SELECTED STATISTICAL INFORMATION

The following information for Santander Río is included for analytical purposes and is derived from, and should be read in conjunction with, the financial statements contained elsewhere herein as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Average balance sheet data has been calculated based upon the average of the sum of the month-end balances for each month in the applicable period. Average income statement and balance sheet data and other related statistical information have been prepared on a consolidated basis. We believe that the average data set forth herein accurately reflect in all material aspects our financial condition and results of operations at the date and for the periods specified.

The selected statistical information set forth below includes information at and for the years ended December 31, 2006, 2007 and 2008 derived from financial statements prepared in accordance with Argentine Banking GAAP. See “Presentation of Financial and Other Information.” Because of the material differences in criteria and presentation between Argentine Banking GAAP and IFRS, such information is not comparable with the selected statistical data as of and for the years ended December 31, 2009 and 2010. For a discussion of such differences, see note 47 to our consolidated financial statements.

Average Balance Sheet and Interest Rates

The following tables show our average balances and interest rates for each of the periods presented. With respect to the tables below and the tables under “—Changes in Net Interest Income—Volume and Rate Analysis” and “—Assets—Earning Assets—Yield Spread,” we have stated average balances on a gross basis, before netting our impairment losses, except for the total average asset figures, which include such netting and all average data have been calculated using monthly averages. We stop accruing interest on loans once they are more than 90 days past due. All our non-accrual loans are included in the table below under “other loans and credits.” Since 2006, our average yield on loans to individual customers has been greater than our overall average yield on loans. Additionally our average yield on loans to SME customers, while less than our overall average yield on loans, has been greater than our average yield on loans to global wholesale banking customers.

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Average Balance Sheets, Income from Interest-Earning

Assets and Interest on Interest-Bearing Liabilities

	IFRS
	For the three months ended March 31,
	(in thousands of pesos, except percentages)
	2010								2011
	Average balance		Interest			Average nominal rate			Average balance		Interest			Average nominal rate
Cash and balance with the Central Bank
Pesos	Ps.	624,912	Ps.	14,563			9.3	%	Ps.	1,416,507	Ps.	9,374			2.6	%
U.S. dollars(1)		1,489,207		33			—			1,570,882		77			—
Total	Ps.	2,114,119	Ps.	14,596			2.8	%	Ps.	2,987,389	Ps.	9,451			1.3	%
Loans and advances to credit institutions
Pesos	Ps.	307,543	Ps.	13,635			17.7	%	Ps.	381,574	Ps.	13,316			14.0	%
U.S. dollars(1)		238,964		28			—			357,179		118			0.1
Total	Ps.	546,507	Ps.	13,663			10.0	%	Ps.	738,753	Ps.	13,434			7.3	%
Loans and receivables — Private Sector
Pesos	Ps.	12,648,114	Ps.	607,753			19.2	%	Ps.	17,794,291	Ps.	799,402			18.0	%
U.S. dollars(1)		2,053,932		23,465			4.6			3,529,919		26,734			3.0
Total	Ps.	14,702,046	Ps.	631,218			17.2	%	Ps.	21,324,210	Ps.	826,136			15.5	%
Loans and receivables — Public Sector
Pesos	Ps.	121,852	Ps.	9,874			32.4	%	Ps.	34,417	Ps.	2,087			24.3	%
Total	Ps.	121,852	Ps.	9,874			32.4	%	Ps.	34,417	Ps.	2,087			24.3	%
Debt instruments
Pesos	Ps.	3,264,720	Ps.	100,043			12.3	%	Ps.	3,160,201	Ps.	103,703			13.1	%
U.S. dollars(1)		13,343		—			—			25,713		—
Total		3,278,063		100,043			12.2	%		3,185,914		103,703			13.0	%
Taxes on gross revenue			Ps.	(42,085	)						Ps.	(59,400	)
Total Interest-earning assets
Pesos	Ps.	16,967,141	Ps.	703,783			16.6	%	Ps.	22,786,990	Ps.	868,482			15.2	%
U.S. dollars(1)		3,795,446		23,526			2.5			5,483,693		26,929			2.0
Total	Ps.	20,762,587	Ps.	727,309			14.0	%	Ps.	28,270,683	Ps.	895,411			12.7	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the three months ended March 31,
	(in thousands of pesos, except percentages)
	2010					2011
	Average balance			Interest	Average nominal rate	Average balance			Interest	Average nominal rate
Cash and balance with the Central Bank and loans and advances to credit institutions
Pesos	Ps.	2,609,725				Ps.	2,844,378
U.S. dollars(1)		1,923,298					2,107,812
Total	Ps.	4,533,023				Ps.	4,952,190
Impairment losses
Pesos	Ps.	(366,282	)			Ps.	(313,895	)
U.S. dollars(1)		(39,521	)				(59,614	)

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	IFRS
	For the three months ended March 31,
	(in thousands of pesos, except percentages)
	2010							2011
	Average balance				Interest	Average nominal rate		Average balance				Interest	Average nominal rate
Total	Ps.	(405,803	)					Ps.	(373,509	)
Tangible assets
Pesos	Ps.	606,482						Ps.	779,562
Total	Ps.	606,482						Ps.	779,562
Intangible assets
Pesos	Ps.	37,086						Ps.	109,356
Total	Ps.	37,086						Ps.	109,356
Other non interest-earning assets
Pesos	Ps.	819,629						Ps.	815,761
U.S. dollars(1)		61,783							96,083
Total	Ps.	881,412						Ps.	911,844
Total non interest-earning assets
Pesos	Ps.	3,706,640						Ps.	4,235,162
U.S. dollars(1)		1,945,560							2,144,281
Total	Ps.	5,652,200						Ps.	6,379,443
Total average assets
Pesos	Ps.	20,673,781		Ps.	703,783	13.6	%	Ps.	27,022,152		Ps.	868,482	12.9	%
U.S. dollars(1)		5,741,006			23,526	1.6			7,627,974			26,929	1.4
Total	Ps.	26,414,787		Ps.	727,309	11.0	%	Ps.	34,650,126		Ps.	895,411	10.3	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the three months ended March 31,
	(in thousands of pesos, except percentages)
	2010							2011
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Deposits from credit institutions
Pesos	Ps.	113,033	Ps.	939		3.3	%	Ps.	87,605	Ps.	1,438		6.6	%
U.S. dollars(1)		108,921		618		2.3			156,233		746		1.9
Total	Ps.	221,954	Ps.	1,557		2.8	%	Ps.	243,838	Ps.	2,184		3.6	%
Customer deposits — Remunerated demand accounts(2)
Pesos	Ps.	1,761,730	Ps.	6,879		1.6	%		—		—		—
Total	Ps.	1,761,730	Ps.	6,879		1.6	%		—		—		—
Customer deposits — Saving accounts
Pesos	Ps.	3,570,571	Ps.	49,724		5.6	%	Ps.	5,600,465	Ps.	69,779		5.0	%
U.S. dollars(1)		2,372,089		89		—			3,650,915		124		—
Total	Ps.	5,942,660	Ps.	49,813		3.4	%	Ps.	9,251,380	Ps.	69,903		3.0	%
Customer deposits — Time deposits
Pesos	Ps.	4,905,991	Ps.	125,145		10.2	%	Ps.	7,177,639	Ps.	186,191		10.4	%
U.S. dollars(1)		1,148,040		1,462		0.5			1,298,436		972		0.3
Total	Ps.	6,054,031	Ps.	126,607		8.4	%	Ps.	8,476,075	Ps.	187,163		8.8	%
Marketable debt securities and other financial liabilities
Pesos	Ps.	298,985	Ps.	8,756		11.7	%	Ps.	209,942	Ps.	7,059		13.4	%
Total	Ps.	298,985	Ps.	8,756		11.7	%	Ps.	209,942	Ps.	7,059		13.4	%
Total interest-bearing liabilities

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	IFRS
	For the three months ended March 31,
	(in thousands of pesos, except percentages)
	2010							2011
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Pesos	Ps.	10,645,901	Ps.	191,443		7.2	%	Ps.	13,075,651	Ps.	264,467		8.1	%
U.S. dollars(1)		3,629,050		2,169		0.2			5,105,584		1,842		0.1
Total	Ps.	14,274,951	Ps.	193,612		5.4	%	Ps.	18,181,235	Ps.	266,309		5.9	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

(2)	In 2010, new Central Bank regulations eliminated this type of remunerated demand accounts. As a result, most of these balances are now maintained as non-remunerated demand accounts.

	IFRS
	For the three months ended March 31,
	(in thousands of pesos, except percentages)
	2010							2011
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Customer deposits — Demand deposits
Pesos	Ps.	4,562,831						Ps.	8,059,578
U.S. dollars(1)		777,080							933,949
Total	Ps.	5,339,911						Ps.	8,993,527
Other liabilities
Pesos	Ps.	2,319,424						Ps.	2,546,266
U.S. dollars(1)		1,043,703							958,066
Total	Ps.	3,363,127						Ps.	3,504,332
Shareholders’ equity
Pesos	Ps.	3,436,798						Ps.	3,971,032
Total	Ps.	3,436,798						Ps.	3,971,032
Total non interest-bearing liabilities and shareholders’ equity
Pesos	Ps.	10,319,053						Ps.	14,576,876
U.S. dollars(1)		1,820,783							1,892,015
Total	Ps.	12,139,836						Ps.	16,468,891
Total liabilities and shareholders’ equity
Pesos	Ps.	20,964,954	Ps.	191,443		3.7	%	Ps.	27,652,527	Ps.	264,467		3.8	%
U.S. dollars(1)		5,449,833		2,169		0.2			6,997,599		1,842		0.1
Total	Ps.	26,414,787	Ps.	193,612		2.9	%	Ps.	34,650,126	Ps.	266,309		3.1	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

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	IFRS
	For the year ended December 31,
	(in thousands of pesos, except percentages)
	2009								2010
	Average balance		Interest			Average nominal rate			Average balance		Interest			Average nominal rate
Cash and balance with the Central Bank
Pesos	Ps.	989,388	Ps.	91,187			9.2	%	Ps.	469,137	Ps.	38,020			8.1	%
U.S. dollars(1)		1,699,679		659			—			1,617,742		204			—
Total	Ps.	2,689,067	Ps.	91,846			3.4	%	Ps.	2,086,879	Ps.	38,224			1.8	%
Loans and advances to credit institutions
Pesos	Ps.	281,578	Ps.	50,301			17.9	%	Ps.	318,991	Ps.	49,367			15.5	%
U.S. dollars(1)		192,493		61			—			297,990		393			0.1
Total	Ps.	474,071	Ps.	50,362			10.6	%	Ps.	616,981	Ps.	49,760			8.1	%
Loans and receivables — Private Sector
Pesos	Ps.	12,136,526	Ps.	2,552,402			21.0	%	Ps.	14,592,128	Ps.	2,684,385			18.4	%
U.S. dollars(1)		1,820,576		125,053			6.9			2,392,793		92,657			3.9
Total	Ps.	13,957,102	Ps.	2,677,455			19.2	%	Ps.	16,984,921	Ps.	2,777,042			16.4	%
Loans and receivables — Public Sector
Pesos	Ps.	176,905	Ps.	45,052			25.5	%	Ps.	70,338	Ps.	30,566			43.5	%
Total	Ps.	176,905	Ps.	45,052			25.5	%	Ps.	70,338	Ps.	30,566			43.5	%
Debt instruments
Pesos	Ps.	1,910,365	Ps.	321,495			16.8	%	Ps.	2,915,431	Ps.	369,112			12.7	%
U.S. dollars(1)		37,628		1,489			4.0			20,518		982			4.8
Total	Ps.	1,947,993	Ps.	322,984			16.6	%	Ps.	2,935,949	Ps.	370,094			12.6	%
Taxes on gross revenue				(157,545	)							(190,353	)
Total Interest-earning assets
Pesos	Ps.	15,494,762	Ps.	2,902,892			18.7	%	Ps.	18,366,025	Ps.	2,981,097			16.2	%
U.S. dollars(1)		3,750,376		127,262			3.4			4,329,043		94,236			2.2
Total	Ps.	19,245,138	Ps.	3,030,154			15.7	%	Ps.	22,695,068	Ps.	3,075,333			13.6	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the year ended December 31,
	(in thousands of pesos, except percentages)
	2009					2010
	Average balance			Interest	Average nominal rate	Average balance			Interest	Average nominal rate
Cash and balance with the Central Bank and loans and advances to credit institutions
Pesos	Ps.	2,250,776				Ps.	3,005,201
U.S. dollars(1)		1,713,123					2,094,945
Total	Ps.	3,963,899				Ps.	5,100,146
Impairment losses
Pesos	Ps.	(308,643	)			Ps.	(302,399	)
U.S. dollars(1)		(39,618	)				(53,734	)
Total	Ps.	(348,261	)			Ps.	(356,133	)

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	IFRS
	For the year ended December 31,
	(in thousands of pesos, except percentages)
	2009							2010
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Tangible assets
Pesos	Ps.	614,284						Ps.	629,705
Total	Ps.	614,284						Ps.	629,705
Intangible assets
Pesos	Ps.	38,888						Ps.	72,019
U.S. dollars(1)		—							—
Total	Ps.	38,888						Ps.	72,019
Other non interest-earning assets
Pesos	Ps.	820,332						Ps.	827,298
U.S. dollars(1)		34,839							70,115
Total	Ps.	855,171						Ps.	897,413
Total non interest-earning assets
Pesos	Ps.	3,415,637						Ps.	4,231,824
U.S. dollars(1)		1,708,344							2,111,326
Total	Ps.	5,183,981						Ps.	6,343,150
Total average assets
Pesos	Ps.	18,910,399	Ps.	2,902,892		15.4	%	Ps.	22,597,849	Ps.	2,981,097		13.2	%
U.S. dollars(1)		5,458,720		127,262		2.3			6,440,369		94,236		1.5
Total	Ps.	24,369,119	Ps.	3,030,154		12.4	%	Ps.	29,038,218	Ps.	3,075,333		10.6	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the year ended December 31,
	(in thousands of pesos, except percentages)
	2009							2010
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Deposits from credit institutions
Pesos	Ps.	130,291	Ps.	5,327		4.1	%	Ps.	147,993	Ps.	11,040		7.5	%
U.S. dollars(1)		145,773		7,909		5.4			135,387		2,810		2.1
Total	Ps.	276,064	Ps.	13,236		4.8	%	Ps.	283,380	Ps.	13,850		4.9	%
Customer deposits — Remunerated demand accounts
Pesos	Ps.	1,635,969	Ps.	32,679		2.0	%	Ps.	440,432	Ps.	9,569		2.2	%
Total	Ps.	1,635,969	Ps.	32,679		8.0	%	Ps.	440,432	Ps.	9,569		8.7	%
Customer deposits — Saving accounts
Pesos	Ps.	2,995,558	Ps.	172,717		5.8	%	Ps.	4,185,439	Ps.	240,368		5.7	%
U.S. dollars(1)		1,972,469		300		—			2,897,764		418		—
Total	Ps.	4,968,027	Ps.	173,017		3.5	%	Ps.	7,083,203	Ps.	240,786		3.4	%
Customer deposits — Time deposits
Pesos	Ps.	5,361,435	Ps.	732,463		13.7	%	Ps.	5,623,220	Ps.	569,630		10.1	%
U.S. dollars(1)		1,238,970		14,336		1.2			1,204,222		4,536		0.4
Total	Ps.	6,600,405	Ps.	746,799		11.3	%	Ps.	6,827,442	Ps.	574,166		8.4	%
Marketable debt securities and other financial liabilities
Pesos	Ps.	330,693	Ps.	36,074		10.9	%	Ps.	150,714	Ps.	18,540		12.3	%
U.S. dollars(1)		82,938		5,209		6.3			—		—
Total	Ps.	413,631	Ps.	41,283		10.0	%	Ps.	150,714	Ps.	18,540		12.3	%

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	IFRS
	For the year ended December 31,
	(in thousands of pesos, except percentages)
	2009							2010
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Total interest-bearing liabilities
Pesos	Ps.	10,453,946	Ps.	979,260		9.4	%	Ps.	10,547,798	Ps.	849,147		8.1	%
U.S. dollars(1)		3,440,150		27,754		0.8			4,237,373		7,764		0.2
Total	Ps.	13,894,096	Ps.	1,007,014		7.2	%	Ps.	14,785,171	Ps.	856,911		5.8	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the year ended December 31,
	(in thousands of pesos, except percentages)
	2009							2010
	Average balance		Interest		Average nominal rate			Average balance		Interest		Average nominal rate
Customer deposits — Demand deposits
Pesos	Ps.	3,905,621						Ps.	6,634,366
U.S. dollars(1)		576,386							842,659
Total	Ps.	4,482,007						Ps.	7,477,025
Other liabilities
Pesos	Ps.	2,085,601						Ps.	2,457,748
U.S. dollars(1)		1,172,291							933,147
Total	Ps.	3,257,892						Ps.	3,390,895
Shareholders’ equity
Pesos	Ps.	2,735,124						Ps.	3,385,127
Total	Ps.	2,735,124						Ps.	3,385,127
Total non interest-bearing liabilities and shareholders’ equity
Pesos	Ps.	8,726,346						Ps.	12,477,241
U.S. dollars(1)		1,748,677							1,775,806
Total	Ps.	10,475,023						Ps.	14,253,047
Total liabilities and shareholders’ equity
Pesos	Ps.	19,180,292	Ps.	979,260		5.1	%	Ps.	23,025,039	Ps.	849,147		3.7	%
U.S. dollars(1)		5,188,827		27,754		0.5			6,013,179		7,764		0.1
Total	Ps.	24,369,119	Ps.	1,007,014		4.1	%	Ps.	29,038,218	Ps.	856,911		2.9	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

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	Argentine Banking GAAP
	For the year ended December 31, 2008
	(in thousands of pesos, except percentages)
	Average balance		Interest earned (1)(2)			Average nominal rate
Cash and due from the Central Bank
Pesos	Ps.	588,090	Ps.	8,787			1.5	%
U.S. dollars(1)		70,982		3,799			5.4
Total	Ps.	659,072	Ps.	12,586			1.9	%
Loans and receivables—Private Sector
Pesos	Ps.	11,002,643	Ps.	1,903,341			17.3	%
U.S. dollars(1)		2,229,792		134,889			6.0
Total	Ps.	13,232,435	Ps.	2,038,230			15.4	%
Loans and receivables — Public Sector
Pesos	Ps.	852,966	Ps.	93,339			10.9	%
Total	Ps.	852,966	Ps.	93,339			10.9	%
Debt instruments
Pesos	Ps.	658,038	Ps.	(260,612	)		(39.6	)%
Total	Ps.	658,038	Ps.	(260,612	)		(39.6	)%
Other interest-earning assets
Pesos	Ps.	1,000,032	Ps.	240,392			24.0	%
U.S. dollars(1)		118,570		5,498			4.6
Total	Ps.	1,118,602	Ps.	245,890			22.0	%

Total Interest-earning assets
Pesos	Ps.	14,101,769	Ps.	1,985,247			14.1	%
U.S. dollars(1)		2,419,344		144,186			6.0
Total	Ps.	16,521,113	Ps.	2,129,433			12.9	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

Argentine Banking GAAP

For the year ended December 31, 2008

(in thousands of pesos, except percentages)

Average balance

Interest earned (1)(2)

Average nominal rate

Cash and balance with the Central Bank and loans and advances to credit institutions

Pesos

Ps.

1,775,967

U.S. dollars(3)

1,275,645

Total

Ps.

3,051,612

Impairment losses

Pesos

Ps.

(251,195

)

U.S. dollars(3)

(35,474

)

Total

Ps.

(286,669

)

Tangible assets

Pesos

581,812

Total

Ps.

581,812

Intangible assets

Pesos

Ps.

94,256

Total

Ps.

94,256

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Argentine Banking GAAP

For the year ended December 31, 2008

(in thousands of pesos, except percentages)

Average balance

Interest earned (1)(2)

Average nominal rate

Other non interest-earning assets

Pesos

Ps.

1,679,595

U.S. dollars(3)

247,936

Total

Ps.

1,927,531

Total non interest-earning assets

Pesos

Ps.

3,880,435

U.S. dollars(3)

1,488,107

Total

Ps.

5,368,542

Total average assets

Pesos

Ps.

17,982,204

Ps.

1,985,247

11.0

U.S. dollars(3)

3,907,451

144,186

3.7

Total

Ps.

21,889,655

Ps.

2,129,433

9.7

(1)	Amounts include securities expenses for an amount of Ps. 302,233 offsetting income related to such instruments.

(2)	Amounts do not include exchange difference for Ps. 193,265 (gain).

(3)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	Argentine Banking GAAP
	For the year ended December 31, 2008
	(in thousands of pesos, except percentages)
	Average balance		Interest earned(1)		Average nominal rate
Deposits from credit institutions
Pesos	Ps.	171,801	Ps.	31,309		18.2	%
U.S. dollars(2)		432,021		31,426		7.3
Total	Ps.	603,822	Ps.	62,735		10.4	%
Customer deposits — Remunerated demand accounts
Pesos	Ps.	1,292,993	Ps.	25,572		2.0	%
Total	Ps.	1,292,993	Ps.	25,572		2.0	%
Customer deposits — Saving accounts
Pesos	Ps.	2,935,064	Ps.	107,865		3.7	%
U.S. dollars(2)		1,154,796		854		0.1
Total	Ps.	4,089,860	Ps.	108,719		2.7	%
Customer deposits — Time deposits
Pesos	Ps.	5,348,489	Ps.	706,602		13.2	%
U.S. dollars(2)		897,695		16,277		1.8
Total	Ps.	6,246,184	Ps.	722,879		11.3	%
Marketable debt securities and other financial liabilities
Pesos	Ps.	376,106	Ps.	32,785		8.7	%
U.S. dollars(2)		176,833		10,855		6.1
Total	Ps.	552,939	Ps.	43,640		7.9	%
Total interest-bearing liabilities
Pesos	Ps.	10,124,453	Ps.	904,134		8.9	%
U.S. dollars(2)		2,661,345		59,412		2.2

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Argentine Banking GAAP

For the year ended December 31, 2008

(in thousands of pesos, except percentages)

Average balance

Interest earned(1)

Average nominal rate

Total

Ps.

12,785,798

Ps.

963,546

7.5

Customer deposits — Demand deposits

Pesos

Ps.

3,698,956

U.S. dollars(2)

298,031

Total

Ps.

3,996,987

Other liabilities

Pesos

Ps.

2,634,561

U.S. dollars(2)

575,342

Total

Ps.

3,209,903

Shareholders’ equity

Pesos

Ps.

1,896,967

Total

Ps.

1,896,967

Total non interest-bearing liabilities and shareholders’ equity

Pesos

Ps.

8,230,484

U.S. dollars(2)

873,373

Total

Ps.

9,103,857

Total liabilities and shareholders’ equity

Pesos

Ps.

18,354,937

Ps.

904,134

4.9

U.S. dollars(2)

3,534,718

59,412

1.7

Total

Ps.

