in accordance with the accounting principles prescribed by the Central Bank of Argentine Republic applicable to the consolidated financials statements, which differ in certain respects from the accounting principles generally accepted in the United States of America (see Note 35 to the consolidated financial statements).

City of Buenos Aires,

September 9, 2005

PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.

Member of Ernst & Young Global

NORBERTO M. NACUZZI

Partner

F-2

Banco Macro Bansud and Subsidiaries

Consolidated balance sheets

As of December 31, 2004 and 2003

		2004			2003(1)
		(stated in thousands of pesos)
ASSETS
CASH
	Cash on hand		327,959			179,695
	Due from banks and correspondents		1,044,194			494,605
	Other		105			—
			1,372,258			674,300
GOVERNMENT AND PRIVATE SECURITIES
	Holdings in investment accounts		53,856			143,976
	Holdings for trading or financial intermediation		88,940			203,431
	Unlisted government securities		839,183			696,975
	Instruments issued by the Central Bank of Argentina		1,097,580			1,097,022
	Investments in listed private securities		29,649			17,499
	Less: Allowances		(2,471	)		(3,137	)
			2,106,737			2,155,766
LOANS
	To the non-financial government sector		809,577			365,549
	To the financial sector		81,812			17,835
	To the non-financial private sector and foreign residents
	Overdrafts		513,390			196,300
	Documents		429,654			148,745
	Mortgage loans		231,603			49,853
	Pledged loans		180,831			25,500
	Personal loans		255,553			107,305
	Credit cards		105,117			61,052
	Other		412,079			120,041
	Accrued interest, adjustments and foreign exchange differences receivable		87,528			20,892
	Less: Unearned discount		(6,759	)		(6,069	)
	Less: Allowances		(225,340	)		(56,279	)
			2,875,045			1,050,724
OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentina		123,291			69,398
	Amounts receivable from spot and forward sales pending settlement		733,995			39,663
	Securities and foreign currency receivable from spot and forward purchases pending settlement		206,561			13,011
	Premiums on options taken		421			—
	Unlisted corporate bonds		928			445
	Other receivables not covered by debtors classification regulations		756,968			533,532
	Receivables from forward transactions without delivery of underlying asset		931			—
	Other receivables covered by debtors classification regulations		83,002			15,953
	Accrued interest receivable not covered by debtors classification regulations		657			—
	Less: Allowances		(107,530	)		(134,145	)
			1,799,224			537,857

F-3

Banco Macro Bansud and Subsidiaries

		2004			2003(1)
		(stated in thousands of pesos)
ASSETS SUBJECT TO FINANCIAL LEASES
	Assets subject to financial leases		60,922			—
	Less: Allowances		(609	)		—
			60,313			—
INVESTMENTS IN OTHER COMPANIES
	In financial institutions		416			275
	Other		15,047			12,634
	Less: Allowances		(719	)		(2	)
			14,744			12,907
OTHER RECEIVABLES
	Receivables from sale of assets		1,822			767
	Other		139,704			230,192
	Accrued interest and adjustments receivable from sale of assets		176			21
	Other accrued interest and adjustments receivable		48			27
	Less: Allowances		(6,201	)		(3,630	)
			135,549			227,377
BANK PREMISES AND EQUIPMENT, NET			193,697			157,680
OTHER ASSETS			158,142			124,154
INTANGIBLE ASSETS
	Goodwill		2,485			3,324
	Organization and development costs, including amparos		79,046			78,861
			81,531			82,185
ITEMS PENDING ALLOCATION			515			2,077
TOTAL ASSETS			8,797,755			5,025,027

F-4

Banco Macro Bansud and Subsidiaries

			2004		2003(1)
			(stated in thousands of pesos)
LIABILITIES
DEPOSITS
	From the non-financial government sector			809,764		382,195
	From the financial sector			4,445		11,909
	From the non-financial private sector and foreign residents
		Checking accounts		844,969		332,318
		Savings accounts		729,234		326,618
		Time deposits		2,588,546		1,583,920
		Investment accounts		48,598		51,627
		Other		225,891		233,810
		Accrued interest, adjustments and foreign exchange differences payable		67,550		104,847
				5,318,997		3,027,244
OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentina—Other			485,267		2,353
	Banks and international institutions			14,668		54,873
	Amounts payable for spot and forward purchases pending settlement			153,661		21,150
	Securities and foreign currency to be delivered under spot and forward sales pending settlement			754,172		37,878
	Premiums on options sold			—		301
	Financing received from Argentine financial institutions			56,835		52,097
	Payables for forward transactions without delivery of underlying asset			676		—
	Other			343,665		275,592
	Accrued interest, adjustments and foreign exchange differences payable			111,778		78,721
				1,920,722		522,965
OTHER LIABILITIES
	Dividends payable			—		231
	Other			53,984		36,254
	Accrued interest, adjustments and foreign exchange differences payable			78		—
				54,062		36,485
PROVISIONS				225,699		285,128
SUBORDINATED CORPORATE BONDS				16,416		24,200
ITEMS PENDING ALLOCATION				4,554		3,783
MINORITY INTEREST IN SUBSIDIARIES				3		3
TOTAL LIABILITIES				7,540,453		3,899,808
SHAREHOLDERS’ EQUITY				1,257,302		1,125,219
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				8,797,755		5,025,027

The accompanying notes 1 through 35 to the consolidated financial statements are an integral part of these statements.

F-5

Banco Macro Bansud and Subsidiaries

Consolidated balance sheets

As of December 31, 2004 and 2003

Memorandum accounts

	2004			2003(1)
	(stated in thousands of pesos)
DEBIT-BALANCE ACCOUNTS
Contingent
—Loans borrowed (unused amounts)		12,693			11,625
—Guarantees received		1,572,284			419,493
—Contingent debit-balance contra accounts		154,361			120,253
		1,739,338			551,371
Control
—Receivables classified as irrecoverable		824,501			471,476
—Other		2,911,113			2,959,706
—Control debit-balance contra accounts		92,873			34,259
		3,828,487			3,465,441
Derivatives
—Notional value of put options taken		10,453			—
—Notional value of forward transactions without delivery of underlying asset		22,304			—
—Derivative debit-balance contra accounts		144,359			125,009
		177,116			125,009
Trust Activity
—Trust funds		16,782			15,993
		16,782			15,993
TOTAL		5,761,723			4,157,814
CREDIT-BALANCE ACCOUNTS
Contingent
—Unused portion of loans granted covered by debtors classification regulations		(22,702	)		—
—Guarantees provided to the Central Bank of Argentina		(422	)		(1,430	)
—Other guarantees provided covered by debtors classification regulations		(90,285	)		(84,904	)
—Other guarantees provided not covered by debtors classification regulations		(2,335	)		(4,073	)
—Other covered by debtors classification regulations		(38,617	)		(29,846	)
—Contingent credit-balance contra accounts		(1,584,977	)		(431,118	)
		(1,739,338	)		(551,371	)
Control
—Checks to be credited		(92,873	)		(34,259	)
—Control credit-balance contra accounts		(3,735,614	)		(3,431,182	)
		(3,828,487	)		(3,465,441	)

F-6

Banco Macro Bansud and Subsidiaries

	2004			2003(1)
	(stated in thousands of pesos)
Derivatives
—Notional value of put options sold		(122,055	)		(125,009	)
—Notional value of forward transactions without delivery of underlying asset		(22,304	)		—
—Derivatives credit-balance contra accounts		(32,757	)		—
		(177,116	)		(125,009	)
Trust activity
—Trust activity credit-balance contra accounts		(16,782	)		(15,993	)
		(16,782	)		(15,993	)
TOTAL		(5,761,723	)		(4,157,814	)

(1) See note 4.2.

The accompanying notes 1 through 35 to the consolidated financial statements are an integral part of these statements.

F-7

Banco Macro Bansud and Subsidiaries

Consolidated statements of income

For the years ended December 31, 2004, 2003 and 2002

	2004		2003(1)			2002(1)
	(stated in thousands of pesos)
FINANCIAL INCOME
Interest on cash and due from banks		1,570		1,892			3,658
Interest on loans to the financial sector		3,327		1,819			15,927
Interest on overdrafts		25,970		21,731			75,767
Interest on documents		11,523		9,804			10,007
Interest on mortgage loans		6,887		6,794			14,001
Interest on pledged loans		1,641		1,727			3,501
Interest on credit card loans		6,011		7,832			22,425
Interest on other loans		61,763		29,383			32,638
Interest on other receivables from financial intermediation		5,611		1,971			8,804
Income from government and private securities, net		156,794		303,500			298,347
Income from guaranteed loans—Presidential Decree No. 1,387/01		14,600		4,183			24,820
C.E.R. (Benchmark Stabilization Coefficient) adjustment		91,435		19,118			254,718
C.V.S. (Salary Variation Coefficient) adjustment		508		24			—
Other		40,260		10,122			858,736
		427,900		419,900			1,623,349
FINANCIAL EXPENSE
Interest on checking accounts		2,335		2,759			3,524
Interest on savings accounts		3,161		3,269			6,214
Interest on time deposits		49,253		84,979			62,796
Interest on financing from the financial sector		79		3,342			4,258
Interest on other liabilities from financial intermediation		9,959		2,528			18,022
Other interest		9,646		20,598			34,819
Net loss from options		5		803			—
C.E.R. adjustment		25,336		41,551			355,898
Other		33,430		81,323			29,653
		133,204		241,152			515,184
GROSS INTERMEDIATION MARGIN— GAIN		294,696		178,748			1,108,165
PROVISION FOR LOAN LOSSES		36,467		35,009			117,767
SERVICE-CHARGE INCOME
Related to lending transactions		7,867		3,978			933
Related to deposits		99,537		82,529			97,960
Other fees		7,414		6,308			8,165
Other		39,607		32,907			30,698
		154,425		125,722			137,756
SERVICE-CHARGE EXPENSE
Fees		4,989		3,651			9,043
Other		19,974		16,354			21,606
		24,963		20,005			30,649
MONETARY LOSS ON FINANCIAL INTERMEDIATION		—		(3,899	)		(317,530	)
ADMINISTRATIVE EXPENSES
Personnel expenses		132,910		112,493			144,116

F-8

Banco Macro Bansud and Subsidiaries

	2004		2003(1)			2002(1)
	(stated in thousands of pesos)
Director’s and statutory auditor’s fees		5,861		5,608			7,126
Other professional fees		16,729		15,560			14,257
Advertising and publicity		12,048		5,991			2,891
Taxes		3,353		3,175			3,480
Other operating expenses		74,256		71,388			77,563
Other		9,823		7,581			10,742
		254,980		221,796			260,175
MONETARY LOSS ON OPERATING EXPENSES		—		(107	)		(9,468	)
NET INCOME FROM FINANCIAL INTERMEDIATION		132,711		23,654			510,332
OTHER INCOME
Income from long-term investments		27		678			16,071
Penalty interest		1,339		1,717			3,013
Recovered loans and allowances reversed		88,398		157,296			130,932
C.E.R. adjustment		—		8			115
Other		19,825		80,923			16,411
		109,589		240,622			166,542
OTHER EXPENSES
Penalty interest and charges payable to the Central Bank of Argentina		146		174			173
Charge for other-receivables uncollectibility and other allowances		3,920		21,730			80,678
Amortization of differences from amparos		11,665		6,258			—
Other		32,920		35,095			56,070
		48,651		63,257			136,921
MINORITY INTEREST		—		—			2
MONETARY LOSS ON OTHER OPERATIONS		—		(337	)		35,760
INCOME BEFORE INCOME TAX		193,649		200,682			575,715
INCOME TAX		672		833			3,601
NET INCOME FOR THE FISCAL YEAR		192,977		199,849			572,114
NET INCOME PER SHARE(2)— stated in pesos		0.32		0.33			1.78

(1)	See note 4.2.
(2)	See note 10.

The accompanying notes 1 through 35 to the consolidated financial statements are an integral part of these statements.

F-9

Banco Macro Bansud and Subsidiaries

Statements of changes in shareholders’ equity

For the fiscal years ended December 31, 2004, 2003 and 2002

			Non-capitalized contributions
									Irrevocable
									contributions
									on account			Adjustments
			Share						of future			to			Earnings reserved
	Capital		issuance			Merger			capital			shareholders’							Unappropriated
Changes	stock(1)		premium			premium			increases			equity			Legal		Voluntary		earnings(4)			Total
	(stated in thousands of pesos)
Balances as of December 31, 2001
—Banco Macro S.A.		35,500		—			657						43,325			54,836		211		117,846			252,375
—Banco Bansud S.A.		64,410		96,017			—						233,157			—		—		(248,107	)		145,477
Irrevocable contributions on account of future capital increases										391,132			414,350										805,482
Capital stock increase approved by the shareholders’ meeting of Banco Bansud S.A. held on May 29, 2002
—Capitalization of irrevocable contributions’		333,242		—			—			(333,242	)		—			—		—		—			—
—Minority shareholders’ contributions		57,590		—			—			—			426			—		—		—			58,016
Merger effects(2)		118,201		(96,017	)		(657	)		(57,890	)		(686,747	)		—		—		(184,984	)		(908,094	)
Distribution of unappropriated retained earnings approved by the Shareholders’ meeting of Banco Macro S.A, held on June 10, 2002:
—Legal reserve																3,513				(3,513	)		—
Net income for the year																				572,114			572,114
Balances as of December 31, 2002(4)		608,943		—			—			—			4,511			58,349		211		253,356			925,370
Distribution of unappropriated retained earnings approved by the Shareholders’ Meeting of Banco Macro held on July 2, 2003:
—Legal reserve																116,280				(116,280	)		—
Net income for the year																				199,849			199,849
Balances as of December 31, 2003(4)		608,943		—			—			—			4,511			174,629		211		336,925			1,125,219
Distribution of unappropriated retained earnings approved by the Shareholders’ Meeting held on April, 30 and July 21, 2004:
—Legal reserve																47,480				(47,480	)		—
—Cash dividends(3)																				(60,894	)		(60,894	)
Net income for the year																				192,977			192,977
Balances as of December 31, 2004		608,943		—			—			—			4,511			222,109		211		421,528			1,257,302

(1)	See note 10.
(2)	See note 3.1.
(3)	Through resolution of July 20, 2004, the Central Bank authorized the above mentioned cash dividends distribution.
(4)	Modified from its original version to apply the adjustments to prior years income to these consolidated financial statements (See notes 4.2. and 7.).

The accompanying notes 1 through 35 to the consolidated financial statements are an integral part of these statements.

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Banco Macro Bansud and Subsidiaries

Consolidated statements of cash flows

For the fiscal years ended December 31, 2004, 2003 and 2002

			2004			2003(1)			2002(1)
			(stated in thousands of pesos)
Cash provided by (used in) operating activities
	Financial income collected			412,864			419,026			1,634,931
	Service-charge income collected			159,501			124,294			139,635
	Other sources of cash(2)			370,215			92,208			76,164
Less:
	Financial expenses paid			(188,416	)		(156,782	)		(318,237	)
	Services-charge expenses paid			(24,895	)		(19,849	)		(32,171	)
	Administrative expenses paid			(220,498	)		(177,658	)		(230,508	)
	Other uses of cash			(33,685	)		(43,184	)		(53,554	)
		Net cash provided by operating activities		475,086			238,055			1,216,260
Plus:
Cash provided by (used in) investing activities
	Decrease/ (increase) in government and private securities			474,860			(1,287,874	)		(539,823	)
	(Increase)/ decrease in loans			(904,902	)		(168,144	)		776,951
	(Increase )/ decrease in other receivables from financial intermediation			(838,470	)		604,231			257,632
	(Increase)/ decrease in other assets			(25,323	)		(47,245	)		(539,486	)
		Net cash used in investing activities		(1,293,835	)		(899,032	)		(44,726	)
Plus:
Cash provided by (used in) financing activities
	Capital increase			—			—			805,482
	Increase/ (decrease) in deposits			807,032			1,190,515			(1,239,772	)
	(Decrease)/ increase in other liabilities			(9,039	)		(49,061	)		60,054
	Increase/ (decrease) in other liabilities from financial intermediation			779,608			(127,787	)		(419,398	)
	Cash dividends paid			(60,894	)		—			—
		Net cash provided by/ (used in) financing activities		1,516,707			1,013,667			(793,634	)
	Monetary loss generated on cash and due from banks			—			(4,343	)		(291,238	)
	Increase in cash and cash equivalents			697,958			348,347			86,662
	Cash and cash equivalents at the beginning of fiscal year (restated)			674,300			325,953			239,291
	Increase in cash and cash equivalents			697,958			348,347			86,662
	Cash and cash equivalents at the end of the fiscal year			1,372,258			674,300			325,953

(1)	See Note 4.2.
(2)	Includes 336,266 related to cash of Nuevo Banco Suquía S.A., as of December 21, 2004 (for further details see note 2.).

The accompanying notes 1 through 35 to the consolidated financial statements are an integral part of these statements.

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Banco Macro Bansud and Subsidiaries

Notes to the consolidated financial statements

As of December 2004 and 2003

(Stated in thousands of pesos, except otherwise indicated)

1. THE BANK, THE ARGENTINE MACROECONOMIC ENVIRONMENT AND FINANCIAL SYSTEM

1.1.    Overview of the Bank

Macro Compañía Financiera S.A. was created in 1977 as a non banking financial institution. On May 30, 1988, it was granted the authorization to operate as a commercial bank, and was incorporated, under the name of Banco Macro S.A. Banco Macro S.A.’s shares have been traded in the Buenos Aires Stock Exchange since November 1994.

After 1994, Banco Macro S.A.’s target market was primarily focused on regional areas outside the city of Buenos Aires. Following this strategy, in 1996, Banco Macro S.A. began the process of acquiring the assets and liabilities of privatized provincial and other banks.

On December 19, 2001 Banco Macro agreed to acquire 59.58% of the capital stock and 76.17% of the voting rights of Banco Bansud. The acquisition was effective January 4, 2002 upon approval of the Central Bank of Argentina.

During 2003, the shareholders decided to merge both financial institutions with the strategic objective of creating a financial institution with a presence throughout Argentina. In December 2003 the merger of Banco Macro S.A. with and into Banco Bansud S.A. was authorized by the Central Bank of Argentina (the Central Bank) and the name was changed to Banco Macro Bansud S.A. (the Bank or Banco Macro Bansud S.A.).

The Bank offers traditional commercial banking products and services to small and medium sized companies and companies operating in regional economies, and to low and middle income individuals.

Banco Macro Bansud conducts certain operations through subsidiaries, including Nuevo Banco Suquía S.A. (a bank acquired in December 2004— for further information see note 2.), Sud Bank & Trust Corporate Limited, Sud Valores Sociedad de Bolsa S.A., Sud Inversiones & Análisis S.A., Sud Valores S.G.F.C.I. S.A. The chart showing the organizational structure as of December 31, 2004, 2003, and 2002 is disclosed in note 4.1., with the percentages indicating the ownership interests and voting rights in each subsidiary.

1.2.    The Argentine macroeconomic environment and the financial system

The Argentine economic and financial situation worsened in 2001, when the Argentine Government (the Federal Government) suspended payments on the sovereign debt and imposed severe restrictions on cash withdrawals from financial institutions.

In early 2002, the Argentine Congress enacted Public Emergency and Foreign Exchange System Reform Law No. 25,561. This law introduced significant changes to the economic model implemented until that date and amended the Convertibility Law (the currency board that pegged the Argentine peso at parity with the US dollar). In addition, different mechanisms were implemented to convert foreign-currency payables and deposits into pesos (known as pesification) and severe foreign exchange restrictions.

Subsequently, the Federal Government has instituted a significant amount of other measures such as compensation for the asymmetrical pesification and application of C.E.R./ C.V.S. (Coeficiente de

F-12

Banco Macro Bansud and Subsidiaries

Estabilización de Referencia/ Coeficiente de Variación Salarial) adjustments (consumer price coefficients based on inflation and salary levels), the government debt restructuring, signing of the Letter of Intent with the International Monetary Fund, relaxation of foreign-exchange controls, final exchange phase of provincial debt instruments, restructuring of private-sector debts and lifting of restrictions on bank deposits.

On January 14, 2005, the Federal Government started the restructuring process for a substantial part of Argentina’s sovereign debt, in default since late 2001. The process included a significant reduction in the principal owed as well as reduction in interest rates and extension of payment terms. For this purpose, the Federal Government offered three types of bonds in exchange for the defaulted securities, as established by Presidential Decree No. 1,753/04. Additionally, the Government announced that it was not planning to make any payments on the debt not submitted to the restructuring process. The exchange period came to an end on February 25, 2005. The acceptance level by the sovereign debt holders received by the exchange offer was significant. On March 3, 2005, the Federal Government announced the outcome of the exchange, the degree of acceptance of which amounted to 76%. This implied that Argentina was no longer in default on its sovereign debt.

The presentation of the financial statements requires Management to make estimates and assumptions that affect the reported figures of assets, liabilities income, expenses and contingencies. The actual amounts and results could differ from these estimates.

These consolidated financial statements should be read in the light of the events explained above.

The following are the measures implemented by the Argentine Government since the late 2001 economic crisis. Certain measures are still prevailing as of the date of these financial statements. Additionally, below are descriptions of the actions implemented by the Bank to address such effects.

a)     Financial compensation to financial institutions

1)     As to devaluation and compulsory conversion into pesos (“pesification”)

Under Law No. 25,561 and the Presidential Decrees No. 214/02, No. 494/02, No. 905/02 and No. 2,167/02, the Federal Government established a compensation mechanism for financial institutions, because of:

†

The losses caused by the conversion into pesos of a significant portion of their liabilities at the Ps. (Argentine pesos or ARS) 1.40 per U.S. dollar, greater than the exchange rate of Ps.1 per U.S. dollar established for the conversion into pesos of a significant portion of its dollar-denominated assets. The compensation mechanism would be achieved through the issuance and delivery of a peso-denominated Compensatory Bond maturing in 2007 (Boden 2007).

†

The currency mismatch generated by the compulsory pesification of different portions of financial institutions’ assets and liabilities. This would be achieved through the conversion of the originally peso- denominated Compensatory Bond into a dollar-denominated Compensatory Bond and, if necessary, through the subscription of a dollar-denominated Coverage Bond (which entailed obtaining a loan from the Central Bank). To achieve this the government established the issuance of dollar-denominated bonds maturing in 2012 (Boden 2012).

During 2002, the Central Bank established the compensation procedure through Communications “A” 3,650 and “A” 3,716 and complementary regulations.

In this respect, the Bank requested “Federal Government Bonds in Argentine pesos at 2%, maturing in 2007”, “Federal Government Compensation Bonds in U.S. dollars at LIBOR, maturing in 2012” and “Argentine Government Coverage Bonds in U.S. dollars at LIBOR, maturing in 2012” which were partially credited to Banco Macro and Banco Bansud by the Central Bank in 2002, pending final review and calculation by the Central Bank.

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Banco Macro Bansud and Subsidiaries

Such final calculation and reviews were issued, through Communiqué “A” 4,165, as supplemented, in August 2004, and the compensation requested by the Bank did not differ significantly from the Central Bank’s calculation.

Subsequently, as mentioned in notes 7. and 11., as of December 31, 2004, the Bank made an additional adjustment to the compensation requested.

The amounts recorded in the consolidated financial statements related to such compensation mechanisms are as follows:

		Amounts as of		Amounts as of
		December 31,		December 31,
Recorded in		2004		2003		Description
Government securities—Holdings in investment accounts			53,856		141,001		Portion of the compensation received
	•  Boden 2012—Compensation		53,856		141,001
Other receivables from financial intermediation—Securities and foreign currency receivable from spot and forward purchases pending settlement			91,454		—		Portion of the compensation received
	•  Boden 2012—Compensation		91,454		—
Other receivables from financial intermediation— Other receivables not covered by debtor classification regulations			609,791		255,977	Compensation and Coverage bonds                            to be issued to the Bank.
	•  Boden 2012— Coverage		280,088		255,977
	•  Boden 2007— Compensation		184,691		—
	•  Boden 2012— Compensation		145,012		—
Total assets			755,101		396,978

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Banco Macro Bansud and Subsidiaries

		Amounts as of		Amounts as of
		December 31,		December 31,
Recorded in		2004		2003		Description
Other liabilities from financial intermediation— Other and Accrued interest, adjustments and foreign exchange and quoted price differences payable			38,162		36,889	Obligation to repay to the Central Bank (recorded offsetting the amounts mentioned above).
	•  Boden 2012— Compensation		30,928		30,013
	•  Boden 2007— Compensation		7,234		6,876
Other liabilities from financial intermediation— Other and Accrued interest, adjustments and foreign exchange and quoted price differences payable			204,634		190,320	Liability with the Central Bank for the future subscription of Boden 2012 (Coverage Bond)
	•  Boden 2012— Coverage		204,634		190,320
Total liabilities			242,796		227,209

In the opinion of the Bank’s Management, the amounts recorded for such compensation included the events and situations known as of the date of issuance of these financial statements. These financial statements include the effects of the compensation finally agreed with the Central Bank as of each balance sheet date.

2) Foreign currency accounts with the Central Bank and minimum liquidity requirements accounts with Deutsche Bank N.Y.

To meet the minimum liquidity requirements established by the Central Bank, the Bank had funds deposited in an account with Deutsche Bank N.Y. Under Central Bank rules, minimum cash reserve requirements are applicable to demand and time deposits and other brokerage liabilities denominated in pesos, foreign currency, or government and corporate securities, and any unused balances of advances in checking accounts under formal agreements not containing any clauses that permit the bank to discretionally and unilaterally revoke the possibility of using such balances. At December 31, 2004 such reserve requirements amounted to $732,205 and USD110,576. At December 31, 2003 such requirements amounted to $406,955 and USD63,161. At both year-ends, they were included in “Due from banks and correspondents”.

Presidential Decree No. 214/02, Presidential Decree No. 1,267/02 and the Central Bank, through Communiqué “A” 4,043, as supplemented, established a method to compute the amount to be reimbursed by the Central Bank itself or by financial institutions for converting into pesos the foreign currency accounts with the Central Bank and the minimum liquidity requirement accounts with Deutsche Bank N.Y.

The final computation reported to the Central Bank on January 5, 2004, was that the Bank should pay 5,685. On March 1, 2004, the amount paid to the Central Bank was 5,825 (including accrued interest). This amount was recorded as a liability as of December 31, 2003.

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Banco Macro Bansud and Subsidiaries

b)     Financial exposure to the Government sector

1)     Guaranteed Loans— Presidential Decree No. 1,387/01

In late 2001, Presidential Decrees No. 1,387/01 and 1,646/01 established the basic terms and characteristics of the exchange of Argentine public-sector debt securities and Loans for new loans called Guaranteed Loans. Subsequently, Presidential Decree No. 471/02 established, among other things, the pesification of all federal, provincial and municipal government obligations denominated in foreign currency under Argentine law, at the Ps.1.40 to USD1 exchange rate, or its equivalent in any other currency, the adjustments by C.E.R. (Coeficiente de Estabilización de Referencia— Benchmark Stabilization Coefficient) and the interest rate applicable to each type of government security and guaranteed loan, on the basis of its average life and original currency. “CER” is an inflation adjustment coefficient based on changes in the consumer price index, which became effective as from February 3, 2002 and it is published by I.N.D.E.C. (Instituto Nacional de Estadística y Censos— Argentine Institute of Statistics and Census).

The guaranteed loans were not subject to Ministry of Economy Resolution No. 73/02, which established the deferral of payments of the Federal Government debt.

As of December 31, 2004, and 2003, the guaranteed loans were presented in the consolidated financial statements in “Loans— To the non-financial government sector” account in an aggregate amount of 720,146 and 337,639, net of discounts, respectively. (See note 4.4.d)).

2)     Provincial debt exchange— Law No. 25,570

On August 27, 2002, through Decree No. 1579, the Federal Executive instructed the Provincial Development Trust Fund to voluntarily convert provincial debts in the form of Government Securities, Bonds, Treasury Bills, or Loans into Secured Bonds.

Later, on October 25, 2002, the Ministry of Economy issued Resolution No. 539/02 describing the mechanism to exchange eligible provincial debt provided in sections 1 and 12, Presidential Decree No. 1,579/02.

During the year ended December 31, 2003, the Bank received the bonds requested amounting to 722.931.

During the year ended December 31, 2004, the Bank applied a portion of its holdings of Secured Bonds to acquire the bonds to be given to its depositors in exchange for rescheduled deposits. (See note 1. c)).

As of December 31, 2004 and 2003, Secured Bonds were recorded in the consolidated financial statements in the “Unlisted government securities” account for 819,498 and 685,314, respectively (See Note 4.4.b)1)).

3)     Exchange of Federal government debt

Presidential Decrees Nos. 1,733/04 and 1,735/04 were issued on December 10, 2004. They established for the restructuring of the Argentine Government bonds; the payment of such bonds was deferred as provided for in Section 59, Law No. 25,827 through a domestic and international exchange transaction. Such transaction should be carried out within the scope and terms and conditions detailed in such decrees and in the offer prospectus.

The restructuring comprised a global exchange offer with holders in the United States, Argentina and several countries in Europe and Asia. The government securities eligible for restructuring include all securities issued before December 31, 2001. Three new debt securities would be issued with a separable unit linked to GDP.

F-16

Banco Macro Bansud and Subsidiaries

In January 2005, the exchange was launched in Argentina and the terms and conditions of the offer were presented to the bondholders. The terms for such offer were to last 5 weeks and the final date was February 25, 2005.

As of December 31, 2004, and 2003, the government securities subject to the abovementioned debt restructuring amount to 17,146 and 17,209, respectively, and are further described in note 21.

The following table condenses the main impacts of the above mentioned exchange transactions as of the date that each exchange occurred:

									Other Receivables
	Government								from Financial				Total
	Securities				Loans				Intermediation				cumulative
													effect
	Increase		Decrease		Increase		Decrease		Increase		Decrease		Gain/(loss)
Guaranteed Loans— Presidential Decree N° 1,387/01 (includes inflation adjustment)(note 1.2.b).1)		—		342,753		498,469		11,458		—		144,930		(672	)
Provincial Debt Exchange— Presidential Decree 1,579 (note 1.2.b).2)		708,413		36,655		—		119,220		—		552,538		—
Exchange of Federal Government Debt— Presidential Decree 1,733/04 and 1,735/04 (note 1.2.b)3)		12,616		12,306		—		—		—		—		310
		721,029		391,714		498,469		130,678		—		697,468		(362	)

c)     Deposits— Rescheduling of Amounts— Exchange for Federal Government bonds (Exchanges I
and II)

As a result of the economic crisis, the Federal Executive issued Decree No. 1,570/01 establishing severe restrictions on cash withdrawal from financial institutions. Subsequently, a number of regulations were issued to reschedule the maturity of certain deposits existing in the financial system. These rescheduled deposits are known as CEDROS.

During 2002, as part of the process related to lifting restrictions on bank deposits, the Federal Executive Branch established Exchanges I and II for financial system deposits. Through those exchanges, holders of deposits could opt to receive government securities in consideration for their rescheduled deposits.

By Decree No. 739/03 of April 1, 2003, the Federal Executive granted depositors the option to secure the release of their rescheduled dollar denominated deposits pesified at the Ps.1.40 = USD1 exchange rate and adjusted by C.E.R. As of May 23, 2003, (deadline for exercising the option), the amount of deposits redeemed by the Bank was 122,427.

In relation to Exchanges I and II, the total of CEDROS settled by the Bank amounted to 353,389. As of December 31, 2004, practically all exchanges were settled.

As of December 31, 2004 and 2003, the Bank had 69,791 and 64,278 as other deposits, respectively, for rescheduled deposits which have not been exchanged (CEDROS plus adjustments by C.E.R. plus accrued interest).

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Banco Macro Bansud and Subsidiaries

d)     Legal actions

The measures adopted by the Federal Executive in 2002 with respect to the situation of public emergency in political, economic, financial and foreign exchange matters triggered a number of legal actions brought by individuals and companies against the Federal Government, the Central Bank and financial institutions. The legal actions claimed that some of those measures infringed upon their constitutional rights. These actions are known as amparos.

In the particular case of deposits denominated in foreign currency, the trial courts ordered, in some cases, the partial or total reimbursement of such deposits, either in foreign currency or at the free-exchange rate at the time of reimbursement, until a final pronouncement was made as to the constitutionality of the pesification of foreign-currency deposits, as previously established.

Some of such claims were filed with the Argentine Supreme Court, which determined whether the judgments granted by the lower courts were constitutional or not, depending on each particular case. The last judgment by the Supreme Court established the constitutionality of the process but some aspects remained undefined. It should be noted that the effects of the Supreme Court’s judgment were limited to the parties to each case, which may change in the future. Nevertheless, lower courts usually follow and apply Supreme Court precedents.

If the courts make a final favorable decision on the constitutionality of pesification of foreign-currency deposits, the Bank would be entitled to require the reimbursement of the amounts paid in excess of the amount required by effective regulations. Conversely, if the courts decide that deposits should be settled in foreign currency at the higher rates, there may be further claims against the Bank. However, the Bank’s management believes that these additional payments should be eventually included in the compensation mechanisms implemented to compensate financial institutions for the effects of the asymmetrical pesification of their assets and liabilities.

As of the date of the respective reports, there still is uncertainty as to the final court decisions and their potential effects on: (i) the recoverability of the capitalized amounts— see below; (ii) court’s decisions which required the Bank to pay to certain depositors a portion of the original amount in US dollars; and (iii) the contingent risk of potential additional unasserted legal claims.

In light of the complexity of the issue, and considering that those situations may result in gain or loss contingencies, whose likelihood of occurrence is considered to be more than remote but less than probable, the related amount or range of the amount involved cannot be estimated.

According to Communiqué “A” 3,916 dated April 3, 2003, the Bank carried a net capitalized amount of 50,037 and 44,730 as of December 31, 2004, and 2003, respectively, as “Intangible assets”. These amounts represent the difference between the amount of the original foreign currency deposits converted at the higher exchange rate dictated by the courts and the amount converted at the lower exchange rate pursuant to the regulations (pesification at Ps.1.4 to USD1 exchange rate, or its equivalent in another currency, plus C.E.R.).

2. ACQUISITION OF NUEVO BANCO SUQUIA S.A.

On April 27, 2004, the Bank decided to participate in the bidding process for the purchase of Nuevo Banco Suquía S.A. to increase its market share, under the framework of a competitive bidding process in which three other bidders participated. The Evaluation Committee for the bidding process carried out by Banco de la Nación Argentina (B.N.A.) for the sale of 100% of the shares (15,000,000 shares of common stock entitled to one vote per share) of Nuevo Banco Suquía S.A. preliminarily awarded the winning bid to the Bank. The stock purchase agreement was signed on September 30, 2004.

F-18

Banco Macro Bansud and Subsidiaries

On December 9, 2004, Central Bank’s Board of Governors issued Resolution No. 361, whereby it approved the transfer of shares representing 100% of the capital stock of Nuevo Banco Suquía S.A. in favor of the Bank.

On December 22, 2004, the shares of Nuevo Banco Suquía S.A. were transferred to the Bank, in consideration of which the latter paid 16,407 in cash. Because Nuevo Banco Suquía S.A.’s shareholders’ equity (book value) amounted to 16,890, the Bank recorded a negative goodwill of 483.

Upon the transfer, pursuant to Central Bank’s rules, the value of Nuevo Banco Suquía S.A.’s assets and liabilities was as follows:

Cash	336,266
Government and private securities	475,029
Loans	862,769
Other receivables from financial intermediation	428,163
Investments in other companies	1,893
Other receivables	21,872
Bank premises and equipment	47,678
Other assets	25,845
Total assets	2,199,515
Deposits	1,548,049
Other liabilities from financial intermediation	599,635
Other liabilities	11,949
Provisions	17,778
Items pending allocation	5,214
Total liabilities	2,182,625
Total shareholders’ equity	16,890
Total liabilities and shareholders’ equity	2,199,515

On the same date, the Bank made an irrevocable capital contribution for future capital increases in the amount of 288,750, as agreed in the bid, and increased Nuevo Banco Suquía S.A.’s shareholders’ equity by the same amount. Additionally, on the same date, at the Regular and Special Shareholders’ Meeting of Nuevo Banco Suquía S.A. the former shareholders approved a motion to capitalize those irrevocable capital contributions, and, therefore, the capital stock increased to 303,750 (303,750,000 shares of common stock entitled to one vote per share).

The results of operations of Nuevo Banco Suquía S.A. were included in these consolidated financial statements as from December 22, 2004. As of December 31, 2004, the shareholders’ equity of Nuevo Banco Suquía S.A. amounted to 307,298.

The following pro forma information is presented to show the results of operations for the year ended December 31, 2004, if both banks had operated on a consolidated basis as from January 1, 2004. The balances for the year ended December 31, 2004 were considered and intercompany transactions were eliminated. These pro forma results are not necessarily indicative of the results of the consolidated entity may have in the future or would have had if merged as from January 1, 2004.

F-19

Banco Macro Bansud and Subsidiaries

	Banco Macro
	Bansud S.A.—			Nuevo Banco			Pro Forma Central
	Consolidated			Suquía S.A. (*)			Bank’s Rules
Financial income		427,900			181,191			609,091
Financial expense		(133,204	)		(105,315	)		(238,519	)
Gross intermediation margin— Gain		294,696			75,876			370,572
Provision for loan losses		(36,467	)		(124,644	)		(161,111	)
Service charge income		154,425			90,924			245,349
Service charge expense		(24,963	)		(24,182	)		(49,145	)
Administrative expenses		(254,980	)		(109,648	)		(364,628	)
Net income/(loss) from financial intermediation		132,711			(91,674	)		41,037
Other income		109,589			46,937			156,526
Other expenses		(48,651	)		(19,742	)		(68,393	)
Net income/ (loss) before income tax		193,649			(64,479	)		129,170
Income Tax		(672	)		—			(672	)
Net income/ (loss) for the year		192,977			(64,479	)		128,498

(*) Including income (loss) from January 1, 2004, through December 21, 2004 (prior to the acquisition date).

As of December 31, 2004, Nuevo Banco Suquía S.A. reported a payable to the Central Bank (resulting from the credit assistance for illiquidity) of 260,500. As of such date, these liabilities were recorded in the “Other liabilities from financial intermediation— Central Bank of Argentina” account. On February 2, 2005, in accordance with Central Bank Communiqué “A” 4,268, the Bank paid in cash to settle such debt.

On March 14, 2005, as established in Central Bank’s Board of Governors point 7 of Resolution No. 361. Banco Macro Bansud S.A. sold 50,000 shares of Nuevo Banco Suquía S.A. to three shareholders for 50; no gain or loss was recognized. Therefore, as from that date, Banco Macro Bansud S.A. holds 99.984% of the capital stock and votes of Nuevo Banco Suquía S.A.

Also, on April 8, 2005, in accordance with the ruling issued by Argentine anti-trust authorities dated March 7, 2005, the Department of Technical Coordination of the Ministry of Economy and Production authorized Banco Macro Bansud S.A. to acquire the capital stock of Nuevo Banco Suquía S.A.

3.     BANK OPERATIONS

3.1.    Acquisition of Banco Bansud S.A. and merger into Banco Macro S.A.

On December 19, 2001, the former Banco Macro S.A. and Banco Nacional de México S.A. (Banamex) executed a stock purchase agreement for 38,377,021 issued and outstanding shares, representing 59.58% of capital stock and 76.17% of voting rights in the former Banco Bansud S.A. (“Bansud”). The acquisition was effective January 4, 2002. The price for such purchase was set at 65,000 payable to Banamex on December 31, 2003. However, this price could be adjusted taking into account the final recovered value obtained by the Bank for the Subordinated Saneo Certificates. As of December 31, 2003, the liability originally recorded for 65,000 was reversed and credited to income for the year then ended because such contingent purchase price was not paid. On August 12, 2004, Banamex assigned the collection rights to third parties. The new creditor notified the Bank that there were no price adjustments to be made and no amount was due.

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Pursuant to the agreement mentioned above, all Banamex’s rights over the irrevocable contributions for future capital increases were assigned to former Banco Macro S.A.; therefore, considering such transaction, former Banco Macro S.A. acquired 81,225% of former Banco Bansud S.A.

On March 28, 2003, Banco Macro S.A. and Banco Bansud S.A. agreed to and announced the terms of their Merger. The Central Bank’s Board of Governors and the C.N.V. (Comisión Nacional de Valores— Argentine Securities and Exchange Commissions) authorized the merger of Banco Macro S.A. (absorbed company) with and into Banco Bansud S.A. (surviving company). The latter changed its name to Banco Macro Bansud S.A. In addition, the C.N.V. authorized the public offering of shares to be delivered in exchange as a result of the merger.

On December 17, 2003, the name change, the merger, the amendments to the bylaws of Banco Macro Bansud S.A. and the capital increase (see Note 10) were registered with the Public Registry of Commerce of the City of Buenos Aires.

In addition, through Communiqué “B” 8,085 dated December 19, 2003, the Central Bank reported that, as previously authorized effective December 17, 2003, Banco Macro S.A. merged with and into Banco Bansud S.A. and changed its name to Banco Macro Bansud S.A.

3.2.    Agreement with the Misiones Provincial Government

In 1997, due to the merger of Banco de Misiones S.A. with and into the former Banco Macro S.A., Banco Macro Bansud S.A., as surviving company, was appointed the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent, for a term of five-year term as from January 1, 1996.

On November 25, 1999, the Bank and the Misiones Provincial Government executed a special-relationship extension agreement. The term agreement mentioned in the preceding paragraph was thereby through December 31, 2007, and the prices of the services to be rendered over such period were set. In addition, the Bank was given the option to extend the agreement a further two years, i.e. through December 31, 2009.

As of December 31, 2004 and 2003, the amounts of deposits held by the Misiones Provincial Government in the Bank are 257,465 (includes 21,816 of deposits subject to court proceedings) and 109,808 (includes 21,828 of deposits subject to court proceedings), respectively.

3.3.    Agreement with the Salta Provincial Government

Due to the merger of Banco de Salta S.A. with and into the former Banco Macro S.A., for a ten-year term as from March 1, 1996, Banco Macro Bansud S.A., as surviving company, became the Provincial Government’s exclusive financial agent and the mandatory channel for all the Province’s payments, deposits and collections.

In addition, on February 22, 2005, the Ministry of the Treasury and Publics Works of the Province of Salta approved the addendum to the special relationship agreement, which extended this agreement term, and its supplementary, extension and additional agreements for a ten-year term as 2005.

As of December 31, 2004 and 2003, the amounts of deposits held by the Salta Provincial Government in the Bank are 255,794 (includes 38,614 of deposits subject to court proceedings) and 140,097 (includes 32,899 of deposits subject to court proceedings), respectively.

3.4.    Agreement with the Jujuy Provincial Government

Due to the merger of Banco de Jujuy S.A. with and into the former Banco Macro S.A., for a term of ten years as from January 12, 1998, Banco Macro Bansud S.A., as surviving company, shall be the

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Provincial Government’s exclusive financial agent and the mandatory channel for all the Province’s payments, deposits and collections.

As of December 31, 2004 and 2003, the amounts of deposits held by the Jujuy Provincial Government in the Bank are 286,696 (includes 29,406 of deposits subject to court proceedings) and 126,067 (includes 20,800 of deposits subject to court proceedings), respectively.

3.5.    Acquisition of assets and liabilities of the former Scotiabank Quilmes S.A.

Through Resolution No. 523 of August 20, 2002, the Central Bank’s Board of Governors approved the formation of Laverc Trust and the transfer of certain assets of Scotiabank Quilmes S.A. (SBQ) into this trust. The trust issued Class “A”, “B” and “C” certificates of participation. In such resolution, the Central Bank also approved to the transfer of 35% of Class “A” and “B” certificates to the former Banco Bansud S.A., in compensation for the deposits assumed by the Bank. In addition, the abovementioned Resolution authorized the former Banco Bansud S.A. to incorporate 36 branches of SBQ.

The Bank incorporated Class “A” and “B” certificates of participation and the liabilities assumed at the values calculated according to Central Bank’s rules and the abovementioned resolutions, which were similar to the fair values thereof as of the transaction date. As a result, this transaction had no material effects on the Bank’s shareholders’ equity because assets acquired and liabilities assumed had the same value.

Related to this transaction, on August 31, 2002, Seguro de Depósitos S.A. (SEDESA) and the former Banco Bansud S.A. entered into a loan agreement, the latter thereby received 66,500 for a ten-year term. Such loan was guaranteed by government securities. In March 2003 and as established by the abovementioned agreement, the former Banco Bansud S.A. exercised its right to prepay the loan, assigning such securities to SEDESA. Upon assignment of the securities, they were recorded at their market value in the amount of 18,335. The difference between the book values of the liabilities paid and the securities assigned 48,165 was recorded under “Net income (loss) on government and private securities” in the statement of income for the year ended December 31, 2003.

As a result of the reconciliations made, and as evidence by the minutes of the meeting held at the Central Bank on January 4, 2005, the adjusted nominal value of Class “A” certificates of participation and the proportional interest held by Banco Macro Bansud S.A. over the total amount of certificates of participation were determined. Such meeting was attended by the court-appointed administrators of SBQ, Banco Macro Bansud S.A. and the trustee of the LAVERC Trust, among others.

As of December 31, 2004, the Bank recorded an amount of 6,774 determined as a result of the reconciliations mentioned above under “Other receivables from financial intermediation— Other not included in debtors classification standards”. This receivable was paid by the LAVERC trust after such year-end.

3.6.    Agreement and and purchase of certain assets of Sociedad Anónima del Atlántico Compañía Financiera (SADELA)

As a result of the effects of the economic and financial crisis undergone by Argentina since late 2001, which are further described in note 1.2., SADELA’s results of operations decreased, which caused it to lose almost all its equity by late 2003.

Accordingly, on October 9, 2003, the Central Bank, through Resolution No. 401, approved SADELA’s reorganization under the provisions of section 35 bis of Financial Institutions Law (reorganization of financial institutions) for the benefit of its depositors.

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Banco Macro Bansud and Subsidiaries

On February 13, 2004, the Central Bank’s Board of Governors issued Resolution No. 46 regarding the transfer of secured assets and liabilities from SADELA under the framework of Financial Institutions Law section 35 bis, Title II (Exclusion Resolution).

The Exclusion Resolution, recital 36, recognized that the obligations undertaken by Banco Macro Bansud S.A. regarding the SADELA deposits shall be exclusively limited to the recorded balances thereof, and that the Bank shall not become successor to SADELA with respect to such deposits.

On March 18, 2004, Banco Macro Bansud S.A., SEDESA and SADELA executed the Agreement for the Sale and Assignment of certain assets of SADELA pursuant to Central Bank Resolution No. 46. In addition, on the same date, Banco Macro Bansud S.A. and SADELA executed the “Memorandum of Compliance with section 35 bis, Financial Institutions Law by SADELA”, for the purpose of setting rules, rights, obligations and conditions under which SADELA transferred and Banco Macro Bansud S.A. received the ownership of assets in the amount of 33,058, free from any encumbrance or title restriction. Such transaction did not bring about any significant effects on the Bank’s shareholders’ equity.

The Bank incorporated the assets and liabilities assumed at the values calculated according to Central Bank’s rules and the abovementioned resolutions, which were similar to the fair values thereof as of the transaction date. This transaction had no material effects on the Bank’s shareholders’ equity because assets and liabilities were assumed in the same amount.

3.7.    Uniones Transitorias de Empresas (JOINT VENTURES)

a)     Banco Macro—Siemens Itron

The Bank participates in the “Banco Macro— Siemens Itron— Unión Transitoria de Empresas” (a joint venture jointly controlled having an interest of 50%), under the agreement entered into by the former Banco Macro S.A. and Siemens Itron Business Services S.A. on April 7, 1998. The current subject-matter of the Unión Transitoria de Empresas (joint venture) agreement is to provide a provincial data processing center to manage tax-related assets, to modernize tax collection systems and procedures in the province of Salta, and to manage and recover the tax and municipal assessment debt.

As of December 31, 2004 and 2003, the net assets amounted to 3,930 and 2,957, respectively, and net income of the joint venture amounted to 3,738 and 2,272, respectively. Under Central Bank rules, this interest is consolidated through the proportionate consolidation method (both net assets and income).

b)     BMB M&A

On October 22, 2004, the Bank entered into a joint venture agreement named “BMB M&A— Unión Transitoria de Empresas” (jointly controlled having an interest of 50%) with Montamat & Asociados S.R.L. The subject-matter of such agreement will be to render audit services related to oil & gas royalties and tax easements in the province of Salta to optimize the collection thereof.

As of December 31, 2004, the joint venture had not yet begun operations.

4. SIGNIFICANT ACCOUNTING POLICIES

The preparation of the Bank’s financial statements requires Management to make, in certain cases, estimates and assumptions to determine the book amounts of assets and liabilities, as well as the disclosure of contingent assets or liabilities as of each of the dates of presentation of the accounting information included in these financial statements.

Management records entries based on the best estimates according to the likelihood of occurrence of different future events and the final amounts may differ from such estimates, which may have a positive or negative impact on future periods.

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Banco Macro Bansud and Subsidiaries

4.1.    Consolidation and basis of presentation

The Consolidated Financial Statements have been prepared under accounting principles issued by the Central Bank (Central Bank’s rules).

Certain disclosures related to formal legal requirements for reporting in Argentina have been omitted for purposes of these Consolidated Financial Statements, since they are not required for the United States Securities and Exchange Commission (“SEC”) reporting purposes.

In accordance with Central Bank’s rules, the presentation of the parent company’s unconsolidated financial statements is mandatory. Consolidated financial statements are to be included as supplementary information to the unconsolidated financial statements. For the purpose of these financial statements, certain unconsolidated financial statements have been included in note 35.

Under Central Bank’s rules and F.A.C.P.C.E. (Federación Argentina de Consejos Profesionales de Ciencias Económicas— Argentine Federation of Professional Council in Economic Sciences) Technical Resolution No. 4, Banco Macro Bansud S.A. has consolidated the following subsidiaries:

					Percentage held of						Equity
											investment
	Shares										amounts as of
					Capital						December 31,
Company	Class		Number		stock			Votes			2004
Nuevo Banco Suquía S.A.(1)		Common		303,750,000		100.000	%		100.000	%		306,815
Sud Bank & Trust(4)		Common		9,816,899		99.999	%		99.999	%		91,354
Sud Valores S.A. Sociedad de Bolsa (2)(4)		Common		940,500		99.000	%		99.000	%		8,853
Sud Inversiones & Análisis S.A.(4)		Common		199,998		99.999	%		99.999	%		2,756
Sud Valores S.G.F.C.I.S.A.(3)(4)		Common		47,750		19.100	%		19.100	%		249
Macro Valores S.A.(4)		Common		1,349,290		99.95	%		99.95	%		5,514

(1)	From December 22, 2004.
(2)	Banco Macro Bansud S.A. has an indirect equity interest in Sud Valores S.A. Sociedad de Bolsa of 1% (through its subsidiary Sud Inversiones & Análisis S.A.— S.I.A.S.A.), in addition to the direct equity interest of 99% in such company.
(3)	Consolidated through S.I.A.S.A., its parent company (percentage held of capital stock and votes: 80.90%).
(4)	Consolidated as of December 31, 2002, 2003 and 2004.

The intercompany transactions have been eliminated.

As of December 31, 2004, 2003, and 2002, prior to consolidation, the financial statements of Sud Bank & Trust were conformed to accounting principles generally accepted in the City of Buenos Aires, Argentina (Argentine GAAP) and Central Bank’s rules. As they were originally stated in United States Dollars, they were translated into pesos following the procedures indicated below:

a)     Assets and liabilities were translated at Central Bank’s benchmark US dollar exchange rate as of the closing date on the last business day of the year.

b)     Capital stock, additional paid-in capital and irrevocable contributions were translated at the effective exchange rate as of the date on which such contributions were made.

c)     Retained earnings were estimated by the difference between assets, liabilities and owners’ contributions as indicated above.

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Banco Macro Bansud and Subsidiaries

d)     The amounts of income statement accounts were translated into pesos, as described in a) above. The difference between the addition of amounts and the lump-sum income (loss) for each period (difference between retained earnings at beginning of year and retained earnings as of period-end) was recorded in the consolidated statements of income in the “Financial income— Other” or “Financial expense— Other” accounts, as the case may be.

4.2.    Comparative information

The Bank’s consolidated financial statements as of December 31, 2003, and 2002, were retroactively restated to include prior period adjustments for the items included in note 7.

Additionally, the preparation of the Bank’s stand-alone financial statements as of December 31, 2002, was changed for comparative purposes, since the merger with and into former Banco Bansud S.A. was given retroactive effect to January 1, 2002.

4.3.    Restatement in constant pesos

Argentine GAAP requires financial statements to be stated in constant pesos. In a monetary stability context, the nominal currency is used as constant currency, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the domestic WPI (Wholesale Price Index) published by the I.N.D.E.C. under F.A.C.P.C.E. Technical Resolution No. 6 restatement method.

The Bank’s consolidated financial statements as of December 31, 2003, and 2002, recognize the changes in the peso purchasing power until February 28, 2003, under Presidential Decree No. 664/03, I.G.J. General Resolution No. 4/03, C.N.V. General Resolution No. 441, and Central Bank Communiqué “A” 3,921. Professional accounting standards provide that the restatement method established by Technical Resolution No. 6 should have been discontinued as from October 1, 2003. See note 6.a) 1).

The accounting information is restated in constant currency on a monthly basis, using INDEC’s domestic WPI measurements.

The restatement coefficient for a given month will result from dividing the index value at the end of the month by the value at the beginning.

The procedure is as follows:

i)     Assets and liabilities are classified into monetary and non-monetary. Monetary assets and liabilities are those that are not adjusted for inflation, but generate a monetary gain (loss). The effect of inflation is broken down depending on its origin, i.e., monetary gain (loss) on financial intermediation, monetary gain (loss) on other transactions and monetary gain (loss) on other operating expenses.

ii)     Non-monetary assets and liabilities, shareholders’ equity and statement-of-income accounts are restated.

4.4.    Valuation methods

Main valuation methods used to prepare the consolidated financial statements under Central Bank’s rules are the following:

a)     Assets and liabilities denominated in foreign currency:

The assets and liabilities denominated in US dollars were valued at Central Bank benchmark US dollar exchange rate effective as of the closing date of transactions on the last business day of each year-end. Additionally, assets and liabilities denominated in other foreign currencies were converted at Central

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Bank’s benchmark exchange rate. Foreign exchange differences were recorded in the income statement for each year-end as foreign exchange, net.

b)     Government and private securities:

b.1)     Government securities:

† Listed:

i)     Holdings in investment accounts— compensation received from the Federal government: They were stated at face values, plus interest accrued under the issuance terms. Under Central Bank Communiqué “A” 3,785, they were translated into pesos, as described in Note 4.4.a),

ii)     Holdings in investment accounts— bonds received from customers as loan settlements: As of December 31, 2003, they were valued under Central Bank Communiqué “A” 3,671, as supplemented, at the settlement value, calculated as instructed by Central Bank Communiqué “A” 3,828 and updated by C.E.R. value accrued as of such date. These bonds were recorded at the same book value as the loans settled.

iii)     Other holdings for trading or intermediation transactions: they were stated at the effective quoted price for each security as of each year-end. Differences in quoted market values were recorded in the income statement.

† Unlisted:

i)     Secured bonds under Presidential Decree No. 1,579/02: as of December 31, 2004, and 2003, they were valued as established by Central Bank Communiqué “A” 3,911, as supplemented, as explained in note 4.4.c) In addition, as of December 31, 2003, this includes secured bonds to be submitted for the subscription for the direct exchange of federal government bonds to be delivered to depositors, which were stated at the settlement value of liabilities.

ii) Argentine External Bills Coupons 2004 series 74, Tax Credit Certificates, other expired and unpaid government securities and other holdings: as of December 31, 2004, they were valued under Central Bank Communiqué “A” 4,084, as supplemented. As of December 31, 2003, they were valued under Central Bank Communiqué “A” 3,911, as supplemented, as explained in note 4.4.c).

† Instruments issued by the Central Bank:

i)     Listed— LEBAC (Letras del Banco Central— Central Bank bills): they were valued at the effective quoted price as of December 31, 2004. Market value differences were recorded in the income statement.

ii)     Unlisted— LEBAC: they were valued at their face value, adjusted by C.E.R., plus interest accrued until each year-end, applying the rates stipulated in their issuance conditions.

iii)     Listed— NOBAC (Notas del Banco Central— Central Bank notes): they were valued at their effective quoted price of the respective note as of December 31, 2004. Market value differences were recorded in the income statement.

iv)     Unlisted— NOBAC (Notas del Banco Central— Central Bank notes, adjusted by C.E.R.): as of December 31, 2004, they were valued at their face value, adjusted by C.E.R., plus interest accrued until year end, applying the rates stipulated in their issuance conditions.

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Banco Macro Bansud and Subsidiaries

b.2)     Investments in listed private securities:

†	Corporate bonds: As of December 31, 2004, they were valued at the effective quoted price at year-end. Market value differences were recorded in the income statement.
†	Debt securities of financial trusts: They were valued at the effective quoted price at year-end. Market value differences were recorded in the income statement.
†	Certificates of participation in financial trusts: As of December 31, 2004, they were valued at the effective quoted price at year-end. As of December 31, 2003, they were valued at acquisition cost, plus income accrued as of year-end. As of December 31, 2003, the necessary allowances were recorded, pursuant to Central Bank Communiqué “A” 2,729, as supplemented. Such net value does not exceed the value arising from the shareholders’ equities of the respective trusts’ financial statements as of December 31, 2003, considering the Bank’s percentage of holdings.
†	Shares: they were valued at their closing market price. Market value differences were recorded in the income statement.
†	Mutual funds: valued at the value of the shares as of each year-end. Value differences were recorded in the income statement.

The Bank uses the specific identification method in determining the cost of investments sold (not classified as trading).

c)     Assets included in Central Bank Communiqué “A” 3,911, as supplemented:

As of December 31, 2004, such assets include: (i) secured bonds under Presidential Decree No. 1,579/02, (ii) unlisted government securities— other holdings, (iii) guaranteed loans under Presidential Decree No. 1,387/01; (iv) assistance granted to the non-financial provincial government sector and (v) other assistance granted to the non-financial government sector.

As of December 31, 2003, such assets include: (i) secured bonds under Presidential Decree No. 1,579/02 (except for secured bonds to be submitted for the subscription of federal government bonds to be delivered to depositors); (ii) unlisted government securities— other holdings; and (iii) assets for the debt exchange provided in Presidential Decree No. 1,387/01 (guaranteed loans), financial assistance granted to the non-financial provincial governments sector submitted for the provincial debt exchange and other financial assistance granted to the non-financial government sector.

The assets valued under Central Bank Communiqué “A” 3,911 were valued at the lower of their present values or notional values. If the present value is greater than the notional value (as defined in point 4 of Central Bank Communiqué “A” 3,911), the amount is debited to asset account and the credit is recorded in an asset offset account. If the present value is less than the notional value, the difference is recorded as a loss in the income statement and the offsetting credit is recorded in the asset account. The amounts recorded in the asset offset account are adjusted each month based on the values calculated in accordance with the communiqué.

In the case of peso-denominated instruments which include indexation clauses, the present value was calculated based on cash flows according to the contractual conditions (taking into account, if applicable, the accumulated C.E.R. accrual by month-end), discounted at the interest rates established in point 2 of such Communiqué (for the year ended December 31, 2004: 3.50% and for the year ended December 31, 2003: 3%). Such calculations were made following specific guidelines established in such Communiqué (present value rate, certain effects determined for the aggregation of securities and guaranteed loans, among others).

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In the case of peso-denominated instruments which do not include indexation clauses, Central Bank Communiqué “A” 4,163 established the methodology to calculate their present values. Thus, the interest rate used to discount the cash flows for the fiscal year ended December 31, 2004, was 3.71%.

d)     Loans and Other Assets from the Non-Financial Government Sector:

d.1)     Guaranteed Loans (established by Presidential Decree No. 1,387/01)

Such Guaranteed Loans were valued, as explained in note 4.4.c) under Central Bank Communiqué “A” 3,911, as supplemented. As of December 31, 2004 and 2003 the technical value, carrying amount and discount of such loans were as follows:

	Technical value		Carrying amount		Discount
2004		754,933		720,146		34,787
2003		337,639		337,639		—

d.2)     Loans to the non-financial government sector and Other financial exposure to the non-financial government sector:

They were valued, as explained in note 4.4.c) under Central Bank Communiqué “A” 3,911, as supplemented.

e)     Interest accrual:

Interest has been accrued based on the compound interest method when earned or incurred. Interest on foreign currency and instruments whose maturity does not exceed 92 days is accrued based on a simple interest formula.

The Bank suspends the accrual of interest generally when the related loan is non-performing and the collection of interest and principal is in doubt, generally after 90 days. Accrued interest remains on the Bank’s books and is considered a part of the loan balance when determining the allowances for loan losses. Interest is then recognized on a cash basis after reducing the receivable of accrued interest, if applicable.

f)     C.E.R. accrual:

As of December 31, 2004, and 2003, receivables and payables were adjusted by C.E.R. as follows:

†	Guaranteed loans: as explained in note 4.4.d)1).
†	Other loans and receivables from sale of assets: Under Central Bank Communiqué “A” 3,507, as supplemented, the payments through September 30, 2002, were made under the original terms of each transaction and were recorded as prepayments. From February 3, 2002, the principal was adjusted by C.E.R. prevailing on December 31, 2004, and 2003, as the case may be.
†	Deposits and other assets and liabilities: C.E.R. adjustment was applied as of December 31, 2004, and 2003, respectively.

g)     Allowance for loan losses and provision for contingent commitments:

These provisions have been calculated based on the estimated uncollectibility risk of the Bank’s credit portfolio. This results from evaluating the degree of debtor’s compliance with payment terms and the guarantees and collateral supporting the respective transactions under Central Bank Communiqué “A” 2,950, as supplemented.

In cases where loans with specifically allocated provisions are settled and the specific provisions that had been established in previous years are greater than what is deemed necessary, the excess is reversed and recorded in current year profit.

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Banco Macro Bansud and Subsidiaries

Recoveries on charged off loans are recorded directly to income.

The Bank also assesses the credit risk associated with off-balance sheet contingent commitments and determines the appropriate amount of credit loss liability that should be recorded. The liability for off-balance sheet credit exposure related to contingent commitments is included in the “Provision for contingent commitments” account.

h)     Loans and deposits of government securities:

They were valued at the quoted price of each type of security, plus accrued interest. Market value differences were recorded in the income statement.

i)     Other receivables from financial intermediation and Other liabilities from financial intermediation:

i.1)     “Amounts receivable from spot and forward sales pending settlement” and “Amounts payable for spot and forward purchases pending settlement”:

They were valued based on the prices agreed upon for each transaction, plus related premiums accrued as of each year-end.

i.2)     “Securities and foreign currency receivable from spot and forward purchases pending settlement” and “Securities and Foreign currency to be delivered under spot and forward sales pending settlement”:

They were valued at the quoted prices of the respective securities and foreign currency as of such dates. Market value differences were recorded in the income statement.

i.3)     Compensation and Federal Government Coverage Bonds (BODEN 2012) to be received (Presidential Decree No. 905/02):

The Compensation and Federal Government Coverage Bonds to be received by the Bank were recorded under “Other receivables from financial intermediation— Other receivables not covered by debtors classification regulations”. They were stated at their nominal value, plus interest accrued according to the issuance conditions, translated into pesos as described in note 4.4.a), and net of adjustments proposed by the Central Bank in calculating the compensation (see note 1.2.a)). The related liabilities of Federal Government Compensation Bonds payable in Argentine pesos maturing in 2007 (BODEN 2007) are presented in “Other liabilities from financial intermediation”.

i.4)     Debt securities and certificates of participation in financial trusts:

†	Laverc: the Bank carried receivables from the Laverc Financial Trust amounting to 6,774 (collected after year-end) and 20,172, as of December 31, 2004 and 2003, respectively. In addition, as of December 31, 2003, the Bank carried Class “A” and “B” certificates of participation, amounting to 46,669. Such assets have been valued at their cost amount plus the related indexation and interest, less payments and redemptions made by the trust.
†	Lujan: Certificates of participation were valued at the face value of the certificates transferred to the Bank, plus interest accrued as of each year-end amounting to 20,588 and 41,979, as of December 31, 2004 and 2003, respectively.
†	San Isidro A, B and C: Class “A” and “B” certificates of participation were valued at the face value of the certificates transferred to the Bank. They were increased by accrued interest plus C.E.R. adjustment through each year-end and thus amounting to 13,101 and 12,312, respectively. Class “C” certificates of participation were valued at the face value of the certificates transferred to the Bank. They were increased by the interest accrued through each year-end, thus amounted to 3,681 as of such dates. This value does not exceed the one included in the financial statements of the trust.

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Banco Macro Bansud and Subsidiaries

†	Saneo Series 01 Commercial Portfolio: as of December 31, 2003, they were valued based on their acquisition cost, considering the accrued income receivable as of each year-end, net of collections and the allowances for impairment in value set by the trust. They were recorded as of December 31, 2003 in the net amount of 12,041.
†	Other: they were valued on the basis of their cost, considering the income accrued as of each year-end, net of collections and allowances recorded.

i.5)     Other Unlisted Corporate Bonds:

They were valued at acquisition cost plus income accrued as of each year-end.

j)     Assets subject to financial leases:

As of December 31, 2004, they were valued at the net investment in the lease less unearned income and calculated in accordance with the conditions agreed upon in the respective agreements, by applying the interest rate imputed therein.

k)     Investments in other companies:

k.1)     Non-controlled financial institutions (less than 50% ownership interest), supplementary and authorized activities:

In Argentine pesos: they were valued at acquisition cost, plus the nominal value of dividends received, restated as explained in note 4.3.

In foreign currency: they were valued at the acquisition cost in foreign currency, plus the nominal value of dividends received, converted into pesos in accordance with the criterion stated in note 4.4.a).

k.2)     In other non-controlled companies (less than 50% ownership interest): they were valued at acquisition cost, plus the nominal value of dividends received, restated as described in note 4.3., net of allowances for impairment in value. Such net values do not exceed the values calculated by the equity method on the basis of the latest financial statements published by the companies.

l)     Other receivables— Federal Government Bonds receivable:

As of December 31, 2004, the Bank acquired from its depositors subscription rights over Federal Government Bonds in US dollars at LIBOR maturing in 2005, 2012 and 2013, and in Argentine Pesos maturing in 2007, for an amount of 19,706. In addition, as of December 31, 2003, it had acquired subscription rights over Federal Government Bonds in US dollars at LIBOR maturing in 2006 and 2013, for an amount of 124,704.

As of December 31, 2004, the subscription rights over Federal Government Bonds in US dollars at LIBOR maturing in 2005, 2012 and 2013 and in Argentine Pesos maturing in 2007 were valued at their respective quoted prices at year-end. As of December 31, 2003 the subscription rights over Federal Government Bonds in US dollars at LIBOR maturing in 2006 and 2013 were valued taking into consideration the quoted prices at year-end.

m)     Bank premises and equipment and other assets:

They were valued at acquisition cost, restated as explained in note 4.3., less the related accumulated depreciation calculated under the straight line method and based on the estimated months of their useful life.

The cost of maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements is added to the carrying amount of the respective fixed assets.

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n)     Intangible assets:

n.1)     Goodwill and organization and development costs (except differences due to court orders (amparos)— Non-deductible for the determination of the computable equity): valued at their acquisition cost restated as explained in note 4.3., less the related accumulated amortization based on the estimated months of useful life.

n.2)     Differences due to court orders (amparos)— Non-deductible for the determination of the computable equity: as of December 31, 2004, and 2003, the “Intangible Assets— Organization and development costs” account includes 50,037 (net of amortization for 17,916) and 44,730 (net of amortization for 6,258), respectively. These amounts resulted from the difference between the amount of the original foreign currency converted at the exchange rate (higher) applied upon payment of the constitutional right protection actions (known as amparos) and the amount recorded under regulations effective upon the payment date (pesification at Ps.1.4 to USD1 exchange rate, or its equivalent in other currency, plus C.E.R.). Additionally, and as disclosed in Communiqué “A” 3,916, as from April 2003, the amount recorded is amortized straight line over 60 months.

o)     Valuation of options

o.1)     Put options taken: As of December 31, 2004, they were valued at the agreed-upon strike price (accrual method). In addition, as of December 31, 2004, the premiums accrued were recorded under “Other receivables from financial intermediation”.

o.2)     Put options sold: Such options were stated at the values of the exchange of the bonds, plus interest and C.E.R. adjustment accrued as of those dates (accrual method). Their notional value relates to amounts representing contingent obligations assumed by the Bank under put options sold on the Federal Government Bond coupons established in Presidential Decrees Nos. 905/02 and 1,836/02, as supplemented, whose holders have requested such option Management has estimated that such guarantees have a fair value of zero. Under Central Bank rules, these are recorded in memorandum accounts.

o.3)     Forward transactions offset: As of December 31, 2004, they were valued at their quoted prices, effective at year-end (accrual method). Any quoted price-differences were charged to income for the year.

p)     Severance payments:

The Bank charges these payments directly to income when incurred.

q)     Provisions for liabilities:

As mentioned in note 3.1., the acquisition of Banco Bansud S.A. by Banco Macro S.A. gave rise to an original recording of negative goodwill of 365,560, which is the difference between the purchase price and the book value of the net equity acquired.

On July 24, 2003, the Central Bank issued Communiqué “A” 3,984, which established the methods for disclosure and amortization of negative goodwill, as well as the treatment thereof in the merger process. Such amortization methods depend on the reasons that originated such negative goodwill and are summarized below:

†	For differences between book and fair values of government securities and guaranteed loans over the period of convergence of these values.
†	For differences between book and carrying values of the loan portfolio during the effective period thereof.
†	For expected future losses, upon occurrence thereof.

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† For differences between book and fair values of non-monetary assets, during the amortization term of these assets.

The amount reversed for the fiscal year may not exceed the amount, which would have been amortized on a straight-line basis over 60 months.

Therefore, if these conditions are met, such goodwill will continue to be amortized.

As of December 31, 2004, and 2003, the referred goodwill is disclosed under “Provisions” in liabilities in the aggregate amounts of 146,224 and 219,336, respectively, net of accumulated amortization. Therefore, as of December 31, 2004, 2003 and 2002, the Bank amortized such goodwill and credited 73,112 to “Other Income— Recovered loans and allowances reversed”, using the proportion of the cap of 20% per year established in such Communiqué.

As mentioned in note 2, the acquisition of Nuevo Banco Suquía S.A. by Banco Macro Bansud S.A. gave rise to an original recording of negative goodwill of 483, which is the difference between the purchase price of the net assets acquired and the book value to those assets

Additionally, the Bank has certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. The Bank accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated.

r)     Shareholders’ equity accounts:

They are restated as explained in note 4.3., except for the “Capital Stock” account which is presented at its original value. The adjustment resulting from its restatement as explained in note 4.3. is included in the “Adjustments to Shareholders’ Equity” account.

s)     Consolidated Statement of Income Accounts:

Accounts reflecting monetary transactions (financial income and expenses, service-charge income and service-charge expenses, administrative expenses, loan losses, etc.) occurred during the fiscal year ended December 31, 2004, were computed at their historical cost; whereas for the fiscal years ended December 31, 2003, and 2002, they were restated as explained in note 4.3.

Accounts reflecting the effects of the sale, retirement or consumption of non-monetary assets were computed on the basis of the restated amounts of such assets, restated as mentioned in note 4.3.

The effect of inflation on monetary assets and liabilities through February 28, 2003, has been recognized in three accounts called “Monetary loss on financial intermediation”, “Monetary loss on operating expenses” and “Monetary loss on other operations”. These accounts include monetary transactions which were restated by applying the adjustment coefficient to the historical amounts on a monthly basis.

t)     Consolidated statement of cash flows:

For the purpose of reporting cash flows, cash and cash equivalents include amounts set forth under “Cash” (“Cash on hand”, “Due from banks Correspondents” and “Others”). The consolidated statements of cash flows were prepared using the measurement methods prescribed by the Central Bank. Cash and cash equivalents represent instruments which are readily convertible to known amounts of cash and have original maturities of 90 days or less.

The Bank paid income tax of 429, 701 and 31 for the years ended December 31, 2004, 2003 and 2002 respectively. Additionally, for such periods, the Bank paid minimum presumed income tax of 10,218 and 6,543 respectively.

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The Bank paid interest expense of 61,424, 120,989 and 113,545 as of December 31, 2004, 2003 and 2002 respectively.

5. INCOME TAX AND MINIMUM PRESUMED INCOME TAX (TOMPI)

a)     As required by Central Bank’s rules, the Bank calculates the income tax charge by applying the 35% rate to taxable income for the year, without giving effect to temporary differences between book and taxable income.

In fiscal year 1998, Law No. 25,063 established minimum presumed income tax for a ten-year term. This tax is supplementary to income tax; while the latter is levied on the taxable income for the year, minimum presumed income tax is a minimum levy assessment by applying the current 0.2% rate to the book value of certain assets. Therefore, the Bank’s tax obligation for each year will be equal to the higher of these taxes. However, if minimum presumed income tax exceeds income tax in a given year, the excess may be credited as a payment towards any income tax in excess of minimum presumed income tax that may occur in any of the following ten years, once accumulated tax loss carry forwards (NOLs) have been used.

The Bank calculated accumulated income tax NOLs. Minimum presumed income tax of 20,658 and 12,271, for 2004 and 2003 respectively, was capitalized under “Other receivables.”

As of December 31, 2004, the minimum presumed income tax credit is considered to be an asset because Management estimates it will be used within ten years, which is the period allowed by the Central Bank Communiqué “A” 4,295, as amended.

The consolidated amounts of minimum presumed income tax credit and NOLs accumulated as of December 31, 2004 will mature as follows:

Minimum presumed income tax credit
Amount	Expiration year
8,108		2009
5,859		2010
3,804		2011
8,613		2012
12,271		2013
20,658		2014
59,313

NOLs
Amount	Expiration year
80,854		2006
284,589		2007
243,155		2008
83,225		2009
691,823

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b) A.F.I.P. (Administración Federal de Ingresos Públicos— Argentine Tax Authorities) and other agencies’ administrative proceedings have had different interpretations regarding the tax treatment of the effect of the pesification and C.E.R. adjustment of guaranteed loans. The Bank believes that the income related to such items is not subject to income tax and therefore has no provided for such effect in the financial statements.

6. DIFFERENCES BETWEEN CENTRAL BANK’S RULES AND PROFESSIONAL ACCOUNTING STANDARDS EFFECTIVE IN THE CITY OF BUENOS AIRES, ARGENTINA

Through Resolution C.D. No. 87/03 of June 18, 2003, the C.P.C.E.C.A.B.A. (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires— Professional Council in Economic Sciences of the City of Buenos Aires) approved the revised professional accounting standards mandatory in the City of Buenos Aires (Technical Resolutions Nos. 6, 8, 9, 16, 17, 18, 20, and 21). In particular, with respect to the financial institutions governed by the Central Bank, the C.P.C.E.C.A.B.A. kept in force Resolution C. No. 98/93, which does not require the net present value (discounting) of beginning and end-of-year balances of monetary receivables and payables generated by financial transactions and refinancing, and of other monetary receivables and payables not generated by trading of goods or services.