21,889,655

Ps.

963,546

4.4

(1)	Includes securities expenses for an amount of Ps. 302,233 offsetting income related to such instruments.

(2)	Does not include exchange difference for Ps. 193,265 (gain).

(3)	Does not include expenses related to guarantee deposits for Ps. 27,211 or turnover tax for Ps. 104,611.

Changes in Net Interest Income—Volume and Rate Analysis

The following tables allocate the changes in our net interest income between changes in average volume and changes in average rate for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 and for the year ended December 31, 2010 compared to the year ended December 31, 2009. We have calculated volume variances based on movements in average balances over the period and rate variance based on changes in interest rates on average interest-earning assets and average interest-bearing liabilities. We have allocated variances caused by changes in both volume and rate to volume. You should read the following tables and the footnotes thereto in light of our observations noted in “—Average Balance Sheet and Interest Rates.”

Change in Financial Income and Expense

	IFRS
	For the three months ended March 31, 2011 and 2010
	(in thousands of pesos)
	Volume		Rate			Net Change
INTEREST-EARNING ASSETS
Cash and balances with the Central Bank
Pesos	Ps.	5,239	Ps.	(10,428	)	Ps.	(5,189	)
U.S. dollars(1)		4		40			44
Total	Ps.	5,243	Ps.	(10,388	)	Ps.	(5,145	)
Loans and advances to credit institutions
Pesos	Ps.	2,584	Ps.	(2,903	)	Ps.	(319	)
U.S. dollars(1)		39		51			90
Total	Ps.	2,623	Ps.	(2,852	)	Ps.	(229	)

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	IFRS
	For the three months ended March 31, 2011 and 2010
	(in thousands of pesos)
	Volume			Rate			Net Change
Loans and receivables—Private Sector
Pesos	Ps.	231,190		Ps.	(39,541	)	Ps.	191,649
U.S. dollars(1)		11,178			(7,909	)		3,269
Total	Ps.	242,368		Ps.	(47,450	)	Ps.	194,918
Loans and receivables—Public Sector
Pesos	Ps.	(5,302	)	Ps.	(2,485	)	Ps.	(7,787	)
Total	Ps.	(5,302	)	Ps.	(2,485	)	Ps.	(7,787	)
Debt instruments
Pesos	Ps.	(3,430	)	Ps.	7,090		Ps.	3,660
Total	Ps.	(3,430	)	Ps.	7,090		Ps.	3,660

Taxes on gross revenue							Ps.	(17,315	)
Total interest-earning assets
Pesos	Ps.	221,812		Ps.	(57,113	)	Ps.	164,699
U.S. dollars(1)		8,291			(4,888	)		3,403
Total	Ps.	230,103		Ps.	(62,001	)	Ps.	168,102

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the three months ended March 31, 2011 and 2010
	(in thousands of pesos)
	Volume			Rate			Net Change
INTEREST-BEARING LIABILITIES
Deposits from credit institutions
Pesos		(417	)		916			499
U.S. dollars(1)		226			(98	)		128
Total		(191	)		818			627
Customer deposits — Remunerated demand accounts
Pesos		(6,879	)		0			(6,879	)
Total		(6,879	)		0			(6,879	)
Customer deposits — Saving accounts
Pesos		25,291			(5,236	)		20,055
U.S. dollars(1)		43			(8	)		35
Total		25,334			(5,244	)		20,090
Customer deposits — Time deposits
Pesos		58,928			2,118			61,046
U.S. dollars(1)		113			(603	)		(490	)
Total		59,041			1,515			60,556
Marketable debt securities and other financial liabilities
Pesos		(2,994	)		1,297			(1,697	)
Total		(2,994	)		1,297			(1,697	)
Total interest-bearing liabilities
Pesos		49,144			23,880			73,024
U.S. dollars(1)		532			(860	)		(328	)
Total		49,676			23,020			72,696

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

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	IFRS
	For the years ended December 31, 2010 and 2009
	(in thousands of pesos)
	Volume			Rate			Net Change
INTEREST-EARNING ASSETS
Cash and balances with the Central Bank
Pesos	Ps.	(42,162	)	Ps.	(11,005	)	Ps.	(53,167	)
U.S. dollars(1)		(10	)		(445	)		(455	)
Total	Ps.	(42,172	)	Ps.	(11,450	)	Ps.	(53,622	)
Loans and advances to credit institutions
Pesos	Ps.	5,790		Ps.	(6,724	)	Ps.	(934	)
U.S. dollars(1)		139			193			332
Total	Ps.	5,929		Ps.	(6,531	)	Ps.	(602	)
Loans and receivables—Private Sector
Pesos	Ps.	451,735		Ps.	(319,752	)	Ps.	131,983
U.S. dollars(1)		22,158			(54,554	)		(32,396	)
Total	Ps.	473,893		Ps.	(374,306	)	Ps.	99,587
Loans and receivables—Public Sector
Pesos	Ps.	(46,310	)	Ps.	31,824		Ps.	(14,486	)
Total	Ps.	(46,310	)	Ps.	31,824		Ps.	(14,486	)
Debt instruments
Pesos	Ps.	127,248		Ps.	(79,631	)	Ps.	47,617
U.S. dollars(1)		(819	)		312			(507	)
Total	Ps.	126,429		Ps.	(79,319	)	Ps.	47,110

Taxes on gross revenue							Ps.	(32,808	)
Total interest-earning assets
Pesos	Ps.	466,052		Ps.	(387,847	)	Ps.	78,205
U.S. dollars(1)		12,597			(45,623	)		(33,026	)
Total	Ps.	478,649		Ps.	(433,470	)	Ps.	45,179

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

	IFRS
	For the years ended December 31, 2010 and 2009
	(in thousands of pesos)
	Volume			Rate			Net Change
INTEREST-BEARING LIABILITIES
Deposits from credit institutions
Pesos	Ps.	1,321		Ps.	4,392		Ps.	5,713
U.S. dollars(1)		(216	)		(4,883	)		(5,099	)
Total	Ps.	1,105		Ps.	491		Ps.	614

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	IFRS
	For the years ended December 31, 2010 and 2009
	(in thousands of pesos)
	Volume			Rate			Net Change
Customer deposits — Remunerated demand accounts
Pesos	Ps.	(25,975	)	Ps.	2,865		Ps.	(23,110	)
Total	Ps.	(25,975	)	Ps.	2,865		Ps.	(23,110	)
Customer deposits — Saving accounts
Pesos	Ps.	68,334		Ps.	(683	)	Ps.	67,651
U.S. dollars(1)		133			(15	)		118
Total	Ps.	68,467		Ps.	(698	)	Ps.	67,769
Customer deposits — Time deposits
Pesos	Ps.	26,519		Ps.	(189,352	)	Ps.	(162,833	)
U.S. dollars(1)		(131	)		(9,669	)		(9,800	)
Total	Ps.	26,388		Ps.	(199,021	)	Ps.	(172,633	)
Marketable debt securities and other financial liabilities
Pesos	Ps.	(22,140	)	Ps.	4,606		Ps.	(17,534	)
U.S. dollars(1)		(5,209	)		—			(5,209	)
Total	Ps.	(27,349	)	Ps.	4,606		Ps.	(22,743	)
Total interest-bearing liabilities
Pesos	Ps.	7,556		Ps.	(137,669	)	Ps.	(130,113	)
U.S. dollars(1)		1,461			(21,451	)		(19,990	)
Total	Ps.	9,016		Ps.	(159,120	)	Ps.	(150,103	)

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

Assets

Earning Assets—Yield Spread

The following tables analyze our average earning assets, interest income and dividends on equity securities and net interest income and shows gross yields, net yields and yield spread for each of the periods indicated. You should read this table and the footnotes thereto in light of our observations noted in “—Average Balance Sheet and Interest Rates.”

	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Net Interest Margin and Spread	(in thousands of pesos, except percentages)
Average earning assets
Pesos	Ps.	15,494,762		Ps.	18,366,025		Ps.	16,967,141		Ps.	22,786,990
U.S. dollars(1)		3,750,376			4,329,043			3,795,446			5,483,693
Total	Ps.	19,245,138		Ps.	22,695,068		Ps.	20,762,587		Ps.	28,270,683
Net interest income
Pesos	Ps.	1,923,632		Ps.	2,131,950		Ps.	512,340		Ps.	604,015
U.S. dollars(1)		99,508			86,472			21,357			25,087
Total	Ps.	2,023,140		Ps.	2,218,422		Ps.	533,697		Ps.	629,102
Gross yield(2)
Pesos		18.73	%		16.23	%		16.59	%		15.25	%
U.S. dollars(1)		3.39			2.18			2.48			1.96
Total		15.75	%		13.55	%		14.01	%		12.67	%
Net yield(3)
Pesos		12.41	%		11.61	%		12.08	%		10.60	%
U.S. dollars(1)		2.65			2.00			2.25			1.83
Total		10.51	%		9.77	%		10.28	%		8.90	%
Yield spread(4)
Pesos		9.37	%		8.18	%		9.40	%		7.15	%
U.S. dollars(1)		2.59			1.99			2.24			196
Total		8.50	%		7.75	%		8.59	%		6.81	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

(2)	Gross yield is the quotient of interest divided by average interest earning assets, which are loans, receivables, debt instruments and other financial assets which yield interest or similar income.

(3)	Net yield is the quotient of net interest income divided by average earning assets.

(4)	Yield spread is the difference between gross yield on earning assets and the average cost of interest-bearing liabilities.

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	Argentine Banking GAAP
	For the year ended December 31,
	2008
Net Interest Margin and Spread	(in thousands of pesos or U.S. dollars, except percentages)
Average earning assets
Pesos	Ps.	14,101,769
U.S. dollars(1)		2,419,344
Total	Ps.	16,521,113
Net interest income
Pesos	Ps.	1,081,114
U.S. dollars(1)		84,773
Total	Ps.	1,165,887
Gross yield
Pesos		14.08	%
U.S. dollars(1)		5.96
Total		12.89	%
Net yield
Pesos		7.67	%
U.S. dollars(1)		3.50
Total		7.06	%
Yield spread
Pesos		5.15	%
U.S. dollars(1)		3.73
Total		5.35	%

(1)	Represents assets or liabilities denominated in U.S. dollars. Values are presented in pesos.

Return on Average Equity and Assets

The following tables present our selected financial ratios for the periods indicated.

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	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Return on Average Equity and Assets	(in thousands of pesos, except percentages)
ROAA: Return on average total assets		4.31	%		4.68	%		4.68	%		4.24	%
ROAE: Return on average stockholders’ equity		38.41			40.18			35.95			37.03
Pay-out(1)		0.78			0.59			—			—
Average stockholders’ equity as a percentage of average total assets		11.22	%		11.66	%		13.01	%		11.46	%

(1)	Dividends declared per share divided by net income per share. On April 14, 2011, we paid a dividend of Ps. 800 million, equal to Ps. 0.742 per share, with respect to fiscal year 2010.

	Argentine Banking GAAP
	For the year ended December 31,
	2008
Return on Average Equity and Assets	(in percentages)
ROAA: Return on average total assets		1.73	%
ROAE: Return on average stockholders’ equity		19.95
Pay-out(1)		0.24
Average stockholders’ equity as a percentage of average total assets		8.67

(1)	Dividends declared per share divided by net income per share.

Interest-Earning Assets

The following table shows the percentage mix of our average interest-earning assets for the years indicated. You should read this table in light of our observations noted in “—Average Balance Sheet and Interest Rates.”

	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Average Interest-Earning Assets	(in percentages)
Cash and balances with the Central Bank		14.0	%		9.2	%		10.2	%		10.6	%
Loans and advances to credit institutions		2.5			2.7			2.6			2.6
Loans and receivables – Private sector		72.5			74.8			70.8			75.4
Loans and receivables – Public sector		0.9			0.3			0.6			0.1
Debt securities		10.1			12.9			15.8			11.3
Other interest-earning assets		—			—			—			—
Total interest-earning assets		100.0	%		100.0	%		100.0	%		100.0	%

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	Argentine Banking GAAP
	For the year ended December 31,
	2008
Average Interest-Earning Assets	(in percentages)
Cash and balances with the Central Bank		4.0	%
Loans and advances to credit institutions		—
Loans and receivables - Private sector		80.1
Loans and receivables - Public sector		5.2
Debt securities		4.0
Other interest-earning assets		6.8
Total interest-earning assets		100.0	%

Investment Securities

At March 31, 2011 and December 31, 2010, the book value of our investment securities was Ps. 3,075 million and Ps. 3,596 million, respectively, (representing 8.5% and 10.6% of our total assets at such dates). Argentine government securities and instruments issued by the Central Bank represented Ps. 2,904 million, or 94.4% of our investment securities at March 31, 2011 and Ps. 3,411 million, or 94.9% of our investment securities at December 31, 2010. At December 31, 2009, the book value of our investment securities was Ps. 2,922 million, (representing 11.1% of our total assets), with Argentine government securities and instruments issued by the Central Bank representing Ps. 2,788 million, or 95.3% of our investment securities. For a discussion of how we value our investment securities, see notes 7 and 8 to our consolidated financial statements.

The following tables show the book values of our investment securities by type and domicile of counterparty at each of the dates indicated. As of March 31, 2011 and December 31, 2010, Ps. 571 million and Ps. 664 million of our available-for-sale debt instruments, respectively, were issued by the Argentine government.

	IFRS
	For the year ended December 31,				For the three months ended March 31,
	2009		2010		2010		2011
Investment Securities	(in thousands of pesos)
Debt instruments issued by the Argentine government (excluding Central Bank)	Ps.	799,997	Ps.	1,307,761	Ps.	538,798	Ps.	1,290,141
Debt instruments issued by the Central Bank (Nobacs and Lebacs)		1,984,489		2,103,280		2,705,648		1,613,373
Debt instruments issued by private sector		106,933		150,099		83,876		141,636
Total debt instruments		2,891,419		3,561,140		3,328,322		3,045,150
Total equity securities		30,530		34,490		31,846		29,418
Total investment securities	Ps.	2,921,949	Ps.	3,595,630	Ps.	3,360,168	Ps.	3,074,568

	Argentine Banking GAAP
	For the year ended December 31,
	2008
Investment Securities	(in thousands of pesos)
Debt instruments issued by the Argentine government (excluding Central Bank)(1)	Ps.	1,015,372
Debt instruments issued by the Central Bank (Nobacs and Lebacs)		1,737,683
Debt instruments issued by private sector		16,592
Total debt instruments		2,769,647
Total equity securities		47,117
Total investment securities	Ps.	2,816,764

(1)	Includes Ps. 155,069 that was classified as available for sale financial assets as of January 1, 2009.

The following tables analyze the maturities and weighted average yields of our debt investment securities (before impairment allowances) at December 31, 2010.

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	Maturity as of December 31, 2010
	Less than 1 year		1 to 5 years		5 to 10 years		More than 10 years		Total
Investment Securities
Debt instruments issued by the Argentine government	Ps.	46,526	Ps.	680,284	Ps.	578,064	Ps.	2,887	Ps.	1,307,761
Debt instruments issued by the Central Bank		2,057,424		45,856		0		0		2,103,280
Debt instruments issued by private sector		125,360		22,620		2,009		110		150,099
Total debt instruments	Ps.	2,229,310	Ps.	748,760	Ps.	580,073	Ps.	2,997	Ps.	3,561,140

Loans and Advances to Credit Institutions

The following tables show our short-term funds deposited with other banks at each of the dates indicated.

	IFRS
	For the fiscal year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Loans and Advances to Credit Institutions	(in thousands of pesos)
Reciprocal accounts	Ps.	174,053		Ps.	73,608		Ps.	78,084		Ps.	124,485
Time deposits		413,311			615,596			424,968			684,643
Reverse repurchase agreements		299,406			381,567			105,947			114,087
Impairment losses		(3,483	)		(3,916	)		(2,847	)		(3,627	)
Total	Ps.	883,287		Ps.	1,066,855		Ps.	606,152		Ps.	919,588

Loan Portfolio

At March 31, 2011 and December 31, 2010, our total loans and advances to customers, which excludes our loans and advances to credit institutions, equaled Ps. 21,645.2 million and Ps. 19,804.5 million, respectively, representing 59.7% and 58.5% of our total assets at such dates. Net of impairment losses, loans and advances to customers equaled Ps. 21,297.8 million and Ps. 19,454.7 million at March 31, 2011 and December 31, 2010, respectively, representing 58.7% and 57.5% of our total assets at such dates. We also have loan commitments drawable by third parties, which amounted to Ps. 357 million and Ps. 303.9 million at March 31, 2011 and December 31, 2010, respectively. Loan commitments drawable by third parties includes mostly credit card lines and commercial commitments. While credit cards are unconditionally cancelable by the issuer, commercial commitments are generally one year facilities, subject to an evaluation of the customer’s projected cash flows and financial history.

Types of Loans by Type of Customer

The following tables analyze our loans and advances to customers (including securities purchased under agreements to resell), by type of customer loan, at each of the dates indicated. For each category of loan, we maintain specific risk management policies in line with the standards of the Santander Group and as managed and

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monitored by our board of directors through the risk committee. Our credit approval processes for each category of loan are structured primarily around our business segments. See “Business—Credit Risk Management” for details on our credit approval policies for retail and wholesale lending.

The Bank has a diversified loan portfolio with no concentration exceeding 10% of total loans.

	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Loans by Type of Customer	(in thousands of pesos)
Public sector	Ps.	126,494		Ps.	33,305		Ps.	129,103		Ps.	34,958
Commercial, financial and industrial		6,230,953			9,553,678			6,978,976			10,499,408
Real estate, construction and other mortgages		1,495,411			1,572,633			1,433,428			1,589,448
Installment loans to individuals		6,156,327			8,494,768			6,673,407			9,366,145
Lease financing		178,095			150,122			157,733			155,240
Total loans and leases, gross		14,187,280			19,804,506			15,372,647			21,645,199
Allowances for possible loan losses		(382,752	)		(349,809	)		(400,156	)		(347,373	)
Loans and leases, net of allowances	Ps.	13,804,528		Ps.	19,454,697		Ps.	14,972,491		Ps.	21,297,826

	Argentine Banking GAAP
	For the fiscal years ending December 31,
	2006			2007			2008
Loans by Type of Customer	(in thousands of pesos)
Public sector	Ps.	1,219,928		Ps.	827,362		Ps.	883,586
Commercial, financial and industrial		3,999,717			5,571,732			6,582,104
Real estate, construction and other mortgages		1,326,159			1,718,297			1,641,569
Installment loans to individuals		2,581,799			4,142,089			5,432,636
Lease financing		259,020			326,497			294,027
Total loans and leases, gross		9,386,624			12,585,977			14,833,922
Allowances for possible loan losses		(152,784	)		(193,898	)		(273,120	)
Loans and leases, net of allowances	Ps.	9,233,840		Ps.	12,392,079		Ps.	14,560,802

Maturity

The following tables set forth an analysis by maturity of our loans and advances to customers by type of loan as of December 31, 2010.

	IFRS
	As of December 31, 2010
	Less than 1 year						1 to 5 Years					Over 5 years					Total
	Balance			% of total			Balance		% of total			Balance		% of total			Balance			% of total
	(in thousands of pesos, except percentages)
Public sector	Ps.	33,305			0.24	%	Ps.	—		—	%	Ps.	—		—	%	Ps.	33,305			0.17	%
Commercial, financial and industrial		6,940,110			50.80			479,483		13.69			2,137,085		93.25			9,553,678			49.11
Real estate, construction and other mortgages		684,121			5.01			733,934		20.95			154,578		6.75			1,572,633			8.08
Installment loans to individuals		6,209,917			45.45			2,284,851		65.22			—		—			8,494,768			43.66
Lease financing		145,109			1.06			5,013		0.14			—		—			150,122			0.77
Total loans and leases, gross		14,012,560			102.56			3,503,281		100.0			2,288,663		100.0			19,804,506			101.8
Allowances for possible loan losses		(349,809	)		(2.56	)		—		—			—		—			(349,809	)		(1.80	)
Loans and leases, net of allowances	Ps.	13,662,753			100.00	%	Ps.	3,503,281		100.00	%	Ps.	2,288,663		100.00	%	Ps.	19,454,697			100.00	%

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Fixed and Variable Rate Loans

The following table sets forth a breakdown of our fixed and variable rate loans having a maturity of more than one year as of December 31, 2010.

	IFRS
	As of December 31,
	2010
Interest rate formula	(in thousands of pesos)
Fixed interest rate	Ps.	13,400,734
Floating rate		6,053,963
Total	Ps.	19,454,697

Movements in Allowances for Credit Losses

The following tables analyze movements in our allowances for credit losses for each of the periods indicated below. For further discussion of movements in the allowances for credit losses, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations for the Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010—Impairment Losses on Financial Assets (Net)” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations for the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009—Impairment Losses on Financial Assets (Net).”

	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Movements in Allowances for Impairment Losses	(in thousands of pesos)
Impairment losses at beginning of year	Ps.	314,753		Ps.	386,235		Ps.	386,235		Ps.	353,725
Provisions for credit losses		471,236			256,357			86,458			75,010
Charge-offs against credit loss allowances		(399,754	)		(288,867	)		(69,690	)		(77,735	)
Allowances for Impairment losses at end of year	Ps.	386,235		Ps.	353,725		Ps.	403,003		Ps.	351,000

	Argentine Banking GAAP
	For the year ended December 31,
	2006			2007			2008
Movements in Allowances for Impairment Losses	(in thousands of pesos)
Impairment losses at beginning of year	Ps.	123,962		Ps.	153,170		Ps.	194,396
Provisions for credit losses		74,548			188,337			302,965
Charge-offs against credit loss allowances		(45,340	)		(147,111	)		(223,302	)
Allowances for Impairment losses at end of year	Ps.	153,170		Ps.	194,396		Ps.	274,059

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The tables below show a breakdown of recoveries, net provisions and charge-offs against credit loss allowance by type and domicile of borrower for the periods indicated.

	IFRS
	For the year ended December 31,				For the three months ended March 31,
	2009		2010		2010		2011
Recoveries of Loans Previously Charged Off-by type	(in thousands of pesos)
Commercial, financial and industrial	Ps.	17,457	Ps.	17,658	Ps.	3,161	Ps.	1,608
Real estate and construction		3,628		3,044		769		502
Installment loans to individuals		41,714		57,845		10,894		12,259
Total recoveries of loans previously charge-off	Ps.	62,799	Ps.	78,548	Ps.	14,824	Ps.	14,369

	For the year ended December 31,
	Argentine Banking GAAP
	2006		2007		2008
Recoveries of Loans Previously Charged Off – by type	(in thousands of pesos)
Commercial, financial and industrial	Ps.	68,380	Ps.	41,973	Ps.	11,577
Real estate and construction		25,629		10,677		7,046
Installment loans to individuals		1,629		15,663		42,095
Total recoveries of loans previously charged-off	Ps.	95,638	Ps.	68,313	Ps.	60,718

	IFRS
	For the year ended December 31,				For the three months ended March 31,
	2009		2010		2010		2011
Net Provisions for Credit Losses	(in thousands of pesos)
Commercial, financial and industrial	Ps.	96,134	Ps.	56,151	Ps.	18,384	Ps.	4,755
Real estate and construction		1,898		1,578		166		(1,778	)
Installment loans to individuals		373,204		198,628		67,908		72,033
Total provisions for credit losses	Ps.	471,236	Ps.	256,357	Ps.	86,458	Ps.	75,010

	Argentine Banking GAAP
	For the year ended December 31,
	2008
Provisions for Credit Losses	(in thousands of pesos)
Commercial, financial and industrial	Ps.	68,231
Real estate and construction		(8,318	)
Installment loans to individuals		243,052
Total provisions for credit losses	Ps.	302,965

	IFRS
	For the year ended December 31,				For the three months ended March 31,
	2009		2010		2010		2011
Charge-offs Against Credit Loss Allowances	(in thousands of pesos)
Commercial, financial and industrial	Ps.	48,725	Ps.	41,845	Ps.	7,762	Ps.	18,778
Real estate and construction		1,917		2,353		772		671
Installment loans to individuals		349,112		244,669		61,156		58,286
Total charge-offs against credit loss allowances	Ps.	399,754	Ps.	288,867	Ps.	69,690	Ps.	77,735

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	Argentine Banking GAAP
	For the year ended December 31,
	2008
Charge-offs Against Credit Loss Allowances	(in thousands of pesos)
Commercial, financial and industrial	Ps.	25,233
Real estate and construction		719
Installment loans to individuals		197,350
Total charge-offs against credit loss allowances	Ps.	223,302

The tables below show a breakdown of impairment losses by type of borrowers and the percentage of loans in each category as a share of total loans at the date indicated.

	IFRS
	For the three months ended March 31,
	2010		% of total loans			2011		% of total loans
Impairment Losses	(in thousands of pesos, except percentages)
Commercial, financial and industrial	Ps.	107,885		26.77	%	Ps.	97,547		27.79	%
Real estate and construction		8,164		2.03			5,546		1.58
Installment loans to individuals		286,954		71.20			247,907		70.63
Total	Ps.	403,003		100.00	%	Ps.	351,000		100.00	%

	IFRS
	For the year ended December 31,
	2009		% of total loans			2010		% of total loans
Impairment Losses	(in thousands of pesos, except percentages)
Commercial, financial and industrial	Ps.	97,263		25.03	%	Ps.	111,569		31.05	%
Real estate and construction		8,770		2.26			7,995		2.22
Installment loans to individuals		280,202		72.71			234,161		66.73
Total	Ps.	386,235		100.00	%	Ps.	353,725		100.00	%

	Argentine Banking GAAP
	For the year ended December 31,
	2008		% of total loans
Impairment Losses	(in thousands of pesos, except percentages)
Commercial, financial and industrial	Ps.	49,854		16.17	%
Real estate and construction		8,790		2.85
Installment loans to individuals		215,415		80.98
Total	Ps.	274,059		100.00	%

Impaired Assets

The following tables show our impaired assets, excluding country-risk.

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	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Impaired Assets	(in thousands of pesos)
Past-due and other non-performing assets	Ps.	304,674		Ps.	265,587		Ps.	291,896		Ps.	228,297
Non-performing loans as a percentage of total loans		2.02	%		1.27	%		1.83	%		1.01	%
Net loan charge-offs as a percentage of total loans		2.65	%		1.38	%		1.74	%		1.38	%

	Argentine Banking GAAP
	For the year ended December 31,
	2006			2007			2008
Impaired Assets	(in thousands of pesos, except percentages)
Past-due and other non-performing assets	Ps.	65,687		Ps.	82,345		Ps.	209,915
Non-performing loans as a percentage of total loans		0.65	%		0.61	%		1.35	%
Net loan charge-offs as a percentage of total loans		(0.50	)%		0.59	%		1.04	%

Evolution of Impaired Assets

The following tables show the movement in our impaired assets (excluding country risk).

	IFRS
	For the year ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Evolution of Impaired Assets	(in thousands of pesos)
Opening balance	Ps.	209,915		Ps.	304,674		Ps.	304,673		Ps.	265,587
Net additions		494,513			249,780			56,913			40,445
Charge-offs		(399,754	)		(288,867	)		(69,690	)		(77,735	)
Closing balance	Ps.	304,674		Ps.	265,587		Ps.	291,896		Ps.	228,297

	Argentine Banking GAAP
	For the year ended December 31,
	2006			2007			2008
Evolution of Impaired Assets	(in thousands of pesos)
Opening balance	Ps.	69,351		Ps.	65,687		Ps.	82,345
Net additions		41,676			163,769			350,872
Charge-offs		(45,340	)		(147,111	)		(223,302	)
Closing balance	Ps.	65,687		Ps.	82,345		Ps.	209,915

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Impaired Asset Ratios

The following tables show the ratio of our impaired assets to total computable credit risk and our coverage ratio at the dates indicated.

	IFRS
	For the three months ended March 31,						For the year ended December 31,
	2010			2011			2009			2010
Impaired Assets and Ratios	(in thousands of pesos)
Computable credit risk(1)	Ps.	15.981.646		Ps.	22.568.414		Ps.	15,074,050		Ps.	20,875,277
Non-performing assets		291,896			228,297			304,674			265,587
Commercial, financial and industrial		112,355			81,449			126,519			104,972
Real estate — mortgage		7,657			5,637			7,322			7,450
Installment loans to individuals		171,884			141,211			170,833			153,165
Impairment losses		403,003			351,000			386,235			353,725
Ratios
Non-performing assets to computable credit risk		1.83	%		1.01	%		2.02	%		1.27	%
Coverage ratio(2)		138.06	%		153.75	%		126.77	%		133.19	%

(1)	Computable credit risk is the sum of the face amounts of loans and leases (including non-performing assets), guarantees and documentary credits.

(2)	Impairment losses as a percentage of non-performing assets.

Liabilities

Deposits

The principal components of our deposits are customer demand, time and notice deposits, and international and domestic inter-bank deposits. Our retail customers are the principal source of our demand, time and notice deposits.

	IFRS
	For the year ended December 31,				For the three months ended March 31,
	2009		2010		2010		2011
Deposits	(in thousands of pesos)
Deposits from Central Bank and credit institutions
Reciprocal accounts	Ps.	15	Ps.	93	Ps.	102	Ps.	824
Time deposits		152,017		181,226		138,069		190,489
Other demand accounts		56,442		59,237		123,803		46,800
Accrued interest		1,441		1,382		1,130		886
Total	Ps.	209,915	Ps.	241,938	Ps.	263,104	Ps.	238,999
Customer deposits
Current accounts	Ps.	6,944,131	Ps.	9,034,807	Ps.	7,446,019	Ps.	8,992,645
Savings accounts		5,696,186		8,982,016		6,199,225		9,560,369
Other demand deposits		323,856		413,224		289,873		396,296
Time deposits		6,273,386		7,653,234		6,046,195		8,934,930
Accrued interest		105,154		91,094		84,202		99,213
Total	Ps.	19,342,713	Ps.	26,174,375	Ps.	20,065,514	Ps.	27,983,453
Total deposits	Ps.	19,552,628	Ps.	26,416,313	Ps.	20,328,618	Ps.	28,222,452

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	Argentine Banking GAAP
	For the year ended December 31,
	2006		2007		2008
Deposits	(in thousands of pesos)
Customer deposits
Current accounts	Ps.	3,202,781	Ps.	4,908,754	Ps.	5,771,793
Savings accounts		2,957,270		4,086,326		4,335,416
Other demand deposits		207,275		265,520		249,181
Time deposits		6,204,683		5,875,407		6,605,744
Total Deposits	Ps.	12,572,009	Ps.	15,136,007	Ps.	16,962,134

Short-Term Borrowings

The following tables show our short-term borrowings consisting of Argentine government securities that we sold under agreements to repurchase for purpose of funding our operations.

	IFRS
	For the three months ended March 31,
	2011
	Amount		Average rate
Short-Term Borrowings	(in thousands of pesos, except percentages)
Securities sold under agreements to repurchase (principally Argentine government securities, excluding those issued by the Central Bank)
At March 31	Ps.	—
Average during period		29,316		9.8	%
Maximum month-end balance		—
Total short-term borrowings at period end	Ps.	—

	IFRS
	For the year ended December 31,
	2009					2010
	Amount		Average rate			Amount		Average rate
Short-Term Borrowings	(in thousands of pesos, except percentages)
Securities sold under agreements to repurchase (principally Argentine government securities, excluding those issued by the Central Bank)
At December 31	Ps.	—				Ps.	—
Average during year		2,615		10.7	%		49,007		9.7	%
Maximum month-end balance		—					142,124
Total short-term borrowings at year-end	Ps.	—				Ps.	—

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	Argentine Banking GAAP
	2008
	Amount		Average rate
Short-Term Borrowings	(in thousands of pesos, except percentages)
Securities sold under agreements to repurchase (principally Argentine government securities)
At December 31	Ps.	340
Average during year		2,476		8.4	%
Maximum month-end balance		93,627
Total short-term borrowings at year-end	Ps.	—

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ARGENTINE BANKING REGULATORY FRAMEWORK

The following is a summary of certain matters relating to the Argentine banking system, including provisions of Argentine law and regulations applicable to financial institutions in Argentina. This summary is not intended to constitute a complete analysis of all laws and regulations applicable to financial institutions in Argentina.

Overview of Central Bank

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

Since 1977, banking activities in Argentina have been regulated primarily by the 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 SEFyC. The SEFyC 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. If a bank does not comply with the technical ratios, it must explain such non-compliance to the Central Bank. There are specific regulations governing reinstatement plans and other measures arising from the failure to comply by these ratios.

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

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

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

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

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Central Bank Supervision

Financial institutions operating in Argentina are subject to the supervision of the Central Bank on a consolidated basis (irrespective of the observance on an individual basis of the regulations applicable thereto). Such entities must file periodic consolidated financial statements that reflect certain 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 impairment loan losses, among others, must be calculated on a consolidated basis.

For the purposes of these regulations:

A “subsidiary” of a local financial entity is any entity or company in any of the following positions:

(1)

the local financial entity has or controls, direct or indirectly, more than 50% of the total votes of any instrument with voting rights in such entity or company,

(2)

the local financial entity has direct or indirect control to determine by itself the composition of most of the management bodies of such entity or company, or

(3)

a majority of the directors of the local financial entity is also a majority of the directors of such entity or company.

The possession or control by the financial entity is considered indirect if exercised through another legal person, its controlling shareholders or directors appointed by such controlling shareholders or persons linked to them, in control of more than 50% –measured as a whole– of the total votes of any instrument with voting rights in another entity or company. Also considered indirect is any other form of control or interest where, in the opinion of the SEFyC (even if the shareholders’ interest does not exceed 50%) a situation of control, and therefore the subsidiary character of an entity or company, is configured or can be inferred from the evidence collected.

A “significant subsidiary” is any subsidiary:

(1)

whose assets, possible commitments and other transactions recorded in memorandum accounts represent 10% or more of the Responsabilidad Patrimonial Computable, or regulatory capital or RC, of the local financial entity and its subsidiaries abroad; or

(2)

whose results of operations corresponding to the current fiscal year represent 10% or more of the results of operations for the current fiscal year of the local financial entity and its subsidiaries abroad.

Permitted Activities and Investments

The Financial Institutions Law governs 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. Commercial banks are authorized to conduct the following activities: (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 subject to approval of the CNV; (iii) make and receive loans; (iv) guarantee customers’ debts; (v) trade foreign currency; (vi) issue credit cards; (vii) act, subject to certain conditions, as brokers in real estate transactions; (viii) carry out commercial financing transactions; (ix) act as registrars of mortgage bonds and (x) act as trustees. In addition, pursuant to the Financial Institutions Law and Communication “A” 3086, commercial banks are prohibited from investing in commercial, industrial, agricultural and other types of companies that do not provide supplemental services to banking services (as defined by applicable Central Bank regulations), without the express authorization of the Central Bank. However, banks are allowed to hold interests in such companies if such interests do not exceed 12.5% of such bank’s voting stock or capital stock.

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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 RC. In addition, the total amount of a commercial bank’s investments in the following activities is limited to 15% of such bank’s RC: (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.” 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 Financial Institutions Law forbids commercial banks from: (i) creating liens on their assets without prior approval from the Central Bank; (ii) accepting their own shares as security; (iii) conducting transactions with their own directors or managers and with companies or persons related thereto under terms that are more favorable than those regularly offered to other customers and (iv) 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.

The Central Bank regulations set forth several requirements for the establishment of local or foreign branches, including authorization by the Central Bank. As of April 24, 1998, the establishment of “agencies” and “permanent promotion stands” requires only notification to the Central Bank. Agencies are permitted to engage only in minor operations (i.e., payment of pensions, collection of loan forms, payment of loans up to Ps. 10,000, collections of public services and taxes and exchange services). A promotion stand may only engage in the receipt and delivery of forms related to services provided by a financial institution, and is not permitted to transact with money and securities. Since July 2005, in order to authorize the opening of new branches, the Central Bank considers, in addition to the general requirements, the specific characteristics of each project, analyzing issues such as consistency with the respective business plan filed with the Central Bank in accordance with the relevant conditions, and with Central Bank policies geared towards promoting a greater availability of banking services, in particular in underserved regions.

Also, financial institutions may establish transitory attention offices, but must have prior authorization from the Board of the Central Bank pursuant to Communication “A” 4771. Government Financial Institutions (provincial, municipal and the City of Buenos Aires) in their respective jurisdictions may choose between these transitional attention offices and agencies specified in the regulation.

Liquidity and Solvency Requirements

Legal Reserve

The Financial Institutions Law requires that financial institutions allocate a certain percentage of their net income set by the Central Bank to a legal reserve which is currently 20.0% of its capital stock. The reserve can only be used during periods in which a financial institution has incurred in losses and has exhausted all other reserves. Banks may not pay dividends if the legal reserve has been impaired. However, as of April 24, 2006, the Central Bank has established by Communication “A” 4526 that whenever the Legal Reserve is used to absorb losses, profits could be distributed if the balance prior to absorption were greater than 20% of the corporate capital plus capital adjustment, once this last amount is achieved.

Non-liquid Assets

Since January 2004, non-liquid assets (computed on the basis of their closing balance at the end of each month, and net of those assets that are deducted to compute the regulatory capital, such as equity investments in financial institutions and goodwill) plus the financings granted to a financial institution’s related persons (computed on the basis of the highest balance during each month for each customer) cannot exceed 100% of the financial institution’s

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RC. Communication “B” 9745 allows financial institutions to invest up to of 150% of such financial institution’s RC in public-sector debt securities and financings.

Non-liquid assets consist of miscellaneous receivables, bank property and equipment, miscellaneous assets, assets securing obligations, except for swap, futures and derivative transactions, intangible assets and equity investments in unlisted companies or listed shares, if the holding exceeds 2.5% of the issuing company’s equity.

Basel Accord

In July 1988, the Basel Committee on Banking Regulations and Supervisory Practices, or the Basel Committee, which includes the supervisory authorities of twelve major industrial countries, adopted an international framework, the Basel Accord, for capital measurement and capital standards of banking institutions. The Basel Accord established a risk asset ratio as the principal measure of capital adequacy.

Minimum Capital Requirements

Financial entities must comply with a minimum capital requirement on the last day of each month. This minimum capital must be equal to the greater of a basic requirement and the total amount of the requirements in respect of credit risks and interest rate, which are based on the methodology proposed in 1988 by the Basel Committee. In 1995, these guidelines were extended to cover market risks. In October 1998, the Central Bank established an additional minimum capital requirement, based on a bank’s interest rate gaps, effective July 1, 1999.

Through Communication “A” 3959 dated June 2, 2003, the Central Bank established minimum capital requirements for financial institutions with the following key provisions:

an 8% requirement on risk-weighted assets, consistent with international standards set by the Basel Committee;

equal percentage requirements for exposure of financial institutions to the private and public sectors;

elimination of the requirement of capital increase as a function of interest rates on loans;

introduction of a requirement established to cover the risk inherent in mismatches between the rate of inflation and market interest rates;

capital adequacy requirements to cover market and interest rate risks, designed to incorporate the U.S. dollar as well as adjustments by the CER (Coeficiente de Estabilización de Referencia) index;

the discontinuance of an increase or decrease of the capital requirement depending on the rating granted to each institution by the SEFyC; and

adjustment risk weightings to take into account, among other factors, the changes introduced in late March 2003 regarding the treatment of public-sector assets.

On July 25, 2003, the Central Bank added the requirement that financial institutions verify their compliance with the regulations regarding minimum capital. As of the date of this prospectus, we comply with the minimum capital requirements currently required by the Central Bank.

Basic Minimum Capital

Pursuant to Communication “A” 5168 dated December 30, 2010, 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:

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Category

Type

Name

Province

Bank

Other entities

(in millions of pesos)

Ciudad Autónoma de Buenos Aires

Ps.

25.0

Ps.

10.0

Comodoro Rivadavia-Rada Tilli y Rawson- Trelew

Chubut

Ps.

14.0

Ps.

8.0

Gran Córdoba y Río Cuarto

Córdoba

Gran Buenos Aires (1), Bahía Blanca Cerri, Mar del Plata-Batán y San Nicolás- Villa Constitución

Buenos Aires, Santa Fe

Gran Mendoza

Mendoza

Neuquén-Plottier

Neuquén

Viedma-Carmen de Patagones

Río Negro, Buenos Aires

Gran Rosario

Santa Fe

Biedma

Chubut

General San Martín, San Justo y Tercero Arriba

Córdoba

Campana, Chivilcoy, Junín, Necochea, Olavarría, Pergamino, Pilar, Tandil, Tres Arroyos y Zárate

Buenos Aires

Bariloche

Río Negro

Castellanos, General López y San Martín

Santa Fe

Prov.

Santa Cruz

Prov

Tierra del Fuego

III

Gran Catamarca

Catamarca

Ps.

12.5

Ps.

6.5

Gran Resistencia

Chaco

Gran Corrientes

Corrientes

Concordia

Entre Ríos

Jujuy-Palpalá

Jujuy

La Rioja

Posadas

Misiones

Salta

Gran San Juan

San Juan

San Luis-El Chorrillo

San Luis

Santiago del Estero-La Banda

Santiago del Estero

Gran Tucumán-Tafí Viejo

Tucumán

Colón, Federación, Gualeguay, Gualeguaychú, Paraná y Uruguay

Entre Ríos

General Pedernera

San Luis

de Buenos Aires (2), de Córdoba (3), del Chubut, de Mendoza, del Neuquén, de Río Negro y de Santa Fe (4)

Prov.

La Pampa

Rest of Argentina

Ps.

10.0

Ps.

5.0

(1)	Excludes the City of Buenos Aires.

(2)	Excludes Marcos Paz, Presidente Perón y San Vicente.

(3)	Excludes Cruz del Eje.

(4)	Excludes Vera.

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Commercial banks acting as custodians of securities that represent investments in Fondo de Garantía de Sustentabilidad del Sistema Integrado Previsional Argentino (FGS), the RC shall be equal to the higher of:

(i)

Ps. 400 million; or

(ii)

1% of the amount of the securities held in custody from the Fondo de Garantía de Sustentabilidad del Sistema Integrado Previsional Argentino (FGS).

Additionally, 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.

The basic minimum capital requirement will be determined and verified on the last day of each month.

Commercial banks must register a RC equal to the higher of Ps. 150 million or the equivalent of 1% of the amount of the registered mortgaged bonds, considered at their amortization net value.

Interest Rate Risk

According to Communication “A” 5091 and related regulations, 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. These regulations govern 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 CAMELBIG ratings, see “—CAMEL Quality Rating System”, may treat 50% of demand deposits as long-term maturities (in the case of financial entities with a rating of 3, the assigned maturity cannot exceed 3 years).

As stated in Communication “A” 4874, contracts with variable interest rates based on foreign indices are treated as if they had fixed interest rates. The risk arising from liabilities tied to variable rates based on domestic indices is considered up to the first rate adjustment date.

Market Risk

Minimum capital requirements for market risks are in addition to other capital 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 years. 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 the currency involved. Overall capital requirements in relation to market risk are 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 Central Bank on a monthly basis. Since May 2003, U.S. dollars have been included as a risk factor for the calculation of the market risk requirement, considering all assets and liabilities in that currency.

To comply with market risk minimum capital requirements, compliance should take into account the daily change in the value of assets included in the ratio as a consequence of changes in their market prices.

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Consequences of a Failure to Meet Minimum Capital Requirements

In the event of non-compliance with capital requirements by an existing financial institution, Communication “A” 4771 provides the following:

(i)

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

(ii)

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

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

Operational Risk

The regulation on operational risk, or OR, recognizes the management of OR as a comprehensive practice, separated from that of other risks given its importance. OR is defined as the risk of loss resulting from inadequate or failed internal processes, individuals and systems or from external events. The definition includes legal risk but excludes strategic and reputational risk. Financial entities must establish a system for OR management that includes policies, processes, procedures and the structure for their adequate management.

Regulatory Capital

Pursuant to the Central Bank’s regulations, a bank’s RC is calculated as:

(i)

Minimum core capital, which includes capital contributions, capital adjustments, reserves, irrevocable capital contributions pending capitalization, unassigned unaudited results (of past fiscal years) and long-term debt securities complying with certain requirements (including a maturity not exceeding 30 years and that the amounts payable thereunder do not exceed the net accounting revenue of the issuer and should provide for non-cumulative defaults so as to allow payments to be deferred and paid at the stated maturity in a lump sum), so long as they do not exceed the predetermined percentage of the basic net worth, generally 20%, with periodic reductions until reaching the international standard of 15% on January 1, 2013; plus

(ii)

Supplementary capital, which may not exceed the minimum core capital and includes, among others, the following: (a) debt securities contractually subordinated to all other liabilities not computable as core capital, with an average initial maturity of at least five years and which were issued under certain conditions and requirements; plus (b) amounts of reserve funds applied to the payment of interest on subordinated debt securities before December 31, 2012, and as from such date, also those amounts which have not been used, provided they exceed certain limits; plus or minus (c) 100% of net earnings or losses recorded through the most recent audited quarterly financial statements; plus or minus (d) 100% of net earnings or losses for the current year as of the date of the most recent quarterly financial statement; plus or minus (e) 50% of profits or 100% of losses, from the most recent audited quarterly or annual financial statements; minus (f) 100% of losses not shown in the financial statements, arising from quantification of any facts and circumstances reported by the auditor; and plus or minus (g) 50% of impairment loan losses on the loan portfolio classified as “normal” or “normal performance”; minus

(iii)

Items to be deducted, which include, among others: (a) participation in other financial entities; (b) securities deposited with custodians that are not registered; (c) securities issued by foreign

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governments with ratings under the rating of the Argentine government; (d) correspondent positive balances with foreign financial institutions with ratings below “investment grade”; (e) unregistered ownership over real property; (f) goodwill; (g) incorporation and development expenses; and (h) provisioning deficiencies as determined by the SEFyC in Argentina.