As of the date of these consolidated financial statements, the Central Bank has not adopted the valuation and disclosure changes provided by these professional accounting standards, and their application in the financial statements of financial institutions is, therefore, not required. For this reason, the Bank did not quantify the net effects on shareholders’ equity or income (loss) caused by all the differences between such accounting standards and Central Bank’s rules.

Below are the main differences between professional accounting standards and Central Bank’s rules as of December 31, 2004, 2003 and 2002:

a)     Valuation aspects

1)     The Bank has not recognized the effects of changes in the peso purchasing power from March 1, 2003 through October 1, 2003. Such recognition is required by Argentine G.A.A.P.

Had the effects of changes in the peso purchasing power, as mentioned above, been recognized, the shareholders’ equity as of December 31, 2004, would have decreased by 7,858, whereas income for the year ended December 31, 2004, would not have been affected significantly and income for the year ended December 31, 2003, would have increased by 14,547. The accounts as of December 31, 2002, presented for comparative purposes, would have been restated to recognize the effects of the changes in the peso purchasing power through September 30, 2003.

2)     The Bank assesses income tax by applying the effective rate to the estimated taxable income without considering the effect of temporary differences between book and taxable income. Under professional accounting standards, income tax should be recognized through the deferred tax method.

3)     As of December 31, 2004, and 2003, the Bank kept an amount of 50,037 (net of amortization for 17,916) and 44,730 (net of amortization for 6,258), respectively, capitalized in the “Intangible assets— Organization and development costs” account. This amount is related to the compliance with legal decisions on amparos. In accordance with professional accounting standards, if the amounts are realizable they should have been recorded in “Other receivables”, should not have been amortized and should have been stated at market value. If the amounts are not realizable, they should be recorded as losses.

4)     Holdings of government securities and loans to the non-financial government sector are valued in accordance with rules and regulations issued by the Federal Government and the Central Bank In particular, Central Bank Communiqué “A” 3,911, as supplemented, establishes a present-value criteria,

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applying regulated discount rates, for the valuation of unlisted government securities and certain receivables from the non-financial government sector. Furthermore, the Central Bank’s rules for recognition of allowance for loan losses provide that receivables from the non-financial government sector are not subject to provisions for loan losses.

In accordance with the professional accounting standards, the assets indicated in (i) through (vi) above should have been stated at their market values.

The Bank’s particular situation in this regard was as follows:

i)     As of December 31, 2004, 2003, and 2002, the Bank recorded in “Government securities— Holdings in investment accounts” and “Other receivables from financial intermediation— Securities and foreign currency receivable from spot and forward purchases pending settlement” the securities received for the compensation established by Presidential Decree No. 905/02 in the aggregate amounts of 145,310, 141,001 and 165,157, respectively. The quoted market prices of such securities amounted to 122,414, 89,430 and 75,972 as of December 31, 2004, 2003, and 2002, respectively.

ii)     As of December 31, 2003 and 2002, the Bank classified a portion of its holdings of government securities as “Holdings in investment accounts” in the aggregate amount of 2,975 and 5,211. The quoted prices of such securities amounted to 2,726 and 2,397 as of December 31, 2003, and 2002, respectively.

iii)     As of December 31, 2002, the Bank valued a portion of its government securities portfolio according to Central Bank Communiqué “A” 3,398, totaling 30,948. The quoted price of such securities amounted to 8,424 as of December 31, 2002.

iv)     As of December 31, 2002, the Bank classified Consolidation Bonds Series 1 in pesos at their face value, plus income accrued as of that date totaling 1,191. The quoted price of such bonds amounted to 619 as of December 31, 2002.

v)     As disclosed in note 1.2.b) 2), as of December 31, 2004, the Bank recorded in “Unlisted government securities” secured bonds under Presidential Decree No. 1,579/02, under Central Bank Communiqué “A” 3,911, as supplemented and other unlisted government securities held that were valued under Central Bank Communiqué “A” 3,911 as supplemented and Central Bank’s Communiqué “A” 4,084, as the case may be, for an amount of 839,183. As of December 31, 2003, the securities and bonds mentioned above were recorded in “Government Securities” and “Loans” (considering that the provincial debt exchange was still pending) for an amount of 528,932, net of secured bonds to be submitted for subscription for the direct exchange to be delivered to depositors. As of December 31, 2002, such securities and bonds were recorded in the “Government Securities”, “Loans” and “Other receivables from financial intermediation” accounts (because the provincial-government debt exchange was pending implementation) in the amount of 696,375.

vi)     As disclosed in note 1.2.b)1), as of December 31, 2004, the Federal Government Guaranteed Loans from the exchange established by Presidential Decree No. 1,387/01, and Other loans to the non-financial government sector are recorded in the “Loans— To the non-financial government sector” account in the net aggregate amount of 809,577. As of December 31, 2003, such loans were recorded under “Loans— To the non-financial government sector” for 362,901. As of December 31, 2002, the Federal Government secured loans derived from the exchange established by Presidential Decree No. 1,387/01 were recorded in the “Loans— To the non-financial government sector” account in the amount of 299,821.

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vii)     As of December 31, 2004, 2003, and 2002, the Bank recorded in “Other receivables from financial intermediation”, other assistance to the non-financial government sector in the aggregate amounts of 435, 1,453, and 871, respectively.

viii)     As disclosed in note 1.2.a)1), as of December 31, 2004, the Bank recorded in “Other receivables from financial intermediation— Other receivables not covered by debtors classification regulations” the remaining right to receive securities as compensation established by Presidential Decree No. 905/02 in the amount of 609,791. Additionally, the Bank recorded in “Other liabilities from financial intermediation— Other” account a liability reflecting the reimbursement to the Central Bank, for 38,162. As of December 31, 2003, such right was recorded in “Other receivables from financial intermediation— Other receivables not covered by debtors classification regulations” for 255,977. Additionally, the liability for the reimbursement to the Central Bank for 36,889 (see note 1.2.a)1)) was recorded in “Other Liabilities from financial intermediation— Other”. As of December 31, 2002, such right was recorded in “Other receivables from financial intermediation— Other receivables not covered by debtors classification regulations” for 292,802.

The bank recorded adjustments to prior years income. In accordance with the professional accounting standards, such adjustments should have being recorded as income (loss) as of the date of determination.

5)     As mentioned in Note 4.4.q), the acquisition of Banco Bansud S.A. by Banco Macro S.A. gave rise originally to the recording of negative goodwill of 365,560. This resulted from the difference between the purchase price and the book value of the net equity acquired according to Central Bank’s rules. Subsequently, as mentioned in the referred note, under Central Bank Communiqué “A” 3,984, the Bank retroactively applied the valuation and disclosure regulations established in such Communiqué and amortized, as of December 31, 2004, 60% of the aggregate amount of such goodwill (the maximum amortization allowed per annum is 20%). This negative goodwill generated gains on inflation through February 28, 2003.

In addition, as mentioned in note 4.4.q), the acquisition of Nuevo Banco Suquía S.A. by Banco Macro Bansud S.A. generated negative goodwill of 483, resulting from the difference between the purchase price and the value of the net assets acquired applying Central Bank’s rules.

Under professional accounting standards effective in the City of Buenos Aires, Argentina, when the cost of an investment is lower than fair value of the related identifiable assets, such difference shall be either deferred (as negative goodwill) and amortized subsequently as appropriate, on the basis of the specific circumstances of the transaction that originated such difference, or be considered a gain for the year.

b)     Disclosure aspects

There are certain disclosure differences between the criteria established by Central Bank and Argentine professional accounting standards.

The Bank has not presented the adjustment for changes in the Argentine peso purchasing power in each respective account in the statements of income.

7. PRIOR PERIOD ADJUSTMENTS

The consolidated financial statements include adjustments to prior-year income related to: (i) the reversal of 20% of the negative goodwill under Central Bank Communiqué “A” No. 3,984; (ii) the reallocation, of the unrealized valuation difference, which had been originated by the adjustments to the compensation received under sections 28 and 29, Presidential Decree No. 905/02, equivalent to

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40% of the net position in foreign currency as of December 31, 2001; and (iii) the additional adjustments arising from the effects of the asymmetrical pesification and the compensation mentioned in notes 1.2.a)1) and 11.

The amounts of such adjustments were a net (decrease) to net assets of (91,170) and (53,625) as of December 31, 2003 and 2002, respectively.

8. RESTRICTED AND PLEDGED ASSETS

Some of the Bank’s assets are restricted as follows:

a)     As of December 31, 2004 and 2003, the “Government Securities” account includes:

1.     Federal Government Bonds in US dollars at LIBOR maturing in 2012 received in compensation (see note 1.2.a)1)) for 1,746 and 4,686, respectively, as security for the subscription of bonds belonging to depositors who opted for the exchange (see note 1.2.c)).

2.     Government Bonds in US dollars at LIBOR maturing in 2012 received as compensation (see note 1.2.a)1)) for 40,597 and 30,110, respectively.

3.     Consolidation Bonds in Pesos— First Series amounting to 1,775 and 3,754, respectively, assigned to settle payables to the Central Bank and safety-net financing originated in the acquisition of assets and liabilities from the former Banco Federal Argentino (B.F.A.).

4.     Secured Bonds for 34,282 and 35,970 (face value of Ps. 24,400,000), respectively, as collateral for the loan granted by Banco de Inversión y Comercio Exterior S.A. (B.I.C.E.) to finance the public work “Paso San Francisco”.

b)     As of December 31, 2004, and 2003, the “Loans” account includes:

1.     Loans secured by mortgages in the amount of 422 and loans secured by pledges in the amount of 1,430, respectively, in turn provided as security in favor of the Federal Treasury Department under the Global Credit Program for Small-sized and Micro-enterprises.

2.     Federal Government Guaranteed Loans in the amount of 16,940 and 16,140, respectively, provided by the former Banco Macro S.A. as security to the Central Bank for the exchange of compensation received in Federal Government Bonds in Pesos at a 2% rate per year, maturing in 2007, for BODEN requested by depositors, under Central Bank Communiqué “B” 7,594.

c)     Additionally, as of December 31, 2004, the “Loans” account includes Federal Government Guaranteed Loans in the amount of 3,931 as security in favor of the Central Bank for the loan mentioned in note 3.6.

d)     The “Other receivables from financial intermediation” account includes Central Bank restricted deposits for 552 as of both years, as set forth by Communiqué “A” 1,190. The Bank has recorded allowances for 100% of this receivable.

e)     Additionally, as of December 31, 2004, the Bank had recorded under “Other receivables from financial intermediation— Central Bank,” 121,317 related to the amounts in the special guarantee accounts with the Central Bank for transactions related to electronic clearing houses and other similar transactions.

f)     As of December 31, 2004, the “Other Receivables” account includes a seizure of 1,292 of blocked assets.

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g)     As of December 31, 2004, Nuevo Banco Suquía S.A. carried 5,313 related to credit card transactions and 1,636 related to other guarantee deposits as guarantees, which were booked as “Guarantee deposits” under the “Miscellaneous receivables” account.

h)     As of December 31, 2004, Nuevo Banco Suquía S.A. had used the class “A” certificate of participation in the Suquía trust as guarantee for the loan granted by the Central Bank to the Bank to purchase Government bonds maturing in 2005, 2007 and 2012. Those bonds would be used for the deposit exchange option exercised by the holders of depositors with Nuevo Banco Suquía S.A. This guarantee covers principal, adjustments and interest up to the maximum amount of 178,056. The original value of the loan was 161,869, and the book-value as of December 31, 2004, was 233,464.

i)     As of December 31, 2004, and 2003, the “Investments in other companies” account includes:

1.     Irrevocable contributions to Tunas del Chaco S.A., Emporio del Chaco S.A. and Prosopis S.A. in the amount of 450 (150 in each company), under the federal taxes deferment, subscribed according to the Law No. 22,021, as amended by Law No. 22,702, which provides that the investment must be kept in assets for a term not shorter than five years commencing on January 1 of the year subsequent to that when the investment was made (investment year: 2003).

2.     Irrevocable contributions to El Taura S.A. for 61 and 90, respectively, which are exempt from provincial taxes according to the standards regulating the tourism promotion system of the Province of Salta pursuant to Provincial Law No. 6,064 (ratified by Provincial Decree No. 1,465/97 issued by the Executive of the Province of Salta), which establishes that the investment should be maintained in assets for a term of at least one year as from the payment date.

3.     Two shares in Mercado de Valores de Buenos Aires S.A., in the amount of 1,452 (owned by Sud Valores S.A. Sociedad de Bolsa) were pledged in favor of “La Buenos Aires Cía. Argentina de Seguros S.A.” to cover the security granted in connection with the Sud Valores S.A. Sociedad de Bolsa’s failure to comply with its obligations.

j)     On March 9, 2004, Nuevo Banco Suquía S.A. gave secured bonds and guaranteed loans to the Central Bank as collateral for the loan for temporary illiquidity, granted through Resolution No. 315/02, dated March 21, 2002. As of December 31, 2004, the value of secured bonds and guaranteed loans amounted to 154,709 and 197,270, respectively.

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9. TRANSACTIONS WITH RELATED PARTIES

As of December 31, 2004, 2003, and 2002, the amounts and income (loss) of the transactions performed with subsidiaries and related companies according to the provisions of Law No. 19,550 are as follows:

							Sud
		Nuevo					Valores						Sud
		Banco					S.A.						Valores			Macro
		Suquía					Sociedad			Sud Bank			S.G.F.C.I.			Valores		Total			Total			Total
		S.A.			S.I.A.S.A.		de Bolsa			& Trust			S.A.			SA.		2004			2003			2002
ASSETS
Cash and due from banks and correspondents			—			—		—			2,131			—			—		2,131			2,756			170
Loans			—			—		—			—			—			—					1,566			1,584
Other receivables from financial intermediation			—			—		14,503			—			—			—		14,503			7,352			—
Other Receivables			4,670			—		—			—			—			—		4,670			—			—
	Total Assets		4,670			—		14,503			2,131			—			—		21,304			11,674			1,754
LIABILITIES
Deposits			3			931		2,639			101			1,272			730		5,676			3,627			4,242
Other liabilities from financial intermediation			—			—		1,478			1,654			—			—		3,132			4,762			4,368
	Total Liabilities		3			931		4,117			1,755			1,272			730		8,808			8,389			8,610
MEMORANDUM ACCOUNTS
Control debit accounts			—			—		—			6,382			—			—		6,382			1,038			80
Total Memorandum Accounts			—			—		—			6,382			—			—		6,382			1,038			80
INCOME/EXPENSE
Financial income			4			—		54			21			—			—		79			501			1,514
Financial expense			(7	)		—		—			(5,437	)		(37	)		—		(5,481	)		(8,471	)		(646	)
Service-charge income			—			1		27			1			1			3		33			10			120
Service-charge expense			—			—		(45	)		(13	)		—			—		(58	)		(112	)		(2	)
Other income			—			—		—			—			—			—		—			—			8
			(3	)		1		36			(5,428	)		(36	)		3		(5,427	)		(8,072	)		994

During 2004 and 2003, the Bank granted loans to certain companies related to executive officers and directors of the Bank and its subsidiaries. Loans granted to those related parties as of December 31, 2004 and 2003 totaled 55,908 and 23,485, respectively. It is the Bank’s policy that such loans are granted in the ordinary course of business at normal credit terms, including interest rate and collateral requirements.

As of December 31, 2004 and 2003, the outstanding deposits of related parties were 36,713 and 7,111, respectively.

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10. CAPITAL STOCK

As of December 31, 2004, and 2003, the capital structure is as follows:

Shares						Capital stock
				Votes
				per		Issued and
Class		Number		share		outstanding(1)		Paid-in(1)
Registered Class A shares of common stock			11,235,670		5		11,236		11,236
Registered Class B shares of common stock			597,707,767		1		597,707		597,707
	Total 2004		608,943,437				608,943		608,943
	Total 2003		608,943,437				608,943		608,943

(1) Related to Ps.608,943,437

Net income per common share for the fiscal years ended December 31, 2004, 2003, 2002, was computed by dividing net income by the weighted average number of outstanding common shares for each year, considering the retroactive effect of the merger mentioned in notes 3.1. and 4.2.

11. CORPORATE BONDS ISSUANCE

The amounts recorded in the consolidated financial statements related to corporate bonds are as follows:

Corporate bonds						As of December, 31
		Original
Class		face value		Ref.		2004		2003
Subordinated corporate bonds			USD60,000,000		11.a)		—		—
Subordinated corporate bonds			USD23,000,000		11.a)		12,665		20,052
Subordinated corporate bonds			USD4,000,000		11.b)		3,751		4,148
	Total						16,416		24,200

Maturities of the corporate bonds as of December 31, 2004, are as follows:

Fiscal year	2004
2005		7,810
2006		6,147
2007		615
2008		615
2009		615
2010		614
Total		16,416

a)     On February 19, 1996, the Regular and Special Stockholders’ Meeting of the former Banco Bansud S.A. authorized issuing Subordinated Corporate Bonds for up to a face value of USD 60,000,000.

After various negotiations between the parties, on April 16, 2003, the former Banco Bansud S.A. paid off at the due date, at the USD1 = ARS1 exchange rate, the last installment of the Subordinated Corporate Bond.

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In addition, on April 12, 1995, the Regular Shareholders’ Meeting of the former Banco Macro S.A. approved creating a global program for the issuance of simple corporate bonds, subordinated or not, non-convertible into shares for up to an aggregate of USD50,000,000, and it entrusted the Board of Directors the responsibility of setting the terms of the referenced bonds (price, form, payment and placement conditions, among others).

On July 20, 1998, the former Banco Macro S.A. received the funds related to a loan that it had requested from the F.F.C.B., now Assistance Trust Fund for Financial Institutions and Insurance (F.F.A.E.F. y S.), in the amount of USD5,000,000, and Banco Macro Bansud S.A. issued Subordinated Corporate Bonds in order to finance the acquisition of Banco de Jujuy S.A.

Pursuant to the request made by the Bank to the F.F.C.B.’s Managing Committee on July 26, 1999, to restructure the financing previously granted, a loan agreement was executed on December 29, 1999 by B.N.A., as F.F.C.B.’s trustee, and the former Banco Macro S.A. Under such agreement, the F.F.C.B. granted the Bank a subordinated loan of USD18,000,000, which was used by the Bank to strengthen computable equity.

The former Banco Macro S.A. undertook to repay in full the new loan convertible into subordinated corporate bonds in five annual, equal and successive instalments, the first instalment falling due on December 29, 2002. In addition, the loan will accrue compensatory interest at 180 days LIBOR plus 3% per year on balances, payable in arrears on an annual basis starting a year after the disbursement date.

On March 17, 2000, the former Banco Macro S.A. requested the C.N.V.’s authorization to issue the fifth series of subordinated corporate bonds in the amount of USD18,000,000, under the Corporate Bonds issuance global program for an aggregate amount of USD50,000,000 as mentioned in point b), in order to repay the loan granted by the FFCB on December 29, 1999.

As of December 31, 2004, the Bank had paid the equivalent of USD14,800,000.

The Managing Committee of the trust fund objected to the pesification of 50% of its loans, therefore requesting re-assessment of all payments made. The former Banco Macro S.A. has submitted all necessary information to the trust fund and rejected the request of such entity.

On March 8, 2004, the Managing Committee of the F.F.R.E. (Fondo Fiduciario para Reconstrucción de Empresas— Enterprise Reconstruction Trust Fund), through B.N.A. in its capacity as trustee for such fund, notified the former Banco Macro S.A. that it had rejected the appeals that such bank had filed against such Committee’s decision of May 28, 2003 (Records of Proceedings No. 88) and thus confirmed the original decision. On May 12, 2004, the Bank amplified the refutation grounds presented to the Managing Committee of the trust fund.

The Ministry of Economy and Production, by Resolution No. 25 of January 17, 2005, rejected the administrative appeal that the Bank had brought against the abovementioned Record of Proceedings No. 88 of May 28, 2003, and stated that such resolution exhausted all administrative proceedings and opened the possibility of recourse to the courts.

The Bank believes that there are ample grounds to consider inappropriate and inapplicable the decision adopted by the Trust Fund’s Managing Committee and supported by the resolution of the Ministry of Economy and Production. However, pursuant to such resolution, the Bank has recorded provisions that reflect the probable increase in the amount payable by the Bank.

In the opinion of the Bank’s Management and under Law No. 25,561 these obligations were pesified at the USD1 = Ps.1 exchange rate and accrue C.E.R. adjustment as from February 3, 2002. Consequently, as of December 31, 2004, the Bank carried these payables in the “Subordinated Corporate Bonds” account for 8,200 in principal plus 4,465 in interest and C.E.R. adjustment accrued

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through year-end. In addition, the Bank carries 41,905 in Liabilities, in the “Provisions— Other Contingencies” account, to recognize the adjustment mentioned above. The recognition of this liability generated an adjustment to prior year income (see note 7).

b)     The Special Shareholders’ Meeting of Banco de Salta S.A. (bank merged with and into the former Banco Macro S.A.) held on January 20, 1997, approved issuing subordinated corporate bonds in the amount of USD 4,000,000 to exercise the power granted to it by the second clause of the loan agreement executed with Banco Provincial de Salta (in liquidation) on June 28, 1996. As required by the bank, through Resolution No. 1006, dated December 19, 1997, the C.N.V. authorized the entry of Banco de Salta S.A. into the public offering regime for the issuance of corporate bonds, and it also approved the public offering of such bonds.

In addition, on October 19, 1999, through Resolution No. 13,043, the C.N.V. authorized the transfer in favor of Banco Macro Misiones S.A. (bank merged with and into the former Banco Macro S.A.), of the authorization granted to Banco de Salta S.A., to issue the referred corporate bonds, since the latter merged with and into the former. Furthermore, it cancelled the authorization granted to Banco de Salta S.A. for the public offering of its corporate bonds.

As of December 31, 2004, the former Banco Macro S.A. had paid the equivalent of USD 1,600,000.

12. ITEMS IN CUSTODY

12.1.    Portfolio management

a)     On March 1, 1996, Banco de Salta S.A. (bank merged with and into the former Banco Macro S.A.) and the Government of the Province of Salta executed an “Agreement to Manage the Loan Portfolio of Banco Provincial de Salta (in liquidation)” related to the non-financial private sector. Former Banco Macro S.A. thereby undertook to perform all the necessary acts to manage such portfolio. In consideration, the Province of Salta assigned the former Banco Macro S.A. a percentage of the amounts effectively recovered.

As of December 31, 2004, and 2003, the loan portfolio managed amounted to 460,702 and 462,741, respectively.

b)     By virtue of the agreement executed on August 11, 1998 between Banco de Jujuy S.A. (merged with and into the former Banco Macro S.A.) and the Province of Jujuy, the former Banco Macro S.A. undertook to perform all necessary acts to manage the loan portfolio of the former Banco de la Provincia de Jujuy and to provide the province of Jujuy with a monthly report on the tasks performed. In consideration thereof, the Province of Jujuy assigned to the former Banco Macro S.A., for all accounts and as a one-time and total consideration, a variable fee determined as a percentage of the amounts actually recovered.

As of December 31, 2004, and 2003, the loan portfolio managed amounted to 49,382 and 50,260, respectively.

c)     In order to securitize personal signature (unsecured) loans in Argentine Pesos granted to individuals through the “Cuenta sueldo” (loan system whereby the instalment payment is automatically debited from the same account into which the Bank credits the salary), the former Banco Macro S.A. created several trusts. These trusts issued debt securities and/or certificates of participation of different classes, which were authorized by the C.N.V., for public offering. The detail is as follows:

i)     On December 20, 1999, a trust agreement was executed with MBA Banco de Inversiones S.A., as trustee. A trust labeled “Fideicomisos Financieros MBA Asset Backed Securities Serie Banco Macro Créditos I” was set up. To such end, debt securities and certificates of participation were issued for a face value of Ps.35,000,000. As of December 31, 2003, the

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loan portfolio managed amounted to 420. As of December 31, 2004 there are no remaining balances related to this loan portfolio.

ii)     On February 21, 2000, a trust agreement was executed with Banco Sudameris Argentina S.A., as trustee. A trust labeled “Macro Personal I” was thereby set up. To such end, class “A” and “B” certificates of participation were issued for a face value of Ps.59,134,000 and Ps.14,783,000, respectively. As of December 31, 2003, the loan portfolio managed amounted to 1,081. As of December 31, 2004 there are no remaining balances related to this loan portfolio.

iii)     On November 1, 2000, a trust agreement was executed with Banco Sudameris Argentina S.A., as trustee. A trust labeled “Macro Personal II” was thereby set up. To such end, class “A” and “B” certificates of participation were issued for a face value of Ps.49,019,000 and Ps.12,255,000, respectively. As of December 31, 2003, the loan portfolio managed amounted to 2,291. As of December 31, 2004 there are no remaining balances related to this loan portfolio.

iv)     On April 30, 2001, a trust agreement was executed with Banco Sudameris Argentina S.A., as trustee. A trust labeled “Macro Personal III” was thereby set up. To such end, class “A”, “B” and “C” certificates of participation were issued for a face value of Ps.35,667,000, Ps.4,458,000 and Ps.4,458,000, respectively. As of December 31, 2003, the loan portfolio managed by the Bank amounted to 2,319. As of December 31, 2004 there are no remaining balances related to this loan portfolio.

v)     On November 1, 2001, a trust agreement was executed with Banco Sudameris Argentina S.A., as trustee. A trust labeled “Macro Personal IV” was thereby set. To such end, class “A”, “B” and “C” certificates of participation were issued for a face value of Ps.20,957,000, Ps.2,620,000 and Ps.2,620,000, respectively. As of December 31, 2003, the loan portfolio managed by the Bank amounted to 2,133. As of December 31, 2004 there are no remaining balances related to this loan portfolio.

Considering the managed portfolio of the trust funds mentioned at c) i) to v), the Bank requested from the trustee the settlement in advance of the portfolio which took place through the refund by the trustee to the holders of certificates of participation of the residual value of the trust funds portfolio.

d)     On April 6, 2001, through Decree No. 806, the Ministry of the Treasury of the Province of Salta approved an extension to the “Contract for the service of collecting, processing and arranging information, managing the loan portfolio and performing collection procedures related to the receivables of I.P.D.U.V. (Instituto Provincial de Desarrollo Urbano y Vivienda— Provincial Institute of Urban and Housing Development) executed on March 27, 2001, between such agency and the former Banco Macro S.A. Through that extension, the Bank will provide to I.P.D.U.V., among others, the service of collecting the instalments payable by successful bidders for housing and a service of performing collection procedures related to such Institute’s receivables. In consideration thereof, the I.P.D.U.V. recognizes a percentage of the amounts effectively recovered to the former Banco Macro S.A.

The loan portfolio managed as of December 31, 2004 and 2003, amounted to 85,916 and 87,339, respectively.

e)     On August 19, 2002, ABN AMRO Bank N.V. Sucursal Argentina, as trustee, the former Scotiabank Quilmes S.A., as trustor, Banco Comafi S.A., as collecting agent and manager and the former Banco Bansud S.A. executed an agreement for the financial trust LAVERC collection administration and management, whereby the management of the assets related to branches transferred to former Banco Bansud S.A. will be carried out by the former Banco Bansud S.A. (for further information see note 3.5.)

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As of December 31, 2004 and 2003, the portfolio managed by the Bank amounted to 222,574 and 150,767, respectively.

In addition, as of December 31, 2004 and 2003, there are other portfolios managed by the Bank in the aggregate amount of 39,752 and 33,824, respectively.

12.2.    Mutual Funds

As of December 31, 2004, the Bank, in its capacity as depository institution, held in custody the shares of interest subscribed by third parties and securities from the following mutual funds:

	Shares of		Shareholders
	interest		equity		Investments(1)
PIONERO CRECIMIENTO		1,396,633		2,601		2,551
PIONERO RENTA		7,943,689		11,960		8,820
PIONERO FINANCIERO DÓLARES		17,635		55		42
PIONERO PESOS		158,612,002		161,546		79,675
PUENTE HNOS.		12,545,833		15,202		11,980
COPERNICO		14,267,094		49,934		40,843

(1) These amounts reflect the funds’ investment portfolios and are recorded under “Debit-balance accounts— Control— Other— Assets in custody”.

13. BANK DEPOSITS GUARANTEE INSURANCE SYSTEM

Law No. 24,485 and Presidential Decree No. 540/95, provided for the organization of a Bank Deposit Guarantee Insurance System. This system is characterized as being limited, mandatory and for valuable consideration. It is designed to provide protection for risks inherent in bank deposits, subsidiary and supplementary to the one offered by the system of bank deposit priorities and protection established by Financial Institutions Law. Law 24,485 provided for the organization of SEDESA to manage the FGD (Fondo de Garantía de los Depósitos— Deposit Guarantee Fund). In August 1995, SEDESA was organized. The Bank holds a 3.6630% equity interest therein, according to the percentages set forth in Central Bank communiqué “B” 8,192 published on April 30, 2004.

This system covers deposits in Argentine pesos and foreign currency made in participating institutions as checking accounts, savings accounts, time deposits or any other modes determined by the Central Bank, as long as they fulfill the requirements of Presidential Decree No. 540/95 and any others established by the enforcement agency. Additionally, the Central Bank issued regulations excluding from the deposits guarantee system those deposits made by other financial institutions, those made by entities related to the Bank, deposits of securities, among others.

14. TRUST ACTIVITIES

Banco Macro Bansud S.A., either directly or through its subsidiary Sud Inversiones & Análisis S.A., acts as trustee. In no case, will the trustee be liable with its own assets or for any obligations undertaken in the performance of the trust. These obligations do not constitute any debt for the trustee and will be satisfied only with the corpus assets. Additionally, the trustee may not levy any encumbrance on the corpus assets or dispose of them beyond the limits set forth in the abovementioned trust agreements. The fees earned by the Bank in its capacity as trustee are calculated under the terms of the respective trust agreements.

As of December 31, 2004, 2003 and 2002, fees earned by the Bank and its subsidiary were not material.

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The following are certain characteristics of the main trusts where the Bank or its subsidiary acts as trustee:

14.1.     Trust Fund for the Economic Development of the Province of Jujuy

The purpose of the formation of the trust was to provide financial assistance to the productive sectors in the Province of Jujuy. In consequence, on May 11, 2000, the Economy Department of the Province of Jujuy (as trustor) and former Banco de Jujuy S.A. (as trustee) entered into a trust agreement (which was later amended on June 6, 2000). The trustor thereby transferred in trust the following:

(i)     the right to be assigned by the Provincial Government to the proceeds from the Federal Tax Revenue Sharing System to guarantee the settlement of the consolidated debt that flows into the Trust Fund for the Economic Development of the Province of Jujuy (up to a face value of 10,000) or the debt provided in exchange, and

(ii)     the profits arising from Trust activities.

The Bank only acts as trustee (managing the trust’s assets) and, therefore, no assets or liabilities were recorded in the consolidated financial statements. In addition, as of December 31, 2004 and 2003, the Trust managed assets amounting to 6,547 and 6,003, respectively.

Due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

14.2.     Transporte Automotor Plaza S.A. Trust

The purpose of formation of the Trust was to secure the guarantee provided by the former Banco Bansud S.A. to Transporte Automotor Plaza S.A. on certain bills of exchange issued for acquiring passenger transportation buses from Scania Latinoamérica Ltda.

In consequence, on May 7, 1998, S.I.A.S.A., Transporte Automotor Plaza S.A. and the former Banco Bansud S.A., in their capacities as trustee, trustor and beneficiary, respectively, signed a trust agreement. The trustor thereby transferred in trust the following:

(i)     The rights to 15% of daily revenues from the exploitation of the public passenger transportation service, and

(ii)     a daily amount equivalent to the value of the bills to fall due in the six-month period divided by the number of working days of such period.

The trustee deposits the funds collected as mentioned in (ii) above in a trust account. The funds mentioned in (i) above are immediately reimbursed to the trustor provided there are no events of default or delay in the fulfillment of any obligation assumed towards the beneficiary.

The Bank records as loan payments the disbursements made by such trust. This trust has not operated since September 2003 and has no assets and liabilities since that time. Due to the characteristics of the transaction (to secure the payment of the financing granted by the Bank to Transporte Automotor Plaza S.A.), the Trust did not issue certificates of participation or debt certificates.

14.3.     San Isidro Trust

The purpose of the San Isidro Trust is the sale of the real property received to pay for the equity certificates issued by the trust. This means that the main cash flow for the repayment of the certificates of equity participation will come from the sale of the property mentioned above. In consequence, on June 4, 2001, the former Banco Macro S.A., as trustee (today Sud Inversiones & Análisis S.A. is the trustee), and República S.A. de Finanzas, as trustor, executed a trust agreement. The “San Isidro” financial trust was thereby set up. Under such agreement, the trustor assigned in trust to the trustee

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the real property and plot of land located in the San Isidro district to realize them and use the proceeds therefrom to redeem the certificates of participation issued by the trust.

The certificates of participation were delivered to Banco Macro Bansud S.A. (the Bank holds 100% of the certificates issued by the Trust) for the repayment of loans previously granted to República S.A. de Finanzas. This represents effectively a foreclosure since the former owner of the assets relinquished all rights to the assets to the trust and the Bank holds 100% of the trust certificates.

The Bank recorded its holdings of San Isidro Trust certificates of participation in the account “Other receivables not covered by debtors classification standards”, as explained in note 4.4.i.4). In addition, as of December 31, 2004 and 2003, the assets managed by the Trust amounted to 16,782 and 15,993, respectively.

The Trust issued classes “A”, “B” and “C” certificates of participation which represent the legal instrument whereby Banco Macro Bansud S.A. is entitled to receive the cash flow established in the Trust Agreement.

14.4.     Municipal Finance Reorganization Trust Fund

The purpose of the formation of the trust was to provide financial assistance to municipalities and municipal commissions in the Province of Jujuy. Consequently, on December 29, 2004, the Finance Minister of the Province of Jujuy, representing the trustor, i.e. the Provincial Government, and Banco Macro Bansud S.A., as trustee, executed a trust agreement. The trustor thereby transferred in trust the following:

(i)     Contributions from the Provincial Treasury in cash, in real property and the proceeds from the sale of real property belonging to the Provincial Government.

(ii)     One half, i.e. 50%, of property tax collections up to the annual amount of six million pesos.

(iii)     Amounts recovered from loans granted to municipalities and municipal commissions.

(iv)     Other resources assigned to the Provincial Government from its own resources, the federal government, or financing from abroad.

(v)     Proceeds from the investment of the trust fund assets.

(vi)     Whatever assets the municipalities and municipal commissions may transfer in trust, under the scope of Provincial Law No. 5,435.

The Bank only acts as trustee (managing the trust’s assets) and, therefore, no assets or liabilities were recorded in the consolidated financial statements.

Additionally, due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

14.5.     Lujan Trust

The Luján Trust was created for the purpose of reducing the customer’s uncollectibility risk of the loan granted to Federalia S.A. de Finanzas. Consequently, on May 20, 2003, the former Banco Bansud S.A. signed a trust agreement with Federalia S.A. de Finanzas, in its capacity as trustor, and Sud Inversiones & Análisis S.A., in its capacity as trustee, whereby a financial trust named “Luján” was created to sell the corpus assets transferred to the trust by the trustor, in accordance with the terms of

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the agreement. The proceeds, net of trust expenses, were to be used to pay off the certificates of participation equity issued by the Trust, subject to their order of preference. The corpus assets are made up of different real property and plots of land located in the Province of Buenos Aires, Argentina.

The Bank recorded its holdings of Lujan Trust certificates of participation in the account “Other receivables not covered by debtors classification standards”, as explained in note 4.4.i.4).

The Trust originally issued classes “Nuevo A”, “A Prima” and “B” certificates of participation. The “A Prima” and “B” certificates are subordinated to the other certificates and are held by Federalia and the Bank has “Nuevo A” certificates.

14.6.     Trusts with depositors of former Banco Bansud S.A.

The purpose of the formation of these trusts was to acquire the rights to subscribe federal government bonds from depositors of former Banco Bansud S.A., who opted for participating in the exchange of deposits described in note 1.2.c).

Consecuently, during 2002 and 2003, certain trust agreements were executed between Sud Inversiones & Análisis S.A. (in its capacity as trustee), the former Banco Bansud S.A. (in its capacity as beneficiary) and depositors of the former Banco Bansud S.A. (in their capacity as Trustors). Such agreement provided that:

a)     The Bank acquired from the depositors the rights to subscribe Federal government bonds.

b)     The trustee undertook to accept such financial instrument and/or any other type of credit, obligation or security that the Federal Government may issue to exchange such deposits, which would be then transferred to the beneficiary.

As of December 31, 2004, two agreements (rights to subscribe Federal government bonds) were outstanding for a total amount of USD 112,303 and were recorded as “other receivables” on the Bank’s balance sheet.

Additionally, due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

14.7.     Mypes II (a) Trust

The purpose of the trust is to provide financial assistance to small-and medium-size enterprises (Mypes) (SMEs).

Consequently, on May 28, 2004, a trust agreement was executed between the Ministry of Economy, in its capacity as trustor and beneficiary, the Ministry of Production, Department of SMEs and Regional Development, in its capacity as executor and organizer and Sud Inversiones & Análisis S.A., in its capacity as trustee. An ordinary trust called “Mypes II (a)” was thereby created according to the Loan Agreement BID 1,192/OC. By virtue of this trust, the trustor and beneficiary assigned in trust the following assets:

1)     The funds contributed by the trustor and beneficiary;

2)     The loans made by the intermediary financial institutions.

The Bank only records as “Loans” the loans directly made to the SME’s according to the Loan Agreement mentioned above.

Additionally, due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

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14.8.     Northia Trust

The purpose of the trust is to secure the repayment of the loan granted by Banco Macro Bansud S.A. to Laboratorios Northia S.A.C.I.F.I.A.

On December 31, 2004, Sud Inversiones & Análisis S.A., in its capacity as trustee, Laboratorios Northia S.A.C.I.F.I.A., in its capacity as trustor and/or debtor and Banco Macro Bansud S.A., in its capacity as beneficiary, executed a guarantee trust agreement called “Northia Trust”, the purpose of which was: (i) to ensure punctual compliance with the obligations assumed by the trustor under the terms of the loan agreement; and (ii) to establish a mechanism that would allow settling the trustor’s payment obligations under the loan agreement, according to the payment schedule and the corpus assets distribution system provided for in the trust agreement. The trustor assigned and transferred in trust the following:

(i)     The collection rights derived from the sales of products made (but not yet paid) and those to be made by the trustor in the future;

(ii)     The amounts the trustor was entitled to collect under the manufacturing and/or medicine provision agreements;

(iii)     The trustor’s collection of its present and future billing;

(iv)     The amounts that the trustor was entitled to collect for any reason and for whatever items related to and/or directly or indirectly resulting from the trustor’s products or business activities;

(v)     The amounts that the trustor was entitled to collect for any reason whatsoever, either past and/or present and/or future (collectively referred to with the preceding items as the “Collection Rights”) related to the production and sale of its products.

As of December 31, 2004, the Bank recorded in “Loans” the loan granted to Laboratorios Northia S.A.C.I.F.I.A. At December 31, 2004 the Trust had no assets and liabilities.

In addition, due to the characteristics of the transaction (the purpose of which is to secure the repayment of the loan granted by the Bank to Laboratorios Northia S.A.C.I.F.I.A.), the Trust did not issue certificates of participation or debt certificates.

14.9.     Fenoglio trust and Desarrollo PI trust

The purpose of the Fenoglio Trust is to secure the payment to an individual of the shares in Fenoglio S.A. acquired by Desarrollo PI S.A.

In this respect, on December 30, 2004, Sud Inversiones & Análisis S.A., in its capacity as trustee, the individual, in her capacity as trustor, and the individual and Desarrollo PI S.A. in their capacity as beneficiaries A and B, respectively, executed a guarantee trust agreement called “Fenoglio Trust”.

In turn, the purpose of the Desarrollo PI S.A. Trust is to secure the repayment of the loan granted by Banco Macro Bansud S.A. to Desarrollo PI S.A. to purchase the shares in Fenoglio S.A.

Consequently, on December 30, 2004, Sud Inversiones & Análisis S.A., in its capacity as trustee, Desarrollo PI S.A., in its capacity as trustor and Banco Macro Bansud S.A., in its capacity as beneficiary, executed a guarantee trust agreement called “Desarrollo PI trust”. The trustor assigned and transferred in trust the following:

(i)     All rights related to the trustor in its capacity as beneficiary B of the Fenoglio trust.

(ii)     Shares.

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As of December 31, 2004, the Bank recorded in “Loans” the credit assistance granted to Desarrollo PI S.A. to purchase the shares in Fenoglio S.A.

Additionally, due to the trusts’ operating characteristics, no certificates of participation or debt certificates were issued.

14.10.     Pulte Trust

The purpose of the trust is to secure the repayment of the loan granted by Banco Macro Bansud S.A. to Pulte S.R.L.

On January 6, 2005, Sud Inversiones & Análisis S.A., in its capacity as trustee, Pulte S.R.L., in its capacity as trustor and/or residual beneficiary and Banco Macro Bansud S.A., in its capacity as beneficiary, executed a guarantee trust agreement called “Pulte Trust”, the purpose of which was: (i) to ensure punctual compliance with the guaranteed obligations; and (ii) to establish a mechanism that would allow settling the trustor’s payment obligations under the loan agreement, according to the payment schedule and the corpus assets distribution system provided for in the trust agreement. The trustor assigned and transferred in trust the following:

(i)     Real property, including: (a) the receivables and proceeds from the real property insurance; (b) the right to obtain and use the authorizations and any type of permissions in connection with the real property; (c) the prospective sale price and/or any other way of legal divestiture of real property.

(ii)     Certain Shares.

The Bank recorded in “Loans” the loans provided to Pulte S.R.L.

In addition, due to the operating characteristics of the trust (the purpose of which is to secure the repayment of the loan granted by the Bank to Pulte S.R.L.), no certificates of participation or debt certificates were issued.

15.  COMPLIANCE WITH REGULATIONS TO ACT AS OVER-THE-COUNTER MARKET AGENT

The Bank’s shareholders’s equity exceeds the minimum amount required by C.N.V. Resolution No. 368/01, to act as over-the-counter market agent.

16. RESTRICTION ON EARNINGS DISTRIBUTION

16.1 Through Communiqué “A” 4,152, the Central Bank provided that those institutions that wish to distribute earnings must request Argentine Superintendency of Financial and Foreign Exchange Institutions (S.E.F. y C’s) prior authorization and meet the requirements set forth in such Communiqué.

16.2.     As established by the Central Bank, as of December 31, 2004:

a)     20% of income for the year, plus/less adjustment to prior-year income (loss), shall be appropriated to the legal reserve. Consequently, at the Shareholders’ Meeting held on April 28, 2005 shareholders of Banco Macro Bansud approved the transfer of 23,193 from unappropriated retained earnings to increase the legal reserve.

b)     Banco Macro Bansud may only pay dividends after making the appropriations required by the law and the Bank’s by laws. Additionally, Banco Macro Bansud may not pay dividends related to the difference between the book value and quoted price of the Federal Government Bonds in US dollars at LIBOR maturing in 2012 (Boden 2012) received under Presidential Decree No. 905/02, Title VI, sections 28 and 29, which was 22,896 at December 31, 2004.

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c)     As established in Central Bank Communiqué “A” 4,295, to determine the amounts to be distributed it will be necessary to deduct the assets recorded by Banco Macro Bansud for minimum presumed income tax from unappropriated retained earnings. Such balance amounted to 38,137.

Accordingly, the Bank’s unappropriated retained earnings as of December 31, 2004, are restricted by 84,226.

16.3.     As stated in note 11, under the agreements executed with the Trust Fund for Assistance to Financial Institutions and Insurance Companies (F.F.A.E.F.y S.), Banco Macro Bansud may not distribute as cash dividends (i) an amount exceeding 50% of liquid and realized income or (ii) an amount exceeding 25% up to 50% of liquid and realized income (as defined in regulations), unless it redeems in advance subordinated corporate bonds for an amount equivalent to 50% of the total cash dividends distributed.

16.4.     According to Law No. 25,063, the dividends distributed in cash or in kind will be subject to a 35% income tax withholding as a single and final payment. Dividend payments are subject to such withholding if they exceed the sum of: (i) the accumulated taxable earnings accumulated as of the year-end immediately prior to the payment or distribution date and (ii) certain tax-exempt income (such as dividend payments from other corporations). This is applicable for tax years ended as from December 31, 1998.

17. BANK CHECKING-ACCOUNT REGULATIONS

Under Law No. 24,760 and Central Bank Communiqué “A” 2,514, as supplemented, regulating bank checking accounts, a system of penalties was established for those financial institutions that, at any time after January 13, 1997, maintained checking accounts open when they should have been closed or opened checking accounts for disqualified holders.

Enforcing Communiqué “A” 2,909 and under Presidential Decree No. 347/99, the Central Bank required financial institutions that, through error or omission, had maintained open checking accounts of disqualified individuals or legal persons, from January 13, 1997, through April 16, 1999, and that had not been previously reported, file a brief reporting the total amount payable on account of the cases detected, with a 15floor and a 2,000cap, taking into account the amounts already paid in such respect. The Bank duly complied with this requirement.

Due to an injunction ordered in a legal action to which the former Banco Bansud S.A. is not a party and which put a stay on the effects of the abovementioned decree, the Central Bank demanded payment of the amount previously reported by the former Banco Bansud S.A., as mentioned in the preceding paragraph. In view of this situation, on October 21, 1999, the Bank paid the amount of 344 (not restated) assessed on the basis established by the Presidential Decree No. 347/99. Additionally the Bank addressed a letter to the oversight agency requesting that the latter reconsider the decision to claim the full amount reported by the Bank, until a definitive judgment had given legal certainty that the decree was valid and effective.

Subsequently, the former Banco Bansud S.A. filed with different courts requesting them to issue an injunction to maintain the status quo against the Central Bank in connection with the collection of such fines.

Management believes that it is not probable that these issues will result in additional losses and therefore no additional amounts have been accrued.

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Banco Macro Bansud and Subsidiaries

18. CLAIMS FROM THE A.F.I.P—D.G.I (FEDERAL PUBLIC REVENUE ADMINISTRATION—FEDERAL TAX BUREAU)

On January 21, 2002, the former Banco Bansud S.A. requested from the above agency that it be included in the debt consolidation, interest and fines exemption and payment in instalment plan system provided by Presidential Decree No. 1,384/01 to settle the taxes payable assessed by the authorities ex-officio according to a resolution of December 19, 2001. The abovementioned claim related to income tax differences of the former Banco del Sud for the 1993 and 1994 tax years, and it was based on having challenged certain methods applied that, in the former Banco Bansud S.A.’s opinion, were consistent with the guidelines set by the relevant regulations.

The amount the Bank has requested to settle is 10,780 in 120 monthly instalments. The amount in question was charged to expense in year ended December 31, 2001. As of December 31, 2004, the unpaid instalments of such settlement were recorded in the “Other liabilities” account.

Between 2002 and 2004, the former Banco Bansud S.A. and Banco Macro Bansud S.A. filed appeals and administrative remedies with the Federal Administrative Tax Court against A.F.I.P.—D.G.I. against resolutions which, in accordance with the position mentioned in the preceding paragraphs, had questioned the tax calculation for fiscal years 1995 through 1998.

The issue under discussion and on which the A.F.I.P. bases its position, that is, the requirement that court-enforced collection proceedings before a court must have been started for unpaid loans to be deducted from income tax, has been recently addressed by the Federal Administrative Tax Court, which ruled that this is not the only condition that would permit such deduction.

Management believes that it is not probable that these issues will result in additional losses and therefore no additional amounts have been accrued.

19. BALANCES IN FOREIGN CURRENCY

The balances of assets and liabilities denominated in foreign currency are as follows:

	As of December 31,
	2004		2003
ASSETS
Cash and due from banks		715,907		370,655
Government and private securities		116,347		221,821
Loans		361,549		160,828
Other receivables from financial intermediation		763,920		275,150
Investments in other companies		99,893		104,541
Other receivables		25,439		136,739
Items pending allocation		—		63
Total		2,083,055		1,269,797
LIABILITIES
Deposits		1,008,586		588,893
Other liabilities from financial intermediations		404,543		168,690
Other liabilities		930		1,281
Items pending allocation		48		—
Other subsidiaries’ liabilities		—		181
Total		1,414,107		759,045

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Banco Macro Bansud and Subsidiaries

20. INTEREST-BEARING DEPOSITS WITH OTHER BANKS

20.1.     Included in “Cash and Due from Banks” there are: (a) interest-bearing deposits with the B.C.R.A. totaling 625,906 and 304,741 as of December 31, 2004 and 2003, respectively and (b) interest-bearing deposits in foreign banks totaling 360,206 and 167,539 as of December 31, 2004 and 2003, respectively.

The interest-bearing deposits with the B.C.R.A. yielded a nominal annual interest rate of 2,05% and 0,80% as of December 31, 2004 and 2003, respectively, and the interest-bearing deposits in foreign banks yielded a nominal annual interest rate of approximately 0,625% and 2,00% as of December 31, 2004 and 2003, respectively.

20.2.     Included in “Other Receivables from Financial Transactions” there are other interest-bearing deposits with B.C.R.A. totaling 98,339 and 69,370 as of December 31, 2004 and 2003, respectively.

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Banco Macro Bansud and Subsidiaries

21. GOVERNMENT AND PRIVATE SECURITIES

		As of December 31,
		2004		2003
GOVERNMENT SECURITIES
Holdings in investment accounts
In foreign currency:
	Federal government bonds in USD at LIBOR, maturity 2012—Compensation (BODEN 2012)		53,856		143,976
Subtotal holdings in investment accounts			53,856		143,976
Holdings for trading or intermediation
In pesos:
	Province of Salta consolidation bonds in pesos		17		13,261
	Consolidation bonds of social security payables in pesos		11,557		6,407
	Federal government bonds (maturity 2007 and 2008) (BODEN 2007 and BODEN 2008)		1,277		98,218
	Consolidation bonds in pesos		5,649		4,020
	Argentine Republic external bills(1)		—		2,089
	Secured bonds Decree 1,579/02		18,351		3,348
	Tax credit certificates Decree 2217/02(1)		—		2,003
	Other		852		1,471
Subtotal holdings for trading or intermediation—In pesos			37,703		130,817
In foreign currency:
	Argentine Republic external bonds		1,271		162
	Argentine Republic external bills(1)		—		5,312
	Federal government bonds—(maturity 2005, 2006, 2012 and 2013)		47,415		64,756
	Consolidation bonds		1,298		—
	Argentine Republic external bills coupons—Series 74(1)		—		416
	Other		1,253		1,968
Subtotal holding for trading or intermediation—In foreign currency			51,237		72,614
Subtotal holding for trading or intermediation			88,940		203,431

(footnotes on following page)

F-53

Banco Macro Bansud and Subsidiaries

		As of December 31,
		2004			2003
Unlisted government securities
In pesos:
	Tax credit certificates under Decree 2,217/02AM, maturity 04/09/02(1)		11,441			3,077
	Argentine Republic external bills coupons(1)		2,089			—
	Federal government bonds—survey rate—3rd Series(1)		19			—
	Secured bonds Decree 1,579/02(2)		819,498			685,314
	Bonds issued by the Municipality of Bahía Blanca at 13.75%		2,257			3,636
	Federal government bonds in pesos at 9%, maturity 2002 (1)(3)		—			4,312
	Misiones Provincial T-Bills (CEMIS) in USD(3)		—			39
	Other		282			597
Subtotal unlisted government securities—In pesos			835,586			696,975
In foreign currency:
	Argentine Republic external bills coupons(1)		3,597			—
	Federal government bonds in USD at Libor, maturity 2013		—			—
Subtotal unlisted government securities—In foreign currency			3,597			—
Subtotal unlisted government securities			839,183			696,975
Instruments issued by Central Bank
In pesos:
	Listed Central Bank external bills (LEBAC)		994,944			—
	Unlisted Central Bank external bills (NOBAC)		102,636			1,097,022
Subtotal instruments issued by Central Bank			1,097,580			1,097,022
Total government securities			2,079,559			2,141,404
PRIVATE SECURITIES
Investments in listed private securities
	Shares		3,951			8,285
	Corporate bonds		14,872			—
	Debt securities in financial trusts		10,069			—
	Certificates of participation in financial trusts		757			9,214
Total private securities			29,649			17,499
Total government and private securities, before allowances			2,109,208			2,158,903
Allowances			(2,471	)		(3,137	)
Total government and private securities			2,106,737			2,155,766

(1)	Relate to the holdings submitted for the Argentine government debt restructuring process mentioned in note 1.2.b)3).
(2)	As of December 31, 2004, these securities were disclosed as “Unlisted government securities” albeit listed, because they are valued under Central Bank Communiqué “A” 3911 as supplemented.
(3)	Related to government securities originally denominated in US dollars and converted into pesos under Federal Executive Decree No. 471/02.

F-54

Banco Macro Bansud and Subsidiaries

		Maturing
				After 1 year		After 5 years
		Within 1		but within		but within 10		After 10
		year		5 years		years		years		Total
		Book value
		(in thousands of pesos)
Government securities
	in pesos:
Holding for trading or intermediation			839		16,850		10,205		9,809		37,703
	Consolidation bonds of social security payables in pesos		—		11,283		259		15		11,557
	Federal government bonds (maturity 2007 and 2008)		—		335		942		—		1,277
	Consolidation bonds in pesos		86		1,662		1,770		2,131		5,649
	Secured bonds Decree 1,579/02		734		3,524		7,231		6,862		18,351
	Other debt bonds		19		46		3		801		869
Unlisted government securities			35,277		158,006		322,528		319,775		835,586
	Secured bonds Decree 1,579/02		33,644		157,171		322,528		306,155		819,498
	Tax credit certificates under Decree 2,217/02AM, maturity 04/09/02		—		—		—		11,411		11,411
	Argentine Republic external bills		—		—		—		2,089		2,089
	Bonds issued by the Municipality of Bahía Blanca at 13.75%		1,509		748		—		—		2,257
	Other debt bonds		124		87		—		120		331
Instruments issued by Central Bank			795,875		301,705		—		—		1,097,580
	Listed Central Bank external bills		722,695		272,249		—		—		994,944
	Unlisted Central Bank external bills		73,180		29,456		—		—		102,636
	Total government securities in pesos		831,991		476,561		332,733		329,584		1,970,869
In foreign currency:
Investment account			8,712		25,796		19,348		—		53,856
Federal government bonds in USD at LIBOR, maturity 2012—Compensation (BODEN 2012)			8,712		25,796		19,348		—		53,856
Holding for trading or intermediation			15,933		25,175		6,346		3,783		51,237
Argentine Republic external bonds			—		—		—		1,271		1,271
Federal government bonds—(maturity 2005, 2006, 2012 and 2013)			15,915		25,154		6,346		—		47,415
Consolidation bonds			—		—		—		1,298		1,298
Other debt bonds			18		21		—		1,214		1,253
Unlisted government securities			—		—		—		3,597		3,597
Argentine Republic external bills coupons			—		—		—		3,597		3,597
Total government securities in foreign currency			24,645		50,971		25,694		7,380		108,690
Total government securities			856,636		527,532		358,427		336,964		2,079,559

F-55

Banco Macro Bansud and Subsidiaries

	Maturing
			After 1 year		After 5 years
	Within 1		but within		but within 10		After 10
	year		5 years		years		years		Total
	Book value
	(in thousands of pesos)
Corporate bonds		—		4,891		95		9,886		14,872
Debt securities in financial trusts		9,667		402		—		—		10,069
Certificates of participation in financial trusts		757		—		—		—		757
Shares		3,951		—		—		—		3,951
Total private securities		14,375		5,293		95		9,886		29,649
Total government and private securities, before allowances		871,011		532,825		358,522		346,850		2,109,208
Allowances										(2,471	)
Total government and private securities										2,106,737

22. LOANS

Description of certain categories of loans in the accompanying Balance Sheets include:

a.     Non-financial government sector: loans to the government sector, excluding government owned financial institutions;

b.     Financial sector: short-term loans to other banks and short-term loans from foreign branches to banks outside Argentina.

c.     Non financial private sector and foreign residents: loans given to the private sector (excluding financial institutions) and residents outside Argentina.

The classification of the loan portfolio in this regard was as follows:

	As of December 31,
	2004			2003
Non-financial government sector		809,577			365,549
Financial sector		81,812			17,835
Non-financial private sector and foreign residents
Commercial
—With Senior “A” guarantees		13,707			9,762
—With Senior “B” guarantees		214,308			33,455
—Without Senior guarantees		1,139,969			438,031
Consumer
—With Senior “A” guarantees		8,622			945
—With Senior “B” guarantees		347,982			56,464
—Without Senior guarantees		484,408			184,962
Less: Allowance		(225,340	)		(56,279	)
Total loans, net of allowance		2,875,045			1,050,724

F-56

Banco Macro Bansud and Subsidiaries

Senior “A” guarantees consist mainly of cash guarantees, gold guarantees, warrants over primary products and other forms of self-liquidating collateral.

Senior “B” guarantees generally consist of mortgages and other forms of collateral pledged to secure the loan amount.

“Without senior guarantees” consist, in general, of unsecured third-party guarantees.

A breakdown of total loans by geographical location of borrowers is as follows:

	2004			2003
Argentina		3,087,000			1,103,796
Chile		7			—
Ecuador		4			—
Thailand		2,651			—
Taiwan		637			—
United States of America		1,054			—
Brazil		207			2,417
Uruguay		8,825			696
France		—			58
United Kingdom		—			36
Less: Provision for loan losses		(225,340	)		(56,279	)
Total loans, net of allowances		2,875,045			1,050,724

A breakdown of total loans by sector activity classified according to the principal business of the borrowers is as follows:

Economic Activity	2004			2003
Agricultural livestock—Forestry—Fishing—Minery—Hunting		261,078			106,296
Foodstuff and beverages		190,586			71,591
Mass productions of products		119,193			18,023
Chemicals		100,356			28,239
Other		759,110			359,630
Electricity, oil, water		16,746			5,479
Construction		90,236			16,685
Retail and consumer products		282,367			50,413
Governmental services		860,039			368,442
Financial sector		326,924			68,209
Real estate, business and leases		93,750			13,996
Total loans		3,100,385			1,107,003
Less: Allowance		(225,340	)		(56,279	)
Total loans, net of Allowance		2,875,045			1,050,724

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Banco Macro Bansud and Subsidiaries

23. ALLOWANCES FOR LOAN LOSSES

The activity in the allowance for loan losses for the fiscal years presented is as follows:

	As of December 31,
	2004			2003			2002
—Balance at the beginning of the fiscal year		56,279			116,125			40,312
—Provision for loan losses(1)		36,467			35,009			117,767
—Allowances for loan losses from acquisition of Banco Bansud S.A.		—			—			52,796
—Allowances for loan losses from acquisition of Nuevo Banco Suquía S.A.		143,457			—			—
—Allowances for loan losses for purchased loans		21,329			495			(53,807	)
—Applications		(32,164	)		(64,887	)		(11,025	)
—Reversals(1)		(28	)		(29,608	)		—
—Monetary gain generated on allowances		—			(855	)		(29,918	)
—Balance at the end of the fiscal year(2)		225,340			56,279			116,125

(1)	As disclosed in note 31, under US SEC requirements, the amount of loan loss provision includes above amounts less recovered loans of 11,332.
(2)	As disclosed in note 31, under US SEC requirements, the amount of allowance for loan losses includes the allowance for assets subject to financial lease (See note 27).

24. OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

The breakdown of other banking receivables by guarantee type is as follows:

	As of December 31,
Description	2004			2003
With preferred guarantees		521,013			—
Without preferred guarantees		1,385,741			672,002
Allowances		(107,530	)		(134,145	)
		1,799,224			537,857

The breakdown of private securities recorded in Other receivables by financial intermediation is as follows:

	As of December 31,
Description	2004		2003
Corporate bonds— Unlisted		928		445
Debt securities in financial trusts— Unlisted		33,106		—
Certificates of participation in financial trusts— Unlisted		88,907		277,555
Total investments in unlisted private securities		122,941		278,000

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Banco Macro Bansud and Subsidiaries

As of December 31, 2004, maturities for the private securities disclosed above are as follows:

	Maturing
			After 1 year		After 5 years
	Within 1		but within 5		but within 10		After 10
	year		years		years		years		Total
Corporate bonds—Unlisted		113		570		245		—		928
Debt securities in financial trusts—Unlisted		23,106		10,000		—		—		33,106
Certificates of participation in financial trusts—Unlisted		12,275		—		—		76,632		88,907
Total investments in unlisted private securities		35,494		10,570		245		76,632		122,941

The Bank enters into forward transactions related to government securities and foreign currencies. The Bank recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date.

The assets and liabilities related to such transactions are as follows:

		As of December 31,
Description		2004		2003
Amounts receivable from spot and forward sales pending settlement
	Receivables from repurchase agreements of government securities		637,782		3,346
	Receivable from spot sales of government and private securities pending settlement		40,378		19,640
	Receivables from other repurchase agreements		1,151		7,270
	Receivables from forward sales of government securities		54,684		9,407
			733,995		39,663
Securities and foreign currency receivable from spot and forward purchases pending settlement
	Forward purchases of securities under repurchase agreements		202,334		3,434
	Spot purchases of government and private securities pending settlement		4,227		9,554
	Other forward purchases		—		23
			206,561		13,011
Amounts payable for spot and forward purchases pending settlement
	Payables for spot purchases of foreign currency pending settlement and forward purchases of foreign currency		1		—
	Payables for forward purchases of securities under repurchase agreements		126,762		3,446
	Payables for spot purchases of government securities pending settlement		3,631		6,417
	Payables under repo transactions		22,678		11,287
	Payable for spot purchases of government and private securities awaiting settlement		589		—
			153,661		21,150

F-59

Banco Macro Bansud and Subsidiaries

		As of December 31,
Description		2004		2003
Securities and foreign currency to be delivered under spot and forward sales pending settlement
	Forward sales of government securities under repurchase agreements		690,539		11,588
	Forward sales of government securities		58,870		13,432
	Forward sales of government securities under other repurchase agreements		1,551		7,822
	Spot sales of government and private securities pending settlement		3,212		5,013
	Other forward Sales		—		23
			754,172		37,878

These instruments consist of foreign currency forward purchase and sale contracts and securities repurchase agreements, whose valuation method is disclosed in note 4.4.i).

The fair value of these instruments held during the years ended December 31, 2004, and 2003, was:

	End-of-year fair
	value
	2004		2003
Assets		206,560		12,988
Liabilities		453,432		29,400

Premiums on these instruments have been included in the “Financial income” and “Financial expense” captions of the consolidated statement of income of each year.

25. PREMISES AND EQUIPMENT AND OTHER ASSETS

25.1.    Premises and equipment

The major categories of the Bank’s premises and equipment, and related accumulated depreciation are presented in the following table:

	As of December, 31,
	Estimated
	useful life
Description	(years)		2004			2003
Buildings		50		198,284			152,649
Furniture and facilities		10		59,017			45,429
Machinery and equipment		5		219,068			177,161
Vehicles		5		19,024			16,127
Other		—		514			—
Accumulated depreciation				(302,210	)		(233,686	)
Total				193,697			157,680

Depreciation expense was 16,570, 16,638 and 21,126 as of December 31, 2004, 2003 and 2002, respectively.

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Banco Macro Bansud and Subsidiaries

25.2.    Other assets

Other assets consisted of the following as of December 31, 2004 and 2003:

	As of December, 31,
	Estimated
	useful life
Description	(years)		2004			2003
Works in progress		—		3,832			181
Works of art		—		962			837
Prepayments for the purchase of assets		—		693			186
Assets acquired by attachment in aide of execution		—		20,864			1,318
Leased buildings		50		8,236			19,523
Stationery and office supplies		—		1,193			738
Other assets(1)		50		147,033			125,297
Accumulated depreciation		—		(24,671	)		(23,926	)
Total				158,142			124,154

(1) Mainly includes buildings acquired by attachment in aide of execution, which under Central Bank rules are included in this line after a period of 6 months from the acquisition.

Depreciation expense was 2,311, 2,473, and 2,492 at December 31, 2004, 2003 and 2002, respectively.

25.3.    Operating leases

As of December 31, 2004, the Bank’s branch network includes certain branches that were located in properties leased to the Bank (some of which are renewable for periods between 2 and 6 years).

The estimated future lease payments in connection with these properties are as follows:

	In thousands
Fiscal year end	of Ps.
2005		6,328
2006		4,724
2007		3,555
2008		1,913
2009		1,122
2010 and after		324
Total		17,966

As of December 31, 2004, 2003 and 2002, rental expenses amounted to 4,338, 3,575 and 4,611, respectively. As of such dates, there are no contractual obligations with separate amounts of minimum rentals, contingent rentals, and sublease rental income.

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Banco Macro Bansud and Subsidiaries

26. INTANGIBLE ASSETS

26.1.    Goodwill:

As of December 31, 2004 and 2003 goodwill breakdown is as follows:

	As of December 31,
	Estimated
	useful life
Description	(years)		2004		2003
Goodwill for the purchase of Banco de Jujuy S.A., net of accumulated amortization of 5,828 as of December 31, 2004		7		2,485		3,324

Amortization expense on goodwill was 839 both as of December 31, 2004 and 2003 and 995 as of December 31, 2002.

On January 12, 1998, Banco Macro acquired 80% of the capital stock of Banco de Jujuy in the amount of Ps.5.1 million. The assets transferred amounted to Ps.30 million and the liabilities assumed amounted to Ps.28 million (historical values).

Under Central Bank Rules, this transaction resulted in Banco Macro’s positive goodwill amounting to Ps.3.5 million, which is amortized in seven years and no impairment is required.

Under U.S. G.A.A.P., as a result of the economic crisis undergone by Argentina since 2001, the Bank concluded that such goodwill was fully impaired and wrote off the total amount of that goodwill and the amortization expenses recognized under Central Bank rules were reversed for U.S. G.A.A.P. purposes. Such adjustment is included in note 35.7.d).

26.2.    Organization and development costs:

As of December 31, 2004 and 2003, of organization and development costs breakdown as follows:

	As of December 31,
	Estimated
	useful life
Description	(years)		2004		2003
Differences due to courts orders— no deductible for the determination of computable equity		5		50,037		44,730
Cost from information technology projects		5		24,941		27,624
Organizational cost		5		2,698		5,575
Other capitalized cost		5		1,370		932
Total				79,046		78,861

Amortization expense was 25,267, 21,511 and 15,921 as of December 31, 2004, 2003 and 2002, respectively.

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Banco Macro Bansud and Subsidiaries

Intangible assets changed as follows during fiscal years ended December 31, 2004, 2003 and 2002:

	Fiscal year ended December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		82,185			37,809			33,103
Additions		25,445			74,187			15,199
Decreases		—			(7,583	)		—
Amortization expense		(26,099	)		(22,228	)		(10,493	)
Balance at the end of the fiscal year		81,531			82,185			37,809

27. OTHER ALLOWANCES AND PROVISIONS

The activity of the following allowances deducted from assets or included in liabilities, in accordance with Central Bank rules, are as follows:

Government and private securities

Recorded to cover possible impairment risk arising out of government securities.

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		3,137			3,844			6,718
Allowances for government and private securities losses from acquisition of Banco Bansud S.A.		—			—			1,839
Allowances for government and private securities losses from acquisition of Nuevo Banco Suquía S.A.		2,471			—			—
Write off		(2,997	)		—			(1,059	)
Reversals		(140	)		(679	)		—
Monetary gain generated on allowances		—			(28	)		(3,654	)
Balance at the end of the fiscal year		2,471			3,137			3,844

Other receivables from financial intermediation

Recorded in compliance with the provision of Communication “A” 2950, as supplemented, of the Central Bank, taking into account note 4.4.g).

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		134,145			118,532			785
Provision for other receivables for financial intermediation losses		716			18,215			378
Provision for other receivables for financial intermediation losses from acquisition of Banco Bansud S.A.		—			—			117,907
Provision for other receivables for financial intermediation losses from acquisition of Nuevo Banco Suquía S.A.		102,767			—			—
Write off		(130,098	)		(43	)		(30	)
Reversals		—			(1,687	)		—
Monetary gain generated on allowances		—			(872	)		(508	)
Balance at the end of the fiscal year		107,530			134,145			118,532

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Assets subject to financial lease

Recorded in compliance with the provision of Communication “A” 2950, as supplemented, of the Central Bank, taking into account note 4.4.g)

	As of December 31,
	2004		2003		2002
Balance at the beginning of the fiscal year		—		—		—
Provision for assets subject to financial lease		609		—		—
Balance at the end of the fiscal year(1)		609		—		—

(1) Under U.S. S.E.C. requirements, they were included in “Assets— Allowance for loan losses”.

Investment in other companies

Recorded to cover possible impairment risk arising out of investments in other companies.

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		2			6			—
Provision for investment in other companies losses		3,003			—			—
Allowances for investment in other companies losses from acquisition of Banco Bansud S.A.		—			—			6
Allowances for investment in other companies losses from acquisition of Nuevo Banco Suquía S.A.		321			—			—
Write off		(2,607	)		(4	)		—
Balance at the end of the fiscal year		719			2			6

Other receivables

Following is a summary of amounts recorded to cover uncollectability risk of other receivables. Amounts include allowances on the receivables recovered from Suquía Trust.

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		3,630			3,256			738
Provision for other receivables losses		1,223			583			227
Allowances for other receivables losses from acquisition of Banco Bansud S.A		—			—			2,726
Allowances for other receivables losses from acquisition of Nuevo Banco Suquía S.A.		1,689			—			—
Applications		(341	)		(185	)		(43	)
Monetary gain generated on allowances		—			(24	)		(392	)
Balance at the end of the fiscal year		6,201			3,630			3,256

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Provisions—Contingencies and Commitments

Following is a rollforward of the allowance recoded under Central Bank’s rules to cover contingent losses related to loan commitments. These amounts have been accrued in accordance with Central Bank’s rules, which are similar to SFAS No. 5.

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		5,342			25,562			971
Provision for contingent commitments losses		843			2,139			1,165
Allowances for contingent commitments losses from acquisition of Banco Bansud S.A		—			—			24,216
Allowances for contingent commitments losses from acquisition of Nuevo Banco Suquía S.A.		48			—			—
Applications		—			(293	)		—
Reversals		(3,113	)		(21,879	)		—
Monetary gain generated on allowances		—			(187	)		(790	)
Balance at the end of the fiscal year		3,120			5,342			25,562

Provisions—Negative Goodwill

Following is the rollforward of the amounts recorded to cover the difference between the purchase price and the book value of the net equity acquired of Banco Bansud:

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		219,336			295,156			—
Allowances		483			—			672,595
Amortization		(73,112	)		(73,112	)		(73,654	)
Monetary gain generated on allowances		—			(2,708	)		(303,785	)
Balance at the end of the fiscal year		146,707			219,336			295,156

Provisions—Other loss contingencies

Principally includes labor litigation and customer and other third-parties claims. The amounts have been accrued in accordance with Central Bank’s rules, which are similar to SFAS No. 5.

	As of December 31,
	2004			2003			2002
Balance at the beginning of the fiscal year		60,450			70,860			—
Provision for other contingent losses		3,211			3,445			—
Provision for other contingent losses from acquisition of Banco Bansud S.A		—			—			70,860
Provision for other contingent losses from acquisition of Nuevo Banco Suquía S.A.		16,948			—			—
Applications		(1,492	)		(2,627	)		—
Reversals		(3,245	)		(11,084	)		—
Monetary gain generated on allowances		—			(144	)		—
Balance at the end of the fiscal year		75,872			60,450			70,860
Total of provisions		225,699			285,128			391,578

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28. DEPOSITS AND OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION

28.1.    Deposits

The aggregate amount of time deposits and investment accounts exceeding Ps.100 or more as of December 31, 2004 is 1,920,000.

28.2.    Central Bank of Argentina

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of December 31,
	2004							2003
	Principal		Interest		Rate			Principal		Interest		Rate
Short-term liabilities		72,162		13,514		4,11	%		2,088		9		4,83	%
Long-term liabilities		329,561		70,030		4,18	%		256		—		0,90	%
Total		401,723		83,544					2,344		9

Accrued interest and adjustments on the above liabilities amounts to 83,544 and 9 as of December 31, 2004, and 2003, respectively, and is included in “Accrued interest, adjustments and foreign exchange differences payable” under the “Other liabilities from financial intermediation” in the accompanying consolidated balance sheets.

Maturities of the long-term liabilities in the table above for each of the following fiscal years are as follows:

	As of December 31,
Fiscal year	2004		2003
2006		71,614		118
2007		52,107		138
2008		80,880		—
2009		71,527		—
2010		17,811		—
As from 2010		35,622		—
Total		329,561		256

28.3.    Banks and international institutions

	As of December 31,
	2004							2003
	Principal		Interest		Rate			Principal		Interest		Rate
Short-term liabilities		13,017		230		3,42	%		53,245		129		2,97	%
Long-term liabilities		1,651		—		2,98	%		1,628		—		2,97	%
Total		14,668		230					54,873		129

Accrued interest and adjustments are included in the “Accrued interest, adjustments and foreign exchange differences payable” account. Amounts are unsecured.

Long-term liabilities expire in 2007.

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In January, 2005 the Bank obtained a USD 50 million loan from Credit Suisse First Boston with an 18-month term at the LIBOR rate plus 2.7%.

28.4.    Financing received from Argentine financial institutions

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of December, 31
	2004							2003
	Principal		Interest		Rate			Principal		Interest		Rate
Short-term liabilities		32,021		673		2,49	%		24,292		599		1,50	%
Long-term liabilities		24,814		14,945		2,05	%		27,805		11,731		4,64	%
Total		56,835		15,618					52,097		12,330

Accrued interest and adjustments are included in “Accrued interest, adjustments and foreign exchange differences payable” under the “Other liabilities from financial intermediation” in the accompanying consolidated balance sheets. Amounts are unsecured.

Maturities of the long-term liabilities in the table above for each of the following fiscal years are as follows:

	As of December 31,
Fiscal year	2004		2003
2005		—		2,671
2006		2,775		2,764
2007		4,210		1,952
2008		1,821		1,786
2009		1,821		1,786
2010		2,579		2,530
2011		2,731		2,679
2012		2,731		2,679
2013		2,731		2,679
2014		4,173		4,093
2015		4,461		4,376
2016		4,461		4,376
2017		4,461		4,376
2018		804		789
Total		39,759		39,536

29. EMPLOYEE BENEFIT PLANS

The Bank does not maintain pension plans for its personnel. The Bank is required to pay employer contributions, determined on the basis of total monthly payroll.

These expenses aggregated 17,988, 14,826 and 16,671 for the fiscal years ended December 31, 2004, 2003 and 2002, respectively, and are included in the “Operating Expenses—Payroll expenses” account in the Consolidated Statements of Income.

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30. MINIMUM CAPITAL REQUIREMENTS

Under Central Bank’s rules, the Bank is required to maintain individual and consolidated minimum levels of equity capital (“minimum capital”). As of December 31, 2004 and 2003, the consolidated minimum capital is based upon risk-weighted assets and also considers interest rate risk and market risk. The required consolidated minimum capital and the consolidated Bank’s capital calculated under the Central Bank’s rules are as follows:

					Excess of actual
					minimum
					capital over
	Required				required
	minimum		Computable		minimum
	capital		capital		capital
December 31, 2004		250,780		1,361,237		1,110,457
December 31, 2003		209,988		1,333,785		1,123,797

31. CONSOLIDATED INCOME STATEMENTS AND BALANCE SHEET

The presentation of consolidated financial statements under Central Bank’s rules differs significantly from the format required by the U.S. Securities and Exchange Commission (SEC) under Rules 9-03 and 9-04 of Regulation S-X (“Article 9”). The following consolidated financial statements were restated into constant pesos, as explained in note 4.3. These consolidated financial statements were prepared using the measurement methods provided by Central Bank, but under US SEC requirements:

Consolidated statements of income		2004			2003			2002
Interest and fees on loans			144,833			111,024			392,835
Interest on interest-bearing deposits with other banks			1,570			1,892			3,658
Interest on other receivables from financial intermediation			18,953			34,045			208,512
Interest on securities and foreign exchange purchased under resale agreements			3,539			780			2,933
Government securities and other trading gains, net			216,937			275,988			171,317
Foreign exchange, net			27,954			(65,498	)		835,003
Other interest income			6,139			2,951			5,341
	Total interest income		419,925			361,182			1,619,599
Interest on deposits			73,899			124,854			379,446
Interest on short-term borrowings			4,602			4,245			7,996
Interest on long-term debt			11,394			6,368			24,248
Other interest expense			34,659			45,462			100,902
Monetary loss on financial intermediation			—			3,899			317,530
	Total interest expense		124,554			184,828			830,122
	Net interest income		295,371			176,354			789,477
Provision for loan losses, net			(25,107	)		7,497			(67,306	)
	Net interest income after provision for loan losses		270,264			183,851			722,171
Service charges on deposit accounts			81,503			82,529			97,960
Credit-card service charges and fees			41,310			18,653			15,672
Other commissions			4,362			4,047			3,451
Foreign currency exchange trading income			5,928			4,926			6,326
Income from equity in other companies			3,765			2,950			18,548
Negative Goodwill			73,112			73,112			73,112

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Consolidated statements of income		2004		2003		2002
Other			29,649		128,010		30,954
Monetary loss on other operations			—		—		35,760
	Total non-interest income		239,629		314,227		281,783
Commissions			4,989		3,651		9,043
Salaries and payroll taxes			132,910		112,493		144,116
Outside consultants and services			16,729		15,560		14,257
Depreciation of bank premises and equipment			18,881		19,111		23,619
Rent			4,898		4,501		5,344
Stationery and supplies			3,902		3,807		4,712
Electric power and communications			9,366		9,391		11,164
Advertising and publicity			12,048		5,991		2,891
Taxes			3,353		3,175		3,480
Management Fee			5,861		5,608		7,126
Insurance			4,096		4,195		3,146
Security services			10,184		8,473		8,077
Maintenance, conservation and repair expenses			11,638		9,130		8,072
Amortization of organization and development expenses			26,106		22,351		16,916
Provision for losses on other receivables and other allowances			3,920		21,730		80,678
Other			47,363		47,785		76,132
Monetary loss on operating expense			—		107		9,468
Monetary loss on other operations			—		337		—
	Total non-interest expense		316,244		297,396		428,241
Minority interest of subsidiaries			—		—		2
Income before income tax expense			193,649		200,682		575,715
Income tax expense			672		833		3,601
Income from continuing operations			192,977		199,849		572,114
Net income			192,977		199,849		572,114
Earnings per common share			0.32		0.33		1.78

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Central Bank’s rules also require certain classifications of assets and liabilities, which are different from those required by Article 9. The following table discloses the Bank’s consolidated balance sheets as of December 31, 2004, and 2003, as if the Bank followed the balance sheet disclosure requirements under Article 9:

			2004			2003
ASSETS
	Cash and due from banks			385,004			201,455
	Interest-bearing deposits in other banks			1,084,451			541,650
	Securities purchased under resale agreements of similar arrangements			853,992			14,050
	Other short-term investments			928			445
	Trading account assets			116,118			220,768
	Investment securities available for sale			1,990,619			1,928,920
	Loans			3,181,895			1,152,507
	Allowance for loan losses			(225,949	)		(56,279	)
	Premises and equipment			351,506			283,757
	Due from customers on acceptances			38,617			29,846
	Other assets			689,637			362,694
		Total assets		8,466,818			4,679,813
LIABILITIES AND SHAREHOLDERS’ EQUITY
	Interest-bearing deposits			3,942,971			2,358,654
	Non interest-bearing deposits			1,376,026			668,590
	Securities sold under repurchase agreements			841,530			34,143
	Other short-term borrowings			167,053			87,432
	Long-term borrowings			610,200			224,737
	Contingent liabilities			79,475			65,792
	Other liabilities			137,225			61,197
	Bank acceptances outstanding			38,617			29,846
	Subordinated corporate bonds			16,416			24,200
	Minority interest in consolidated subsidiaries			3			3
		Total liabilities		7,209,516			3,554,594
	Common shares			608,943			608,943
	Retained appropriated earnings			222,320			174,840
	Retained unappropriated earnings			421,528			336,925
	Other shareholders’ equity			4,511			4,511
		Total shareholders’ equity		1,257,302			1,125,219
		Total liabilities and shareholders’ equity		8,466,818			4,679,813

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Banco Macro Bansud and Subsidiaries

32. OPERATIONS BY GEOGRAPHICAL SEGMENT

The principal financial information, classified by country of office where transactions originate, is shown below:

	As of December 31,
	2004			2003			2002
Total revenues		691,914			786,244			1,927,647
Argentina		678,380			774,920			1,922,694
Bahamas		13,534			11,324			4,953
Net income		192,977			199,849			572,114
Argentina		195,920			207,070			600,990
Bahamas		(2,943	)		(7,221	)		(28,876	)
Total assets		8,797,755			5,025,027			3,818,074
Argentina		8,353,264			4,814,982			3,665,791
Bahamas		444,491			210,045			152,283

33. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank enters into various transactions involving off-balance-sheet financial instruments. These instruments could be used to meet the risk management, trading and financing needs of customers or for the Bank’s proprietary trading and asset and liability management purposes, and could be subject to varying degrees of credit and market risk. Credit risk and market risk associated with on- and off-balance-sheet financial instruments are monitored on an aggregate basis.

The Bank uses the same credit policies in determining whether to enter or extend call and put option contracts, commitments, conditional obligations and guarantees as it does for granting loans.

Derivatives

In the normal course of business, the Bank enters into a variety of transactions principally in the foreign exchange and stock markets. Most counterparts in the derivative transactions are banks and other financial institutions.

These instruments include:

†	Options: they confer the right to the buyer, but no obligation, to receive or pay a specific quantity of an asset or financial instrument for a specified price at or before a specified date. Options may be traded on a stock exchange or under Over-the-Counter (OTC) agreements.
†	Forwards: they are agreements to deliver or take delivery at a specified rate, price or index applied against the underlying asset or financial instrument, at a specific date. Forwards are traded on stock exchange at standardized amounts of the underlying asset or financial instrument.

Pursuant to Central Bank’s rules, forward transactions must be recorded under “Other receivables from financial intermediations” and “Other liabilities from financial intermediations” in the accompanying consolidated balance sheets and they were valued as mentioned in note 4.4.i) (accrual method).

The notional contractual amount of these instruments represents the volume of outstanding transactions and do not represent the potential gain or loss associated with the market or credit risk of such transactions. The market risk of derivatives arises from the potential for changes in value due to fluctuations in market prices.

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The credit risk of derivatives arises from the potential of the counterparty to default on its contractual obligations. The effect of such a default varies as the market value of derivative contracts changes. Credit exposure exists at a particular point in time when a derivative has a positive market value. The Bank attempts to limit its credit risk by dealing with creditworthy counterparts and obtaining collateral, where appropriate. The following table shows, the notional value of outstanding forward contracts as of December 31, 2004, and 2003:

	As of December 31,
	2004			2003
Put options taken		10,453	(a)		—
Forward sales of foreign exchange		22,304	(b)		—
Forward purchases of foreign exchange		22,304	(b)		—
Put options sold		122,055	(c)		125,009

(a)

The Company acquired from another financial institution the rights to receive government bonds -  Boden 2013. In order to mitigate the risk generated by the possible delay of delivery of the underlying bonds, the Bank acquired a put option for the same face value. Under Central Bank rules, they were valued at their strike price (accrual method). This is the only transaction of this type that the Bank entered during 2004.

(b)

Such transactions are matched both in terms of amounts and maturity. The Bank enters into these transactions to take advantage of price differentials. The volume of these transactions is very low (less than 40 in 2004). Under Central Bank rules, they were valued at accrual method as of December 31, 2004. They expired in January 2005.

(c) Such options were imposed by the Federal Government to all financial institutions.

As mentioned on in Note 4.4.o, the Bank recorded in memorandum accounts the amounts representing obligations of the Bank under put options sold related to the Federal Government Bond coupons established in Presidential Decrees Nos. 905/02 and 1,836/02.

During the Argentine crisis and pursuant to such decrees, the deposits which were denominated in US Dollars were exchanged for peso denominated government bonds using a Ps.1.4 to the U.S.$1.00 exchange rate. The bonds received by the depositors carried an interest rate plus CER (an inflation index) adjustment.

In order to enhance the public’s trust in the system and the exchange mechanisms, the Central Bank of Argentina effectively required the banks to issue a put option to the depositors who so requested. Such put options will entitle the bondholders to receive 1.4 exchange rate, plus accrued interest plus CER. This was intended to effectively provide a floor for the yield of such government bonds for the holders, therefore, if the value of these bonds were to decrease below the terms of the put options (ie, Ps.1.4 exchange rate plus interest plus CER), the holders would then be able to present the put options to the Bank and receive such value. These options expire 30 days after the expiration of each coupon received by the depositors, in varying dates through 2013. As it is a put option established by the Federal Government to the detriment of the Bank, the holders of such options did not pay any type of premium to the Bank and thus the Bank has never recognized any income from these options, and has never established an initial liability since it received no up-front premium.

Since the exchange, these government bonds have increased in value significantly given the improvement of the Argentina’s economy and therefore of the government’s creditworthiness. Therefore the options have never had any intrinsic value. It should be noted that the interest rate and terms of the options are the same as the bonds and therefore the options will only be

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Banco Macro Bansud and Subsidiaries

exercised in case of government default. The Bank understands that such options have only a di minimus value. Under Central Bank rules, they were valued at their strike price and recorded only in memo accounts.

Credit-related financial instruments

The Bank’s exposure to credit loss in the event of the counterparts’ failure to fulfill the commitments to extending credit, guarantees granted and foreign trade acceptances is represented by the contractual notional amount of those investments.

A summary of credit exposure related to these items is shown below (*):

	As of December 31,
	2004		2003
Unused portion of loans granted per debtors classification regulations		22,702		—
Other guarantees provided covered by debtors classification regulations		90,285		84,904

(*)  A significant portion of the Bank’s guarantees as of December 31, 2004, and 2003, have a remaining maturity of less than one year.

The Bank accounts for checks drawn thereon and on other banks, as well as other items in process of collection, such as notes, bills and miscellaneous items, in memorandum accounts until the related item clears or is accepted. In Management’s opinion, no significant risk of loss exists on these clearing transactions. The amounts of clearing items in collection process are as follows:

	As of December 31,
	2004		2003
Checks drawn on the Bank pending clearing		261,096		180,558
Checks drawn on other Banks		92,873		34,259

34. BUSINESS SEGMENT CONSOLIDATED INFORMATION

SFAS No. 131 requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available that is regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. Management has determined that the Bank has one reportable segment related to banking activities.

35. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN CENTRAL BANK’S RULES AND UNITED STATES ACCOUNTING PRINCIPLES

The following is a description of the significant differences between Central Bank’s rules followed in the preparation of the Bank’s financial statements and those applicable in the United States under generally accepted accounting principles (“U.S. G.A.A.P.”). “SFAS” shall refer to Statements of Financial Accounting Standards.

35.1. Income taxes

a)     As explained in note 5, Central Bank’s rules do not require the recognition of deferred tax assets and liabilities and, therefore, income tax is recognized on the basis of amounts due in accordance with Argentine tax regulations and no deferred tax and liabilities are recognized.

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For purposes of U.S. G.A.A.P. reporting, the Bank applies SFAS No. 109 “Accounting for income taxes”. Under this method, income tax is recognized based on the liability method whereby deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax basis of assets and liabilities at each reporting date. SFAS No. 109 requires that an allowance for deferred tax assets be provided to the extent that it is more likely than not that they will not be realized, based on the weight of available evidence.

Deferred tax assets and liabilities are summarized as follows:

			As of December 31,
Description			2004			2003
Deferred tax assets:
	Governments and private securities valuation			—			28,946
	Loans			28,361			33,270
	Intangible assets			14,477			15,084
	Other liabilities			—			2,859
	Allowance for loss contingencies			30,566			26,252
	Net tax loss carry forwards			242,138			92,317
		Total deferred assets		315,542			198,728
Deferred tax liabilities:
	Governments and private securities valuation			(3,788	)		—
	Property, equipment and other assets			(58,770	)		(47,319	)
	Other liabilities			(9,988	)		—
	Foreign exchange difference			(4,562	)		(1,159	)
	Other			(29	)		(384	)
		Total deferred liabilities		(77,137	)		(48,862	)
Deferred tax asset				238,405			149,866
Allowance for deferred tax assets				(109,931	)		(102,621	)
Net deferred tax assets under U.S. G.A.A.P				128,474			47,245

As of December 31, 2004, the consolidated tax loss carry forwards of 691,823 are as follows:

Expiration year	Amount
2006		80,854
2007		284,589
2008		243,155
2009		83,225
		691,823

The evolution of the net deferred tax assets/ liabilities during 2004 fiscal year is summarized as follows:

	2004			2003
Net deferred tax assets at the beginning of the year		47,245			(20,249	)
Net deferred tax assets acquired on business combinations		135,123			(2,496	)
Amount recorded in comprehensive income		(47,893	)		(28,095	)
Deferred tax expense for the year		(6,001	)		98,085
Net deferred tax assets as of December 31, 2004		128,474			47,245

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The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory income tax rate in Argentina to income before income tax in accordance with U.S. G.A.A.P.:

		Year ended
		December 31,
Description		2004			2003
Pre-tax income in accordance with U.S. G.A.A.P.			100,902			216,119
Statutory income tax rate			35.00	%		35.00	%
Tax on net income at statutory rate			35,316			75,642
Permanent differences at the statutory rate:
	—Variation of allowances		(63,533	)		(65,926	)
	—Income not subject to income tax		9,386			(103,496	)
	—Others		25,504			(3,472	)
Income tax in accordance with U.S. G.A.A.P.			6,673			(97,252	)

The following table accounts for the difference between the actual tax provision under Central Bank regulations and the total income tax expense in accordance with U.S. G.A.A.P.:

	Year ended
	December 31,
Description	2004		2003
Income tax in accordance with Central Bank regulations		672		833
Deferred tax charges/ (benefit)		6,001		(98,085	)
Total income tax expense in accordance with U.S. G.A.A.P.		6,673		(97,252	)

b) In addition, as of December 31, 2004 and 2003 the Bank records an asset of 59,313 and 38,655, respectively for the credit for Tax on minimum presume income. As mentioned in note 5 to the financial statements, under Central Bank Rules, such credit is considered to be an asset because Management estimates it will be used within ten years, which is the period allowed by the Central Bank Communiqué “A” 4,295, as amended. In accordance with U.S. G.A.A.P., a valuation allowance was recorded for the portion of such credit which was deemed to be more likely than not that it would not be recovered, as per paragraphs 17 (e) and 25 of SFAS 109. The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 8,662 as of December 31, 2004 and 2003, each year.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 8,662 as of December 31, 2004 and 2003, each year.

35.2.    Exposure to the Argentine Public Sector and Private Securities

a) Loans—Non-financial federal governmental sector

As mentioned in note 1.2.b.1) during the fiscal year ended December 31, 2001, and as a consequence of Presidential Decree No. 1,387/01, the Bank exchanged a portion of federal government securities effective as of November 6, 2001, and received so-called guaranteed loans in consideration thereof.

As provided for by Central Bank Communiqués “A” 3,366 and “A” 3,385, the exchange was made at the carryover book value of the securities as of the date of the exchange with no impact on the income statement.

According to Central Bank’s rules, such loans were valued by using the criteria described in note 4.4.

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The loans received in this exchange were not significant.

In addition, subsequently, the Bank acquired additional guaranteed loans in the market and also through business combinations described elsewhere in this footnote. The difference between the cost of each acquired loan and its expected future cash flows is accounted for in accordance with PB 6—Amortization of Discounts on Acquired Loans. In 2005, the Bank will implement SOP 03-3—“Accounting for Certain Loans and Debt Securities Acquired in a Transfer”.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 168,219 and 171,431 as of December 31, 2004 and 2003, respectively.

On the other hand, income would increase by 3,212 and decrease by 30,412 for the year ended December 31, 2004 and 2003.

b)     Loans/Bonds—Non-financial provincial government sector

Presidential Decree No. 1,387/01 instructed the Argentine Ministry of Economy to offer the possibility of converting provincial government debt into secured loans.

As mentioned in note 1.2.b)2), through Decree No. 1,579/02, the Federal Executive instructed the Provincial Development Trust Fund to assume provincial debts that were in the form of Government Securities, Bonds, Treasury Bills, or Loans and to voluntarily convert them into Secured Bonds. The Federal Government was entrusted by provincial governments with the duty to renegotiate provincial government debts, which could be restructured under the same terms and conditions as the federal government debt and government securities.

The Bank presented before Banco de la Nación Argentina, in its capacity as fiduciary agent of the Fiduciary Fund for Provincial Development, the eligible assets (primarily loans) receivable from the Provincial Government Sector under the abovementioned decrees, for the exchange established by Presidential Decree No. 1,387/01.

Under U.S. G.A.A.P., as mentioned above, and in light of the characteristics of the transaction, the Bank considered this transaction to be in line with SFAS 15 “Accounting by Debtors and Creditors for Troubled Debt Restructurings”. As the debtor was actually experiencing financial difficulties and the creditor granted concessions.

At the time of the exchange, in accordance with SFAS No. 114 “Accounting by Creditors for Impairment of a Loan”, as of December 31, 2001, and 2002, the Bank measured impairment based on the present value of expected future cash flows discounted at the asset’s effective interest rate, with a corresponding charge to bad-debt expense.

In 2003, the loans were exchanged for government securities known as Secured Bonds (BOGAR) which were accounted for in accordance with SFAS 115.

As of December 31, 2004, and 2003, these BOGAR are classified for U.S. G.A.A.P. purposes as available for sale securities and carried at fair value with the unrealized gain or loss, net of income taxes, recognized as a charge or credit to equity through other comprehensive income. In connection with estimating the fair value of the BOGAR, the Bank used quoted market values.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would increase assets by 30,509 and decrease by 71,985 as of December 31, 2004 and 2003, respectively.

On the other hand, income would increase by 12,407 and 175,923 for the years ended December 31, 2004, and 2003, respectively.

The breakdown of unrealized gains within the shareholders’ equity accounts as of December 31, 2004, and 2003, is disclosed in note 35.16.

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c)     Other Loans—Non-financial provincial government sector

As of December 31, 2004 and 2003, the Bank had other loans granted to the non-financial provincial government sector (excluding the assets presented for the debt exchange mentioned in point b) above, which were valued according to the criterion described in note 4.4.

In accordance with SFAS No. 114, as of December 31, 2004 and 2003, the Bank deemed these loans to be impaired and measured impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, with a corresponding adjustment to bad-debt expense.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 5,945 and 18,792 as of December 31, 2004 and 2003, respectively.

On the other hand, income would increase by 12,847 and 18,016 for the years ended December 31, 2004, and 2003, respectively.

d)     Compensatory Bonds received and to be received in connection with the compensation for the “asymmetric pesification” and Coverage Bonds to be received in connection with the compensation for foreign currency position

As mentioned in note 1.2.a), under Law No. 25,561 and Presidential Decrees No. 494/ 02, No. 905/ 02 and No. 2,167/ 02, the Federal Government established a compensation mechanism for financial institutions because of the negative financial effects resulting from the pesification of foreign currency-denominated loans and deposits into pesos at different exchange rates. In this regard, as further explained in such note, the Central Bank, through Communiqués “A” 3,650, “A” 3,716, as supplemented, regulated the compensation mechanism mentioned above.

As of December 31, 2004 and 2003, according to Central Bank’s rules the compensation received and to be received and the Coverage bond to be received were valued according to the criterion described in note 4.4.

Under U.S. G.A.A.P., these assets (including those used for forward purchases under repurchase agreements) should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported net of income tax within the shareholders’ equity accounts.

Additionally, SFAS No. 115 requires that if the decline in fair value is judged to be other than temporary, the cost of the security shall be written down to fair value, and the amount of the write-down shall be included in earnings. The new cost basis shall not be changed for subsequent recoveries in fair value. Subsequent increases in the fair value of available-for-sale securities shall be included in other comprehensive income.

As of December 31, 2002, the Bank considered that the decline in fair value was other than temporary and recognized such loss.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 69,936 and 147,146 as of December 31, 2004 and 2003, respectively.

On the other hand, income would increase by 29,194 and 86,576 for the years ended December 31, 2004 and 2003, respectively.

The breakdown of unrealized gains within the shareholders’ equity accounts as of December 31, 2004 and 2003, is disclosed in note 35.16.

e)     Other unlisted government securities

As of December 31, 2004, 2003, and 2002, the Bank had other unlisted government securities (excluding those unlisted government securities mentioned above). In accordance with Central Bank’s rules, these unlisted government securities were valued according to the criterion described in note 4.4.

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According to U.S. G.A.A.P., these securities should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported as net of income tax within the shareholders’ equity accounts. However, SFAS No. 115 requires that if the decline in fair value is judged to be other than temporary, the cost of the security shall be written down to fair value, and the write down amount shall be included in earnings.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would increase assets by 14,351 and 4,874 as of December 31, 2004 and 2003, respectively.

On the other hand, income would increase by 9,477 and 37,621 for the years ended December 31, 2004 and 2003, respectively.

The amortized cost and fair value of Government Securities available for sale as of December 31, 2004 and 2003, are as follows:

			Net unrealized gains
	Amortized cost		before income taxes		Fair value
2004		2,221,116		204,708		2,425,824
2003		1,752,887		66,605		1,819,492

The proceeds from sales of available for sale securities and the gross realized gains and gross realized losses that have been included in earnings as a result of those sales, for the periods ended December 31, 2004 and 2003 are as follows:

	Proceeds from sales
	as of December 31,
Available for sale securities (*)	2004	2003
Debt Securities Issued by Argentinian Government	570,800	447,897

(*)There have been no realized gains or losses as a result of those sales, therefore there were no gains and losses reclassified out of accumulated other comprehensive income into earnings for the periods ended December 31, 2004 and 2003 (very short term securities).

The amount of the net unrealized holding gain or loss on available for sale securities that have been included in accumulated other comprehensive income is as follows:

	Other Comprehensive Income
Securities	2003		Increase		Decrease		2004
Compensatory Bonds		11,580		18,215		76		29,719
Secured Bonds Decree 1579/02		38,109		90,087		—		128,196
Compensatory Bonds to be Received		16,916		31,874		1,997		46,793
Total Government Securities		66,605		140,176		2,073		204,708

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Banco Macro Bansud and Subsidiaries

The portion of trading gains and losses for the period that relates to trading securities still held as of December 31, 2004 and 2003 are as follows:

	Gains as of
	December 31,
Trading Securities	2004		2003
Debt Securities Issued by Argentinian Government		1,470		4,651
Shares		264		491
Corporate Bonds		173		—
Other Debt Securities		3		—
		1,910		5,142

35.3.    Loan origination fees

The Bank recognizes fees on consumer loans, such as credit cards, mortgage, pledged and personal loans stand by letters of credit and guarantees issued, when collected and charges direct origination costs when incurred. In accordance with U.S. G.A.A.P. under SFAS No. 91, loan origination fees and certain direct loan origination costs should be recognized over the life of the related loan as an adjustment of yield or by straight-line method, as appropriate.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 7,313 and 3,247 as of December 31, 2004 and 2003, respectively. Income for the year ended December 31, 2004 would decrease by 4,066 and income for the year ended December 31, 2003 would increase 348.

35.4. Allowance for loan losses

The loan loss reserve represents the estimate of probable losses in the loan portfolio. Determining the loan loss reserve requires significant management judgments and estimates including, among others, identifying impaired loans, determining customers’ ability to pay and estimating the fair value of underlying collateral or the expected future cash flows to be received. Actual events will likely differ from the estimates and assumptions used in determining the loan loss reserve. Additional loan loss reserve could be required in the future.

The loan loss reserve is maintained in accordance with Central Bank’s rules. This results from evaluating the degree of debtors’ compliance and the guarantees and collateral supporting the respective transactions.

Increases in the reserve are based on the deterioration of the quality of existing loans, while decreases in the reserve are based on regulations requiring the write-off of non-performing loans classified as “non-recoverable” after a certain period of time and on management’s decisions to write off non-performing loans evidencing a very low probability of recovery.

In addition, under Central Bank’s rules, the Bank records recoveries on previously charged-off loans directly to income and records the amount of charged-off loans in excess of amounts specifically allocated as a direct charge to the consolidated income of statement. The Bank does not partially charge off troubled loans until final disposition of the loan, rather, the allowance is maintained on a loan-by-loan basis for its estimated settlement value.

Under Central Bank rules, a minimum loan loss reserve is calculated primarily based upon the classification of commercial loan borrowers and upon delinquency aging (or the number of days the loan is past due) for consumer and housing loan borrowers. Although the Bank is required to follow

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the methodology and guidelines for determining the minimum loan loss reserve, as set forth by the Central Bank, the Bank is allowed to establish additional loan loss reserve.

For commercial loans, the Bank is required to classify all commercial loan borrowers. In order to classify them, the Bank must consider different parameters related to each of those customers. In addition, based on the overall risk of the portfolio, the Bank considers whether or not additional loan loss reserves in excess of the minimum required are warranted.

For consumer loan portfolio, the Bank classifies loans based upon delinquency aging, consistent with the requirements of the Central Bank. Minimum loss percentages required by the Central Bank are also applied to the totals in each loan classification.

Under U.S. G.A.A.P., a portion of the total allowance typically consists of general amounts that are used, for example, to cover loans that are analyzed on a “pool” basis and to supplement specific allowances in recognition of the uncertainties inherent in point estimates.

The Bank’s accounting for its loan loss reserve under Central Bank’s rules differs in some respects with practices of U.S.-based banks, as discussed below.

a) Recoveries and charge-offs

Under Central Bank rules, recoveries are recorded in a separate income line item under other income. Charge-offs are recorded directly as loan loss provision in the income statement. Under U.S. G.A.A.P., recoveries and charge-offs would be recorded in the allowance for loan losses in the balance sheet; however there would be no impact on net income or shareholders’ equity.

b) Credit card loans

The Bank establishes its reserve for credit card loans based on the past due status of the loan. All loans without preferred guaranties greater than 180 days have been reserved at 50% in accordance with the Central Bank’s rules.

Under U.S. G.A.A.P., the bank adopted a policy to charge off loans which are 180 days past due should be charged off.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decreased by 419 and 260 as of December 31, 2004 and 2003, respectively. In addition, income would decrease by 159 and increase by 1,256 for the periods ended December 31, 2004 and 2003, respectively.

c) Impaired loans—Non Financial Private Sector and residents abroad

SFAS No. 114, “Accounting by Creditors for Impairment of a Loan” and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan—Income Recognition and Disclosures” for computing U.S. G.A.A.P. adjustments. SFAS No. 114, as amended by SFAS No. 118, require a creditor to measure impairment of a loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. This Statement is applicable to all loans (including those restructured in a troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogenous loans that are collectively evaluated for impairment. Loans are considered impaired when, based on Management’s evaluation, a borrower will not be able to fulfill its obligation under the original loan terms.

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The following table discloses the amounts required by SFAS 114, as of December 31, 2004 and 2003:

		Fiscal year ended
		December 31,
		2004		2003
—Total amount of loans considered as impaired			366,445		158,139
	Amount of loans considered as impaired for which there is a related allowance for credit losses		201,650		98,617
	Amount of loans considered as impaired for which there is no related allowance for credit losses		164,795		59,522
—Reserves allocated to impaired loans			137,655		75,026
—Average balance of impaired loans during the fiscal year			262,292		184,660
—Interest income recognized on impaired loans			575		332

The Bank recognizes interest income on impaired loans on a cash basis method.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decreased by 809 and 1,550 as of December 31, 2004 and 2003, respectively. In addition, income would be increased by 741 and decreased by 1,550 for the periods ended December 31, 2004 and 2003, respectively.

Under U.S. G.A.A.P., the activity in the allowance for loan losses for the fiscal years presented is as follows:

	Fiscal year ended
	December 31,
	2004			2003
Balance at the beginning of the fiscal year		58,089			117,641
Provision for loan losses		36,467			36,559
Allowance for loan losses from Nuevo Banco Suquía S.A. (See note 35.7.)		143,457
Charge-offs		(11,445	)		(95,256	)
Monetary gain generated on allowances		—			(855	)
Balance at the end of the fiscal year		226,568			58,089

d)     Interest recognition—non-accrual loans

The method applied to recognize income on loans is described in Note 4.4.e). Additionally, the accrual of interest is discontinued generally when the related loan is non performing and the collection of interest and principal is in doubt generally after 90 days of being past due. Accrued interest remains on the Banks books and is considered a part of the loan balance when determining the reserve for credit losses.

Under U.S. G.A.A.P. the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or Management has serious doubts about further collectibility of principal or interest, even though the loan currently is performing. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decreased by 3,945 and 2,462 as of December 31, 2004 and 2003, respectively. In addition, income would have decreased by 1,483 and increased by 667 for the years ended December 31, 2004 and 2003, respectively.

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35.5.    Intangible assets

a) Judgments due to court decisions related to foreign currency-denominated deposits

As stated in notes 4.4.n)2) and 26.2), the Bank capitalized exchange differences related to constitutional protection and court judgments resulting from court decisions (amparos) as intangible assets.

These differences resulted from the difference between the amount of the original foreign currency converted at the higher exchange rate determined by the courts and the lower exchange rates pursuant to the Central Bank’s rules (pesification at Ps.1.4 to USD1 exchange rate, or its equivalent in other currency, plus C.E.R.).

These intangible assets are being amortized under the straight-line method over 60 months under Central Bank’s rules.

Financial institutions have asked the government to compensate them for the losses generated from the payment of deposits pursuant to judicial orders at the free market exchange rate, which was greater than that established by the government for pesification of the financial institutions’ assets and liabilities. As of the date of preparation of these financial statements, the Supreme Court has not issued any decision regarding compensation to banks for making payments under amparos. However, the Bank’s management believes that these additional payments should be eventually included in the compensation mechanisms implemented to compensate financial institutions for the effects of the asymmetrical pesification of their assets and liabilities.

Under U.S. G.A.A.P., the right to obtain this compensation is deemed a contingent gain which can not be recognized until realized, pursuant to SFAS 5—Accounting for Contingencies.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would be to decrease assets by 50,037 and 44,730 as of December 31, 2004 and 2003, respectively. In addition income would decrease by 5,307 and 9,980 for the years then ended, respectively.

b)     Software costs

Under U.S. G.A.A.P. SOP 98-1, defines three stages for the costs of computer software developed or obtained for internal use: the preliminary project stage, the application development stage and the post-implementation operation stage. Only certain costs in the second stage should be capitalized. Under Central Bank’s rules, the Bank capitalized costs relating to all three of the stages of software development and amortized these costs on straight-line basis.

Under SOP 98-1, the Bank properly capitalized only certain costs of computer software developed or obtained for internal use (mainly, services provided to develop the software during the application development stage, costs incurred to obtain computer software from third parties, and travel expenses incurred by employees in their duties directly associated with developing software).

The effects of adjustments required to state such assets in accordance with U.S. G.A.A.P. would be to decrease assets by 7,033 and 10,413 as of December 31, 2004 and 2003, respectively. In addition income would increase by 3,380 and 6,563 for the fiscal years ended December 31, 2004 and 2003, respectively.

c)     Organizational costs

Applying U.S. G.A.A.P. also resulted in other adjustments relative to capitalized organizational costs resulting in a decrease to the Bank’s assets of 2,698 and 5,575 as of December 31, 2004 and 2003, respectively. In addition, income would have increased by 2,877 and 3,431 for the fiscal years ended December 31, 2004 and 2003, respectively.

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35.6.    Vacation accrual

The cost of vacations earned by employees is generally recorded by the Bank when paid. U.S. G.A.A.P. requires that this expense be recorded on an accrual basis as the vacations are earned.

Had U.S. G.A.A.P. been applied, the Bank’s shareholders’ equity would be decreased by 3,295 and 3,186 as of December 31, 2004 and 2003, respectively. In addition, the income for the years ended December 31, 2004 and 2003 would decrease by 109 and 1,811, respectively.

35.7.    Business Combinations

a) Acquisition of controlling interest in former Banco Bansud S.A.

As stated in note 3.1., in January 2002, the Bank acquired the controlling interest in former Banco Bansud S.A., at a contingent purchase price of 65,000 (subsequently deemed not to be payable).

Under Central Bank rules, business combinations are recorded at the carryover book value of the acquired company and goodwill is recognized based on the difference of the book value of the net assets acquired and the purchase price (including contingent consideration). The Bank recognized a negative goodwill resulting from the difference between the net equity book value, as computed under such standards, at the acquisition date and the contingent purchase price. The negative goodwill is considered as a monetary liability for purposes of inflation accounting and is being amortized under the straight line method over 5 years. As explained in note 3.1., the contingent purchase price was recorded as a liability at the date of the acquisition and was reversed into income as a gain in 2003 when it was determined that such contingent consideration was not payable.

Under US G.A.A.P., SFAS 141 “Business combination” requires this acquisition to be accounted for under the purchase method. The contingent purchase price was not considered since it never materialized and thus the purchase price was deemed to be zero. The assets acquired and liabilities assumed were recognized at their fair values at the date of acquisition. The difference between the purchase price and the fair value of the net assets acquired resulted in a negative goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (taking into account the percentage of acquisition):

Cash	144,385
Government Securities	74,352
Loans	1,431,727
Other assets	691,443
Tangible non-current assets	145,257
Total assets acquired	2,487,164
Deposits	2,582,768
Other liabilities	1,050,536
Total liabilities assumed	3,633,304
Net assets	(1,146,140	)
% acquired	81.225	%
Net assets acquired	(930,952	)
Irrevocable capital contribution transferred	970,668 (**	)
Total net assets acquired	39,716
Purchase price	—
Negative Goodwill	(39,716	) (*)

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  (*) The negative goodwill has been applied to reduce on a pro rata basis the amounts assigned to the non-current assets acquired. Given the circumstances described in note 1.2. no identifiable intangible assets were recognized.

(**) The irrevocable capital contributions were made by Banamex in its capacity as Banco Bansud S.A.’s shareholder pursuant to the acquisition by Banco Macro S.A. Banco Macro obtained the rights over these irrevocable contributions as the new shareholders of Banco Bansud.

The reconciliation of shareholders’ equity to U.S. G.A.A.P. below includes the effects of the purchase accounting adjustments, related deferred tax effects, the reversal of the negative goodwill and related amortization and inflation effects calculated under Central Bank’s rules, and the reversal of the gain related to the de-recognition of the contingent purchase price.

Had U.S. G.A.A.P. been applied, the Bank’s assets would be increased by 15,738 and 82,489 as of December 31, 2004 and 2003, respectively. In addition, the income for the years ended December 31, 2004 and 2003 would decrease by 66,751 and 195,364, respectively.

b) Merger with and into former Banco Bansud S.A.—a downstream merger

As disclosed in note 3.1., in March 2003 the Bank and its subsidiary former Banco Bansud S.A., entered into a merger agreement (the “Merger Agreement”). The Merger Agreement provided that, former Banco Macro S.A. was merged with and into former Banco Bansud S.A., with former Banco Bansud S.A. continuing as the surviving corporation, renamed Banco Macro Bansud S.A. The result of this transaction was a single stockholder group, including the former minority interest of former Banco Bansud S.A., owning the consolidated net assets. The terms of the merger were agreed to and announced on March 28, 2003. Before the merger, the former Banco Bansud was a public company in the Argentine stock market with a readily available tradable market value of its shares.

The acquisition date was December 2003, upon the appropriate shareholders and regulatory approvals. At that date, Banco Bansud issued the common shares and exchanged for all the outstanding common stock of Banco Macro.

Banco Macro S.A. shareholders received 14.75 shares of former Banco Bansud S.A. for each common share of Banco Macro S.A.

Under Central Bank rules, the merger was accounted for based on the carryover value of assets and liabilities as of January 1, 2002 since the merger was given retroactive effect to that date. Additionally, therefore, the minority interest was not recognized in 2003.

Under U.S. G.A.A.P., this transaction was accounted for as a downstream merger and an acquisition of minority interest. SFAS 141 requires the acquisition of the minority interest of former Banco Bansud S.A. to be accounted for under the purchase method. As the consideration given to the minority interest was not in the form of cash, the cost of the interest acquired was determined based on the fair value of the net assets given. The quoted market price of the former Banco Bansud shares traded was used to determine such cost. The terms of the acquisition were agreed to and announced on March 28, 2003. On that date the share price of former Banco Bansud was Ps.1.490. The average share price between two days before and end two days after that date was Ps.1.494, which is the price used to determine the acquisition cost. This is in accordance with EITF 99-12 which requires that the quoted market price to be used must consider the market price during a reasonable short period of time, such as just a few days before and after the acquisition is agreed to and announced.

The cost of the acquired minority interest (“purchase price”) has been allocated to the identifiable tangible and intangible assets with finite lives acquired and liabilities assumed based upon their fair value as of the acquisition date, and the excess of the fair value over the cost resulting in a negative goodwill. Merged results were recognized after acquisition date.

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The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition corresponding to the minority interest acquired (December 2003):

Cash	296,626
Government securities	1,333,992
Loans	520,751
Other assets	667,643
Tangible non-current assets	106,988
Intangible assets subject to amortization—Customer related assets (5-year weighted average useful life)	45,365
Total assets acquired	2,971,365
Deposits	1,793,742
Other liabilities	449,806
Total liabilities assumed	2,243,548
Net assets	727,817
% acquired	18.775	%
Net assets acquired	136,648
Purchase price	127,694
Negative Goodwill	(8,954	) (*)

(*) The negative goodwill has been applied to reduce on a pro rata bases the amount assigned to the non-current intangible and tangible assets acquired.

Therefore, the U.S. G.A.A.P. reconciliation of shareholders’ equity and net income reflects the effects of the purchase accounting adjustments, and the related effects on the deferred income tax, and the minority interest from January 1, 2003 through the merger date in December 2003, as well as the effects of the amortization of identified intangible assets, and comprehensive income.

Had U.S. G.A.A.P. been applied, the Bank’s assets would decrease by 118,735 and 118,208 as of December 31, 2004 and 2003, respectively. In addition, the income for the years ended December 31, 2004 and 2003 would decrease by 527 and 52,423, respectively.

c) Acquisition of Nuevo Banco Suquía S.A.

As mentioned in note 2, in December 2004, the Bank acquired 100% of Nuevo Banco Suquía S.A., at a cash purchase price of 16,407.

Under Central Bank Rules, business combinations are accounted for at carryover value. The Bank recognized the difference between the net equity book value at the acquisition date and the purchase price as a negative goodwill, the negative goodwill is being amortized under the straight line method over 5 years.

Under U.S. G.A.A.P., SFAS 141 requires the acquisition of the controlling interest of Nuevo Banco Suquía S.A. to be accounted for as a business combination applying purchase accounting. The purchase price has been allocated to the identifiable tangible and intangible assets with finite lives acquired and liabilities assumed based upon their fair value as of the acquisition date, and the excess of the fair value over the cost resulting in a negative goodwill.

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Banco Macro Bansud and Subsidiaries

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date corresponding to the 100% interest acquired.

Cash	336,266
Government securities	411,815
Loans	837,164
Other assets(1)	553,759
Tangible non-current assets	72,445
Intangible assets subject to amortization—Customer related assets (5-year weighted average useful life)	46,783
Total assets acquired	2,258,232
Deposits	1,548,049
Other liabilities	599,701
Total liabilities assumed	2,147,750
Net assets	110,482
% acquired	100	%
Purchase price	16,407
Negative Goodwill	(94,075	) (2)

(1)	Includes 135,123 of deferred tax assets, net of allowances.
(2)	The negative goodwill has been applied to reduce on a pro rata basis the amounts assigned to the non-current intangible and tangible assets acquired.

Therefore, the U.S. G.A.A.P. reconciliation of shareholders# equity and net income reflects the purchase accounting adjustments and related deferred income tax effects and reversal of negative goodwill calculated under Central Bank’s rules, effects of amortization of intangible assets acquired.

Had U.S. G.A.A.P. been applied, the Bank’s assets would increase by 453 as of December 31, 2004. In addition, the income for the year ended December 31, 2004 would increase by 453.

d)     Other

Applying U.S. G.A.A.P. also resulted in other adjustments relative to business combination resulting in a decrease to the Bank’s assets by 9,488 and 10,460 as of December 31, 2004 and 2003, respectively. In addition, income would increase by 972 and decrease by 47,303 for the fiscal years ended December 31, 2004 and 2003, respectively.

35.8.    Earnings Per Share

The Bank holds, and has held, a capital structure with only common stock outstanding.

Central Bank’s rules do not require the disclosure of earnings per share nor dividend per share.

Under U.S. G.A.A.P., SFAS 128, “Earnings per share”, it is required to present basic per-share amounts (Basic EPS) which is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period.

Diluted earnings per share (Diluted EPS) measure the performance if the potential common shares that were dilutive had been issued. Potential common shares are securities that do not have a current right to participate fully in earnings but could do so in the future. No potential common shares exist, and therefore basic and diluted EPS are the same.

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Banco Macro Bansud and Subsidiaries

The following table sets forth the computation of Basic EPS:

	2004		2003
Numerator:
Net income under U.S. G.A.A.P		94,229		313,371
Denominator:
Common stock outstanding during the year(1)		608,943,437		523,471,785
Common stock issued on merger with and into former Banco Bansud S.A.(2)		—		85,471,652
Weighted-average common shares outstanding for the year		608,943,437		526,750,150
Basic EPS under U.S. G.A.A.P. (stated in Ps.)		0.15		0.59

(1)	Common stock of the Bank prior to the merger described in note 3.1 was retroactively restated for the equivalent number of shares received in the merger after giving effect to the exchange ratio of 14.75 shares to 1.
(2)	See note 35.7.

During 2004 the Bank paid 60,894 in cash dividends. Dividend per share amounted to Ps. 0.10.

35.9.    Reporting on Comprehensive Income (loss)

SFAS No. 130 “Reporting on Comprehensive Income” requires entities to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (“comprehensive income”). Comprehensive income (loss) is the total of net income (loss) and all other non-owner changes in equity.

This statement requires that comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements with an aggregate amount of comprehensive income (loss) reported in that same financial statement. The adoption of this accounting disclosure is shown in notes 35.15. In the Bank’s case, comprehensive income is affected by SFAS 52 cumulative translation adjustments related to the foreign subsidiary and unrealized gains and losses of available for sale securities, net of income taxes.

35.10.    Restatement of financial statements in constant pesos

Pursuant to Central Bank’s rules, the Bank’s financial statements recognize the effects of inflation as described in note 4.3.

As allowed by the SEC, as the Banking financial statements are restated applying a methodology that comprehensively addresses the accounting for inflation, the effects of general price-level changes recognized in the Bank’s financial statements do not need to be eliminated in reconciling to U.S. G.A.A.P.

35.11.    Accounting for derivative instruments and hedging activities

SFAS No. 133 “Accounting for derivatives instruments and hedging activities” establishes accounting and reporting standards for derivative instruments, including certain ones embedded in other contracts (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation,

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an unrecognized firm commitment, an available for sale security, or a foreign currency denominated forecasted transaction.

Among other provisions, SFAS No. 133 requires that for a transaction to qualify for special hedge accounting treatment the transaction must meet specific test of effectiveness that will reduce the volatility in the income statement to the extent that the hedge is effective and all hedge ineffectiveness is required to be reported currently in computing of net income. SFAS No. 133 further requires the identification of assets, liabilities or anticipated transactions being hedged and periodic revaluation of such hedged positions to reflect the changes in market value of risk being hedged. SFAS No. 133 further expands the definition of derivatives to include certain contacts or provisions commonly embedded in contracts or financial instruments and requires that such derivatives be reported at fair value. The Bank had no such embedded derivatives.

Considering the derivatives used by the Bank (described in note 33 and according to the valuation standards described in notes 4.4.i) and 4.4.o), Management believes that the effect of the application of this accounting requirement does not have a material impact on the Bank’s consolidated financial condition or results of operations.

35.12    Adjustment to Prior-Year Income

As described in note 7 as required by Central Bank rules, the consolidated financial statements include several adjustments to prior-year income generated by changes in accounting estimates and accounting principles.

Under U.S. G.A.A.P., APB 20 generally prohibits retroactive restatement of prior year financial statements to reflect such changes, because the events should be recorded in the year they took place.

The following table discloses the effect for each item that caused an adjustment to prior period income:

	2004			2003
Effect of the changes in accounting estimates generated by the asymmetrical pesification and the compensation mentioned in note 1.2.a)1) — (Lower) assets		(50,144	)		(45,872	)
Effect of the changes in accounting estimates generated by the pesification of corporate bonds mentioned in note 11. (Greater)/Lower liabilities		(41,026	)		10,306
Effect of the changes in accounting principles generated by the reversal of 20% of the negative goodwill under Central Bank Communiqué “A” No. 3,984 mentioned in note 4.4.q). — Lower liabilities		—			73,112
Net income effect		(91,170	)		37,546

Had U.S. G.A.A.P. been applied, the Bank’s net assets would have increased by 91,170 as of December 31, 2003. In addition, income would have decreased by 91,170 as of December 31, 2004 and would have increased by 37,545 as of December 31, 2003.

35.13    Foreign currency translation

Financial statements of the subsidiary Sud Bank & Trust were translated under Central Bank rules as described in note 4.1. U.S. G.A.A.P. foreign currency translation requirements are covered by SFAS No. 52 “Foreign Currency Translation” and differs with Central Bank rules in the translation of the income statement accounts, which under U.S. G.A.A.P. should have been translated at the exchange rate other than at the year-end exchange rate, and resulting differences in translation adjustments between assets and liabilities and components of shareholders’ equity are recognized as an other comprehensive income.

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Banco Macro Bansud and Subsidiaries

Had U.S. G.A.A.P. been applied, the Bank’s net income for fiscal years ended December 31, 2004 and 2003 should have been increased by 1,265 and decreased by 13,666, respectively, and these resulting differences recognized as other comprehensive income

35.14    Accounting for guarantees

The Bank issues financial guarantees, which are obligations to pay to a third party when a customer fails to repay its obligation.

The Bank charges a fee for issuance of these guarantees, which is which is deferred and recognized as income over the period of the guarantee.

Under Central Bank rules, guarantees issued are recognized as liabilities when it is probable that the obligation undertaken by the guarantor will be performed.

Under US G.A.A.P., SFAS interpretation No. 45 “Guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness or others” requires that at inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. Such liability at inception is deemed to be the fee received by the Bank with and offsetting entry equal to the consideration received. Subsequent reduction of liability is based on an amortization method as the Bank is decreasing its risk.

Had U.S. G.A.A.P. applied, no differences would have existed in the Bank records. Additionally, the Bank recognizes the maximum potential amount of future payments in Memorandum accounts.

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Banco Macro Bansud and Subsidiaries

35.15. Set forth below are the significant adjustments to consolidated net income and shareholders’ equity which would be required if U.S. G.A.A.P. instead of Central Bank’s rules had been applied:

			Increase/ (decrease)
			Consolidated net income
			years ended December 31,
			Ref.			2004			2003
Net income in accordance with Central Bank’s rules							192,977			199,849
	Income Taxes
		Deferred taxes, net of allowances		35.1.a	)		(6,001	)		98,085
	Exposure to the Argentine public sector and private securities
		Loans—Non-financial federal governmental sector		35.2.a	)		3,212			(30,412	)
		Loans/Bonds—Non-financial government sector		35.2.b	)		12,407			175,923
		Other loans—Non-financial provincial government sector		35.2.c	)		12,847			18,016
		Compensatory Bonds		35.2.d	)		29,194			86,576
		Other unlisted government securities		35.2.e	)		9,477			37,621
	Loan origination fees			35.3			(4,066	)		348
	Allowance for loan losses
		Credit Card Loans		35.4.b	)		(159	)		1,256
		Impaired Loans—Non Financial Private Sector and residents abroad		35.4.c	)		741			(1,550	)
		Interest recognition—non accrual loans		35.4.d	)		(1,483	)		667
	Intangible assets
		Judgments due to court decisions related to foreign currency- denominated deposits		35.5.a	)		(5,307	)		(9,980	)
		Software costs		35.5.b	)		3,380			6,563
		Organizational cost		35.5.c	)		2,877			3,431
	Vacation accrual			35.6			(109	)		(1,811	)
	Business combination
		Acquisition of controlling interest in former Banco Bansud S.A.		35.7.a	)		(66,751	)		(195,364	)
		Merger with and into former Banco Bansud S.A.—a downstream merger		35.7.b	)		(527	)		(52,423	)
		Acquisition of Nuevo Banco Suquia S.A.		35.7.c	)		453			—
		Other		35.7.d	)		972			(47,303	)
	Adjustment to prior-year income			35.12			(91,170	)		37,545
	Foreign currency translation			35.13			1,265			(13,666	)
Net income in accordance with U.S. G.A.A.P.							94,229			313,371
Comprehensive income
	Net income in accordance with U.S. G.A.A.P.						94,229			313,371
	Other comprehensive income, net of tax:						88,945			53,191
Total comprehensive income, net in accordance with U.S. G.A.A.P.							183,174			366,562
Net income per share in accordance with U.S. G.A.A.P.							0.15			0.59
Weighted average number of shares Outstanding (in thousands)							608,943			526,750

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				Increase/ (decrease)
				Consolidated shareholders’ equity
				at December 31,
				Ref.			2004			2003
Shareholders’s equity in accordance with Central
Bank’s rules								1,257,302			1,125,219
		Income Taxes
			Deferred taxes, net of allowances		35.1.a	)		(4,153	)		49,741
			Allowance for tax on minimum presume income		35.1.b	)		(8,662	)		(8,662	)
	Exposure to the Argentine public sector and private securities
			Loans—Non-financial federal governmental sector		35.2.a	)		(168,219	)		(171,431	)
			Loans/Bonds—Non-financial government sector		35.2.b	)		30,509			(71,985	)
			Other loans—Non-financial provincial government sector		35.2.c	)		(5,945	)		(18,792	)
			Compensatory Bonds		35.2.d	)		(69,936	)		(147,146	)
			Other unlisted government securities		35.2.e	)		14,351			4,874
	Loan origination fees				35.3			(7,313	)		(3,247	)
	Allowance for loan losses
			Credit Card Loans		35.4.b	)		(419	)		(260	)
			Impaired Loans—Non Financial Private Sector and residents abroad		35.4.c	)		(809	)		(1,550	)
			Interest recognition—non accrual loans		35.4.d	)		(3,945	)		(2,462	)
	Intangible assets
			Judgments due to court decisions related to foreign currency-denominated deposits		35.5.a	)		(50,037	)		(44,730	)
			Software costs		35.5.b	)		(7,033	)		(10,413	)
			Organizational cost		35.5.c	)		(2,698	)		(5,575	)
	Vacation accrual				35.6			(3,295	)		(3,186	)
	Business combination
			Acquisition of controlling interest in former Banco Bansud S.A.		35.7.a	)		15,738			82,489
			Merger with and into former Banco Bansud S.A.—a downstream merger		35.7.b	)		(118,735	)		(118,208	)
			Acquisition of Nuevo Banco Suquia S.A.		35.7.c	)		453			—
			Other		35.7.d	)		(9,488	)		(10,460	)
	Adjustment to prior-year income				35.12			—			91,170
Shareholders’ equity in accordance with U.S. G.A.A.P.(*)								857,666			735,386

(*) Includes the effects of other comprehensive income.

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35.16. Set forth below are the accumulated other comprehensive income (loss) balances, as of December 31, 2004 and 2003— net of related income tax effects:

	Year ended December 31, 2004									Year ended December 31, 2003(1)
				Unrealized									Unrealized
	Foreign			gains/			Accumulated			Foreign			gains/			Accumulated
	currency			(losses) on			other			currency			(losses) on			other
	items			securities			comprehensive			items			securities			comprehensive
Beginning Balance		14,287			43,293			57,580			4,389			—			4,389
Current-fiscal year change		(1,265	)		138,103			136,838			14,681			66,605			81,286
Tax effects		443			(48,336	)		(47,893	)		(4,783	)		(23,312	)		(28,095	)
Ending balance		13,465			133,060			146,525			14,287			43,293			57,580

(1) The available for sale securities as of December 31, 2002 were deemed to have an other than temporary impairment.

35.17.    Statement of Cash flows

According to SFAS 95 “Statement of Cash Flows”, a statement of cash flows for a period shall report net cash provided or used by operating, investing, and financing activities and the net effect of those flows on cash and cash equivalents during the period in a manner that reconciles beginning and ending cash and cash equivalents. Central Bank’s rules classify cash flows as operating activities and other.

The statement of cash flows under Central Bank’s rules differs from the statement of cash flows under U.S. G.A.A.P. in the following aspects:

The Bank’s transactions that did not provide an actual movement of funds in each year (non cash transactions) were eliminated from the respective cash changes. The following are the main non cash transactions, based on their book values under Central Bank’s rules:

†	At December 31, 2003 the Bank exchanged provincial public debt into Secured Bond due in 2018. The loans and securities exchanged had a net book value of 722,931 (See note 1).
†	At December 31, 2004 and 2003 the Bank entered into forward, unsettled spot and repurchase contracts to buy or sell foreign currencies, listed Government and other securities at future dates, exchanging non cash assets or liabilities for other non cash assets or liabilities with a book value of 522,744 and 25,945, respectively.
†	At December 31, 2002, the Bank received Government Securities in compensation according to the Federal Executive Decree 905/ 02. At December 31, 2004 and 2003 the bank recorded that compensation in investment accounts. Additionally, the compensation pending to be received was recorded in “Other receivables from financial transactions” account (See note 1).
†	The financial statements as of December 31, 2004 and 2003, include a liability of 204,634 and 160,927, respectively, for the future subscription of the Federal Government Coverage Bond in US dollars at LIBOR, maturing in 2012, through a prepayment to be made by the Central Bank under the terms of Presidential Decree No. 905/ 02 (See note 1).
†	In 2003, the former Banco Bansud S.A. settled a payable to SEDESA related to the transaction mentioned in note 3.5. in the amount of 66,500 by delivering certain government securities with a book value of 18,335.
†	In 2004, the Bank incorporated the assets and liabilities of SADELA and acquired Nuevo Banco Suquía (See note 3.6.).

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Banco Macro Bansud and Subsidiaries

†	In 2004 and 2003, the Bank received loan portfolio and other assets in redemption of the LAVERC trust for 23,782 and 18,845, respectively.
†	In 2004 and 2003, the Bank settled subordinate corporate bonds by delivering government securities for 7,371 and 19,590, respectively.
†	In 2004, the Bank settled rescheduled deposits by delivering Federal Government Bonds acquired by the Bank through the delivery of its own bonds for 161,672.
†	In 2004 and 2003, the Bank received Federal Government Bonds in US dollars at LIBOR, maturing in 2012, in redemption of certain loans for 4,396 and 14,131, respectively.

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Banco Macro Bansud and Subsidiaries

The statement of cash flow under U.S. G.A.A.P. is shown below:

		Year ended December 31,
		2004			2003
Cash provided by (used in) operating activities
	Interest received on loans, leases and investments		386,284			435,095
	Fees and commissions received		159,501			124,294
	Other sources of cash		33,949			92,208
Less:
	Interest Paid		(188,416	)		(156,782	)
	Fees and commissions paid		(24,895	)		(19,849	)
	Cash paid to suppliers and employees		(220,498	)		(177,658	)
	(Increase) from intangible assets		(24,837	)		(66,604	)
	(Increase) in other receivables and other assets		(456,789	)		(164,891	)
	Other uses of cash		(33,685	)		(43,184	)
	Net cash (used in) provided by operating activities		(369,386	)		22,629
Plus:
Cash provided by (used in) investing activities
	Proceeds from sales of trading and investment securities		3,524,971			3,312,523
	Purchases of trading and investment securities		(2,549,912	)		(2,960,202	)
	(Increase) in other trading and investment securities, net		(133,458	)		(939,383	)
	(Increase) in loans and leases, net		(977,662	)		(163,430	)
	Proceeds from Bank premises and equipment		20,098			46,571
	Purchases of Bank premises and equipment		(29,861	)		(16,303	)
	Cash provided by incorporated of net asset of SADELA		628			—
	Purchase of Nuevo Banco Suquia S.A., net of cash acquired		319,859			—
	Net cash provided by (used in) investing activities		174,663			(720,224	)
Plus:
Cash provided by (used in) financing activities
	Increase in deposits, net		968,299			1,190,515
	Increase in long term borrowings		66,841			41,471
	(Decrease) in long term borrowings		(61,315	)		(7,665	)
	(Decrease) in forward purchases of securities under repurchase agreements		(566	)		—
	(Decrease) in other short term liabilities, net		(19,684	)		(174,036	)
	Cash dividends paid		(60,894	)		—
	Net cash provided by financing activities		892,681			1,050,285
Monetary loss generated on cash and due from banks			—			(4,343	)
Increase in cash and cash equivalents			697,958			348,347
Cash at the beginning of fiscal year (restated)			674,300			325,953
Cash at the end of the fiscal year			1,372,258			674,300

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Banco Macro Bansud and Subsidiaries

Set forth below is the reconciliation of net income as per Central Bank’s rules to net cash flows from operating activities, as required by SFAS 95 “Statement of Cash Flows”:

		Year ended
		December 31,
		2004			2003
Net (loss)/gain for the fiscal year			192,977			199,849
Adjustments to reconcile net income to net cash from operating activities:
	Amortization and depreciation		44,960			44,334
	Provision for loan losses and special reserves, net of reversals		(36,679	)		(87,659	)
	Net income from government and private securities		(32,601	)		(229,306	)
	Foreign exchange differences		(27,954	)		(65,498	)
	Equity (loss)/gain of unconsolidated subsidiaries		(27	)		678
	Monetary loss generated on cash and due from banks					4,343
	(Increase) from intangible assets		(24,837	)		(66,604	)
	Net (increase)/ decrease in other sources or uses of cash		(456,789	)		(164,891	)
	Net (increase) in interest receivable and payable and other accrued income and expenses		(1,856	)		371,314
	Net (increase)/ decrease in other sources or uses of cash		(26,580	)		16,069
Net cash (used in) provided by operating activities			(369,386	)		22,629

35.18. Forward transactions pending settlement

The Bank enters into forward pending settlement for trading purposes.

Under Central Bank’s rules for such forward transactions, the Bank recognizes both a receivable and a payable upon the agreement, which reflect the amount of cash, currency or securities to be exchanged at the closing date. The receivable or payable representing the receipt or delivery of securities or currency is stated at market value.

Under U.S. G.A.A.P., accounting for forward contracts are governed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This standard requires that such derivatives be accounted for at fair value. The Bank does not apply hedge accounting. The instruments outstanding at each balance sheet are short term and are recorded at their fair value.

Had U.S. G.A.A.P. been applied, the Bank’s assets and liabilities would be decreased by approximately 54,684 and 10,014 as of December 31, 2004 and 2003, respectively.

35.19. Fair value of financial instruments

A significant portion of the Bank’s assets and liabilities are in short-term financial instruments, with a remaining maturity of less than one year, and/or with variable rates. These short-term and variable-rate financial instruments are considered to have a fair value equivalent to their carrying value at the balance sheet date.

SFAS 107 “Disclosures about Fair Value of Financial Instruments” requires disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practicable to estimate fair value.

For financial instruments with remaining maturity over one year and with fixed-rates, and therefore not included above, the following methods and assumptions were used to estimate their fair value.

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Government and private securities

• Listed—Investment accounts: fair value for these securities is based upon market prices (if available) as of December 31, 2004 and 2003; if market prices are not available, the Bank uses values of securities with similar terms and conditions,

• Unlisted government securities: fair value for these securities was taken to be equal to the present value of future cash flows discounted at the year-end market interest rates for securities of similar interest rate, credit risk and duration.

Loans and assets subject to financial leases

Fair value is estimated by discounting future cash flows using the current rates at which loans would be made to borrowers with similar credit ratings and for the same remaining maturities, considering the contractual terms in effect as of December 31, 2004 and 2003.

Other receivables from financial intermediation

• Forward purchases of Government securities under repurchase agreements with holdings in investment accounts: fair value for these receivables were based upon market prices or discounted cash flows as of December 31, 2004 and 2003 of the securities to be received after the fiscal year-end.

• Compensation to financial institutions for the effects of devaluation and pesification to be received: fair value for these receivables were based upon market prices (if available) as of December 31, 2004 and 2003.

Deposits

The Bank’s deposits as of December 31, 2004 and 2003, that have a remaining maturity of under one year were considered to have a fair value equivalent to their carrying value at the balance sheet date while for those that have a remaining maturity of over one year (investments accounts, rescheduled deposits and time deposits), the fair value was taken to be equal to the present value of future cash flows discounted at the average year-end market interest rates for similar deposits.

Loans received from BCRA and other banks and international institutions

Fair value for long-term loans is estimated by discounting future cash flows using current rates at which liabilities were received while fair value for short-term loans was considered to be equivalent to their carrying value at the balance sheet.

Subordinated corporate bonds

As of December 31, 2004 and 2003, fair value was taken to be equal to the present value of future cash flows discounted at the average year end market interest rates for securities of similar interest rate, credit risk and duration.

Off-Balance sheet

Commitments to extending credit, standby letters of credit, guarantees granted and foreign trade acceptances: it is estimated that there is no difference between the fee charged to the Bank for these transactions and their fair value.

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Banco Macro Bansud and Subsidiaries

The following is a summary of carrying amounts under Central Bank’s rules and estimated fair values of financial instruments as of December 31, 2004 and 2003:

		As of December 31,
		2004				2003
		Carrying		Estimated		Carrying		Estimated
		amount		fair value		amount		fair value
FINANCIAL ASSETS
	Cash		1,372,258		1,372,258		674,300		674,300
	Government and private securities		2,106,737		1,931,589		2,155,766		1,889,838
	Loans		2,875,045		2,653,671		1,050,724		925,159
	Other receivables from financial intermediation		1,799,224		1,843,347		537,857		524,328
	Assets subject to financial leases		60,313		60,313		—		—
	Other receivables		135,549		127,475		227,377		226,837
			8,349,126		7,988,653		4,646,024		4,240,462
FINANCIAL LIABILITIES
	Deposits		5,318,997		5,321,735		3,027,244		3,060,471
	Other liabilities from financial intermediation		1,920,722		1,833,663		522,965		524,402
	Other Liabilities		54,062		55,634		36,485		37,545
	Subordinated Corporate Bonds		16,416		16,235		24,200		24,006
			7,310,197		7,227,267		3,610,894		3,646,424

35.20. Transfers of financial assets

In order to securitize personal loans in Argentine Pesos granted to individuals, between December 1999 and November 2001, the former Banco Macro S.A. created the trusts “Asset Backed Securities Serie Banco Macro Créditos I” and “Macro personal I, II, III and IV”.

In addition, the trusts “Multiactivos—Series Prendas I and II” was created in November 1999 and March 2000, respectively, in connection with securitization of chattel mortgage by the former Banco Bansud S.A.

These trusts issued debt securities and/or different participation certificates classes, which were authorized by the C.N.V. for public offering.

For Central Bank rules, the debt securities and certificates retained by the Bank are accounted for at cost plus accrued interest for the debt securities, and the equity method is used to account for the residual interest in the trusts.

These transactions did not qualify for sales treatment under U.S. G.A.A.P because they did not meet the criteria in paragraph 9(c) of SFAS 140 “Accounting for transfers and servicing of financial assets and extinguishment of liabilities”. Therefore, the Bank accounted for these transactions as financing transactions.

In August 2003 “Multiactivos—Series Prendas I and II”, and in August 2004 “Asset Backed Securities Series Banco Macro Créditos I” and “Macro Personal I, II, III and IV” were terminated, and the residual loan portfolio of those trusts had been properly reflected into the Bank’s loan portfolio under Central Bank rules.

Therefore, the effect of applying SFAS 140 was to decrease “Trading account assets” and “Other assets” and increase Loans by 6,078, as of December 31, 2003, with no impact in the income statement. There was no adjustment needed at December 31, 2004 because all such trusts had been

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Banco Macro Bansud and Subsidiaries

terminated and the residual loan portfolio properly reflected into the Bank’s loan portfolio under Central Bank rules.

35.21. Joint venture

As explained in note 3.7.a), the Bank participates in the “Banco Macro—Siemens Itron—Unión Transitoria de Empresas” (a joint venture jointly controlled having an interest of 50%). Under Central Bank rules this interest is consolidated through the proportional consolidation method.

Since under U.S. G.A.A.P., that method of consolidation is not appropriate for such investments and they are accounted for using equity method.

Therefore, had U.S. G.A.A.P. been applied as of December 31, 2004 and 2003, Other assets should have been increased by 3,930 and 2,957, respectively, with an offsetting decrease in various assets and liabilities accounts. Additionally, as of December 31, 2004 and 2003, Income from equity in other companies should have been increased by 3,738 and 2,272, respectively, with an offsetting decrease in various income and expense accounts.

35.22. Items in process of collection

The Bank does not give accounting recognition to checks drawn against the Bank or other Banks or other items to be collected, until such time as the related item clears or is accepted. Such items are recorded by the Bank in Memorandum accounts. U.S. banks, however, account for such items through balance sheet clearing accounts at the time the items are presented for collection.

Had U.S. G.A.A.P. been applied, the Bank’s assets and liabilities would decrease by approximately 168,223 and 146,299 as of December 31, 2004 and 2003, respectively.

35.23. Acceptances

Foreign trade acceptances are not recorded on the balance sheet by the Bank. In accordance with Regulation S-X, acceptances and related customer liabilities should be recorded on the balance sheet. Adjustment required to state balance sheets in accordance with Regulation S-X would be to increase assets (due from customers on acceptances) and increase liabilities (bank acceptances outstanding) by 38,617 and 29,846 as of December 31, 2004 and 2003, respectively.

35.24. Variable Interest Entities

Banco Macro Bansud S.A., either directly or through its subsidiary Sud Inversiones & Análisis S.A., acts as trustee, in certain trusts.

Under Central Bank Rules, the Bank is not required to consolidate these trusts.

Under U.S. G.A.A.P., FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities” addresses consolidation of variable interest entities, as defined in the rules, which have certain characteristics.

The Bank has certain trust activities. In all cases, except for Lujan Trust as described below, such trusts are not variable interest entities. Therefore, the Bank did not consolidate these trusts.

Under FASB Interpretation No. 46(R), Luján Trust, as described in note 14, is considered a variable interest entity. In accordance with paragraph 14 of such Interpretation, the Bank is not the primary beneficiary and, therefore, consolidation of the trust is not appropriate.

In addition, San Isidro Trust, as explained in note 14, represents effectively a foreclosed asset since the former owner of the assets relinquished all rights to the assets to the trust and the Bank holds 100% of the trust certificates.

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Banco Macro Bansud and Subsidiaries

Under Central Bank Rules, as of December 2003 and 2004, these certificates amounted to 16,782 and 15,993, respectively, and were recorded as “Other receivables not covered by debtors classification standards”. However, under US GAAP theses certificates represents a foreclosed asset (not financial assets) and should be reclassified. This reclassification does not have effect the net income and equity. This foreclosed asset is accounted at the lower carrying amount or fair value less cost to sell.

35.25. Parent only financial statements

Following is the parent company-only financial information as required by regulation S-X 9-06. This information is prepared in accordance with Central Bank rules. The investment in Nuevo Banco Suquía S.A. and the other subsidiaries are accounted for under the equity method.

Total net restricted assets as of December 31, 2004 amounted to approximately 31,541. Restrictions are related to the fact that Nuevo Banco Suquía S.A. can not pay dividends without prior approval from the Central Bank of Argentina and due to legal lending limits.

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Banco Macro Bansud and Subsidiaries

Balance sheet (parent company only)

			2004			2003
ASSETS
CASH
	Cash on hand			218,213			176,667
	Banks and correspondents			481,496			329,681
				699,709			506,348
GOVERNMENT AND PRIVATE SECURITIES
	Holdings in investment accounts			53,856			143,976
	Holdings for trading or financial intermediation			82,670			186,493
	Unlisted Government securities			540,230			696,608
	Instruments issued by the Central Bank of Argentine			737,964			1,097,022
	Investments in listed private securities			14,291			17,043
	Less: Allowances						(3,137	)
				1,429,011			2,138,005
LOANS
	To the non-financial government sector			505,466			365,481
	To the financial sector			27,357			10,974
	To the non-financial private sector and residents abroad
		Overdrafts		349,034			197,866
		Documents		319,930			148,745
		Mortgage loans		61,935			49,853
		Pledged loans		29,673			25,500
		Personal loans		223,886			107,305
		Credit cards		81,390			61,052
		Other		325,316			119,454
		Interest, adjustments and foreign exchange differences receivable		40,472			20,872
	Less: Interest documented			(5,019	)		(6,069	)
	Less: Allowances			(81,691	)		(56,279	)
				1,877,749			1,044,754
OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION
	Central Bank of the Argentina			99,820			69,398
	Amounts receivable for spot and forward sales pending settlement			423,484			18,552
	Instruments to be received for spot and forward purchases pending settlement			206,561			12,988
	Premiums for options taken			421			—
	Unlisted Corporate Bonds			928			445
	Other receivables not covered by debtor classification regulations			362,083			533,532
	Other receivables covered by debtor classification regulations			10,232			15,953
	Less: Allowances			(4,763	)		(134,145	)
				1,098,766			516,723
ASSETS SUBJECT TO FINANCIAL LEASES
	Assets subject to financial leases			60,922			—
	Less: Allowances			(609	)		—
				60,313			—

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Banco Macro Bansud and Subsidiaries

		2004			2003
INVESTMENTS IN OTHER COMPANIES
	In financial institutions		398,886			94,573
	Other		25,999			23,430
	Less: Negative Goodwill		(483	)		—
	Less: Allowances		(398	)		(2	)
			424,004			118,001
OTHER RECEIVABLES
	Receivables from sale of assets		1,107			767
	Other		122,664			228,185
	Accrued interest and adjustments receivable from sale of assets		20			21
	Other accrued interest and adjustments receivable		48			27
	Less: Allowances		(4,512	)		(3,630	)
			119,327			225,370
BANK PREMISES AND EQUIPMENT			146,470			157,556
OTHER ASSETS			125,322			114,301
INTANGIBLE ASSETS
	Goodwill		2,485			3,324
	Organization and development costs, including amparos		78,431			78,854
			80,916			82,178
ITEMS PENDING COLLECTION			335			2,077
	TOTAL ASSETS		6,061,922			4,905,313

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Banco Macro Bansud and Subsidiaries

			2004		2003
LIABILITIES
DEPOSITS
	From the non-financial government sector			808,317		382,195
	From the financial sector			3,843		11,909
	From the non-financial private sector and residents abroad
		Checking accounts		433,467		307,666
		Savings accounts		431,753		326,618
		Time deposits		1,620,795		1,518,553
		Investment accounts		34,789		51,627
		Other		118,980		233,811
		Interest, adjustments and foreign exchange differences payable		43,237		104,428
				3,495,181		2,936,807
OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION
	Central Bank of the Argentina — Other			1,581		2,353
	Banks and International institutions			14,668		54,873
	Amounts payable for spot and forward purchases pending settlement			132,460		12,971
	Instruments to be delivered for spot and forward sales pending settlement			462,194		19,993
	Financing received from Argentine financial institutions			56,631		52,097
	Other			285,350		275,497
	Accrued interest, adjustments and foreign exchange differences payable			94,682		78,721
				1,047,566		496,505
OTHER LIABILITIES
	Dividends payable			—		231
	Other			37,014		33,444
				37,014		33,675
PROVISIONS				208,220		285,128
SUBORDINATED CORPORATE BONDS				16,416		24,200
SUSPENSE ITEMS				223		3,779
	TOTAL LIABILITIES			4,804,620		3,780,094
STOCKHOLDERS’ EQUITY				1,257,302		1,125,219
	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			6,061,922		4,905,313

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Banco Macro Bansud and Subsidiaries

Memorandum accounts (parent company only)

		2004			2003
DEBIT-BALANCE ACCOUNTS
Contingent
—Loans obtained (unused amounts)			12,693			11,625
—Guaranties received			573,700			419,493
—Contra contingent debit accounts			117,837			119,666
			704,230			550,784
Control
—Receivables classified as irrecoverable			479,754			471,476
—Other			2,052,608			1,272,940
—Contra control debit accounts			57,196			34,259
			2,589,558			1,778,675
Derivatives
—Notional value of put options taken			10,453			—
—Notional value of forward transactions without delivery of underlying asset			7,435			—
—Contra debit accounts for derivatives			129,490			125,009
			147,378			125,009
Trust Activity
—Funds received in trust			16,782			15,993
			16,782			15,993
	TOTAL		3,457,948			2,470,461
CREDIT ACCOUNTS
Contingent
—Unused portion of loans granted, covered by debtor classification regulations			(84	)		—
—Guarantees provided to the Central Bank of Argentina			(422	)		(1,430	)
—Other guaranties provided covered by debtor classification regulations			(82,845	)		(84,904	)
—Other guaranties provided not covered by debtor classification regulations			(2,335	)		(3,486	)
—Other covered by debtor classification regulations			(32,151	)		(29,846	)
—Contingent credit-balance contra accounts			(586,393	)		(431,118	)
			(704,230	)		(550,784	)
Control
—Items to be credited			(57,196	)		(34,259	)
—Contra control credit accounts			(2,532,362	)		(1,744,416	)
			(2,589,558	)		(1,778,675	)

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Banco Macro Bansud and Subsidiaries

		2004			2003
For Derivatives
—Notional value of put options sold			(122,055	)		(125,009	)
—Notional value of forward transactions without delivery of underlying asset			(7,435	)		—
—Contra credit account for derivatives			(17,888	)		—
			(147,378	)		(125,009	)
For Trustee Activities
—Contra credit accounts for trustee activities			(16,782	)		(15,993	)
			(16,782	)		(15,993	)
	TOTAL		(3,457,948	)		(2,470,461	)

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Banco Macro Bansud and Subsidiaries

Statements of income (parent only)

		2004		2003
FINANCIAL INCOME
Interest on cash and due from banks			2		1,588
Interest on loans to the financial sector			1,954		1,788
Interest on overdrafts			25,403		21,932
Interest on documents			11,196		9,804
Interest on mortgage loans			6,449		6,794
Interest on pledged loans			1,118		1,727
Interest on credit card loans			5,858		7,832
Interest on other loans			60,952		29,063
Interest on other receivables from financial intermediation			5,611		1,867
Income from government and private securities, net			162,748		300,360
Income from guaranteed loans — Decree 1,387/01			14,355		4,183
C.E.R. (benchmark stabilization coefficient) adjustment			91,022		19,118
C.V.S. (salary variation coefficient) adjustment			475		24
Other			34,717		9,973
			421,860		416,053
FINANCIAL EXPENSE
Interest on checking accounts			2,201		2,725
Interest on savings accounts			3,115		3,269
Interest on certificates of deposit			43,256		82,852
Interest on financing from the financial sector			78		3,340
Interest on other liabilities from financial intermediation			15,394		10,808
Other interest			9,230		20,598
C.E.R. adjustment			24,865		41,551
Other			33,158		67,142
			131,297		232,285
	GROSS INTERMEDIATION MARGIN — GAIN		290,563		183,768
PROVISION FOR LOAN LOSSES			36,156		35,009
SERVICE-CHARGE INCOME
Related to assets			7,718		4,006
Related to liabilities			97,458		82,539
Other commissions			7,252		6,308
Other			36,585		32,005
			149,013		124,858
SERVICE-CHARGE EXPENSE
Commissions			4,014		3,473
Other			19,903		16,438
			23,917		19,911
MONETARY LOSS ON FINANCIAL INTERMEDIATION			—		(3,899	)

F-105

Banco Macro Bansud and Subsidiaries

		2004		2003
ADMINISTRATION EXPENSE
Payroll expenses			128,296		110,779
Fees to Bank Directors and Statutory Auditors			5,601		4,908
Other professional fees			16,106		15,018
Advertising and publicity			11,921		5,985
Taxes			2,955		2,865
Other operating expense			73,263		70,991
Other			9,012		7,092
			247,154		217,638
MONETARY LOSS ON OPERATING EXPENSE			—		(107	)
	NET INCOME FROM FINANCIAL INTERMEDIATION		132,349		32,062
OTHER INCOME
Penalty interest			1,295		1,717
Penalty recovered loans and allowances reversed			88,398		157,296
C.E.R. adjustment			—		8
Other			19,308		78,790
			109,001		237,811
OTHER EXPENSE
Loss from long-term investments			81		6,537
Punitive interest and charges paid to Central Bank of the Argentina			146		174
Charge for other-receivables uncollectibility and other allowances			3,850		21,730
Amortization of differences from amparos			11,665		6,258
Other			32,631		35,095
			48,373		69,794
MONETARY LOSS ON OTHER OPERATIONS			—		(230	)
	INCOME BEFORE INCOME TAX		192,977		199,849
INCOME TAX			—		—
	NET INCOME FOR THE FISCAL YEAR		192,977		199,849

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Banco Macro Bansud and Subsidiaries

Statements of cash flows (parent only)

			2004(2)			2003
Changes in Cash
Cash at beginning of fiscal year (restated)				506,348			206,498
Increase in funds				193,361			299,850
Cash at end of the fiscal year				699,709			506,348
Reasons for changes in cash in constant currency
Cash provided by ordinary operations
Financial income collected				398,660			415,147
Services-charge income collected				154,089			123,430
Financial expense paid				(179,139	)		(148,175	)
Services-charge expense paid				(23,849	)		(19,755	)
Administration expense paid				(212,672	)		(173,500	)
		Subtotal		137,089			197,147
Other sources of cash:
Net decrease in government and private securities				659,796			—
Net decrease in other receivables from financial intermediation				—			621,466
Net increase in deposits				619,395			1,136,320
Net increase in other liabilities from financial intermediation				535,028			—
Other sources of cash				30,319			90,095
	Subtotal			1,844,538			1,847,881
	Total of sources of cash			1,981,627			2,045,028
Uses of cash:
Net increase in government and private securities				—			(1,286,777	)
Net increase in loans				(782,022	)		(170,491	)
Net increase in other receivables from financial intermediation				(586,692	)		—
Net increase in other assets				(319,205	)		(41,252	)
Net decrease in other liabilities from financial intermediation				—			(150,177	)
Net decrease in other liabilities				(9,432	)		(49,061	)
Cash dividends paid				(60,894	)		—
Other uses of cash				(30,021	)		(43,184	)
	Total of cash used			(1,788,266	)		(1,740,942	)
	Monetary loss generated on cash and due from banks(1)			—			(4,236	)
	Increase in funds			193,361			299,850

(1)	Relates to the monetary income from financial intermediation, from operating expenses, and from other operations.
(2)	Includes the changes produced by the incorporation of certain assets and liabilities of SADELA.