Financial institutions (together with their branches in Argentina and abroad) must comply with minimum capital requirements both on an individual and a consolidated basis.

The minimum capital requirement for credit risk is the sum of:

(a)

10% of the value of our fixed or illiquid assets;

(b)

8% of the value of certain categories of financial or liquid assets, net of certain allowances and reserves, multiplied by a coefficient based on the perceived risk of such assets; and

(c)

8% of certain assets of the non-financial public sector as accounted for in investment accounts or under special valuation criteria determined by the Central Bank.

The sum of (a), (b) and (c) shall then be multiplied by a second coefficient ranging from 0.970 to 1.15 based on the rating that the SEFyC grants to the bank based on the its net worth, asset quality, management, profitability and liquidity. To determine a bank’s risk-weighted assets, the Central Bank has assigned to each category of liquid asset a risk value based on the type of asset, borrower, collateral or guarantee, if any. For example, consider the risk values assigned to the following assets:

cash, gold, public securities subject to minimum capital requirements for market risk, and debt instruments issued by the Central Bank were assigned a 0% risk value;

correspondents’ accounts and other demand accounts with banks of the country and abroad rated as “investment grade” and bonds issued by governments of member countries of the Organization of Economic Cooperation and Development (“OECD”), which are internationally rated “AA” or higher, were assigned a 20% risk value;

debt instruments issued by Argentine provinces, municipalities or other public sector agencies, which are not expressly guaranteed by the national government, were assigned a 100% risk value;

loans to the non-financial private sector with preferred guarantees in cash, gold or bonds on fixed-term deposit certificates issued by the creditor entity itself and with automatic reimbursements for export transactions corresponding to multilateral and bilateral foreign trade agreements were assigned a 0% risk value;

loans to the non-financial private sector with preferred guarantees granted by mutual guarantee companies registered with the Central Bank, export credit insurance policies and documentary credits in use were assigned a 50% risk value;

purchase money, home mortgage loans and automobile-backed loans were assigned a 50% risk value, provided they do not exceed 75% of their appraisal value;

the amount of a loan exceeding 75% of their appraisal value and most unsecured loans and debt instruments as well as holdings of listed stock were assigned a 100% risk value; and

loans to the non-financial public sector not guaranteed by the national government were assigned a 100% risk value.

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Minimum Cash Requirements

Financial institutions shall keep a portion of their deposits or obligations readily available and not allocated to lending 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 and 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 CER index is applied.

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

		Rate (Pesos)			Rate (Foreign Currency)
	Item	(%)
1.	Checking account deposits (on demand)		19	%		—	%
2.	Savings account deposits (on demand)		19			20
3.	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		19			20
4.	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		19			20
5.	Unused balances of advances in checking accounts under formal agreements		19			—
6.	Deposits in checking accounts of non-bank financial institutions, computed for purposes of meeting their required minimum cash reserve		100			—
7.	Time deposits, liabilities under acceptances, repurchase agreements, exchange- traded repurchase agreements (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, 13 and 15 of this table:
	(i) Up to 29 days		14			20
	(ii) From 30 days to 59 days		11			15

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		Rate (Pesos)		Rate (Foreign Currency)
	Item	(%)
	(iii) From 60 days to 89 days		7		10
	(iv) From 90 days to 179 days		2		5
	(v) From 180 days to 365 days		0		2
	(vi) More than 365 days		0		0
	(b) Others
10.	Liabilities owing to the Trust Fund for Assistance to Financial and Insurance Institutions		0
11.	Demand and time deposits made upon a court order with funds arising from cases pending before the court, and the related immobilized balances		10		10
12.	Deposits, in any form, which constitute the credit of mutual funds.		19		20
13.	Special deposits related to inflows of funds. Decree 616/2005				100
14.	Deposits and other liabilities (excluding the “Fondo de Desempleo para los Trabajadores de la Industria de la Construcción”), which return is higher than the 15% of BADLAR rates average, corresponding to the preceding month		100
15.	Term investments instrumented in transferable certificates in registered form, in pesos, for public-sector owners have the right to exercise the early termination option in less than 30 days from its constitution		16

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 coins 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) cash in transit and held by cash transportation companies; (vii) special accounts maintained with the Central Bank by ANSES and (viii) the “No. 60” subaccount, opened with the Central de Registro y Liquidación de Pasivos Públicos y Fideicomisos Financieros, or CRYL, the primary clearing system in Argentina, for sovereign debt securities and securities issued by the Central Bank for monetary regulation purposes.

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 and must be observed separately for each currency of denomination of the comprised obligations.

The aggregate balances of the eligible items referred to from (ii) to (v) and (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 (daily minimum requirement), 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. The daily minimum required is 70% when there was a deficit in the previous month.

Any deficiencies in meeting the required minimum cash reserve and the daily minimum reserve in pesos and in securities and instruments denominated in pesos, are subject to a penalty equal to twice the BADLAR rate for private banks deposits in pesos, as reported on the last business day of the relevant period.

Any deficiencies in meeting the required minimum cash reserve in foreign currency and in securities and instruments denominated in that currency, are subject to a penalty equal to the higher of twice the BADLAR rate for private banks in U.S. dollars or twice the 30-day LIBOR for operations in that currency, reported on the last business day of the relevant period.

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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 in 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.

Lending Limits

The amount of equity participation and credit, including guarantees granted that a financial institution may have or grant to any particular customer at any time is limited based on the institution’s RC on the last day of the immediately preceding month and on the customer’s computable net worth. According to Central Bank regulations, a financial institution may not lend or otherwise provide credit assistance (“financial assistance”) to or invest in the capital stock of a single unrelated customer of the private-sector in amounts in excess of 15% of such financial institution’s RC (25% for loans with certain senior guarantees) or 100% of such customer’s computable net worth, provided that the financial institution may grant additional financial assistance to such customer up to an amount equal to 300% of such customer’s computable net worth as long as such additional assistance does not exceed 2.5% of the financial institution’s RC. The financial assistance granted to financial institutions and foreign banks rated as “investment grade” cannot exceed 25% of the RC of such institution. The limit for foreign banks not rated as “investment grade” is 5%.

The financial assistance to the federal government sector, including the federal government bonds being held, cannot exceed 50% of the financial institution’s RC. The total amount of the financial assistance granted to the federal, provincial and municipal government sector cannot exceed 75% of the financial institution’s RC. The following are not considered a breach of the regulations: (a) excess arising from financings outstanding as of March 31, 2003 and (b) excess determined by or resulting in an increase in the financings mentioned in (a) upon receipt of: (i) compensation bonds or notes in accordance with Articles 28 and 29 of Decree No. 905/2002 or by the application of specific provisions, after that date, under Law No. 25561 (the Public Emergency Law); (ii) bonds issued under the Mortgage Refinancing System established by Law No. 25798; (iii) bonds issued under Decree No. 1735/2004 for the restructuring of Argentina’s sovereign debt, in exchange for existing securities eligible as of March 31, 2003 and (iv) debt instruments of the Argentine government subscribed by financial institutions through an exchange, payment-in-kind or swap, after January 1, 2009, under the specific provisions of the competent authority in that area.

The aggregate amount of relevant transactions with affiliated companies or individuals may not exceed at any time the limits of the financial institution’s net worth as of the last day of the month prior to the month of calculation, according to the following general rules:

in the case of local financial institutions which have transactions that are subject to consolidation by the lender if the entity receiving financial assistance has received a grade 1 rating from the SEFyC, the financial institution can provide assistance for an amount up to 100% of its RC. If the financial institution has received a grade 2 from the SEFyC, general financial assistance can be provided for an amount up to 20% of the financial institution’s RC. If the financial institution has received a grade 3 rating by the SEFyC, general financial assistance can be provided for an amount up to 10% of the financial institution’s RC. In all cases, additional assistance may be granted in specific cases set forth by the regulations;

in the case of local financial institutions not included in the preceding paragraph, the financial institution can provide assistance for an amount up to 10% of its RC;

in the case of other related local companies that provide supplemental services to the activity performed by the financial institution and which consolidate financial statements with the lending financial institution,

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such companies may receive assistance for an amount ranging from 10% to 100% of the RC of the financial institution which grants assistance, subject to additional limits in certain cases, as specified in the applicable regulations; and

in case of foreign banks rated “investment grade,” the financial institution can provide assistance for an amount up to 10% of its RC.

If the financial institution has a rating of 4 or 5, financial assistance to a related person or company cannot be granted, except in certain situations. For a description of the ratings system, see “—CAMEL Quality Rating System.”

Finally, the total, non-excluded amount of financial assistance provided to, and the shareholder participation in, the related persons and companies by a financial institution, cannot exceed 20% of the institution’s RC, except when the applicable limit is 100%.

Under Central Bank regulations, a person is “related” to a financial institution (and thus part of the same “economic group”):

if the financial institution controls, is controlled by, or is under common control with, such person;

if the financial institution or the person that controls the financial institution and such person have common directors to the extent such directors, voting together, will constitute a simple majority of each board; or

in certain exceptional cases, if such person has a relationship with the financial institution or with the person controlling such financial institution, that might result in economic damage to such financial institution, as determined by the board of directors of the Central Bank.

In turn, control by one person of another is defined under such regulations as:

holding or controlling, directly or indirectly, 25% or more of the voting stock of the other person;

having held 50% or more of the voting stock of the other person at the time of the last election of directors;

holding, directly or indirectly, any other kind of participation in the other person so as to be able to prevail in its shareholders’ or board of directors meetings; or

when the board of directors of the Central Bank determines that a person is exercising a controlling influence, directly or indirectly, in the direction or policies of another person.

The regulations contain several non-exclusive factors to be used in determining the existence of such controlling influence, including, among others:

holding a sufficient amount of the other person’s capital stock as to exercise influence over the approval of such person’s financial statements and payment of dividends;

representation in the other person’s board of directors;

significant transactions between both persons;

transfers of directors or senior officers between both persons;

technical and administrative subordination by one person to the other; and

participation in the creation of policies of the financial institution.

Notwithstanding the limitations described above, a bank’s aggregate amount of non-exempt total financial exposure (including equity interests) independently of whether customers qualify as such bank’s related parties or

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not, in the case in which such exposure exceeds 10% of such bank’s RC, may not exceed three times the bank’s RC excluding total financial exposure to domestic financial institutions, or five times the bank’s RC, including such exposure.

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.

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 (credit graduation) and credit limits on the basis of the customer’s net worth (on customer’s RC).

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 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 “—Consequences of a Failure to Meet Minimum Capital Requirements” to become applicable.

CAMEL Quality Rating System

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

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

The Central Bank began to rate financial institutions based on the “CAMEL” quality rating system in 1994. Each letter of the CAMEL system corresponds to an area of the operations of each bank being rated, with: “C” standing for capital, “A” for assets, “M” for management, “E” for earnings and “L” for liquidity. Each factor is evaluated and rated on a scale from 1 to 5, 1 being the highest rating an entity can receive. The Central Bank modified the supervision system effective in September 2000. The objective and basic methodology of the new system, denominated “CAMELBIG”, do not differ substantially from the CAMEL system. The criteria were redefined in order to evaluate business risks separately from management risks. The criteria used to rate the business risks are: capital, assets, market, earnings, liquidity and business. The criteria used to rate management

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risks are: internal control and the quality of management. A final rating for the financial institution is obtained by combining the rating of each individual criterion under evaluation.

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 foreign exchange transactions can only be carried out with entities authorized by the Central Bank. Since January 2, 2003, there have been further modifications to the restrictions imposed by the Central Bank. For a more detailed description of the foreign exchange controls in place, see “Exchange Rates and Exchange Controls—Exchange Controls.”

Foreign Currency Lending Capacity

The regulations relating to 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: (i) pre-financing and financing of exports to be made directly or through principals or other brokers; (ii) financing to manufacturers or processors of goods, provided that such transactions are supported by a purchase agreement with an exporter, payable in foreign currency, and the underlying assets are fungible commodities traded in public markets; (iii) 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; (iv) financing of capital expenditure projects and/or the acquisition of a whole class of goods that are tied to goods produced for export; (v) financing of commercial customers that are treated as consumer or housing loans in accordance with provisions of “Classification of debtors”, involved in the import of fixed assets which increases the production of goods destined to the domestic market; (vi) debt securities or certificates of participation in financial trusts, which underlying assets are certain types of loans originated by financial institutions according to Communication “A” 4851; (vii) debt securities or certificates of participation in financial trusts, issued in foreign currency and with public offering approved by the CNV, which underlying assets are documents secured by mutual guarantee companies registered in the registry enabled in the Central Bank, or by national and provincial funds created with the same purposes, purchased by the trustee to finance operations in the terms and conditions referred to in items mentioned above; (viii) 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 (ix) loans made from one financial entity to another.

The lending capacity shall be determined for each foreign currency raised on the basis of the monthly average of daily balances recorded during each calendar month. Any defect in the application shall increase the minimum cash requirement in the relevant currency.

With the purpose of granting such financings, whatever the source of resources applied, financial institutions must verify that customers have sufficient ability to pay, which must take into account at least two scenarios which provide for significant variations of different magnitudes in the exchange rate in the term of one year, in both cases exceeding the latest estimate available in this matter arising from the Market Expectations Survey published by the Central Bank.

General Exchange Position

The general exchange position, or GEP, includes all the liquid foreign currency assets of the institution, such as gold and foreign currency reserves maintained in Argentina and abroad, deposits and investments, regardless of their term, in foreign banks, investments in foreign government securities (OECD members and sovereign debt rated not less than “AA”), certificates of time deposits in foreign institutions (rated not less than “AA”), other liquid investments abroad and correspondents’ debit and credit balances. It also includes purchases and sales of these

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assets already arranged and pending settlement involving foreign exchange purchases and sales performed with customers within a term not exceeding two business days, and third-party funds pending settlement (Communication “A” 4814, Item 1). It does not include, however, third parties’ foreign currency held in custody, term sales and purchases of foreign currency or securities nor direct investments abroad.

The GEP limit is calculated every month and, therefore, updated on the first business day of the month. Pursuant to the relevant reporting system regulations, this limit is set at 15% of the amount equivalent in U.S. dollars to the computable equity (RC) at the end of the month immediately proceeding the last month when filing with the Central Bank has already expired. It will be increased by an amount equivalent in U.S. dollars to 5% of the total amount traded by the institution on account of the purchases and sales of foreign currency in the calendar month prior to the immediately preceding month, and by 2% of the total demand and time deposits locally held and payable in foreign bills, excluding deposits held in custody, recorded by the institution at the end of the calendar month prior to the immediately preceding month. If the ceiling does not exceed $8.0 million, this figure will be considered its floor.

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

According to Communication “A” 3640, 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.

The minimum GEP limit will be raised by $12,000,000 when the financial institution operates in foreign exchange transactions with 15 or more countries. Additionally and cumulatively, it will be increased to a maximum equivalent of $5,000,000 in connection with foreign currency holdings in bills that do not correspond to U.S. dollars and/or euros; for up to $1,000,000 for checks against foreign banks purchased from third parties, which are credited in correspondent accounts; and up to the equivalent of $3,000,000 for the amount of U.S. dollars or euro notes sent to the United States Federal Reserve or the European Central Bank, pending accreditation after 72 hours as of the date of shipment thereof.

The authorized exceptions to the minimum limit of maximum GEP shall be used by financial institutions as long as the extended limit is consistent and compatible with the limits to the Foreign Currency Net Global Position.

Financial institutions may request prior approval of the Central Bank to exceed the limits set out in this rule for specific needs and transitional periods, which shall be granted as long as this contributes to the objectives of the Central Bank regarding foreign exchange and monetary policy.

Foreign Currency Net Global Position

All assets and liabilities from financial intermediation and bonds in foreign currencies are included in the net global position. Forward transactions under master agreements entered into within domestic self-regulated markets are also included, with settlement of the net amount without delivery of the underlying asset. Deductible assets for determining RC are excluded from the ratio.

Two ratios are considered:

Negative foreign currency net global position: This position cannot exceed 30% of RC. As from January 2007, the limit was reduced to 15%, but it can be extended up to 30% under certain circumstances, including if: (i) the financial entity registers mid- and long-term financings in pesos to the non-financial private-sector, for an amount equal to the incremental of the negative foreign currency net global position (mid- and long-term are those exceeding four years, weighting capital maturity without considering CER) or (ii) the financial entity registers an incremental on credit risk minimum capital requirements equal to the general limit extension of the negative foreign currency net global position.

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Positive foreign currency net global position: This limit (currently suspended), cannot exceed the lower of 30% of RC or “own liquid funds.” Own liquid funds refer to RC without “fixed assets” and loans to related customers.

The excesses of these ratios are subject to a charge equal to the higher of twice the nominal interest rate of U.S. dollar-denominated Central Bank notes (Central Bank bill) or twice the U.S. dollar LIBOR for the last business day of the month. Charges not paid when due are subject to an overdue penalty of an additional 50% of the amount originally due.

Debt Classification and Impairment Loan Losses

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.

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 that exceed the equivalent of Ps. 750,000 and whose repayment is not connected to the customer’s permanent or periodical income, but to the evolution of its productive or commercial activity, shall be included within the commercial portfolio.

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.

Financings of a commercial nature of up to the equivalent of Ps. 750,000, whether or not they have preferred collateral, may be grouped together with consumer and credits. If exercised, this option shall generally apply to the entire portfolio and shall be provided under the “Operating procedures of classification and provision” and may only be changed with a six-month notice to the SEFyC.

Under the current debt classification system, each customer, as well as the customer’s outstanding debts, is 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 of 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.

With regards to foreign currency financing customers, whatever the source of resources applied, the bank must analyze whether the customer has sufficient payment capacity to cover maturities even in the event of significant changes in exchange rates. To this end, at least two scenarios must be analyzed, which provide for significant variations of different magnitudes in the exchange rate in the term of one year, in both cases exceeding the latest estimate available in the Market Expectations Survey published by the Central Bank at the time of evaluation.

Commercial Loans Classification

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

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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 any interest or principal payment 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).
Technically non-recoverable		(a) Borrower has defaulted on its payment obligations under a loan for more than 180 calendar days according to the report provided by the Central Bank, which report includes (i) financial institutions liquidated by the Central Bank; (ii) residual entities created as a result of the privatization of public financial institutions, or in the privatization or dissolution process; (iii) financial institutions whose licenses have been revoked by the Central Bank and find themselves subject to judicial liquidation or bankruptcy proceedings and (iv) trusts in which Seguro de Depósitos Sociedad Anónima 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; and/or (c) customers in the non-financial private-sector, whose debt (in every respect) plus the amount of the requested funding, upon the granting of it, exceeds the lower of 2.5% of the RC of the entity on the last day of the preceding month or Ps. 2,000,000, and have not submitted a statement about whether they are related or not to the financial entity, with the exception of debtors under court or out-of-court restructuring proceedings, for a period of up to 540 days from the beginning of such proceedings, provided that legal counsel to the relevant financial institution issues an opinion on the reasonableness of the chances of recovery of amounts due.

The debtor should be re-categorized where the financial institution has classified such debtor more than one level above the classification of those of at least two other financial institutions or trusts whose credits together represent 40% or more of the total reported by all creditors, according to the latest information available in the centralized debtor database.

Consumer and Housing Loans Classification

Under Central Bank’s regulations, consumer and housing borrowers are classified as follows:

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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.
Low Risk		Loans with payment obligations overdue for a period of more than 31, but less than 90 calendar days.
Medium Risk		Loans with payment obligations overdue for a period of more than 90, but less than 180 calendar days.
High Risk		Includes, among other cases, customers with payment delays of more than 180 days to one year. It also includes debtors who have (i) applied for a court-supervised debt reorganization proceeding; (ii) entered into a pre-packaged reorganization agreement (pending court approval) or (iii) been subject to a bankruptcy petition (pending bankruptcy declaration by the court), in respect of obligations that are equal to or greater than 20% of the net worth of the customer. If the bankruptcy petition remains undismissed for 90 days after filing, this percentage is reduced to 5% to 20% of the customer’s net worth.
Non-recoverable loans		Includes, among others, insolvent debtors or debtors with bankruptcy declared by a court, with very low repayment capacity. It also includes debtors with loans overdue for more than one year.
Technically non-recoverable		Same criteria as for commercial loans in the technically non-recoverable category.

Minimum Credit Allowances

The following minimum credit allowances are required to be made under Argentine Banking GAAP by Argentine financial entities in relation to the credit portfolio category. The percentages are applied to the aggregate principal amount of all loans to the classified borrower. Allowances under IFRS may differ.

Category	With Preferred Guarantees			Without Preferred Guarantees
“Normal” and “Normal Performance”		1	%		1	%
“Under observation” and “Low Risk”		3	%		5	%
“Under negotiation or refinancing agreement”		6	%		12	%
“With Problems” and “Medium Risk”		12	%		25	%
“With high risk of insolvency” and “High Risk”		25	%		50	%
“Non-recoverable”		50	%		100	%
“Technically non-recoverable”		100	%		100	%

Loans backed with preferred guarantees “A” require a 1% provision independently of the customer category. Financial institutions may make allowances for amounts exceeding the established minimum if they deem it reasonable.

Allowances for Loan Losses

Allowance for loan losses is maintained in accordance with applicable regulatory requirements of the Central Bank. Increases in the allowances 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 equivalent in foreign currency. Allowances under IFRS may differ. See note 2 to our consolidated financial statements.

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Minimum Frequency for Classification Review

The result of the classification review will be included in the customer’s file. The minimum frequency for classification review is as follows.

(a)

Every calendar quarter, for customers which, individually considered, received financings at any time equivalent to 5% or more of its computable net worth or, in the case of financial trusts, 5% or more of the assets of such trusts as of the month preceding the end of such calendar quarter. To this end, a group or an economic unit is treated as a single customer.

(b)

Every six months, for customers which, individually considered, received financings which at any time range from 1%, or Ps. 2,000,000, whichever is less, and 5% of its computable net worth; in case of financial trust, such limits are calculated on the underlying assets. In both cases, the calculation is made as of the month immediately preceding the end of such six-month period. To this end, a group or an economic unit is treated as a single customer. At the end of every first calendar semester, the review shall have reached not less than 50% of the commercial loan portfolio. If necessary, the financial entity shall include in its review customers with financings that do not reach 1% of the computable net worth or 1% of the assets in the case of financial trusts, or the equivalent of Ps. 2,000,000.

(c)

Every financial year, the review should have reached the entire commercial portfolio.

Payment of Dividends

The Central Bank has imposed restrictions on the payment of dividends, substantially limiting the ability of financial institutions to distribute such dividends without its prior consent. The Central Bank has eased these restrictions through Communication “A” 4,589, as amended by Communication “A” 4,591, “A” 5,072 and others, by providing for a mechanism for the calculation of distributable profits of the financial institutions. In addition, pursuant to Central Bank regulations, we may only distribute dividends if we have satisfied the following conditions throughout the month preceding the request to the SEFyC for approval of the dividend:

we are not subject to the provisions of Sections 34 (“Regularization and sanitation”) or 35 (“Restructuring of the institution in receipt of credit and bank deposits”) of the Financial Institutions Law;

we are not receiving financial assistance from the Central Bank, except in certain limited cases;

we are in compliance with the reporting obligations of the Central Bank; and

we are in compliance with minimum capital requirements (on an individual or consolidated basis) and with minimum cash reserves (on average).