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Banco Macro Bansud and Subsidiaries

35.26.     New accounting pronouncements (U.S. G.A.A.P.)

Exchanges of non-monetary assets:

In December 2004, the FASB issued Statement 153 Exchanges of non-monetary assets that replaces the exception from fair value measurement in APB Opinion No. 29 Accounting for Non-monetary Transactions, for non-monetary exchanges of similar productive assets with a general exception from fair value measurement for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. In the opinion of the Bank’s Management the adoption of this rule does not have an impact on net income and shareholders’ equity. The Bank does not expect this statement to have a material effect on its financial statements.

Accounting for certain loans or debt securities acquired in a transfer

In 2003, the AICPA issued Statement of Position 03-3 “Accounting for Certain Loans or Debt Securities Acquired in a Transfer” that addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. Includes loans acquired in purchase business combinations, but does not apply to loans originated by the entity. It limits the yield that may be accreted to the excess of the investor’s estimate of undiscounted expected principal, interest, and other cash flows over the investor’s initial investment in the loan and requires that the non-accretable difference not be recognized as an adjustment of yield, loss accrual, or valuation allowance. Displaying accretable yield and non-accretable difference in the balance sheet is prohibited. Subsequent increases in cash flows expected to be collected generally should be recognized prospectively through adjustment of the loan’s yield over its remaining life and decreases should be recognized as impairment.

This Statement of Position prohibits “carrying over” or creation of valuation allowances in the initial accounting of all loans acquired in the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination.

SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. The implementation of this SOP had not a material effect on the Bank’s financial statements.

Accounting changes and error corrections

On May 2005, the FASB issued Statement 154 that replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS 154 applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement. When a pronouncement includes specific transition provisions, those provisions should be followed. The changes require retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine the period specific effects of an accounting change on one or more individual prior periods presented, this Statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, this Statement requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable.

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Banco Macro Bansud and Subsidiaries

The retrospective application of a change in accounting principle should be limited to the direct effects of the change. Indirect effects of a change should be recognized in the period of the accounting change. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principles. The Board decided that the provisions of this Statement should be effective for accounting changes made in fiscal years beginning after December 15, 2005. The Bank does not expect this statement to have a material effect on its financial statements.

F-109

BANCO MACRO BANSUD S.A.

Condensed interim consolidated financial statements as of June 30, 2005

F-110

Banco Macro Bansud and Subsidiaries

Consolidated balance sheets

As of June 30, 2005 and December 31, 2004

(Information as of June 30, 2005 is unaudited)

			06/30/2005			12/31/2004
			(stated in thousands of pesos)
ASSETS
CASH
	Cash on hand			327,417			327,959
	Due from banks and correspondents			816,069			1,044,194
	Other			102			105
				1,143,588			1,372,258
GOVERNMENT AND PRIVATE SECURITIES
	Holdings in investment accounts			53,018			53,856
	Holdings for trading or financial intermediation			118,200			88,940
	Unlisted government securities			881,247			839,183
	Instruments issued by the Central Bank of Argentina			1,694,378			1,097,580
	Investments in listed private securities			64,386			29,649
	Less: Allowances			(1,199	)		(2,471	)
				2,810,030			2,106,737
LOANS
	To the non-financial government sector			701,957			809,577
	To the financial sector			158,644			81,812
	To the non financial private sector and foreign residents
		Overdrafts		545,527			513,390
		Documents		405,809			429,654
		Mortgage loans		223,357			231,603
		Pledged loans		183,865			180,831
		Personal loans		279,462			255,553
		Credit cards		163,492			105,117
		Other		578,061			412,079
		Accrued interest, adjustments, foreign exchange and quoted price differences receivable		79,257			87,528
	Less: Unearned discount			(7,612	)		(6,759	)
	Less: Allowances			(173,676	)		(225,340	)
				3,138,143			2,875,045
OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentina			109,994			123,291
	Amounts receivable from spot and forward sales pending settlement			487,234			733,995
	Securities and foreign currency receivable from spot and forward purchases pending settlement			308,128			206,561
	Premiums on options taken			240			421
	Unlisted corporate bonds			916			928
	Other receivables not covered by debtors classification regulations			758,175			756,968
	Receivables from forward transactions without delivery of underlying asset			—			931

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		06/30/2005			12/31/2004
		(stated in thousands of pesos)
	Other receivables covered by debtors classification regulations		37,968			83,002
	Accrued interest receivable not covered by debtors classification regulations		657			657
	Less: Allowances		(35,390	)		(107,530	)
			1,667,922			1,799,224
ASSETS SUBJECT TO FINANCIAL LEASES
	Assets subject to financial leases		81,874			60,922
	Less: Allowances		(820	)		(609	)
			81,054			60,313
INVESTMENTS IN OTHER COMPANIES
	In financial institutions		404			416
	Other		13,664			15,047
	Less: Allowances		(688	)		(719	)
			13,380			14,744
OTHER RECEIVABLES
	Receivables from sale of assets		7,838			1,822
	Minimum presumed income tax— Tax Credit		56,191			53,933
	Other		87,256			85,771
	Accrued interest and adjustments receivable from sale of assets		192			176
	Other accrued interest and adjustments receivable		48			48
	Less: Allowances		(7,341	)		(6,201	)
			144,184			135,549
BANK PREMISES AND EQUIPMENT, NET			194,901			193,697
OTHER ASSETS			160,014			158,142
INTANGIBLE ASSETS
	Goodwill		2,066			2,485
	Organization and development costs, including amparos		73,585			79,046
			75,651			81,531
ITEMS PENDING ALLOCATION			359			515
TOTAL ASSETS			9,429,226			8,797,755

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			06/30/2005		12/31/2004
			(stated in thousands of pesos)
LIABILITIES
DEPOSITS
	From the non financial government sector			956,319		809,764
	From the financial sector			5,815		4,445
	From the non-financial private sector and foreign residents
		Checking accounts		894,155		844,969
		Savings accounts		878,739		729,234
		Time deposit		3,130,617		2,588,546
		Investment accounts		51,538		48,598
		Other		200,589		225,891
		Accrued interest, adjustments, foreign exchange and quoted price differences payable		62,349		67,550
				6,180,121		5,318,997
OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION
		Central Bank of Argentina— Other		224,847		485,267
		Banks and International institutions		144,936		14,668
		Amounts payable for spot and forward purchases pending settlement		216,473		153,661
		Securities and foreign currency to be delivered under spot and forward sales pending settlement		532,942		754,172
		Premiums on options sold		85		—
		Financing received from Argentine financial institutions		52,296		56,835
		Payables for forward transactions without delivery of underlying asset		—		676
		Other		333,026		343,665
		Accrued interest, adjustments, foreign exchange and quoted price differences payable		120,339		111,778
				1,624,944		1,920,722
OTHER LIABILITIES
	Other			47,210		53,984
	Accrued interest and adjustments payable			—		78
				47,210		54,062
PROVISIONS				199,900		225,699
SUBORDINATED CORPORATE BONDS				17,589		16,416
ITEMS PENDING ALLOCATION				10,661		4,554
MINORITY INTEREST IN SUBSIDIARIES				60		3
TOTAL LIABILITIES				8,080,485		7,540,453
SHAREHOLDERS’ EQUITY				1,348,741		1,257,302
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				9,429,226		8,797,755

The accompanying notes 1 through 25 to the interim consolidated financial statements

are an integral part of these statements.

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Consolidated balance sheets

As of June 30, 2005 and December 31, 2004

Memorandum accounts

(Information as of June 30, 2005 is unaudited)

	06/30/2005			12/31/2004
	(stated in thousands of pesos)
DEBIT-BALANCE ACCOUNTS
Contingent
—Loans borrowed (unused amounts)		164,709			12,693
—Guarantees received		1,652,575			1,572,284
—Contingent debit-balance contra accounts		182,060			154,361
		1,999,344			1,739,338
Control
—Receivables classified as irrecoverable		843,516			824,501
—Other		2,902,758			2,911,113
—Control debit-balance contra accounts		115,736			92,873
		3,862,010			3,828,487
Derivatives
—Notional value of put options taken		10,278			10,453
—Notional value of forward transactions without delivery of underlying asset		—			22,304
—Derivative debit-balance contra accounts		131,442			144,359
		141,720			177,116
Trust Activity
—Trust funds		—			16,782
		—			16,782
TOTAL		6,003,074			5,761,723
CREDIT-BALANCE ACCOUNTS
Contingent
—Unused portion of loans granted covered by debtors classification regulations		(25,756	)		(22,702	)
—Guarantees provided to the Central Bank of Argentina		(137	)		(422	)
—Other guarantees provided covered by debtors classification regulations		(95,612	)		(90,285	)
—Other guarantees provided not covered by debtors classification regulations		(1,948	)		(2,335	)
—Other covered by debtors classification regulations		(58,607	)		(38,617	)
—Contingent credit-balance contra accounts		(1,817,284	)		(1,584,977	)
		(1,999,344	)		(1,739,338	)
Control
—Checks to be credited		(115,736	)		(92,873	)
—Control credit-balance contra accounts		(3,746,274	)		(3,735,614	)
		(3,862,010	)		(3,828,487	)

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	06/30/2005			12/31/2004
	(stated in thousands of pesos)
Derivatives
—Notional value of call options sold		(12,825	)		—
—Notional value of put options sold		(118,617	)		(122,055	)
—Notional value of forward transactions without delivery of underlying asset		—			(22,304	)
—Derivatives credit-balance contra accounts		(10,278	)		(32,757	)
		(141,720	)		(177,116	)
Trust activity
—Trust activity credit-balance contra accounts		—			(16,782	)
		—			(16,782	)
TOTAL		(6,003,074	)		(5,761,723	)

The accompanying notes 1 through 25 to the interim consolidated financial statements are an integral part of these statements.

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Consolidated statements of income

For the six-month periods ended June 30, 2005 and 2004 (unaudited)

	06/30/2005		06/30/2004
	(stated in thousands of pesos)
FINANCIAL INCOME
Interest on cash and due from banks		3,356		246
Interest on loans to the financial sector		2,767		499
Interest on overdrafts		25,023		11,625
Interest on documents		14,412		5,041
Interest on mortgage loans		12,544		2,827
Interest on pledged loans		11,789		306
Interest on credit card loans		8,204		2,565
Interest on other loans		55,068		24,384
Interest on other receivables from financial intermediation		6,955		1,981
Income from government and private securities, net		49,123		113,727
Income from guaranteed loans— Presidential Decree No. 1,387/01		15,612		6,313
Net income from options		—		23
CER (benchmark stabilization coefficient) adjustment		106,043		48,932
CVS (Salary Variation Coefficient) adjustment		590		141
Other		26,735		17,240
		338,221		235,850
FINANCIAL EXPENSE
Interest on checking-accounts		1,284		1,013
Interest on savings-accounts		1,949		1,527
Interest on time deposits		44,428		25,816
Interest on financing from the financial sector		273		29
Interest on other liabilities from financial intermediation		8,265		4,901
Other interest		6,586		4,828
Net loss from options		374		—
CER adjustment		67,044		15,915
Other		25,774		17,740
		155,977		71,769
GROSS INTERMEDIATION MARGIN— GAIN		182,244		164,081
PROVISION FOR LOAN LOSSES		34,479		13,236
SERVICE-CHARGE INCOME
Related to lending transactions		8,218		3,328
Related to deposits		93,484		46,713
Other fees		6,340		3,185
Other		32,494		18,807
		140,536		72,033

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	06/30/2005			06/30/2004
	(stated in thousands of pesos)
SERVICE-CHARGE EXPENSE
Fees		14,553			1,968
Other		13,321			9,231
		27,874			11,199
ADMINISTRATIVE EXPENSES
Personnel expenses		116,750			65,058
Director’s and statutory auditor’s fees		10,627			3,977
Other professional fees		10,028			8,062
Advertising and publicity		6,852			3,451
Taxes		3,705			1,663
Other operating expenses		50,637			36,781
Other		6,463			4,723
		205,062			123,715
NET INCOME FROM FINANCIAL INTERMEDIATION		55,365			87,964
OTHER INCOME
Income from long-term investments		254			239
Penalty interest		1,460			442
Recovered loans and allowances reversed		84,208			41,690
Other		27,556			6,216
		113,478			48,587
OTHER EXPENSES
Penalty interest and charges payable to the Central Bank		20			127
Charge for other receivables uncollectibility and other allowances		15,958			2,706
C.E.R. adjustment		3			—
Amortization of differences from amparos		6,855			5,547
Other		23,483			18,764
		46,319			27,144
MINORITY INTEREST		(8	)		—
INCOME BEFORE INCOME TAX		122,516			109,407
INCOME TAX		630			367
NET INCOME FOR THE PERIOD		121,886			109,040
NET INCOME PER SHARE(1)— stated in pesos		0.20			0.18

(1) See note 8

The accompanying notes 1 through 25 to the interim consolidated financial statements are an integral part of these statements.

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Statements of changes in shareholders’ equity

For the six-month periods ended June 30, 2005, and 2004 (unaudited)

			Adjustments to		Unrealized		Earnings reserved
	Capital		shareholders’		valuation						Unappropriated
Changes	stock(1)		equity		difference		Legal		Voluntary		earnings			Total
	(stated in thousands of pesos)
Balances as of December 31, 2003		608,943		4,511		14,164		174,629		211		413,935			1,216,393
Adjustment to prior year income (Note 6)												(78,297	)		(78,297	)
Balance as of December 31, 2003, adjusted		608,943		4,511		14,164		174,629		211		335,638			1,138,096
Distribution of unappropriated retained earnings approved by the Shareholders’ Meeting held on April 30, 2004:
—Legal reserve								47,480				(47,480	)
Net income for the period												109,040			109,040
Balances as of June 30, 2004		608,943		4,511		14,164		222,109		211		397,198			1,247,136

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Statements of changes in shareholders’ equity

For the six-month periods ended June 30, 2005, and 2004 (unaudited)

			Adjustments to		Earnings reserved
	Capital		shareholders’						Unappropriated
Changes	stock(1)		equity		Legal		Voluntary		earnings			Total
	(stated in thousands of pesos)
Balances as of December 31, 2004		608,943		4,511		222,109		211		421,528			1,257,302
Distribution of unappropriated retained earnings approved by the Shareholders’ Meeting held on April 28, 2005:
—Legal reserve						23,193				(23,193	)
—Cash dividends(2)										(30,447	)		(30,447	)
Net income for the period										121,886			121,886
Balances as of June 30, 2005		608,943		4,511		245,302		211		489,774			1,348,741

(1)	See note 8.
(2)	Through resolution of July 20, 2004, the Central Bank authorized the above mentioned cash dividends distribution.

The accompanying notes 1 through 25 to the interim consolidated financial statements are an integral part of these statements.

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Consolidated statements of cash flows

For the six-month periods ended June 30, 2005 and 2004 (unaudited)

			06/30/2005			06/30/2004
			(stated in thousands of pesos)
Cash provided by (used in) operating activities
	Financial income collected			342,012			218,563
	Service-charge income collected			140,129			71,656
	Other sources of cash			87,752			11,309
Less:
	Financial expenses paid			(132,655	)		(80,341	)
	Services-charge expenses paid			(27,034	)		(11,135	)
	Administrative expenses paid			(199,160	)		(110,413	)
	Other uses of cash			(18,896	)		(19,123	)
		Net cash provided by operating activities		192,148			80,516
Plus:
Cash provided by (used in) investing activities
	(Increase)/ decrease in government and private securities			(684,936	)		473,783
	(Increase) in loans			(319,975	)		(716,195	)
	Decrease/ (increase) in other receivables from financial intermediation			121,759			(213,044	)
	(Increase) in other assets			(60,726	)		(79,414	)
		Net cash used in investing activities		(943,878	)		(534,870	)
Plus:
Cash provided by (used in) financing activities
	Increase in deposits			861,357			385,486
	(Decrease)/ increase in other liabilities from financial intermediation			(297,333	)		110,627
	(Decrease) in other liabilities			(10,517	)		(1,616	)
	Cash dividends paid			(30,447	)		—
		Net cash provided by financing activities		523,060			494,497
	(Decrease)/ increase in cash and cash equivalents			(228,670	)		40,143
	Cash and cash equivalents at the beginning of fiscal year			1,372,258			674,300
	(Decrease)/increase in cash and cash equivalents			(228,670	)		40,143
	Cash and cash equivalents at the end of the period			1,143,588			714,443

The accompanying notes 1 through 25 to the consolidated financial statements are an integral part of these statements.

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Notes to the interim consolidated financial statements

As of June 2005

(Information as of June 30, 2005 and 2004 is unaudited)

(Stated in thousands of pesos, except otherwise indicated)

1. THE BANK, THE ARGENTINE MACROECONOMIC ENVIRONMENT AND FINANCIAL SYSTEM

1.1.    Overview of the Bank

Macro Compañía Financiera S.A. was created in 1977 as a non banking financial institution. On May 30, 1988, it was granted the authorization to operate as a commercial bank, and was incorporated, under the name of Banco Macro S.A. Banco Macro S.A.’s shares have been traded in the Buenos Aires Stock Exchange since November 1994.

After 1994, Banco Macro S.A.’s target market was primarily focused on regional areas outside the city of Buenos Aires. Following this strategy, in 1996, Banco Macro S.A. began the process of acquiring the assets and liabilities of privatized provincial and other banks.

On December 19, 2001 Banco Macro agreed to acquire 59.58% of the capital stock and 76.17% of the voting rights of Banco Bansud. The acquisition was effective January 4, 2002 upon approval of the Central Bank of Argentina.

During 2003, the shareholders decided to merge both financial institutions with the strategic objective of creating a financial institution with a presence throughout Argentina. In December 2003 the merger of Banco Macro S.A. with and into Banco Bansud S.A. was authorized by the Central Bank of Argentina (the Central Bank) and the name was changed to Banco Macro Bansud S.A (the Bank or Banco Macro Bansud).

The Bank offers traditional commercial banking products and services to small and medium sized companies and companies operating in regional economies, and to low and middle income individuals.

Banco Macro Bansud S.A. conducts certain operations through subsidiaries, including Nuevo Banco Suquía S.A. (a bank acquired in December 2004— for further information see note 2.), Sud Bank & Trust Corporate Limited, Sud Valores Sociedad de Bolsa S.A., Sud Inversiones & Análisis S.A., Sud Valores S.G.F.C.I. S.A. The chart showing the organizational structure as of June 30, 2005 is disclosed in note 3, with the percentages indicating the ownership interests and voting rights in each subsidiary.

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1.2.    The Argentine macroeconomic environment and the financial system

a)     Financial compensation to financial institutions

As to devaluation and compulsory conversion into pesos (“pesification”)

The amounts recorded in the interim consolidated financial statements related to such compensation mechanisms are as follows:

		Amounts as of		Amounts as of
Recorded in		June 30, 2005		December 31, 2004		Description
Government securities— Holdings in investment accounts			53,018		53,856	Portion of the compensation received
	•  Boden 2012— Compensation		53,018		53,856
Other receivables from financial intermediation—Securities and foreign currency receivable from spot and forward purchases pending settlement			89,245		91,454	Portion of the compensation received
	•  Boden 2012— Compensation		89,245		91,454
Other receivables from financial intermediation—Other receivables not covered by debtors classification regulations(i)			577,738		609,791	Compensation and Coverage bonds to be issued to the Bank.
	•  Boden 2012— Coverage		261,548		280,088
	•  Boden 2007— Compensation		190,143		184,691
	•  Boden 2012— Compensation		126,047		145,012
Total of assets			720,001		755,101
Other liabilities from financial intermediation—Other and Accrued interest, adjustments and foreign exchange and quoted prices differences payable(ii)			22,898		38,162	Obligation to repay to the Central Bank (recorded offsetting the amounts mentioned above).
	•  Boden 2012— Compensation		15,416		30,928
	•  Boden 2007— Compensation		7,482		7,234
Other liabilities from financial intermediation— Other and Accrued interest, adjustments and foreign exchange and quoted prices differences payable(i)			206,823		204,634	Liability with Central Bank for the future subscription BODEN 2012(Coverage Bond)
	•  Boden 2012— Coverage		206,823		204,634
Total of liabilities			229,721		242,796

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In the opinion of the Bank’s Management, the amounts recorded for such compensation included the events and situations known as of the date of issuance of these financial statements. These financial statements include the effects of the compensation finally agreed with the Central Bank as of each balance sheet date.

(i)     Additionally, all the Compensation and Coverage Bonds (Federal Government Bonds in US dollars at LIBOR 2012) of the former Banco Bansud S.A. which were pending settlement were received in September 2005. Consequently, the only Federal Government Bonds remaining outstanding are those related to Nuevo Banco Suquia S.A., which comprise of Federal Government Bonds in Argentine pesos at 2% maturing in 2007 with a face value of 8,799 and Federal Government Bonds in US dollars at LIBOR 2012 with a face value of 127,777.

(ii)     In August 2005, the Bank’s payable to the Central Bank of Argentina in Federal Government Compensation Bonds in Argentine pesos at 2% maturing in 2007 was settled.

b)     Deposits— Rescheduling of Amounts.

As of June 30, 2005 and December 31, 2004, the Bank had 39,535 and 69,791 as “Other deposits”, respectively, for rescheduled deposits (CEDROS plus adjustments by C.E.R. plus accrued interest).

As of August 22, 2005 these rescheduled deposits (CEDROS plus adjustments by C.E.R. plus accrued interest) were redeemed in their totality.

c)     Legal actions

The measures adopted by the Federal Executive in 2002 with respect to the situation of public emergency in political, economic, financial and foreign exchange matters triggered a number of legal actions brought by individuals and companies against the Federal Government, the Central Bank and financial institutions. The legal actions claimed that some of those measures infringed upon their constitutional rights. These actions are known as amparos.

In the particular case of deposits denominated in foreign currency, the trial courts ordered, in some cases, the partial or total reimbursement of such deposits, either in foreign currency or at the free-exchange rate at the time of reimbursement, until a final pronouncement was made as to the constitutionality of the pesification of foreign-currency deposits, as previously established.

Some of such claims were filed with the Argentine Supreme Court, which determined whether the judgments granted by the lower courts were constitutional or not, depending on each particular case. The last judgment by the Supreme Court established the constitutionality of the process but some aspects remained undefined. It should be noted that the effects of the Supreme Court’s judgment were limited to the parties to each case, which may change in the future. Nevertheless, lower courts usually follow and apply Supreme Court precedents.

If the courts make a final favorable decision on the constitutionality of pesification of foreign-currency deposits, the Bank would be entitled to require the reimbursement of the amounts paid in excess of the amount required by effective regulations. Conversely, if the courts decide that deposits should be settled in foreign currency at the higher rates, there may be further claims against the Bank. However, the Bank’s management believes that these additional payments should be eventually included in the compensation mechanisms implemented to compensate financial institutions for the effects of the asymmetric pesification of their assets and liabilities.

As of the date of the respective reports, there still is uncertainty as to the final court decisions and their potential effects on: (i) the recoverability of the capitalized amounts— see below; (ii) court’s

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decisions which required the Bank to pay to certain depositors a portion of the original amount in US dollars; and (iii) the contingent risk of potential additional unasserted legal claims.

In light of the complexity of the issue, and considering that those situations may result in gain or loss contingencies, whose likelihood of occurrence is considered to be more than remote but less than probable, the related amount or range of the amount involved cannot be estimated.

According to Communiqué “A” 3,916 dated April 3, 2003, the Bank carried a net capitalized amount of 46,774 and 50,037 as of June 30, 2005 and December 31, 2004, respectively, as “Intangible assets”. These amounts represent the difference between the amount of the original foreign currency deposits converted at the higher exchange rate dictated by the courts and the amount converted at the lower exchange rate pursuant to the regulations (pesification at Ps. 1.4 to USD 1 exchange rate, or its equivalent in another currency, plus C.E.R).

2. ACQUISITION OF NUEVO BANCO SUQUIA S.A.

On April 27, 2004, the Bank decided to participate in the bidding process for the purchase of Nuevo Banco Suquía S.A. to increase its market share, under the framework of a competitive bidding process in which three other bidders participated. The Evaluation Committee for the bidding process carried out by Banco de la Nación Argentina (B.N.A.) for the sale of 100% of the shares (15,000,000 shares of common stock entitled to one vote per share) of Nuevo Banco Suquía S.A. preliminarily awarded the winning bid to the Bank. The stock purchase agreement was signed on September 30, 2004.

On December 9, 2004, Central Bank’s Board of Governors issued Resolution No. 361, whereby it approved the transfer of shares representing 100% of the capital stock of Nuevo Banco Suquía S.A. in favor of the Bank.

On December 22, 2004, the shares of Nuevo Banco Suquía S.A. were transferred to the Bank, in consideration of which the latter paid 16,407 in cash. Because Nuevo Banco Suquía S.A.’s shareholders’ equity (book value) amounted to 16,890, the Bank recorded a negative goodwill of 483.

Upon the transfer, pursuant to Central Bank’s rules, the value of Nuevo Banco Suquía S.A.’s assets and liabilities was as follows:

Cash	336,266
Government and private securities	475,029
Loans	862,769
Other receivables from financial intermediation	428,163
Investments in other companies	1,893
Other receivables	21,872
Bank premises and equipment	47,678
Other assets	25,845
Total assets	2,199,515
Deposits	1,548,049
Other liabilities from financial intermediation	599,635
Other liabilities	11,949
Provisions	17,778
Items pending allocation	5,214
Total liabilities	2,182,625
Total shareholders’ equity	16,890
Total liabilities and shareholders’ equity	2,199,515

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On the same date, the Bank made an irrevocable capital contribution for future capital increases in the amount of 288,750, as agreed in the bid, and increased Nuevo Banco Suquía S.A.’s shareholders’ equity by the same amount. Additionally, on the same date, at the Regular and Special Shareholders’ Meeting of Nuevo Banco Suquía S.A. the former shareholders approved a motion to capitalize those irrevocable capital contributions, and, therefore, the capital stock increased to 303,750 (303,750,000 shares of common stock entitled to one vote per share).

The results of operations of Nuevo Banco Suquía S.A. were included in these consolidated financial statements as from December 22, 2004. As of June 30, 2005 and December 31, 2004, the shareholders’ equity of Nuevo Banco Suquía S.A. amounted to 354,049 and 307,298, respectively.

As of December 31, 2004, Nuevo Banco Suquía S.A. reported a payable to the Central Bank (resulting from the credit assistance for illiquidity) of 260,500. As of such date, these liabilities were recorded in the “Other liabilities from financial intermediation— Central Bank of Argentina” account. On February 2, 2005, in accordance with Central Bank Communiqué “A” 4,268, the Bank paid cash to settle such debt.

On March 14, 2005, as established in Central Bank’s Board of Governors point 7 of Resolution No. 361. Banco Macro Bansud S.A. sold 50,000 shares of Nuevo Banco Suquía S.A. to three shareholders for 50; no gain or loss was recognized. Therefore, as from that date, Banco Macro Bansud S.A. holds 99.984% of the capital stock and votes of Nuevo Banco Suquía S.A.

Also, on April 8, 2005, in accordance with the ruling issued by Argentine anti-trust authorities dated March 7, 2005, the Department of Technical Coordination of the Ministry of Economy and Production authorized Banco Macro Bansud S.A. to acquire the capital stock of Nuevo Banco Suquía S.A.

3. SIGNIFICANT ACCOUNTING POLICIES

The preparation of the Bank’s financial statements requires Management to make, in certain cases, estimates and assumptions to determine the book amounts of assets and liabilities, as well as the disclosure of contingent assets or liabilities as of each of the dates of presentation of the accounting information included in these financial statements.

Management records entries based on the best estimates according to the likelihood of occurrence of different future events and the final amounts may differ from such estimates, which may have a positive or negative impact on future periods.

The accompanying unaudited interim consolidated financial statements as of June 30, 2005 have been prepared in accordance with Central Bank’s rules for interim financial information. The consolidated balance sheet at December 31, 2004 has been derived from the audited financial statement at that date. The unaudited interim consolidated financial statements and the consolidated balance sheet do not include all of the information and footnotes required by Central Banks rules for complete financial statements and therefore should be read in conjunction with the complete consolidated financial statements as of and for the year ended December 31, 2004. All adjustments which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown are of a normal, recurring nature and have been reflected in the unaudited consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of the results expected for the full fiscal year or for any future period.

The interim consolidated financial statements include the accounts of the Bank and its subsidiaries, both majority and wholly owned. Significant intercompany accounts and transactions have been eliminated in this consolidation. Investments in 50% or less owned affiliates, in which the Company exercises significant influence, are accounted for by the equity method.

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Under Central Bank’s rules and F.A.C.P.C.E. (Federación Argentina de Consejos Profesionales de Ciencias Económicas—Argentine Federation of Professional Council in Economic Sciences) Technical Resolution No. 4, Banco Macro Bansud S.A. has consolidated the following subsidiaries, as of June 30, 2005 and December 31, 2004 except Nuevo Banco Suquia S.A., which was consolidated from the date of the acquisition (December 22, 2004):

					Percentage held of
											Equity
	Shares										investment
Company					Capital						amounts as of
	Class		Number		stock			Votes			June 30, 2005
Nuevo Banco Suquía S.A.(1)		Common		303,750,000		99.984	%		99.984	%		354,049
Sud Bank & Trust		Common		9,816,899		99.999	%		99.999	%		95,742
Sud Valores S.A. Sociedad de Bolsa(2)		Common		940,500		99.000	%		99.000	%		9,632
Sud Inversiones & Análisis S.A.		Common		199,998		99.999	%		99.999	%		3,097
Sud Valores S.G.F.C.I.S.A.(3)		Common		47,750		19.100	%		19.100	%		325
Macro Valores S.A.		Common		1,349,290		99.95	%		99.95	%		3,699

(1)	Net of negative goodwill for 483.
(2)	Banco Macro Bansud S.A. has an indirect equity interest in Sud Valores S.A. Sociedad de Bolsa of 1% (through its subsidiary Sud Inversiones & Análisis S.A.—S.I.A.S.A.), in addition to the direct equity interest of 99% in such company.
(3)	Consolidated through S.I.A.S.A., its parent company (percentage held of capital stock and votes: 80.90%).

4. INCOME TAX AND MINIMUM PRESUMED INCOME TAX (TOMPI)

a)     As required by Central Bank’s rules, the Bank calculates the income tax charge by applying the 35% rate to taxable income for the year, without giving effect to temporary differences between book and taxable income.

In fiscal year 1998, Law No. 25,063 established minimum presumed income tax for a ten-year term. This tax is supplementary to income tax; while the latter is levied on the taxable income for the year, minimum presumed income tax is a minimum levy assessment by applying the current 0.2% rate to the book value of certain assets. Therefore, the Bank’s tax obligation for each year will be equal to the higher of these taxes. However, if minimum presumed income tax exceeds income tax in a given year, the excess may be credited as a payment towards any income tax in excess of minimum presumed income tax that may occur in any of the following ten years, once accumulated tax loss carry forwards (NOLs) have been used.

As of June 30, 2005 and 2004, the Bank estimated the existence of accumulated income tax NOLs and assessed a minimum presumed income tax charge that was capitalized under “Other receivables.”

Consequently, as of June 30, 2005, the Bank capitalized a total amount of Ps. 56,191 in connection with the minimum presumed income tax credit, which is considered to be an asset because Management estimates it will be used within ten years, which is the period allowed by the Central Bank Communiqué “A” No. 4295, as supplemented.

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The consolidated amounts of minimum presumed income tax credit and NOLs accumulated as of June 30, 2005 will mature as follows:

Minimum presumed income tax credit
	Expiration
Amount	Year
8,108		2009
5,859		2010
3,804		2011
8,613		2012
12,271		2013
14,913		2014
2,623		2015
56,191

NOLs
	Expiration
Amount	Year
80,853		2006
284,589		2007
243,154		2008
83,121		2009
691,717

b)     A.F.I.P. (Administración Federal de Ingresos Públicos— Argentine Tax Authorities) and other agencies’ administrative proceedings have had different interpretations regarding the tax treatment of the effect of the pesification and C.E.R. adjustment of guaranteed loans. The Bank believes that the income related to such items is not subject to income tax and therefore has no provided for such effect in the financial statements.

5. DIFFERENCES BETWEEN CENTRAL BANK’S RULES AND PROFESSIONAL ACCOUNTING STANDARDS EFFECTIVE IN THE CITY OF BUENOS AIRES, ARGENTINA

Through Resolution C.D. No. 87/03 of June 18, 2003, the C.P.C.E.C.A.B.A. (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires— Professional Council in Economic Sciences of the City of Buenos Aires) approved the revised professional accounting standards mandatory in the City of Buenos Aires (Technical Resolutions Nos. 6, 8, 9, 16, 17, 18, 20, and 21). In particular, with respect to the financial institutions governed by the Central Bank, the C.P.C.E.C.A.B.A. kept in force Resolution C. No. 98/93, which does not require the net present value (discounting) of beginning and end-of-year balances of monetary receivables and payables generated by financial transactions and refinancing, and of other monetary receivables and payables not generated by trading of goods or services.

As of the date of these interim consolidated financial statements, the Central Bank has not adopted the valuation and disclosure changes provided by these professional accounting standards, and their application in the financial statements of financial institutions is, therefore, not required. For this reason, the Bank did not quantify the net effects on shareholders’ equity or income (loss) caused by all the differences between such accounting standards and Central Bank’s rules.

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Below are the main differences between professional accounting standards and Central Bank’s rules as of June 30, 2005 and as of December 31, 2004:

a)     Valuation aspects

1)     The Bank has not recognized the effects of changes in the peso purchasing power from March 1, 2003 through October 1, 2003. Such recognition is required by Argentine G.A.A.P.

Had the effect of the changes in the peso purchasing power been recognized, the shareholders’ equity as of June 30, 2005, and as of December 31, 2004, would have decreased by about 7,858, while results of operations for the six-month period ended June 30, 2005, and for the fiscal year ended December 31, 2004, would not have varied significantly.

2)     The Bank assesses income tax by applying the effective rate to the estimated taxable income without considering the effect of temporary differences between book and taxable income. Under professional accounting standards, income tax should be recognized through the deferred tax method.

3)     As of June 30, 2005 and as of December 31, 2004, the Bank kept an amount of 46.774 (net of amortization for 24,770) and 50,037 (net of amortization for 17,916), respectively, capitalized in the “Intangible assets— Organization and development costs” account. This amount is related to the compliance with legal decisions on amparos. In accordance with professional accounting standards, if the amounts are realizable they should have been recorded in “Other receivables”, should not have been amortized and should have been stated at market value. If the amounts are not realizable, they should be recorded as losses.

4)     Holdings of government securities and loans to the non-financial government sector are valued in accordance with rules and regulations issued by the Federal Government and the Central Bank. Central Bank Communiqué “A” 3,911, as supplemented, establishes present-value criteria, applying regulated discount rates, for the valuation of unlisted government securities and certain receivables from the non-financial government sector.

Furthermore, the Central Bank’s rules for recognition of allowance for loan losses provide that receivables from the non-financial government sector are not subject to provisions for loan losses, whereas professional accounting standards require receivables to be compared with their recoverable value every time financial statements are prepared.

The Bank’s particular situation in this regard was as follows:

i)     As of June 30, 2005 and December 31, 2004, the Bank recorded in “Government securities— Holdings in investment accounts” and “Other receivables from financial intermediation— Securities and foreign currency to be received for spot and forward purchases pending settlement” the securities received for the compensation established by Presidential Decree No. 905/02 in the aggregate consolidated amounts of 142,263 and 145,310, respectively. Under professional accounting standards, these assets should be stated at their market values. As of June 30, 2005 and December 31, 2004, the quoted price of such compensation amounted to 124,568 and 122,414, respectively.

ii)     As of June 30, 2005 and December 31, 2004, Federal Government secured bonds deriving from the exchange established by Presidential Decree No. 539/02 and other holdings of unlisted government securities were recorded in “Unlisted government securities” for a total net amount of 881,160 and 839,183. In accordance with professional accounting standards, these assets should be stated at their market values. As of June 30, 2005 and December 31, 2004, the quoted price of such bonds and/or securities amounted to 780,647 and 672,337, respectively.

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iii)     As of June 30, 2005 and December 31, 2004, Government guaranteed loans deriving from the exchange established by Presidential Decree No. 1,387/01 are recorded in “Loans— To the nonfinancial government sector” for a total net amount of 641,444 and 720,026, respectively. In accordance with professional accounting standards, these assets should be stated at their market values. As of June 30, 2005 and December 31, 2004, the estimated carrying value of such loans amounted to 598,783 and 649,662, respectively.

iv)     As of June 30, 2005 and December 31, 2004, the Bank booked in “Other receivables from financial intermediation— Other not covered by debtor classification regulations” the remaining rights for securities to be received for the compensation established by Presidential Decree No. 905/02 totaling 577,738 and 609,791, respectively. In accordance with professional accounting standards, these assets should be stated at their market values. As of June 30, 2005 and December 31, 2004 the quoted price of such compensation amounted to 546,837 and 533,494, respectively.

In addition, the Bank allocated the adjustments referred to in note 6 as prior-year adjustment, whereas, under professional accounting standards, such adjustments should have been charged to income for the six-month period ended June 30, 2004.

5)     The acquisition of Banco Bansud S.A. by Banco Macro S.A. gave rise originally to the recording of negative goodwill of 365,560. This resulted from the difference between the purchase price and the book value of the net equity acquired according to Central Bank’s rules. Subsequently, under Central Bank Communiqué “A” 3,984, the Bank retroactively applied the valuation and disclosure regulations established in such Communiqué and amortized, as of June 30, 2005, 70% of the aggregate amount of such goodwill (the maximum amortization allowed per annum is 20%). This negative goodwill generated gains on inflation through February 28, 2003.

In addition, the acquisition of Nuevo Banco Suquía S.A. by Banco Macro Bansud S.A. generated negative goodwill of 483, resulting from the difference between the purchase price and the value of the net assets acquired applying Central Bank’s rules.

Under professional accounting standards effective in the City of Buenos Aires, Argentina, when the cost of an investment is lower than fair value of the related identifiable assets, such difference shall be either deferred (as negative goodwill) and amortized subsequently as appropriate, on the basis of the specific circumstances of the transaction that originated such difference, or be considered a gain for the year.

b)     Disclosure aspects

There are certain disclosure differences between the criteria established by Central Bank and Argentine professional accounting standards.

6. PRIOR PERIOD ADJUSTMENTS

The statement of changes in shareholders’ equity includes adjustments to prior-year income (loss) for the additional adjustments arising from the effects of asymmetric pesification and compensations amounting to 78,297 prior to December 31, 2003.

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7. TRANSACTIONS WITH RELATED PARTIES

The receivables/ payables and income (loss) from transactions performed with subsidiaries and related companies according to the provisions of Law No. 19,550 are as follows:

					Sud		Sud
	Nuevo				Valores		Bank &		Sud
	Banco		Sud		S.A.		Trust		Valores		Macro		Total		Total
	Suquía		Inversiones &		Sociedad		Company		S.G.F.C.I.		Valores		June		December
	S.A.		Análisis S.A.		de Bolsa		Limited		S.A.		S.A.		2005		2004
ASSETS
Cash		—		—		—		2,072		—		—		2,072		2,131
Loans		231		—		—		—		—		—		231		—
Other receivables from financial intermediation		7,335		—		66,721		87		—		—		74,143		14,503
Other Receivables		4,810		—		—		—		—		—		4,810		4,670
Total Assets		12,376		—		66,721		2,159		—		—		81,256		21,304

						Sud		Sud
		Nuevo				Valores		Bank &		Sud
		Banco		Sud		S.A.		Trust		Valores		Macro		Total		Total
		Suquía		Inversiones &		Sociedad		Company		S.G.F.C.I.		Valores		June		December
		S.A.		Análisis S.A.		de Bolsa		Limited		S.A.		S.A.		2005		2004
LIABILITIES
Deposits			1,637		970		2,032		652		32		140		5,463		5,676
Other liabilities from financial intermediation			7,308		—		39,447		87,092		—		—		133,847		3,132
	Total Liabilities		8,945		970		41,479		87,744		32		140		139,310		8,808

					Sud		Sud
	Nuevo				Valores		Bank &		Sud
	Banco		Sud		S.A.		Trust		Valores		Macro		Total		Total
	Suquía		Inversiones &		Sociedad		Company		S.G.F.C.I.		Valores		June		December
	S.A.		Análisis S.A.		de Bolsa		Limited		S.A.		S.A.		2005		2004
MEMORANDUM ACCOUNTS
Control debit accounts		—		—		—		109,425		—		—		109,425		6,382
Contingent credit accounts		1,000		—		—		—		—		—		1,000		—
Total Memorandum Accounts		1,000		—		—		109,425		—		—		110,425		6,382

						Sud			Sud
	Nuevo					Valores			Bank &			Sud
	Banco			Sud		S.A.			Trust			Valores			Macro		Total			Total
	Suquía			Inversiones &		Sociedad			Company			S.G.F.C.I.			Valores		June			June
	S.A.			Análisis S.A.		de Bolsa			Limited			S.A.			S.A.		2005			2004
INCOME/ EXPENSE
Financial income		147			—		6						—					153			52
Financial expense		(12	)		—		—			(1,601	)		(10	)				(1,623	)		(2,448	)
Service-charge income		10					44						1			1		56			3
Service-charge expense		—			—		(24	)										(24	)		(18	)
Total income (expense)		145					26			(1,601	)		(9	)		1		(1,438	)		(2,411	)

During the six month period ended June 30, 2005 and the fiscal year ended December 31, 2004, the Bank granted loans to certain companies related to executive officers and directors of the Bank and its

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subsidiaries. Loans granted to those related parties as of June 30, 2005 and December 31, 2004 totaled 57,952 and 55,908, respectively. It is the Bank’s policy that such loans are granted in the ordinary course of business at normal credit terms, including interest rate and collateral requirements.

As of June 30, 2005 and December 31, 2004, the outstanding deposits of related parties were 64,316 and 36,713, respectively.

8. CAPITAL STOCK

As of June 30, 2005 and December 31, 2004, the capital structure is as follows:

Shares					Capital stock
			Votes
Class			per		Issued and
	Number		share		outstanding(1)		Paid-in(1)
Registered Class A shares of common stock		11,235,670		5		11,236		11,236
Registered Class B shares of common stock		597,707,767		1		597,707		597,707
Total June 30, 2005 and December 31, 2004		608,943,437				608,943		608,943

(1) Related to Ps. 608,943,437.

On September 26, 2005, the Regular and Special Shareholders’ Meetings of BANCO MACRO BANSUD S.A. approved a capital stock increase through the public subscription of shares for a face value of up to ARS 75,000,000 by issuing up to 75,000,000 common, class B and book-entry shares, with ARS 1 face value and entitled to one vote each. The increase would amount to 12.32% of capital stock, which would thus rise from ARS 608,943,437 to ARS 683,943,437. The new Class B shares would have the same rights as the Class B shares that are outstanding upon issuance, including the right to collect dividends. The Class B shares issued for the approved capital stock increase will be offered for public subscription in Argentina and may be offered abroad too.

9. CORPORATE BONDS

The amounts recorded in the interim consolidated financial statements related to corporate bonds are as follows:

Corporate Bonds
Class		Original face value		Ref.			06/30/2005		12/31/2004
Subordinated corporate bonds			USD 60,000,000		9.a	)		—		—
Subordinated corporate bonds			USD 23,000,000		9.a	)		13,949		12,665
Subordinated corporate bonds			USD  4,000,000		9.b	)		3,640		3,751
	Total							17,589		16,416

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Maturities of the corporate bonds as of June 30, 2005, are as follows:

	As June 30,
Fiscal Year	2005
2005		8,475
2006		6,510
2007		651
2008		651
2009		651
2010		651
Total		17,589

a) On February 19, 1996, the Regular and Special Stockholders’ Meeting of the former Banco Bansud S.A. authorized issuing Subordinated Corporate Bonds for up to a face value of USD 60,000,000.

After various negotiations between the parties, on April 16, 2003, the former Banco Bansud S.A. paid off at the due date, at the USD 1 = ARS 1 exchange rate, the last installment of the Subordinated Corporate Bond.

In addition, on April 12, 1995, the Regular Shareholders’ Meeting of the former Banco Macro S.A. approved creating a global program for the issuance of simple corporate bonds, subordinated or not, non-convertible into shares for up to an aggregate of USD 50,000,000, and it entrusted the Board of Directors the responsibility of setting the terms of the referenced bonds (price, form, payment and placement conditions, among others).

On July 20, 1998, the former Banco Macro S.A. received the funds related to a loan that it had requested from the F.F.C.B., now Assistance Trust Fund for Financial Institutions and Insurance (F.F.A.E.F. y S.), in the amount of USD 5,000,000, and Banco Macro Bansud S.A. issued Subordinated Corporate Bonds in order to finance the acquisition of Banco de Jujuy S.A.

Pursuant to the request made by the Bank to the F.F.C.B.’s Managing Committee on July 26, 1999, to restructure the financing previously granted, a loan agreement was executed on December 29, 1999 by B.N.A., as F.F.C.B.’s trustee, and the former Banco Macro S.A. Under such agreement, the F.F.C.B. granted the Bank a subordinated loan of USD 18,000,000, which was used by the Bank to strengthen computable equity.

The former Banco Macro S.A. undertook to repay in full the new loan convertible into subordinated corporate bonds in five annual, equal and successive instalments, the first instalment falling due on December 29, 2002. In addition, the loan will accrue compensatory interest at 180 days LIBOR plus 3% per year on balances, payable in arrears on an annual basis starting a year after the disbursement date.

On March 17, 2000, the former Banco Macro S.A. requested the C.N.V.’s authorization to issue the fifth series of subordinated corporate bonds in the amount of USD 18,000,000, under the Corporate Bonds issuance global program for an aggregate amount of USD 50,000,000 as mentioned in point b), in order to repay the loan granted by the FFCB on December 29, 1999.

As of June 30, 2005, the Bank had paid the equivalent of USD 14,800,000.

The Managing Committee of the trust fund objected to the pesification of 50% of its loans, therefore requesting re-assessment of all payments made. The former Banco Macro S.A. has submitted all necessary information to the trust fund and rejected the request of such entity.

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On March 8, 2004, the Managing Committee of the F.F.R.E. (Fondo Fiduciario para Reconstrucción de Empresas— Enterprise Reconstruction Trust Fund), through B.N.A. in its capacity as trustee for such fund, notified the former Banco Macro S.A. that it had rejected the appeals that such bank had filed against such Committee’s decision of May 28, 2003 (Records of Proceedings No. 88) and thus confirmed the original decision. On May 12, 2004, the Bank amplified the refutation grounds presented to the Managing Committee of the trust fund.

The Ministry of Economy and Production, by Resolution No. 25 of January 17, 2005, rejected the administrative appeal that the Bank had brought against the abovementioned Record of Proceedings No. 88 of May 28, 2003, and stated that such resolution exhausted all administrative proceedings and opened the possibility of recourse to the courts.

The Bank believes that there are ample grounds to consider inappropriate and inapplicable the decision adopted by the Trust Fund’s Managing Committee and supported by the resolution of the Ministry of Economy and Production. However, pursuant to such resolution, the Bank has recorded provisions that reflect the probable increase in the amount payable by the Bank.

In the opinion of the Bank’s Management and under Law No. 25,561 these obligations were pesified at the USD1 = Ps.1 exchange rate and accrue C.E.R. adjustment as from February 3, 2002. Consequently, as of June 30, 2005, the Bank carried these payables in the “Subordinated Corporate Bonds” account for 8,200 in principal plus 5,749 in interest and C.E.R. adjustment accrued through year-end. In addition, the Bank carries the above mentioned adjustment in Liabilities, in the “Provisions— Other Contingencies” account.

b) The Special Shareholders’ Meeting of Banco de Salta S.A. (bank merged with and into the former Banco Macro S.A.) held on January 20, 1997, approved issuing subordinated corporate bonds in the amount of USD 4,000,000 to exercise the power granted to it by the second clause of the loan agreement executed with Banco Provincial de Salta (in liquidation) on June 28, 1996. As required by the bank, through Resolution No. 1006, dated December 19, 1997, the C.N.V. authorized the entry of Banco de Salta S.A. into the public offering regime for the issuance of corporate bonds, and it also approved the public offering of such bonds.

In addition, on October 19, 1999, through Resolution No. 13,043, the C.N.V. authorized the transfer in favor of Banco Macro Misiones S.A. (bank merged with and into the former Banco Macro S.A.), of the authorization granted to Banco de Salta S.A., to issue the referred corporate bonds, since the latter merged with and into the former. Furthermore, it cancelled the authorization granted to Banco de Salta S.A. for the public offering of its corporate bonds.

As of June 30, 2005, the former Banco Macro S.A. had paid the equivalent of USD 1,800,000.

10. ITEMS IN CUSTODY— PORTFOLIO MANAGEMENT

On June 7, 2005, a trust agreement was executed with Banco de Valores S.A., as trustee, whereby “Macro Personal V” trust was set up. To such end, class “A” and “B” certificates of participation were issued for a face value of 59,524 and 10,504, respectively.

As of June 30, 2005, the portfolio managed by the Bank amounts to 59,956.

11. TRUST ACTIVITIES

Banco Macro Bansud S.A., either directly or through its subsidiary Sud Inversiones & Análisis S.A., acts as trustee. In no case, will the trustee be liable with its own assets or for any obligations undertaken in the performance of the trust. These obligations do not constitute any debt for the trustee and will be satisfied only with the corpus assets. Additionally, the trustee may not levy any

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encumbrance on the corpus assets or dispose of them beyond the limits set forth in the above mentioned trust agreements. The fees earned by the Bank in its capacity as trustee are calculated under the terms of the respective trust agreements.

As of June 30, 2005, the new trust (ONEXT Financial Trust) where the Bank or its subsidiary acts as trustee, is as follows:

The purpose of the trust is to provide enough guarantees for the repayment of the loan granted by the Bank to Dalvian House S.A., Conjunto los Cerros S.A. and Dalvian Constructora S.A.

Consequently, on May 19, 2005, a trust agreement was executed by Banco Macro Bansud S.A., Banco Credicoop Cooperativo Limitado, Dalvian House S.A. and Conjunto los Cerros S.A., in their capacities as trustors, parties of the first part and Sud Inversiones & Análisis S.A., in its capacity as trustee, party of the second part, Dalvian House S.A., in its capacity of Dalvian Constructora, party of the third part and Tecan Austral S.A., party of the fourth part, whereby the “ONEXT Financial Trust” was set up, by virtue of which the trustors conveyed the fiduciary ownership of the following:

(i)  Macro Bansud: the amount of 16,060 to the trust account.

(ii)  Credicoop: the amount of 16,060 to the trust account.

(iii)  Dalvian House: the plots of land owned, including: a) the right to obtain and use the authorizations and any type of permissions in connection with such plots of land; and b) the prospective sale price and/or any other way of legal divestiture thereof.

(iv)  Conjunto los Cerros: the plots of land owned, including: a) the right to obtain and use the authorizations and any type of permissions in connection with such plots of land; and b) the prospective sale price and/or any other way of legal divestiture thereof.

The trust issued debt securities of 32,120 and certificates of participation (the collection of which is subordinated to the payment of the debt securities issued) of 48,947.

The Bank recorded its holding of debt securities issued by the Trust in “Other Receivables from financial intermediation” at acquisition cost, plus interest accrued through period-end of 16,278. These debt securities represent the legal instrument whereby Banco Macro Bansud S.A. (beneficiary) is entitled to the proceeds from the trust’s assets.

12.     RESTRICTION ON EARNINGS DISTRIBUTION

12.1. Through Communiqué “A” 4,152, the Central Bank provided that those institutions that wish to distribute earnings must request Argentine Superintendency of Financial and Foreign Exchange Institutions (S.E.F. y C.’s) prior authorization and meet the requirements set forth in such Communiqué.

12.2. Under the agreements executed with the Trust Fund for Assistance to Financial Institutions and Insurance Companies (F.F.A.E.F.y S.), Banco Macro Bansud may not distribute as cash dividends (i) an amount exceeding 50% of liquid and realized income or (ii) an amount exceeding 25% up to 50% of liquid and realized income (as defined in regulations), unless it redeems in advance subordinated corporate bonds for an amount equivalent to 50% of the total cash dividends distributed.

12.3. According to Law No. 25,063, the dividends distributed in cash or in kind will be subject to a 35% income tax withholding as a single and final payment. Dividend payments are subject to such withholding if they exceed the sum of: (i) the accumulated taxable earnings accumulated as of the year-end immediately prior to the payment or distribution date and (ii) certain tax-exempt income (such as dividend payments from other corporations). This is applicable for tax years ended as from December 31, 1998.

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12.4. Banco Macro Bansud may only pay dividends after making the appropriations required by the law and the Bank’s by laws. Additionally, Banco Macro Bansud may not pay dividends related to the difference between the book value and quoted price of the Federal Government Bonds in US dollars at LIBOR maturing in 2012 (Boden 2012) received under Presidential Decree No. 905/02, Title VI, sections 28 and 29, which was 17,695 at June 30, 2005.

12.5. As established in Central Bank Communiqué “A” 4,295, to determine the amounts to be distributed it will be necessary to deduct the assets recorded by Banco Macro Bansud for minimum presumed income tax from unappropriated retained earnings. Such balance amounted to 43,619.

13. BANK CHECKING-ACCOUNT REGULATIONS

Under Law No. 24,760 and Central Bank Communiqué “A” 2,514, as supplemented, regulating bank checking accounts, a system of penalties was established for those financial institutions that, at any time after January 13, 1997, maintained checking accounts open when they should have been closed or opened checking accounts for disqualified holders.

Enforcing Communiqué “A” 2,909 and under Presidential Decree No. 347/99, the Central Bank required financial institutions that, through error or omission, had maintained open checking accounts of disqualified individuals or legal persons, from January 13, 1997, through April 16, 1999, and that had not been previously reported, file a brief reporting the total amount payable on account of the cases detected, with a 15 floor and a 2,000 cap, taking into account the amounts already paid in such respect. The Bank duly complied with this requirement.

Due to an injunction ordered in a legal action to which the former Banco Bansud S.A. is not a party and which put a stay on the effects of the above mentioned decree, the Central Bank demanded payment of the amount previously reported by the former Banco Bansud S.A., as mentioned in the preceding paragraph. In view of this situation, on October 21, 1999, the Bank paid the amount of 344 (not restated) assessed on the basis established by the Presidential Decree No. 347/99. Additionally the Bank addressed a letter to the oversight agency requesting that the latter reconsider the decision to claim the full amount reported by the Bank, until a definitive judgment had given legal certainty that the decree was valid and effective.

Subsequently, the former Banco Bansud S.A. filed with different courts requesting them to issue an injunction to maintain the status quo against the Central Bank in connection with the collection of such fines.

Management believes that it is not probable that these issues will result in additional losses and therefore no additional amounts have been accrued.

14. CLAIMS FROM THE A.F.I.P— D.G.I (FEDERAL PUBLIC REVENUE ADMINISTRATION— FEDERAL TAX BUREAU)

On January 21, 2002, the former Banco Bansud S.A. requested from the above agency that it be included in the debt consolidation, interest and fines exemption and payment in instalment plan system provided by Presidential Decree No. 1,384/01 to settle the taxes payable assessed by the authorities ex-officio according to a resolution of December 19, 2001. The abovementioned claim related to income tax differences of the former Banco del Sud for the 1993 and 1994 tax years, and it was based on having challenged certain methods applied that, in the former Banco Bansud S.A.’s opinion, were consistent with the guidelines set by the relevant regulations.

The amount the Bank has requested to settle is 10,780 in 120 monthly instalments. The amount in question was charged to expense in year ended December 31, 2001. As of June 30, 2005, the unpaid instalments of such settlement were recorded in the “Other liabilities” account.

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Between 2002 and 2004, the former Banco Bansud S.A. and Banco Macro Bansud S.A. filed appeals and administrative remedies with the Federal Administrative Tax Court against A.F.I.P.— D.G.I. against resolutions which, in accordance with the position mentioned in the preceding paragraphs, had questioned the tax calculation for fiscal years 1995 through 1998.

The issue under discussion and on which the A.F.I.P. bases its position, that is, the requirement that court-enforced collection proceedings before a court must have been started for unpaid loans to be deducted from income tax, has been recently addressed by the Federal Administrative Tax Court, which ruled that this is not the only condition that would permit such deduction.

Management believes that it is not probable that these issues will result in additional losses and therefore no additional amounts have been accrued.

15. BALANCES IN FOREIGN CURRENCY

The balances of assets and liabilities denominated in foreign currency are as follows:

	As of June 30,		As of December 31,
	2005		2004
ASSETS
Cash and due from banks		580,631		715,907
Government and private securities		109,193		116,347
Loans		542,396		361,549
Other receivables from financial intermediation		712,334		763,920
Investments in other companies		96,389		99,893
Other receivables		14,261		25,439
Total		2,055,204		2,083,055
LIABILITIES
Deposits		1,057,942		1,008,586
Other liabilities from financial intermediations		585,329		404,543
Other liabilities		851		930
Items pending allocation		498		48
Total		1,644,620		1,414,107

16. INTEREST-BEARING DEPOSITS WITH OTHER BANKS

16.1 Included in “Cash and Due from Banks” there are: (a) interest-bearing deposits with the B.C.R.A. totaling 523,213 and 625,906 as of June 30, 2005 and December 31, 2004, respectively and (b) interest-bearing deposits in foreign banks totaling 145,572 and 360,206 as of June 30, 2005 and December 31, 2004, respectively.

The interest-bearing deposits with the B.C.R.A. yielded a nominal annual interest rate of 2.55% and 2.05% as of June 30, 2005 and December 31, 2004, respectively, and the interest-bearing deposits in foreign banks yielded a nominal annual interest rate of approximately 2.89% and 2.00% as of June 30, 2005 and December 31, 2004, respectively.

16.2 Included in “Other Receivables from Financial intermediation” there are other interest-bearing deposits with B.C.R.A. totaling 106,599 and 98,339 as of June 30, 2005 and December 31, 2004, respectively.

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17. GOVERNMENT AND PRIVATE SECURITIES

		As of June 30,		As of December 31,
		2005		2004
GOVERNMENT SECURITIES
Holdings in investment accounts
In foreign currency:
	Federal government bonds in USD at LIBOR, maturity 2012— Compensation (BODEN 2012)		53,018		53,856
Subtotal holdings in investment accounts			53,018		53,856
Holdings for trading or financial intermediation
In pesos:
	Province of Salta consolidation bonds in pesos		216		17
	Consolidation bonds of social security payables in pesos		8,103		11,557
	Federal government bonds (maturity 2007, 2008 and 2014) (BODEN 2007, BODEN 2008 and BODEN 2014)		4,708		1,277
	Consolidation bonds in pesos		4,347		5,649
	Discount in Pesos		41,611		—
	Secured bonds Decree 1,579/02		8,081		18,351
	Province of Tucumán		186		—
	Par in Pesos		2,168		—
	Other		77		852
Subtotal holdings for trading or intermediation— In pesos			69,497		37,703
In foreign currency:
	Argentine Republic external bonds		—		1,271
	Treasury Bill— Maturity 2005		3,354		—
	Federal government bonds— (maturity 2005, 2006, 2012 and 2013)		45,297		47,415
	Consolidation bonds		—		1,298
	Other		52		1,253
Subtotal holding for trading or intermediation— In foreign currency			48,703		51,237
Subtotal holding for trading or financial intermediation			118,200		88,940
Unlisted government securities
In pesos:
	Tax credit certificates under Decree 2,217/02AM, maturity 04/09/02		4,903		11,441
	Argentine Republic external bills coupons		—		2,089
	Federal government bonds— survey rate— 3rd Series		—		19
	Secured bonds Decree 1,579/02		862,679		819,498
	Bonds issued by the Municipality of Bahía Blanca at 13.75%		1,435		2,257
	Discount in Pesos		12,049		—
	Other		181		282

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		As of June 30,			As of December 31,
		2005			2004
Subtotal unlisted government securities— In pesos			881,247			835,586
In foreign currency:
	Argentine Republic external bills coupons		—			3,597
Subtotal unlisted government securities— In foreign currency			—			3,597
Subtotal unlisted government securities			881,247			839,183
Instruments issued by the Central Bank of Argentina
In pesos:
	Listed Central Bank external bills (LEBAC)		1,481,199			994,944
	Unlisted Central Bank external bills (NOBAC)		213,179			102,636
Subtotal instruments issued by the Central Bank of Argentina			1,694,378			1,097,580
Total government securities			2,746,843			2,079,559
PRIVATE SECURITIES
Investments in listed private securities
	Shares		8,723			3,951
	Corporate bonds		15,260			14,872
	Debt securities in financial trusts		2,908			10,069
	Certificates of participation in financial trusts		33,407			757
	Mutual Funds		4,088			—
Total private securities			64,386			29,649
Total government and private securities, before allowances			2,811,229			2,109,208
Allowances			(1,199	)		(2,471	)
Total government and private securities			2,810,030			2,106,737

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Following is a table showing maturities for Government and private securities as of June 30, 2005:

		Maturing
						After 5 years
		Within		After 1 year but		but within 10		After 10
		1 year		within 5 years		years		years		Total
Government securities
In pesos:
Holding for trading or financial intermediation			2,012		10,275		10,672		46,538		69,497
	Province of Salta Consolidation In pesos		61		154		1		—		216
	Consolidation bonds of social security payables in pesos		431		5,151		2,521		—		8,103
	Federal government bonds (maturity 2007, 2008 and 2014)		532		591		3,585		—		4,708
	Consolidation bonds in pesos		573		2,664		1,029		81		4,347
	Secured bonds Decree 1,579/02		392		1,643		3,457		2,589		8,081
	Discount in Pesos		—		—		—		41,611		41,611
	Par in Pesos		—		—		—		2,168		2,168
	Province of Tucuman		10		38		79		59		186
	Other debt bonds		13		34		—		30		77
Unlisted government securities			44,006		175,652		368,532		293,057		881,247
	Secured bonds Decree 1,579/02		42,942		175,158		368,532		276,047		862,679
	Tax credit certificates under Decree 2,217/02AM, maturity 04/09/02		—		—		—		4,903		4,903
	Discount in Pesos		—		—		—		12,049		12,049
	Bonds issued by the Municipality of Bahía Blanca at 13.75%		960		475		—		—		1,435
	Other debt bonds		104		19		—		58		181
Instruments issued by the Central Bank of Argentina			1,312,681		381,697		—		—		1,694,378
	Listed Central Bank external bills		1,115,754		365,445		—		—		1,481,199
	Unlisted Central Bank external bills		196,927		16,252		—		—		213,179
Total government securities in pesos			1,358,699		567,624		379,204		339,595		2,645,122

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	Maturing
					After 5 years
	Within		After 1 year but		but within 10		After 10
	1 year		within 5 years		years		years		Total
In foreign currency:
Investment account		8,600		25,381		19,037		—		53,018
Federal government bonds in USD at LIBOR, maturity 2012— Compensation (BODEN 2012)		8,600		25,381		19,037		—		53,018
Holding for trading or financial intermediation		23,631		13,212		11,808		52		48,703
Federal government bonds— (maturity 2006, 2012 and 2013)		20,277		13,212		11,808		—		45,297
Treasury Bill (maturity 2005)		3,354		—		—		—		3,354
Other debt bonds		—		—		—		52		52
Total government securities in foreign currency		32,231		38,593		30,845		52		101,721
Total government securities		1,390,930		606,217		410,049		339,647		2,746,843

	Maturing
					After 5 years
	Within		After 1 year but		but within 10		After 10
	1 Year		within 5 Years		Years		Years		Total
Corporate bonds		11,009		3,797		454				15,260
Debt securities in financial trusts		2,787		121		—		—		2,908
Certificates of participation in financial trusts		24,678		8,729		—		—		33,407
Mutual Funds		4,088								4,088
Shares		8,723		—		—		—		8,723
Total private securities		51,285		12,647		454		—		64,386
Total government and private securities, before allowances		1,442,215		618,864		410,503		339,647		2,811,229
Allowances										(1,199	)
Total government and private securities										2,810,030

18. LOANS

Description of certain categories of loans in the accompanying Balance Sheets include:

†	Financial government sector: loans to the government sector, excluding government owned financial institutions;
†	Financial sector: short-term loans to other banks and short-term loans from foreign branches to banks outside Argentina.

†  Non financial private sector and foreign residents: loans given to the private sector (excluding financial institutions) and residents outside Argentina.

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Banco Macro Bansud and Subsidiaries

The classification of the loan portfolio in this regard was as follows:

	As of			As of
	June 30,			December 31,
	2005			2004
Non-financial government sector		701,957			809,577
Financial sector		158,644			81,812
Non-financial private sector and foreign residents
Commercial
—With Senior “A” guarantees		37,399			13,707
—With Senior “B” guarantees		148,822			214,308
—Without Senior guarantees		1,245,770			1,139,969
Consumer
—With Senior “A” guarantees		11,154			8,622
—With Senior “B” guarantees		373,548			347,982
—Without Senior guarantees		634,525			484,408
Less: Allowance		(173,676	)		(225,340	)
Total loans, net of allowance		3,138,143			2,875,045

Senior “A” guarantees consist mainly of cash guarantees, gold guarantees, warrants over primary products and other forms of self-liquidating collateral.

Senior “B” guarantees generally consist of mortgages and other forms of collateral pledged to secure the loan amount.

“Without senior guarantees” consist, in general, of unsecured third-party guarantees.

A breakdown of total loans by geographical location of borrowers is as follows:

	As of			As of
	June 30,			December 31,
	2005			2004
Argentina		3,257,917			3,087,000
Chile		5			7
Ecuador		1			4
Thailand		3,585			2,651
Taiwan		685			637
United States of America		26,043			1,054
Brazil		366			207
Uruguay		8,580			8,825
United Kingdom		14,498			—
Malasya		60			—
Sweden		79			—
Less: Allowances		(173,676	)		(225,340	)
Total loans, net of allowances		3,138,143			2,875,045

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Banco Macro Bansud and Subsidiaries

A breakdown of total loans by sector activity classified according to the principal business of the borrowers is as follows:

	As of			As of
	June 30,			December 31,
Economic Activity	2005			2004
Agricultural livestock— Forestry— Fishing— Minery— Hunting		389,705			261,078
Foodstuff and beverages		209,469			190,586
Mass productions of products		64,595			119,193
Chemicals		94,031			100,356
Other		963,273			759,110
Electricity, oil, water		16,030			16,746
Construction		138,008			90,236
Retail and consumer products		252,359			282,367
Governmental services		757,812			860,039
Financial sector		321,400			326,924
Real estate, business and leases		105,137			93,750
Total loans		3,311,819			3,100,385
Less: Allowances		(173,676	)		(225,340	)
Total loans, net of Allowances		3,138,143			2,875,045

19. ALLOWANCES FOR LOAN LOSSES AND OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

	As of			As of
	June 30,			December 31,
	2005			2004
Loans:
Balance at the beginning of the fiscal year		225,340			56,279
Allowance for loan losses		28,804			36,467
Allowances for loan losses for purchased loans		—			21,329
Allowances for loan losses from acquisition of Nuevo Banco Suquia S.A.		—			143,457
Write offs		(53,402	)		(32,164	)
Recoveries		(27,066	)		(28	)
Balance at the end of the Period/ Fiscal Year		173,676			225,340

	As of			As of
	June 30,			December 31,
	2005			2004
Other receivables from financial intermediation:
Balance at the beginning of the fiscal year		107,530			134,145
Provision for other receivables for financial intermediation losses		6,667			716
Provision for other receivables for financial intermediation losses from acquisition of Nuevo Banco Suquía S.A.		—			102,767
Write offs		(71,209	)		(130,098	)
Recoveries		(7,598	)		—
Balance at the end of the Period/ Fiscal Year		35,390			107,530

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20. OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

The breakdown of other banking receivables by guarantee type is as follows:

	As of			As of
	June 30,			December 31,
Description	2005			2004
With preferred guarantees		83,522			521,013
Without preferred guarantees		1,619,790			1,385,741
Allowances		(35,390	)		(107,530	)
		1,667,922			1,799,224

The breakdown of private securities recorded in Other receivables by financial intermediation is as follows:

	As of		As of
	June 30,		December 31,
Description	2005		2004
Corporate bonds— Unlisted		916		928
Debt securities in financial trusts— Unlisted		53,136		33,106
Certificates of participation in financial trusts— Unlisted		108,049		88,907
Total investments in unlisted private securities		162,101		122,941

As of June 30, 2005, maturities for the private securities disclosed above are as follows:

	Maturing
			After 1 year		After 5 years
	Within		but within 5		but within 10		After 10
	1 Year		Years		Years		Years		Total
Corporate bonds— Unlisted		11		534		371		—		916
Debt securities in financial trusts— Unlisted		30,499		20,856		1,781		—		53,136
Certificates of participation in financial trusts— Unlisted		22,288		—		—		85,761		108,049
Total investments in unlisted private securities		52,798		21,390		2,152		85,761		162,101

The Bank enters into forward transactions related to government securities and foreign currencies. The Bank recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date.

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Banco Macro Bansud and Subsidiaries

The assets and liabilities related to such transactions are as follows:

		As of		As of
		June 30,		December 31,
Description		2005		2004
Amounts receivable from spot and forward sales pending settlement
	Receivables from repurchase agreements of government securities		322,408		637,782
	Receivable from spot sales of government and private securities pending settlement		117,761		40,378
	Receivables from other repurchase agreements		—		1,151
	Receivables from forward sales of government securities		2,690		54,684
	Receivables from spot sales of foreign currency		4,334		—
	Receivables from other forward sales		40,041		—
			487,234		733,995
Securities and foreign currency receivable from spot and forward purchases pending settlement
	Forward purchases of securities under repurchase agreements		202,105		202,334
	Spot purchases of government and private securities pending settlement		74,565		3,638
	Spot purchases of foreign currency		14,454
	Other spot purchases		17,004		589
			308,128		206,561
Amounts payable for spot and forward purchases pending settlement
	Payables for forward purchases of securities under repurchase agreements		123,434		126,762
	Payables for spot purchases of government securities pending settlement		34,727		3,631
	Payables for spot purchases of foreign currency pending settlement and forward purchases of foreign currency		14,450		1
	Payables under repo transactions		24,954		22,678
	Payable for spot purchases of government and private securities awaiting settlement		18,908		589
			216,473		153,661
Securities and foreign currency to be delivered under spot and forward sales pending settlement
	Forward sales of government securities under repurchase agreements		359,280		690,539
	Spot sales of government and private securities pending settlement		121,504		3,212
	Forward sales of government securities under other repurchase agreements		6,095		1,551
	Forward sales of government securities		5,817		58,870
	Spot sales of foreign currency		4,336		—
	Other forward Sales		35,910		—
			532,942		754,172

21. DEPOSITS AND OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION

21.1 Deposits

The aggregate amount of time deposits and investment accounts exceeding Ps.100 or more as of June 30, 2005 is 2,522,000.

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21.2 Central Bank of Argentina

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of June 30, 2005								As of December 31, 2004
	Principal		Interest			Rate			Principal		Interest		Rate
Short- term liabilities		8,261		24,449			3.55	%		72,162		13,514		4.11	%
Long- term liabilities		125,331		77,945			3.62	%		329,561		70,030		4.18	%
Total		133,592		102,394	(1)					401,723		83,544

(1) As of June 30, 2005, “Interest” includes 11,139 related to accrued interest and adjustments on the above mentioned liabilities, booked in “Accrued interest, adjustments, foreign exchange and quoted price differences payable” account.

Maturities of the long-term liabilities in the table above for each of the following Periods are as follows:

	As of
	June 30,
Periods	2005
2006		—
2007		29,876
2008		28,900
2009		28,900
2010		28,900
As from 2010		86,700
Total		203,276

21.3    Banks and international institutions

	As of June 30, 2005							As of December 31, 2004
	Principal		Interest		Rate			Principal		Interest		Rate
Short- term liabilities		396		3,627		0.81	%		13,017		230		3.42	%
Long- term liabilities(1)		144,540		—		5.61	%		1,651		—		2.98	%
Total		144,936		3,627					14,668		230

(1) In January, 2005 the Bank obtained a USD 50 million loan from Credit Suisse First Boston with an 18-month term at the LIBOR rate plus 2.7%. The loan agreement includes restrictions, principally related to the compliance of the payments established. Likewise, the loan agreement contains other restrictions connected to the fulfillment of financial ratios. As of June 30, 2005 the Bank had duly complied with the obligations assumed with the loan.

Accrued interest and adjustments are included in the “Accrued interest, adjustments, foreign exchange and quoted price differences payable” account. Amounts are unsecured.

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21.4    Financing received from Argentine financial institutions

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of June 30, 2005							As of December 31, 2004
	Principal		Interest		Rate			Principal		Interest		Rate
Short- term liabilities		28,553		3,251		3.82	%		32,021		673		2.49	%
Long- term liabilities		23,743		14,478		3.00	%		24,814		14,945		2.05	%
Total		52,296		17,729					56,835		15,618

Accrued interest and adjustments are included in “Accrued interest, adjustments,, foreign exchange and quoted price differences payable” under the “Other liabilities from financial intermediation” in the accompanying consolidated balance sheets. Amounts are unsecured.

Maturities of the long-term liabilities in the table above for each of the following Periods are as follows:

	As of
	June 30,
Periods	2005
2006		—
2007		2,567
2008		1,927
2009		1,927
2010		2,248
2011		2,891
2012		2,891
2013		2,891
2014		3,501
2015		4,722
2016		4,722
2017		4,722
2018		3,212
		38,221

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22. PROVISION

Provisions— Contingencies and Commitments

Following is a rollforward of the allowance recoded under Central Bank’s rules to cover contingent losses related to loan commitments. These amounts have been accrued in accordance with Central Bank’s rules, which are similar to SFAS No. 5.

	As of			As of
	June 30,			December 31,
	2005			2004
Balance at the beginning of the fiscal year		3,120			5,342
Provision for contingent commitments losses		405			843
Allowances for contingent commitments losses from acquisition of Nuevo Banco Suquía S.A.		—			48
Reversals		(301	)		(3,113	)
Monetary gain generated on allowances		—			—
Balance at the end of the Period		3,224			3,120

Provisions— Negative Goodwill

Following is the rollforward of the amounts recorded to cover the difference between the purchase price and the book value of the net equity acquired of Banco Bansud and Nuevo Banco Suquía S.A. (from December 22, 2004):

	As of			As of
	June 30,			December 31,
	2005			2004
Balance at the beginning of the fiscal year		146,707			219,336
Allowances— Nuevo Banco Suquía S.A.		—			483
Amortization— ex Banco Bansud S.A.		(36,556	)		(73,112	)
Balance at the end of the Period/ Fiscal Year		110,151			146,707

Provisions— Other loss contingencies

Principally includes labor litigation and customer and other third-parties claims. The amounts have been accrued in accordance with Central Bank’s rules, which are similar to SFAS No. 5.

	As of			As of
	June 30,			December 31,
	2005			2004
Balance at the beginning of the fiscal year		75,872			60,450
Provision for other contingent losses		14,064			3,211
Provision for other contingent losses from acquisition of Nuevo Banco Suquía S.A.					16,948
Write off		(1,455	)		(1,492	)
Reversals		(1.956	)		(3,245	)
Balance at the end of the Period/ Fiscal Year		86,525			75,872
Total of provisions		199,900			225,699

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23. MINIMUM CAPITAL REQUIREMENTS

Under Central Bank’s rules, the Bank is required to maintain individual and consolidated minimum levels of equity capital (“minimum capital”). As of June 30, 2005 and December 31, 2004, the consolidated minimum capital is based upon risk-weighted assets and also considers interest rate risk and market risk. The required consolidated minimum capital and the consolidated Bank’s capital calculated under the Central Bank’s rules are as follows:

					Excess of actual
	Required				minimum capital
	minimum		Computable		over required
	capital		capital		minimum capital
June 30, 2005		369,565		1,368,780		999,215
December 31, 2004		250,780		1,361,237		1,110,457

24. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank enters into various transactions involving off-balance-sheet financial instruments. These instruments could be used to meet the risk management, trading and financing needs of customers or for the Bank’s proprietary trading and asset and liability management purposes, and could be subject to varying degrees of credit and market risk. Credit risk and market risk associated with on- and off-balance-sheet financial instruments are monitored on an aggregate basis.

The Bank uses the same credit policies in determining whether to enter or extend call and put option contracts, commitments, conditional obligations and guarantees as it does for granting loans.

Derivatives

In the normal course of business, the Bank enters into a variety of transactions principally in the foreign exchange and stock markets. Most counterparts in the derivative transactions are banks and other financial institutions.

These instruments include:

†	Options: they confer the right to the buyer, but no obligation, to receive or pay a specific quantity of an asset or financial instrument for a specified price at or before a specified date. Options may be traded on a stock exchange or under Over-the-Counter (OTC) agreements.
†	Forwards: they are agreements to deliver or take delivery at a specified rate, price or index applied against the underlying asset or financial instrument, at a specific date. Forwards are traded on stock exchange at standardized amounts of the underlying asset or financial instrument.

Pursuant to Central Bank’s rules, forward transactions must be recorded under “Other receivables from financial intermediations” and “Other liabilities from financial intermediations” in the accompanying consolidated balance sheets and they were valued as mentioned in note 5.4.i) (accrual method).

The notional contractual amount of these instruments represents the volume of outstanding transactions and do not represent the potential gain or loss associated with the market or credit risk of such transactions. The market risk of derivatives arises from the potential for changes in value due to fluctuations in market prices.

The credit risk of derivatives arises from the potential of the counterparty to default on its contractual obligations. The effect of such a default varies as the market value of derivative contracts changes. Credit exposure exists at a particular point in time when a derivative has a positive market value. The Bank attempts to limit its credit risk by dealing with creditworthy counterparts and obtaining

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collateral, where appropriate. The following table shows, the notional value of outstanding forward contracts as of June 30, 2005 and December 31, 2004:

	As of		As of
	June 30,		December 31,
	2005		2004
Put options taken		10,278		10,453
Forward sales of foreign exchange		—		22,304
Forward purchases of foreign exchange		—		22,304
Put options sold		118,617		122,055

Credit-related financial instruments

The Bank’s exposure to credit loss in the event of the counterparts’ failure to fulfill the commitments to extending credit, guarantees granted and foreign trade acceptances is represented by the contractual notional amount of those investments.

A summary of credit exposure related to these items is shown below(*):

	As of		As of
	June 30,		December 31,
	2005		2004
Unused portion of loans granted per debtors classification regulations		25,756		22,702
Other guarantees provided covered by debtors classification regulations		95,612		90,285

(*) A significant portion of the Bank’s guarantees as of June 30, 2005 and December 31, 2004 have a remaining maturity of less than one year.

The Bank accounts for checks drawn thereon and on other banks, as well as other items in process of collection, such as notes, bills and miscellaneous items, in memorandum accounts until the related item clears or is accepted. In Management’s opinion, no significant risk of loss exists on these clearing transactions. The amounts of clearing items in collection process are as follows:

	As of		As of
	June 30,		December 31,
	2005		2004
Checks drawn on the Bank pending clearing		211,905		261,096
Checks drawn on other Banks		115,736		92,873

25. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN CENTRAL BANK’S RULES AND UNITED STATES ACCOUNTING PRINCIPLES

The following is a description of the significant differences between Central Bank’s rules followed in the preparation of the Bank’s financial statements and those applicable in the United States under generally accepted accounting principles (“U.S. G.A.A.P.”). “SFAS” shall refer to Statements of Financial Accounting Standards.

25.1 Income taxes

a)     As explained in note 4, Central Bank’s rules do not require the recognition of deferred tax assets and liabilities and, therefore, income tax is recognized on the basis of amounts due in accordance with Argentine tax regulations and no deferred tax and liabilities are recognized.

For purposes of U.S. G.A.A.P. reporting, the Bank applies SFAS No. 109 “Accounting for income taxes”. Under this method, income tax is recognized based on the liability method whereby deferred

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tax assets and liabilities are recorded for temporary differences between the financial reporting and tax basis of assets and liabilities at each reporting date. SFAS No. 109 requires that an allowance for deferred tax assets be provided to the extent that it is more likely than not that they will not be realized, based on the weight of available evidence.

Deferred tax assets and liabilities are summarized as follows:

			As of June 30,
Description			2005			2004
Deferred tax assets:
	Governments and private securities valuation			—			38,430
	Loans			64,302			23,294
	Intangible assets			13,015			14,720
	Allowance for loss contingencies			33,590			11,765
	Net tax loss carry forwards			168,842			81,636
	Other			4,192			1,181
		Total deferred assets		283,941			171,026
Deferred tax liabilities:
	Governments and private securities valuation			(7,071	)		—
	Property, equipment and other assets			(42,619	)		(45,447	)
	Foreign exchange difference			(4,540	)		—
	Other			—			(325	)
		Total deferred liabilities		(54,230	)		(45,772	)
Deferred tax asset				229,711			125,254
Allowance for deferred tax assets				(111,736	)		(71,486	)
Net deferred tax assets under U.S. G.A.A.P				117,975			53,768

As of June 30, 2005, the consolidated tax loss carry forwards of 482,406 are as follows:

Expiration Year	Amount
2006		650
2007		211,327
2008		187,309
2009		83,120
		482,406

The evolution of the net deferred tax assets as of June 30, 2005 and 2004 is summarized as follows:

	2005			2004
Net deferred tax assets at the beginning of the year		128,474			47,245
Net deferred tax assets acquired on business combinations		—			—
Amount recorded in comprehensive income		(10,996	)		(701	)
Deferred tax benefit for the period		497			7,224
Net deferred tax assets as of June 30, 2005 and 2004		117,975			53,768

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The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory income tax rate in Argentina to income before income tax in accordance with U.S. G.A.A.P.:

		As of June 30,
Description		2005			2004
Pre-tax income in accordance with U.S. G.A.A.P			102,456			58,839
Statutory income tax rate			35.00	%		35.00	%
Tax on net income at statutory rate			35,860			20,594
Permanent differences at the statutory rate:
	—Variation of allowances		1,805			(31,135	)
	—Income not subject to income tax		(21,037	)		(4,374	)
	—Others		(16,495	)		8,058
Income tax in accordance with U.S. G.A.A.P			133			(6,857	)

The following table accounts for the difference between the actual tax provision under Central Bank regulations and the total income tax expense in accordance with U.S. G.A.A.P.:

	As of June 30,
Description	2005			2004
Income tax in accordance with Central Bank regulations		630			367
Deferred tax (benefit)		(497	)		(7,224	)
Total income tax benefit in accordance with U.S. G.A.A.P		133			(6,857	)

b) In addition, as of June 30, 2005 and 2004 the Bank records an asset of 56,191 and 42,723, respectively for the credit for Tax on minimum presume income. As mentioned in note 4 to the financial statements, under Central Bank Rules, such credit is considered to be an asset because Management estimates it will be used within ten years, which is the period allowed by the Central Bank Communiqué “A” 4,295, as amended. In accordance with U.S. G.A.A.P., a valuation allowance was recorded for the portion of such credit which was deemed to be more likely than not that it would not be recovered, as per paragraphs 17 (e) and 25 of SFAS 109.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 11,432 and 8,662 as of June 30, 2005 and 2004, each period. In addition, income for the period ended June 30, 2005 would decrease by 2,770.

25.2    Exposure to the Argentine Public Sector and Private Securities

a) Loans—Non-financial federal governmental sector

During the fiscal year ended December 31, 2001, and as a consequence of Presidential Decree No. 1,387/01, the Bank exchanged a portion of federal government securities effective as of November 6, 2001, and received so-called guaranteed loans in consideration thereof.

As provided for by Central Bank Communiqués “A” 3,366 and “A” 3,385, the exchange was made at the carryover book value of the securities as of the date of the exchange with no impact on the income statement.

Such loans were valued according to Central Bank Communiqué “A” 3,911, as supplemented. The loans received in this exchange were not significant.

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In addition, subsequently, the Bank acquired additional guaranteed loans in the market and also through business combinations described elsewhere in this footnote. The difference between the cost of each acquired loan and its expected future cash flows is accounted for in accordance with PB 6—Amortization of Discounts on Acquired Loans. In 2005, the Bank implemented SOP 03-3—“Accounting for Certain Loans and Debt Securities Acquired in a Transfer” for loans acquired.

The effects of adjustments require to state amounts in accordance with U.S. G.A.A.P. would decrease assets by 189,592 and 174,887 as of June 30, 2005 and 2004, respectively.

On the other hand, income would decrease by 21,373 and 3,456 for the periods ended June 30, 2005 and 2004.

b) Loans/Bonds—Non-financial provincial government sector

Presidential Decree No. 1,387/01 instructed the Argentine Ministry of Economy to offer the possibility of converting provincial government debt into secured loans.

Through Decree No. 1,579/02, the Federal Executive instructed the Provincial Development Trust Fund to assume provincial debts that were in the form of Government Securities, Bonds, Treasury Bills, or Loans and to voluntarily convert them into Secured Bonds. The Federal Government was entrusted by provincial governments with the duty to renegotiate provincial government debts, which could be restructured under the same terms and conditions as the federal government debt and government securities.

The Bank presented before Banco de la Nación Argentina, in its capacity as fiduciary agent of the Fiduciary Fund for Provincial Development, the eligible assets (primarily loans) receivable from the Provincial Government Sector under the abovementioned decrees, for the exchange established by Presidential Decree No. 1,387/01.

Under U.S. G.A.A.P., as mentioned above, and in light of the characteristics of the transaction, the Bank considered this transaction to be in line with SFAS 15 “Accounting by Debtors and Creditors for Troubled Debt Restructurings”. As the debtor was actually experiencing financial difficulties and the creditor granted concessions.

At the time of the exchange, in accordance with SFAS No. 114 “Accounting by Creditors for Impairment of a Loan”, as of December 31, 2001 and 2002, the Bank measured impairment based on the present value of expected future cash flows discounted at the asset’s effective interest rate, with a corresponding charge to bad-debt expense.

In 2003, the loans were exchanged for government securities known as Secured Bonds (BOGAR) which were accounted for in accordance with SFAS 115.

As of June 30, 2005 and 2004, these BOGAR are classified for U.S. G.A.A.P. purposes as available for sale securities and carried at fair value with the unrealized gain or loss, net of income taxes, recognized as a charge or credit to equity through other comprehensive income. In connection with estimating the fair value of the BOGAR, the Bank used quoted market values.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would increase assets by 85,527 and decrease 59,711 as of June 30, 2005 and 2004, respectively.

On the other hand, income would increase by 1,741 and 8,373 for the periods ended June 30, 2005 and 2004, respectively.

The breakdown of unrealized gains within the shareholders’ equity accounts as of June 30, 2005 and 2004, is disclosed in note 25.15.

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c) Other Loans— Non-financial provincial government sector

As of June 30, 2005 and 2004, the Bank had other loans granted to the non-financial provincial government sector (excluding the assets presented for the debt exchange mentioned in point b) above, which were valued according to Central Bank Communiqué “A” 3,911, as supplemented.

In accordance with SFAS No. 114, as of December 31, 2004 and 2003, the Bank deemed these loans to be impaired and measured impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, with a corresponding adjustment to bad-debt expense.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 5,360 and 3,590 as of June 30, 2005 and 2004, respectively.

On the other hand, income would increase by 585 and 15,202 for the periods ended June 30, 2005 and 2004, respectively.

d) Compensatory Bonds received and to be received in connection with the compensation for the “asymmetric pesification” and Coverage Bonds to be received in connection with the compensation for foreign currency position

Under Law No. 25,561 and Presidential Decrees No. 494/02, No. 905/02 and No. 2,167/02, the Federal Government established a compensation mechanism for financial institutions because of the negative financial effects resulting from the pesification of foreign currency-denominated loans and deposits into pesos at different exchange rates. In this regard, as further explained in such note, the Central Bank, through Communiqués “A” 3,650, “A” 3,716, as supplemented, regulated the compensation mechanism mentioned above.

As of June 30, 2005 and 2004, according to Central Bank’s rules the compensation received and to be received and the Coverage bond to be received were valued according to Central Bank Communiqué “A” 3,911, as supplemented.

Under U.S. G.A.A.P., these assets (including those used for forward purchases under repurchase agreements) should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported net of income tax within the shareholders’ equity accounts.

Additionally, SFAS No. 115 requires that if the decline in fair value is judged to be other than temporary, the cost of the security shall be written down to fair value, and the amount of the write-down shall be included in earnings. The new cost basis shall not be changed for subsequent recoveries in fair value. Subsequent increases in the fair value of available-for-sale securities shall be included in other comprehensive income.

As of December 31, 2002, the Bank considered that the decline in fair value was other than temporary and recognized such loss.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 34,897 and 119,348 as of June 30, 2005 and 2004, respectively.

On the other hand, income would increase by 54,529 and 28,740 for the periods ended June 30, 2005 and 2004, respectively.

The breakdown of unrealized gains within the shareholders’ equity accounts as of June 30, 2005 and 2004, is disclosed in note 25.15.

e) Other unlisted government securities

As of June 30, 2005 and 2004, the Bank had other unlisted government securities (excluding those unlisted government securities mentioned above). These unlisted government securities were valued according to Central Bank Communiqué “A” 3,911, as supplemented.

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According to U.S. G.A.A.P., these securities should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported as net of income tax within the shareholders’ equity accounts. However, SFAS No. 115 requires that if the decline in fair value is judged to be other than temporary, the cost of the security shall be written down to fair value, and the write down amount shall be included in earnings.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would increase assets by 22,433 and 10,046 as of June 30, 2005 and 2004, respectively.

On the other hand, income would increase by 13,048 and 5,172 for the periods ended June 30, 2005 and 2004, respectively.

The amortized cost and fair value of Government Securities available for sale as of June 30, 2005 and 2004, are as follows:

			Net unrealized
	Amortized		gains before
	cost		income taxes		Fair value
2005		2,897,761		233,528		3,131,289
2004		1,462,057		69,564		1,531,621

The proceeds from sales of available for sale securities and the gross realized gains and gross realized losses that have been included in earnings as a result of those sales, for the periods ended June 30, 2005 and 2004 are as follows:

	Proceeds from sales
	as of June 30,
Available for sale securities (*)	2005		2004
Debt Securities Issued by Argentinian Government		190,844		525,037

(*) There have been no realized gains or losses as a result of those sales, therefore there were no gains and losses reclassified out of accumulated other comprehensive income into earnings for the periods ended June 30, 2005 and 2004 (very short term securities)

The amount of the net unrealized holding gain or loss on available for sale securities that have been included in accumulated other comprehensive income is as follows:

	Other Comprehensive Income
Securities	Dec-03		Increase		Decrease		Jun-04
Compensatory Bonds		11,580		—		76		11,504
Secured Bonds Decree 1579/02		38,109		3,901		—		42,010
Compensatory Bonds to be Received		16,916		—		866		16,050
Total Government Securities		66,605		3,901		942		69,564

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	Other Comprehensive Income
Securities	Dec-04		Increase		Decrease		Jun-05
Compensatory Bonds		29,719		—		6,735		22,984
Secured Bonds Decree 1579/02		128,196		47,079		314		174,961
Discount in Pesos		—		1,545		—		1,545
Compensatory Bonds to be Received		46,793		2,926		15,681		34,038
Total Government Securities		204,708		51,550		22,730		233,528

The portion of trading gains and losses for the period that relates to trading securities still held as of June 30, 2005 and 2004 are as follows:

	Gains/ Losses
	as of June 30,
Trading Securities	2004			2003
Debt Securities Issued by Argentinian Government		1,206			5,238
Shares		(33	)		98
Corporate Bonds		334			—
Other Debt Securities		331			172
		1,838			5,508

25.3    Loan origination fees

The Bank recognizes fees on consumer loans, such as credit cards, mortgage, pledged and personal loans stand by letters of credit and guarantees issued, when collected and charges direct origination costs when incurred. In accordance with U.S. G.A.A.P. under SFAS No. 91, loan origination fees and certain direct loan origination costs should be recognized over the life of the related loan as an adjustment of yield or by straight-line method, as appropriate.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 8,475 and 3,825 as of June 30, 2005 and 2004, respectively. Income for the periods ended June 30, 2005 and 2004 would decrease by 1,162 and 578, respectively.

25.4    Allowance for loan losses

The loan loss reserve represents the estimate of probable losses in the loan portfolio. Determining the loan loss reserve requires significant management judgments and estimates including, among others, identifying impaired loans, determining customers’ ability to pay and estimating the fair value of underlying collateral or the expected future cash flows to be received. Actual events will likely differ from the estimates and assumptions used in determining the loan loss reserve. Additional loan loss reserve could be required in the future.

The loan loss reserve is maintained in accordance with Central Bank’s rules. This results from evaluating the degree of debtors’ compliance and the guarantees and collateral supporting the respective transactions.

Increases in the reserve are based on the deterioration of the quality of existing loans, while decreases in the reserve are based on regulations requiring the write-off of non-performing loans classified as “non-recoverable” after a certain period of time and on management’s decisions to write off non-performing loans evidencing a very low probability of recovery.

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In addition, under Central Bank’s rules, the Bank records recoveries on previously charged-off loans directly to income and records the amount of charged-off loans in excess of amounts specifically allocated as a direct charge to the consolidated income of statement. The Bank does not partially charge off troubled loans until final disposition of the loan, rather, the allowance is maintained on a loan-by-loan basis for its estimated settlement value.

Under Central Bank rules, a minimum loan loss reserve is calculated primarily based upon the classification of commercial loan borrowers and upon delinquency aging (or the number of days the loan is past due) for consumer and housing loan borrowers. Although the Bank is required to follow the methodology and guidelines for determining the minimum loan loss reserve, as set forth by the Central Bank, the Bank is allowed to establish additional loan loss reserve.

For commercial loans, the Bank is required to classify all commercial loan borrowers. In order to classify them, the Bank must consider different parameters related to each of those customers. In addition, based on the overall risk of the portfolio, the Bank considers whether or not additional loan loss reserves in excess of the minimum required are warranted.

For consumer loan portfolio, the Bank classifies loans based upon delinquency aging, consistent with the requirements of the Central Bank. Minimum loss percentages required by the Central Bank are also applied to the totals in each loan classification.

Under U.S. G.A.A.P., a portion of the total allowance typically consists of general amounts that are used, for example, to cover loans that are analyzed on a “pool” basis and to supplement specific allowances in recognition of the uncertainties inherent in point estimates.

The Bank’s accounting for its loan loss reserve under Central Bank’s rules differs in some respects with practices of U.S.-based banks, as discussed below.

a)     Recoveries and charge-offs

Under Central Bank rules, recoveries are recorded in a separate income line item under other income. Charge-offs are recorded directly as loan loss provision in the income statement. Under US GAAP, recoveries and charge-offs would be recorded in the allowance for loan losses in the balance sheet; however there would be no net impact on net income or shareholders’ equity.

b)     Credit Card Loans

The Bank establishes its reserve for credit card loans based on the past due status of the loan. All loans without preferred guaranties greater than 180 days have been reserved at 50% in accordance with the Central Bank’s rules.

Under U.S. G.A.A.P., the bank adopted a policy to charge off loans which are 180 days past due should be charged off.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decreased by 328 and 173 as of June 30, 2005 and 2004, respectively. In addition, income would increase by 91 and 87 for the periods ended June 30, 2005 and 2004, respectively.

c)     Impaired loans— Non Financial Private Sector and residents abroad

SFAS No. 114, “Accounting by Creditors for Impairment of a Loan” and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan— Income Recognition and Disclosures” for computing U.S. G.A.A.P. adjustments. SFAS No. 114, as amended by SFAS No. 118, require a creditor to measure impairment of a loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. This Statement is applicable to all loans (including those restructured in a

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troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogenous loans that are collectively evaluated for impairment. Loans are considered impaired when, based on Management’s evaluation, a borrower will not be able to fulfill its obligation under the original loan terms.

The following table discloses the amounts required by SFAS 114, as of June 30, 2005 and 2004:

		As of June 30,
		2005		2004
—Total amount of loans considered as impaired			164,233		124,330
	Amount of loans considered as impaired for which there is a related allowance for credit losses		106,936		121,951
	Amount of loans considered as impaired for which there is no related allowance for credit losses		57,297		2,379
—Reserves allocated to impaired loans			59,079		37,151
—Average balance of impaired loans during the fiscal year			265,339		141,235
—Interest income recognized on impaired loans			1,744		331

The Bank recognizes interest income on impaired loans on a cash basis method.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decreased by 2,418 and 237 as of June 30, 2005 and 2004, respectively. In addition, income would be decreased by 1,609 and increased by 1,313 for the periods ended June 30, 2005 and 2004, respectively.

Under U.S. G.A.A.P., the activity in the allowance for loan losses for the periods presented is as follows:

	As of June 30,
	2005			2004
Balance at the beginning of the fiscal year		226,568			58,089
Provision for loan losses		30,322			25,742
Charge-offs		(80,468	)		(5,058	)
Monetary gain generated on allowances		—			—
Balance at the end of the period fiscal year		176,422			78,773

d)     Interest recognition— non-accrual loans

Under Central Bank rules, the accrual of interest is discontinued generally when the related loan is non-performing and the collection of interest and principal is in doubt generally after 90 days of being past due. Accrued interest remains on the Banks books and is considered a part of the loan balance when determining the reserve for credit losses.

Under U.S. G.A.A.P. the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or Management has serious doubts about further collectibility of principal or interest, even though the loan currently is performing. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decreased by 4,043 and 2,621 as of June 30, 2005 and 2004, respectively. In addition, income would have decreased by 98 and 159 for the periods ended June 30, 2005 and 2004, respectively.

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25.5    Intangible assets

a)     Judgments due to court decisions related to foreign currency-denominated deposits

The Bank capitalized exchange differences related to constitutional protection and court judgments resulting from court decisions (amparos) as intangible assets.

These differences resulted from the difference between the amount of the original foreign currency converted at the higher exchange rate determined by the courts and the lower exchange rates pursuant to the Central Bank’s rules (pesification at Ps.1.4 to USD1 exchange rate, or its equivalent in other currency, plus C.E.R.).

These intangible assets are being amortized under the straight-line method over 60 months under Central Bank’s rules.

Financial institutions have asked the government to compensate them for the losses generated from the payment of deposits pursuant to judicial orders at the free market exchange rate, which was greater than that established by the government for pesification of the financial institutions’ assets and liabilities. As of the date of preparation of these financial statements, the Supreme Court has not issued any decision regarding compensation to banks for making payments under amparos. However, the Bank’s management believes that these additional payments should be eventually included in the compensation mechanisms implemented to compensate financial institutions for the effects of the asymmetrical pesification of their assets and liabilities.

Under U.S. G.A.A.P., the right to obtain this compensation is deemed a contingent gain which can not be recognized until realized, pursuant to SFAS 5— Accounting for Contingencies.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would be to decrease assets by 46,774 and 48,440 as June 30, 2005 and 2004, respectively. In addition income would increase by 3,263 and decrease by 3,710 for the periods ended, respectively.

b)     Software costs

Under U.S. G.A.A.P. SOP 98-1, defines three stages for the costs of computer software developed or obtained for internal use: the preliminary project stage, the application development stage and the post-implementation operation stage. Only certain costs in the second stage should be capitalized. Under Central Bank’s rules, the Bank capitalized costs relating to all three of the stages of software development and amortized these costs on straight-line basis.

Under SOP 98-1, the Bank properly capitalized only certain costs of computer software developed or obtained for internal use (mainly, services provided to develop the software during the application development stage, costs incurred to obtain computer software from third parties, and travel expenses incurred by employees in their duties directly associated with developing software).

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 6,215 and 8,513 as of June 30, 2005 and 2004, respectively. In addition income would increase by 818 and 1,900 for the periods ended June 30, 2005 and 2004, respectively.

c)     Organizational costs

Applying U.S. G.A.A.P. also resulted in other adjustments relative to capitalized organizational costs resulting in a decrease to the Bank’s assets of 2,279 and 3,209 as of June 30, 2005 and 2004, respectively. In addition income would have increased by 419 and 2,366, for the periods ended June 30, 2005 and 2004, respectively.

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Banco Macro Bansud and Subsidiaries

25.6    Vacation accrual

The cost of vacations earned by employees is generally recorded by the Bank when paid. U.S. G.A.A.P. requires that this expense be recorded on an accrual basis as the vacations are earned.

Had U.S. G.A.A.P. been applied, the Bank’s shareholder’s equity would be increased by 3,361 and 618 as of June 30, 2005 and 2004, respectively. In addition, the income for the periods ended June 30, 2005 and 2004 would increase by 6,656 and 3,804, respectively.

25.7    Business Combinations

a)     Acquisition of controlling interest in former Banco Bansud S.A.

In January 2002, the Bank acquired the controlling interest in former Banco Bansud S.A., at a contingent purchase price of 65,000 (subsequently deemed not to be payable).

Under Central Bank rules, business combinations are recorded at the carryover book value of the acquired company and goodwill is recognized based on the difference of the book value of the net assets acquired and the purchase price (including contingent consideration). The Bank recognized a negative goodwill resulting from the difference between the net equity book value, as computed under such standards, at the acquisition date and the contingent purchase price. The negative goodwill is considered as a monetary liability for purposes of inflation accounting and is being amortized under the straight line method over 5 years. In addition, the contingent purchase price was recorded as a liability at the date of the acquisition and was reversed into income as a gain in 2003 when it was determined that such contingent consideration was not payable.

Under US G.A.A.P., SFAS 141 “Business combination” requires this acquisition to be accounted for under the purchase method. The contingent purchase price was not considered since it never materialized and thus the purchase price was deemed to be zero. The assets acquired and liabilities assumed were recognized at their fair values at the date of acquisition. The difference between the purchase price and the fair value of the net assets acquired resulted in a negative goodwill.

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Banco Macro Bansud and Subsidiaries

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (taking into account the percentage of acquisition):

Cash	144,385
Government Securities	74,352
Loans	1,431,727
Other assets	691,443
Tangible non-current assets	145,257
Total assets acquired	2,487,164
Deposits	2,582,768
Other liabilities	1,050,536
Total liabilities assumed	3,633,304
Net assets	(1,146,140	)
% acquired	81.225	%
Net assets acquired	(930,952	)
Irrevocable capital contribution transferred	970,668	(**)
Total net assets acquired	39,716
Purchase price	—
Negative Goodwill	(39,716	) (*)

(*)	The negative goodwill has been applied to reduce on a pro rata basis the amounts assigned to the non-current assets acquired. Given the Argentine economic environment and the Banks’ situation at the time of the acquisition, no identifiable intangible assets were recognized.
(**)	The irrevocable capital contributions were made by Banamex in its capacity as Banco Bansud S.A.’s shareholder pursuant to the acquisition by Banco Macro S.A. Banco Macro obtained the rights over these irrevocable contributions as the new shareholders of Banco Bansud.

The reconciliation of shareholders’ equity to U.S. G.A.A.P. below includes the effects of the purchase accounting adjustments, related deferred tax effects, the reversal of the negative goodwill and related amortization and inflation effects calculated under Central Bank’s rules, and the reversal of the gain related to the de-recognition of the contingent purchase price.

Had U.S. G.A.A.P. been applied, the Bank’s assets would be decreased by 18,503 and increased by 49,979 as of June 30, 2005 and June 30, 2004, respectively. In addition, the income for the periods ended June 30, 2005 and 2004 would decrease 34,241 and 32,511 respectively.

b)     Merger with and into former Banco Bansud S.A.— a downstream merger

In March 2003 the Bank and its subsidiary former Banco Bansud S.A., entered into a merger agreement (the “Merger Agreement”). The Merger Agreement provided that, former Banco Macro S.A. was merged with and into former Banco Bansud S.A., with former Banco Bansud S.A. continuing as the surviving corporation, renamed Banco Macro Bansud S.A. The result of this transaction was a single stockholder group, including the former minority interest of former Banco Bansud S.A., owning the consolidated net assets. The terms of the merger were agreed to and announced on March 28, 2003. Before the merger, the former Banco Bansud was a public company in the Argentine stock market with a readily available tradable market value of its shares.

The acquisition date was December 2003, upon the appropriate shareholders and regulatory approvals. At that date, Banco Bansud issued the common shares and exchanged for all the outstanding common stock of Banco Macro.

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Banco Macro Bansud and Subsidiaries

Banco Macro S.A. shareholders received 14.75 shares of former Banco Bansud S.A. for each common share of Banco Macro S.A.

Under Central Bank rules, the merger was accounted for based on the carryover value of assets and liabilities as of January 1, 2002 since the merger was given retroactive effect to that date. Additionally, therefore, the minority interest was not recognized in 2003.

Under U.S. G.A.A.P., this transaction was accounted for as a downstream merger and an acquisition of minority interest. SFAS 141 requires the acquisition of the minority interest of former Banco Bansud S.A. to be accounted for under the purchase method. As the consideration given to the minority interest was not in the form of cash, the cost of the interest acquired was determined based on the fair value of the net assets given. The quoted market price of the former Banco Bansud shares traded was used to determine such cost. The terms of the acquisition were agreed to and announced on March 28, 2003. On that date the share price of former Banco Bansud was Ps.1.490. The average share price between two days before and end two days after that date was Ps.1.494, which is the price used to determine the acquisition cost. This is in accordance with EITF 99-12 which requires that the quoted market price to be used must consider the market price during a reasonable short period of time, such as just a few days before and after the acquisition is agreed to and announced.

The cost of the acquired minority interest (“purchase price”) has been allocated to the identifiable tangible and intangible assets with finite lives acquired and liabilities assumed based upon their fair value as of the acquisition date, and the excess of the fair value over the cost resulting in a negative goodwill. Merged results were recognized after acquisition date.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition corresponding to the minority interest acquired (December 2003):

Cash	296,626
Government securities	1,333,992
Loans	520,751
Other assets	667,643
Tangible non-current assets	106,988
Intangible assets subject to amortization— Customer related assets (5-year weighted average useful life)	45,365
Total assets acquired	2,971,365
Deposits	1,793,742
Other liabilities	449,806
Total liabilities assumed	2,243,548
Net assets	727,817
% acquired	18.775	%
Net assets acquired	136,648
Purchase price	127,694
Negative Goodwill	(8,954	) (*)

(*)  The negative goodwill has been applied to reduce on a pro rata bases the amount assigned to the non-current intangible and tangible assets acquired.

Therefore, the U.S. G.A.A.P. reconciliation of shareholders’ equity and net income reflects the effects of the purchase accounting adjustments, and the related effects on the deferred income tax, and the minority interest from January 1, 2003 through the merger date in December 2003, as well as the effects of the amortization of identified intangible assets, and comprehensive income.

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Banco Macro Bansud and Subsidiaries

Had U.S. G.A.A.P. been applied, the Bank’s assets would decrease by 118,999 and 118,471 as of June 30, 2005 and 2004, respectively. In addition, the income for the periods ended June 30, 2005 and 2004 would decrease 264 and 263, respectively

c)     Acquisition of Nuevo Banco Suquía S.A.

As mentioned in note 2, in December 2004, the Bank acquired 100% of Nuevo Banco Suquía S.A., at a cash purchase price of 16,407.

Under Central Bank Rules, business combinations are accounted for at carryover value. The Bank recognized the difference between the net equity book value at the acquisition date and the purchase price as a negative goodwill. The negative goodwill is being amortized under the straight line method over 5 years.

Under U.S. G.A.A.P., SFAS 141 requires the acquisition of the controlling interest of Nuevo Banco Suquía S.A. to be accounted for as a business combination applying purchase accounting. The purchase price has been allocated to the identifiable tangible and intangible assets with finite lives acquired and liabilities assumed based upon their fair value as of the acquisition date, and the excess of the fair value over the cost resulting in a negative goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date corresponding to the 100% interest acquired.

Cash	336,266
Government securities	411,815
Loans	837,164
Other assets(1)	553,759
Tangible non-current assets	72,445
Intangible assets subject to amortization— Customer related assets (5-year weighted average useful life)	46,783
Total assets acquired	2,258,232
Deposits	1,548,049
Other liabilities	599,701
Total liabilities assumed	2,147,750
Net assets	110,482
% acquired	100	%
Purchase price	16,407
Negative Goodwill	(94,075	) (2)

(1)	Includes 135,123 of deferred tax assets, net of allowances.
(2)	The negative goodwill has been applied to reduce on a pro rata basis the amounts assigned to the non-current intangible and tangible assets acquired.

Therefore, the U.S. G.A.A.P. reconciliation of shareholders’ equity and net income reflects the purchase accounting adjustments and related deferred income tax effects and reversal of negative goodwill calculated under Central Bank’s rules, effects of amortization of intangible assets acquired.

Had U.S. G.A.A.P. been applied, the Bank’s assets would decrease by 39,973 as of June 30, 2005. In addition, the income for the period ended June 30, 2005 would decrease by 40,426.

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Banco Macro Bansud and Subsidiaries

d)     Other

Had U.S. G.A.A.P. been applied, other adjustments relative to business combination would decrease the Bank’s assets by 8,928 and 9,974 as of June 30, 2005 and 2004, respectively. In addition, income would increase by 560 and 486 for the periods ended, respectively.

25.8    Reporting on Comprehensive Income (loss)

SFAS No. 130 “Reporting on Comprehensive Income” requires entities to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (“comprehensive income”). Comprehensive income (loss) is the total of net income (loss) and all other non-owner changes in equity.

This statement requires that comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements with an aggregate amount of comprehensive income (loss) reported in that same financial statement. The adoption of this accounting disclosure is shown in notes 25.15. In the Bank’s case, comprehensive income is affected by SFAS 52 cumulative translation adjustments related to the foreign subsidiary and unrealized gains and losses of available for sale securities, net of income taxes.

25.9    Restatement of financial statements in constant pesos

Pursuant to Central Bank’s rules, the Bank’s financial statements recognize the effects of inflation.

As allowed by the SEC, as the Banking financial statements are restated applying a methodology that comprehensively addresses the accounting for inflation, the effects of general price-level changes recognized in the Bank’s financial statements do not need to be eliminated in reconciling to U.S. G.A.A.P.

25.10    Accounting for derivative instruments and hedging activities

SFAS No. 133 “Accounting for derivatives instruments and hedging activities” establishes accounting and reporting standards for derivative instruments, including certain ones embedded in other contracts (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available for sale security, or a foreign currency denominated forecasted transaction.

Among other provisions, SFAS No. 133 requires that for a transaction to qualify for special hedge accounting treatment the transaction must meet specific test of effectiveness that will reduce the volatility in the income statement to the extent that the hedge is effective and all hedge ineffectiveness is required to be reported currently in computing of net income. SFAS No. 133 further requires the identification of assets, liabilities or anticipated transactions being hedged and periodic revaluation of such hedged positions to reflect the changes in market value of risk being hedged. SFAS No. 133 further expands the definition of derivatives to include certain contacts or provisions commonly embedded in contracts or financial instruments and requires that such derivatives be reported at fair value.

Management believes that the effect of the application of this accounting requirement does not have a material impact on the Bank’s consolidated financial condition or results of operations.

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Banco Macro Bansud and Subsidiaries

25.11    Adjustment to Prior-Year Income

As described in note 6 as required by Central Bank rules, the interim consolidated financial statements include several adjustments to prior-year income generated by changes in accounting estimates. These changes were generated by the asymmetrical pesification and compensation.

Under U.S. G.A.A.P., APB 20 generally prohibits retroactive restatement of prior year financial statements to reflect such changes, because the events should be recorded in the year they took place.

Had U.S. G.A.A.P. been applied, net income for the period ended June 30, 2004 would have decreased by 78,292.

25.12    Foreign currency translation

Financial statements of the subsidiary Sud Bank & Trust were translated under Central Bank rules. U.S. G.A.A.P. foreign currency translation requirements are covered by SFAS No. 52 “Foreign Currency Translation” and differs with Central Bank rules in the translation of the income statement accounts, which under U.S. G.A.A.P. should have been translated at the exchange rate other than at the year-end exchange rate, and resulting differences in translation adjustments between assets and liabilities and components of shareholders’ equity are recognized as an other comprehensive income.

Had U.S. G.A.A.P. been applied, the Bank’s net income for periods ended June 30, 2005 and 2004 should have decreased by 2,597 and increased by 957, respectively, and these resulting differences recognized as other comprehensive income.

25.13    Accounting for guarantees

The Bank issues financial guarantees, which are obligations to pay to a third party when a customer fails to repay its obligation.

The Bank charges a fee for issuance of these guarantees, which is which is deferred and recognized as income over the period of the guarantee.

Under Central Bank rules, guarantees issued are recognized as liabilities when it is probable that the obligation undertaken by the guarantor will be performed.

Under US G.A.A.P., SFAS interpretation No 45 “Guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness or others” requires that at inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. Such liability at inception is deemed to be the fee received by the Bank with and offsetting entry equal to the consideration received. Subsequent reduction of liability is based on an amortization method as the Bank is decreasing its risk.

Had U.S. G.A.A.P. been applied, no differences would have existed in the Bank records. Additionally, the Bank recognizes the maximum potential amount of future payments in Memorandum accounts.

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Banco Macro Bansud and Subsidiaries

25.14 Set forth below are the significant adjustments to consolidated net income and shareholders’ equity which would be required if U.S. G.A.A.P. instead of Central Bank’s rules had been applied:

			Increase/ (decrease)
			Consolidated net income
			periods ended June 30,
			Ref.			2005			2004
Net income in accordance with Central Bank’s rules							121,886			109,040
	Income taxes
		Deferred taxes, net of allowances		25.1.a	)		497			7,224
		Allowance for tax on minimum presume income		25.1.b	)		(2,770	)		—
	Exposure to the Argentine public sector and private securities
		Loans— Non-financial federal governmental sector		25.2.a	)		(21,373	)		(3,456	)
		Loans/ Bonds— Non-financial government sector		25.2.b	)		1,741			8,373
		Other loans— Non-financial provincial government sector		25.2.c	)		585			15,202
		Compensatory Bonds		25.2.d	)		54,529			28,740
		Other unlisted government securities		25.2.e	)		13,048			5,172
	Loan origination fees			25.3			(1,162	)		(578	)
	Allowance for loan losses
		Credit Card Loans		25.4.b	)		91			87
		Impaired Loans— Non Financial Private Sector and residents abroad		25.4.c	)		(1,609	)		1,313
		Interest recognition— non accrual loans		25.4.d	)		(98	)		(159	)
	Intangible assets
		Judgments due to court decisions related to foreign currency— denominated deposits		25.5.a	)		3,263			(3,710	)
		Software costs		25.5.b	)		818			1,900
		Organizational costs		25.5.c	)		419			2,366
	Vacation accrual			25.6			6,656			3,804
	Business combination
		Acquisition of controlling interest in former Banco Bansud S.A.		25.7.a	)		(34,241	)		(32,511	)
		Merger with and into former Banco Bansud S.A.— a downstream merger		25.7.b	)		(264	)		(263	)
		Acquisition of Nuevo Banco Suquia S.A.		25.7.c	)		(40,426	)		—
		Other		25.7.d	)		560			486
	Adjustment to prior-year income			25.11			—			(78,292	)
	Foreign currency translation			25.12			(2,597	)		957
Net income in accordance with U.S. G.A.A.P.							99,553			65,695
Comprehensive income
	Net income in accordance with U.S. G.A.A.P.						99,553			65,695
	Other comprehensive income, net of tax:						20,422			1,301
Total comprehensive income, net in accordance with U.S. G.A.A.P.							119,975			66,996
Net income per share in accordance with U.S. G.A.A.P.							0.16			0.11
Weighted average number of shares Outstanding (in thousands)							608,943			608,943

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Banco Macro Bansud and Subsidiaries

			Increase/ (decrease)
			Consolidated shareholders’ equity
			at June 30,
			Ref.			2005			2004
Shareholders’s equity in accordance with Central Bank’s rules							1,348,741			1,247,136
	Income taxes
		Deferred taxes, net of allowances		25.1.a	)		(14,652	)		56,264
		Allowance for tax on minimum presume income		25.1.b	)		(11,432	)		(8,662	)
	Exposure to the Argentine public sector and private securities
		Loans— Non-financial federal governmental sector		25.2.a	)		(189,592	)		(174,887	)
		Loans/ Bonds— Non-financial government sector		25.2.b	)		85,527			(59,711	)
		Other loans— Non-financial provincial government sector		25.2.c	)		(5,360	)		(3,590	)
		Compensatory Bonds		25.2.d	)		(34,897	)		(119,348	)
		Other unlisted government securities		25.2.e	)		22,433			10,046
	Loan origination fees			25.3			(8,475	)		(3,825	)
	Allowance for loan losses
		Credit Card Loans		25.4.b	)		(328	)		(173	)
		Impaired Loans— Non Financial Private Sector and residents abroad		25.4.c	)		(2,418	)		(237	)
		Interest recognition— non accrual loans		25.4.d	)		(4,043	)		(2,621	)
	Intangible assets
		Judgments due to court decisions related to foreign currency— denominated deposits		25.5.a	)		(46,774	)		(48,440	)
		Software costs		25.5.b	)		(6,215	)		(8,513	)
		Organizational costs		25.5.c	)		(2,279	)		(3,209	)
	Vacation accrual			25.6			3,361			618
	Business combination
		Acquisition of controlling interest in former Banco Bansud S.A.		25.7.a	)		(18,503	)		49,979
		Merger with and into former Banco Bansud S.A.— a downstream merger		25.7.b	)		(118,999	)		(118,471	)
		Acquisition of Nuevo Banco Suquia S.A.		25.7.c	)		(39,973	)		—
		Other		25.7.d	)		(8,928	)		(9,974	)
Shareholders’ equity in accordance with U.S. G.A.A.P. (*)							947,194			802,382

(*)     Includes the effects of other comprehensive income.

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Banco Macro Bansud and Subsidiaries

25.15 Set forth below are the accumulated other comprehensive income (loss) balances, as of June 30, 2005 and 2004— net of related income tax effects:

	Period ended June 30, 2005									Period ended June 30, 2004
				Unrealized									Unrealized
	Foreign			gains/			Accumulated			Foreign			gains/			Accumulated
	currency			(losses) on			other			currency			(losses) on			other
	items			securities			comprehensive			items			securities			comprehensive
Beginning Balance		13,465			133,060			146,525			14,287			43,293			57,580
Current-fiscal year change		2,597			28,821			31,418			(957	)		2,959			2,002
Tax effects		(909	)		(10,087	)		(10,996	)		335			(1,036	)		(701	)
Ending balance		15,153			151,794			166,947			13,665			45,216			58,881

25.16 Statement of Cash flows

According to SFAS 95 “Statement of Cash Flows”, a statement of cash flows for a period shall report net cash provided or used by operating, investing, and financing activities and the net effect of those flows on cash and cash equivalents during the period in a manner that reconciles beginning and ending cash and cash equivalents. Central Bank’s rules classify cash flows as operating activities and other.

The statement of cash flows under Central Bank’s rules differs from the statement of cash flows under U.S. G.A.A.P. in the following aspects:

The Bank’s transactions that did not provide an actual movement of funds in each year (non cash transactions) were eliminated from the respective cash changes. The following are the main non cash transactions, based on their book values under Central Bank’s rules:

• At June 30, 2005 and 2004 the Bank entered into forward, unsettled spot and repurchase contracts to buy or sell foreign currencies, listed Government and other securities at future dates, exchanging non cash assets or liabilities for other non cash assets or liabilities with a book value of 322,797 and (30,044), respectively.

• At December 31, 2002, the Bank received Government Securities in compensation according to the Federal Executive Decree 905/02. At June 30, 2005 and June 30, 2004 the bank recorded that compensation in investment accounts. Additionally, the compensation pending to be received was recorded in “Other receivables from financial transactions” account (see note 1.2.a)).

• At June 30, 2005 and 2004, were 2,189 and 16,857, respectively, for the future subscription of the Federal Government Coverage Bond in US dollars at LIBOR, maturing in 2012, through a prepayment to be made by the Central Bank under the terms of Presidential Decree No. 905/02.

• In 2004, the Bank incorporated the assets and liabilities of SADELA.

• During the six-month period ended June 30, 2005 and 2004 the Bank received loan portfolio and other assets in redemption of the LAVERC trust for 9,530.

• During the six-month period ended June 30, 2004, the Bank settled subordinate corporate bonds by delivering government securities for 2,190.

• During the six-month period ended June 30, 2004, the Bank received Federal Government Bonds in US dollars at LIBOR, maturing in 2012, in redemption of certain loans for 2,462.

• During the six-month period ended June 30, 2005, was created the “Macro Personal V” financial trust, transfering assets (consumer loans) for 70,029. The Trust issued Class “A” and “B”

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	certificate of participation. As of June 30, 2005, the Bank held Class “A” and “B” certificate of participation for 32,506.
•	During the six-month period ended June 30, 2005, the Bank exchanged City of Cordoba’s provincial debt into Secured Bonds.

The statement of cash flow under U.S. G.A.A.P. is shown below:

		As of June 30,
		2005			2004
Causes of changes in cash and cash equivalents
Cash provided by (used in) operating activities
	Interest received on loans, leases and investments		377,112			225,765
	Fees and commissions received		140,129			71,656
	Increase in other receivables and other assets		198,753			—
	Other sources of cash		87,752			11,309
	Less:
	Interest paid		(132,655	)		(80,341	)
	Fees and commissions paid		(27,034	)		(11,135	)
	Cash paid to suppliers and employees		(199,160	)		(110,413	)
	Increase from intangible assets		(7,775	)		(13,043	)
	Decrease in other receivables and other assets		—			(114,448	)
	Other sources of cash		(18,896	)		(19,123	)
	Net cash provided by (used in) operating activities		418,226			(39,773	)
Plus:
Cash provided by (used in) investing activities
	Proceeds from sales of trading and investment securities		3,824,091			1,822,798
	Purchases of trading and investment securities		(4,760,410	)		(1,416,263	)
	(Increase)/ decrease in other trading and investment securities		(22,277	)		43,203
	(Increase) in loans and leases, net		(407,884	)		(730,823	)
	Proceeds from Bank premises and equipment		3,998			5,012
	Decrease/ (increase) in other receivables and other assets, net		198,753			(114,448	)
	Cash provided by the incorporation of net assets of SADELA		—			628
	Net cash used in investing activities		(1,388,997	)		(298,407	)
Plus:
Cash provided by (used in) financing activities
	Increase in deposits, net		861,357			385,081
	Increase in long term borrowings		174,171			28,866
	(Decrease) in long term borrowings		(14,640	)		(6,856	)
	(Decrease) in other short term liabilities, net		(248,340	)		(28,768	)
	Cash dividends paid		(30,447	)		—
	Net cash provided by financing activities		742,101			378,323
(Decrease)/ increase in cash and cash equivalents			(228,670	)		40,143
Cash at the beginning of fiscal year			1,372,258			674,300
Cash at the end of period			1,143,588			714,443

F-168

Banco Macro Bansud and Subsidiaries

Set forth below is the reconciliation of net income as per Central Bank’s rules to net cash flows from operating activities, as required by SFAS 95 “Statement of Cash Flows”:

		As of June 30,
		2005			2004
Net (loss)/gain for the period			121,886			109,040
Adjustments to reconcile net income to net cash from operating activities:
	Amortization and depreciation		24,003			16,966
	Provision for loan losses and special reserves, net of reversals		(7,753	)		(21,121	)
	Net income from government and private securities		(33,783	)		(33,803	)
	Foreign exchange differences		(4,318	)		(6,942	)
	Equity (loss) of unconsolidated subsidiaries		(254	)		(239	)
	Net decrease in interest receivable and payable and other accrued income and expenses		92,367			16,615
	Increase from intangible assets		(7,775	)		(13,043	)
	Increase/(decrease) in other receivables and other assets, net		198,753			(114,448	)
	Net decrease in other sources or uses of cash		35,100			7,202
Net cash provided by operating activities			418,226			(39,773	)

25.17 Forward transactions pending settlement

The Bank enters into forward pending settlement for trading purposes.

Under Central Bank’s rules for such forward transactions, the Bank recognizes both a receivable and a payable upon the agreement, which reflect the amount of cash, currency or securities to be exchanged at the closing date. The receivable or payable representing the receipt or delivery of securities or currency is stated at market value.

Under U.S. G.A.A.P., accounting for forward contracts are governed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This standard requires that such derivatives be accounted for at fair value. The Bank does not apply hedge accounting. The instruments outstanding at each balance sheet are short term and are recorded at their fair value.

Had U.S. G.A.A.P. been applied, the Bank’s assets and liabilities would be decreased by approximately 41,727 and 54,684 as of June 30, 2005 and December 31, 2004, respectively.

25.18 Transfers of financial assets

In order to securitize personal loans in Argentine Pesos granted to individuals, between December 1999 and November 2001, the former Banco Macro S.A. created the trusts “Asset Backed Securities Serie Banco Macro Créditos I” and “Macro personal I, II, III and IV”. In addition, on June 7, 2005, the Bank created the trust “Macro Personal V”.

These trusts issued debt securities and/or different participation certificates classes, which were authorized by the C.N.V. for public offering.

For Central Bank rules, the debt securities and certificates retained by the Bank are accounted for at cost plus accrued interest for the debt securities, and the equity method is used to account for the residual interest in the trusts.

These transactions did not qualify for sales treatment under U.S. G.A.A.P. because they did not meet the criteria in paragraph 9(c) of SFAS 140 “Accounting for transfers and servicing of financial assets and extinguishment of liabilities”. Therefore, the Bank accounted for these transactions as financing transactions.

F-169

Banco Macro Bansud and Subsidiaries

Finally, in August 2004 “Asset Backed Securities Serie Banco Macro Créditos I” and “Macro Personal I, II, III and IV” were terminated, and the residual loan portfolio of those trusts had been reflected into the Bank’s loan portfolio.

Therefore, the effect of applying SFAS 140 was to decrease “Trading account assets” and “Other assets” and increase Loans by 59,956 as of June 30, 2005, with no impact in the income statement.

25.19 Joint venture

The Bank participates in the “Banco Macro— Siemens Itron— Unión Transitoria de Empresas” and BMB M & A (joint ventures jointly controlled having an interest of 50%). Under Central Bank rules this interest is consolidated through the proportional consolidation method.

Since under U.S. G.A.A.P., that method of consolidation is not appropriate for such investments and they are accounted for using equity method.

Therefore, had U.S. G.A.A.P. been applied as of June 30, 2005 and December 31, 2004, Other assets should have been increased by 4,767 and 3,930, respectively, with an offsetting decrease in various assets and liabilities accounts. Additionally, as of June 30, 2005 and 2004, Income from equity in other companies should have been increased by 2,028 and 2,081, respectively, with an offsetting decrease in various income and expense accounts.

25.20 Items in process of collection

The Bank does not give accounting recognition to checks drawn against the Bank or other Banks or other items to be collected, until such time as the related item clears or is accepted. Such items are recorded by the Bank in Memorandum accounts. U.S. banks, however, account for such items through balance sheet clearing accounts at the time the items are presented for collection.

Had U.S. G.A.A.P. been applied, the Bank’s assets and liabilities would decrease by approximately 96,169 and 168,223 as of June 30, 2005 and December 31, 2004, respectively.

25.21 Acceptances

Foreign trade acceptances are not recorded on the balance sheet by the Bank. In accordance with Regulation S-X, acceptances and related customer liabilities should be recorded on the balance sheet. Adjustment required to state balance sheets in accordance with Regulation S-X would be to increase assets (due from customers on acceptances) and increase liabilities (bank acceptances outstanding) by 58,607 and 38,617 as of June 30, 2005 and December 31, 2004, respectively.

25.22 Variable Interest Entities

Banco Macro Bansud S.A., either directly or through its subsidiary Sud Inversiones & Análisis S.A., acts as trustee, in certain trusts.

Under Central Bank Rules, the Bank is not required to consolidate these trusts.

Under U.S. G.A.A.P., FASB Interpretation No. 46 (R), “Consolidation of Variable Interest Entities” addresses consolidation of variable interest entities, as defined in the rules, which have certain characteristics.

The Bank has certain trust activities. In all cases, except for Lujan Trust as described below, such trusts are not variable interest entities. Therefore, the Bank did not consolidate these trusts.

Under FASB Interpretation No. 46 (R), Luján Trust, is considered a variable interest entity. In accordance with paragraph 14 of such Interpretation, the Bank is not the primary beneficiary and, therefore, consolidation of the trust is not appropriate.

F-170

Banco Macro Bansud and Subsidiaries

In addition, San Isidro Trust, represents effectively a foreclosed asset since the former owner of the assets relinquished all rights to the assets to the trust and the Bank holds 100% of the trust certificates.

Under Central Bank Rules, as of June 30, 2005 and December 31, 2004, these certificates amounted to 16,782 and were recorded as “Other receivables not covered by debtors classification standards”. However, under U.S. G.A.A.P. these certificates represents a foreclosed asset (not financial assets) and should be reclassified. This reclassification does not have effect the net income and equity. This foreclosed asset is accounted at the lower of its carrying amount or fair value (less cost to sell).

25.23 New accounting pronouncements (U.S. G.A.A.P.)

Exchanges of non-monetary assets

In December 2004, the FASB issued Statement 153 Exchanges of non-monetary assets that replaces the exception from fair value measurement in APB Opinion No. 29 Accounting for Non-monetary Transactions, for non-monetary exchanges of similar productive assets with a general exception from fair value measurement for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. In the opinion of the Bank’s Management the adoption of this rule does not have an impact on net income and shareholders’ equity. The Bank does not expect this statement to have a material effect on its financial statements.

Accounting Changes and Error Corrections

On May 2005, the FASB issued Statement 154 that replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS 154 applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement. When a pronouncement includes specific transition provisions, those provisions should be followed. The changes require retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine the period specific effects of an accounting change on one or more individual prior periods presented, this Statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, this Statement requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable. The retrospective application of a change in accounting principle should be limited to the direct effects of the change. Indirect effects of a change should be recognized in the period of the accounting change. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principles. The Board decided that the provisions of this Statement should be effective for accounting changes made in fiscal years beginning after December 15, 2005. The Bank does not expect this statement to have a material effect on its financial statements.

F-171

BANCO MACRO BANSUD S.A.

Consolidated Financial Statements as of and for the two years ended December 31, 2005, together with the report of independent registered public accounting firm

F-172

Report of independent registered public accounting firm

To the Directors of

BANCO MACRO BANSUD S.A.

Sarmiento 447

City of Buenos Aires

We have audited the accompanying consolidated balance sheets of BANCO MACRO BANSUD S.A. (a bank organized under Argentine legislation) and its subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the two years then ended. These financial statements are the responsibility of the Bank’s Management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Bank’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Banco Macro Bansud S.A. and its subsidiaries as of December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the two years then ended, in accordance with the accounting principles prescribed by the Central Bank of Argentine Republic applicable to the consolidated financial statements.

City of Buenos Aires,

February 27, 2006

PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.

Member of Ernst & Young Global

NORBERTO M. NACUZZI

Partner

F-173

Banco Macro Bansud and Subsidiaries

Consolidated balance sheets

As of December 31, 2005 and 2004

		2005			2004
		(stated in thousands of pesos)
ASSETS
CASH
	Cash on hand		346,504			327,959
	Due from banks and correspondents		842,518			1,044,197
	Other		107			105
			1,189,129			1,372,261
GOVERNMENT AND PRIVATE SECURITIES
	Holdings in investment accounts		105,416			53,856
	Holdings for trading or financial intermediation		164,786			88,940
	Unlisted government securities		199,070			839,183
	Instruments issued by the Central Bank of Argentina		2,463,102			1,097,580
	Investments in listed private securities		59,902			29,649
	Less: Allowances		(512	)		(2,471	)
			2,991,764			2,106,737
LOANS
	To the non-financial government sector		645,342			809,577
	To the financial sector		80,511			81,812
	To the non-financial private sector and foreign residents
	Overdrafts		432,772			513,390
	Documents		433,748			429,654
	Mortgage loans		298,060			231,603
	Pledged loans		230,321			180,831
	Personal loans		476,917			255,553
	Credit cards		241,344			105,117
	Other		779,237			412,079
	Accrued interest, adjustments, foreign exchange and quoted price differences receivable		72,861			87,528
	Less: Unposted payments		(6,050	)		—
	Less: Unearned discount		(10,411	)		(6,759	)
	Less: Allowances		(247,532	)		(225,340	)
			3,427,120			2,875,045

F-174

Banco Macro Bansud and Subsidiaries

		2005			2004
		(stated in thousands of pesos)
OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentina		99,672			123,291
	Amounts receivable from spot and forward sales pending settlement		395,980			733,995
	Securities and foreign currency receivable from spot and forward purchases pending settlement		236,609			206,561
	Premiums on options taken		32			421
	Unlisted corporate bonds		927			928
	Other receivables not covered by debtors classification regulations		325,946			756,968
	Receivables from forward transactions without delivery of underlying asset		6			931
	Other receivables covered by debtors classification regulations		48,516			83,002
	Accrued interest receivable not covered by debtors classification regulations		—			657
	Less: Allowances		(27,600	)		(107,530	)
			1,080,088			1,799,224
ASSETS SUBJECT TO FINANCIAL LEASES
	Assets subject to financial leases		146,265			60,922
	Less: Allowances		(1,470	)		(609	)
			144,795			60,313
INVESTMENTS IN OTHER COMPANIES
	In financial institutions		423			416
	Other		14,586			14,825
	Less: Allowances		(1,304	)		(719	)
			13,705			14,522
OTHER RECEIVABLES
	Receivables from sale of assets		10,747			1,822
	Minimum presumed income tax— Tax credit		53,593			53,933
	Other		114,149			85,825
	Accrued interest and adjustments receivable from sale of assets		11,767			176
	Other accrued interest and adjustments receivable		48			48
	Less: Allowances		(18,246	)		(6,201	)
			172,058			135,603
BANK PREMISES AND EQUIPMENT, NET			223,540			193,864
OTHER ASSETS			174,659			158,142
INTANGIBLE ASSETS
Goodwill			1,646			2,485
Organization and development costs, including amparos			68,445			79,046
			70,091			81,531
ITEMS PENDING ALLOCATION			873			515
TOTAL ASSETS			9,487,822			8,797,757

F-175

Banco Macro Bansud and Subsidiaries

			2005		2004
			(stated in thousands of pesos)
LIABILITIES
DEPOSITS
	From the non-financial government sector			822,687		809,764
	From the financial sector			5,208		4,445
	From the non-financial private sector and foreign residents
		Checking accounts		1,036,175		844,969
		Savings accounts		1,100,633		729,234
		Time deposits		3,222,011		2,588,546
		Investment accounts		29,826		48,598
		Other		292,767		225,891
		Accrued interest, adjustments, foreign exchange and quoted price differences payable		56,019		67,550
				6,565,326		5,318,997
OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentina— Other			206,352		485,267
	Banks and international institutions			154,006		14,668
	Amounts payable for spot and forward purchases pending settlement			108,682		153,661
	Securities and foreign currency to be delivered under spot and forward sales pending settlement			429,714		754,172
	Premiums on options sold			18		—
	Financing received from Argentine financial institutions			25,154		56,835
	Payables for forward transactions without delivery of underlying asset			64		676
	Other			186,371		343,665
	Accrued interest, adjustments, foreign exchange and quoted price differences payable			32,802		111,778
				1,143,163		1,920,722
OTHER LIABILITIES
	Other			98,628		53,986
	Accrued interest and adjustments			—		78
				98,628		54,064
PROVISIONS				178,150		225,699
SUBORDINATED CORPORATE BONDS				12,047		16,416
ITEMS PENDING ALLOCATION				854		4,554
MINORITY INTEREST IN SUBSIDIARIES				80		3
TOTAL LIABILITIES				7,998,248		7,540,455
SHAREHOLDERS’ EQUITY				1,489,574		1,257,302
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				9,487,822		8,797,757

The accompanying notes 1 through 27 to the consolidated financial statements are an integral part of these statements.

F-176

Banco Macro Bansud and Subsidiaries

Consolidated balance sheets

As of December 31, 2005 and 2004

Memorandum accounts

		2005			2004
		(stated in thousands of pesos)
DEBIT-BALANCE ACCOUNTS
Contingent
—Loans borrowed (unused amounts)			164,709			12,693
—Guarantees received			1,848,718			1,572,284
—Contingent debit-balance contra accounts			185,631			154,361
			2,199,058			1,739,338
Control
—Receivables classified as irrecoverable			818,433			824,501
—Other			2,920,865			2,911,113
—Control debit-balance contra accounts			82,050			92,873
			3,821,348			3,828,487
Derivatives
—Notional value of put options taken			133,456			10,453
—Notional value of forward transactions without delivery of underlying asset			15,301			22,304
—Derivative debit-balance contra accounts			288,512			144,359
			437,269			177,116
Trust Activity
—Trust funds (see note 14.)			—			16,782
			—			16,782
	TOTAL		6,457,675			5,761,723
CREDIT-BALANCE ACCOUNTS
Contingent
—Unused portion of loans granted covered by debtors classification regulations			(20,118	)		(22,702	)
—Guarantees provided to the Central Bank of Argentina			—			(422	)
—Other guarantees provided covered by debtors classification regulations			(94,402	)		(90,285	)
—Other guarantees provided not covered by debtors classification regulations			(1,474	)		(2,335	)
—Other covered by debtors classification regulations			(69,637	)		(38,617	)
—Contingent credit-balance contra accounts			(2,013,427			(1,584,977	)
			(2,199,058	)		(1,739,338	)
Control
—Checks to be credited			(82,050	)		(92,873	)
—Control credit-balance contra accounts			(3,739,298	)		(3,735,614	)
			(3,821,348	)		(3,828,487	)
Derivatives
—Notional value of call options sold			(120,886	)		—
—Notional value of put options sold			(112,423	)		(122,055	)
—Notional value of forward transactions without delivery of underlying asset			(55,203	)		(22,304	)
—Derivatives credit-balance contra accounts			(148,757	)		(32,757	)
			(437,269	)		(177,116	)
Trust activity
—Trust activity credit-balance contra accounts			—			(16,782	)
			—			(16,782	)
	TOTAL		(6,457,675	)		(5,761,723	)

The accompanying notes 1 through 27 to the consolidated financial statements are an integral part of these statements.

F-177

Banco Macro Bansud and Subsidiaries

Consolidated statements of income

For the years ended December 31, 2005 and 2004

	2005		2004
	(stated in thousands
	of pesos)
FINANCIAL INCOME
Interest on cash and due from banks		7,861		1,570
Interest on loans to the financial sector		6,325		3,327
Interest on overdrafts		53,953		25,970
Interest on documents		32,157		11,523
Interest on mortgage loans		29,655		6,887
Interest on pledged loans		26,160		1,641
Interest on credit card loans		18,233		6,011
Interest on other loans		121,062		61,763
Interest on other receivables from financial intermediation		15,115		5,611
Income from government and private securities, net		156,158		156,794
Income from guaranteed loans—Presidential Decree No. 1,387/01		28,625		14,600
C.E.R. (Benchmark Stabilization Coefficient) adjustment		185,421		91,435
C.V.S. (Salary Variation Coefficient) adjustment		1,987		508
Other		67,138		40,251
		749,850		427,891
FINANCIAL EXPENSE
Interest on checking accounts		2,647		2,335
Interest on savings accounts		4,302		3,161
Interest on time deposits		106,486		49,253
Interest on financing from the financial sector		980		79
Interest on other liabilities from financial intermediation		13,839		9,959
Other interest		13,288		9,646
Net loss from options		1,017		5
C.E.R. adjustment		117,048		25,336
Other		43,569		33,430
		303,176		133,204
GROSS INTERMEDIATION MARGIN—GAIN		446,674		294,687
PROVISION FOR LOAN LOSSES		70,309		36,467
SERVICE-CHARGE INCOME
Related to lending transactions		19,171		7,867
Related to deposits		199,970		99,537
Other fees		12,866		7,414
Other		71,134		39,607
		303,141		154,425
SERVICE-CHARGE EXPENSE
Fees		31,214		4,989
Other		28,296		19,974
		59,510		24,963

F-178

Banco Macro Bansud and Subsidiaries

	2005			2004
	(stated in thousands
	of pesos)
ADMINISTRATIVE EXPENSES
Personnel expenses		254,821			132,575
Director’s and statutory auditor’s fees		14,142			5,861
Other professional fees		26,104			16,773
Advertising and publicity		22,668			12,048
Taxes		5,808			3,353
Other operating expenses		104,826			74,436
Other		14,657			9,890
		443,026			254,936
NET INCOME FROM FINANCIAL INTERMEDIATION		176,970			132,746
OTHER INCOME
Income from long-term investments		2,724			27
Penalty interest		3,167			1,339
Recovered loans and allowances reversed		168,064			88,398
C.E.R. adjustment		191			—
Other		44,355			19,817
		218,501			109,581
OTHER EXPENSES
Penalty interest and charges payable to the Central Bank of Argentina		33			146
Charge for other-receivables uncollectibility and other allowances		39,177			3,920
C.E.R. adjustment		3			—
Amortization of differences from amparos		14,100			11,665
Other		45,370			32,920
		98,683			48,651
MINORITY INTEREST		(27	)		—
INCOME BEFORE INCOME TAX		296,761			193,676
INCOME TAX		34,042			699
NET INCOME FOR THE FISCAL YEAR		262,719			192,977
NET INCOME PER SHARE(1)—stated in pesos		0.43			0.32

(1) See note 10.

The accompanying notes 1 through 27 to the consolidated financial statements are an integral part of these statements.

F-179

Banco Macro Bansud and Subsidiaries

Statements of changes in shareholders’ equity

For the fiscal years ended December 31, 2005 and 2004

			Adjustments to		Earnings reserved
	Capital		shareholders’						Unappropriated
Changes	stock(1)		equity		Legal		Voluntary		earnings(3)			Total
	(stated in thousands of pesos)
Balances as of December 31, 2003(3)		608,943		4,511		174,629		211		336,925			1,125,219
Distribution of unappropriated retained earnings approved by the Shareholders’ Meeting held on April, 30 and July 21, 2004:
—Legal reserve						47,480				(47,480	)		—
—Cash dividends(2)										(60,894	)		(60,894	)
Net income for the year										192,977			192,977
Balances as of December 31, 2004		608,943		4,511		222,109		211		421,528			1,257,302
Distribution of unappropriated retained earnings approved by the Shareholders’ Meeting held on April, 28, 2005:
—Legal reserve						23,193				(23,193	)		—
—Cash dividends(2)										(30,447	)		(30,447	)
Net income for the year										262,719			262,719
Balances as of December 31, 2005		608,943		4,511		245,302		211		630,607			1,489,574

(1)	See note 10.
(2)	Through resolution of July 20, 2004, the Central Bank authorized the above mentioned cash dividends distribution.
(3)	Modified from its original version to apply the adjustments to prior years’ income to these consolidated financial statements (See notes 4.2. and 7.).

The accompanying notes 1 through 27 to the consolidated financial statements are an integral part of these statements.

F-180

Banco Macro Bansud and Subsidiaries

Consolidated statements of cash flows

For the fiscal years ended December 31, 2005 and 2004

			2005			2004
			(stated in thousands
			of pesos)
Cash provided by (used in) operating activities
	Financial income collected			792,215			412,864
	Service-charge income collected			302,738			159,501
	Other sources of cash(1)			85,135			370,215
Less:
	Financial expenses paid			(284,936	)		(188,416	)
	Services-charge expenses paid			(59,193	)		(24,895	)
	Administrative expenses paid			(406,821	)		(220,498	)
	Other uses of cash			(27,998	)		(33,685	)
		Net cash provided by operating activities		360,960			475,086
Plus:
Cash provided by (used in) investing activities
	(Increase)/decrease in government and private securities			(706,893	)		474,860
	(Increase) in loans			(573,255	)		(904,902	)
	Decrease/(increase) in other receivables from financial intermediation			529,526			(838,470	)
	(Increase)/decrease in other assets			(238,629	)		(25,322	)
		Net cash used in investing activities		(989,251	)		(1,293,834	)
Plus:
Cash provided by (used in) financing activities
	Increase in deposits			1,252,599			807,032
	(Decrease) in other liabilities			(1,667	)		(9,037	)
	(Decrease)/increase in other liabilities from financial intermediation			(775,326	)		779,608
	Cash dividends paid			(30,447	)		(60,894	)
		Net cash provided by/(used in) financing activities		445,159			1,516,709
	(Decrease)/Increase in cash and cash equivalents			(183,132	)		697,961
	Cash and cash equivalents at the beginning of fiscal year (restated)			1,372,261			674,300
	Cash and cash equivalents at the end of the fiscal year			1,189,129			1,372,261

(1)  As of December 31, 2005, includes 40,838 related to cash of Banco Empresario de Tucumán Cooperativo Limitado (see note 3.8) and as of December 31, 2004, 336,265 related to cash of Nuevo Banco Suquía S.A. (see note 3.1.).