Amount Available for Distribution

Pursuant to Central Bank regulations, financial institutions may distribute dividends up to the positive amount resulting from the subtraction from retained earnings of (i) legal reserves, (ii) capitalized losses resulting from amparos, (iii) the positive difference between the book value and the market value of any government bonds not marked to market, (iv) adjustments to asset valuation notified by the SEFyC and (v) individual preferential assets valuation allowances granted by the SEFyC. The Central Bank also requires banks to verify the absence of any deficiencies in the bank’s capital position to ensure that the dividend will not compromise the bank’s liquidity or solvency.

Priority Rights of Depositors

Under Section 49 of the Financial Institutions Law, in the event of judicial liquidation or bankruptcy of a bank, depositors have a general and absolute priority right to collect their claims over all other creditors, except claims secured by pledges or mortgages and certain employee liens. Additionally, the holders of any type of deposit have a special priority right over all other creditors of the bank, except certain employee creditors, to be paid out of (i) any

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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 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) deposits of an amount higher than Ps. 50,000, or its commercial loan portfolio (including customers in the group mentioned in paragraph (a) above), 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.

SSGD has been implemented through the establishment of a Deposit Guarantee Fund (“FGD”), managed by a private-sector corporation called Seguro de Depósitos Sociedad Anónima, or Deposit Insurance Corporation or SEDESA. The shareholders of SEDESA are the Argentine federal government and a trust set up by the participating financial institutions. These institutions must pay FGD a monthly contribution determined by Central Bank’s regulations. SSGD is financed through regular and additional contributions made by financial institutions.

Effective payment on this insurance 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.

Decree No. 214/2002, Section 16, provided that SEDESA may issue registered securities to offer them to depositors in payment of the guarantee in the event it should not have sufficient funds available.

Deposits covered by this insurance include, among others, deposits in pesos and foreign currency in the participating entities under (i) current accounts; (ii) current accounts in Cooperative Credit Unions; (iii) savings accounts; (iv) fixed term deposits and (v) salary, basic, universal free and special accounts, etc.

Deposits covered by this insurance do not include, among others, (a) transferable time deposits whose ownership has been acquired by endorsement, even when the last endorsee is the original depositor; (b) placements which offer incentives or payments other than interest rate and, where applicable, the amount payable on application of the CER, whatever name or form they take (insurance, lotteries, tourism, services, etc.); (c) deposits bearing interest above the reference rates published by the Central Bank; (d) deposits of financial institutions with other brokers, including certificates of deposit acquired by secondary trading; (e) deposits made by persons related, directly or indirectly to the entity and (f) time deposits of securities, acceptances or guarantees.

The guarantee will cover the repayment of principal deposited, interest, adjustments by the CER and price differentials, as applicable, accrued up to (a) the date of revocation of the authorization to operate or (b) the date of suspension of the entity by virtue of Article 49 of the Charter of the Central Bank, if this measure was adopted prior to it, up to the aggregate amount of Ps. 120,000. In the case of accounts and deposits payable to two or more persons, the guarantee limit remains at Ps. 120,000.

SEDESA may require, prior to the settlement of the guarantee, that depositors prove the source and availability of funds deposited with appropriate records. Furthermore, SEDESA shall report to the authorities when noticing irregularities or criminal acts aimed at obtaining the improper collection of the guarantee.

Capital Markets

Commercial banks are authorized to subscribe and sell debt securities. Currently, there are no statutory limitations as to the amount of securities a bank may undertake to subscribe. However, pursuant to Communication “A” 5034, banks may only sell their own debt securities for a minimum denomination amount of Ps. 400,000. In

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addition, under Central Bank regulations, debt security underwriting by a bank is treated as “financial assistance” and, accordingly, until the securities are sold to third parties, such underwriting is subject to limitations.

In 1990, MERVAL authorized firms organized as sociedades de bolsa, or brokerage houses, to operate as brokers on the Buenos Aires Stock Exchange together with individual stockbrokers. There are currently no restrictions on ownership of a sociedad de bolsa by a commercial bank, and, in fact, most of the main 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 brokers 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.

Financial Institutions in Economic Difficulties

Under the Financial Institutions Law, if a financial institution:

evidences a cash reserve deficiency during a given period of time,

has not satisfied certain technical standards on an ongoing basis,

has not maintained minimum net worth standards, or

is deemed by the Central Bank to have impaired solvency or liquidity,

such financial entity must submit a regularization plan under such terms and conditions as may be established by the Central Bank within a term that may not exceed thirty days. However, the Central Bank may appoint overseers with veto powers and/or demand the creation of guarantees and restrict or prohibit the distribution or remittances of profits. The lack of submission, the rejection or any noncompliance with the regularization plan entitles the Central Bank to revoke the authorization to operate as a financial entity and to impose sanctions. If the plan is accepted the Central Bank may grant a temporary exemption with respect to the observance of the technical regulations and dismiss or postpone the payment of fines, if any.

Likewise, and prior to the revocation of the authorization to operate as a financial entity, the Central Bank may authorize the restructuring of the entity for the protection of its depositors, by implementing any of the following decisions, or a combination thereof, in a sequential, gradual or direct manner: reduction, increase and assignment of capital stock, exclusion of assets and liabilities and their transfer to other financial institutions and/or judicial intervention.

Dissolution and Liquidation of Financial Institutions

As provided in the Financial Institutions Law, the Central Bank must be notified of any decision adopted by a financial institution’s officer or its legal or corporate body concerning its dissolution. The Central Bank must then notify such decision to a competent commercial court, which will determine which of the bank’s officer, its legal or corporate body or an independent liquidator appointed for this purpose will be in charge of the liquidation. The court’s decision will be based on whether there is sufficient assurance regarding the ability of such an officer or corporate body to carry out the liquidation properly.

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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 bankrupt 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.

After notification of the resolution ordering the revocation of authorization to operate as a financial institution, and until a competent court decides upon the termination of the activity or the liquidation of the bank, any commitment to increase the bank’s liabilities shall be void; additionally, the enforcement of and the accrual of interest under such liabilities shall cease.

In the event of self-liquidation, judicial liquidation or bankruptcy at the request of the intervening court, the Central Bank should provide notice and technical assistance prior to the revocation of the authorization to operate.

Money Laundering

The concept of money laundering generally refers to transactions intended to introduce criminal proceeds into the institutional system and thus to transform profits from illegal activities into assets of an apparent legitimate source.

On April 13, 2000, the Argentine Congress passed Law No. 25,246, which defines money laundering as a crime. In addition, the law, which amends several sections of the Argentine criminal code, created UIF, and established an administrative criminal system to the same end.

Pursuant to the Argentine criminal code, it shall be considered money laundering whenever a person converts, transfers, manages, sells, encumbers, or otherwise uses money, or any other assets derived from a crime in which that person has not participated, with the possible result that the original or resulting assets may appear to have a legitimate origin, provided the value of such assets exceeds Ps. 50,000, whether such amount derives from one or more transactions.

In line with internationally accepted practice, Law No. 25,246, as amended, does not attribute exclusive responsibility in controlling these transactions to government agencies, but it also assigns certain duties to diverse private-sector entities, such as financial entities, stockbrokers, brokerage houses and insurance companies. These duties consist of obtaining and disclosing information. Moreover, Central Bank regulations require banks to take certain minimum precautions to prevent money laundering.

According to the rules of Guía de Transacciones Inusuales o Sospechosas en la Órbita del Sistema Financiero y Cambiario, or the Guide to Foreign Exchange and Irregular or Suspicious Financial Transactions, approved by the Financial Information Unit Resolution No. 37/2011, financial entities have the obligation to report, in relation to investments, the following transactions, among others:

(i)

investments in securities of a disproportionate value, relative to the business of the investor;

(ii)

deposits or back-to-back loans in jurisdictions known as paraiso fiscal, or tax heavens or “non-cooperative” jurisdictions;

(iii)

requests for asset management services where the source of funds is not certain or does not relate to the business of the investor;

(iv)

unusual transfers of large amounts of securities or interests;

(v)

unusual and frequent use of special investment accounts and

(vi)

frequent purchase and sale of securities during the same day of the same amount and volume, where they appear unusual in relation to the business of the investor.

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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 regulations.

In addition, financial institutions are required to report to the UIF 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. Until recently Myanmar was the only country on the list. However, following international recommendations, the Central Bank has issued Communication “A” 5126, pursuant to which banks must take special precautions with regards to transactions involving certain additional countries.

Financial institutions should comply with the precautions contained in Central Bank regulations, together with the provisions of Law No. 25,246, as amended, and other relevant related regulations issued by the UIF.

Auditing Requirements

We are required under Argentine law to prepare our financial statements in accordance with Argentine Banking GAAP and other applicable regulations.

Financial institutions must inform the Central Bank the name of the public accountant appointed to carry out an external audit of its financial statements and other information required by the financial institution, and the term of his/her engagement, indicating initiation and ending dates, expressed in fiscal years audited. In the case of professionals working on behalf of accounting firms, financial institutions must also indicate the name of he relevant firm. The designation of public accountant, as well as subsequent changes, must be informed within fifteen business days. In the event that the public accountant is changed before the engagement contract expires, the financial institution shall indicate the cause of such change.

The external audit should be performed by certified public accountants designated by the financial institutions enrolled in the register of auditors maintained by the SEFyC. These professionals may not serve simultaneously for more than one financial institution and shall remain in office for no more than five consecutive years. In order to be reappointed as external auditor, a term equal to the period during which the relevant professional acted as external auditor shall have elapsed.

In conclusion of the task, external auditors should send financial institutions the reports listed below:

(1)

a report on the financial statements at the end of a fiscal year,

(2)

a report with the results of limited reviews of the financial statements of the entity at the end of each quarter,

(3)

a memorandum on the internal control system of institutions, which must contain at least a description of significant deficiencies observed in the system arising from the implementation of tasks set out in Appendices II and III of the Central Bank’s Accounting and Auditing Rules (CONAU), Section F and the suggestions for solving them, and

(4)

special reports.

For the management of the institution to become aware of the contents of the memorandum or reports referred to in paragraphs (3) and (4) above, such memorandum reports shall be transcribed into the minutes of the meetings of the Board or Council management of the entity or, alternatively, in a special book for such purposes.

Internal Audit Committee – Integration and functions

Financial entities shall create an Internal Audit Committee composed of at least two members of the Board of Directors and the head of internal audit of the entity.

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The Internal Audit Committee shall, among other duties:

supervise the adequate operation of the internal control systems through periodic evaluations;

improve the effectiveness of internal controls;

review and comment on internal audit plans;

review and approve annual internal audit plans;

review the reports issued by the internal audit;

review comments made by internal and external auditors on the weaknesses detected in the internal control systems, as well as the corrective measures implemented by the general management;

review the results in the reports of the Controller and Supervisory Board;

liaise with the officers of the SEFyC who are responsible for the control of the relevant entity;

review annual and quarterly financial statements and the auditors’ reports, as well as any other relevant financial information;

review periodically compliance with the rules related to the independence of external auditors;

review transactions where there is a conflict of interests with members of any of the entity’s bodies or with its shareholders; and

analyze the fees charged by the external auditors, stating separately those corresponding to external audits and related services from other special services rendered by the external auditors.

Merger, Consolidation and Transfer of Going Concern

The merger with another financial institution or other entities shall be subject to authorization by the Central Bank. A merger agreement is thus not valid and binding until it has been authorized by the relevant general shareholders’ meeting and it has been approved by the Central Bank.

The entity resulting from the merger must submit a financial and economic structure for the analysis and approval of the Central Bank. In the event that additional capital contributions are required for the merger, the entity must submit additional information.

The parties to the merger shall be in compliance with reporting requirements of the Central Bank.

The parties to the merger or the acquiring company must submit a study showing the viability of the proposed transaction systems.

The merger rules governing financial institutions shall also apply to transfers of going concerns.

Credit Cards Law No. 25,065

Law No. 25,065, enacted in 1999, governs different aspects of the credit, purchase and debit card system. Among other things, this law: (i) creates an obligation to sign a contract between the bank and the holder of the credit card before the card is issued; (ii) fixes a maximum limit on financial interest charged on balances, which may not exceed by more than 25% of the rate applied to personal loan transactions; (iii) sets a maximum 3% fee to be charged by the banks to commercial establishments, and is not permitted to charged commercial establishments in the same line of business with different rates; and (iv) prohibits providing information to financial background databases regarding credit card holders with delinquent payments.

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Law No. 26,361, enacted in 2008, amended article 50 of Law No. 25,065, empowering the Secretariat of the Domestic Commerce, a department of the Ministry of Economy and Production, to issue regulatory provisions and exercise its powers to control, survey and determine compliance with respect to commercial matters. The City of Buenos Aires and the Provinces will act as local enforcement authorities in their respective jurisdictions, with the power to delegate, if applicable, to their dependent bodies or to municipalities. Irrespective of the above, the federal government may act concurrently, even if the presumed infringements occur only within the scope of the Autonomous City of Buenos Aires or the Provinces.

Pursuant to Law No. 25,065, the Central Bank has been appointed as the regulatory authority of the Credit Cards Law in connection to financial matters thereof.

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MANAGEMENT

Board of Directors

Our bylaws provide that our board of directors must be composed of a minimum of four and a maximum of 17 directors elected for three-year terms by the shareholders at the annual ordinary shareholders’ meeting and, if the board of directors is composed of more than eight directors, the board will be divided into three classes with no less than three directors per class. The annual ordinary shareholders’ meeting may also appoint an equal or lesser number of alternate directors, to hold office for the same term as regular directors, to fill any vacancy in the board occurring for any reason whatsoever, and shall further determine the order of substitution. Eleven directors and four alternate directors were appointed at our shareholders’ meeting held on March 16, 2011. The business address of our directors and officers is Bartolomé Mitre 480, Buenos Aires, Argentina.

Our board of directors meets at least once a month and is responsible for setting our short- and long-term strategies and policies and supervising management. Pursuant to Central Bank regulations, financial institutions, such as us, with deposits greater than 1% of the total deposits in the Argentine financial system may not have members of management on their board of directors. In response to this new regulatory requirement, several of our directors, including Mr. Cristofani, Mr. Tempesta and Mr. Rodríguez, which were also members of our management until March 2011, now serve exclusively as members of our board of directors. Our board of directors, including through the various committees described in “—Committees Reporting to the Board of Directors,” ensures that the strategies, policies and other directives and overall strategic objectives are carried out.

Powers and Duties

Under Argentine corporate law, directors are responsible for the diligent and prudent performance of their duties as prudent business people. Directors are jointly and severally accountable to us, our shareholders and third parties for any improper performance of their duties, any infringement of laws, the bylaws or regulations, if any, as well as for any damages resulting from fraud, willful misconduct or gross negligence. In accordance with Argentine corporate law and our bylaws, resolutions adopted by a shareholders’ meeting may assign specific duties to the directors. In such event, a director’s liability will be determined by reference to the performance of such duties, provided that certain registration requirements are complied with. Under Argentine corporate law, directors are prohibited from engaging in activities in competition with us without the express authorization of our shareholders. Agreements entered into between directors and us require ratification in accordance with the procedures established by applicable law when such agreements are not entered into in the ordinary course of business and are not carried out on an arm’s-length basis. See “Related Party Transactions.” Directors must inform the board of any conflict of interest that might exist in a specific transaction, and refrain from voting on any such matters.

Directors will not be liable if, notwithstanding their presence at a meeting at which a resolution was adopted or their knowledge of such resolution, a written record exists of their opposition to such decision and they report this to the supervisory committee (described below) before any claim against them is brought before the board of directors, the supervisory committee, a shareholders’ meeting, the controlling authority or any competent court. Except in the event of the forced liquidation or bankruptcy of us, approval by our shareholders of a director’s performance waives any liability of a director towards us, provided that shareholders representing at least 5% of our capital stock do not object to such decision, and provided that such liability does not arise from the infringement of any laws or the bylaws.

We may file legal actions against the directors if requested to do so by the majority of shareholders. If any such legal actions are not filed within six months of a shareholders’ resolution approving such legal actions, any shareholder may bring such legal actions on behalf and for the benefit of us.

In order to comply with Rule 10A-3 under the Securities Exchange Act of 1934, as amended, immediately following the consummation of this offering, at least one member of our audit committee must be independent within the meaning of Rule 10A-3. Within 90 days of the consummation of this offering, we must have two independent directors within the meaning of Rule 10A-3 and, within one year of the consummation of this offering, all members of our audit committee members must be independent within the meaning of Rule 10A-3. We currently

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have two members of our audit committee who are independent within the meaning of Rule 10A-3 and who will continue to be members of our audit committee following the consummation of this offering.

As mentioned above, pursuant to Central Bank regulations, financial institutions, such as us, with deposits greater than 1% of the total deposits in the Argentine financial system may not have members of management on their board of directors.

The following table sets forth information about the members and alternate members of our board of directors, each of whom was elected at our shareholders’ meeting on March 16, 2011. At this meeting, the shareholders determined which directors serve for one-, two- and three-year terms, depending on the class to which each director is assigned.

Name	Position	Year of expiration of term
José Luis Enrique Cristofani	Chairman	2013
Guillermo Rubén Tempesta	Vice Chairman	2013
Luis Miguel García Morales(1)	Director	2013
Norberto Oscar Rodríguez	Director	2012
Luis Alberto Aragón(1)	Director	2012
Víctor Barallat López(2)	Director	2012
Oscar Enrique Von Chrismar(2)	Director	2012
Fernando Omar De Illana(2)(3)	Director	2011
Alberto Remigio Abad(3)	Director	2011
Carlos Alberto Gindre(3)	Director	2011
Jorge Emilio Verruno(3)	Director	2011
Luis Miguel Incera(2)	Alternate Director	2013
Luis Marcelo Nuñez(2)	Alternate Director	2013
Hugo Pentenero(3)	Alternate Director	2013
Alberto Piedrafita(3)	Alternate Director	2013

(1)	On leave from board duties until September 2011.

(2)	Pending Central Bank approval.

(3)	Independent within the meaning set forth in Book I, Chapter III, Section II of the CNV Regulations.

Senior Management

The following table sets forth certain relevant information regarding our current executive officers:

Name	Position	Year of Appointment to Current Position
Luis Miguel García Morales	Chief Commercial Banking Officer	1997
Oscar Correa	Chief Corporate Communications Officer	2000
Gabriel Juan Ribisich	Chief Financial Officer	2007
Jorge Edgardo Thomas	Chief Risk Officer	2005
Luis Alberto Aragón	Chief Strategic Planning Officer Chief Human Resources Officer	2000 2004
José Marcial Melián	Chief Systems, Operations and Organization Officer	2006
Pablo Agote Alique	Chief Internal Audit Officer	2009
Marisa Lupi	Chief Transformation, Efficiency and Quality Officer	2011

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Brief biographical information of the members of our board of directors and our senior management is set forth below.

José Luis Enrique Cristofani, age 56. Mr. Cristofani is the chairman of our board of directors and, as such is our legal representative. He is also the chairman of the Director Committee, the Quality Committee, the Operational Risk Committee, the Businesses and Risks Committee and ALCO. In his capacity as chairman of these committees, Mr. Cristofani is responsible for overseeing implementation by management of the board's directives and in that capacity interacts regularly with senior management. He obtained his degrees in Accounting and Business Administration from the University of Buenos Aires. He formerly worked for J.P. Morgan Co. Incorporated Buenos Aires (“J.P. Morgan Buenos Aires”) in the Corporate Finance Unit. In 1984, he was transferred to Madrid to act as Head of Corporate Finance, and in 1988 he became Head of the Securities Unit. In 1992, he returned to J.P. Morgan Buenos Aires and was appointed a member of the Management Committee. In 1992, he joined Banco Santander as Administration Manager of Banco Santander and Regional Manager of Santander Investment. He was our General Manager from September 1997 to March 2011.

Guillermo Rubén Tempesta, age 45. Mr. Tempesta is the vice chairman of our board of directors and is the chairman of the Legal and Compliance Committee and the Analysis and Resolution Committee and a member of the Director Committee, the Quality Committee, the Operational Risk Committee, the Businesses and Risks Committee and the Regulatory Information and Control Committee. In his capacity as a member of these committees, Mr. Tempesta is responsible for overseeing implementation by management of the board's directives, particularly those related to legal and compliance matters, and in that capacity interacts regularly with senior management. He received a law degree from the Law and Social Sciences School of the University of La Plata in 1987. From 1987 to 1993, he attended various postgraduate courses and obtained a Doctor in Law degree from the European University Institute in Florence, Italy in 1992. From 1993 to 1996, he performed duties for the Government of the Province of Buenos Aires, the Argentine Constitutional Convention and the Buenos Aires Supreme Court of Justice. From 1996 to 2003, when he joined Santander Río, he was a member of the banking and finance department of the law firm Cárdenas, Cassagne & Asociados. He was our Chief Legal Officer from 2003 to March 2011.

Luis Miguel García Morales, age 51. Mr. García Morales is a member of our board of directors and our Chief Commercial Banking Officer. He received a degree in Accounting from the University of Buenos Aires. He joined Santander Río in 1995, and in 1997 he became head of Santander Río’s branch network and was appointed Chief Commercial Banking Officer. Previously, he served nine years at Banco Exprinter, where he performed assignments in the brokerage house, and in the corporate and SME business divisions. Mr. García Morales is on leave from his board duties until September 2011. In order to remain in compliance with Central Bank regulations, when Mr. García Morales’ leave expires, we will determine whether he will continue to be an officer or director.

Norberto Oscar Rodríguez, age 50. Mr. Rodríguez is a member of our board of directors. He is the chairman of the Regulatory Information and Corporate Control Committee and is a member of the Director Committee, the Internal Audit Committee, the Systems Committee, the Analysis and Resolution Committee, the ALCO, the Quality Committee, the Operational Risk Committee, the Businesses and Risks Committee and the Legal and Compliance Committee. In his capacity as a member of these committees, Mr. Rodríguez is responsible for overseeing implementation by management of the board's directives, particularly those related to administrative, corporate control and accounting matters, and in that capacity interacts regularly with senior management. He obtained a degree in Accounting from the University of Buenos Aires in 1983. He served at Price Waterhouse & Co. S.R.L. in the Financial Entities Division. He was Operations Manager at the Continental Illinois National Bank in Argentina until 1988. From 1989 to 1995 he held the position of Administration, Planning and Technology Manager at the MBA Investment Bank. He joined Santander Río in 1995 and performed duties in the Planning and Control Department. He was our Chief Administration and Corporate Control Officer from 2002 to March 2011.