The accompanying notes 1 through 27 to the consolidated financial statements are an integral part of these statements

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Notes to the consolidated financial statements

As of December 31, 2005 and 2004

(Stated in thousands of pesos, except otherwise indicated)

1. OVERVIEW OF THE BANK

Macro Compañía Financiera S.A. was created in 1977 as a non banking financial institution. On May 30, 1988, it was granted the authorization to operate as a commercial bank, and was incorporated, under the name of Banco Macro S.A.

After 1994, Banco Macro S.A.’s target market was primarily focused on regional areas outside the city of Buenos Aires. Following this strategy, in 1996, Banco Macro S.A. began the process of acquiring banks and the assets and liabilities of privatized provincial and other banks.

On December 19, 2001 Banco Macro agreed to acquire 59.58% of the capital stock and 76.17% of the voting rights of Banco Bansud. The acquisition was effective January 4, 2002 upon approval of the Central Bank of Argentina.

During 2003, the shareholders decided to merge both financial institutions with the strategic objective of creating a financial institution with a presence throughout Argentina. In December 2003 the merger of Banco Macro S.A. with and into Banco Bansud S.A. was authorized by the Central Bank of Argentina (the Central Bank) and the name was changed to Banco Macro Bansud S.A (the Bank or Banco Macro Bansud).

The Bank offers traditional commercial banking products and services to small and medium sized companies and companies operating in regional economies, and to low and middle income individuals.

Banco Macro Bansud conducts certain operations through subsidiaries, including Nuevo Banco Suquía S.A. (a bank acquired in December 2004—for further information see note 3.1), Sud Bank & Trust Corporate Limited (a bank organized under Bahamas legislation), Macro Securities S.A. Sociedad de Bolsa (formerly known Sud Valores S.A. Sociedad de Bolsa), Sud Inversiones & Análisis S.A., Sud Valores S.G.F.C.I. S.A. and Macro Valores S.A. The chart showing the organizational structure as of December 31, 2005 is disclosed in note 4.1., with the percentages indicating the ownership interests and voting rights in each subsidiary.

Banco Macro S.A.’s shares have public offer and are listed at the Buenos Aires Stock Exchange since November 1994 (see additionally note 10).

2. THE BANK, THE ARGENTINE MACROECONOMIC ENVIRONMENT AND FINANCIAL SYSTEM

The Argentine economic and financial situation worsened in 2001, when the Argentine Government (the Federal Government) suspended payments on the sovereign debt and imposed severe restrictions on cash withdrawals from financial institutions.

In early 2002, the Argentine Congress enacted Public Emergency and Foreign Exchange System Reform Law No. 25,561. This law introduced significant changes to the economic model implemented until that date and amended the Convertibility Law (the currency board that pegged the Argentine peso at parity with the US dollar) effective since March 2001. After a period of an official foreign exchange market, a single foreign exchange market was established, subject to Central Bank (Central Bank of Argentina) requirements and regulations. Such laws and subsequent presidential decrees established, among others, measures that affected the financial system, primarily related to the conversion into

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pesos of its assets and liabilities in foreign currency at different exchange rates and the related compensatory measures.

Since 2003, the current government administration has launched a program that included important measures such as the lifting of the restrictions on bank deposits, the relaxing of foreign-exchange controls and the monetary reunification. In addition, during 2005, the government debt restructuring process was completed and the Argentine Government settled its payable to the International Monetary Fund. Also, the banking system is undergoing a financial strengthening process.

The presentation of the financial statements requires Management to make estimates and assumptions which affect the reported figures of assets, liabilities income, expenses and contingencies. The actual amounts and results could differ from these estimates.

These consolidated financial statements should be read in the light of the events explained above.

The following are the measures implemented by the Argentine Government since the late 2001 economic crisis. Certain measures are still prevailing as of the date of these financial statements. Additionally, below are descriptions of the actions implemented by the Bank to address such effects.

a)     Financial compensation to financial institutions

1)     As to devaluation and compulsory conversion into pesos (“pesification”)

Under Law No. 25,561 and the Presidential Decrees No. 214/02, No. 494/02, No. 905/02 and No. 2,167/02, the Federal Government established a compensation mechanism for financial institutions for the effects of those measures as a result of:

• The losses caused by the conversion into pesos of a significant portion of their liabilities at the Ps. (Argentine pesos or ARS) 1.40 per U.S. dollar, greater than the exchange rate of Ps.1 per U.S. dollar established for the conversion into pesos of a significant portion of its dollar-denominated assets. The compensation mechanism would be achieved through the issuance and delivery of a peso-denominated Compensatory Bond maturing in 2007 (Boden 2007).

• The currency mismatch generated by the compulsory pesification of different financial institutions’ assets and liabilities. This would be achieved through the conversion of the originally peso-denominated Compensatory Bond into a dollar-denominated Compensatory Bond and, if necessary, through the subscription of a dollar-denominated Coverage Bond (which entailed obtaining a loan from the Central Bank). To achieve this the government established the issuance of dollar-denominated bonds maturing in 2012 (Boden 2012).

During August, September and October 2005, Banco Macro Bansud S.A. and its subsidiary, Nuevo Banco Suquía S.A., received the remaining compensation requested as mentioned above and paid the related liabilities to the Central Bank.

In addition, the Bank assigned a portion of BODEN 2012 (compensation and coverage) to settle net liabilities for such securities existing as of the date when such bonds were received. As a result, BODEN 2012 at a face value of thousand USD 62,183 were valued at their quoted prices.

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The consolidated amounts recorded in the financial statements as of each date on such account, net of the transactions performed, are as follows:

		Amounts as of		Amounts as of
		December 31,		December 31,
Recorded in		2005		2004		Description
Government securities—Holdings in investment accounts			105,416		53,856	Portion of the compensation received
	•  Boden 2007—Compensation(a)		10,705		53,856
	•  Boden 2012—Compensation		94,711
Other receivables from financial intermediation—Securities and foreign currency receivable from spot and forward purchases pending settlement			82,244		91,454	Portion of the compensation received
	•  Boden 2012—Compensation		82,244		91,454
Other receivables from financial intermediation—Other receivables not covered by debtors classification regulations					609,791	Compensation and Coverage bonds to be issued to the Bank.
	•  Boden 2012—Coverage				280,088
	•  Boden 2007—Compensation				184,691
	•  Boden 2007—Compensation				145,012
Total assets			187,660		755,101
Other liabilities from financial intermediation—Other and Accrued interest, adjustments, foreign exchange and quoted price differences payable					38,162	Obligation to repay to the Central Bank for the agreed adjustments to the compensation
Other liabilities from financial intermediation—Other and Accrued interest, adjustments, foreign exchange and quoted price differences payable					204,634	Obligations payable to the Central Bank for the future subscription of BODEN 2012 (Coverage Bond)
Total liabilities					242,796

(a) Relates to bonds received for the incorporation of certain excluded assets and liabilities of Banco Empresario de Tucumán Cooperativo Limitado (see note 3.8)

As of the date of issuance of these financial statements, there are no pending matters related to such compensation.

b)     Financial exposure to the Government sector

1)     Guaranteed Loans—Presidential Decree No. 1,387/01

In late 2001, Presidential Decrees No. 1,387/01 and 1,646/01 established the basic terms and characteristics of the exchange of Argentine public-sector debt securities and Loans for new loans called Guaranteed Loans. Subsequently, Presidential Decree No. 471/02 established, among other

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things, the pesification of all federal, provincial and municipal government obligations denominated in foreign currency under Argentine law, at the Ps. 1.40 to USD 1 exchange rate, or its equivalent in any other currency, the adjustments by C.E.R. (Coeficiente de Estabilización de Referencia—Benchmark Stabilization Coefficient) and the interest rate applicable to each type of government security and guaranteed loan, on the basis of its average life and original currency. “CER” is an inflation adjustment coefficient based on changes in the consumer price index, which became effective as from February 3, 2002 and it is published by I.N.D.E.C. (Instituto Nacional de Estadística y Censos—Argentine Institute of Statistics and Census)

The guaranteed loans were not subject to Ministry of Economy Resolution No. 73/02, which established the deferral of payments of the Federal Government debt.

In addition to the guaranteed loans received in the abovementioned exchange, the Bank performed other transactions that changed its position with respect to such loans.

As of December 31, 2005, and 2004, the guaranteed loans were presented in the consolidated financial statements in “Loans—To the non-financial government sector” account in an aggregate amount of 641,801 and 720,146, net of discounts, respectively. (See note 4.4.d)).

2)     Provincial debt exchange—Law No. 25,570

On October 25, 2002, the Ministry of Economy issued Resolution No. 539/02 describing the mechanism to exchange eligible provincial debt provided in sections 1 and 12, Presidential Decree No. 1,579/02. The Bank received Secured Bonds as a result of such exchange.

In addition to the secured bonds received in the abovementioned exchange, the Bank performed other transactions that changed its position with respect to such loans.

During the year ended December 31, 2004, the Bank applied a portion of its holdings of Secured Bonds to acquire the bonds to be given to its depositors in exchange for rescheduled deposits.

As of December 31, 2005 and 2004, these Secured Bonds were recorded in the consolidated financial statements in the “Unlisted government securities” account for 197,771 and 819,498, respectively (See Note 4.4.b)1)).

3)     Exchange of Federal government debt

Presidential Decrees Nos. 1,733/04 and 1,735/04 were issued on December 10, 2004. They established for the restructuring of the Argentine Government bonds; the payment of such bonds was deferred as provided for in Section 59, Law No. 25,827 through a domestic and international exchange transaction. Such transaction should be carried out within the scope and terms and conditions detailed in such decrees and in the offer prospectus.

The restructuring comprised a global exchange offer with holders in the United States, Argentina and several countries in Europe and Asia. The government securities eligible for restructuring include all securities issued before December 31, 2001. Three new debt securities (par, quasi-par and discount) were issued with a separable unit linked to GDP, replacing the government securities eligible for restructuring. All of them mature from 30 to 42 years as from December 31, 2003, at interest rates ranging from 1.33% to 8.28%.

In January 2005, the exchange was launched in Argentina and the terms and conditions of the offer were presented in Europe and the United States. The final acceptance level was approximately 76%.

In June 2005, the Argentine government exchanged the government securities eligible for restructuring for the new bonds and credited such bonds to the respective bank accounts through Caja de Valores

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(depository trust company). In this respect, the Bank received Argentine discount bonds in Argentine pesos in the amount of 12,049.

c)     Deposits—Rescheduling of Amounts.—Exchange for Federal Government bonds (Exchanges I and II)

As a result of the economic crisis, the Federal Executive issued Decree No. 1,570/01 establishing severe restrictions on cash withdrawal from financial institutions. Subsequently, a number of regulations were issued to reschedule the maturity of certain deposits existing in the financial system (CEDROS). The Central Bank, through a series of Communiqués, established the dates for the reimbursements of deposits based on their currency and amounts. The last available date is August 2005.

As part of the process related to lifting restrictions on bank deposits, the Federal Executive Branch established Exchanges I and II for financial system deposits. Through those exchanges, holders of deposits could opt to receive government securities in consideration for their rescheduled deposits.

In relation to Exchanges I and II, the total deposits settled by the former Banco Macro S.A. and the former Banco Bansud S.A. amounted to 353,389 (246,457 related to the former Banco Bansud S. A. and 106,932 related to the former Banco Macro S.A.). As of December 31, 2004, all exchanges were completed.

d)     Legal actions

The measures adopted by the Federal Executive in 2002 with respect to the situation of public emergency in political, economic, financial and foreign exchange matters triggered a number of legal actions brought by individuals and companies against the Federal Government, the Central Bank and financial institutions. The legal actions claimed that some of those measures infringed upon their constitutional rights. These actions are known as amparos.

In the particular case of deposits denominated in foreign currency, the trial courts ordered, in some cases, the partial or total reimbursement of such deposits, either in foreign currency or at the free-exchange rate at the time of reimbursement, until a final pronouncement was made as to the constitutionality of the pesification of foreign-currency deposits, as previously established.

Some of such claims were filed with the Argentine Supreme Court, which determined whether the judgments granted by the lower courts were constitutional or not, depending on each particular case and in a different way in similar situations. In one of the last judgments, the Supreme Court established the constitutionality of the process but some aspects remained undefined. It should be noted that the effects of the Supreme Court’s judgment were limited to the parties to each case, which may change in the future. Nevertheless, lower courts usually follow and apply Supreme Court precedents.

If the courts make a final favorable decision on the constitutionality of pesification of foreign-currency deposits, the Bank would be entitled to require the reimbursement of the amounts paid in excess of the amount required by effective regulations. Conversely, if the courts decide that deposits should be settled in foreign currency at the higher rates, there may be further claims against the Bank. However, the Bank’s management believes that these additional payments should be eventually included in the compensation mechanisms implemented to compensate financial institutions for the effects of the asymmetrical pesification of their assets and liabilities.

There still is uncertainty as to the final court decisions and their potential effects on: (i) the recoverability of the capitalized amounts—see below and note 6; (ii) court’s decisions which required the Bank to pay to certain depositors a portion of the original amount in US dollars; and (iii) the contingent risk of potential additional unasserted legal claims.

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During 2005 and to the date of issuance of the accompanying financial statements, the courts did not issue a final decision regarding the substance of such actions, the injunctions were reduced significantly and the deposits originally denominated in USD rescheduled expired.

Taking into account the previous comments, the Bank’s management and legal counsel estimate that there would be no additional significant effects on the Bank’s financial position that could derive from the final outcome of such actions.

According to Communiqué “A” 3,916 dated April 3, 2003, the Bank carried a net capitalized amount of 42,632 and 50,037 as of December 31, 2005, and 2004, respectively, as “Intangible assets”. These amounts represent the difference between the amount of the original foreign currency deposits converted at the higher exchange rate dictated by the courts and the amount converted at the lower exchange rate pursuant to the regulations (pesification at Ps.1.4 to USD1 exchange rate, or its equivalent in another currency, plus C.E.R.).

3. BANK OPERATIONS

3.1. Acquisition of Nuevo Banco Suquía S.A.

On April 27, 2004, the Bank decided to participate in the bidding process for the purchase of Nuevo Banco Suquía S.A. to increase its market share, under the framework of a competitive bidding process in which three other bidders participated. The Evaluation Committee for the bidding process carried out by Banco de la Nación Argentina (B.N.A.) for the sale of 100% of the shares (15,000,000 shares of common stock entitled to one vote per share) of Nuevo Banco Suquía S.A. preliminarily awarded the winning bid to the Bank. The stock purchase agreement was signed on September 30, 2004.

On December 9, 2004, Central Bank’s Board of Governors issued Resolution No. 361, whereby it approved the transfer of shares representing 100% of the capital stock of Nuevo Banco Suquía S.A. in favor of the Bank.

On December 22, 2004, the shares of Nuevo Banco Suquía S.A. were transferred to the Bank, in consideration of which the latter paid 16,407 in cash. Because Nuevo Banco Suquía S.A.’s shareholders’ equity (book value) amounted to 16,890, the Bank recorded a negative goodwill of 483.

On the same date, the Bank made an irrevocable capital contribution for future capital increases in the amount of 288,750, as agreed in the bid, and increased Nuevo Banco Suquía S.A.’s shareholders’ equity by the same amount. Additionally, on the same date, at the Regular and Special Shareholders’ Meeting of Nuevo Banco Suquía S.A. the former shareholders approved a motion to capitalize those irrevocable capital contributions, and, therefore, the capital stock increased to 303,750 (303,750,000 shares of common stock entitled to one vote per share).

On March 14, 2005, as established in Central Bank’s Board of Governors point 7 of Resolution No. 361. Banco Macro Bansud S.A. sold 50,000 shares of Nuevo Banco Suquía S.A. to three shareholders for 50; no gain or loss was recognized. Therefore, as from that date, Banco Macro Bansud S.A. holds 99.984% of the capital stock and votes of Nuevo Banco Suquía S.A.

Also, on April 8, 2005, in accordance with the ruling issued by Argentine anti-trust authorities dated March 7, 2005, the Department of Technical Coordination of the Ministry of Economy and Production authorized Banco Macro Bansud S.A. to acquire the capital stock of Nuevo Banco Suquía S.A.

3.2.    Agreement with the Misiones Provincial Government

In 1997, due to the merger of Banco de Misiones S.A. with and into the former Banco Macro S.A., Banco Macro Bansud S.A., as surviving company, was appointed the Provincial Government’s

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exclusive financial agent, as well as revenue collection and obligation payment agent, for a term of five-year term as from January 1, 1996.

On November 25, 1999, the Bank and the Misiones Provincial Government executed a special-relationship extension agreement. The term agreement mentioned in the preceding paragraph was thereby through December 31, 2007, and the prices of the services to be rendered over such period were set. In addition, the Bank was given the option to extend the agreement a further two years, i.e. through December 31, 2009.

As of December 31, 2005, the amounts of deposits held by the Misiones Provincial Government in the Bank are 268,057 (includes 23,533 of deposits subject to court proceedings).

3.3.    Agreement with the Salta Provincial Government

Due to the merger of Banco de Salta S.A. with and into the former Banco Macro S.A., for a ten-year term as from March 1, 1996, Banco Macro Bansud S.A., as surviving company, became the Provincial Government’s exclusive financial agent and the mandatory channel for all the Province’s payments, deposits and collections.

In addition, on February 22, 2005, the Ministry of the Treasury and Publics Works of the Province of Salta approved the addendum to the special relationship agreement, which extended this agreement term, and its supplementary, extension and additional agreements for a ten-year term as 2005. Such term expires on March 1, 2016.

As of December 31, 2005, the amounts of deposits held by the Salta Provincial Government in the Bank are 191,957 (includes 45,891 of deposits subject to court proceedings).

3.4.    Agreement with the Jujuy Provincial Government

Due to the merger of Banco de Jujuy S.A. with and into the former Banco Macro S.A., for a term of ten years as from January 12, 1998, Banco Macro Bansud S.A., as surviving company, shall be the Provincial Government’s exclusive financial agent and the mandatory channel for all the Province’s payments, deposits and collections.

During the year 2005, the contract was extended until November 4, 2014.

As of December 31, 2005, the amounts of deposits held by the Jujuy Provincial Government in the Bank are 328,878 (includes 35,945 of deposits subject to court proceedings).

3.5.    Acquisition of assets and liabilities of the former Scotiabank Quilmes S.A.

Through Resolution No. 523 of August 20, 2002, the Central Bank’s Board of Governors approved the formation of Laverc Trust and the transfer of certain assets of Scotiabank Quilmes S.A. (SBQ) into this trust. The trust issued Class “A”, “B” and “C” certificates of participation. In such resolution, the Central Bank also approved to the transfer of 35% of Class “A” and “B” certificates to the former Banco Bansud S.A., in compensation for the deposits assumed by the Bank. In addition, the abovementioned Resolution authorized the former Banco Bansud S.A. to incorporate 36 branches of SBQ.

The Bank incorporated Class “A” and “B” certificates of participation and the liabilities assumed at the values calculated according to Central Bank’s rules and the abovementioned resolutions, which were similar to the fair values thereof as of the transaction date. As a result, this transaction had no material effects on the Bank’s shareholders’ equity because assets acquired and liabilities assumed had the same value.

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As of December 31, 2004, the Bank recorded an amount of 6,774 (nil at December 31, 2005) under “Other receivables from financial intermediation—Other not included in debtors classification standards”. This receivable was paid by the LAVERC trust after such year-end.

3.6.    Agreement and purchase of certain assets of Sociedad Anónima del Atlántico Compañía Financiera (SADELA)

On February 13, 2004, the Central Bank’s Board of Governors issued Resolution No. 46 regarding the transfer of secured assets and liabilities from SADELA under the framework of Financial Institutions Law section 35 bis, Title II (Exclusion Resolution).

The Exclusion Resolution, recital 36, recognized that the obligations undertaken by Banco Macro Bansud S.A. regarding the SADELA deposits shall be exclusively limited to the recorded balances thereof, and that the Bank shall not become legal successor to SADELA with respect to such deposits.

On March 18, 2004, Banco Macro Bansud S.A., SEDESA and SADELA executed the Agreement for the Sale and Assignment of certain assets of SADELA pursuant to Central Bank Resolution No. 46. In addition, on the same date, Banco Macro Bansud S.A. and SADELA executed the “Memorandum of Compliance with section 35 bis, Financial Institutions Law by SADELA”, for the purpose of setting rules, rights, obligations and conditions under which SADELA transferred and Banco Macro Bansud S.A. received the ownership of assets in the amount of 33,058, free from any encumbrance or title restriction. Such transaction did not bring about any significant effects on the Bank’s shareholders’ equity.

The Bank incorporated the assets and liabilities assumed at the values calculated according to Central Bank’s rules and the abovementioned resolutions, which were similar to the fair values thereof as of the transaction date. This transaction had no material effects on the Bank’s shareholders’ equity because assets and liabilities were assumed in the same amount.

3.7. Uniones Transitorias de Empresas (JOINT VENTURES)

a)     Banco Macro—Siemens Itron

The Bank participates in the “Banco Macro—Siemens Itron—Unión Transitoria de Empresas” (a joint venture jointly controlled having an interest of 50%), under the agreement entered into by the former Banco Macro S.A. and Siemens Itron Business Services S.A. on April 7, 1998. The current subject-matter of the Unión Transitoria de Empresas (joint venture) agreement is to provide a provincial data processing center to manage tax-related assets, to modernize tax collection systems and procedures in the province of Salta, and to manage and recover the tax and municipal assessment debt.

As of December 31, 2005 and 2004, the net assets amounted to 2,424 and 3,930, respectively, and net income of the joint venture amounted to 4,185 and 3,738, respectively. Under Central Bank rules, this interest is consolidated through the proportionate consolidation method (both net assets and income).

b)     BMB M&A

On October 22, 2004, the Bank entered into a joint venture agreement named “BMB M&A—Unión Transitoria de Empresas” (jointly controlled having an interest of 50%) with Montamat & Asociados S.R.L. The subject-matter of such agreement will be to render audit services related to oil & gas royalties and tax easements in the province of Salta to optimize the collection thereof.

As of December 31, 2005, the net assets amounted to 1,153. Under Central Bank rules, this interest is consolidated through the proportionate consolidation method (both net assets and income).

3.8.    Banco Empresario de Tucumán Cooperativo Limitado (Banco Empresario)

On November 11, 2005, through Resolution No. 345, the Central Bank’s Board of Governors notified Banco Macro Bansud of the authorization to transfer certain excluded assets and liabilities of Banco

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Empresario de Tucumán Cooperativo Limitado under the provisions of section 35 bis (II), Financial Institutions Law.

Therefore, the Bank recorded assets and liabilities amounting to 101,787 and 158,287, respectively, for such transaction, which were offset by a capital contribution of 56,500 made by SEDESA. Consequently, such transaction did not have any significant effects on the Bank’s shareholders’ equity.

3.9.    Banco del Tucumán S.A.

On November 24, 2005, Banco Macro Bansud S.A. signed a stock purchase agreement whereby the Bank would acquire from Banco Comafi S.A. 75% of the capital stock and voting rights in Banco del Tucumán S.A. The price of that transaction is fixed at: (i) 10,234 paid by the Bank in cash upon signing the agreement and is recorded under “Other receivable—Other” and (ii) in thousands USD 13,858 payable upon closing the transaction, subject to adjustments to the price to be determined based on the final value of certain assets and liabilities of Banco de Tucumán S.A. In addition, such transaction is still subject to the approval, by the Central Bank, Federal Anti-Trust Board authorities and the Government of the Province of Tucumán and, therefore, to the date of issuance of these financial statements, the Bank has not taken control over Banco del Tucumán S.A. as of December 31, 2005.

Based on the financial information provided by Banco del Tucumán S.A. (unaudited information), as of December 31, 2005, such bank has assets amounting to 827,028, liabilities amounting to 777,096 and shareholders’ equity amounting to 49,932.

4. SIGNIFICANT ACCOUNTING POLICIES

The preparation of the Bank’s financial statements requires Management to make, in certain cases, estimates and assumptions to determine the book amounts of assets and liabilities, as well as the disclosure of contingent assets or liabilities as of each of the dates of presentation of the accounting information included in these financial statements.

Management records entries based on the best estimates according to the likelihood of occurrence of different future events and the final amounts may differ from such estimates, which may have a positive or negative impact on future periods.

4.1. Consolidation and basis of presentation

The Consolidated Financial Statements have been prepared taking into account accounting principles issued by the Central Bank (Central Bank’s rules).

For the purpose of these financial statements certain disclosures related to formal legal requirements for reporting in Argentina, have been omitted since they are not required for SEC reporting purposes.

Under Central Bank’s rules and F.A.C.P.C.E. (Federación Argentina de Consejos Profesionales de Ciencias Económicas—Argentine Federation of Professional Council in Economic Sciences) Technical

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Resolution No. 4, Banco Macro Bansud S.A. has consolidated the following subsidiaries as of December 31, 2005 and 2004:

					Percentage held of						Equity
											Investment
	Shares										amounts as of
					Capital						December 31,
Company	Class		Number		Stock			Votes			2005
Nuevo Banco Suquía S.A.(1)		Common		303,700,000		99.984	%		99.984	%		473,117
Sud Bank & Trust(4)(5)		Common		9,816,899		99.999	%		99.999	%		103,638
Macro Securities S.A. Sociedad de Bolsa(2)(4)		Common		940,500		99.000	%		99.000	%		10,906
Sud Inversiones & Análisis S.A. (4)		Common		2,344,134		99.999	%		99.999	%		3,465
Sud Valores S.G.F.C.I.S.A.(3)(4)		Common		47,750		19.100	%		19.100	%		390
Macro Valores S.A.(4)		Common		1,349,290		99.95	%		99.95	%		3,732

(1)	From December 22, 2004.
(2)	Banco Macro Bansud S.A. has an indirect equity interest in Macro Securities S.A. Sociedad de Bolsa of 1% (through its subsidiary Sud Inversiones & Análisis S.A.—S.I.A.S.A.), in addition to the direct equity interest of 99% in such company.
(3)	Consolidated through S.I.A.S.A., its parent company (percentage held of capital stock and votes: 80.90%).
(4)	Consolidated as of December 31, 2005 and 2004.
(5)	Sud Bank & Trust consolidates with Sud Asesores (ROU) S.A. (percentage held of votes: 100%. As of December 31, 2005, the equity investment amounts to 267).

The intercompany transactions have been eliminated.

As of December 31, 2005 and 2004, prior to consolidation, the financial statements of Sud Bank & Trust were conformed to accounting principles generally accepted in the City of Buenos Aires, Argentina (Argentine GAAP) and Central Bank’s rules. As they were originally stated in United States Dollars, they were translated into pesos following the procedures indicated below:

a)     Assets and liabilities were translated at Central Bank’s benchmark US dollar exchange rate as of the closing date on the last business day of the year.

b)     Capital stock, additional paid-in capital and irrevocable contributions were translated at the effective exchange rate as of the date on which such contributions were made.

c)     Retained earnings were estimated by the difference between assets, liabilities and owners’ contributions as indicated above.

d)     The amounts of income statement accounts were translated into pesos, as described in a) above. The difference between the addition of amounts and the lump-sum income (loss) for each period (difference between retained earnings at beginning of year and retained earnings as of period-end) was recorded in the consolidated statements of income in the “Financial income—Other” or “Financial expense—Other” accounts, as the case may be.

4.2.    Comparative information

The consolidated financial statements as of December 31, 2005, are presented comparatively with those of December 31, 2004.

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4.3.    Restatement in constant pesos

Argentine GAAP requires financial statements to be stated in constant pesos. In a monetary stability context, the nominal currency is used as constant currency, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the domestic WPI (Wholesale Price Index) published by the I.N.D.E.C. under F.A.C.P.C.E. Technical Resolution No. 6 restatement method.

The Bank’s consolidated financial statements recognize the changes in the peso purchasing power until February 28, 2003, under Presidential Decree No. 664/03, I.G.J. General Resolution No. 4/03, C.N.V. General Resolution No. 441, and Central Bank Communiqué “A” 3,921. Professional accounting standards provide that the restatement method established by Technical Resolution No. 6 should have been discontinued as from October 1, 2003. See note 6.a)1).

The accounting information is restated in constant currency on a monthly basis, using INDEC’s domestic WPI measurements.

The restatement coefficient for a given month will result from dividing the index value at the end of the month by the value at the beginning.

The procedure is as follows:

i)     Assets and liabilities are classified into monetary and non-monetary. Monetary assets and liabilities are those that are not adjusted for inflation, but generate a monetary gain (loss). The effect of inflation is broken down depending on its origin, i.e., monetary gain (loss) on financial intermediation, monetary gain (loss) on other transactions and monetary gain (loss) on other operating expenses.

ii)     Non-monetary assets and liabilities, shareholders’ equity and statement-of-income accounts are restated.

4.4.    Valuation methods

Main valuation methods used to prepare the consolidated financial statements under Central Bank’s rules are the following:

a)     Assets and liabilities denominated in foreign currency:

The assets and liabilities denominated in US dollars were valued at Central Bank benchmark US dollar exchange rate effective as of the closing date of transactions on the last business day of each year-end. Additionally, assets and liabilities denominated in other foreign currencies were converted at Central Bank’s benchmark exchange rate. Foreign exchange differences were recorded in the income statement for each year-end as foreign exchange, net.

b) Government and private securities:

          b.1) Government securities:

† Listed:

                           i)  Holdings in investment accounts—compensation received from the Federal government: Under the Central Bank Communiqué “A” 3,785 they were stated at face values, plus interest accrued under the issuance terms. As described in Note 4.4.a), they were translated into pesos, as the case may be.

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ii)  Holdings for trading or intermediation transactions: they were stated at the effective quoted price for each security as of each year-end. Differences in quoted market values were recorded in the income statement.

† Unlisted:

i)  Secured bonds under Presidential Decree No. 1,579/02: as of December 31, 2005, and 2004, they were valued as established by Central Bank Communiqué “A” 3,911, as supplemented, as explained in note 4.4.c)

ii)  Argentine External Bills Coupons 2004 series 74, Tax Credit Certificates, other expired and unpaid government securities and other holdings: they were valued under Central Bank Communiqué “A” 4,084, as supplemented.

† Instruments issued by the Central Bank:

i)  Listed—LEBAC (Letras del Banco Central—Central Bank bills): they were valued at the effective quoted price as of each year-end. Market value differences were recorded in the income statement.

ii)  Unlisted—LEBAC: they were valued at their face value, adjusted by C.E.R., plus interest accrued until each year-end, applying the rates stipulated in their issuance conditions.

iii)  Listed—NOBAC (Notas del Banco Central—Central Bank notes): they were valued at their effective quoted price of the respective note as of each year-end. Market value differences were recorded in the income statement.

iv)  Unlisted—NOBAC (Notas del Banco Central—Central Bank notes, adjusted by C.E.R.): as of December 31, 2004, they were valued at their face value, adjusted by C.E.R., plus interest accrued until year end, applying the rates stipulated in their issuance conditions.

          b.2) Investments in listed private securities:

†

Corporate bonds, Debt securities of financial trusts, Shares and Mutual funds: they were valued at the effective quoted price at year-end. Market value differences were recorded in the income statement.

†

Certificates of participation in financial trusts: As of December 31, 2005, Macro Personal V certificates were valued at cost plus interest accrued at year-end. Additionally, the necessary allowances were recorded, pursuant to Central Bank Communiqué “A” 2,729, as supplemented. Such net value does not exceed the value arising from the shareholders’ equities of the respective trusts’ financial statements as of December 31, 2005, considering the Bank’s percentage of holdings. As of December 31, 2004, the certificates of participation in financial trust were valued at the effective quoted price at year-end.

The Bank uses the specific identification method in determining the cost of investments sold (not classified as trading).

c) Assets included in Central Bank Communiqué “A” 3,911, as supplemented:

As of December 31, 2005 and 2004, such assets include: (i) secured bonds under Presidential Decree No. 1,579/02, (ii) unlisted government securities—other holdings, (iii) guaranteed loans

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under Presidential Decree No. 1,387/01; (iv) assistance granted to the non-financial provincial government sector and (v) other assistance granted to the non-financial government sector.

The assets valued under Central Bank Communiqué ”A” 3,911 were valued at the lower of their present values or notional values. If the present value is greater than the notional value (as defined in point 4 of Central Bank Communiqué ”A” 3,911), the amount is debited to asset account and the credit is recorded in an asset offset account. If the present value is less than the notional value, the difference is recorded as a loss in the income statement and the offsetting credit is recorded in the asset account. The amounts recorded in the asset offset account are adjusted each month based on the values calculated in accordance with the communiqué.

In the case of peso-denominated instruments which include indexation clauses, the present value was calculated based on cash flows according to the contractual conditions (taking into account, if applicable, the accumulated C.E.R. accrual by month-end), discounted at the interest rates established in point 2 of such Communiqué (for the year ended December 31, 2005: 4.00% and for the year ended December 31, 2004: 3.50%). Such calculations were made following specific guidelines established in such Communiqué (present value rate, certain effects determined for the aggregation of securities and guaranteed loans, among others).

In the case of peso-denominated instruments which do not include indexation clauses, Central Bank Communiqué ”A” 4,163 established the methodology to calculate their present values. Thus, the interest rate used to discount the cash flows for the fiscal year ended December 31, 2005 was 4.50% and for the fiscal year ended December 31, 2004 was 3.71%.

d) Loans and Other Assets from the Non-Financial Government Sector:

          d.1) Guaranteed Loans (established by Presidential Decree No. 1,387/01)

Such Guaranteed Loans were valued, as explained in note 4.4.c) under Central Bank Communiqué “A” 3,911, as supplemented.

          d.2) Loans to the non-financial government sector and Other financial exposure to the non-financial government sector:

They were valued, as explained in note 4.4.c) under Central Bank Communiqué “A” 3,911, as supplemented.

e) Interest accrual:

Interest has been accrued based on the compound interest method when earned or incurred. Interest on foreign currency and instruments whose maturity does not exceed 92 days is accrued based on a simple interest formula.

The Bank suspends the accrual of interest generally when the related loan is non-performing and the collection of interest and principal is in doubt, generally after 90 days. Accrued interest remains on the Bank’s books and is considered a part of the loan balance when determining the allowances for loan losses. Interest is then recognized on a cash basis after reducing the receivable of accrued interest, if applicable.

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f) C.E.R. accrual:

          As of December 31, 2005, and 2004, receivables and payables were adjusted by C.E.R. as follows:

†	Guaranteed loans: as explained in note 4.4.d)1).
†	Other loans and receivables from sale of assets: Under Central Bank Communiqué “A” 3,507, as supplemented, the payments through September 30, 2002, were made under the original terms of each transaction and were recorded as prepayments. From February 3, 2002, the principal was adjusted by C.E.R. prevailing on December 31, 2005, and 2004, as the case may be.
†	Deposits and other assets and liabilities: C.E.R. adjustment was applied as of December 31, 2005, and 2004, respectively.

g) Allowance for loan losses and provision for contingent commitments:

These provisions have been calculated based on the estimated uncollectibility risk of the Bank’s credit portfolio. This results from evaluating the degree of debtors’ compliance with payment terms and the guarantees and collateral supporting the respective transactions under Central Bank Communiqué “A” 2,950, as supplemented.

In cases where loans with specifically allocated provisions are settled and the specific provisions that had been established in previous years are greater than what is deemed necessary, the excess is reversed and recorded in current year profit.

Recoveries on charged off loans are recorded directly to income.

The Bank also assesses the credit risk associated with off-balance sheet contingent commitments and determines the appropriate amount of credit loss liability that should be recorded. The liability for off-balance sheet credit exposure related to contingent commitments is included in the “Provision for contingent commitments” account.

h) Loans and deposits of government securities:

They were valued at the quoted price of each type of security, plus accrued interest. Market value differences were recorded in the income statement.

i) Other receivables from financial intermediation and Other liabilities from financial intermediation:

i.1) “Amounts receivable from spot and forward sales pending settlement” and “Amounts payable for spot and forward purchases pending settlement”:

They were valued based on the prices agreed upon for each transaction, plus related premiums accrued as of each year-end.

i.2) “Securities and foreign currency receivable from spot and forward purchases pending settlement” and “Securities and foreign currency to be delivered under spot and forward sales pending settlement”:

They were valued at the quoted prices of the respective securities and foreign currency as of such dates. Market value differences were recorded in the income statement.

i.3) Compensation and Federal Government Coverage Bonds (BODEN 2012) to be received (Presidential Decree No. 905/02):

As of December 31, 2004, the Compensation and Federal Government Coverage Bonds to be received by the Bank were recorded under “Other receivables from

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financial intermediation— Other receivables not covered by debtors classification regulations”. They were stated at their nominal value, plus interest accrued according to the issuance conditions, translated into pesos as described in note 4.4.a), and net of adjustments proposed by the Central Bank in calculating the compensation (see note 2.a.1)). The related liabilities of Federal Government Compensation Bonds payable in Argentine pesos maturing in 2007 (BODEN 2007) are presented in “Other liabilities from financial intermediation”.

          i.4) Debt securities and certificates of participation in financial trusts:

†	Debt securities: as of December 31, 2005 they were valued, under Central Bank Communiqué “A” 4,414, as supplemented, increasing their cost value by internal rate return. As of December 31, 2004 they were valued at the cost value, plus interest accrued as of year-end.
†	Certificates of participation: as of December 31, 2005 and 2004, they were valued at the face value plus interest accrued as of each year-end plus C.E.R. adjustment if applicable.

The amounts recorded in the Bank’s consolidated financial statements related to certificates of participation and debt securities held in financial trusts, net of allowances, amounted to:

Financial Trusts
	2005		2004
BG(a)		82.357		—
Tucumán(b)		63.269		—
Luján(b)		42.571		20.588
TST & AF(b)		32.336		—
Tarjeta Privada		16.783		14.700
San Isidro(b)		16.782		16.782
Onext(b)		16.648		—
Puerto Madero(b)		12.733		—
Tarjeta Shopping		8.707		7.795
Pharma		—		12.809
Other		6.340		13.086
Total		298.526		85.760

(a)	On December 20, 2005, Banco Galicia y Buenos Aires S.A., in its capacity as trustor, executed an agreement with Equity Trust Company (Argentina) S.A., in its capacity as trustee, whereby the BG trust was created. Such trust’s purpose is to collect certain receivables transferred by the trustor and, with the related proceeds, settle payables and certificates of participation issued.
(b)	See note 14.

          i.5) Other Unlisted Corporate Bonds:

As of December 31, 2005, they were valued under Central Bank Communiqué “A” 4,414, as supplemented, increasing the cost value by the internal interest rate return. As of December 31, 2004, they were valued at acquisition cost plus income accrued as of each year-end.

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j) Assets subject to financial leases:

As of December 31, 2005 and 2004, they were valued at the net investment in the lease less unearned income and calculated in accordance with the conditions agreed upon in the respective agreements, by applying the interest rate imputed therein.

k) Investments in other companies:

k.1) Non-controlled financial institutions (less than 50% ownership interest), supplementary and authorized activities:

In Argentine pesos: they were valued at acquisition cost, plus the nominal value of dividends received, restated as explained in note 4.3.

In foreign currency: they were valued at the acquisition cost in foreign currency, plus the nominal value of dividends received, converted into pesos in accordance with the criterion stated in note 4.4.a).

k.2) In other non-controlled companies (less than 50% ownership interest): they were valued at acquisition cost, plus the nominal value of dividends received, restated as described in note 4.3., net of allowances for impairment in value. Such net values do not exceed the values calculated by the equity method on the basis of the latest financial statements published by the companies.

l) Other receivables— Federal Government Bonds receivable:

As of December 31, 2005, the Bank acquired from its depositors subscription rights over Federal Government Bonds in US dollars at LIBOR maturing in 2013 for an amount of 5,193 and additionally, as of December 31, 2004 the Bank acquired from its depositors subscription rights over Federal Government Bonds in US dollars at LIBOR maturing in 2005, 2012 and 2013, and in Argentine Pesos maturing in 2007, for an amount of 19,706.

As of December 31, 2005, the subscription rights were valued at their respective quoted prices at year-end.

m) Bank premises and equipment and other assets:

They were valued at acquisition cost, restated as explained in note 4.3., less the related accumulated depreciation calculated under the straight line method and based on the estimated months of their useful life.

The cost of maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements is added to the carrying amount of the respective fixed assets.

n) Intangible assets:

n.1) Goodwill and organization and development costs (except differences due to court orders (amparos)— Non-deductible for the determination of the computable equity): valued at their acquisition cost restated as explained in note 4.3., less the related accumulated amortization based on the estimated months of useful life.

n.2) Differences due to court orders (amparos)— Non-deductible for the determination of the computable equity: as of December 31, 2005, and 2004, the “Intangible Assets— Organization and development costs” account includes 42,632 (net of amortization for 32,013) and 50,037 (net of amortization for 17,916), respectively. These amounts resulted from the difference between the amount of the original foreign currency converted at the exchange rate (higher) applied upon payment of the constitutional right protection actions (known as

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amparos) and the amount recorded under regulations effective upon the payment date (pesification at Ps. 1.4 to USD 1 exchange rate, or its equivalent in other currency, plus C.E.R.). Additionally, and as disclosed in Communiqué “A” 3,916, as from April 2003, the amount recorded is amortized straight line over 60 months.

o) Valuation of options

o.1) Put options taken: they were valued at the agreed-upon strike price (accrual method).In addition, the premiums accrued were recorded under “Other receivables from financial intermediation”.

o.2) Put options sold: Such options were stated at the values of the exchange of the bonds, plus interest and C.E.R. adjustment accrued as of those dates (accrual method). Their notional value relates to amounts representing contingent obligations assumed by the Bank under put options sold on the Federal Government Bond coupons established in Presidential Decrees Nos. 905/02 and 1,836/02, as supplemented, whose holders have requested such option Management has estimated that such guarantees have a fair value of zero. Under Central Bank rules, these are recorded in memorandum accounts.

o.3) Call options sold: they were valued at the effective quoted price as of the year-end. Market value differences were recorded in the income statement.

o.4) Forward transactions offset: As of December 31, 2005 and 2004, they were valued at their quoted prices, effective at year-end (accrual method). Any quoted price-differences were charged to income for the year.

p) Severance payments:

The Bank charges these payments directly to income when incurred.

q) Provisions for liabilities:

The acquisition of Banco Bansud S.A. by Banco Macro S.A. gave rise to an original recording of negative goodwill of 365,560, which is the difference between the purchase price and the book value of the net equity acquired.

On July 24, 2003, the Central Bank issued Communiqué “A” 3,984, which established the methods for disclosure and amortization of negative goodwill, as well as the treatment thereof in the merger process. Such amortization methods depend on the reasons that originated such negative goodwill and are summarized below:

†	For differences between book and fair values of government securities and guaranteed loans over the period of convergence of these values.
†	For differences between book and carrying values of the loan portfolio during the effective period thereof.
†	For expected future losses, upon occurrence thereof.
†	For differences between book and fair values of non-monetary assets, during the amortization term of these assets.

The amount reversed for the fiscal year may not exceed the amount, which would have been amortized on a straight-line basis over 60 months.

Therefore, if these conditions are met, such goodwill will continue to be amortized.

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As of December 31, 2005, and 2004, the referred goodwill is disclosed under “Provisions” in liabilities in the aggregate amounts of 73,112 and 146,224, respectively, net of accumulated amortization. Therefore, as of December 31, 2005 and 2004 the Bank amortized such goodwill and credited 73,112 to “Other Income— Recovered loans and allowances reversed”, using the proportion of the cap of 20% per year established in such Communiqué.

Additionally, the acquisition of Nuevo Banco Suquía S.A. by Banco Macro Bansud S.A gave rise to an original recording of negative goodwill of 483, which is the difference between the purchase price of the net assets acquired and the book value to those assets.

The Bank also has certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. The Bank accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated.

r) Shareholders’ equity accounts:

They are restated as explained in note 4.3., except for the “Capital Stock” account which is presented at its original value. The adjustment resulting from its restatement as explained in note 4.3. is included in the “Adjustments to Shareholders’ Equity” account.

s) Consolidated Statement of Income Accounts:

Accounts reflecting monetary transactions (financial income and expenses, service-charge income and service-charge expenses, administrative expenses, loan losses, etc.) occurred during the fiscal year ended December 31, 2005 and 2004, were computed at their historical cost.

Accounts reflecting the effects of the sale, retirement or consumption of non-monetary assets were computed on the basis of the restated amounts of such assets, restated as mentioned in note 4.3.

The effect of inflation on monetary assets and liabilities through February 28, 2003, has been recognized in three accounts called “Monetary loss on financial intermediation”, “Monetary loss on operating expenses” and “Monetary loss on other operations”. These accounts include monetary transactions which were restated by applying the adjustment coefficient to the historical amounts on a monthly basis.

t) Consolidated statement of cash flows:

For the purpose of reporting cash flows, cash and cash equivalents include amounts set forth under “Cash” (“Cash on hand”, “Due from banks Correspondents” and “Others”). The consolidated statements of cash flows were prepared using the measurement methods prescribed by the Central Bank. Cash and cash equivalents represent instruments which are readily convertible to known amounts of cash and have original maturities of 90 days or less.

5.     INCOME TAX AND MINIMUM PRESUMED INCOME TAX (TOMPI)

a)     As required by Central Bank ’s rules, the Bank calculates the income tax charge by applying the 35% rate to taxable income for the year, without giving effect to temporary differences between book and taxable income.

In fiscal year 1998, Law No. 25,063 established minimum presumed income tax for a ten-year term. This tax is supplementary to income tax; while the latter is levied on the taxable income for the year, minimum presumed income tax is a minimum levy assessment by applying the current 0,2% rate to

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the book value of certain assets. Therefore, the Bank’s tax obligation for each year will be equal to the higher of these taxes. However, if minimum presumed income tax exceeds income tax in a given year, the excess may be credited as a payment towards any income tax in excess of minimum presumed income tax that may occur in any of the following ten years, once accumulated tax loss carry forwards (NOLs) have been used.

As of December 31, 2004, the Bank had accumulated NOLs. Also, the Bank assessed a minimum presumed income tax charge, which was capitalized under “Other receivables”.

As of December 31, 2005, the Bank estimated income tax in the amount of 34,042. Additionally, the Bank assessed a minimum presumed income tax charge, which was capitalized under “Other receivables”.

Consequently, as of December 31, 2005, the Bank maintained a total amount of 53,593 capitalized in connection with the minimum presumed income tax credit, which is considered an asset because Management estimates it will be used within ten years, which is the period allowed by Central Bank Communiqué “A” No. 4,295, as supplemented.

The following is a detail of such tax credit and the estimated NOLs, indicating the year of origin and the estimated year to use it:

Minimum presumed income tax
		Estimated year
Origination year	Amount	will be used
1999	8,108		2005
2000	5,859		2005
2001	3,804		2005
2002	8,613		2005/9
2003	12,285		2005/9
2004	14,924		2005/9
	53,593

NOLs
Amount	Expiration year
650		2006
113,870		2007
163,571		2008
82,989		2009
250		2010
361,330

Additionally, as of December 31, 2005, the Bank prepaid 11,846 for the tax year ended December 31, 2005, recorded in the “Other receivables” account.

b)     A.F.I.P. (Administración Federal de Ingresos Públicos— Argentine Tax Authorities) and other agencies’ administrative proceedings have had different interpretations regarding the tax treatment of the effect of the pesification and C.E.R. adjustment of guaranteed loans. The Bank believes that the income related to such items is not subject to income tax and therefore has not provided for such effect in the financial statements.

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6. DIFFERENCES BETWEEN CENTRAL BANK’S RULES AND PROFESSIONAL ACCOUNTING STANDARDS EFFECTIVE IN THE CITY OF BUENOS AIRES, ARGENTINA

Standards effective in the City of Buenos Aires as of December 31, 2005:

Through Resolution C.D. No. 87/03 of June 18, 2003, the C.P.C.E.C.A.B.A. (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires—Professional Council in Economic Sciences of the City of Buenos Aires) approved the revised professional accounting standards mandatory in the City of Buenos Aires (Technical Resolutions Nos. 6, 8, 9, 16, 17, 18, 20, and 21). In particular, with respect to the financial institutions governed by the Central Bank, the C.P.C.E.C.A.B.A. kept in force Resolution C. No. 98/93, which does not require the net present value (discounting) of beginning and end-of-year balances of monetary receivables and payables generated by financial transactions and refinancing, and of other monetary receivables and payables not generated by trading of goods or services.

As of the issuance date of these consolidated financial statements, the Central Bank has not adopted the valuation and disclosure changes provided by these professional accounting standards and their application in the financial statements of financial institutions is therefore not required. For this reason, the Bank did not quantify the net effects on shareholders’ equity or income (loss) caused by all the differences between such accounting standards and Central Bank rules.

The following are the main differences between the professional accounting standards and Central Bank rules, which affect the Bank as of December 31, 2005 and 2004:

a)     Valuation aspects

1)     The Bank has not recognized the effects of changes in the peso purchasing power from March 1, 2003 through October 1, 2003. Such recognition is required by Argentine G.A.A.P.

Had the effects of changes in the peso purchasing power, as mentioned above, been recognized, the shareholders’ equity as of December 31, 2005 and 2004, would have decreased by about 7,858, while results of operations for the years ended would not have varied significantly.

2)     The Bank assesses income tax by applying the effective rate to the estimated taxable income without considering the effect of temporary differences between book and taxable income. Under professional accounting standards, income tax should be recognized through the deferred tax method.

3)     Under Central Bank Communiqué “A” 3,916, as of December 31, 2005 and 2004, the Bank kept an amount of 42,632 and 50,037, respectively, capitalized in the “Intangible assets—Organization and development costs” account. This amount represents the foreign exchange differences resulting from the compliance with legal decisions regarding precautionary measures that required the Bank to reimburse certain deposits converted into pesos in their original currency, less amortizations.

This accounting treatment is not in line with the disclosure and measurement methods established by professional accounting standards, which require decreasing the book value of surpluses paid by the Bank over the recoverable value, which was not determined as of the date of these financial statements.

4)     Holdings of government securities and loans to the non-financial government sector are valued in accordance with rules and regulations issued by the Federal Government and the Central Bank. In particular, Central Bank Communiqué “A” 3,911, as supplemented, establishes a present-value criteria, applying regulated discount rates, notional values and undiscounted cash flows, as detailed in notes 4.4.b.1) and 4.4.d). Furthermore, the Central Bank’s rules for recognition of allowance for loan losses provide that receivables from the non-financial government sector are not subject to provisions

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for loan losses, whereas professional accounting standards require receivables to be compared with their recoverable value every time financial statements are prepared.

The Bank’s particular situation in this regard is as follows:

i)     As of December 31, 2005, the Bank booked in “Government securities—Holdings in investment accounts” and “Other receivables from financial intermediation—Securities and foreign currency receivable from spot and forward purchases pending settlement” the securities received for the compensation established by Presidential Decree No. 905/02 in the aggregate amount of 187,660. In accordance with professional accounting standards, such assets should have been recorded at their current value. As of December 31, 2005 the quoted price of such securities amounted to 167,284.

As of December 31, 2004, the Bank booked in “Government securities —Holdings in investment accounts” and “Other receivables from financial intermediation—Securities and foreign currency receivable from spot and forward purchases pending settlement” the securities received in compensation in the aggregate amount of 145,310. Additionally, the Bank booked in “Other receivables from financial intermediation—Other not covered by debtor classification standards” the remaining rights for securities to be received for the compensation established by Presidential Decree No. 905/02 totaling 609,791. These assets were required to be stated at market value in accordance with professional accounting standards. As of December 31, 2004, the quoted price of such compensation amounted to 533,494.

As mentioned in note 2.a)1, the difference between the quoted price and the book amounts at beginning of year of securities intended to settle net liabilities booked under “Argentine Government bonds in US dollars accruing interest at LIBOR and maturing in 2012” should have been recorded against prior-year adjustment under professional accounting standards.

ii)     As of December 31, 2005 and 2004, Federal Government Secured Bonds deriving from the exchange established by Presidential Decree No. 1,579/02 and other holdings of unlisted government securities were recorded in “Unlisted government securities” for a total net amount of 199,070 and 839,183, respectively. According to professional accounting standards, such assets should be stated at market value. As of December 31, 2005, and 2004, the quoted price of such bonds and/or securities amounted to 189,845 and 672,337, respectively.

iii)     As disclosed in note 2.b)1), as of December 31, 2005 and 2004, the Federal Government Guaranteed Loans from the exchange established by Presidential Decree No. 1,387/01, and Other loans to the non-financial government sector are recorded in the “Loans—To the non-financial government sector” account in the net aggregate amount of 641,801 and 720,026, respectively. According to professional accounting standards, such assets should be stated at market value. As of December 31, 2005, and 2004, the estimated market value of such loans amounted approximately to 635,477 and 649,662, respectively.

In addition, the Bank allocated the adjustments referred to in note 7 as prior-year adjustment, whereas, under professional accounting standards, such adjustments should have been charged to income for the year ended December 31, 2004.

5) As mentioned in Note 4.4.q), the acquisition of Banco Bansud S.A. by Banco Macro S.A. gave rise originally to the recording of negative goodwill of 365,560. This resulted from the difference between the purchase price and the book value of the net equity acquired according to Central Bank’s rules. Subsequently, as mentioned in the referred note, under Central Bank Communiqué “A” 3,984, the Bank retroactively applied the valuation and disclosure regulations established in such Communiqué and amortized, as of December 31, 2005, 80% of the aggregate amount of such goodwill (the

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maximum amortization allowed per annum is 20%). This negative goodwill generated gains on inflation through February 28, 2003.

In addition, the acquisition of Nuevo Banco Suquía S.A. by Banco Macro Bansud S.A. generated negative goodwill of 483, resulting from the difference between the purchase price and the value of the net assets acquired applying Central Bank’s rules.

Under professional accounting standards effective in the City of Buenos Aires, Argentina, when the cost of an investment is lower than fair value of the related identifiable assets, such difference shall be either deferred (as negative goodwill) and amortized subsequently as appropriate, on the basis of the specific circumstances of the transaction that originated such difference, or be considered a gain for the year.

b) Disclosure aspects

There are certain disclosure differences between the criteria established by Central Bank and Argentine professional accounting standards.

Changes in professional accounting standards:

In August 2005, the CPCECABA approved Resolution CD No 93/05, whereby it introduced a series of changes in its professional accounting standards, as a result of the agreement entered into with the FACPCE to unify Argentine professional accounting standards. Such Resolution is effective for fiscal years beginning as from January 1, 2006, and its early enforcement is accepted. In addition, it establishes transition standards that defer the effective term of certain changes to the years beginning as from January 1, 2008.

The most significant changes for the Company are as follows:

†	Annulment of the suspension of the net present value measurement of beginning and end-of-year balances of monetary receivables and payables generated by financial transactions and refinancing, and of other monetary receivables and liabilities not generated by trading of goods or services in the financial institutions’ financial statements; and
†	For matters not foreseen in general or specific accounting standards and that cannot be resolved by using the general framework of accounting standards, International Financial Reporting Standards and interpretations approved by the International Accounting Standards Board, effective for the fiscal year in question, shall be applied.

7. PRIOR PERIOD ADJUSTMENTS

The figures originally stated as of December 31, 2003 have been modified to give retroactive effect the following adjustments: (i) the reallocation, of the unrealized valuation difference, which had been originated by the adjustments to the compensation received under sections 28 and 29, Presidential Decree No. 905/02, equivalent to 40% of the net position in foreign currency as of December 31, 2001; and (ii) the additional adjustments arising from the effects of the asymmetrical pesification and the compensation mentioned in notes 2.a)1) and 11.

The amounts of such adjustments were a net decrease to net assets of 9,222 and 81,948 as of December 31, 2003 and 2002, respectively (totaled net decreased to net assets of 91,170).

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8. RESTRICTED AND PLEDGED ASSETS

Some of the Bank’s assets are restricted as follows:

a)     As of December 31, 2005 and 2004, the “Government Securities” account includes:

1.     Discount Bonds received as exchange of Consolidation Bonds in Pesos—First Series, amounting to 2,242 and 1,775, respectively, assigned to settle payables to the Central Bank and safety-net financing originated in the acquisition of assets and liabilities from the former Banco Federal Argentino (B.F.A.).

2.     Secured Bonds for 35,872 and 34,282 (face value of Ps. 24,400,000), respectively, as collateral for the loan granted by Banco de Inversión y Comercio Exterior S.A. (B.I.C.E.) to finance the public work “Paso San Francisco”.

3.     As of December 31, 2005, GDP-linked securities maturing in 2035 for 276, under the provisions of the Prospectus Supplement approved by Presidential Decree No. 1,735/04, originally attached to the Discount Bonds issued under the “Offer to exchange eligible Argentine government debt securities”.

4.     As of December 31, 2005, Listed—LEBAC (Central Bank bills)—for 7,267 as security for Rofex transactions.

5.     As of December 31, 2005, Argentine Government Compensation Bonds in Argentine pesos at a 2% rate maturing in 2007 for 10,705 of the former Banco Empresario de Tucumán Cooperativo Limitado (Banco Empresario) as security for the loan granted by the Central Bank to such bank and repaid by Banco Macro Bansud on December 2, 2005. The Central Bank released such security on January 4, 2006.

6.     Federal Government Bonds in US dollars at LIBOR maturing in 2012 received in compensation (see note 2.a)1)) for 2,101, as of December 31, 2004, as security for the subscription of bonds belonging to depositors who opted for the exchange (see note 2.c)),

7.     Government Bonds in US dollars at LIBOR maturing in 2012 received as compensation (see note 2.a)1)) for 48,837 as of December 31, 2004.

b)     “Loans” account includes:

1.     As of December 31, 2005 and 2004, Federal Government Guaranteed Loans in the amount of 16,066 and 16,940, respectively, provided by the former Banco Macro S.A. as security to the Central Bank for the exchange of compensation received in Federal Government Bonds in Pesos at a 2% rate per year, maturing in 2007, for BODEN requested by depositors, under Central Bank Communiqué “B” 7,594.

2.     As of December 31, 2005, agreements for loans backed by pledges and signature loans for 16,208 as security for Sud Inversiones & Análisis S.A., in full compliance with the terms and conditions of the program called “Mypes II (a)” and under the Global Credit Program for Small-sized and Micro-enterprises.

3.     As of December 31, 2004, Loans secured by mortgages and pledges in the amount of 1,852, in turn provided as security in favor of the Federal Treasury Department under the Global Credit Program for Small-sized and Micro-enterprises.

4.     Federal Government Guaranteed Loans in the amount of 3,931 as of December 31, 2004 as security in favor of the Central Bank for the loan mentioned in note 3.6.

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c)     As of December 31, 2005, and 2004, the “Other receivables from financial intermediation” account includes:

1.     Central Bank restricted deposits for 552 as of both years, as set forth by Communiqué “A” 1,190. The Bank has recorded allowances for 100% of this receivable.

2.     Special guarantee accounts with the Central Bank for transactions related to electronic clearing houses and other similar transactions, its had recorded under “Other receivables from financial intermediation—Central Bank,” by 66,231 and 121,317, respectively.

3.     As of December 31, 2005, contributions to the Risk Fund of Garantizar S.G.R. for 10,000 made by the Bank on December 26, 2005 in its capacity as contributory partner of such company. Such contributions may be fully or partially reimbursed two years after the date of the contribution.

d)     As of December 31, 2005 and 2004, the “Other Receivables” account includes:

1.     Blocked assets as of 543 and 1,292, respectively.

2.     Guarantees related to credit card transactions by 12,178 and 13,011, respectively, and other guarantee deposits by 2,335 and 3,971 respectively, which were booked as “Guarantee deposits”.

e)     As of December 31, 2005, and 2004, the “Investments in other companies” account includes:

1.     Irrevocable contributions to Tunas del Chaco S.A., Emporio del Chaco S.A. and Prosopis S.A. in the amount of 450 (150 in each company), under the federal taxes deferment, subscribed according to the Law No. 22,021, as amended by Law No. 22,702, which provides that the investment must be kept in assets for a term not shorter than five years commencing on January 1 of the year subsequent to that when the investment was made (investment year: 2003).

2.     Irrevocable contributions to El Taura S.A. for 61 and 90, respectively, which are exempt from provincial taxes according to the standards regulating the tourism promotion system of the Province of Salta pursuant to Provincial Law No. 6,064 (ratified by Provincial Decree No. 1,465/97 issued by the Executive of the Province of Salta), which establishes that the investment should be maintained in assets for a term of at least one year as from the payment date.

3.     Two shares in Mercado de Valores de Buenos Aires S.A., in the amount of 1,452 (owned by Macro Securities S.A. Sociedad de Bolsa) were pledged in favor of “La Buenos Aires Cía. Argentina de Seguros S.A.” to cover the security granted in connection with the Macro Securities S.A. Sociedad de Bolsa’s failure to comply with its obligations.

f)     As of December 31, 2005, Nuevo Banco de Suquía S.A. had requested to Central Bank the replacement of the original guarantee for the loan granted by the Central Bank to the Bank to purchase Government bonds maturing in 2005, 2007 and 2012. Those bonds would be used for the deposit exchange option exercised by the holders of depositors with Nuevo Banco Suquía S.A. As of December 31, 2004, Nuevo Banco Suquía S.A. had used the class “A” certificate of participation in the Suquía trust as guarantee and it was replaced by Guaranteed Loans, the amount of Guaranteed Loans affected as of December 31, 2005 is 215,941.

As of December 31, 2005 and 2004 the book-value of the loan was 216,197 and 233,747 respectively.

g)     On March 9, 2004, Nuevo Banco Suquía S.A. gave secured bonds and guaranteed loans to the Central Bank as collateral for the loan for temporary illiquidity, granted through Resolution

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No. 315/02, dated March 21, 2002. As of December 31, 2005 and 2004, the value of secured bonds and guaranteed loans amounted to 368,924 and 351,979, respectively.

9. TRANSACTIONS WITH RELATED PARTIES

As of December 31, 2005 and 2004, the amounts and income (loss) of the transactions performed with subsidiaries and related companies according to the provisions of Law No. 19,550 are as follows:

							Macro
		Nuevo					Valores						Sud
		Banco					S.A.			Sud			Valores			Macro
		Suquía					Sociedad			Bank &			S.G.F.C.I.			Valores		Total			Total
		S.A.			S.I.A.S.A.		de Bolsa			Trust			S.A.			SA.		2005			2004
ASSETS
Cash and due from banks and correspondents			409			—		—			2,173			—			—		2,582			2,131
Loans			1,609			—		—			26,185			—			—		27,794			—
Other receivables from financial intermediation			252			—		36,687			—			—			—		36,939			14,503
Other receivables			5,144			—		—			—			—			—		5,144			4,670
	Total assets		7,414			—		36,687			28,358			—			—		72,459			21,304
LIABILITIES
Deposits			1,081			547		707			44			1,359			3,679		7,417			5,676
Other liabilities from financial intermediation			700			—		72,151			1,691			—			—		74,542			3,132
	Total liabilities		1,781			547		72,858			1,735			1,359			3,679		81,959			8,808
MEMORANDUM ACCOUNTS
	Control debit accounts		—			—		—			144,202			—			—		144,202			6,382
Derivatives debit accounts			21,469			—		—						—			—		21,469			—
Contingency credit accounts			1,000			—		—			—			—			—		1,000			—
INCOME/EXPENSE
	Financial income		933			—		14			149			—			—		1,095			79
Financial expense			(980	)		—		—			(2,079	)		(10	)		—		(3,069	)		(5,481	)
Service-charge income			10			1		64			2			1			2		80			33
Service-charge expense			—			—		(37	)		—			—			—		(37	)		(58	)
			(37	)		1		41			(1,928	)		(9	)		2		(1,931	)		(5,427	)

During 2005 and 2004, the Bank granted loans to executive officers and directors of the Bank and certain companies related to them and its subsidiaries. Loans granted to those related parties as of December 31, 2005 and 2004 totaled 81,170 and 55,908, respectively. It is the Bank’s policy that such loans are granted in the ordinary course of business at normal credit terms, including interest rate and collateral requirements.

As of December 31, 2005 and 2004, the outstanding deposits of related parties were 219,222 and 36,713, respectively.

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10. CAPITAL STOCK

As of December 31, 2005, and 2004, the capital structure is as follows:

Shares						Capital stock
				Votes
				per		Issued and
Class		Number		share		outstanding(1)		Paid-in(1)
Registered Class A shares of common stock			11,235,670		5		11,236		11,236
Registered Class B shares of common stock			597,707,767		1		597,707		597,707
	Total 2005		608,943,437				608,943		608,943
	Total 2004		608,943,437				608,943		608,943

(1) Related to Ps. 608,943,437.

On September 26, 2005, the Regular and Special Shareholders’ Meetings of BANCO MACRO BANSUD S.A. approved a capital stock increase through the public subscription of shares for a face value of up to ARS 75,000,000 by issuing up to 75,000,000 common, class B and book-entry shares, with ARS 1 face value and entitled to one vote each. The increase would amount to 12.32% of capital stock, which would thus rise from ARS 608,943,437 to ARS 683,943,437. The new Class B shares would have the same rights as the Class B shares that are outstanding upon issuance, including the right to collect dividends. The Class B shares to be issued for the approved capital stock increase will be offered for public subscription in Argentina and may be offered abroad too.

On January 6, 2006, Banco Macro Bansud S.A. submitted a request for registration with the SEC in connection with its Class B shares. Such shares will be offered as American Depositary Shares (“ADS”) in Argentina and internationally. Each ADS will represent Class B shares and Banco Macro Bansud S.A. intends that ADS are listed on the New York Stock Exchange. As required by Argentine laws, all the current shareholders of Banco Macro Bansud S.A. are entitled to their preemptive rights and rights of first refusal on the shares to be issued by virtue of the capital increase.

Net income per common share for the fiscal years ended December 31, 2005 and 2004, was computed by dividing net income by the weighted average number of outstanding common shares for each year.

11. CORPORATE BONDS ISSUANCE

The amounts recorded in the consolidated financial statements related to corporate bonds are as follows:

Corporate Bonds							As of December 31,
		Original
Class		face value		Ref.			2005		2004
Subordinated corporate bonds			USD 60,000,000		a	)		—		—
Subordinated corporate bonds			USD 23,000,000		a	)		8,554		12,665
Subordinated corporate bonds			USD 4,000,000		b	)		3,493		3,751
	Total							12,047		16,416

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Maturities of the corporate bonds as of December 31, 2005, are as follows:

Fiscal Year	2005
2006		9,299
2007		687
2008		687
2009		687
2010		687
Total		12,047

a.1)     On February 19, 1996, the Regular and Special Stockholders’ Meeting of the former Banco Bansud S.A. authorized issuing Subordinated Corporate Bonds for up to a face value of USD 60,000,000.

The net funds collected from these corporate bonds were used to settle the loan borrowed from the Fondo Fiduciario de Capitalización Bancaria—Bank Capitalization Trust Fund (F.F.C.B.) as consequence of the acquisition of certain assets and liabilities from the Banco Federal Argentino.

After various negotiations between the parties, on April 16, 2003, the former Banco Bansud S.A. paid off at the due date, at the USD1 = ARS1 exchange rate, the last installment of the Subordinated Corporate Bond.

a.2)     On April 12, 1995, the Regular Shareholders’ Meeting of the former Banco Macro S.A. approved creating a global program for the issuance of simple corporate bonds, subordinated or not, non-convertible into shares for up to an aggregate of USD 50,000,000, and it entrusted the Board of Directors the responsibility of setting the terms of the referenced bonds (price, form, payment and placement conditions, among others).

i) On July 20, 1998, the former Banco Macro S.A. received the funds related to a loan that it had requested from the F.F.C.B., now Assistance Trust Fund for Financial Institutions and Insurance (F.F.A.E.F. y S.), in the amount of USD 5,000,000, and Banco Macro Bansud S.A. issued Subordinated Corporate Bonds in order to finance the acquisition of Banco de Jujuy S.A.

As of December 31, 2005, the Bank paid off at the due date, at the USD1 = ARS1 exchange rate, the last installment of the Subordinated Corporate Bond.

ii) Pursuant to the request made by the Bank to the F.F.C.B.’s Managing Committee on July 26, 1999, to restructure the financing previously granted, a loan agreement was executed on December 29, 1999 by B.N.A., as F.F.C.B.’s trustee, and the former Banco Macro S.A. Under such agreement, the F.F.C.B. granted the Bank a subordinated loan of USD 18,000,000, which was used by the Bank to strengthen computable equity.

The former Banco Macro S.A. undertook to repay in full the new loan convertible into subordinated corporate bonds in five annual, equal and successive installments, the first installment falling due on December 29, 2002. In addition, the loan will accrue compensatory interest at 180 days LIBOR plus 3% per year on balances, payable in arrears on an annual basis starting a year after the disbursement date.

On March 17, 2000, the former Banco Macro S.A. requested the C.N.V.’s authorization to issue the fifth series of subordinated corporate bonds in the amount of USD 18,000,000, under the Corporate Bonds issuance global program for an aggregate amount of USD 50,000,000 as mentioned in point b), in order to repay the loan granted by the FFCB on December 29, 1999.

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As of December 31, 2004, the Bank had paid the equivalent of USD 14,400,000.

The Managing Committee of the trust fund (F.F.C.B.) objected to the pesification of 50% of its loans, therefore requesting re-assessment of all payments made. The former Banco Macro S.A. has submitted all necessary information to the trust fund and rejected the request of such entity.

In this respect, on March 17, 2005, Banco Macro Bansud S.A. advised Central Bank of the acceptance of the guidelines defined by such agency and reflecting the right to receive the compensation for the asymmetric conversion into pesos and the effect of the global net negative position resulting therefrom. As of December 31, 2004, the recognition of this liability generated an adjustment to prior year income (see note 7).

Although the Bank accepted the re-dollarization of 50% of the payables to the F.F.R.E. as of December 31, 2001, on July 19, 2005, it reported to the Central Bank that the creditor still had to define several aspects, such as decrease in the interest rate to be applied to amounts in pesos and in USD and the treatment of compensatory and punitive interest, which is relevant to the final calculation of the amounts due and payable to date.

b)     The Special Shareholders’ Meeting of Banco de Salta S.A. (bank merged with and into the former Banco Macro S.A.) held on January 20, 1997, approved the issuance of subordinated corporate bonds of USD 4,000,000 to exercise the power granted to it by the second clause of the loan agreement executed with Banco Provincial de Salta (in liquidation) on June 28, 1996. As required by the bank, through Resolution No. 1006, dated December 19, 1997, the C.N.V. authorized the entry of Banco de Salta S.A. into the public offering regime for the issuance of corporate bonds, and it also approved the public offering of such bonds.

In addition, on October 19, 1999, through Resolution No. 13,043, the C.N.V. authorized the transfer in favor of Banco Macro Misiones S.A. (bank merged with and into the former Banco Macro S.A.), of the authorization granted to Banco de Salta S.A., to issue the referred corporate bonds, since the latter merged with and into the former. Furthermore, it cancelled the authorization granted to Banco de Salta S.A. for the public offering of its corporate bonds.

As of December 31, 2004, the former Banco Macro S.A. had paid the equivalent of USD 2,000,000.

12. ITEMS IN CUSTODY

12.1.    Portfolio Management

a)     On March 1, 1996, Banco de Salta S.A. (bank merged with and into the former Banco Macro S.A.) and the Government of the Province of Salta executed an “Agreement to Manage the Loan Portfolio of Banco Provincial de Salta (in liquidation)” related to the non-financial private sector. Former Banco Macro S.A. thereby undertook to perform all the necessary acts to manage such portfolio. In consideration, the Province of Salta assigned the former Banco Macro S.A. a percentage of the amounts effectively recovered.

As of December 31, 2005, and 2004, the loan portfolio managed amounted to 458,249 and 460,702, respectively.

b)     By virtue of the agreement executed on August 11, 1998 between Banco de Jujuy S.A. (merged with and into the former Banco Macro S.A.) and the Province of Jujuy, the former Banco Macro S.A. undertook to perform all necessary acts to manage the loan portfolio of the former Banco de la Provincia de Jujuy and to provide the province of Jujuy with a monthly report on the tasks performed. In consideration thereof, the Province of Jujuy assigned to the former Banco Macro S.A., for all

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accounts and as a one-time and total consideration, a variable fee determined as a percentage of the amounts actually recovered.

As of December 31, 2005, and 2004, the loan portfolio managed amounted to 47,764 and 49,382, respectively.

c)     In order to securitize personal signature (unsecured) loans in Argentine Pesos granted to individuals through the “Cuenta sueldo” (loan system whereby the instalment payment is automatically debited from the same account into which the Bank credits the salary), on June 7 2005, the Bank created “Macro Personal V Trust” (with Banco de Valores S.A., as trustee). This trust issued classes “A” and “B” certificates of participation, which were authorized by the C.N.V., for public offering, for a face value of 59,524 and 10,504, respectively. This agreement establishes that Banco Macro Bansud as trustor is the manager of the credit portfolio.

As of December 31, 2005, the portfolio managed by the Bank amounts to 21,875.

d)     On April 6, 2001, through Decree No. 806, the Ministry of the Treasury of the Province of Salta approved an extension to the “Contract for the service of collecting, processing and arranging information, managing the loan portfolio and performing collection procedures related to the receivables of I.P.D.U.V. (Instituto Provincial de Desarrollo Urbano y Vivienda—Provincial Institute of Urban and Housing Development) executed on March 27, 2001, between such agency and the former Banco Macro S.A. Through that extension, the Bank will provide to I.P.D.U.V., among others, the service of collecting the instalments payable by successful bidders for housing and a service of performing collection procedures related to such Institute’s receivables. In consideration thereof, the I.P.D.U.V. recognizes a percentage of the amounts effectively recovered to the former Banco Macro S.A.

The loan portfolio managed as of December 31, 2005 and 2004, amounted to 86,691 and 85,916, respectively.

e)     On August 19, 2002, ABN AMRO Bank N.V. Sucursal Argentina, as trustee, the former Scotiabank Quilmes S.A., as trustor, Banco Comafi S.A., as collecting agent and manager and the former Banco Bansud S.A. executed an agreement for the financial trust LAVERC collection administration and management, whereby the management of the assets related to branches transferred to former Banco Bansud S.A. will be carried out by the former Banco Bansud S.A. (for further information see note 3.5.)

As of December 31, 2005 and 2004, the portfolio managed by the Bank amounted to 195,130 and 222,754, respectively.

In addition, as of December 31, 2005 and 2004, there are other portfolios managed by the Bank in the aggregate amount of 51,439 and 39,752, respectively.

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12.2.    Mutual Funds

As of December 31, 2005, the Bank, in its capacity as depository institution, held in custody the shares of interest subscribed by third parties and securities from the following mutual funds:

	Shares of interest		Shareholders Equity	Investments(1)
PIONERO CRECIMIENTO		1,956,437	4,093	4,004
PIONERO RENTA		31,113,572	52,381	49,622
PIONERO FINANCIERO DÓLARES		17,635	55	11
PIONERO PESOS		189,437,497	200,423	199,198
PUENTE HNOS.		10,732,614	17,022	14,461
COPERNICO		31,516,013	120,431	79,526
PIONERO GLOBAL		2,906,817	3,028	2,999

(1)  These amounts reflect the funds’ investment portfolios and are recorded under “Debit-balance accounts—Control—Other—Assets in custody”.

13.     BANK DEPOSITS GUARANTEE INSURANCE SYSTEM

Law No. 24,485 and Presidential Decree No. 540/95, provided for the organization of a Bank Deposit Guarantee Insurance System. This system is characterized as being limited, mandatory and for valuable consideration. It is designed to provide protection for risks inherent in bank deposits, subsidiary and supplementary to the one offered by the system of bank deposit priorities and protection established by Financial Institutions Law. Law 24,485 provided for the organization of SEDESA to manage the FGD (Fondo de Garantía de los Depósitos—Deposit Guarantee Fund). In August 1995, SEDESA was organized. The Bank holds a 3.4619% equity interest therein, according to the percentages set forth in Central Bank communiqué “B” 8,436 published on March 18, 2005.

This system covers deposits in Argentine pesos and foreign currency made in participating institutions as checking accounts, savings accounts, time deposits or any other modes determined by the Central Bank, as long as they fulfill the requirements of Presidential Decree No. 540/95 and any others established by the enforcement agency. Additionally, the Central Bank issued regulations excluding from the deposits guarantee system those deposits made by other financial institutions, those made by entities related to the Bank, deposits of securities, among others.

14.     TRUST ACTIVITIES

Banco Macro Bansud S.A., either directly or through its subsidiary Sud Inversiones & Análisis S.A., acts as trustee. In no case will the trustee be liable with its own assets or for any obligations undertaken in the performance of the trust. These obligations do not constitute any debt for the trustee and will be satisfied only with the corpus assets. Additionally, the trustee may not levy any encumbrance on the corpus assets or dispose of them beyond the limits set forth in the abovementioned trust agreements. The fees earned by the Bank in its capacity as trustee are calculated under the terms of the respective trust agreements.

The following are certain characteristics of the main trusts where the Bank or its subsidiary acts as trustee:

14.1.    Trust Fund for the Economic Development of the Province of Jujuy

The purpose of the formation of the trust was to provide financial assistance to the productive sectors in the Province of Jujuy. In consequence, on May 11, 2000, the Economy Department of the Province

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of Jujuy (as trustor) and former Banco de Jujuy S.A. (as trustee) entered into a trust agreement (which was later amended on June 6, 2000). The trustor thereby transferred to trust the following:

(i) the right to be assigned by the Provincial Government to the proceeds from the Federal Tax Revenue Sharing System to guarantee the settlement of the consolidated debt that flows into the Trust Fund for the Economic Development of the Province of Jujuy (up to a face value of 10,000) or the debt provided in exchange, and

(ii) the profits arising from Trust activities.

The Bank only acts as trustee (managing the trust’s assets) and, therefore, no assets or liabilities were recorded in the consolidated financial statements. In addition, as of December 31, 2005 and 2004, the Trust managed assets amounting to 6,585 and 6,547, respectively.

Due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

14.2.     Transporte Automotor Plaza S.A.

The purpose of formation of the Trust was to secure the guarantee provided by the former Banco Bansud S.A. to Transporte Automotor Plaza S.A. on certain bills of exchange issued for acquiring passenger transportation buses from Scania Latinoamérica Ltda.

In consequence, on May 7, 1998, S.I.A.S.A., Transporte Automotor Plaza S.A. and the former Banco Bansud S.A., in their capacities as trustee, trustor and beneficiary, respectively, signed a trust agreement. The trustor thereby transferred to trust the following:

(i) The rights to 15% of daily revenues from the exploitation of the public passenger transportation service, and

(ii) a daily amount equivalent to the value of the bills to fall due in the six-month period divided by the number of working days of such period.

The trustee deposits the funds collected as mentioned in (ii) above in a trust account. The funds mentioned in (i) above are immediately reimbursed to the trustor provided there are no events of default or delay in the fulfillment of any obligation assumed towards the beneficiary.

The Bank records as loan payments the disbursements made by such trust. This trust has not operated since September 2003 and has had no assets and liabilities since then.

Due to the characteristics of the transaction (to secure the payment of the financing granted by the Bank to Transporte Automotor Plaza S.A.), the Trust did not issue certificates of participation or debt certificates.

14.3.     San Isidro Trust

The purpose of the San Isidro Trust is the sale of the real property received to pay for the certificates issued by the trust. This means that the main cash flow for the repayment of the certificates of participation will come from the sale of the property mentioned above. In consequence, on June 4, 2001, the former Banco Macro S.A., as trustee (today Sud Inversiones & Análisis S.A. is the trustee), and República S.A. de Finanzas, as trustor, executed a trust agreement. The “San Isidro” financial trust was thereby set up. Under such agreement, the trustor assigned to the trust the real property and plot of land located in the San Isidro district, to realize them and use the proceeds therefrom to redeem the certificates of participation issued by the trust.

The certificates of participation were delivered to Banco Macro Bansud S.A. (the Bank holds 100% of the certificates issued by the Trust) for the repayment of loans previously granted to República S.A. de

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Finanzas. This represents effectively a foreclosure since the former owner of the assets relinquished all rights to the assets to the trust and the Bank holds 100% of the trust certificates.

The Bank recorded its holdings of San Isidro Trust certificates of participation in the account “Other receivables not covered by debtors classification standards”, as explained in note 4.4.i.4). In addition, as of December 31, 2005 and 2004, the assets managed by the Trust amounted to 16,782.

The Trust issued classes “A”, “B” and “C” certificates of participation which represent the legal instrument whereby Banco Macro Bansud S.A. is entitled to receive the cash flow established in the Trust Agreement.

14.4. Municipal Finance Reorganization Trust Fund

The purpose of the formation of the trust was to provide financial assistance to municipalities and municipal commissions in the Province of Jujuy. Consequently, on December 29, 2004, the Finance Minister of the Province of Jujuy, representing the trustor, i.e. the Provincial Government, and Banco Macro Bansud S.A., as trustee, executed a trust agreement. The trustor thereby transferred in trust the following:

(i) Contributions from the Provincial Treasury in cash, in real property and the proceeds from the sale of real property belonging to the Provincial Government.

(ii) One half, i.e. 50%, of property tax collections up to the annual amount of six million pesos.

(iii) Amounts recovered from loans granted to municipalities and municipal commissions.

(iv) Other resources assigned to the Provincial Government from its own resources, the federal government, or financing from abroad.

(v) Proceeds from the investment of the trust fund assets.

(vi) Whatever assets the municipalities and municipal commissions may transfer in trust, under the scope of Provincial Law No. 5,435.

The Bank only acts as trustee (managing the trust’s assets) and, therefore, no assets or liabilities were recorded in the consolidated financial statements. In addition, as of December 31, 2005, the Trust managed assets amounting to 79,644.

Additionally, due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

14.5. Luján Trust

The Luján Trust was created for the purpose of reducing the customer’s uncollectibility risk of the credit asistance granted to Federalia S.A. de Finanzas. Consequently, on May 20, 2003, the former Banco Bansud S.A. signed a trust agreement with Federalia S.A. de Finanzas, in its capacity as trustor, and Sud Inversiones & Análisis S.A., in its capacity as trustee, whereby a financial trust named “Luján” was created to sell the corpus assets transferred to the trust by the trustor, in accordance with the terms of the agreement. The proceeds, net of trust expenses, were to be used to pay off the certificates of participation issued by the Trust, subject to their order of preference. The corpus assets are made up of different real property and plots of land located in the Province of Buenos Aires, Argentina.

The Bank recorded its holdings of Lujan Trust certificates of participation in the account “Other receivables not covered by debtors classification standards”, as explained in note 4.4.i.4).

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The Trust issued class “Nuevo A”, “Prima A” and “B” certificates of participation. The “B” certificates are subordinated to the other certificates.

14.6. Trusts with depositors of former Banco Bansud S.A

The purpose of the formation of these trusts was to acquire the rights to subscribe federal government bonds from depositors of former Banco Bansud S.A., who opted to participate in the exchange of deposits.

Consecuently, during 2002 and 2003, certain trust agreements were signed between Sud Inversiones & Análisis S.A. (in its capacity as trustee), the former Banco Bansud S.A. (in its capacity as beneficiary) and depositors of the former Banco Bansud S.A. (in their capacity as Trustors). Such agreement provided that:

a.     The Bank acquired from the depositors the rights to subscribe federal government bonds.

b.     The trustee undertook to accept such financial instrument and/or any other type of credit, obligation or security that the Federal Government may issue to exchange such deposits, which would be then transferred to the beneficiary.

As of September 30, 2005, the abovementioned agreements were terminated as their subject-matter was fulfilled and, accordingly, these trusts were terminated.

14.7.     Mypes II (a) Trust

The purpose of the trust is to provide financial assistance to small-and medium-size enterprises (Mypes) (SMEs).

Consequently, on May 28, 2004, a trust agreement was executed between the Ministry of Economy, in its capacity as trustor and beneficiary, the Ministry of Production, Department of SMEs and Regional Development, in its capacity as executor and organizer and Sud Inversiones & Análisis S.A., in its capacity as trustee. An ordinary trust called “Mypes II (a)” was thereby created. By virtue of this trust, the trustor and beneficiary assigned in trust the following assets:

1) The funds contributed by the trustor and beneficiary;

2) The loans made by the intermediary financial instrtutions

Additionally, due to the characteristics of the transaction, the Trust did not issue certificates of participation or debt certificates.

The Bank records as loans the loans made under the program.

14.8.     Northia Trust

The purpose of the trust is to secure the repayment of the loan granted by Banco Macro Bansud S.A. to Laboratorios Northia S.A.C.I.F.I.A.

On December 31, 2004, Sud Inversiones & Análisis S.A., in its capacity as trustee, Laboratorios Northia S.A.C.I.F.I.A., in its capacity as trustor and/or debtor and Banco Macro Bansud S.A., in its capacity as beneficiary, executed a guarantee trust agreement called “Northia Trust”, the purpose of which was: (i) to ensure punctual compliance with the obligations assumed by the trustor under the terms of the loan agreement; and (ii) to establish a mechanism that would allow settling the trustor’s payment obligations under the loan agreement, according to the payment schedule and the corpus

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assets distribution system provided for in the trust agreement. The trustor assigned and transferred in trust the following:

(i) The collection rights derived from the sales of products made (but not yet paid) and those to be made by the trustor in the future;

(ii) The amounts the trustor was entitled to collect under the manufacturing and/or medicine provision agreements;

(iii) The trustor’s collection of its present and future billing;

(iv) The amounts that the trustor was entitled to collect for any reason and for whatever items related to and/or directly or indirectly resulting from the trustor’s products or business activities;

(v) The amounts that the trustor was entitled to collect for any reason whatsoever, either past and/or present and/or future (collectively referred to with the preceding items as the “Collection Rights”) related to the production and sale of its products.

As of December 31, 2005 and 2004, the Bank recorded in “Loans” the loan granted to Laboratorios Northia S.A.C.I.F.I.A.

In addition, due to the characteristics of the transaction (the purpose of which is to secure the repayment of the loan granted by the Bank to Laboratorios Northia S.A.C.I.F.I.A.), the Trust did not issue certificates of participation or debt certificates.

14.9. Fenoglio trust and Desarrollo PI trust

The purpose of the Fenoglio Trust is to secure the payment to an individual of the shares in Fenoglio S.A. acquired by Desarrollo PI S.A.

In this respect, on December 30, 2004, Sud Inversiones & Análisis S.A., in its capacity as trustee, the individual, in her capacity as trustor, and the individual and Desarrollo PI S.A. in their capacity as beneficiaries A and B, respectively, executed a guarantee trust agreement called “Fenoglio Trust”.

In turn, the purpose of the Desarrollo PI S.A. Trust is to secure the repayment of the loan granted by Banco Macro Bansud S.A. to Desarrollo PI S.A. to purchase the shares in Fenoglio S.A.

Consequently, on December 30, 2004, Sud Inversiones & Análisis S.A., in its capacity as trustee, Desarrollo PI S.A., in its capacity as trustor and Banco Macro Bansud S.A., in its capacity as beneficiary, executed a guarantee trust agreement called “Desarrollo PI trust” to ensure the repayment of the loan.

The trustor assigned and transferred in trust the following:

(i) All rights related to the trustor in its capacity as beneficiary B of the Fenoglio trust.

(ii) Certain Shares.

As of December 31, 2005 and 2004, the Bank recorded in “Loans” the loan granted to Desarrollo PI S.A. to purchase the shares in Fenoglio S.A.

Additionally, due to the trusts’ operating characteristics, no certificates of participation or debt certificates were issued.

14.10.     Pulte S.R.L. Trust

The purpose of the trust is to secure the repayment of the loan granted by Banco Macro Bansud S.A. to Pulte S.R.L.

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On January 6, 2005, Sud Inversiones & Análisis S.A., in its capacity as trustee, Pulte S.R.L., in its capacity as trustor and/or residual beneficiary and Banco Macro Bansud S.A., in its capacity as beneficiary, executed a guarantee trust agreement called “Pulte Trust”, the purpose of which was: (i) to ensure punctual compliance with the guaranteed obligations; and (ii) to establish a mechanism that would allow settling the trustor’s payment obligations under the loan agreement, according to the payment schedule and the corpus assets distribution system provided for in the trust agreement. The trustor assigned and transferred in trust the following:

(i) Real property, including: (a) the receivables and proceeds from the real property insurance; (b) the right to obtain and use the authorizations and any type of permissions in connection with the real property; (c) the prospective sale price and/or any other way of legal divestiture of real property.

(ii) Shares.

The Bank recorded in “Loans” the loan provided to Pulte S.R.L.

In addition, due to the operating characteristics of the trust (the purpose of which is to secure the repayment of the loan granted by the Bank to Pulte S.R.L.), no certificates of participation or debt certificates were issued.

14.11.     Onext Trust

The purpose of the trust is to provide enough guarantees for the repayment of the credit assistance granted by the Bank to Dalvian House S.A., Conjunto los Cerros S.A. and Dalvian Constructora S.A.

Consequently, on May 19, 2005, a trust agreement was executed by Banco Macro Bansud S.A., Banco Credicoop Cooperativo Limitado, Dalvian House S.A. and Conjunto los Cerros S.A., in their capacities as trustors, parties of the first part and Sud Inversiones & Análisis S.A., in its capacity as trustee, party of the second part, Dalvian House S.A., in its capacity of Dalvian Constructora, party of the third part and Tecan Austral S.A., party of the fourth part, whereby the “ONEXT Financial Trust” was set up, by virtue of which the trustors conveyed the fiduciary ownership of the following:

†	Macro Bansud: the amount of 16,060 to the trust account.
†	Credicoop: the amount of 16,060 to the trust account.
†	Dalvian House: the plots of land owned, including: a) the right to obtain and use the authorizations and any type of permissions in connection with such plots of land; and b) the prospective sale price and/or any other way of legal divestiture thereof.
†	Conjunto los Cerros: the plots of land owned, including: a) the right to obtain and use the authorizations and any type of permissions in connection with such plots of land; and b) the prospective sale price and/or any other way of legal divestiture thereof.

The Trust issued debt securities of 32,120 and certificates of participation (the collection of which is subordinated to the payment of the debt securities issued) of 48,947.

The Bank recorded its holdings of debt securities issued by the Trust in “Other receivables from financial intermediation”.

14.12.     Tucumán Trust

On August 31, 2005, Sud Inversiones & Análisis, in its capacity as trustee, Federalia Sociedad Anónima de Finanzas, Maxifarm S.A., Gabrinel S.A., in their capacity as trustors, and the holder of certificates of participation, in their capacity as beneficiaries, executed a trust agreement to create the

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“Tucumán” financial trust, whereby the trustors assign to the trust the fiduciary ownership of debt certificates issued by the República trust.

The purpose of such trust is to guarantee the payment of certificates of participation issued by the trustee, namely: “A” certificate of participation, with a total face value of 61,000 and “B” certificate of participation.

14.13.     Puerto Madero Siete Trust

On September 27, 2005, Sud Inversiones & Análisis S.A., in its capacity as trustee, certain Bank’s shareholders and others, in their capacity of trustors and the holders of the certificates of participation, in their capacity as beneficiaries, executed a trust agreement to create the “Puerto Madero Siete” financial trust, the purpose of which is to purchase the real property “Dock 1, Eastern Area” and, potentially, other real property to carry out a business plan in the Puerto Madero area, City of Buenos Aires.

The trustors assign and transfer to the trust the following corpus assets:

†	Initial contributions (mainly cash).
†	The additional funds in Argentine pesos and/or foreign currency the beneficiaries may potentially contribute to carry out the business plan.
†	The other assets and rights that may be incorporated into the trust during the term thereof.

14.14.     TST&AF Trust

On November 29, 2005, an agreement was executed to replace the Trustee of the TST&AF trust between Austral Financial LLC (formerly known as Tishman Speyer— Citigroup Alternative Investments and Austral Financial LLC), in its capacity as Trustor, First Trust of New York, National Association, Permanent Representation Office in Argentina, in its capacity as Trustee, Sud Inversiones & Análisis, in its capacity as Substitute Trustee and Austral Financial LLC, Proa del Puerto S.A. and Sud Bank and Trust Company Limited, in its capacity as Beneficiaries, whereby the Trustee ratifies its express and irrevocable resignation as trustee, the Beneficiaries ratify the acceptance of the Trustee’s resignation and appoint Sud Inversiones & Análisis S.A. as Substitute Trustee of the Trust.

Sud Inversiones & Análisis S.A., in its capacity as Substitute Trustee, will manage the following assets:

†	The site located at Block 1, “I”, Dock IV, in Puerto Madero, City of Buenos Aires, intended for the construction of a real estate project; and
†	All other assets and rights related to the abovementioned real estate.

15. COMPLIANCE WITH REGULATIONS TO ACT AS OVER-THE-COUNTER MARKET AGENT

The Bank’s shareholder’s equity exceeds the minimum amount required by C.N.V. Resolution No. 368/01, to act as over-the-counter market agent.

16. RESTRICTION ON EARNINGS DISTRIBUTION

16.1     Through Communiqué “A” 4,152, the Central Bank provided that those institutions that wish to distribute earnings must request Argentine Superintendency of Financial and Foreign Exchange Institutions (S.E.F. y C.’s) prior authorization and meet the requirements set forth in such Communiqué.

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16.2     As established by the Central Bank, as of December 31, 2005:

a)     20% of income for the year, plus/less adjustment to prior-year income (loss), shall be appropriated to the legal reserve. The amount that shall be transfered from unappropriated retained earnings to increase the legal reserve is 52,544.

b)     Banco Macro Bansud may only pay dividends after making the appropriations required by the law and the Bank’s by laws. Additionally, Banco Macro Bansud may not pay dividends related to the difference between the book value and quoted price of the Federal Government Bonds in US dollars at LIBOR maturing in 2012 (Boden 2012) received under Presidential Decree No. 905/02, Title VI, sections 28 and 29, which was 20,376 at December 31, 2005.

c) As established in Central Bank Communiqué “A” 4,295, to determine the amounts to be distributed it will be necessary to deduct the assets recorded by Banco Macro Bansud for minimum presumed income tax from unappropriated retained earnings. Such balance amounted to 42,723.

Accordingly, the Bank’s unappropriated retained earnings as of December 31, 2004, are restricted by 115,643.

16.3     As stated in note 11, under the agreements executed with the Trust Fund for Assistance to Financial Institutions and Insurance Companies (F.F.A.E.F.y S.), Banco Macro Bansud may not distribute as cash dividends (i) an amount exceeding 50% of liquid and realized income or (ii) an amount exceeding 25% up to 50% of liquid and realized income (as defined in regulations), unless it redeems in advance subordinated corporate bonds for an amount equivalent to 50% of the total cash dividends distributed.

16.4     According to Law No. 25,063, the dividends distributed in cash or in kind will be subject to a 35% income tax withholding as a single and final payment. Dividend payments are subject to such withholding if they exceed the sum of: (i) the accumulated taxable earnings accumulated as of the year-end immediately prior to the payment or distribution date and (ii) certain tax-exempt income (such as dividend payments from other corporations). This is applicable for tax years ended as from December 31, 1998.

17. CLAIMS FROM THE A.F.I.P—D.G.I (FEDERAL PUBLIC REVENUE ADMINISTRATION—FEDERAL TAX BUREAU)

On January 21, 2002, the former Banco Bansud S.A. requested from the above agency that it be included in the debt consolidation, interest and fines exemption and payment in instalment plan system provided by Presidential Decree No. 1,384/01 to settle the taxes payable assessed by the authorities ex-officio according to a resolution of December 19, 2001. The abovementioned claim related to income tax differences of the former Banco del Sud for the 1993 and 1994 tax years, and it was based on having challenged certain methods applied that, in the former Banco Bansud S.A.’s opinion, were consistent with the guidelines set by the relevant regulations.

The amount the Bank has requested to settle is 10,780 in 120 monthly instalments. The amount in question was charged to expense in year ended December 31, 2001. As of December 31, 2005, the unpaid instalments of such settlement were recorded in the “Other liabilities” account.

Between 2002 and 2005, the former Banco Bansud S.A. and Banco Macro Bansud S.A. filed appeals and administrative remedies with the Federal Administrative Tax Court against A.F.I.P.—D.G.I. against resolutions which, in accordance with the position mentioned in the preceding paragraphs, had questioned the tax calculation for fiscal years 1995 through 1999.

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The issue under discussion and on which the A.F.I.P. bases its position, that is, the requirement that court-enforced collection proceedings before a court must have been started for unpaid loans to be deducted from income tax, has been recently addressed by the Federal Administrative Tax Court, which ruled that this is not the only condition that would permit such deduction.

Management believes that it is not probable that these issues will result in additional losses and therefore no additional amounts have been accrued.

18. BALANCES IN FOREIGN CURRENCY

The balances of assets and liabilities denominated in foreign currency are as follows:

	As of December 31,
	2005		2004
ASSETS
Cash and due from banks		692,246		715,907
Government and private securities		232,269		116,347
Loans		542,108		361,549
Other receivables from financial intermediation		355,274		763,920
Investments in other companies		104,091		99,893
Other receivables		11,987		25,439
Total		1,937,975		2,083,055

	As of December 31,
	2005		2004
LIABILITIES
Deposits		1,092,755		1,008,586
Other liabilities from financial intermediations		393,064		404,543
Other liabilities		3,477		930
Items pending allocation		25		48
Total		1,489,321		1,414,107

19. INTEREST-BEARING DEPOSITS WITH OTHER BANKS

19.1     Included in “Cash and Due from Banks” there are: (a) interest-bearing deposits with the Central Bank totaling 619,695 and 625,906 as of December 31, 2005 and 2004, respectively and (b) interest-bearing deposits in foreign banks totaling 65,575 and 360,206 as of December 31, 2005 and 2004, respectively.

19.2     Included in “Other Receivables from Financial Intermediation” there are other interest-bearing deposits with Central Bank totaling 94,601 and 98,339 as of December 31, 2005 and 2004, respectively.

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20. GOVERNMENT AND PRIVATE SECURITIES

		As of December 31,
		2005		2004
GOVERNMENT SECURITIES
Holdings in investment accounts
In pesos:
	Federal government bonds, maturity 2007—Compensation		10,705		—
Subtotal holdings in investment accounts—in pesos			10,705		—
In foreign currency:
	Federal government bonds in USD at LIBOR, maturity 2012—Compensation		94,711		53,856
Subtotal holdings in investment accounts—in foreign currency			94,711		53,856
Subtotal holdings in investment accounts			105,416		53,856
Holdings for trading or intermediation
In pesos:
	Consolidation bonds of social security payables in pesos		9,110		11,557
	Federal government bonds (maturity 2007, 2008 and 2014)		644		1,277
	Consolidation bonds in pesos		2,906		5,649
	Secured bonds Decree 1,579/02		22,391		18,351
	Discount Bonds in Pesos		13,378		—
	Other		2,069		869
Subtotal holdings for trading or intermediation—In pesos			50,498		37,703
In foreign currency:
	Federal government bonds—(maturity 2005, 2006, 2012 and 2013)		109,658		47,415
	Treasury Bills (maturity 2007)		4,543		—
	Argentine Republic external bonds		—		1,271
	Consolidation bonds		—		1,298
	Other		87		1,253
Subtotal holding for trading or intermediation—In foreign currency			114,288		51,237
Subtotal holding for trading or intermediation			164,786		88,940

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		As of December 31,
		2005			2004
Unlisted government securities
In pesos:
	Secured bonds Decree 1,579/02(1)		197,771			819,498
	Tax credit certificates under Decree 2,217/02AM, maturity 04/09/02(1)		—			11,441
	Argentine Republic external bills coupons(1)		—			2,089
	Bonds issued by the Municipality of Bahía Blanca at 13.75%		505			2,257
	Other		794			301
Subtotal unlisted government securities—In pesos			199,070			835,586
In foreign currency:
	Argentine Republic external bills coupons		—			3,597
Subtotal unlisted government securities—In foreign currency			—			3,597
Subtotal unlisted government securities			199,070			839,183
Instruments issued by Central Bank
In pesos:
	Listed Central Bank external bills		1,343,258			762,050
	Listed Central Bank external notes		822,351			73,180
	Unlisted Central Bank external bills		297,493			232,894
	Unlisted Central Bank external notes		—			29,456
Subtotal instruments issued by Central Bank			2,463,102			1,097,580
Total government securities			2,932,374			2,079,559
PRIVATE SECURITIES
Investments in listed private securities
	Shares		8,071			3,951
	Corporate bonds		24,016			14,872
	Debt securities in financial trusts		3,448			10,069
	Certificates of participation in financial trusts		19,005			757
	Mutual funds		5,362			—
Total private securities			59,902			29,649
Total government and private securities, before allowances			2,992,276			2,109,208
Allowances			(512	)		(2,471	)
Total government and private securities			2,991,764			2,106,737

(1) As of December 31, 2004, these securities were disclosed as “Unlisted government securities” albeit listed, because they are valued under Central Bank Communiqué “A” 3911 as supplemented.

21. LOANS

Description of certain categories of loans in the accompanying Balance Sheets include:

a.	Non-financial government sector: loans to the government sector, excluding government owned financial institutions;
b.	Financial sector: short-term loans to other banks and short-term loans from foreign branches to banks outside Argentina.

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c. Non financial private sector and foreign residents: loans given to the private sector (excluding financial institutions) and residents outside Argentina.

The classification of the loan portfolio in this regard was as follows:

	As of December 31,
	2005			2004
Non-financial government sector		645,342			809,577
Financial sector		80,511			81,812
Non-financial private sector and foreign residents
Commercial
—With Senior “A” guarantees		29,891			13,707
—With Senior “B” guarantees		210,335			214,308
—Without Senior guarantees		1,261,459			1,139,969
Consumer
—With Senior “A” guarantees		15,560			8,622
—With Senior “B” guarantees		434,582			347,982
—Without Senior guarantees		996,972			484,408
Less: Allowance		(247,532	)		(225,340	)
Total loans, net of allowance		3,427,120			2,875,045

Senior “A” guarantees consist mainly of cash guarantees, gold guarantees, warrants over primary products and other forms of self-liquidating collateral.

Senior “B” guarantees generally consist of mortgages and other forms of collateral pledged to secure the loan amount.

“Without senior guarantees” consist, in general, of unsecured third-party guarantees.

A breakdown of total loans by geographical location of borrowers is as follows:

	2005			2004
Argentina		3,578,312			3,087,000
Chile		354			7
Ecuador		—			4
Thailand		423			2,651
Taiwan		—			637
United States of America		70,425			1,054
Brazil		139			207
Uruguay		9,546			8,825
Peru		247			—
United Kingdom		15,178			—
Bahamas		28			—
Less: Provision for loan losses		(247,532	)		(225,340	)
Total loans, net of allowances		3,427,120			2,875,045

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A breakdown of total loans by sector activity classified according to the principal business of the borrowers is as follows:

Economic Activity	2005			2004
Agricultural livestock—Forestry—Fishing—Minery—Hunting		444,809			261,078
Foodstuff and beverages		235,114			190,586
Mass productions of products		76,180			119,193
Chemicals		61,070			100,356
Electricity, oil, water		24,580			16,746
Construction		220,663			90,236
Retail and consumer products		281,170			282,367
Governmental services		717,113			860,039
Financial sector		240,103			326,924
Real estate, business and leases		57,697			93,750
Other		1,316,153			759,110
Total loans		3,674,652			3,100,385
Less: Allowance		(247,532	)		(225,340	)
Total loans, net of Allowance		3,427,120			2,875,045

22. ALLOWANCES FOR LOAN LOSSES

The activity in the allowance for loan losses for the fiscal years presented is as follows:

	As of December 31,
	2005			2004
Balance at the beginning of the fiscal year		225,340			56,279
Provision for loan losses(a)		61,008			36,467
Allowances for loan losses from acquisition of Nuevo Banco Suquía S.A.		—			143,457
Allowances for loan losses from incorporation of assets and liabilities of Banco Empresario de Tucumán Cooperativo Limitado		74,775			—
Allowances for loan losses for purchased loans		6,262			21,329
Write Offs		(54,830	)		(32,164	)
Reversals		(65,023	)		(28	)
Balance at the end of the fiscal year		247,532			225,340

(a)  As of December 31, 2005, the amount of provision for loan losses disclosed in the statement of income, includes above amounts, and, mainly, the provision for other receivables for financial intermediation (see note 26).

23. OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

The breakdown of other banking receivables by guarantee type is as follows:

	As of December 31,
Description	2005			2004
With preferred guarantees		176,857			521,013
Without preferred guarantees		930,831			1,385,741
Allowances		(27,600	)		(107,530	)
		1,080,088			1,799,224

F-223

Banco Macro Bansud and Subsidiaries

The breakdown of private securities recorded in Other receivables from financial intermediation is as follows:

	As of December 31,
Description	2005		2004
Corporate bonds—Unlisted		927		928
Debt securities in financial trusts—Unlisted		124,700		33,106
Certificates of participation in financial trusts—Unlisted		193,062		88,907
Total investments in unlisted private securities		318,689		122,941

The Bank enters into forward transactions related to government securities and foreign currencies. The Bank recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date.

The assets and liabilities related to such transactions are as follows:

		As of December 31,
Description		2005		2004
Amounts receivable from spot and forward sales pending settlement
	Receivables from repurchase agreements of government securities		247,743		637,782
	Receivable from spot sales of government and private securities pending settlement		87,732		40,378
	Receivables from other repurchase agreements		—		1,151
	Receivables from forward sales of government securities		2,821		54,684
	Receivables from other forward sales		57,684		—
			395,980		733,995
Securities and foreign currency receivable from spot and forward purchases pending settlement
	Forward purchases of securities under repurchase agreements		162,402		202,334
	Spot purchases of government and private securities pending settlement		74,207		4,227
			236,609		206,561

F-224

Banco Macro Bansud and Subsidiaries

		As of December 31,
Description		2005		2004
Amounts payable for spot and forward purchases pending settlement
	Payables for spot purchases of foreign currency pending settlement and forward purchases of foreign currency		4		1
	Payables for forward purchases of securities under repurchase agreements		88,647		126,762
	Payables for spot purchases of government securities pending settlement		11,906		3,631
	Payables under repo transactions		8,125		22,678
	Payable for spot purchases of government and private securities awaiting settlement		—		589
			108,682		153,661
Securities and foreign currency to be delivered under spot and forward sales pending settlement
	Forward sales of government securities under repurchase agreements		284,656		690,539
	Forward sales of government securities		4,428		58,870
	Forward sales of government securities under other repurchase agreements		—		1,551
	Spot sales of government and private securities pending settlement		87,910		3,212
	Other forward Sales		52,720		—
			429,714		754,172

These instruments consist of foreign currency forward purchase and sale contracts and securities repurchase agreements, whose valuation method is disclosed in note 4.4.i).

Premiums on these instruments have been included in the “Financial income” and “Financial expense” captions of the consolidated statement of income of each year.

24.     BANK PREMISES AND EQUIPMENT AND OTHER ASSETS

24.1.    Bank Premises and Equipment

The major categories of the Bank’s premises and equipment, and related accumulated depreciation are presented in the following table:

	As of December 31,
	Estimated
	useful life
Description	(years)		2005			2004
Buildings		50		238,028			198,284
Furniture and facilities		10		60,985			59,017
Machinery and equipment		5		231,885			219,068
Vehicles		5		20,149			19,024
Other		—		540			681
Accumulated depreciation				(328,047	)		(302,210	)
Total				223,540			193,864

Depreciation expense was 19,218 and 16,570, as of December 31, 2005 and 2004, respectively.

F-225

Banco Macro Bansud and Subsidiaries

24.2.    Other assets

Other assets consisted of the following as of December 31, 2005 and 2004:

	As of December 31,
	Estimated
	useful life
Description	(years)		2005			2004
Works in progress		—		6,932			3,832
Works of art		—		1,175			962
Prepayments for the purchase of assets		—		4,191			693
Assets acquired by attachment in aide of execution		—		26,213			20,864
Leased buildings		50		10,529			8,236
Stationery and office supplies		—		1,236			1,193
Other assets(1)		50		137,336			147,033
Accumulated depreciation		—		(12,953	)		(24,671	)
Total				174,659			158,142

(1) Mainly includes buildings acquired by attachment in aide of execution, which under Central Bank rules are included in this line after a period of 6 months from the acquisition.

Depreciation expense was 2,024 and 2,311 at December 31, 2005 and 2004, respectively.

24.3.    Operating Leases

As of December 31, 2005, the Bank’s branch network includes certain branches that were located in properties leased to the Bank (some of which are renewable for periods between 2 and 6 years).

The estimated future lease payments in connection with these properties are as follows:

	In thousands
Fiscal year end	of Ps.
2006		7,752
2007		6,527
2008		4,079
2009		2,026
2010		1,444
2011 and after		742
Total		22,570

As of December 31, 2005 and 2004, rental expenses amounted to 7,249 and 4,338, respectively. As of such dates, there are no contractual obligations with separate amounts of minimum rentals, contingent rentals, and sublease rental income

F-226

Banco Macro Bansud and Subsidiaries

25.     INTANGIBLE ASSETS

25.1.    Goodwill:

As of December 31, 2005 and 2004 goodwill breakdown is as follows:

	As of December 31,
	Estimated
	useful life
Description	(years)		2005		2004
Goodwill for the purchase of Banco de Jujuy S.A., net of accumulated amortization of 6,667 as of December 31, 2005		7		1,646		2,485

Amortization expense on goodwill was 839 as of December 31, 2005 and 2004.

On January 12, 1998, Banco Macro acquired 80% of the capital stock of Banco de Jujuy in the amount of Ps.5.1 million. The assets transferred amounted to Ps.30 million and the liabilities assumed amounted to Ps.28 million (historical values).

Under Central Bank Rules, this transaction resulted in Banco Macro’s positive goodwill amounting to Ps.3.5 million, which is amortized in seven years and no impairment is required.

25.2.    Organization and development costs:

As of December 31, 2005 and 2004, of organization and development costs breakdown as follows:

	As of December 31,
	Estimated
	useful life
Description	(years)		2005		2004
Cost from information technology projects and other		5		25,813		29,009
Differences due to courts orders—non deductibles for the determination of the computable equity		5		42,632		50,037
Total				68,445		79,046

Amortization expense was 26,168 and 25,267 as of December 31, 2005 and 2004, respectively.

Intangible assets changed as follows during fiscal years ended December 31, 2005 and 2004:

	Fiscal Year Ended
	December 31,
	2005			2004
Balance at the beginning of the fiscal year		81,531			82,185
Additions		16,086			25,445
Decreases		—			—
Amortization expense		(27,526	)		(26,099	)
Balance at the end of the fiscal year		70,091			81,531

F-227

Banco Macro Bansud and Subsidiaries

26. OTHER ALLOWANCES AND PROVISIONS

The activity of the following allowances deducted from assets or included in liabilities in accordance with Central Bank rules are as follows:

Government and private securities

Recorded to cover possible impairment risk arising out of government securities.

	As of December 31,
	2005			2004
Balance at the beginning of the fiscal year		2,471			3,137
Allowances for government and private securities losses from acquisition of Nuevo Banco Suquía S.A.		—			2,471
Allowances for government and private securities losses		512			—
Write off		(2,471	)		(2,997	)
Reversals		—			(140	)
Monetary gain generated on allowances		—			—
Balance at the end of the fiscal year		512			2,471

Other receivables from financial intermediation

Recorded in compliance with the provision of Communication “A” 2950, as supplemented, of the Central Bank, taking into account note 4.4.g).

	As of December 31,
	2005			2004
Balance at the beginning of the fiscal year		107,530			134,145
Provision for other receivables for financial intermediation losses		9,958			716
Provision for other receivables for financial intermediation losses from acquisition of Nuevo Banco Suquía S.A.		—			102,767
Write off		(78,789	)		(130,098	)
Reversals		(11,099	)		—
Monetary gain generated on allowances		—			—
Balance at the end of the fiscal year		27,600			107,530

Assets subject to financial lease

Recorded in compliance with the provision of Communication “A” 2950, as supplemented, of the Central Bank, taking into account note 4.4.g)

	As of
	December 31,
	2005			2004
Balance at the beginning of the fiscal year		609			—
Provision for assets subject to financial lease		875			609
Applications		(14	)		—
Balance at the end of the fiscal year		1,470			609

F-228

Banco Macro Bansud and Subsidiaries

Investment in other companies

Recorded to cover possible impairment risk arising from investments in other companies.

	As of
	December 31,
	2005			2004
Balance at the beginning of the fiscal year		719			2
Provision for investment in other companies losses		1,049			3,003
Allowances for investment in other companies losses from acquisition of Nuevo Banco Suquía S.A.		—			321
Write off		(167	)		(2,607	)
Reversals		(297	)		—
Balance at the end of the fiscal year		1,304			719

Other receivables

Following is a summary of amounts recorded to cover collectibility risks of other receivables. Amounts include allowances on the receivables recovered from Suquía Trust.

	As of
	December 31,
	2005			2004
Balance at the beginning of the fiscal year		6,201			3,630
Provision for other receivables losses		13,220			1,223
Allowances for other receivables losses from acquisition of Nuevo Banco Suquía S.A.		—			1,689
Write off		(1,098	)		(341	)
Reversals		(77	)		—
Monetary gain generated on allowances		—			—
Balance at the end of the fiscal year		18,246			6,201

Provisions—Contingencies and Commitments

Following is a roll-forward of the allowance recoded under Central Bank’s rules to cover contingent losses related to loan commitments. These amounts have been accrued in accordance with Central Bank’s rules, which are similar to SFAS No. 5.

	As of
	December 31,
	2005			2004
Balance at the beginning of the fiscal year		3,120			5,342
Provision for contingent commitments losses		1,692			843
Allowances for contingent commitments losses from acquisition of Nuevo Banco Suquía S.A.		—			48
Write off		(1,043	)		—
Reversals		(1,693	)		(3,113	)
Monetary gain generated on allowances		—			—
Balance at the end of the fiscal year		2,076			3,120

F-229

Banco Macro Bansud and Subsidiaries

Provisions—Negative Goodwill

Following is the rollforward of the amounts recorded to cover the difference between the purchase price and the book value of the net equity acquired of Banco Bansud:

	As of December 31,
	2005			2004
Balance at the beginning of the fiscal year		146,707			219,336
Allowances		—			483
Amortization		(73,112	)		(73,112	)
Monetary gain generated on allowances		—			—
Balance at the end of the fiscal year		73,595			146,707

Provisions—Other loss contingencies

Principally includes labor litigation and customer and other third-parties claims. The amounts have been accrued in accordance with Central Bank’s rules, which are similar to SFAS No. 5.

	As of December 31,
	2005			2004
Balance at the beginning of the fiscal year		75,872			60,450
Provision for other contingent losses		37,440			3,211
Provision for other contingent losses from acquisition of Nuevo Banco Suquía S.A.		—			16,948
Provision for other contingent losses from incorporation of assets and liabilities of Banco Empresario de Tucumán Cooperativo Limitado		6,796
Write off		(13,347	)		(1,492	)
Reversals		(4,282	)		(3,245	)
Monetary gain generated on allowances		—			—
Balance at the end of the fiscal year		102,479			75,872
Total of provisions		178,150			225,699

27.     DEPOSITS AND OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION

27.1.    Deposits

The aggregate amount of time deposits and investment accounts exceeding Ps.100 thousand or more as of December 31, 2005 is Ps. 2,378,113 thousand.

F-230

Banco Macro Bansud and Subsidiaries

27.2.    Central Bank of Argentina

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of December 31,
	2005								2004
	Principal		Interest			Rate			Principal		Interest		Rate
Short-term liabilities		8,419		25,904			4,10	%		72,162		13,514		4,11	%
Long-term liabilities		107,174		75,984			4,24	%		329,561		70,030		4,18	%
Total		115,593		101,888	(1)					401,723		83,544

(1) As of December 31, 2005, “Interest” includes 11,129 related to accrued interest and adjustments on the above liabilities booked in “Accrued interest, adjustments, foreign exchange and quoted price differences payable” under the “Other liabilities from financial intermediation” in the accompanying consolidated balance sheets.

Maturities of the long-term liabilities in the table above for each of the following fiscal years are as follows:

	As of
Fiscal Year	December 31, 2005
2006		—
2007		30,937
2008		30,444
2009		30,444
2010		30,444
As from 2010		60,889
Total		183,158

27.3.    Banks and international institutions

	As of December 31,
	2005								2004
	Principal			Interest		Rate			Principal		Interest		Rate
Short-term liabilities		154,006	(a)		4,538		5,62	%		13,017		230		3,42	%
Long-term liabilities		—			—					1,651		—		2,98	%
Total		154,006			4,538					14,668		230

(a) In January, 2005 the Bank obtained a USD 50 million loan from Credit Suisse First Boston with an 18-month term at the LIBOR rate plus 2.7%. The loan agreement includes restrictions, principally related to the compliance of the payments established. Likewise, the loan agreement contains ther restrictions connected to the fulfillment of financial ratios. As of June 30, 2005 the Bank had duly complied with the obligations assumed with the loan

Accrued interest and adjustments are included in the “Accrued interest, adjustments and foreign exchange differences payable” account. Amounts are unsecured.

F-231

Banco Macro Bansud and Subsidiaries

27.4.    Financing received from Argentine financial institutions

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of December 31,
	2005							2004
	Principal		Interest		Rate			Principal		Interest		Rate
Short-term liabilities		2,481		999		1,97	%		32,021		673		2,49	%
Long-term liabilities		22,673		16,106		3,11	%		24,814		14,945		2,05	%
Total		25,154		17,105					56,835		15,618

Accrued interest and adjustments are included in “Accrued interest, adjustments and foreign exchange differences payable” under the “Other liabilities from financial intermediation” in the accompanying consolidated balance sheets. Amounts are unsecured.

Maturities of the long-term liabilities in the table above for each of the following fiscal years are as follows:

	As of
Fiscal Year	December 31, 2005
2006		—
2007		2,194
2008		2,032
2009		2,032
2010		2,878
2011		3,049
2012		3,049
2013		3,049
2014		4,658
2015		4,980
2016		4,980
2017		4,980
2018		898
Total		38,779

F-232

NUEVO BANCO SUQUÍA S.A.

Financial statements as of and for the two years ended December 31, 2004, together with the report of independent registered public accounting firm

F-233

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors of

NUEVO BANCO SUQUÍA S.A.

25 de Mayo 160

City of Córdoba

We have audited the accompanying balance sheets of NUEVO BANCO SUQUÍA S.A. (a bank organized under Argentine legislation) as of December 31, 2004 and 2003, and the related statements of income, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2004. These financial statements are the responsibility of the Bank’s Management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Bank’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nuevo Banco Suquía S.A. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended, in accordance with the accounting principles prescribed by the Central Bank of Argentine Republic, which differ in certain respects from the accounting principles generally accepted in the United States of America (see Note 20 to the financial statements).

City of Buenos Aires, Republic of Argentina

September 30, 2005

PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.

Member of Ernst & Young Global

Norberto M. Nacuzzi

Partner

F-234

Nuevo Banco Suquía S.A.

Balance sheets

As of December 31, 2004 and 2003

			2004			2003
			(stated in thousands of pesos)
ASSETS
CASH
	Cash on hand			105,875			111,050
	Due from banks and correspondents			204,521			240,228
	Other			105			103
				310,501			351,381
GOVERNMENT AND PRIVATE SECURITIES
	Holdings for trading or intermediation			3,519			8,322
	Unlisted Government securities			298,732			270,254
	Instruments issued by the Central Bank of Argentine Republic			359,616			137,272
	Investments in listed private securities			13,386			4,819
	Less: Allowances			(2,471	)		—
				672,782			420,667
LOANS
	To the non-financial government sector			303,990			280,044
	To the financial sector			47,504			—
	To the non-financial private sector and foreign residents			773,553			365,771
		Overdrafts		164,356			67,880
		Documents		109,724			49,548
		Mortgage loans		169,668			78,619
		Collaterals loans		151,158			39,864
		Personal loans		31,667			9,533
		Credit cards		23,727			60,379
		Other		78,288			32,231
		Accrued Interest, adjustments and foreign exchange differences receivable		46,705			29,120
	Less: Unearned discount			(1,740	)		(1,403	)
	Less: Allowances			(143,495	)		(31,606	)
				981,552			614,209
OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentine Republic			23,471			4,989
	Amounts receivable from spot and forward sales pending settlement			233,159			—
	Other receivables not covered by debtor classification regulations			393,212			512,920
	Other receivables covered by debtor classification regulations			72,770			39,183
	Accrued interest receivable not covered by debtors classification regulations			657			—
	Less: Allowances			(102,767	)		(18,300	)
				620,502			538,792

F-235

Nuevo Banco Suquía S.A.

			2004			2003
			(stated in thousands of pesos)
INVESTMENTS IN OTHER COMPANIES
	In financial institutions			182			—
	Other			2,032			847
	Less: Allowances			(321	)		—
				1,893			847
OTHER RECEIVABLES
	Receivables from sale of assets			715			342
	Shareholders			—			11,250
	Other			20,477			24,504
	Accrued interest and adjustments receivable from sale of assets			156			91
	Other accrued interest and adjustments receivable			—			11
	Less: Allowances			(1,689	)		(574	)
				19,659			35,624
BANK PREMISES AND EQUIPMENT, NET				47,116			50,199
OTHER ASSETS				24,947			20,316
INTANGIBLE ASSETS
	Organization and development costs			608			632
				608			632
ITEMS PENDING ALLOCATION				180			359
		TOTAL ASSETS		2,679,740			2,033,026

F-236

Nuevo Banco Suquía S.A.

Balance sheets

As of December 31, 2004 and 2003

				2004		2003
				(stated in thousands of pesos)
LIABILITIES
DEPOSITS
	From the non-financial government sector				1,447		419
	From the financial sector				605		636
	From the non-financial private sector and foreign residents				1,541,658		1,340,702
		Checking accounts			364,301		304,958
		Savings accounts			297,481		170,712
		Certificates of deposit			731,370		690,483
		Investment accounts			13,809		—
		Other			111,581		137,886
		Accrued Interest, adjustments and foreign exchange differences payable			23,116		36,663
					1,543,710		1,341,757
OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION
	Central Bank of Argentina—Other				483,686		506,664
	Amounts payable for spot and forward purchases pending settlement				1		—
	Securities and foreign currency to be delivered under spot and forward sales pending settlement				233,108		—
	Financing received from Argentine financial institutions				204		268
	Other				59,767		36,787
	Accrued Interest, adjustments and foreign exchange differences payable				17,100		3,302
					793,866		547,021
OTHER LIABILITIES
	Fees				—		268
	Other				13,461		16,642
	Accrued Interest, adjustments and foreign exchange differences payable				78		231
					13,539		17,141
PROVISIONS					16,996		37,902
ITEMS PENDING ALLOCATION					4,331		7,836
			TOTAL LIABILITIES		2,372,442		1,951,657
SHAREHOLDERS’ EQUITY					307,298		81,369
			TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		2,679,740		2,033,026

F-237

Nuevo Banco Suquía S.A.

Memorandum accounts

		2004		2003
		(stated in thousands of pesos)
DEBIT ACCOUNTS
Contingent
—Guaranties received			990,109		583,617
—Contingent debit-balance contra accounts			36,524		23,242
			1,026,633		606,859
Control
—Receivables classified as irrecoverable			344,747		—
—Other			550,514		594,910
—Control debit-balance contra accounts			35,677		29,199
			930,938		624,109
	TOTAL		1,957,571		1,230,968
CREDIT ACCOUNTS
Contingent
—Unused portion of loans granted and covered by debtor classification regulations			22,618		7,203
—Other guarantees provided covered by debtor classification regulations			7,440		6,091
—Other covered by debtor classification regulations			6,466		9,948
—Contingent credit-balance contra accounts			990,109		583,617
			1,026,633		606,859
Control
—Checks to be credited			35,677		29,199
—Control credit-balance contra accounts			895,261		594,910
			930,938		624,109
	TOTAL		1,957,571		1,230,968

The accompanying notes 1 through 20 to the financial statements are an integral part of these statements.

F-238

Nuevo Banco Suquía S.A.

Statements of income for fiscal years

Ended December 31, 2004 and 2003

	2004		2003
	(stated in thousands of pesos)
FINANCIAL INCOME
Interest on cash and due from banks		1,931		2,824
Interest on loans to the financial sector		302		149
Interest on overdrafts		16,377		13,165
Interest on documents		8,739		10,361
Interest on mortgage loans		13,081		5,095
Interest on collateral loans		13,140		3,234
Interest on credit card loans		4,131		9,374
Interest on other loans		13,352		4,731
Interest on other receivables from financial intermediation		—		3
Income from government and private securities, net		39,716		100,429
Income from guaranteed loans—Presidential Decree 1,387/01		8,459		7,723
C.E.R. (Benchmark Stabilization Coefficient) adjustment		42,418		46,953
C.V.S. (Salary Variation Coefficient) adjustment		4,583		6,200
Other		20,132		13,858
		186,361		224,099
FINANCIAL EXPENSE
Interest on checking accounts		1,170		1,222
Interest on savings accounts		1,576		1,873
Interest on certificates of deposit		26,677		81,416
Other Interest		15,617		23,551
C.E.R. adjustment		54,166		19,725
Other		7,992		10,145
		107,198		137,932
GROSS INTERMEDIATION MARGIN—GAIN		79,163		86,167
PROVISION FOR LOAN LOSSES		124,682		800
SERVICE-CHARGE INCOME
Related to lending transactions		3,104		741
Related to deposits		71,355		53,477
Other fees		5,912		4,307
Other		13,361		9,877
		93,732		68,402
SERVICE-CHARGE EXPENSE
Fees		19,596		16,443
Other		5,252		3,528
		24,848		19,971
MONETARY LOSS ON FINANCIAL INTERMEDIATION		—		(508	)

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	2004			2003
	(stated in thousands of pesos)
ADMINISTRATION EXPENSE
Personnel expenses		76,803			70,614
Director’s and statutory auditor’s fees		669			268
Other professional fees		1,474			1,068
Advertising and publicity		1,712			1,780
Taxes		3,770			3,580
Other operating expenses		25,581			23,725
Other		3,203			2,209
		113,212			103,244
MONETARY INCOME ON OPERATING EXPENSE		—			15
NET (LOSS)/ INCOME FROM FINANCIAL INTERMEDIATION		(89,847	)		30,061
OTHER INCOME
Income from long-term investments		—			147
Penalty interest		1,157			3,311
Recovered loans and allowances reversed		39,117			1,048
Other		6,853			6,061
		47,127			10,567
OTHER EXPENSE
Loss from long-term investments		74			—
Charge for other-receivables uncollectibility and other allowances		17,217			37,950
C.E.R. adjustment		26			17
Other		2,784			1,724
		20,101			39,691
MONETARY INCOME ON OTHER OPERATIONS		—			14
NET (LOSS)/ INCOME BEFORE INCOME TAX		(62,821	)		951
INCOME TAX		—			—
NET (LOSS)/ INCOME FOR THE FISCAL YEAR		(62,821	)		951

The accompanying notes 1 through 20 to the financial statements are an integral part of these statements.

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Statements of changes in shareholders’ equity

For fiscal years ended December 31, 2004 and 2003

				Irrevocable
				contributions
				on account of			Adjustments to			Earnings reserved
		Capital		future capital			shareholders’							Unappropriated
Movements		stock(1)		increases			equity			Legal		Voluntary		earnings			Total
		(stated in thousands of pesos)
Balances as of December 31, 2002			15,000		—			60			—		—		65,441			80,501
Distribution of unappropriated earnings approved by the Shareholders’ Meeting of April 24, 2003:
	Legal reserve		—		—			—			13,078		—		(13,078	)		—
Other movements			—		—			(83	)		—		—		—			(83	)
Net income for the fiscal year			—		—			—			—		—		951			951
Balances as of December 31, 2003			15,000		—			(23	)		13,078		—		53,314			81,369
Distribution of unappropriated earnings approved by the Shareholders’ Meeting of April 30, 2004:
	Legal reserve		—		—			—			186		—		(186	)		—
Irrevocable contributions on account of future capital increases received on December 22, 2004(2)			—		288,750			—			—		—		—			288,750
Capital stock increase approved by the
	Shareholders’ Meeting of December 22, 2004(2)		288,750		(288,750	)		—			—		—		—			—
Net (loss) for the fiscal year			—		—			—			—		—		(62,821	)		(62,821	)
Balance as of December 31, 2004			303,750		—			(23	)		13,264		—		(9,693	)		307,298

(1)	Integrated by 303,750,000 and 15,000,000 ordinary shares of face value Ps.1 each and one vote per share, as of December 31, 2004 and 2003, respectively. As of the date of these financial statements, the capital is subscribed and paid-in.
(2)	See note 1.b).

The accompanying notes 1 through 20 to the financial statements are an integral part of these statements.

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Statements of cash flows for the fiscal years

Ended December 31, 2004 and 2003

			2004			2003
			(stated in thousands of pesos)
Cash provided by (used in) operating activities
	Financial income collected			152,835			193,642
	Service-charge income collected			93,732			68,402
	Other sources of cash			7,961			10,542
Less:
	Financial expenses paid			(97,277	)		(217,721	)
	Services-charge expenses paid			(28,160	)		(16,175	)
	Administrative expenses paid			(110,306	)		(113,115	)
		Net cash provided by/ (used in) operating activities		18,785			(74,425	)
Plus:
Cash provided by (used in) investing activities
	(Increase) in government and private securities			(253,157	)		(415,172	)
	(Increase) in loans			(414,733	)		(478,091	)
	(Increase )/ decrease in other receivables from financial intermediation			(124,267	)		755,442
	(Increase) in other assets			(3,249	)		(75,819	)
		Net cash used in investing activities		(795,406	)		(213,640	)
Plus:
Cash provided by (used in) financing activities
	Capital increase			300,000			—
	Increase in deposits			215,500			387,983
	(Decrease)/ increase in other liabilities			(2,969	)		1,024
	Increase/ (decrease) in other liabilities from financial intermediation			223,210			(6,530	)
		Net cash provided by financing activities		735,741			382,477
	Monetary loss generated on cash			—			(2,065	)
	(Decrease)/ Increase in cash and cash equivalents			(40,880	)		92,347
	Cash and cash equivalents at the beginning of fiscal year (restated)			351,381			259,034
	(Decrease)/ Increase in cash and cash equivalents			(40,880	)		92,347
	Cash and cash equivalents at the end of the fiscal year			310,501			351,381

The accompanying notes 1 through 20 to the financial statements are an integral part of these statements.

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Notes to the Financial Statements

As of December 31, 2004 and 2003

(Stated in thousands of pesos)

1. COMPANY ORGANIZATION AND SALE OF CAPITAL STOCK

a)     Company organization

As a result of the illiquidity situation resulting from the permanent cash withdrawals made by the depositors of the former Banco Suquía S.A., on May 17, 2002, the former Banco Bisel S.A., acting on its own account and in its capacity as parent of the former Banco Suquía S.A., requested that the Central Bank of Argentine Republic (the Central Bank) consider the possibility of implementing the procedure provided for in section 35 bis of the Financial Institutions Law. The grounds for such request were that the controlling shareholder of the group, Crédit Agricole S.A., had resolved not to make new capital contributions to its subsidiaries and that the Central Bank had refused to continue to provide liquidity.

Consequently, Central Bank Resolution No. 95 dated May 19, 2002, established the discontinuance of operations of the former Banco Suquía S.A. under section 49 of Central Bank charter and its reorganization under section 35 bis of Financial Institutions Law, in defense of the depositors’ interests.

According to such resolution, the Central Bank resolved to:

†	Suspend the activities of Banco Suquía S.A. for a 120-day term. This term expired on September 16, 2002.
†	Approve the establishment of the Suquía trust, designating Banco de la Nación Argentina as trustee, which received certain (“excluded”) assets from the former Banco Suquía S.A.
†	Authorize Nuevo Banco Suquía S.A. to operate as a retail commercial bank, assuming the secured liabilities of the former Banco Suquía S.A. and Central Bank rediscounts.
†	Authorize Banco de la Nación Argentina to be the majority shareholder of the new bank, establishing that the former should take the necessary actions to manage, stabilize and sell its ownership interest in the latter as soon as possible, according to the relevant effective regulations.

Simultaneously, the former Banco Suquía S.A., in its capacity as trustor, Banco de la Nación Argentina, in its capacity as trustee, and Nuevo Banco Suquía S.A., in its capacity as beneficiary, signed the Suquía trust agreement. The purpose of the Suquía trust was to transfer the fiduciary ownership of certain assets from the former Banco Suquía to Banco de la Nación Argentina for their management and realization in favor of the trust’s beneficiaries. In this respect, the trust, issued privileged Class “A” and subordinated Class “B” certificates of participation, the beneficiaries of which were Nuevo Banco Suquía S.A. and the former Banco Suquía, respectively.

The Class “A” certificate of participation was issued for a value equal to the nominal value of the liabilities assumed by the new bank, plus those arising subsequently from legal decisions resulting in an increase to the deposits transferred plus accrued interest (at the rate applied by the Central Bank for rediscounts or the rate equal to C.E.R. (Coeficiente de Estabilización de Referencia— Benchmark Stabilization Coefficient) for that month, plus a nominal 5% rate p.a., whichever higher). The Class “A” certificate of participation was entirely held by Nuevo Banco Suquía S.A., which amounted to 25,551 and 512,920 as of December 31, 2004, and 2003, respectively. As explained in note 2.c), full allowances were set up for these amounts as of December 31, 2004.

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The Class “B” certificate of participation is subordinated to the Class “A” certificate of participation and was issued for an amount equal to that of the remaining corpus assets.

As a result, Nuevo Banco Suquía S.A. began operations on May 22, 2002. Its bylaws were approved by Resolution No. 56 of the Argentine Ministry of Economy on June 4, 2002. Its registered office was established in the City of Buenos Aires to act as a commercial bank. Banco de la Nación Argentina subscribed for 99% of the capital stock and Fundación Banco de la Nación Argentina subscribed for the remaining 1%.

b)     Sale of capital stock

On April 30, 2004, once the bidding process had been completed, Banco de la Nación Argentina and Banco Macro Bansud executed a preliminary sale agreement for 100% of the shares of Nuevo Banco Suquía S.A., subject to the Central Bank’s approval.

On December 9, 2004, through Resolution No. 361/04, the Central Bank’s Board of Governors resolved not to make any findings on the transfer of shares from Nuevo Banco Suquía S.A. to Banco Macro Bansud S.A., thus effectively approving the transaction. This transfer took place on December 22, 2004, the date on which the new shareholder also made the capital contribution amounting to 288,750 pursuant to the abovementioned bidding process.

A Special Shareholders’ Meeting was held on January 19, 2005, where the shareholders approved, among other issues, the change of the Bank’s registered office to the City of Córdoba. The new registered office was registered with Inspección de Personas Jurídicas de la Provincia de Córdoba (Business Associations Regulatory Agency of the Province of Córdoba).

Finally, on March 14, 2005, Banco Macro Bansud S.A. transferred 0.01646% of the Bank’s capital stock to certain shareholders. Therefore, as of December 31, 2004, its ownership interest was 99.98354%.

2. THE BANK, THE ARGENTINE MACROECONOMIC ENVIRONMENT AND FINANCIAL SYSTEM

The Argentine economic and financial situation worsened in 2001, when the government suspended payments on the sovereign debt and imposed severe restrictions on cash withdrawals from financial institutions.

In early 2002, the Argentine Congress enacted Public Emergency and Foreign Exchange System Reform Law No. 25,561. This law introduced significant changes to the economic model implemented until that date and amended Convertibility Law (the currency board that pegged the Argentine peso at parity with the US dollar). In addition, different mechanisms were implemented to convert foreign-currency payables and deposits into pesos (known as pesification) and severe foreign exchange restrictions.

Subsequently, the Federal Government has instituted a significant amount of other measures such as compensation for the asymmetrical pesification and application of C.E.R./ C.V.S. (Coeficiente de Estabilización de Referencia/ Coeficiente de Variación Salarial) adjustments (consumer price coefficients based on inflation and salary levels), the government debt restructuring, signing of the Letter of Intent with the International Monetary Fund, relaxation of foreign-exchange controls, final exchange phase of provincial debt instruments, restructuring of private-sector debts and lifting of restrictions on bank deposits.

On January 14, 2005, the Federal Government started the restructuring process for a substantial part of Argentina’s sovereign debt, in default since late 2001. The process included a significant reduction in the principal owed as well as reduction in interest rates and extension of payment terms. For this purpose, the Federal Government offered three types of bonds in exchange for the defaulted securities,

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as established by Presidential Decree No. 1,753/04. Additionally, the Government announced that it was not planning to make any payments on the debt not submitted to the restructuring process. The exchange period came to an end on February 25, 2005. The acceptance level by the sovereign debt holders received by the exchange offer was significant. On March 3, 2005, the Federal Government announced the outcome of the exchange, the degree of acceptance of which amounted to 76%. This implied that Argentina was no longer in default on its sovereign debt.

The presentation of the financial statements requires Management to make estimates and assumptions that affect the reported figures of assets, liabilities income, expenses and contingencies. The actual amounts and results could differ from these estimates.

These financial statements should be read in the light of the events explained above.

The following are the measures implemented by the Argentine Government since the late 2001 economic crisis. Certain measures are still prevailing as of the date of these financial statements. Additionally, below are descriptions of the actions implemented by the Bank to address such effects.

a) Financial institutions compensation

1) For the effects of the devaluation and compulsory pesification

According to the provisions of Law No. 25,561 and sections 2, 3 and 6 of Presidential Decree No. 214/02, as amended and supplemented, a significant portion of assets and liabilities in foreign currency were converted into pesos in early 2002. The compensation to be provided to financial institutions was established in Sections 28 and 29 of Presidential Decree No. 905/2002 dated June 1, 2002.

Under such sections, the Argentine Ministry of Economy was to provide financial institutions with Argentine Government Bonds (BODEN) denominated in Argentine pesos and/or US dollars as a full and final compensation for the negative equity effects arising from pesification at an asymmetrical exchange rate of receivables and payables denominated in foreign currency, as well as for the net negative position in foreign currency resulting from their pesification.

At the end of 2004, the Central Bank completed reviewing the calculation of the compensation for the asymmetric pesification of the foreign currency position of the former Banco Suquía prior to devaluation. Several changes were made to the regulations and interpretation criteria of the process that, due to its complexity, resulted in several adjustments that the Central Bank required from the Bank and were recorded. Upon completion of Central Bank’s review, the final amounts were determined and only the formal delivery of the bonds is still pending.

Also, as of December 31, 2004, the Bank disclosed in “Other receivables from financial intermediation— Other receivables not covered by debtor classification regulations”, the compensation receivable in federal government bonds (BODEN 2007 and BODEN 2012) for 347,694. As of December 31, 2003, there was no such an amount (these assets were redeemed from the Suquía trust during 2004).

2) For the effects of the asymmetric indexation

Law No. 25,796 and Presidential Decree No. 117/2004 allowed for compensation to financial institutions of up to 2,800,000 to compensate fully, solely and definitively the effects caused by effective general rules, whereby the CVS (salary variation coefficient) and C.E.R. became applicable to some assets and liabilities of the bank, respectively. The Central Bank set forth the procedural rules to compensate each financial institution, following the criteria established by law.

Thus, as of December 31, 2003, the Bank recorded 18,105 (net of allowances) for the estimated amount of compensation to be received.

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During the year ended December 31, 2004, the Bank decided not to join the abovementioned compensation system. In consequence, the above mentioned compensation was charged off to income statement.

b) Financial assistance to the government sector

1) Guaranteed Loans— Decree No. 1,387/2001

On November 1, 2001, through Presidential Decree No. 1,387/01, the Federal Executive instructed the Ministry of Economy to offer, i.e. on a voluntary basis, to exchange federal and provincial government debts for secured-loan certificates issued and to be paid by the Federal Government or the FFDP (Provincial Development Trust Fund), with the aim of reducing interest rates of the securities to be exchanged and extending amortization terms.

In late 2001, Presidential Decrees No. 1,387/01 and 1,646/01 established the basic terms and characteristics of the exchange of Argentine public-sector debt securities and loans for new loans called Guaranteed Loans and their characteristics. Subsequently, Presidential Decree No. 471/02 established, among other things, the pesification of all federal, provincial and municipal government obligations denominated in foreign currency under Argentine law, at the Ps. 1.40 to USD 1 exchange rate, or its equivalent in any other currency, and adjusted by C.E.R. and the interest rate applicable to each type of government security and guaranteed loan, on the basis of its average life and original currency. “C.E.R.” is an inflation adjustment coefficient based on changes in the consumer price index, which became effective as from February 3, 2002 and it is published by I.N.D.E.C. (Instituto Nacional de Estadística y Censos— Argentine Institute of Statistics and Census).

Subsequently, the Federal Executive issued Presidential Decree No. 644/02 establishing the steps to be followed by institutions to accept the new conditions (pesification at the rate of Ps 1.40 to USD 1.00, application of CER, and change of the interest rate) in order to receive principal and interest payments on guaranteed loans. Should the new exchange conditions not be accepted, the original government securities, i.e. those submitted for exchange for guaranteed loans certificates, would be reverted to.

The Bank redeemed from the Suquía trust certain guaranteed loans, which were recorded in the “Loans to the non-financial government sector” account totaling 229,360 and 217,891 in the financial statements as of December 31, 2004, and 2003, respectively.

Also, the Bank complied with the provisions of Presidential Decree No. 739/03, which allows the Bank to settle the illiquidity rediscount payables to the Central Bank in the same amount of installments, not exceeding 70, as those of assets provided as security. In the case of the Bank, these assets are made up of most of the abovementioned guaranteed loans and bonds.

However, it is noteworthy that the Bank, making use of the option established by Central Bank Communiqués “A” 4,268 and “A” 4,282, fully repaid the remaining amount of rediscount on February 2, 2005.

A.F.I.P. (Administración Federal de Ingresos Públicos— Federal Public Revenue Agency) and other agencies’ administrative proceedings have had different interpretations regarding the exemption of guaranteed loans from the pesification and the C.E.R. adjustment. The Bank has considered the income mentioned in the preceding paragraph to not be subject to income tax; consequently, its effect on the calculations of income tax accrual was not considered.

2) Provincial debt exchange— Law No. 25,570

On October 25, 2002, the Ministry of Economy issued Resolution No. 539/02 describing the mechanism to exchange eligible provincial debt provided in sections 1 and 12, Presidential Decree

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No. 1,579/02. As of the date of issuance of these financial statements, such bonds were delivered at different stages, depending on the provincial governments involved.

In prior years, the Bank received from the Suquía trust secured bonds (BOGAR) arising from the pesification of debts of the Provinces of Córdoba, Salta, Entre Ríos and Mendoza.

Finally, on June 6, 2005, the loan granted to the Municipality of the City of Córdoba was restructured through the exchange for secured bonds.

As of December 31, 2004, and 2003, such secured bonds were recorded in the “Unlisted government securities” account totaling 289,430 and 270,254, respectively.

3) Exchange of government debt

Presidential Decrees Nos. 1,733 and 1,735 were issued on December 10, 2004. They established the restructuring of the Argentine Government bonds; the payment of such bonds was deferred as provided for in Section 59, Law No. 25,827 through a domestic and international exchange transaction. Such transaction should be carried out within the scope and terms and conditions detailed in such decrees and in the offer prospectus.

The restructuring comprised a global exchange offer with holders in the United States, Argentina and several countries in Europe and Asia. The government securities eligible for restructuring include all securities issued before December 31, 2001. Three new debt securities (par, quasi-par and discount) were issued with a separable unit linked to GDP, replacing the government securities eligible for restructuring. All of them mature from 30 to 42 years as from December 31, 2003, at interest rates ranging from 1.33% to 8.28%.

In January 2005, the exchange was launched in Argentina and the terms and conditions of the offer were presented in Europe and the U.S. The final acceptance level was about 76%.

The bonds were finally exchanged in June 2005 by transferring discount bonds that the Bank had selected for the exchange of the government securities eligible for restructuring. As of June 30, 2005, the securities involved in this process amounted to 1,654.

Considering that Central Bank’s rules do not require setting minimum loan loss provisions, they do not require setting any allowance for the credit assistance granted to this sector. Also, in light of the successful closing of the government debt exchange process mentioned above and considering that the Federal Government is complying with the maturities of its liabilities, including those specified above, the Bank does not record any loan loss provisions for such financing.

c) Outstanding issues related to the payment of the certificate of participation in the Suquía trust

As a result of the former Banco Suquía’s closing process, the establishment of the Suquía trust and the organization of Nuevo Banco Suquía S.A., as mentioned in note 1, the excluded assets of the former Banco Suquía S.A., pursuant to Resolution No. 581 of Central Bank’s Board of Governors, were transferred to the Suquía trust.

Nuevo Banco Suquía S.A. received assets, from the trust in exchange for Class “A” certificate of participation held by Nuevo Banco Suquía S.A.

Although as of the date of issuance of these financial statements, some bank premises and equipment have not yet been appraised and a portion of the loan portfolio received and classified in a situation other than normal, as established in the trust agreement, has not yet been valued, the Bank’s Management has concluded that the effect of these pending appraisals and valuations will not be material to the financial statements taken as a whole.

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The Class “A” certificate of participation in the Suquía trust amounting to 25,551 and 512,920 as of December 31, 2004, and 2003, respectively was recorded in the “Other receivables from financial intermediation— Other not covered by debtor classification standards” account. Based on estimates the recoverability of the trust’s remaining assets and the potential results of the appraisals and valuations of the assets referred to in the preceding paragraph, 100% allowances were recorded for these amounts as of December 31, 2004.

d) Deposits. Rescheduling of amounts. Exchange for Argentine government bonds

(Exchange I and II)

As a result of the economic crisis, the Federal Executive has issued Decree No. 1,570/2001 establishing severe restrictions on the withdrawal of funds from financial institutions. Subsequently, a number of rules were issued that established a schedule for rescheduled maturity of deposits existing in the financial system (CEDROS). The Central Bank, through a series of communiqués, established the dates for the reimbursements of deposits based on their currency and amounts.

As part of the process related to lifting restrictions on bank deposits, the Federal Executive Branch established Exchanges I and II for financial system deposits. Through those exchanges, holders of deposits could opt for receiving government securities in consideration for their rescheduled deposits.

In relation to Exchange I, the Bank received requests from its depositors for Argentine government bonds amounting to approximately 231,044. On September 9, 2002, the Bank requested loans in pesos to acquire “Federal Government Bonds in US dollars at LIBOR maturing in 2005”, “Federal Government Bonds in pesos at 2% maturing in 2007” and “Federal Government Bonds in US dollars at LIBOR maturing in 2012”, as established in point 2(4)2 of Central Bank Communiqué “A” 3,717 in the amount of 161,869. In such request, the Bank offered as security a first pledge on Class “A” certificate of participation in the Suquía financial trust (see note 6.4).

In relation to Exchange II, the Bank received requests from its depositors amounting to 13,119 (principal). As of the date of issuance of these financial statements, the subscription and delivery of such bonds is being implemented by the Federal Government.

As of December 31, 2004, and 2003, the Bank carried 52,218 and 104,405, respectively, in rescheduled deposits (CEDROS).

e) Legal actions

The measures adopted by the Federal Executive in 2002 with respect to the situation of public emergency in political, economic, financial and foreign exchange matters triggered a number of legal actions brought by individuals and companies against the Federal Government, the Central Bank and financial institutions for claiming that some of those measures infringed upon their constitutional rights (“amparos”).

In the particular case of deposits denominated in foreign currency, the trial courts began to order the partial or total reimbursement of such deposits, either in foreign currency or at the free-exchange rate at the time of reimbursement, until a final pronouncement was made as to the constitutionality of the pesification of foreign-currency deposits, as previously established.

Some of such claims were filed with the Argentine Supreme Court, which decided whether the judgments granted by the lower courts were constitutional or not depending on each particular case. The last judgment passed by the Supreme Court established the constitutionality of the process but some aspects remained undefined. It should be noted that the effects of the Supreme Court’s judgment were limited to the parties to each case, which may change in the future. Nevertheless, lower courts usually follow and apply Supreme Court precedents.

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If the courts make a final favorable decision on the constitutionality of pesification of foreign-currency deposits (e.g. if a decision similar to the abovementioned last judgment is pronounced), the Bank would be entitled to require the reimbursement of the amounts paid in excess of the amount required by effective regulations. Conversely, if the courts decide that deposits should be reimbursed in foreign currency, then there may be further claims against the Bank. However, the Bank’s management believes that these additional payments should be eventually included in the compensation mechanisms implemented to compensate financial institutions for the effects of the asymmetrical pesification of their assets and liabilities.

As of the date of the respective report, there still is uncertainty as to the final court decisions and their potential effects on: (i) the recoverability of the capitalized amounts; (ii) those depositors’ claims sustained, but only as to the delivery of a portion of the original amount in US dollars; and (iii) the contingent risk of potential additional legal claims pending with courts as to which no judgment has yet been issued on the constitutional actions.

As established in the Suquía trust establishment agreement, the amounts that Nuevo Banco Suquía S.A. should pay in excess of the amount of such pesified deposits and adjusted according to effective regulations, mainly resulting from US dollar-exchange differences, shall be compensated by the Suquía trust by increasing the amount of the Class “A” certificate of participation issued by such trust fund.

In the event that the trust’s assets are not enough to cover the higher amounts paid in this respect, they may be recorded in the “Intangible assets” account, in accordance with Central Bank’s rules, and the Bank will analyze the actions to be taken to recover them.

To date, the Bank has been able to compensate the constitutional rights protection actions paid to its depositors with the increase of Class “A” certificate of participation in the Suquía trust.