Luis Alberto Aragón, age 50. Mr. Aragón is a member of our board of directors and is our Chief Strategic Planning Officer and Chief Human Resources Officer. He holds a degree in Industrial Engineering from the Argentine Catholic University and an MBA from L’Ecole des Ponts et Chaussées in Paris. He worked for BankBoston, Buenos Aires from 1993 to 1996. In 1996 he joined Santander Río, where he performed duties in the

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International Business Division. He was in charge of Investment Relations in 1997, and also took on the management of Strategic Planning and E-Business in March 2000. He has been the Chief Human Resources Officer since 2004. Mr. Aragón is on leave from his board duties until September 2011. In order to remain in compliance with Central Bank regulations, when Mr. Aragón’s leave expires, we will determine whether he will continue to be an officer or director.

Víctor Barallat López, age 54. Mr. Barallat is a member of our board of directors. Mr. Barallat is the Chief Financial Officer and Business Development Director of Banco Santander’s Latin American Division. Additionally, he is a member of the boards of directors of Administración de Bancos Latinoamericanos Santander (ABLASA), GES Grupo Empresarial Santander, Santander Latinoamérica Management, Santander Bancorp, Banco Santander Puerto Rico, Santander Chile Holding and Teatinos Siglo XXI. He also worked as Banco Santander’s Director of Strategy and Investor Relations from 1997 to 1999. Mr. Barallat holds a degree in Mining Engineering from the Universidad Politécnica de Madrid and a Masters of Business Administration from the Wharton School of Business.

Oscar Enrique Von Chrismar, age 57. Mr. Von Chrismar is a member of our board of directors and holds a degree in Industrial Engineering from the University of Santiago, Chile. He worked for Morgan Bank Chile as Chief Financial Officer from 1979 to 1987 and then joined Grupo ING BankChile in the same position from 1988 to 1990. In 1990 he joined Santander Chile, where he performed duties in the Financial Division. He was named Vice-President and CEO of Banco Santander Perú from 1995 to 1997. From 1997 to 2009, he served as CEO of Banco Santander Chile. He has been Vice-President of Banco Santander Chile since 2010.

Fernando Omar De Illana, age 59. Mr. De Illana is a member of our board of directors and obtained a degree in Accounting from the University of Buenos Aires. From 1980 to 1984 he was Chief Financial Officer of Grafa S.A. From 1984 to 1992 he served as the CEO and CFO of Bunge and Born. He joined Orígenes AFJP in 1994 as a director and also served as CEO until the end of 2007. He served as a director of Santander Río in previous years and is currently an independent director.

Alberto Remigio Abad, age 65. Mr. Abad is a member of our board of directors and obtained a degree in Accounting from the University of Buenos Aires. He served as Auditor for Price Waterhouse until 1971 as Executive Director until 1991 in the Comptroller General of Public Enterprises (SIGEP) and as President of the Comptroller General of Public Enterprises (SIGEN), continuing as a Trustee’s Office until 1995. He later served as Controller at the National Institute of Social Services for Retirees and Pensioners (PAMI), as Vice President of Group Bapro SA. and Federal Revenue Manager. He has been an independent director since April 2008.

Carlos Alberto Gindre, age 60. Mr. Gindre is a member of our board of directors and obtained a degree in Accounting from the University of Buenos Aires in 1973. He joined Ernst & Young in 2002 to become an audit partner, in charge of Financial Services and Healthcare. Previously, he served at Arthur Andersen, where he started to work in 1973. As member of the Banco de la Nación Argentina External Audit Coordinating Committee, during fiscal years 1979 to 1982 he supervised audit and consulting assignments and participated in special Foreign Trade and Exchange revisions at several financial entities. He has been an independent director since January 2005.

Jorge Emilio Verruno, age 61. Mr. Verruno is a member of our board of directors and obtained a degree in Accounting from the University of Buenos Aires in 1971. He became part of the Pistrelli, Díaz y Asociados Audit and Managerial Consulting Division in 1971, was promoted to Manager in 1976 and became a partner in 1983. During his career at this firm, he took part in many audit and consulting assignments in financial entities and held various positions. In 1998 he was appointed partner and Director of the Audit and Managerial Consulting Division at Arthur Andersen Latin America, and held the position of Managing partner of the firm in Argentina. In 2002, he became Managing partner at Pistrelli, Henry Martin y Asociados S.R.L. He has been an independent director since January 2005.

Luis Miguel Incera, age 54. Mr. Incera is an alternate member of our board of directors and received a law degree from the Law and Political Science School at the Argentine Catholic University. He received a masters degree and graduated as a Specialist in Procedural Law from the Argentine Notarial University in 1987. He has been a partner in the law firm Pérez Alati, Grondona, Benites, Arntsen y Martínez de Hoz (Jr.) since September 2004.

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Luis Marcelo Núñez, age 41. Mr. Núñez is an alternate member of our board of directors and received a law degree from the Law School of the University of Buenos Aires. He worked as a lawyer for PriceWaterhouseCoopers from 1994 through 1999. Between 1998 and 1999 he completed a program on International Law at the University of California (Davis), and received a specialist degree in tax law from the Faculty of Law at the University of Buenos Aires in 2001. Mr. Núñez was appointed as an active member of the Argentine Association of Tax Studies in 2008. He has been a partner in the law firm Pérez Alati, Grondona, Benites, Arntsen y Martínez de Hoz (Jr.) since 2007.

Hugo Pentenero, age 62. Mr. Pentenero is an alternate member of our board of directors and holds a degree in Accounting from the School of Economic Sciences of the University of Buenos Aires. He joined Pistrelli, Díaz y Asociados in 1970, and served as partner in the Energy, Chemicals and Public Utilities – Audit and Business Consulting Division and as partner and Director of the Energy Industry for Latin America. He was elected a Santander Río independent alternate director by the Annual and Extraordinary Shareholders’ Meeting held on April 29, 2005.

Alberto Piedrafita, age 60. Mr. Piedrafita is an alternate member of our board of directors and holds a degree in Accounting from the School of Economic Sciences of the University of Buenos Aires. He joined Pistrelli, Díaz y Asociados in 1971. He was a partner in this firm from 1985 to 2002, when he left to join Ernst & Young, serving also as a partner until April 2004. He was elected a independent alternate director by the Ordinary and Extraordinary Shareholders’ Meeting held on April 29, 2005.

Oscar Correa, age 63. Mr. Correa holds a degree in Business Administration from the Argentine Catholic University. He currently serves as Santander Río’s Chief Corporate Communications Officer. Before joining Santander Río he was Media Services Director at A.C. Nielsen Argentina and held other positions in various international advertising agencies.

Gabriel Juan Ribisich, age 46. Mr. Ribisich holds a degree in Economics from the School of Economic Sciences of the University of Buenos Aires and is a Capital Markets Specialized Expert graduated from the Argentine Capital Markets Institute. In 1990 he joined Santander Río, where he has held various positions and is currently Chief Treasury Officer. He is a member of the Quality Committee, the Operational Risk Committee and the Businesses and Risks Committee. Before joining Santander Río, he worked for Banco de Galicia y Buenos Aires S.A. from 1982 to 1990.

Jorge Edgardo Thomas, age 54. Mr. Thomas holds a degree in Business Administration from the University of Buenos Aires. He is a member of the ALCO, the Quality Committee, the Operational Risk Committee and the Businesses and Risks Committee. In 1997, he started to work for Santander Río de la Plata S.A. as Commercial Banking Risk Manager. In November 2001, he was appointed Corporate and SME Risk Acceptance Director. In January 2005, he became the Bank’s Chief Risk Officer.

José Marcial Melián, age 50. Mr. Melián holds a degree from the University of Morón. He has been our Chief Systems, Operations and Organization Officer since 2006. He is also the chairman of the Systems Committee and a member of the Quality Committee, the Operational Risk Committee and the Businesses and Risks Committee. Previously, he was our Chief Operations Officer from 1997 to 2006. Mr. Melián previously served as Operations Manager from 1991 to 1994 and General Accountant from 1994 to 1996 at Banco Santander in Spain.

Pablo Agote Alique, age 38. Mr. Agote obtained a degree in Business and Economics from the University Complutense of Madrid, Spain. He is the chairman of the Internal Audit Committee. He has served as the Chief Internal Audit Officer at Santander Río since October 2009. Prior to this, he was a Senior Auditor of Banco Santander in Spain.

Marisa Lupi, age 40. Ms. Lupi is a Certified Public Accountant and holds a bachelors degree in Business Administration and a masters degree in Marketing from San Andrés University. Ms. Lupi was appointed to oversee the Organization and Quality in the Media unit in 2008 and was appointed Chief Transformation, Efficiency and Quality Officer in April 2011. She previously worked as Senior Consultant in Planning, Integration and Organizational Change at Levy & Co. Ms. Lupi joined Banco Santander Rio in 1997 as Investor Relations Analyst.

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She managed Quality of Service projects, was Project Manager for Intranet and Internet areas and subsequently Business Manager for Internet and Personal Mobile Banking.

Supervisory Committee

Under Argentine corporate law and our bylaws, a supervisory committee is in charge of supervising our board of directors and ensuring our compliance with applicable laws and regulations. The supervisory committee consists of three members, or Members, and three alternate members, or Alternate Members. In accordance with the bylaws, Members and Alternate Members are elected by a majority vote of the holders of ordinary shares. Each member of the supervisory committee is elected at the annual shareholders’ meeting and serves for a one-year term, and they may be reelected. Pursuant to Argentine corporate law, only lawyers and accountants admitted to practice in Argentina or civil partnerships composed of such persons may serve as Members of an Argentine corporation.

The primary duty of the supervisory committee is to monitor statutory compliance by the board of directors with Argentine corporate law, the bylaws and the resolutions of shareholders’ meetings. In fulfilling these duties, the supervisory committee does not exercise any management oversight and therefore does not assess the merits of the business criteria applied and decisions adopted in the different corporate areas, as these matters are the exclusive responsibility of the board of directors. Members’ duties include attending all board of directors’ meetings, preparing a report addressed to shareholders and supplying certain information at the request of shareholders representing not less than 2% of our capital stock.

The following table shows the members appointed to our supervisory committee by our shareholders at the annual meeting held on March 16, 2011.

Name		Position
Jorge Luis Pérez Alati		Member
Betina Di Croce		Member
Diego María Serrano Redonnet		Member
María Gabriela Grigioni		Alternate Member
Guillermo Eduardo Quiñoa		Alternate Member
Santiago Daireaux		Alternate Member

Brief biographical information of the members of our supervisory committee is set forth below.

Jorge Luis Pérez Alati, age 56. Mr. Pérez Alati received a law degree from the Law School of the Argentine Catholic University and holds a Master of Laws degree from Columbia University in the City of New York, United States of America. He is a founding partner of the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.).

Betina Di Croce, age 49. Ms. Di Croce received a law degree from the Law School of the University of La Plata, and she is a partner at the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.).

Diego María Serrano Redonnet, age 44. Mr. Serrano Redonnet received a law degree from the Law School of the Argentine Catholic University and holds a Master of Laws degree from Harvard University, Cambridge, Massachusetts, United States of America. He is a partner at the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.).

María Gabriela Grigioni, age 47. Ms. María Gabriela Grigioni received a law degree from the Law School of the University of Buenos Aires, and she is a partner at the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.).

Guillermo Eduardo Quiñoa, age 44. Mr. Quiñoa received a law degree from the Law School of the University of Buenos Aires, and he is a partner at the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.).

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Santiago Daireaux, age 43. Mr. Daireaux received a law degree from the Law School of the Argentine Catholic University and holds a Master of Laws degree from the University of Pennsylvania, Philadelphia, PA, United States of America. He is a partner at the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.).

Independence of the Members of the Board of Directors and 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 when, among other things, the 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 significant participation in a corporation having significant participation in the company or a significant influence over the company; (ii) is a director or an employee of, or is otherwise related to, any shareholder having significant participation in the company, or to any other company in or over which such shareholder has direct or indirect 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 firm that has a professional relationship with, or receives remuneration (other than the one received due to his performance as a director) from, the company, any shareholder having direct or indirect significant participation in or significant influence over the company, or any company in or over which such shareholder also has direct or indirect significant participation or a significant influence; (v) directly or indirectly sells or provides goods or services to the company or to any shareholder who has direct or indirect significant participation in or significant influence over the company, for amounts that significantly exceed his remuneration as a member of the board of directors; or (vi) is the spouse or relative (up to second grade of affinity or up to fourth grade of consanguinity) of any person who would not be considered independent, according to the above listed rules, if such person had been a member of the board of directors of the company. In this paragraph, “significant influence” shall mean the ability of any given person, who does not control a company, to exert influence over such company’s operative and financial policies.

Directors José Luis Enrique Cristofani, Guillermo Rubén Tempesta, Luis Miguel García Morales, Norberto Oscar Rodriguez, Luis Alberto Aragón, Víctor Barallat López and Oscar Von Chrismar, and Alternate Directors Luis Miguel Incera and Luis Marcelo Núñez are not independent according to the criteria set forth in Book I, Chapter III, Section 11 of the CNV Regulations.

Directors Fernando De Illana, Alberto Abad, Carlos Alberto Gindre and Jorge Verruno and Alternate Directors Hugo Pentenero and Alberto Piedrafita are independent within the meaning of the criteria set forth in Book I, Chapter III, Section 11 of the CNV Regulations.

Members of the supervisory committee Jorge Luis Pérez Alati, Betina Di Croce and Diego María Serrano Redonnet, and Alternate Members María Gabriela Grigioni, Guillermo Eduardo Quiñoa, and Santiago Daireaux are members of the law firm Pérez Alati, Grondona, Benites, Arntsen and Martínez de Hoz (Jr.), which provides professional services to us.

External Auditors

Mr. Carlos Bernardo Srulevich, a certified public accountant and a partner of the firm Deloitte & Co. S.R.L., was appointed by our shareholders at our shareholders’ meeting held on March 16, 2011 as the certifying accountant in relation to the balance sheet, statements of income and the corresponding schedules for the fiscal year ending on December 31, 2011. Mr. Srulevich has also been the certifying accountant for the balance sheet, statements of income and corresponding schedules for the fiscal year ended on 2010. Roxana Mabel Fiasche was the certifying accountant for the balance sheet, statements of income and corresponding schedules for the fiscal year ended on 2009, 2008, 2007 and 2006.

The firm Deloitte & Co. S.R.L. has its domicile at Florida 234, 5th floor, (C1005AAF) City of Buenos Aires, Argentina, and is registered with the Professional Council in Economic Sciences of the City of Buenos Aires, under Volume 1, Page 3.

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Committees Reporting to the Board of Directors

Director Committee

The Director Committee meets regularly and serves as a liaison between our board of directors and senior management in order to ensure that our overall strategic objectives are being implemented. The Director Committee is comprised of Mr. Cristofani (Chairman), Mr. Tempesta and Mr. Rodríguez.

Audit Committee

On May 14, 2003, in compliance with the Transparency Executive Decree and CNV regulations, which include rules for the improvement of corporate governance, the board of directors approved the Rules of Procedure that govern the performance of our audit committee. These Rules of Procedure define the audit committee’s structure and the minimum qualification requirements of committee members, in addition to providing guidelines in relation to the main duties to be performed. The Rules of Procedure were registered in accordance to the Argentine Corporate Regulatory Authority on December 5, 2003.

The audit committee is responsible for the appointment, compensation, retention and oversight of the work of the auditors (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services for us. The audit committee has established procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. The audit committee is authorized to engage independent counsel and other advisers as it determines necessary to carry out its duties. The audit committee is allowed to set its own budget to provide for (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for us; (ii) compensation to any advisers employed by the audit committee; and (iii) ordinary administrative expenses of the audit committee that are necessary or appropriate in carrying out its duties.

Among its other capacities and duties, the audit committee:

supervises the application of information policies in relation to corporate risk management;

supplies the market with complete information regarding transactions where a conflict of interest may exist with respect to any members of the corporate bodies or controlling shareholders;

gives its opinion on the reasonableness of proposals concerning directors’ and managers’ fees and stock option plans proposed by the governing body and on our compliance with any legal requirements and the reasonableness of the conditions for the issuance of shares or convertible securities in the event of a capital increase when preemptive rights may be excluded or limited;

verifies our compliance with applicable rules of conduct;

expresses its opinion on transactions with related parties;

examines external and internal auditors plans and expresses an opinion thereon at the time of presentation and publication of the annual financial statements;

submits the action plan provided for in Article 15 of the Transparency Executive Decree to the board of directors and the supervisory committee;

fulfills any obligations that may be imposed on such committee by our bylaws, as well as any applicable laws and regulations;

assumes responsibility for claims receipts and investigation procedures; and

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prepares an annual action plan for the fiscal year, for which it will report to the board of directors and supervisory committee.

According to the Audit Committee Rules of Procedure, the board of directors is in charge of determining the number of members that make up the audit committee. The minimum number of audit committee members is three, and the maximum is seven. The majority of audit committee members must be independent directors qualified in the fields of business, finance and accounting. The members of the audit committee are appointed by plurality of votes by the members of the board for a period of three years, provided that their terms as director do not expire prior to the expiration of such period.

The following table sets forth certain relevant information of the members of the audit committee:

Name	Position	Age	Date of Appointment	Status
Carlos Gindre	Chairman of the Audit Committee and Independent Director	60	01/17/2005	Independent
Jorge Verruno	Independent Director	61	01/31/2005	Independent
Norberto Oscar Rodríguez	Director	50	14/04/2009	Not independent

In order to comply with Rule 10A-3 under the Securities Exchange Act of 1934, as amended, we already have two independent directors on our audit committee. Within one year of the consummation of this global offering, we expect that all three of our audit committee members will be independent within the meaning of Rule 10A-3.

Internal Audit Committee

The Internal Audit Committee is responsible for supervising the proper functioning of our internal control systems and procedures. Furthermore, the committee reviews our annual and quarterly financial statements, the external auditors’ reports, the relevant financial information and the audit committee’s reports. The Internal Audit Committee holds monthly meetings and prepares written reports that detail the topics discussed at such meetings and outline issues that require further discussion by the board of directors.

The Internal Audit Committee is comprised of Mr. Agote (Chairman), Mr. Gindre and Mr. Rodríguez.

Systems Committee

The Systems Committee (i) oversees the proper functioning of our information technology and related systems; (ii) contributes to the improvement of the effectiveness of our information technology and related systems; (iii) develops long-term plans regarding our information technology and related systems; (iv) periodically evaluates our information technology and related systems; (v) reviews the audits of our information technology and related systems and oversees the implementation of corrective actions designed to address observed weaknesses; and (vi) communicates with the External Audit Management System Division of the SEFyC.

The Systems Committee is comprised of Mr. Melián (Chairman), Mr. Rodríguez, Mr. García Morales, Mr. Aragón and other relevant employees.

Analysis and Resolution Committee

The Analysis and Resolution Committee is responsible for planning, coordinating and monitoring compliance with anti-money laundering policies approved by the board of directors. Its responsibilities include (i) defining policies for compliance with anti-money laundering guidelines; (ii) being a permanent forum for the discussion of money laundering and terrorist financing risks; (iii) developing and implementing anti-money laundering and terrorist financing controls; (iv) monitoring the implementation of training programs regarding money laundering and terrorist financing; (v) establishing appropriate mechanisms for the internal reporting of unusual or suspicious activities and informing the board of directors and regulators of any such activities; (vi) supporting the anti-money laundering committee in its examination of unusual or suspicious transactions; and (vii) approving and following-up

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on the work program submitted by the anti-money laundering committee for the relevant fiscal year, for which it will report to the board of directors.

The Analysis and Resolution Committee is comprised of Mr. Tempesta (Chairman), Mr. García Morales, Mr. Ribisich, Mr. Melián, Mr. Rodríguez, Mr. Agote and other relevant employees.

Assets and Liabilities Committee (ALCO)

The ALCO defines our policies in terms of asset and liability management, with the objective of capitalizing on our competitive advantages in treasury operations, maximizing our net interest revenue and return on assets and equity while limiting interest rate risk and liquidity risk, within the limits provided by Argentine banking regulations.

The ALCO is comprised of Mr. Cristofani (Chairman), Mr. García Morales, Mr. Ribisich, Mr. Melián, Mr. Rodríguez, Mr. Aragón, Mr. Thomas and other relevant employees.

Legal and Compliance Committee

The Legal and Compliance Committee is responsible for (i) overseeing compliance with applicable legal and regulatory requirements; (ii) overseeing compliance with applicable board resolutions; (iii) overseeing active litigation; and (iv) providing legal support and advice to our board of directors.

The Legal and Compliance Committee is comprised of Mr. Tempesta (Chairman), Mr. Rodríguez and Mr. De Illana.

Regulatory Information and Corporate Control Committee

The Regulatory Information and Control Committee is responsible for overseeing administrative, corporate control and accounting matters.

The Regulatory Information and Control Committee is comprised of Mr. Rodríguez (Chairman), Mr. Tempesta and Mr. De Illana.

Quality Committee

The Quality Committee is responsible for establishing our quality policy and objectives, overseeing the Quality Plan and supervising the development and implementation of the quality management system, as well as efforts to improve the effectiveness of the quality management system.

The Quality Committee is comprised of Mr. Cristofani (Chairman), Mr. García Morales, Mr. Ribisich, Mr. Melián, Mr. Rodríguez, Mr. Tempesta, Mr. Aragón, Mr. Thomas and other relevant employees.

Operational Risk Committee

The Operational Risk Committee provides for the implementation of our operational risk policies and management procedures. It also oversees the control and reporting processes and procedures for the operational risk management system approved by our board of directors.

The Operational Risk Committee is comprised of Mr. Cristofani (Chairman), Mr. García Morales, Mr. Ribisich, Mr. Melián, Mr. Rodríguez, Mr. Tempesta, Mr. Aragón, Mr. Thomas and other relevant employees.

Businesses and Risks Committee

The Businesses and Risks Committee is responsible for developing the policies for managing risks in the different business segments.

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The Businesses and Risks Committee is comprised of Mr. Cristofani (Chairman), Mr. García Morales, Mr. Ribisich, Mr. Melián, Mr. Rodríguez, Mr. Tempesta, Mr. Aragón, Mr. Thomas and other relevant employees.

Compensation

Compensation of Directors, Members of the Supervisory Committee and Executive Officers

The aggregate amount of compensation paid by us to all of our executive officers during fiscal year 2010 was Ps. 33.6 million. For the same period, the supervisory committee received total fees of Ps. 67,000. The following table sets forth the compensation paid to our non-executive directors for the fiscal year ended December 31, 2010. Our executive directors did not receive any fees for their duties as directors, because they held officer positions with us and received compensation as such.

Name	Compensation (in pesos)
Alberto Remigio Abad	Ps.	210,600
Claudio Alberto Cesario		173,375
Carlos Alberto Gindre		210,600
Jorge Emilio Verruno		210,600

At the annual shareholders’ meeting, our shareholders establish the maximum annual aggregate compensation of our directors and members of our audit committee. We are not required under Argentine law to disclose on an individual basis the compensation of our executive officers, and we do not otherwise publicly disclose such information.