In light of the complexity of the issue, and considering that those situations may result in gain or loss contingencies, whose likelihood of occurrence is considered to be more than remote but less than probable, the related amount or range of the amount involved cannot be estimated.

3. SIGNIFICANT ACCOUNTING POLICIES

The preparation of the Bank’s financial statements requires Management to make, in certain cases, estimates and assumptions to determine the book amounts of assets and liabilities, as well as the disclosure of contingent assets or liabilities as of each of the dates of presentation of the accounting information included in these financial statements.

Management records entries based on the best estimates according to the likelihood of occurrence of different future events and the final amounts may differ from such estimates, which may have a positive or negative impact on future periods.

3.1.     Comparative information

The financial statements for the fiscal year ended December 31, 2004 are presented comparatively with the financial statements for the year ended December 31, 2003.

3.2.     Restatement in constant pesos

The accounting standards in Argentina require financial statements to be stated in constant pesos. In a monetary stability context, the nominal currency is used as constant currency, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the domestic WPI (Wholesale Price Index) published by the I.N.D.E.C, under F.A.C.P.C.E. (Federación Argentina de Consejos Profesionales de

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Ciencias Económicas— Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 6 restatement method.

The Bank’s financial statements, recognize the changes in the peso purchasing power until February 28, 2003, under Presidential Decree No. 664/2003, C.N.V. (Comisión Nacional de Valores— Argentine Securities and Exchange Commissions) General Resolution No. 441 and Central Bank Communiqué “A” 3,921. Professional accounting standards provide that the restatement method established by Technical Resolution No. 6 should have been discontinued as from October 1, 2003.

The accounting information is restated in constant currency on a monthly basis, using I.N.D.E.C.’s domestic WPI measurements.

3.3.     Valuation methods

These financial statements have been prepared under Central Bank’s rules.

a)     Assets and liabilities denominated in foreign currency

As of December 31, 2004 and 2003, the assets and liabilities denominated in US dollars were valued at Central Bank benchmark US dollar exchange rate effective as of the closing date of transactions on the last business day of each year-end. Additionally, assets and liabilities denominated in other foreign currencies were converted at Central Bank’s benchmark exchange rate. Foreign exchange differences were recorded in the income statement for each year-end as foreign exchange, net.

b)     Government and private securities

1) Listed government securities

Holdings for trading or intermediation transactions: they were stated at the effective quoted price for each security as of each year-end. Differences in quoted market values were recorded in the income statement for each year-end.

2) Unlisted government securities

i)     Secured bonds under Presidential Decree No. 1,579/02 and Tax Credit Certificates: as of December 31, 2004 and 2003, they were valued as established by Central Bank Communiqué “A” 3,911 and 4,084, as supplemented, at the lower of net present value or notional value. The difference between the determined value and the notional value, calculated as established in point 3 of Central Bank Communiqué “A” 4,084, was reflected in the income (loss) for each year.

In the case of peso- denominated instruments which include indexation clauses (C.E.R.), the present value was calculated based on cash flows according to the contractual conditions (taking into account, if applicable, the accumulated C.E.R. accrual by month-end), discounted at the interest rates established in point 2 of such Communiqué (for the year ended December 31, 2004: 3.50% and for the year ended December 31, 2003: 3%). Such calculations were made following specific guidelines established in such Communiqué (present value rate, certain effects determined for the aggregation of securities and guaranteed loans, among others).

In the case of peso-denominated instruments which do not include indexation clauses, Central Bank Communiqué “A” 4,163 established the methodology to calculate their present values. Thus, the interest rate used to discount the cash flows for the fiscal year ended December 31, 2004, was 3.71%

ii)     Instruments issued by the Central Bank— LEBAC (Central Bank bills): they were valued at their face value, adjusted by C.E.R., plus interest accrued until each year-end, applying the rates stipulated in their issuance conditions.

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3)     Investments in listed private securities

As of December 31, 2004 and 2003, they were valued at the effective quoted price at year-end. Market value differences were recorded in the income statement for each year-end.

c)     Loans and Other Assets from the Non-Financial Government Sector

The guaranteed loans certificates issued by the Federal Government under Presidential Decree No. 1,387/01 and other loans to the non-financial government sector were valued as established by Central Bank Communiqué “A” 3,911, as supplemented, at the lower of net present value or notional value. The difference between the determined value and the notional value, calculated as established in point 3 of Central Bank Communiqué “A” 4,084, was reflected in the income (loss) for each year.

In the case of peso- denominated instruments which include indexation clauses, the present value was calculated based on cash flows according to the contractual conditions (taking into account, if applicable, the accumulated C.E.R. accrual by month-end), discounted at the interest rates established in point 2 of such Communiqué (for the year ended December 31, 2004: 3.50% and for the year ended December 31, 2003: 3%). Such calculations were made following specific guidelines established in such Communiqué (present value rate, certain effects determined for the aggregation of securities and guaranteed loans, among others).

In the case of peso-denominated instruments which do not include indexation clauses, Central Bank Communiqué “A” 4,163 established the methodology to calculate their present values. Thus, the interest rate used to discount the cash flows for the fiscal year ended December 31, 2004, was 3.71%.

d)     Interest accrual

Interest has been accrued by a compound interest when earned, except interest on foreign currency and interest whose maturity does not exceed 92 days, on which interest has been accrued by a simple interest formula.

The Bank suspends the accrual of interest generally when the related loan is non-performing and the collection of interest and principal is in doubt, generally after 90 days. Accrued interest remains on the Bank’s books and is considered a part of the loan balance when determining the allowances for loan losses. Interest is then recognized on a cash basis after reducing the receivable of accrued interest, if applicable.

e)     C.E.R. accrual

As of December 31, 2004 and 2003, receivables and payables have been adjusted by the C.E.R. as follows:

†	Guaranteed loans: they were indexed in accordance with Ministry of Economy Resolution No. 50/02, which provided that income and amortization payments related to these loans should be made considering the C.E.R. of ten business days before the due date of such payment.
†	Other loans: under Central Bank Communiqué “A” 3,507, as supplemented, the payments through September 30, 2002, were made under the original terms of each transaction and were recorded as prepayments. From February 3, 2002, the principal was adjusted by C.E.R. prevailing on December 31, 2004, and 2003, as the case may be.
†	Deposits and other assets and liabilities: the C.E.R. was applied as of December 31, 2004 and 2003, respectively.

f)     Allowance for loan losses and provisions for commitments

These provisions have been calculated based on the estimated uncollectibility risk of the Bank’s credit portfolio. This results from evaluating the degree of the debtors’ compliance and the guarantees and

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collateral supporting the respective transactions under Central Bank Communiqué “A” 2,950, as supplemented.

In cases where loans with specifically allocated provisions are settled and the specific provisions that had been established in previous years are greater than what is deemed necessary, the excess is reversed and recorded in current year profit.

Recoveries on charged off loans are recorded directly to income.

The Bank also assesses the credit risk associated with off-balance sheet commitments and determines the appropriate amount of credit loss liability that should be recorded. The liability for off-balance sheet credit exposure related to commitments is included in “Provisions” in the accompanying Balance Sheet.

g) Other receivables and Other liabilities from financial intermediation

g.1)     Amounts receivable from spot and forward sales pending settlement:

As of December 31, 2004, and 2003, they were valued based on the prices agreed upon for each transaction, plus related premiums accrued as of each year-end.

g.2)     Securities and foreign currency to be delivered under spot and forward sales pending settlement:

As of December 31, 2004 and 2003, they were valued at the listed prices of the respective instruments as of such dates. Listed-price differences were allocated to the income (loss) for each year-end.

g.3)     Compensation Bonds to be received (Decree No. 905/02):

As of December 31, 2004, the Compensation Bonds to be received by the Bank have been booked under the “Other receivables from financial intermediation— Other receivables not covered by debtor classification regulations” account, and were valued at their nominal value, plus interest accrued according to the issuance conditions, translated into pesos as described in Note 3.3.a), pursuant to Central Bank Communiqué “A” 3,785.

h) Certificate of participation in the Suquía trust

As of December 31, 2004, and 2003, the certificate of participation in the Suquía trust was stated at (ii) the nominal value, (ii) plus interest accrued at year-end, in accordance with clause 19(1)4 of the Suquía trust agreement, (iii) net of the redemptions made by the Bank in its capacity as beneficiary of the certificate of participation, as established by clause 19(1)5 of the second amendment to the Suquía trust agreement.

As of December 31, 2004, and 2003, such certificate was recorded in the “Other receivables from financial intermediation— Other not covered by debtor classification standards” account since such certificate is not publicly offered. As explained in note 2.c), as of December 31, 2004, the Bank established an allowance for the total amount of the abovementioned asset.

i) Investments in other companies

They were valued at cost, restated as explained in note 3.2., which does not exceed the value determined by the equity method.

j) Bank premises and equipment and other assets

They were valued at acquisition cost, restated as explained in note 3.2., less the related accumulated depreciation calculated under the straight line method and based on the estimated months of their useful life.

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As of December 31, 2004, the Bank’s branch network includes certain branches that were located in properties leased to the Bank (some of which are renewable for periods between 2 and 6 years).

The estimated future lease payments in connection with these properties are as follows:

	In thousands
Fiscal year end	of Ps.
2005		2,578
2006		2,027
2007		1,549
2008		771
2009		288
2010 and after		131
Total		7,344

As of December 31, 2004 and 2003 rental expenses amounted to 4,807 and 4,529 respectively.

k)     Intangible assets

They were valued at acquisition cost, restated as explained in note 3.2., less the related accumulated depreciation calculated based on the estimated months of their useful life over five years using the straight line method.

l)     Government securities deposited

They were valued at each security listed price as of each years-end, plus the related accrued interest. Listed-price differences and interest accrued were charged in the income statement for each year-end. They are included in the “Certificates of deposits” account.

m)     Provisions for liabilities

They represent contingencies not booked in other accounts in relation with existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. The Bank accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated.

n)     Severance pay

Severance pay is charged to income upon payment.

o)     Shareholders’ equity accounts

They are restated as explained in note 3.2., except for the “Capital Stock” account which has been maintained at original value. The adjustment resulting from its restatement as explained in note 3.2. is included in the “Adjustments to Shareholders’ Equity” account.

p)     Statement of Income Accounts

Accounts reflecting monetary transactions (financial income and expenses, service-charge income and service-charge expenses, administrative expenses, loan losses, etc.) which occurred during the fiscal year ended December 31, 2004, were computed at their historical value considering the monthly accrual; whereas for the fiscal years ended December 31, 2003, was restated as explained in note 3.2.

Accounts reflecting the effects on income of the sale, retirement or consumption of non-monetary assets were computed on the basis of the restated amounts of such assets which were restated as mentioned in note 3.2.

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The effect of inflation on the maintenance of monetary assets and liabilities through February 28, 2003, has been recognized in three accounts called “Monetary loss on financial intermediation”, “Monetary income on operating expenses” and “Monetary income on other operations”. These account include monetary transactions which were restated by applying adjustment coefficient to the historical amounts accrued on a monthly basis.

q)     Statement of cash flow

For the purpose of reporting cash flows, cash and cash equivalents include amounts set forth under “Cash” (“Cash on hand”, “Due from banks Correspondents” and “Others”). The statements of cash flows were prepared using the measurement methods prescribed by the Central Bank. Cash and cash equivalents represent instruments which are readily convertible to known amounts of cash and have original maturities of 90 days or less.

The Bank paid minimum presumed income tax of 3,440 and 2,056 for the years ended December 31, 2004 and 2003, respectively.

The Bank paid interest expense of 49,006 and 113,911 as of December 31, 2004 and 2003, respectively.

4. INCOME TAX AND MINIMUM PRESUMED INCOME TAX

The Bank calculates the income tax charge by applying the effective 35% rate to taxable income for the year, without giving effect to temporary differences between book and taxable income.

In fiscal year 1998, Law No. 25,063 established minimum presumed income tax for a ten-year term. This tax is supplementary to income tax; while the latter is levied on the taxable income for the year, minimum presumed income tax is a minimum levy assessment by applying the current 1% rate on the potential income of certain productive assets. Therefore, the Bank’s tax obligation for each year will be equal to the higher of these taxes. In the case of institutions governed by Financial Institutions Law, such law provides that they shall consider as taxable income 20% of their assets subject to tax after deducting those assets defined as non-computable. However, if minimum presumed income tax exceeds income tax in a given year, the excess may be credited as a payment towards any income tax in excess of minimum presumed income tax that may occur in any of the following ten years, once accumulated net operating losses (NOLs) have been used.

As of December 31, 2004 and 2003, the Bank did not accrue income tax because it carried a net operating loss as of those dates.

The accumulated minimum presumed income tax amounting to 10,129 as of December 31, 2004, was capitalized in the “Other receivables— Other” account. Pursuant to Central Bank Communiqué “A” 4,295, tax credits break down as follows:

	Tax credit		Estimated year to
Year of origin	capitalized		use the tax credit
2002		2,075		2009
2003		3,791		2009
2004		4,263		2009
		10,129

The Bank capitalized this amount, which is considered to be an asset because Management estimates it will be used within ten years, which is the period allowed by The Central Bank Communiqué “A” 4,295, as supplemented.

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5. DIFFERENCES BETWEEN CENTRAL BANK’s RULES AND PROFESSIONAL ACCOUNTING STANDARDS EFFECTIVE IN THE PROVINCE OF CORDOBA, ARGENTINA

On December 8, 2000, the Board of Governance of the F.A.C.P.C.E. approved Technical Resolutions Nos. 16, 17, 18.19, and 20 incorporating amendments to professional accounting valuation and disclosure standards. On February 28, 2002, the Professional Council in Economic Sciences of the Province of Córdoba approved such standards with certain amendments, which are mandatorily effective for the years beginning January 1, 2003, except for Technical Resolution No. 21, which is effective for the years beginning April 1, 2003.

As of the date of issuance of these financial statements, the Central Bank had not adopted all the valuation and disclosure changes required by professional accounting standards and their application to the financial statements of financial institutions is therefore not required. Therefore, the Bank did not quantify the net effects on the shareholders’ equity or the gain (loss) generated by all the differences between such accounting standards and those of the Central Bank.

Below are the main differences between professional accounting standards and Central Bank’s rules as of December 31, 2004, and 2003:

a.    Valuation aspects

1.     The Bank determines income tax by applying the effective rate to estimated taxable income without considering the effect of temporary differences between book and taxable income. In accordance with the professional accounting standards effective in the Province of Córdoba, income tax should be recognized by the deferred tax method, which consists in recognizing (as receivable or payable) the tax effect of temporary differences between the book and tax valuation of assets and liabilities, and in subsequently charging them to income for the periods in which such differences are reversed, considering the possibility of using net operating losses in the future.

2.     Holdings of Government Securities and credit assistance to the non-financial government sector are valued in accordance with rules and regulations issued by the Federal Government and the Central Bank. In particular, the Central Bank Communiqué “A” 3,911 as supplemented establishes present value criteria, applying regulated discount rates, for the valuation of unlisted government securities and certain receivables from the non-financial government sector, as explained in notes 3.3.b) and 3.3.c). Additionally, effective loan-loss provisioning regulations issued by the Central Bank establish that receivables from the non-financial government sector are not subject to loan-loss provisioning, whereas professional accounting standards require receivables to be compared with their recoverable value every time financial statements are prepared.

The Bank’s particular situation was as follows:

i.     As disclosed in Notes 2.b.2), as of December 31, 2004 and 2003, the Bank booked in “Unlisted Government securities”, secured bonds under Decree No. 1,579/02, that were valued according Central Bank Communiqué “A” 3,911 as supplemented, for an amount of 289,430 and 270,254, respectively. In accordance with professional accounting standards, these assets should be stated at their market values.

ii.     As disclosed in Notes 2.b.1), as of December 31, 2004 and 2003, the Federal Government Guaranteed Loans from the exchange established by Federal Executive Decree No. 1,387/01, are booked in the account “Loans— To the non-financial government sector” in the net aggregate amount of 229,360 and 217,891, respectively. In accordance with professional accounting standards, these assets should be stated at their market values.

iii.     As explained in note 2.a.1), as of December 31, 2004, the Bank recorded in “Other receivables from financial intermediation— Other not covered by debtor classification stan-

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dards” Federal Government Bonds to be received— BODEN 2007 and 2012— for the compensation established by Presidential Decree No. 905/02, which were stated at their face values in the amount of 347,694. In accordance with professional accounting standards, these assets should be stated at their market values.

b.    Disclosure aspects

1.     The Bank has not presented a statement of cash flows broken down by operating, investment and financing activities, and disclosing interest, dividends, and taxes for the amounts actually collected or paid.

2.     As of December 31, 2004, and 2003, the Bank did not disclose the information by segment in its statement of income.

6. RESTRICTED ASSETS

6.1.     On March 9, 2004, Nuevo Banco Suquía S.A. transferred secured bonds and guaranteed loans to the Central Bank to guarantee the advance for temporary illiquidity granted by the regulatory agency through Resolution No. 315/02, dated March 21, 2002. This guarantee replaces the one previously granted to the Central Bank by assigning the first pledge on the Class “A” certificate of participation in the Suquía trust, which is part of the Bank’s assets.

This change to the guarantee resulted from the Bank’s compliance with Central Bank Communiqué “A” 3,941 dated April 30, 2003.

As of December 31, 2004, the value of secured bonds and guaranteed loans involved amounted to 351,979. As of December 31, 2003, there was no such an amount.

On February 2, 2005, and under the framework of the call for bids for the early repayment of installments payable to the Central Bank, as provided for in Communiqués “A” 4,268 and “A” 4,282, the Bank made the early repayment of 164,709. On the same date, the Bank made the early repayment of the remaining additional outstanding balance of such loans of 99,755.

Notwithstanding the latter payment, the guarantee proportional thereto has not yet been released, whereas the guarantee for the portion repaid by the bidding process shall be kept over the original term of the loan.

6.2.     As of December 31, 2004 and 2003, the Bank kept the following assets as guarantee, which were recorded in the “Guarantee deposits” account in the “Other receivables—Other” item.

Item	2004		2003
Credit card transactions		5,313		9,721
Other guarantee deposits		1,636		1,394

6.3.     As of December 31, 2004 and 2003, the Bank had booked under account “Other receivables from financial intermediation— Central Bank of Argentine Republic” 22,978 y 3,877, respectively, related to the amounts in the special guarantee accounts with the Central Bank for transactions related to the electronic clearing houses and similar ones.

6.4.     As of December 31, 2004 and 2003, the Bank had used the Class “A” certificate of participation in the Suquía trust as guarantee for the advance granted by the Central Bank to purchase “Government bonds 2005, 2007 and 2012,” which would be used for the deposit exchange option exercised by the holders of deposits at Nuevo Banco Suquía S.A. This guarantee covers principal, adjustments and interest up to the maximum amount of 178,056. The original value of the advance

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was 161,869, and the book-value as of December 31, 2004 y 2003, was 233,464 y 229,384, respectively.

7. BANK DEPOSITS GUARANTEE INSURANCE SYSTEM

Law No. 24,485, and Decree No. 540/95, provided for the organization of a Bank Deposit Guarantee Insurance System, characterized as being limited, mandatory and for valuable consideration, designed to provide coverage for risks inherent in bank deposits, as a protection subsidiary and supplementary to the one offered by the system of bank deposit privileges and protection created by Financial Institutions Law. Such Law provided for the organization of the company “Seguro de Depósitos S.A.” (SEDESA) to manage the Deposit Guarantee Fund (F.G.D.). In August 1995, such company was organized.

This system shall cover the deposits in Argentine pesos and foreign currency opened in the participating institutions as checking accounts, savings accounts, certificates of deposit or any other modes determined by the Central Bank, as long as fulfilling the requirements under Presidential Decree No. 540/95 and any others established by the enforcement agency. On the other hand, the Central Bank issued rules excluding from the deposits guarantee system the deposits made by other financial institutions, those made by entities related to the Bank, deposits of securities, etc.

8. TRANSACTIONS WITH RELATED PARTIES

The amounts as of December 31, 2004, of the transactions with the parent company (Banco Macro Bansud S.A.) are as follows:

Item	2004
Assets
Cash— Due from banks and correspondents		3
Net income (loss)
Financial income— Interest on other receivables from financial intermediation		7
Financial expense— Other interest		(4	)

9. STATUTORY OPERATING RATIOS

As of December 31, 2004, the Bank submitted to the Central Bank its monthly statutory operating ratios required by such regulatory agency. It did not comply with the credit risk diversification and global foreign currency position ratios, while it duly complied with the fixed assets and minimum capital ratios as of that date.

The shortage in the global foreign currency position results from holding BODEN 2012 to be received as compensation for the asymmetrical pesification and redeemed from the Suquía trust, which is a pervasive situation in the entire financial system. If these bonds are excluded from the position, there is no such non-compliance with this ratio. However, the Bank filed a note with the Central Bank regarding this situation. No reply has been received as of the date of these financial statements.

The shortage in the credit risk diversification ratio results from the redemptions of the certificates of participation in the Suquía trust, especially of federal government guaranteed loan certificates. The Bank believes that such requirement is not applicable because these loans are preexisting ones upon the creation of the trust and the organization of Nuevo Banco Suquía.

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10. RESTRICTION ON EARNINGS DISTRIBUTION

†	On June 2, 2004, the Central Bank issued Communiqué “A” 4,152, which amended Communiqué “A” 3,574 by allowing financial institutions to distribute earnings subject to prior authorization by the Argentine Regulatory Agency of Financial and Foreign Exchange Institution in compliance with the Communiqué “A” 4,152 abovementioned requirements.
†	The Bank may not distribute cash dividends, except insofar as the amount by which, after the appropriations required by the law and the Bank’s bylaws, earnings exceed the difference between the book value and listed price of the Federal Government Bonds to be received under Presidential Decree No. 905/02, Title VI, sections 28 and 29, which was 23,163 at December 31, 2004.

Finally, as established in Central Bank Communiqué “A” 4,295, to determine the amounts to be distributed it will be necessary to deduct the assets booked for minimum presumed income credits from unappropriated retained earnings. Such balance amounts to 10,129 at December 31, 2004.

† According to Law No. 25.063, the dividends distributed in cash or in kind exceeding taxable income accumulated as of the year-end immediately prior to the payment or distribution date will be subject to a 35% income tax withholding as a single and final payment. Income to be considered in each tax year will result from deducting the tax paid for the tax period(s) in which allocable income was generated or the related proportional amount from taxable income, and adding dividends or income from other corporations not computed upon determining such income in the same tax period(s).

11. BALANCES IN FOREIGN CURRENCY

The balances of assets and liabilities denominated in foreign currency are as follows:

	As of December 31,
	2004		2003
ASSETS
Cash		133,254		85,861
Government and private securities		7,770		721
Loans		36,186		11,909
Other receivables from financial intermediation		199,470		4,722
Investments in other companies		182		—
Other receivables		15		18
Items pending allocation		—		26
Total		376,877		103,257
LIABILITIES
Deposits		148,217		89,593
Other liabilities from financial intermediations		1,736		2,402
Other liabilities		70		493
Items pending allocation		48		172
Total		150,071		92,660

12. INTEREST-BEARING DEPOSITS WITH OTHER BANKS

12.1.     Included in “Cash— Due from Banks and correspondents” there are: (a) interest-bearing deposits with the B.C.R.A. totaling 188,275 and 224,330 as of December 31, 2004 and 2003,

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respectively, and (b) interest bearing deposits in foreign banks totaling 13,772 and 11,151 as of December 31, 2004 and 2003, respectively.

The interest-bearing deposits with the B.C.R.A. yielded a nominal annual interest rate of 2,05% and 0,80% as of December 31, 2004 and 2003, respectively.

12.2.     Included in “Other Receivables from financial intermediation” there are other interest-bearing deposits with B.C.R.A. totaling 22,978 and 3,877 as of December 31, 2004 and 2003, respectively.

13. GOVERNMENT AND PRIVATE SECURITIES

			As of December 31,
			2004			2003
GOVERNMENT SECURITIES
Holdings for trading or intermediation
	Federal Government Bonds in Pesos at Libor, maturity 2008 (Boden 2008)			1,123			7,088
	Federal Government Bonds in USD at LIBOR, maturity 2005 (Boden 2005)			290			478
	Other			2,106			756
Subtotal holding for trading or intermediation				3,519			8,322
Unlisted government securities
	Secured Bonds(1)			289,430			270,254
	Tax Credit Certificates Decree 979/01			9,302			—
Subtotal unlisted government securities				298,732			270,254
Instruments issued by Central Bank
		Unlisted Central Bank external bills (LEBAC)		359,616			137,272
Subtotal instruments issued by Central Bank				359,616			137,272
Total government securities				661,867			415,848
PRIVATE SECURITIES
Investments in listed private securities
		Shares		613			448
		Corporate bonds		9,886			—
		Certificates of participation in financial trusts		2,887			4,371
Total private securities				13,386			4,819
Total government and private securities, before allowances				675,253			420,667
Allowances				(2,471	)		—
Total government and private securities				672,782			420,667

(1) As of December 31, 2004, these securities were disclosed as “Unlisted government securities” albeit listed, because they are valued under Central Bank Communiqué “A” 3911 as supplemented.

14. LOANS

Description of certain categories of loans in the accompanying Balance Sheets include:

a.     Non-financial government sector: loans to the government sector, excluding government owned financial institutions;

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b.     Financial sector: short-term loans to other banks and short-term loans from foreign branches to banks outside Argentina.

c.     Non financial private sector and foreign residents: loans given to the private sector (excluding financial institutions) and residents outside Argentina.

The classification of the loan portfolio in this regard was as follows:

	As of December 31,
	2004			2003
Non-financial government sector		303,990			280,044
Financial sector		47,504			—
Non-financial private sector and foreign residents
Commercial
—With Senior “A” guarantees		4,613			—
—With Senior “B” guarantees		126,269			37,876
—Without Senior guarantees		207,631			58,793
Consumer
—With Senior “A” guarantees		6,581			—
—With Senior “B” guarantees		282,687			122,253
—Without Senior guarantees		145,772			146,849
Less: Allowance		(143,495	)		(31,606	)
Total loans, net of allowance		981,552			614,209

Senior “A” guarantees consist mainly of cash guarantees, gold guarantees, warrants over primary products and other forms of self-liquidating collateral.

Senior “B” guarantees generally consist of mortgages and other forms of collateral pledged to secure the loan amount.

“Without senior guarantees” consist, in general, of unsecured third-party guarantees.

A breakdown of total loans by sector activity classified according to the principal business of the borrowers is as follows:

Economic Activity	2004			2003
Agricultural livestock— Forestry— Fishing— Minery— Hunting		148,733			43,710
Foodstuff and beverages		59,987			15,958
Mass productions of products		106,577			36,822
Electricity, oil, water		4,167			3,642
Construction		55,526			27,391
Retail and consumer products		102,705			60,028
Governmental services		343,168			309,163
Financial sector		70,674			13,666
Real estate, business and leases		26,052			20,065
Other services		97,541			35,895
Other		109,917			79,475
Total loans		1,125,047			645,815
Less: allowance		(143,495	)		(31,606	)
Total loans, net of allowance		981,552			614,209

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15. ALLOWANCES FOR LOAN LOSSES AND OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

The activity in the allowance for loan losses for the fiscal years presented is as follows under Central Bank rules:

	As of December 31
	2004			2003
—Balance at the beginning of the fiscal year		31,606			30,176
—Provision for loan losses(1)(2)		84,562			360
—Allowances for loan losses redeemed from Suquía Trust		376,605			2,730
—Write offs		(347,228	)		(975	)
—Recoveries(1)		(2,050	)		(463	)
—Monetary gain generated on allowances		—			(222	)
—Balance at the end of the fiscal year		143,495			31,606

The activity in the allowance for other receivables from financial intermediation for the fiscal years presented is as follows under Central Bank rules:

	As of December 31
	2004			2003
—Balance at the beginning of the fiscal year		18,300			13
—Provision for loan losses(2)		39,831			—
—Allowances for loan losses redeemed from Suquía Trust		64,081			18,356
—Write offs		(18,244	)		(20	)
—Recoveries		(1,201	)		(49	)
—Balance at the end of the fiscal year		102,767			18,300

(1)

As of December 31, 2004 and 2003 the amount of provision for loan losses disclosed in note 19, under US SEC Regulation S-X, includes above amounts (i) less recovered loans of 346 and 524, respectively, (ii) plus direct charges off of 289 and 440, respectively, and (iii) less/plus allowances recorded as of December 31, 2003 as contingent liabilities under Central Bank rules, but considered loan loss allowances under US G.A.A.P. of (35,321) and 35,321, respectively, which were reclassified by the bank as loan loss allowances during the fiscal year ended December 31, 2004.

(2)

As of December 31, 2004 and 2003 the amount of provision for loan losses disclosed in the Statements of Income, under Central Bank rules, includes above amounts plus direct charges off of 289 and 440, respectively.

16. OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

The breakdown of other banking receivables by guarantee type is as follows:

	As of December 31,
Description	2004			2003
With preferred guarantees		218,214			—
Without preferred guarantees		505,055			557,092
Allowances		(102,767	)		(18,300	)
Total		620,502			538,792

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As of December 31, 2004 and 2003, Other receivables by financial intermediation includes 34,752 and 512,920, respectively, for unlisted certificates of participation in financial trusts.

In addition, the Bank enters into forward transactions related to government securities and foreign currencies. The Bank recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date. The assets and liabilities related to such transactions are as follows:

		As of
		December 31,
Description		2004		2003
Amounts receivable from spot and forward sales pending settlement
	Receivables from repurchase agreements of government securities		233,159		—
			233,159		—
Amounts payable for spot and forward purchases pending settlement
	Payables for spot purchases of foreign currency pending settlement and forward purchases of foreign currency		1		—
			1		—
Securities and foreign currency to be delivered under spot and forward sales pending settlement
	Forward sales of government securities under repurchase agreements		233,108		—
			233,108		—

These instruments consist of short term foreign currency forward purchase and sale contracts and securities repurchase agreements, whose valuation method is disclosed in note 3.3.g).

17. OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION

The Bank borrowed funds under various credit facilities from the Central Bank for specific purposes, as follows:

	As of December, 31
	2004				2003
	Amount		Rate		Amount		Rate
Short-term liabilities		84,282		2%-3,5% + CER		47,523		2%-3,5% + CER
Long-term liabilities		399,404		2%-3,5% + CER		459,141		2%-3,5% + CER
Total		483,686				506,664

Accrued interest and adjustments on the above liabilities amounts to 83,535 and 73,756 as of December 31, 2004, and 2003, respectively, and is included in “Central Bank of Argentina— Other” under the “Other liabilities from financial intermediation” in the accompanying balance sheets.

18. MINIMUM CAPITAL REQUIREMENTS

Under Central Bank’s rules, the Bank is required to maintain minimum levels of equity capital (“minimum capital”). As of December 31, 2004 and 2003, the minimum capital is based upon risk-

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weighted assets and also considers interest rate risk and market risk. The required minimum capital and the Bank’s capital calculated under the Central Bank’s rules are as follows:

	Required				Excess/(defect) of actual
	minimum		Computable		minimum capital over
	capital		capital		required minimum capital
December 31, 2004		67,498		315,407		247,909
December 31, 2003		84,034		57,668		(26,366	)

19. INCOME STATEMENTS AND BALANCE SHEET

The presentation of financial statements under Central Bank’s rules differs significantly from the format required by the U.S. Securities and Exchange Commission (SEC) under Rules 9-03 and 9-04 of Regulation S-X (“Article 9”). The following financial statements were restated into constant pesos, as explained in note 3.2. These financial statements were prepared using the measurement methods provided by Central Bank, but under US SEC requirements:

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Statements of income		2004			2003
Interest and fees on loans			109,049			89,704
Interest on interest-bearing deposits with other banks			1,931			2,824
Interest on other receivables from financial intermediation			21,672			109,697
Interest on securities and foreign exchange purchased under resale agreements			239			—
Government securities and other trading gains, net			37,300			8,964
Foreign exchange, net			19,274			13,651
Other interest income			1,279			3,346
	Total interest income		190,744			228,186
Interest on deposits			39,482			102,165
Interest on short-tern borrowings			14,346			17,082
Other interest expense			58,547			22,002
Monetary loss on financial intermediation			—			508
	Total interest expense		112,375			141,757
	Net interest income		78,369			86,429
Provision for loan losses, net			(47,134	)		(35,134	)
	Net interest income after provision for loan losses		31,235			51,295
Service charges on deposit accounts			71,355			53,477
Other commissions			2,594			2,526
Foreign currency exchange trading income			4,934			3,452
Income from long-term investments			—			147
Other			18,476			14,232
	Total non-interest income		97,359			73,834
Commissions			19,596			16,443
Salaries and payroll taxes			76,803			70,614
Outside consultants and services			1,474			1,068
Depreciation of bank premises and equipment			4,168			1,901
Rent			4,807			4,529
Stationery and supplies			1,831			1,878
Electric power and communications			5,567			5,469
Advertising and publicity			1,712			1,780
Taxes			3,770			3,580
Management Fee			669			268
Insurance			644			535
Security services			4,287			4,017
Maintenance, conservation and repair expenses			4,373			3,902
Amortization of organization and development expenses			340			1,643
Provision for losses on other assets and other allowances, net			55,648			2,568
(Loss) from long-term investments			74			—
Other			5,652			4,012
Monetary loss on operating expense			—			(15	)
Monetary loss on other operations			—			(14	)
	Total non-interest expense		191,415			124,178
(Loss)/ Income before income tax expense			(62,821	)		951
(Loss)/ Income tax expense			—			—
(Loss)/ Income from continuing operations			(62,821	)		951
Net (Loss)/ Income			(62,821	)		951

Central Bank ’s rules also require certain classifications of assets and liabilities, which are different from those required by Article 9. The following table discloses the Bank’s balance sheets as of

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December 31, 2004, and 2003, as if the Bank followed the balance sheet disclosure requirements under Article 9:

			2004			2003
ASSETS
	Cash and due from banks			108,454			115,900
	Interest-bearing deposits in other banks			225,025			239,358
	Securities purchased under resale agreements of similar arrangements			233,159			—
	Trading account assets			14,434			13,141
	Investment securities available for sale			658,348			407,526
	Loans			1,125,047			645,815
	Allowance for loan losses			(143,495	)		(66,927	)
	Premises and equipment			72,063			70,515
	Due from customers on acceptances			6,466			9,948
	Compensation to be received for the asymmetric pesification			347,694			—
	Certificates of participation in Suquía Trust, net of allowances			—			512,920
	Other assets, net of allowances			186,225			202,018
		Total assets		2,833,420			2,150,214
LIABILITIES AND SHAREHOLDERS’ EQUITY
	Interest-bearing deposits			1,150,192			1,050,816
	Non interest-bearing deposits			393,518			290,941
	Securities sold under repurchase agreements			233,108			—
	Other short-term borrowings			154,517			47,240
	Long-term borrowings			329,374			459,141
	Contingent liabilities			16,996			2,581
	Other liabilities			241,951			208,178
	Bank acceptances outstanding			6,466			9,948
		Total liabilities		2,526,122			2,068,845
	Common shares			303,750			15,951
	Retained appropriated earnings			13,264			13,078
	Retained unappropriated earnings			(9,693	)		52,363
	Other shareholders’ equity			(23	)		(23	)
		Total shareholders’ equity		307,298			81,369
		Total liabilities and shareholders’ equity		2,833,420			2,150,214

20. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN CENTRAL BANK’S RULES AND UNITED STATES ACCOUNTING PRINCIPLES

The following is a description of the significant differences between Central Bank’s rules followed in the preparation of the Bank’s financial statements and those applicable in the United States under generally accepted accounting principles (“U.S. G.A.A.P.”). “SFAS” shall refer to Statements of Financial Accounting Standards.

20.1.    Income taxes

a)     As explained in note 4, Central Bank’s rules do not require the recognition of deferred tax assets and liabilities and, therefore, income tax is recognized on the basis of amounts due in accordance with Argentine tax regulations and no deferred tax and liabilities are recognized.

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For purposes of U.S. G.A.A.P. reporting, the Bank applies SFAS No. 109 “Accounting for income taxes”. Under this method, income tax is recognized based on the liability method whereby deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax basis of assets and liabilities at each reporting date. SFAS No. 109 requires that an allowance for deferred tax assets be provided to the extent that it is more likely than not that they will not be realized, based on the weight of available evidence.

Deferred tax assets and liabilities are summarized as follows:

			As of December 31,
Description			2004			2003
Deferred tax assets:
	Governments and private securities valuation			6,973			38,512
	Loans			50,033			7,616
	Other liabilities			2,191			1,810
	Allowance for loss contingencies			5,949			13,266
	Tax loss carryforwards			180,982			152,192
		Total deferred assets		246,128			213,396
Deferred tax liabilities:
	Property, equipment and other assets			(478	)		(633	)
	Foreign exchange difference			(978	)		(619	)
	Other			(44	)		(164	)
		Total deferred liabilities		(1,500	)		(1,416	)
Deferred tax asset				244,628			211,980
Allowance for deferred tax assets				(134,856	)		(145,897	)
Net deferred tax assets under U.S. G.A.A.P.				109,772			66,083

As of December 31, 2004, the tax loss carryforwards of 517,090 are as follows:

Expiration year	Amount
2007		265,367
2008		169,466
2009		82,257
		517,090

The evolution of the net deferred tax assets during 2004 fiscal year is summarized as follows:

	2004			2003
Net deferred tax assets (liabilities) at the beginning of the year		66,083			(1,029	)
Amount recorded in comprehensive income		(21,446	)		(5,018	)
Deferred tax benefit for the year		65,135			72,130
Net deferred tax assets at the end of year(1)		109,772			66,083

(1) This amount does not include the effect of push down adjustments (see note 20.6.).

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The following table accounts for the difference between the actual tax provision under Central Bank regulations and the total income tax expense in accordance with U.S. G.A.A.P.:

	Year ended
	December 31,
Description
	2004			2003
Income tax in accordance with Central Bank regulations		—			—
Deferred tax benefit (expense)
—Government and private securities		(10,093	)		43,000
—Loans		42,417			6,453
—Allowance for loss contingencies		(7,317	)		13,008
—Tax loss carryforwards		28,790			59,314
—Allowance for deferred tax assets		11,041			(49,744	)
—Other, net		297			99
Total income tax benefit in accordance with U.S. G.A.A.P.		65,135			72,130

b)     In addition, as explained in note 4, under BCRA’ rules, as of December 31, 2004 and 2003 the Bank has an asset of 10,129 and 6,140, respectively, for the credit for Tax on minimum presume income. As mentioned in note 4 to the financial statements, under Central Bank Rules, such credit is considered to be an asset because Management estimates it will be used within ten years, which is the period allowed by the Central Bank Communiqué “A” 4,295, as amended. In accordance with U.S. G.A.A.P., a 100% valuation allowance was recorded for such credit which was deemed to be more likely than not that it would not be recovered, as per paragraphs 17 (e) and 25 of SFAS 109.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 10,129 and 6,140 as of December 31, 2004 and 2003, each year.

On the other hand, loss for the year ended December 31, 2004 would increase by 3,989 and income for the year ended December 31, 2003 would decrease by 4,156.

20.2.    Exposure to the Argentine Public Sector and Private Securities

a)     Loans— Non-financial federal governmental sector

As mentioned in note 2.b)1) the Bank redeemed from the Suquía trust certain guaranteed loans, which were recorded in the “Loans— To the non-financial government sector” account totaling 229,360 and 217,891 in the financial statements as of December 31, 2004, and 2003, respectively.

According to Central Bank’s rules, such loans were valued by using the criteria described in note 3.3.c).

Under U.S. G.A.A.P., the difference between the cost of each guaranteed loan and its expected future cash flows is accounted for in accordance with PB 6— Amortization of Discounts on Acquired Loans. In 2005, the Bank will implement SOP 03-3— “Accounting for Certain Loans and Debt Securities Acquired in a Transfer”.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 99,945 and 100,125 as of December 31, 2004 and 2003, respectively.

On the other hand, loss for the year ended December 31, 2004 would decrease by 180 and income for the year ended December 31, 2003 would decrease by 100,125.

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b)     Bonds— Non-financial provincial government sector

As mentioned in note 2.b)2), on October 25, 2002, the Ministry of Economy issued Resolution No. 539/02 describing the mechanism to exchange eligible provincial debt provided in sections 1 and 12, Presidential Decree No. 1,579/02.

In prior years, the Bank received from the Suquía trust secured bonds (BOGAR) arising from the pesification of debts of the Provinces of Córdoba, Salta, Entre Ríos and Mendoza.

According to Central Bank’s rules, such bonds were valued by using the criteria described in note 3.3.b)2)i).

As of December 31, 2004, and 2003, these BOGAR are classified for U.S. G.A.A.P. purposes as available for sale securities and thus subject to the provisions of SFAS 115, carried at fair value with the unrealized gain or loss, net of income taxes, recognized as a charge or credit to equity through other comprehensive income. In connection with estimating the fair value of the BOGAR, the Bank used quoted market values.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 54,043 and 106,050 as of December 31, 2004 and 2003, respectively.

On the other hand, loss for the year ended December 31, 2004 would decrease by 20,947 and income for the year ended December 31, 2003 would decrease by 120,386.

The breakdown of unrealized gains within the shareholders’ equity accounts as of December 31, 2004, and 2003, is disclosed in note 20.15.

c)     Other Loans— Non-financial provincial government sector

As of December 31, 2004 and 2003, the Bank had other loans granted to the non-financial provincial government sector. In accordance with SFAS No. 114, as of December 31, 2004 and 2003, the Bank deemed these loans to be impaired and measured impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, with a corresponding adjustment to bad-debt expense.

According to Central Bank’s rules, such bonds were valued by using the criteria described in note 3.3.c).

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 19,580 and 26,390 as of December 31, 2004 and 2003, respectively.

On the other hand, loss for the year ended December 31, 2004 would decrease by 6,810 and income for the year ended December 31, 2003 would decrease by 26,390.

d)     Compensatory Bonds to be received in connection with the compensation for the “asymmetric pesification”

As mentioned in note 2.a)1), under Law No. 25,561 and Presidential Decrees No. 905/02, the Federal Government established a compensation mechanism for financial institutions because of the negative financial effects resulting from the pesification of foreign currency-denominated loans and deposits into pesos at different exchange rates.

As of December 31, 2004, according to Central Bank’s rules, the compensations to be received were valued according to the criterion described in note 3.3.g)3).

Under U.S. G.A.A.P., these assets should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported net of income tax within the shareholders’ equity accounts.

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The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 23,163 as of December 31, 2004. Loss for the year ended December 31, 2004 would increase by 53,377.

The breakdown of unrealized gains within the shareholders’ equity accounts as of December 31, 2004, is disclosed in note 20.15.

e)     CER/ CVS compensation

As mentioned in note 2.a)2), Law No. 25,796 and Presidential Decree No. 117/2004 allowed for compensation to financial institutions of up to 2,800,000 to compensate fully, solely and definitively the effects caused by effective general rules, in cases where the CVS (salary variation coefficient) and C.E.R. became applicable to some assets and liabilities of the bank.. The Central Bank set forth the procedural rules to compensate each financial institution, following the criteria established by law.

Thus, as of December 31, 2003, the Bank recorded 18,105 (net of allowances) for the estimated amount of compensation to be received. During the year ended December 31, 2004, the Bank decided not to join the abovementioned compensation system. In consequence, the above mentioned compensation was charged off to income.

Under U.S. G.A.A.P., the right to obtain this compensation is deemed a contingent gain which can not be recognized until realized, pursuant to SFAS 5— Accounting for Contingencies.

In consequence, the effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 18,105 as of December 31, 2003.

On the other hand, loss for the year ended December 31, 2004 would decrease by 18,105 and income for the year ended December 31, 2003 would decrease by 18,105.

f)     Other unlisted government securities

As of December 31, 2004, the Bank had other unlisted government securities (excluding those unlisted government securities mentioned above). In accordance with Central Bank’s rules, these unlisted government securities were valued according to the criterion described in note 3.3.b)2)i).

According to U.S. G.A.A.P., these securities should be considered as “available for sale” and carried at fair value, with unrealized gains and losses reported as net of income tax within the shareholders’ equity accounts.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 6,511 as of December 31, 2004. Loss for the year ended December 31, 2004 would increase by 6,511.

The amortized cost and fair value of Government Securities available for sale as of December 31, 2004 and 2003, are as follows:

			Gross
	Amortized		unrealized
	cost		gains		Fair value
2004		846,715		75,610		922,325
2003		287,140		14,336		301,476

The effects of adjustments required to state the amounts mentioned from a) through f) in accordance with U.S. G.A.A.P. do not include the effect of push down adjustments (see note 20.6.).

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20.3.    Loan origination fees

The Bank recognizes fees on consumer loans, such as credit cards, mortgage, pledged and personal loans stand by letters of credit and guarantees issued, when collected and charges direct origination costs when incurred. In accordance with U.S. G.A.A.P. under SFAS No. 91, loan origination fees and certain direct loan origination costs should be recognized over the life of the related loan as an adjustment of yield or by straight-line method, as appropriate.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would decrease assets by 2,508 and 501 as of December 31, 2004 and 2003, respectively. Loss for the year ended December 31, 2004 would increase by 2,007 and income for the year ended December 31, 2003 would decrease by 501.

20.4.    Allowance for loan losses

The loan loss reserve represents the estimate of probable losses in the loan portfolio. Determining the loan loss reserve requires significant management judgments and estimates including, among others, identifying impaired loans, determining customers’ ability to pay and estimating the fair value of underlying collateral or the expected future cash flows to be received. Actual events will likely differ from the estimates and assumptions used in determining the loan loss reserve. Additional loan loss reserve could be required in the future.

The loan loss reserve is maintained in accordance with Central Bank’s rules. This results from evaluating the degree of debtors’ compliance and the guarantees and collateral supporting the respective transactions.

Increases in the reserve are based on the deterioration of the quality of existing loans, while decreases in the reserve are based on regulations requiring the write-off of non-performing loans classified as “non-recoverable” after a certain period of time and on management’s decisions to write off non-performing loans evidencing a very low probability of recovery.

In addition, under Central Bank’s rules, the Bank records recoveries on previously charged-off loans directly to income and records the amount of charged-off loans in excess of amounts specifically allocated as a direct charge to the income of statement. The Bank does not partially charge off troubled loans until final disposition of the loan, rather, the allowance is maintained on a loan-by-loan basis for its estimated settlement value.

Under Central Bank rules, a minimum loan loss reserve is calculated primarily based upon the classification of commercial loan borrowers and upon delinquency aging (or the number of days the loan is past due) for consumer and housing loan borrowers. Although the Bank is required to follow the methodology and guidelines for determining the minimum loan loss reserve, as set forth by the Central Bank, the Bank is allowed to establish additional loan loss reserve.

For commercial loans, the Bank is required to classify all commercial loan borrowers. In order to classify them, the Bank must consider different parameters related to each of those customers. In addition, based on the overall risk of the portfolio, the Bank considers whether or not additional loan loss reserves in excess of the minimum required are warranted.

For consumer loan portfolio, the Bank classifies loans based upon delinquency aging, consistent with the requirements of the Central Bank. Minimum loss percentages required by the Central Bank are also applied to the totals in each loan classification.

Under U.S. G.A.A.P., a portion of the total allowance typically consists of general amounts that are used, for example, to cover loans that are analyzed on a “pool” basis and to supplement specific allowances in recognition of the uncertainties inherent in point estimates.

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The Bank’s accounting for its loan loss reserve under Central Bank rules differs in some respects with practices of U.S.-based banks, as discussed below.

a)     Recoveries and charge-offs

Under Central Bank rules, recoveries are recorded in a separate income line item under other income. Charge-offs are recorded directly as loan loss provision in the income statement. Under US GAAP, recoveries and charge-offs would be recorded in the allowance for loan losses in the balance sheet; however there would not impact on net income or shareholders’ equity.

b)     Credit Card Loans

The Bank establishes its reserve for credit card loans based on the past due status of the loan. All loans without preferred guaranties greater than 180 days have been reserved at 50% in accordance with the Central Bank’s rules.

Under U.S. G.A.A.P., the bank adopted a policy to charge off loans which are 180 days past due should be charged off.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decrease by 138 and 532 as of December 31, 2004 and 2003, respectively. In addition, loss for the year ended December 31, 2004 would be decrease by 394. Income for the year ended December 31, 2003 would be increase by 3,507.

c)     Impaired loans— Non Financial Private Sector and residents abroad

SFAS No. 114, “Accounting by Creditors for Impairment of a Loan”, and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan— Income Recognition and Disclosures”, are used for computing U.S. G.A.A.P. adjustments. SFAS No. 114, as amended by SFAS No. 118, require a creditor to measure impairment of a loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. This Statement is applicable to all loans (including those restructured in a troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogenous loans that are collectively evaluated for impairment. Loans are considered impaired when, based on Management’s evaluation, a borrower will not be able to fulfill its obligation under the original loan terms.

There are no adjustments related to impaired loans as of and for the years ended December 31, 2004 and 2003.

d)     Interest recognition— non-accrual loans

The method applied to recognize income on loans is described in Note 3.3.d). Additionally, the accrual of interest is discontinued generally when the related loan is non performing and the collection of interest and principal is in doubt generally after 90 days of being past due. Accrued interest remains on the Banks books and is considered a part of the loan balance when determining the reserve for credit losses.

Under U.S. G.A.A.P. the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or Management has serious doubts about further collectibility of principal or interest, even though the loan currently is performing. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses.

Had U.S. G.A.A.P. been applied, the Bank’s assets would have decrease by 2,403 and 789 as of December 31, 2004 and 2003, respectively. In addition, loss for the year ended December 31, 2004 would be increase by 1,614. Income for the year ended December 31, 2003 would be decrease by 789.

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20.5.    Certificate of participation in Suquía Trust

As a result of the organization of Nuevo Banco Suquía S.A. as further described in Note 1.a), the new bank, in its capacity as beneficiary, the former Banco Suquía S.A., in its capacity as trustor, and Banco de la Nación Argentina, in its capacity as trustee, signed the Suquía trust agreement, whereby the so called “excluded” assets from the suspended bank were assigned thereto for Banco de la Nación Argentina to have the fiduciary ownership of, manage and realize the respective assets. In consideration thereof, privileged Class “A” and subordinated Class “B” certificates of participation were issued.

The Class “A” certificate of participation was issued for a value equal to the nominal value of the liabilities assumed by the new bank, plus those arising subsequently from legal decisions resulting in an increase to the deposits transferred, plus accrued interest (at the rate applied by the Central Bank for rediscounts or the rate equal to C.E.R. for that month, plus a nominal 5% rate p.a., whichever higher). The Class “A” certificate of participation was entirely held by Nuevo Banco Suquía S.A., which amounted to 25,551 and 512,920 as of December 31, 2004, and 2003, respectively. Full allowances were set up for these amounts as of December 31, 2004.

As explained in note 3.3.h), under Central Bank’s Rules, the certificate of participation in the Suquía trust was stated at (i) the nominal value (ii) plus interest accrued at year-end, in accordance with clause 19(1)4 of the Suquía trust agreement, (iii) net of the redemptions made by the Bank in its capacity as beneficiary of the certificate of participation, as established by clause 19(1)5 of the second amendment to the Suquía trust agreement. As of the date of the organization of Nuevo Banco Suquía S.A., the nominal value of this certificate approximated fair value and was equal to the fair value of liabilities assumed by the new bank.

Under US G.A.A.P., Nuevo Banco Suquía S.A. was deemed to have been acquired by the new shareholder and therefore the transaction was accounted for under SFAS 141, which requires the assets received (certificates A) and liabilities assumed (deposits) to be recognized at their fair values at the date of the incorporation. Redemptions should be recognized at the fair values of the assets received as of the date of each redemption. Certificate A of Suquía Trust is accounted for as a loan and is reviewed for impairment at each balance sheet date.

Under US G.A.A.P., the Suquía Trust is considered a related party.

Under FIN 46(R), “Consolidation of Variable Interest Entities”, Suquía Trust is considered a variable interest entity. In accordance with paragraph 14 of FIN 46(R), Nuevo Banco Suquía S.A. was not the primary beneficiary and, therefore, consolidation of the trust was not appropriate. As of December 31, 2004, Certificate A of Suquía Trust has been fully reserved.

The effect of the adjustments required to state such amounts in accordance with U.S. G.A.A.P., would be to decrease assets by 60,890 as of December 31, 2003, with no effect as of December 31, 2004.

On the other hand, loss for the year ended December 31, 2004 would decrease by 60,890 and income for the year ended December 31, 2003 would decrease by 59,375.

20.6.    Business combination— push down accounting

As a result of the acquisition of Nuevo Banco Suquía S.A. by Banco Macro Bansud S.A. as further described in Note 1.b), in accordance with SAB 54, the Bank has applied push down accounting as of December 22, 2004 and for the period from that date to December 31, 2004.

Push down accounting is the basis of accounting which reflects the parent company’s cost in the separate financial statements of the purchased subsidiary and therefore any difference between the purchase price and the net U.S. G.A.A.P. book value of the acquiree is pushed down to the financial statements of the subsidiary. The application of push down accounting results in a new basis of

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accounting for the “successor” period beginning December 23, 2004. Information related to all “predecessor” periods prior to the acquisition is accounted for using the historical basis of accounting.

The effect of these adjustments is summarized as follows:

Increase in fair value of guaranteed loans	95,742
Deferred income taxes	25,351
Core deposits intangibles	46,783
Write down of non-current assets	(94,075	)
Decrease in other liabilities from financial transactions	41,107
Total increase in net assets	114,908

As a result of these adjustments, the equity of Nuevo Banco Suquía S.A. was increased by 114,908 as of December 31, 2004. The effect of push down adjustments in the income statement for the period from December 22 to December 31, 2004 was not material.

20.7.    Intangible assets

Under U.S. G.A.A.P. SOP 98-1, defines three stages for the costs of computer software developed or obtained for internal use: the preliminary project stage, the application development stage and the post-implementation operation stage. Only certain costs in the second stage should be capitalized. Under Central Bank’s rules, the Bank capitalized costs relating to all three of the stages of software development.

The effects of adjustments required to state such amounts in accordance with U.S. G.A.A.P. would be to decrease assets by 608 and 632 as of December 31, 2004 and 2003, respectively. In addition loss for the year ended December 31, 2004 would decrease by 24 and income for the year ended December 31, 2003 would increase by 833. These amounts do not include the effect of push down adjustments (see note 20.6.).

20.8.    Vacation accrual

The cost of vacations earned by employees is generally recorded by the Bank when paid. U.S. G.A.A.P. requires that this expense be recorded on an accrual basis as the vacations are earned.

Had U.S. G.A.A.P. been applied, the Bank’s shareholders’ equity would be decreased by 6,232 and 5,172 as of December 31, 2004 and 2003, respectively. In addition, loss for the year ended December 31, 2004 would increase by 1,060 and income for the year ended December 31, 2003 would decrease by 1,388.

20.9.    Capital Stock

Central Bank Rules allow recognition of capital contributions into financial institutions on condition that:

†	Such contributions have been approved by the Shareholders’ Meeting.
†	At least 25% of the subscribed capital has been paid in, as provided in the Argentine Business Associations Law.

If not all subscribed capital is paid in, the remaining balance is booked in assets in the account “Other receivables— Shareholders”. As of December 31, 2003, the capital contributions to the Bank that remained to be paid in totaled 11,250, which the shareholders paid in full during the fiscal year ended December 31, 2004.

Under US GAAP, only shareholders’ contributions actually paid in can be considered capital.

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The effect of the adjustments required to state such amounts in accordance with US GAAP would decrease assets by 11,250 as of December 31, 2003, with no effect on income.

20.10.    Reporting on Comprehensive Income (loss)

SFAS No. 130 “Reporting on Comprehensive Income” requires entities to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (“comprehensive income”). Comprehensive income (loss) is the total of net income (loss) and all other non-owner changes in equity.

This statement requires that comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements with an aggregate amount of comprehensive income (loss) reported in that same financial statement. The adoption of this accounting disclosure is shown in notes 20.15. In the Bank’s case, comprehensive income is affected by unrealized gains and losses of available for sale securities, net of income taxes.

20.11.    Restatement of financial statements in constant pesos

Pursuant to Central Bank Rules, the Bank’s financial statements recognize the effects of inflation as described in note 3.2.

As allowed by the SEC, as the Banking financial statements are restated applying a methodology that comprehensively addresses the accounting for inflation, the effects of general price-level changes recognized in the Bank’s financial statements do not need to be eliminated in reconciling to U.S. G.A.A.P.

20.12. Accounting for derivative instruments and hedging activities

SFAS No. 133 “Accounting for derivatives instruments and hedging activities” establishes accounting and reporting standards for derivative instruments, including certain ones embedded in other contracts (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available for sale security, or a foreign currency denominated forecasted transaction.

Among other provisions, SFAS No. 133 requires that for a transaction to qualify for special hedge accounting treatment the transaction must meet specific test of effectiveness that will reduce the volatility in the income statement to the extent that the hedge is effective and all hedge ineffectiveness is required to be reported currently in computing of net income. SFAS No. 133 further requires the identification of assets, liabilities or anticipated transactions being hedged and periodic revaluation of such hedged positions to reflect the changes in market value of risk being hedged. SFAS No. 133 further expands the definition of derivatives to include certain contacts or provisions commonly embedded in contracts or financial instruments and requires that such derivatives be reported at fair value. The Bank had no such embedded derivatives.

The Bank had no derivative transactions in 2004 and 2003.

20.13. Accounting for guarantees

The Bank issues financial guarantees, which are obligations to pay to a third party when a customer fails to repay its obligation. The Bank charges a fee for issuance of these guarantees, which is which is deferred and recognized as income over the period of the guarantee.

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Under Central Bank rules, guarantees issued are recognized as liabilities when it is probable that the obligation undertaken by the guarantor will be performed.

Under U.S. G.A.A.P., SFAS interpretation No 45 “Guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness or others” requires that at inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. Such liability at inception is deemed to be the fee received by the Bank with and offsetting entry equal to the consideration received. Subsequent reduction of liability is based on an amortization method as the Bank is decreasing its risk.

Had U.S. G.A.A.P. applied, no differences would have existed in the Bank records. Additionally, the Bank recognizes the maximum potential amount of future payments in Memorandum accounts.

20.14. Set forth below are the significant adjustments to net (loss)/ income and shareholders’ equity which would be required if U.S. G.A.A.P. instead of Central Bank’s rules had been applied:

		Increase/(decrease)
		Net (loss)/income
		years ended December 31,
		Ref.		2004			2003
Net (loss)/ income in accordance with Central Bank’s rules					(62,821	)		951
	Deferred taxes		20.1.a)		65,135			72,130
	Tax on minimum presumed income		20.1.b)		(3,989	)		(4,156	)
	Loans— Non financial federal government sector		20.2.a)		180			(100,125	)
	Bonds— Non financial provincial government sector		20.2.b)		20,947			(120,386	)
	Other loans— Non financial provincial government sector		20.2.c)		6,810			(26,390	)
	Compensatory Bonds		20.2.d)		(53,377	)		—
	CER/ CVS compensation		20.2.e)		18,105			(18,105	)
	Other unlisted government securities		20.2. f)		(6,511	)		—
	Loan origination fees		20.3		(2,007	)		(501	)
	Credit card loans		20.4.b)		394			3,507
	Interest recognition— non-accrual loans		20.4.d)		(1,614	)		(789	)
	Certificate of participation in Suquía Trust		20.5		60,890			(59,375	)
	Intangible assets		20.7		24			833
	Vacation accrual		20.8		(1,060	)		(1,388	)
Net income/(loss) in accordance with U.S. G.A.A.P.(1)					41,106			(253,794	)

(1) The breakdown of net income for the year ended December 31, 2004 is as follows (see note 20.6.):

—Income from January 1st to December 22, 2004 (pre acquisition):	42,205
—Loss from December 23 to December 31, 2004 (post acquisition):	(1,099	)
Total	41,106

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		2004		2003
Comprehensive income/(loss)
	Net income/ (loss) in accordance with U.S. G.A.A.P.		41,106		(253,794	)
	Other comprehensive income, net of tax		39,828		9,318
Total comprehensive income/ (loss), net in accordance with U.S. G.A.A.P.(2)			80,934		(244,476	)

(2) The breakdown of comprehensive income for the year ended December 31, 2004 is as follows (see note 20.6.):

—Comprehensive income from January 1st to December 22, 2004 (pre acquisition):	79,373
—Comprehensive income from December 23 to December 31, 2004 (post acquisition):	1,561
Total	80,934

		Increase/ (decrease)
		Shareholders’ equity at
		December 31,
		Ref.		2004			2003
Shareholders’s equity in accordance with Central Bank’s rules					307,298			81,369
	Deferred taxes		20.1.a)		109,772			66,083
	Tax on minimum presumed income		20.1.b)		(10,129	)		(6,140	)
	Loans— Non financial federal government sector		20.2.a)		(99,945	)		(100,125	)
	Bonds— Non financial provincial government sector		20.2.b)		(54,043	)		(106,050	)
	Other loans— Non financial provincial government sector		20.2. c)		(19,580	)		(26,390	)
	Compensatory Bonds		20.2.d)		(23,163	)		—
	CER/ CVS compensation		20.2.e)		—			(18,105	)
	Other unlisted government securities		20.2. f)		(6,511	)		—
	Loan origination fees		20.3		(2,508	)		(501	)
	Credit card loans		20.4.b)		(138	)		(532	)
	Interest recognition— non-accrual loans		20.4.d)		(2,403	)		(789	)
	Certificate of participation in Suquía Trust		20.5		—			(60,890	)
	Business combination— push down accounting		20.6		114,908			—
	Intangible assets		20.7		(608	)		(632	)
	Vacation accrual		20.8		(6,232	)		(5,172	)
	Capital Stock		20.9		—			(11,250	)
Shareholders’ equity in accordance with U.S. G.A.A.P. (*)					306,718			(189,124	)

(*) Includes the effects of other comprehensive income.

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The following table shows the activity of the Shareholders’ equity for the year ended December 31, 2004, in accordance with U.S. G.A.A.P.:

			Increase/
	Ref.		(decrease)
Shareholders’ equity as of December 31, 2003				(189,124	)
Capital stock paid-in		20.9		11,250
Total comprehensive income from January 1st to December 22, 2004 (pre acquisition)				79,373
Push down accounting effect on Shareholders’ equity		20.6		114,908
Shareholders’ equity as of December 22, 2004				16,407
Capital stock paid-in				288,750
Total comprehensive income from December 23 to December 31, 2004 (post acquisition)				1,561
Shareholders’ equity as of December 31, 2004				306,718

20.15. Set forth below are the accumulated other comprehensive income balances for unrealized gains on securities, as of December 31, 2004 and 2003— net of related income tax effects:

	Year ended			Year ended
	December 31,			December 31,
	2004			2003
Beginning Balance		9,318			—
Current-fiscal year change		61,274			14,336
Tax effects		(21,446	)		(5,018	)
Ending balance(1)		49,146			9,318

(1) The breakdown of accumulated other comprehensive income for the year ended December 31, 2004 is as follows (see note 20.6.):

—Other comprehensive income before December 22, 2004 (pre acquisition):	46,486
—Other comprehensive income from December 23 to December 31, 2004 (post acquisition):	2,660
Total	49,146

20.16. Statement of Cash flows

According to SFAS 95 “Statement of Cash Flows”, a statement of cash flows for a period shall report net cash provided or used by operating, investing, and financing activities and the net effect of those flows on cash and cash equivalents during the period in a manner that reconciles beginning and ending cash and cash equivalents. Central Bank’s rules classify cash flows as operating activities and other.

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The statement of cash flows under Central Bank’s rules differs from the statement of cash flows under U.S. G.A.A.P. in the following aspects:

The Bank’s transactions that did not provide an actual movement of funds in each year (non cash transactions) were eliminated from the respective cash changes. The following are the main non cash transactions, based on their book values under Central Bank’s rules:

†	During 2004 and 2003, the Bank received securities, loans portfolio, compensation to be received from the asymmetric pesification and other assets in redemption of the certificates of participation in Suquía Trust for 514,505 and 783,745, respectively.
†	At December 31, 2004 the Bank exchanged provincial public debt into Secured Bond due in 2018. The loans and securities exchanged had a net book value of 11,250.
†	At December 31, 2004 the Bank entered into unsettled spot and repurchase contracts to buy or sell foreign currencies, listed Government and other securities at future dates, exchanging non cash assets or liabilities for other non cash assets or liabilities with a net book value of 233,050.

The statement of cash flow under U.S. G.A.A.P. is shown below:

		Year ended
		December 31,
		2004			2003
Cash provided by (used in) operating activities
	Interest received on loans and investments		175,612			193,642
	Fees and commissions received		93,732			68,402
	Other sources of cash		7,961			10,542
	Increase in other assets		5,171			—
	Less:
	Interest paid		(97,277	)		(217,721	)
	Fees and commissions paid		(28,160	)		(16,175	)
	Cash paid to suppliers and employees		(110,306	)		(113,115	)
	Decrease in other assets		—			(3,039	)
	Net cash provided by (used in) operating activities		46,733			(77,464	)
Plus:
Cash used in investing activities
Purchases of trading and investment securities			(243,977	)		(153,006	)
Proceeds from sales of trading and investment securities			29,833			8,197
Increase in loans, net			(309,876	)		(36,305	)
Increase in other receivables from financial intermediation, net			(72,881	)		(28,303	)
Purchases of bank premises and equipment and other assets			(1,785	)		(1,404	)
Proceeds from sales of bank premises and equipment and other assets			8,382			220
	Net cash used in investing activities		(590,304	)		(210,601	)
Plus:
Cash provided by financing activities
Capital Increase			300,000			—
Increase in deposits, net			215,500			387,983
Repayment of long-term liabilities from financial intermediation			(29,700	)		—
Increase/ (decrease) in short-term liabilities, net			16,891			(5,506	)
	Net cash provided by financing activities		502,691			382,477
Monetary loss generated on cash and due from banks			—			(2,065	)

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	Year ended
	December 31,
	2004			2003
(Decrease) increase in cash and cash equivalents		(40,880	)		92,347
Cash at the beginning of fiscal year		351,381			259,034
Cash at the end of the fiscal year		310,501			351,381

Set forth below is the reconciliation of net income as per Central Bank’s rules to net cash flows from operating activities, as required by SFAS 95 “Statement of Cash Flows”:

		Year ended
		December 31,
		2004			2003
Net (loss)/gain for the fiscal year			(62,821	)		951
Adjustments to reconcile net income to net cash from operating activities:
	Amortization and depreciation		63,385			58,802
	Provision for loan losses and special reserves, net of reversals		98,958			38,226
	Net income from government and private securities		(16,939	)		(100,429	)
	Foreign exchange differences		(20,111	)		(13,651	)
	Monetary loss generated on cash and due from banks		—			(2,065	)
	Net (increase) in interest receivable and payable and other accrued income and expenses		(20,984	)		(56,112	)
	Increase/(decrease) in other assets		5,171			(3,039	)
	Other		74			(147	)
Net cash provided by (used in) operating activities			46,733			(77,464	)

20.17. Forward transactions pending settlement

The Bank enters into forward pending settlement for trading purposes.

Under Central Bank’s rules for such forward transactions, the Bank recognizes both a receivable and a payable upon the agreement, which reflect the amount of cash, currency or securities to be exchanged at the closing date. The receivable or payable representing the receipt or delivery of securities or currency is stated at market value.

Under U.S. G.A.A.P., accounting for forward contracts are governed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This standard requires that such derivatives be accounted for at fair value. The Bank does not apply hedge accounting.

Had U.S. G.A.A.P. applied, no differences would have existed.

20.18. Items in process of collection

The Bank does not give accounting recognition to checks drawn against the Bank or other Banks or other items to be collected, until such time as the related item clears or is accepted. Such items are recorded by the Bank in Memorandum accounts. U.S. banks, however, account for such items through balance sheet clearing accounts at the time the items are presented for collection.

Had U.S. G.A.A.P. been applied, the Bank’s assets and liabilities would increase by approximately 147,214 and 142,561 as of December 31, 2004 and 2003, respectively.

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20.19. Acceptances

Foreign trade acceptances are not recorded on the balance sheet by the Bank. In accordance with Regulation S-X, acceptances and related customer liabilities should be recorded on the balance sheet. Adjustment required to state balance sheets in accordance with Regulation S-X would be to increase assets (due from customers on acceptances) and increase liabilities (bank acceptances outstanding) by 6,466 and 9,948 as of December 31, 2004 and 2003, respectively.

20.20. New accounting pronouncements (U.S. G.A.A.P.)

Exchanges of non-monetary assets:

In December 2004, the FASB issued Statement 153 Exchanges of non-monetary assets that replaces the exception from fair value measurement in APB Opinion No. 29 Accounting for Non-monetary Transactions, for non-monetary exchanges of similar productive assets with a general exception from fair value measurement for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. In the opinion of the Bank’s Management the adoption of this rule does not have an impact on net income and shareholders’ equity. The Bank does not expect this statement to have a material effect on its financial statements.

Accounting for Certain Loans or Debt Securities Acquired in a Transfer

In 2003, the AICPA issued Statement of Position 03-3 “Accounting for Certain Loans or Debt Securities Acquired in a Transfer” that addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. Includes loans acquired in purchase business combinations, but does not apply to loans originated by the entity. It limits the yield that may be accreted to the excess of the investor’s estimate of undiscounted expected principal, interest, and other cash flows over the investor’s initial investment in the loan and requires that the non-accretable difference not be recognized as an adjustment of yield, loss accrual, or valuation allowance. Displaying accretable yield and non- accretable difference in the balance sheet is prohibited. Subsequent increases in cash flows expected to be collected generally should be recognized prospectively through adjustment of the loan’s yield over its remaining life and decreases should be recognized as impairment.

This Statement of Position prohibits “carrying over” or creation of valuation allowances in the initial accounting of all loans acquired in the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination.

SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. The implementation of this SOP had not a material effect on the Bank’s financial statements.

Accounting Changes and Error Corrections

On May 2005, the FASB issued Statement 154 that replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS 154 applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement. When a pronouncement includes specific transition provisions, those provisions should be followed. The changes require retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine the period specific effects of an accounting change on one or more individual prior periods presented, this

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Statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, this Statement requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable. The retrospective application of a change in accounting principle should be limited to the direct effects of the change. Indirect effects of a change should be recognized in the period of the accounting change. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principles. The Board decided that the provisions of this Statement should be effective for accounting changes made in fiscal years beginning after December 15, 2005. The Bank does not expect this statement to have a material effect on its financial statements.

F-281

      Until             (25 days after the effective date), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. Such delivery obligation may be satisfied by filing the prospectus with the Securities and Exchange Commission.

PART II

Information not required in the prospectus

ITEM 6.     INDEMNIFICATION OF DIRECTORS AND OFFICERS

Neither the laws of Argentina nor the Registrant’s bylaws or other constitutive documents provide for indemnification of directors or officers. The Registrant does not maintain liability insurance and has not entered into indemnity agreements which would insure or indemnify its directors or officers in any manner against liability which he or she may incur in his or her capacity as such.

ITEM 7.     RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 8.     EXHIBITS

(a) The following documents are filed as part of this Registration Statement:

1	.1*	Form of International Underwriting Agreement.
3	.1	Amended and Restated Bylaws of the Registrant.
4	.1*	Form of Deposit Agreement among the registrant, The Bank of New York, as depositary, and the holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipts.
4	.2*	Form of Standby Purchase Agreement.
5	.1	Form of Opinion of Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, Argentine legal counsel of the Registrant, as to the validity of the Class B shares.
8	.1*	Form of Opinion of Shearman & Sterling LLP, as to U.S. tax matters.
8	.2*	Form of Opinion of Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, as to Argentine tax matters.
21	.1*	List of subsidiaries.
23	.1	Consent of Pistrelli, Henry Martin y Asociados S.R.L.
23	.2*	Consent of Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, Argentine legal counsel of the Registrant (included in Exhibits 5.1 and 8.2).
23	.3*	Consent of Shearman & Sterling LLP, U.S. legal counsel of the Registrant (included in Exhibit 8.1).
24	.1*	Powers of Attorney (included on signature page to the Registration Statement).

*     Previously filed.

(b) Financial Statement Schedules

None.

II-1

PART II

ITEM 9.     UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6 of this Registration Statement, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby also undertakes that:

1.	For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement at the time it was declared effective.
2.	For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3.	For the purposes of Item 512(F) of Regulation S-K, the undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

II-2

Signatures

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Buenos Aires, Argentina, on March 20, 2006.

BANCO MACRO BANSUD S.A.

By:  /s/ Jorge Horacio Brito

Name: Jorge Horacio Brito

Title:   Chief Executive Officer

By:  /s/ Delfín Jorge Ezequiel Carballo

Name: Delfín Jorge Ezequiel Carballo

Title: Chief Financial Officer

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Power of attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Roberto Julio Eilbaum, and each of them, individually, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, in connection with this registration statement, including to sign in the name and on behalf of the undersigned, this registration statement and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on March 20, 2006 in the capacities indicated:

		Title
Name
/s/ Jorge Horacio Brito Jorge Horacio Brito		Chairman and Chief Executive Officer
/s/ Delfín Jorge Ezequiel Carballo Delfín Jorge Ezequiel Carballo		Vice Chairman and Chief Financial Officer
Fernando Andrés Sansuste		Director
* Juan Pablo Brito Devoto		Director and Chief Accounting Officer
* Jorge Pablo Brito		Director
* Luis Carlos Cerolini		Director
/s/ Roberto Julio Eilbaum Roberto Julio Eilbaum		Director
* Alejandro Macfarlane		Director
* Carlos Enrique Videla		Director
Puglisi & Associates		Authorized Representative in the United States
* Donald J. Puglisi Authorized Signatory
*By:	/s/ Roberto Julio Eilbaum Attorney-in-fact

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EXHIBITS INDEX

1	.1*	Form of International Underwriting Agreement.
3	.1	Amended and Restated Bylaws of the Registrant.
4	.1*	Form of Deposit Agreement among the registrant, The Bank of New York, as depositary, and the holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipts.
4	.2*	Form of Standby Purchase Agreement.
5	.1	Form of Opinion of Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, Argentine legal counsel of the Registrant, as to the validity of the Class B shares.
8	.1*	Form of Opinion of Shearman & Sterling LLP, as to U.S. tax matters.
8	.2*	Form of Opinion of Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, as to Argentine tax matters.
21	.1*	List of subsidiaries.
23	.1	Consent of Pistrelli, Henry Martin y Asociados S.R.L.
23	.2*	Consent of Bruchou, Fernández Madero, Lombardi & Mitrani Abogados, Argentine legal counsel of the Registrant (included in Exhibits 5.1 and 8.2).
23	.3*	Consent of Counsel of Shearman & Sterling LLP, U.S. legal counsel of the Registrant (included in Exhibit 8.1).
24	.1*	Powers of Attorney (included on signature page to the Registration Statement).

*     Previously filed