The compensation to members of our board of directors and executive officers is paid monthly. The maximum aggregate compensation includes, for our executive officers, amounts paid under our bonus program. The criteria for granting and paying bonus compensation vary depending on the department and the activities performed by such executive officer.

Our directors and officers may participate in the pension plan that is available to some of our employees and they are entitled to use company-provided cars and the reimbursement of related transportation expenses.

Our directors are not entitled to benefits upon termination of employment, with the exception of José Luis Enrique Cristofani, who is entitled to certain benefits, including the payment of an amount slightly higher than required by applicable law, upon termination.

We typically agree to indemnify our directors and executive officers when they leave the Bank from claims arising during the time they were our directors or officers.

Share Compensation Plans

Performance Share Plan Payable in Shares of Banco Santander

Banco Santander’s shareholders have approved a multi-year incentive plan payable in shares of Banco Santander for the benefit of the Santander Group’s executive officers and other members of management and any other executives. This plan is approved by Banco Santander’s shareholders meeting and its beneficiaries are designated by the board of directors or, when so delegated by the board of directors, the executive committee of Banco Santander. The beneficiaries of the plan use such compensation exclusively to receive shares of Banco Santander. The expenses associated with this plan are borne by us and are part of the overall compensation of the beneficiaries of the plan.

On August 4, 2008, our board of directors adopted Banco Santander’s incentive plan payable in shares of Banco Santander for 187 managers. The plan was implemented through the granting of a certain number of shares of Banco Santander depending on the position, performance and trajectory of the beneficiary and is composed of two

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cycles: one during 2007 and 2008 (178,731 total shares), and the other during 2007, 2008 and 2009 (270,338 total shares). The total cost of both cycles of the plan allocated to us was €2.5 million or Ps. 12.3 million.

On May 17, 2010, the board adopted another similar incentive plan composed of one cycle during 2008, 2009 and 2010 (275,106 total shares). The total cost of the plan to us as of December 31, 2010 was €1.5 million or Ps. 8.0 million.

For each cycle, each beneficiary who keeps working with us for the duration of the plan is entitled to a number of shares based on the achievement of certain performance targets by the Santander Group. The targets are defined by comparing the Santander Group’s performance with that of a benchmark group of financial institutions and are linked to two parameters: total shareholder return, or TSR, and growth in earnings per share, or EPS. The relevant performance targets are considered as of the third anniversary of the commencement of each cycle (with the exception of the first cycle, for which the second anniversary was considered). Shares awarded in each cycle are delivered within seven months from the end of the cycle.

At the end of each year, TSR and the EPS growth is calculated for the Santander Group and each of the benchmark entities and the results are ranked. Each of the two criteria (TSR and EPS growth) is weighted at 50% in the calculation of the percentage of shares to be delivered, based on the following scale and in accordance with the Santander Group’s relative position among the group of benchmark financial institutions:

The Santander Group’s Place in the TSR Ranking	Percentage of Maximum Shares to be Delivered	The Santander Group’s Place in the EPS Growth Ranking		Percentage of Maximum Shares to be Delivered
1st to 6th	50%		1st to 6th	50%
7th	43%		7th	43%
8th	36%		8th	36%
9th	29%		9th	29%
10th	22%		10th	22%
11th	15%		11th	15%
12th and below	0%		12th and below	0%

We make certain adjustments to the ranking and award criteria if any benchmark group entity is acquired by another company and its shares cease trading or it ceases to exist.

Incentive Share Plans Payable in Shares of Santander Río

As of the date of this prospectus, no incentive share plan has been approved by our board of directors. However, in order to attract and retain highly qualified and capable professionals and to promote the success of our business, our board of directors may establish an incentive share plan, or a series of incentive share plans, payable in our Class B shares within the framework approved at our shareholders’ meeting on March 16, 2011.

We may establish incentive share plans that include our directors, executive officers or employees, as determined by our board of directors. Award amounts may be determined based on individual performance, total shareholder return and earnings per share growth, or other factors pursuant to the terms determined by our board of directors for the respective incentive share plan.

At our shareholders’ meeting held on March 16, 2011, our shareholders approved a maximum amount of shares issuable pursuant to any such incentive plan of 0.5% of our capital stock. However, the maximum number of shares to be granted pursuant to the incentive share plans currently under consideration will be no more than 2.8 million Class B shares, which represent less than 0.3% of our outstanding capital stock on the date of this prospectus.

Share Ownership

None of the members of our board of directors, supervisory committee or senior management hold shares of our capital stock.

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PRINCIPAL AND SELLING SHAREHOLDERS

We are a subsidiary of Banco Santander. The Santander Group, through its stand-alone subsidiaries, is the largest foreign bank group in Latin America in terms of assets, with a global business volume of more than €2,064.7 billion (the sum of loans, deposits and mutual funds) as of March 31, 2011. The Santander Group had stockholders equity of €79,753 million and a market capitalization of €69,143 million as of March 31, 2011, and net income of €9,129 million in 2010. As of March 31, 2011, the Santander Group had 14,179 offices in 15 countries and operations in 20 countries worldwide. As a result of its voting control over us, the Santander Group is in a position to cause the election of a majority of the members of our management and to determine substantially all matters to be decided by a vote of shareholders.

As of the date of this prospectus, Banco Santander (formerly Banco Santander Central Hispano, S.A.) directly or indirectly owns 99.3% of our total capital stock. Our relationship with the Santander Group has provided us with access to the expertise of the Santander Group in areas such as technology, product innovation, human resources and internal audit control systems. In addition, the Santander Group requires us to follow its banking policies, procedures and standards, especially with respect to credit approval and risk management. Such policies and expertise have been successfully used by the Santander Group in the Spanish and other banking markets, and we believe that such policies and expertise have had and will continue to have a beneficial effect upon our operations. In accordance with Banco Santander’s general practice with respect to its publicly traded subsidiaries, Banco Santander has informed us that it intends to increase our free float over time to approximately 25% as market opportunities arise.

Pursuant to the underwriting agreement among us, Administración de Bancos Latinoamericanos Santander, S.L. or ABLASA, as selling shareholder, and the international underwriters, ABLASA will sell preferred shares to the international underwriters at the same price as the Class B shares underlying the ADSs sold by us to the international underwriters. The international underwriters, in accordance with the conversion right granted to all holders of our preferred shares, will subsequently exercise their right to convert, on a one-to-one basis, each such preferred share into a Class B share by filing a notice of conversion with Caja de Valores. Following such conversion, the international underwriters will deposit each Class B share credited to their account at Caja de Valores as a result of the exercise of their right to convert, and the depositary shall register the appropriate number of ADSs in the name of the international underwriters and deliver to them ADRs representing such ADSs.

As of , 2011, % of our Class A shares were held in Argentina by holders, % of our Class B shares were held in Argentina by holders and % of our preferred shares were held in Argentina by holders. The following table presents the beneficial ownership of our capital stock as of the date of this prospectus.

Name	Class A Shares(1)		Percentage of Outstanding Class A Shares			Class B Shares(1)		Percentage of Outstanding Class B Shares			Preferred Shares(1)		Percentage of Outstanding Preferred Shares			Percentage of Total Share Capital
Administración de Bancos Latinoamericanos Santander, S.L.(2)		105,180,556		73.83	%		113,702,250		38.19	%		635,447,536		99.49	%		79.19	%
Banco Santander, S.A.(3)		—		—			88,830,009		29.84			—		—			8.23
BRS Investments S.A.(4)		36,730,452		25.78			2,539,000		0.85			—		—			3.64
Santander Overseas Bank Inc.(5)		—		—			88,900,158		29.86			—		—			8.24
Minority shareholders(6)		539,151		0.38			3,752,671		1.26			3,253,232		0.51			0.70
Total		142,450,159		100.00	%		297,724,088		100.00	%		638,700,768		100.00	%		100.00	%

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The following table presents the beneficial ownership of our capital stock following the offering, assuming no exercise of the over-allotment option, no conversion of preferred shares to Class B shares by minority shareholders and no exercise by minority shareholders of their preemptive rights.

Name	Shares Sold in the Offering		Class A Shares(1)		Percentage of Outstanding Class A Shares			Class B Shares		Percentage of Outstanding Class B Shares(1)	Preferred Shares(1)		Percentage of Outstanding Preferred Shares			Percentage of Total Share Capital
Administradora de Bancos Latinoamericanos Santander, S.L.(2)				105,180,556		73.83	%		113,702,250
Banco Santander, S.A.(3).		—		—		—			88,830,009			—		—
BRS Investments S.A.(4)		—		36,730,452		25.78			2,539,000			—		—
Santander Overseas Bank Inc.(5)		—		—		—			88,900,158			—		—
Minority shareholders(6)		—		539,151		0.38						3,253,232
Total				142,450,159		100.00	%			100.00%				100.00	%	100.00%

The following table presents the beneficial ownership of our capital stock following the offering, assuming full exercise of the over-allotment option, no conversion of preferred shares to Class B shares by minority shareholders and no exercise by minority shareholders of their preemptive rights.

Name	Shares Sold in the Offering		Class A Shares(1)		Percentage of Outstanding Class A Shares			Class B Shares		Percentage of Outstanding Class B Shares	Preferred Shares		Percentage of Outstanding Preferred Shares			Percentage of Total Share Capital
Administradora de Bancos Latinoamericanos Santander, S.L.(2)				105,180,556		73.83	%		113,702,250
Banco Santander, S.A.(3)		—		—		—			88,830,009			—		—
BRS Investments S.A.(4)		—		36,730,452		25.78			2,539,000			—		—
Santander Overseas Bank Inc.(5)		—		—		—			88,900,158			—		—
Minority shareholders(6)		—		539,151		0.38						3,253,232
Total				142,450,159		100.00	%			100.00%				100.00	%	100.00%

The following table presents the beneficial ownership of our capital stock following the offering, assuming full exercise of the over-allotment option, the conversion of all preferred shares held by minority shareholders to Class B shares and full exercise by minority shareholders of their preemptive rights.

Name	Shares Sold in the Offering		Class A Shares(1)		Percentage of Outstanding Class A Shares			Class B Shares		Percentage of Outstanding Class B Shares	Preferred Shares		Percentage of Outstanding Preferred Shares			Percentage of Total Share Capital
Administradora de Bancos Latinoamericanos Santander, S.L.(2)				105,180,556		73.83	%		113,702,250					100.00	%
Banco Santander, S.A.(3)		—		—		—			88,830,009			—		—
BRS Investments S.A.(4)		—		36,730,452		25.78			2,539,000			—		—
Santander Overseas Bank Inc.(5)		—		—		—			88,900,158			—		—
Minority shareholders(6)		—		539,151		0.38						—		—
Total				142,450,159		100.00	%			100.00%				100.00	%	100.00%

(1)	Our Class A shares are entitled to five votes per share. Our Class B shares are entitled to one vote per share. Our preferred shares have no voting rights, except in specific cases.

(2)

Wholly controlled by Banco Santander, which directly holds a 24.1% interest and indirectly holds a 75.9% interest through Santander Investments I.S.A., which is also wholly controlled by Banco Santander. Administradora de Bancos Latinoamericanos Santander, S.L. will sell preferred shares to the international underwriters, which the international underwriters will convert to Class B shares on a one-to-one basis, in accordance with the conversion right granted to all holders of our preferred shares. The address of Administradora de Bancos Latinoamericanos Santander, S.L. is Av. de Cantabria S/N, Ciudad Grupo Santander, 28660 Boadilla del Monte, Madrid, Spain.

(3)	The address of Banco Santander is Paseo de Pereda 9-12, Santander, Spain.

(4)

Indirectly and wholly controlled by Banco Santander, through Administración de Bancos Latinoamericanos Santander, S.L. (the owner of a 94.9% interest in BRS Investments S.A.) and Santander Investments I.S.A. (the owner of a 5.1% interest in BRS Investments S.A.). The address of BRS Investments S.A. is Bouchard 547 piso 23, Buenos Aires, Argentina.

(5)	Indirectly and wholly controlled by Banco Santander through Santander Holding Internacional, S.A. The address of Santander Overseas Bank Inc. is 221 Ponce de Leon, San Juan, Puerto Rico 00917.

(6)

Any preemptive or accretion rights exercised by minority shareholders will be satisfied with Class B shares at the closing of the global offering and at the end of the preeemptive subscription period on , 2011. The maximum number of such shares that may be issued, assuming all minority shareholders exercise their preemptive rights, is Class B shares.

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RELATED PARTY TRANSACTIONS

The Argentine Corporate law and Central Bank regulations require that our transactions with related parties be on a market basis, that is, on similar terms to those customarily prevailing in the market. We are required to compare the terms of any such transaction to those prevailing in the market at the date the transaction is entered into.

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. Central Bank regulations establish that loans to directors, controlling shareholders, officers and other related entities must be granted on an equal basis with respect to rates, tenor and guarantees as loans granted to the general public. Additionally, the Central Bank establishes limits for transactions with related parties.

The parties related to us are deemed to include, in addition to its subsidiaries, associates and jointly controlled entities, our key management personnel, as well as all individuals who are related to them by a family relationship of up to the second degree of consanguinity and/or first degree by marriage, and the entities over which our key management personnel may exercise significant influence or control.

Loans made to related parties were made in the ordinary course of business. They were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and they do not involve more than the normal risk of collectability nor do they present other unfavorable features.

Transactions with related parties

The following presents information on our transactions with related parties. All transactions with related parties are reflected in our consolidated financial statements.

Insurance

We sell insurance policies underwritten by Santander Río Seguros S.A., a member of the Santander Group, and receive commissions in exchange. The commissions received in the three months ended March 31, 2011 and 2010 amounted to Ps. 42.9 million and Ps. 20.3 million, respectively, and the commissions received in 2010 and 2009 amounted to Ps. 70.8 million and Ps. 71.6 million, respectively. For a description and impact of the recently announced memorandum of understanding entered into between Zurich and Banco Santander on our insurance business, see “Business—Commercial Banking—Individuals—Insurance.”

Information Technology

We purchase services from various information technology providers of the Santander Group, including Isban Argentina S.A., Isban S.A. (Spain), Isban Chile S.A., Isban Mexico S.A. and Produban S.A.

The amounts recorded as intangible assets for these purchases as of March 31, 2011 and December 31, 2010 and 2009 amounted to Ps. 47.7 million, Ps. 57.7 million and Ps. 24.0 million, respectively. We recorded administrative expenses for related services of Ps. 15.2 million, Ps. 72.4 million and Ps. 74.0 million for the three months ended March 31, 2011 and fiscal years 2010 and 2009, respectively.

Other Related Party Transactions

The following table presents financial information on our transactions with related parties.

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	As of
	March 31, 2011						December 31, 2010						December 31, 2009						January 1, 2009
	Associates		Parent		Other Related- Party		Associates		Parent		Other Related- Party		Associates		Parent		Other Related- Party		Associates		Parent		Other Related- Party

Assets
Loans and receivables (1) (2)		—	Ps.	50,694	Ps.	9,015		—	Ps.	35,404	Ps.	7,683	Ps.	3,894	Ps.	23,669	Ps.	7,186	Ps.	3,102	Ps.	27,733	Ps.	4,181
Banco Santander S.A.		—		50,694		—		—		35,404		—		—		23,669		—		—		27,733		—
Santander Río Asset Management Gerente FCI S.A.		—		—		1,215		—		—		1,200		—		—		1,069		—		—		657
Gire S.A.		—		—		—		—		—		—		3,894		—		—		3,102		—		—
Santander Investment Securities Inc.		—		—		3,242		—		—		—		—		—		—		—		—		—
Portal Universia Argentina S.A.		—		—		359		—		—		—		—		—		—		—		—		—
Santander Río Servicios S.A.		—		—		554		—		—		—		—		—		—		—		—		—
Other		—		—		359		—		—		6,483		—		—		6,116		—		—		3,524

Liabilities
Financial liabilities at amortized cost - Other financial liabilities		—	Ps.	806,802	Ps.	38,382		—	Ps.	20,786	Ps.	1,581	Ps.	1,136	Ps.	4,108	Ps.	2,880	Ps.	1,057	Ps.	25,977	Ps.	2,390
Banco Santander S.A.		—		107,362		—		—		20,786		—		—		4,108		—		—		25,977		—
Santander Río Servicios S.A.		—		—		—		—		—		1,527		—		—		1,151		—		—		2,390
Administración de Bancos Latinoamericanos Santander S.L.		—		633.520		—		—		—		—		—		—		—		—		—		—
BRS Investment S.A.		—		—		29,120		—		—		—		—		—		—		—		—		—
Santander Overseas Bank Inc.		—		65,920		—		—		—		—		—		—		—		—		—		—
Gire S.A.		—		—		—		—		—		—		1,136		—		—		1,057		—		—
Other		—		—		9,262		—		—		54		—		—		1,729		—		—		—

Financial liabilities at amortized cost - Customer deposits (3)	Ps.	114,480		—	Ps.	59,098	Ps.	105,891	Ps.	1,171	Ps.	90,304	Ps.	82,625	Ps.	1,176	Ps.	72,797	Ps.	55,127	Ps.	20,146	Ps.	103,642
Banco Santander S.A.		—		—		—		—		1,171		—		—		1,176		—		—		20,146		—
Gire S.A.		114,457		—		—		105,700		—		—		82,625		—		—		54,922		—		—
Isban Argentina S.A.		—		—		5,842		—		—		18,815		—		—		21,033		—		—		14,629
Santander Río Seguros S.A.		—		—		12,379		—		—		13,584		—		—		9,793		—		—		72,787
BRS Investments S.A.		—		—		21,882,277		—		—		20,686		—		—		10,995		—		—		6,839
Other		—		—		14,412		191		—		37,219		—		—		30,976		205		—		9,386

Financial liabilities at amortized cost - Marketable debt securities		—		—	Ps.	3,008		—		—	Ps.	3,069		—		—	Ps.	1,334		—		—		—
Santander Río Seguros S.A.		—		—		3,008		—		—		3,069		—		—		1,334		—		—		—

Software purchases		—		—	Ps.	47,685		—		—	Ps.	57,667		—		—	Ps.	23,965		—		—	Ps.	22,246
Isban Argentina S.A.		—		—		44,178		—		—		54,976		—		—		20,659		—		—		17,884
Other		—		—		3,507		—		—		2,691		—		—		3,306		—		—		4,363

(1)	Includes loans to key management personnel of Ps. 1.2 million, Ps. 5.8 million and Ps. 4.1 million as of March 31, 2011 and December 31, 2010 and 2009, respectively.

(2)	Loans and receivables principally include purchases of foreign currency agreed to but not settled by March 31, 2011 and December 31, 2010 of Ps. 24.5 million and Ps. 19.6 million, respectively.

(3)	Includes deposits of key management personnel in amounts of Ps. 10.1 million, Ps. 26.6 million and Ps. 15.8 million as of March 31, 2011 and December 31, 2010 and 2009, respectively.

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									For the years ended December 31,
	2010								2009									For the three months ended March 31, 2011
	Associates			Parent			Other Related- Party		Associates			Parent			Other Related- Party			Associates			Parent			Other Related- Party
Income
Interest and similar income		—		Ps.	1		Ps.	173		—			—		Ps.	798			—			—		Ps.	993
Santander Río Seguros S.A.		—			—			46		—			—			—			—			—			—
Santander Río Servicios S.A.		—			—			28		—			—			8			—			—			22
Other		—			1			99		—			—			790			—			—			971

Fee and commission income		—			—		Ps.	50,489		—			—		Ps.	85,104			—			—		Ps.	83,432
Santander Río Seguros S.A.		—			—			42,920		—			—			71,652			—			—			70,859
Santander Río Asset Management Gerente FCI S.A.		—			—			4,120		—			—			13,288			—			—			11,339
Santander Investment Securities Inc.		—			—			3,242		—			—			—			—			—			—
Gire S.A.		—			—			196		—			—			—			—			—			—
Other		—			—			11		—			—			164			—			—			1,234
Total income		—		Ps.	1		Ps.	50,662		—			—		Ps.	85,902			—			—		Ps.	84,425

Expense
Interest expense and similar charges	Ps.	2,391		Ps.	64		Ps.	773	Ps.	6,312		Ps.	2		Ps.	2,125		Ps.	4,720		Ps.	1,960		Ps.	6,747
Banco Santander S.A.		—			64			—		—			2			—			—			1,960			—
Gire S.A.		2,391			—			—		6,312			—			—			4,720			—			—
BRS Investments S.A.		—			—			530		—			—			1,319			—			—			893
Santander Río Seguros S.A.		—			—			—		—			—			23			—			—			4,503
Other		—			—			243		—			—			783			—			—			1,351

Fee and commission expense		—			—			—		—			—		Ps.	84,149			—			—		Ps.	65,901
Santander Río Seguros S.A.		—			—			—		—			—			84,149			—			—			65,901

Administrative expenses		—			—		Ps.	18,546	Ps.	716			—		Ps.	96,191			—			—		Ps.	111,150
Isban Argentina S.A.		—			—			10,231		—			—			63,488			—			—			66,170
Santander Río Servicios S.A.		—			—			1,838		—			—			23,781			—			—			36,505
Isban S.A.		—			—			3,179		—			—			5,618			—			—			1,291
Isban Chile S.A.		—			—			—		—			—			1,992			—			—			6,250
Isban Mexico S.A.		—			—			1,844		—			—			—			—			—			—
Gire S.A.		—			—			—		716			—			—			—			—			—
Aquanima Argentina S.A.		—			—			1,024		—			—			—			—			—			—
Other		—			—			430		—			—			1,312			—			—			933

Contingent liabilities		—		Ps.	57,407		Ps.	18,890		—			—		Ps.	9,687			—			—		Ps.	6,257
Banco Santander S.A.		—			57,407			—		—			—			—			—			—			—
Banco Santander Chile S.A.		—			—			13,262		—			—			8,335			—			—			4,188
Santander Río Seguros S.A.		—			—			4,068		—			—			—			—			—			—
Other		—			—			1,560		—			—			1,352			—			—			2,069
Total expense	Ps.	2,391		Ps.	64		Ps.	19,319	Ps.	7,028		Ps.	2		Ps.	182,465		Ps.	4,720		Ps.	1,960		Ps.	183,798
Profit/(Loss) for the period(1)	Ps.	(2,391	)	Ps.	(63	)	Ps.	31,343	Ps.	(7,028	)	Ps.	(2	)	Ps.	(96,563	)	Ps.	(4,720	)	Ps.	(1,960	)	Ps.	(99,373	)

(1)	Profit/(loss) for the period is provided before income taxes.

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DESCRIPTION OF CAPITAL STOCK

Set forth below is certain information relating to our capital stock, including brief summaries of certain provisions of our bylaws, Argentine corporate law (including Law No. 19,550, as amended, hereinafter referred to as Law 19,550) and certain related laws and regulations of Argentina, all as in effect as at the date of this prospectus. 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, which are an exhibit to the registration statement of which this prospectus forms a part, Argentine corporate law and the provisions of other applicable Argentine laws and regulations, including those of the CNV and the BASE rules.

General

We were organized as a corporation on June 20, 1908. Our capital stock consists of 1,078,875,015 shares, represented by 142,450,159 Class A shares (five votes per share), 297,724,088 Class B shares (one vote per share) and 638,700,768 preferred shares (no voting rights, except in certain cases), all of which are book-entry shares, fully paid and of a par value of Ps. 1.00 each. Under our bylaws, we may issue different classes of shares of common stock entitled from one to five votes per share; however, pursuant to CNV regulations, we cannot issue additional shares of any class of capital stock that could entitle the holder thereof to more than one vote per share so long as we are publicly listed. Our Class B shares have been listed on the BASE since 1997. Holders of Class A shares or preferred shares are permitted to convert their shares into Class B shares on a one-to-one basis.

Corporate Purpose

Our bylaws provide that our corporate purpose is to conduct and engage in banking transactions in accordance with any laws and regulations governing such transactions, including but not limited to collecting deposits, extending credit facilities and purchasing or selling equity or debt securities for our account or the account of others. To carry out our corporate purpose, we have the full legal capacity to acquire any rights, incur any obligations and perform any acts that are not prohibited by applicable laws or our bylaws.

Liability of Shareholders

The liability of shareholders for any company losses shall be limited to the amount of their respective shareholdings in the company. However, under Argentine corporate law, any shareholders that voted in favor of any action that is subsequently declared null by a court on grounds of such action being against the law or the corporate bylaws (or regulations, if any) will be jointly and severally liable for any damages caused to the company, other shareholders or third parties as a result of such action.

Registration and Transfer of Shares

Our shares are book-entry shares. Our shareholders are required to keep their shares through book-entry registers maintained by Caja de Valores. Any transfers, liens and charges related to such shares shall be registered in the register of shareholders and may only be enforced against us and any third parties after such registration requirement has been complied with. Shares may be transferred by the execution and delivery of transfer instructions to Caja de Valores through any participants in Caja de Valores.

Voting Rights

The holders of Class A shares are entitled to five votes per share, subject to certain exceptions, and the holders of Class B shares are entitled to one vote per share at any meeting of our shareholders. The holders of preferred shares are not entitled to vote except in specific cases. All classes of capital stock will have one vote per share upon any vote regarding: (i) a material change in our corporate purpose; (ii) a change of our domicile to a foreign country; (iii) our dissolution prior to the extinction of the corporate existence of the company; (iv) any merger or spin-off where we are not the surviving company; and (v) a total or partial recapitalization resulting from a mandatory capital reduction. Pursuant to CNV regulations, we may not issue shares with more than one vote per share so long as we are publicly listed in Argentina. New Class A shares may not be issued unless (i) permitted by applicable law in force or (ii) the capital increase derives from the capitalization of the “Capital Adjustment” reserve. In either such case, Class B and preferred shares must be issued in the same proportion as then outstanding.

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Conflicts of Interest

Under Law 19,550, if a shareholder votes on any issue in which he has a conflict of interest, such shareholder shall be liable for any damages derived therefrom when without the vote of such shareholder the required majority for a valid decision to be made in such respect would not have been reached.

Argentine law also provides that if a member of our board of directors has a conflict of interest in any business transaction, such director is required to inform the board of directors and the supervisory committee and to refrain from taking part in the respective deliberation. If a director infringes this statutory provision, such director shall be liable for any damages that may be derived from his actions. Similarly, the audit committee shall evaluate any transaction or agreement that may involve a conflict of interest under applicable law.

Cumulative Voting

Pursuant to Law 19,550, shareholders are entitled to request that cumulative voting procedures be applied for the election of up to one-third of the directors and members of the supervisory committee to be appointed at any shareholders meeting. In the event that at least one shareholder gives us notice of its decision to exercise cumulative voting rights, which notice must be given not less than three business days before the date of the respective shareholders’ meeting, all the shareholders shall be entitled to, but under no obligation to exercise, such right. The total number of votes corresponding to a shareholder that exercises cumulative voting rights is multiplied by the number of vacancies to be filled by the relevant election, and each such shareholder may distribute the total number of such votes among a number of nominees not exceeding one third of the number of vacancies to be filled. Shareholders that do not exercise cumulative voting rights shall be entitled to cast the number of votes corresponding to their shares for each of the vacancies to be filled. The nominees who receive the largest number of votes among all the votes cast at the meeting shall be appointed to fill those vacancies. Nominees may be elected either by cumulative or non-cumulative voting. In the event of a tie between two nominees, Law 19,550 establishes a procedure to break such tie.

Shareholders’ Meetings

Shareholders’ meetings may be ordinary or extraordinary. We must call and hold an ordinary, annual shareholders’ meeting within four months after the end of each fiscal year to consider the matters set forth in the first two paragraphs of Section 234 of Law 19,550, including the approval of our financial statements, allocation of the net income for the fiscal year, approval of the board of directors’ and supervisory committee’s performance and reports, appointment of directors and members of the supervisory committee and approval of their remuneration. Other matters that may be submitted to an annual shareholders’ meeting called and held at any time include appointment of the external auditors, consideration of the liability of directors and members of the supervisory committee, a capital increase and issue of certain notes. Extraordinary shareholders’ meetings may be called at any time to transact business that does not fall within the scope of annual shareholders’ meetings, in particular an amendment to our bylaws, issuance of debentures or notes generally, the early dissolution of the company, a merger, spin-off, reduction of ordinary shares, redemption of shares, the conversion of the company into a different type of company, and limitations to the preemptive rights of shareholders for the subscription of new shares. Shareholders’ meetings may consider only the matters that are included in the agenda of the respective meeting, unless all outstanding shares are present at the meeting, and resolutions are adopted by the unanimous votes of such shareholders, although there are certain exceptions to this rule recognized under Argentine law.

In addition, pursuant to Executive Decree No. 677/2001, the following matters must be considered by our shareholders during an ordinary shareholders’ meeting: (i) the disposition of, or creation of any lien over, our assets, as long as such decision has not been made in the ordinary course of business; (ii) the execution of administration or management agreements; and (iii) the authorization for payment of any material agreement providing assets or services to us.

Shareholders’ meetings may be called by the board of directors at the times prescribed by law, or whenever the board of directors may so deem advisable. Also, the board of directors must call a shareholders’ meeting at the request of shareholders representing as a whole not less than five per cent of our capital stock. The members of the supervisory committee have powers to call, in their sole judgment, ordinary and extraordinary shareholders’

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meetings upon any failure of the board of directors to do so. If the board of directors or the supervisory committee fails to call a shareholders’ meeting after such request, a shareholders’ meeting may be ordered to be held by the CNV or a court of competent jurisdiction. In order to attend meetings, shareholders shall deposit with us a book-entry shareholding certificate issued to their name to such effect by Caja de Valores, not less than three business days before the date when the meeting will be held. If a shareholder is entitled to attend any shareholders’ meeting, such shareholder may attend the meeting either personally or through a representative designated by proxy. Neither directors nor members of the supervisory committee nor our officers or employees may act as proxies.

Special Shareholders’ Meetings of Classes of Shares

A special shareholders’ meeting must be called and held to adopt any resolution that affects the rights of a certain class of shares, and only such resolution requires the consent or ratification of such class. The special shareholders’ meetings will be governed by the same rules established for ordinary shareholders’ meetings.

Notice of Shareholders’ Meetings

Notices of shareholders’ meetings shall be published for five days in the Official Gazette of the Argentine Republic, in one of the newspapers of widest circulation in Argentina and in the bulletins of any stock exchanges or security markets in Argentina on which our shares are listed, between 20 and 45 days before the date when the meeting will be held. Such notice shall indicate the nature of the shareholders’ meeting, date, time and place for the meeting and the corresponding agenda. Any shareholders’ meeting adjourned for lack of quorum at the first meeting shall be held within the following 30 days, and the relevant notice shall be published for three days, not less than eight days before the day when the adjourned shareholders’ meeting will be held. Notices of annual shareholders’ meetings on first and second call may be published at the same time, and in such case, in the absence of quorum at the first meeting, if the adjourned meeting is held on the same day, the adjourned meeting should start not less than one hour after the time of the first meeting.

The board of directors shall determine the appropriate form of publication for notices of shareholders’ meetings outside Argentina, in accordance with the requirements of the respective jurisdictions and stock exchanges on which our shares may be listed.

Quorum and Majorities

An ordinary shareholders’ meeting on first call shall be duly convened with the attendance of shareholders representing a majority of voting shares, and action shall be taken by the affirmative vote of an absolute majority of present shareholders entitled to vote with respect to such action. A shareholders’ meeting adjourned upon the failure of the first meeting shall be deemed duly convened regardless of the number of shares present, and action shall be taken by an absolute majority of votes present, regardless of the number of such votes.

An extraordinary shareholders’ meeting shall be held on first call with the attendance of shareholders representing 60% of voting shares. An extraordinary shareholders’ meeting adjourned upon the failure of the first meeting shall be duly constituted with the attendance of shareholders representing at least 30% of the voting shares. Action at extraordinary shareholders’ meetings shall be taken by the affirmative vote of an absolute majority of present shares entitled to vote. Notwithstanding the foregoing, approval by a majority of voting shares shall be required, without plurality of votes, to decide certain issues described in “—Voting Rights” above. With respect to such matters, the preferred shares are entitled to one vote per share.

Dividends

The declaration, amount and payment of dividends has to be decided by the vote of a majority of holders of Class A and Class B shares, on the basis of an annual proposal by the board of directors. Dividends must be paid in proportion to the respective holdings. Payment of dividends is also subject to Central Bank approval.

In the case of cash dividends, once dividends are approved at our shareholders meeting, the board of directors must make them available within thirty calendar days from the date of approval unless the shareholders meeting had approved staggering the payments or have authorized the board of directors to do so in accordance with applicable

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rules. However, no dividends can be paid until Central Bank approval has been granted. Typically, dividends are declared at our shareholders’ meetings, with payment subject to Central Bank approval.

In the case of stock dividends, the board of directors must make them available within three months of the date of the approval.

The procedure for holders that are not Argentine residents may vary if the owner of the right to receive dividends has assigned custody to us or not. In the event that we have been assigned custody, dividends are calculated at the relevant exchange rate and a U.S. dollar amount is remitted to a specified account. Otherwise, the peso amount corresponding to dividends is deposited with Caja de Valores, the paying agent of any dividends distributed by us.

The right to receive a cash or stock dividend shall expire three years from the date of payment, after which such dividend shall be deemed to be forfeited to us.

For more information regarding the applicable regime and restrictions for distribution of dividends, please see “Dividends and Dividend Policy” and “Exchange Rates and Exchange Controls.”

Capital Increases and Reductions

Our capital stock may be increased with no limitation whatsoever by resolution adopted by an ordinary shareholders’ meeting. Capital increases do not require any amendment to our corporate bylaws, but they shall be communicated to the CNV and the Central Bank, published in the Official Gazette, and registered with the Public Registry of Commerce. Capital reductions may be voluntary or mandatory. Voluntary capital reductions shall be approved by an extraordinary shareholders’ meeting, and unless such reduction is effected through the use of net income, retained earnings or available reserves, they shall have effect only after the respective notice has been published and creditors have been able to receive payment of or a security for their claims, or in the absence of such payment or security, after the statutory 20-day period for attachments to be levied by any dissatisfied creditors shall have elapsed. A capital reduction is mandatory when the losses exceed the reserves and more than 50% of our capital stock. We have not issued any capital stock since 2005.

Investors Exceeding 2% After the Global Offering and Transfers Exceeding 5%

According to Central Bank regulations, when an Argentine financial institution’s stock is offered through a local or foreign stock exchange, the institution must disclose to the Central Bank the name, nationality and address of any investors who individually purchased more than 2% of such institution’s capital stock.

Also, pursuant to Central Bank regulations, transfers of shares or capitalizations of irrevocable capital contributions that represent, individually or in the aggregate during a six-month period, 5% or more of the capital stock and/or voting interest of a financial institution, must be reported to the Central Bank, regardless of whether in the entity’s judgment such transfer does not alter the structure of its group of shareholders. Moreover, in the event the investor was not previously a shareholder of ours, any transfer or capitalization of a capital contribution must be reported to the Central Bank irrespective of the size of such transfer or capitalization. Any transfer of shares or capitalizations of irrevocable capital contributions that, pursuant to the foregoing, must be reported to the Central Bank, will be executed pending, or “ad referendum” of, the Central Bank’s approval.

If the transaction may result in a change of the institution’s rating or alter the structure of the respective groups of shareholders, the offering document must explicitly state that the prospective investors whose purchases might affect such rating or structure, will require prior approval from the Central Bank in order to complete the transaction.

Preemptive Rights and Accretion Rights

Pursuant to our bylaws and Law 19,550, if a capital increase and the issuance of new shares are approved at a shareholders’ meeting, such issuance shall be offered on a pro rata basis to Class A, Class B and preferred shares. Class A, Class B and preferred shares shall have pro rata rights to subscribe any new issues of Class B shares and preferred shares, and also any issues of released shares that may be made in the form of Class B shares upon a capitalization of profits or of reserves established from profits for prior fiscal years. Preemptive rights may be

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exercised within 30 days after the last notice given to shareholders in relation to the exercise of their preemptive rights by means of announcements published in the Official Gazette and in one of the newspapers of widest general circulation in Argentina. Such period may be reduced to a minimum of 10 days if it is so decided by an extraordinary shareholders’ meeting.

Pursuant to Law 19,550, any shareholders that have exercised their preemptive rights and given notice of their intention to exercise accretion rights may exercise their accretion rights pro rata to any shares not subscribed by other shareholders. Class A, Class B and preferred shares not subscribed by shareholders pursuant to shareholders’ preemptive or accretion rights may be offered to third parties.

Appraisal Rights

Upon the approval by our shareholders of (i) a merger or spin-off where we are not the surviving entity and the purchaser’s shares are not authorized for public offering or listed on a stock exchange; (ii) a change in our legal nature; (iii) a material change in our corporate purpose; (iv) a transfer of our domicile abroad; (v) our voluntary retirement from the public offering system; (vi) a delisting of our shares from the BASE or the mandatory revocation of the authorization for public offering or (vii) a full or partial capital reimbursement after a mandatory capital reduction, any shareholders that have voted against such decision or have not attended the shareholders’ meeting where such decision was approved may exercise their appraisal rights and shall be entitled to receive the book value of their shares, determined on the basis of our most recent balance sheet prepared in accordance with Argentine laws and regulations, provided these shareholders exercise such appraisal rights within the periods herein set forth. Due to the absence of legal precedents addressing this topic, it is not clear 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 shall be exercised within five days after the shareholders’ meeting where the respective resolution was adopted, if the relevant shareholder voted against such resolution, or within 15 days after the relevant shareholders’ meeting if the dissenting shareholder did not attend the meeting and is able to provide evidence that it was a shareholder at the time of the meeting. In the event of a merger or spin-off involving a company authorized to make public offering of its shares, appraisal rights may not be exercised if the shares to be received as a result of such transaction are listed. Appraisal rights are extinguished if the resolution that gave rise to such rights is annulled by another shareholders’ meeting held within 60 days after the meeting where such resolution was adopted.

Payments derived from the exercise of appraisal rights shall be made within one year after the date of the shareholders’ meeting where the relevant resolution was adopted, except in the event of (i) a voluntary withdrawal or abandonment of a public offering or listing of shares, or (ii) survival of the company after the authorization for a public offering or listing of shares has been canceled. In these cases, the period for payment is reduced to 60 days after the date of the relevant resolution or the date on which the voluntary withdrawal or the abandonment of such public offering is made public.

Liquidation

In the event of our liquidation, our assets shall be (i) used to cancel any existing debts and liabilities; (ii) distributed pro rata to the holders of preferred shares up to the reimbursement of the face value of the preferred shares and (iii) distributed pro rata to the holders other classes of preferred shares, if any, pursuant to their respective terms. If there are remaining assets, the holders of Class A shares, Class B shares and preferred shares shall be entitled to receive and participate pro rata in the proceeds of the liquidation thereof.

Preferred Shares

Our bylaws provide that preferred shares may be issued pursuant to a resolution adopted by an annual shareholders’ meeting and in accordance with applicable law. Preferred shares may be entitled to a fixed cumulative dividend, with or without an additional share in our profits, as decided by the shareholders’ meeting that authorized the issue.

On April 29, 2005 and July 29, 2005, respectively, shareholders’ meetings approved the issuance of preferred shares. These preferred shares are not entitled to vote except for specific matters (see “—Quorum and Majorities”

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and “—Voting Rights” above) and are entitled to priority reimbursement of their face value in the case of liquidation. Preferred shares may be converted into Class B shares on a one-to-one basis at the option of the holder.

Exclusive Jurisdiction

Our bylaws are governed by Argentine law, and any action related to the enforcement of the bylaws or the exercise of shareholders’ rights under such corporate bylaws or Argentine law shall be brought in an Argentine court sitting in the City of Buenos Aires.

Term

Pursuant to our bylaws, our term of duration was originally 99 years after the date of registration of our corporate bylaws with the Public Registry of Commerce, or July 31, 2008. Our term of duration may be extended by a resolution adopted by an extraordinary shareholders’ meeting, and pursuant to the resolution adopted by the extraordinary shareholders’ meeting held on July 28, 1997, such term was extended for another 99 years through July 31, 2107.

Exchange of Shares

Pursuant to Section 4 of our corporate bylaws, any shareholder may exchange its Class A shares for Class B shares at any time, at a one-to-one exchange ratio, by notice given to our Board of Directors to such an effect and no approval of our shareholders shall be required. As a result of such exchange, the voting rights of the exchanging shareholder shall be reduced, and consequently the voting rights percentage of any remaining shareholders shall be increased. Class B shares cannot be exchanged for Class A shares or preferred shares.

In addition, preferred shares may be converted into Class B shares on a one-to-one basis at the option of the holder by providing notice to Caja de Valores.

Registration Requirements of Foreign Companies That Hold Class B Shares Directly

Under Argentine regulations, foreign companies that hold shares directly and not through ADSs in an Argentine company must register with the Inspección General de Justicia, or 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. In addition, foreign companies must comply with the requirements of Resolution No. 07/05 of IGJ each year.

Anti-Takeover Provisions

Our bylaws do not contain any provision that would (i) oblige us to disclose information regarding our shareholders or (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.

Tag Along Rights

Section 25 of our bylaws opts out of the Optional System for the Mandatory Acquisition of Shares in a Public Offering. Accordingly, a shareholder who acquires more than 35% of our capital stock will not be required to conduct a public tender offer for the remainder of our capital stock.

We have been informed by our principal shareholders that they intend to propose an amendment to our bylaws that would provide for compliance with the Optional System for the Mandatory Acquisition of Shares in a Public Offering at the annual shareholders meeting to be held in 2012. Pursuant to such a system, in the event of a change of control, anyone who, individually or with other persons, directly or indirectly, intends to acquire a significant portion (as defined by the regulation, but never less than 35%) of our voting interests must previously launch an offer to acquire a certain amount of our capital stock, which amount will vary, depending on the percentage of our capital stock such person intends to acquire.

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Certain Differences between Argentine and U.S. Corporate Law

As an investor, you should be aware that Law 19,550 and the Argentine Securities Market Law, both of which apply to us, differ in certain material respects from laws generally applicable to U.S. corporations and their shareholders.

Mergers, Consolidations and Similar Arrangements

Under Argentine law, a company is permitted to merge with another company only if a majority of the shares representing the company’s outstanding capital stock approve the merger at a duly convened general extraordinary shareholders’ meeting. Notwithstanding the foregoing, the company’s bylaws may impose a higher threshold than a majority of shares, in order to approve such a decision. Our bylaws do not include such a provision.

In contrast, pursuant to Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all of the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under specific circumstances, be entitled to appraisal rights pursuant to which the shareholder may receive payment in the amount of the fair market value of the shares held by the shareholder (as determined by a court) in lieu of the consideration the shareholder would otherwise receive in the transaction. Delaware law also provides that a parent corporation, by resolution of its board of directors and without any shareholder vote, may merge with any subsidiary of which it owns at least 90% of each class of capital share. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights.

Anti-Takeover Provisions

Although a specific rule does not exist regarding anti-takeover provisions under Argentine law, public companies are allowed to include provisions in their bylaws in order to restrict the ability of third parties to acquire control of the company. The company’s bylaws may provide that in order to take certain actions, a supermajority is required with respect to the shares entitled to vote thereon. Pursuant to the CNV rules, any group or individual that directly or indirectly seeks to acquire an amount of voting shares of a company (including rights to subscribe to such shares or options to acquire such shares) that could result in the acquisition of substantial participation rights with respect to the capital stock of such company is required, prior to the acquisition and within ten days of seeking to acquire such company, to conduct a mandatory public offering, provided that the issuer does not opt out of the optional system for mandatory acquisition of shares in a public offering.

In contrast, under Delaware law, corporations can implement shareholder rights plans and other measures, including staggered terms for directors and super-majority voting requirements, to prevent takeover attempts. Delaware law also prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the shareholder became an interested shareholder unless:

prior to the date of the transaction in which the shareholder became an interested shareholder, the board of directors of the corporation approves either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder;

upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owns at least 85% of the voting stock of the corporation, excluding shares held by directors, officers, and employee stock plans; or

at or after the date of the transaction in which the shareholder became an interested shareholder, the business combination is approved by the board of directors and authorized at a shareholders’ meeting by at least 66⅔% of the voting stock which is not owned by the interested shareholder.

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Class Action Lawsuits

Under Argentine law, there is no specific regulation governing class action lawsuits for corporate matters. However, “demandas colectivas” (similar to class actions) have been admitted by courts under certain circumstances, i.e., for purposes of consumer protection claims. See “Risk Factors—Risks Relating to the Argentine Financial System.” Thus, we cannot guarantee that class actions lawsuits will not be available to present claims regarding corporate matters in the future. In contrast, under Delaware law, class actions and derivative actions are generally available to shareholders for purposes of, among other things, breaches of fiduciary duty, corporate waste and other actions or omissions that conflict with applicable law. In these kinds of actions, the court generally has discretion to permit the winning party to recover attorneys’ fees incurred in connection with the action.

Shareholder Proposals

Under Argentine law, directors are nominated by shareholders, and there is no special provision restricting the manner in which nominations may be made.

In contrast, Delaware law does not include a provision restricting the manner in which nominations for directors may be made by shareholders or the manner in which business may be brought before a meeting.

Calling of Extraordinary Shareholders’ Meetings

Under Argentine law and our bylaws, a shareholders’ meeting may be convened by the board of directors. Moreover, pursuant to Section 236 of the Argentine Commercial Companies Law, shareholders representing at least five percent of our ordinary shares may request that the board of directors call a shareholders’ meeting. The members of the supervisory committee have powers to call, in their sole discretion, regular and extraordinary shareholders’ meetings upon any failure of the board of directors to do so.

Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws to call an extraordinary meeting of shareholders.

Cumulative Voting

Under Argentine law, cumulative voting for the election of one-third of the vacant positions for directors or members of the supervisory committee is permitted, unless restricted by the company’s bylaws in which case they are elected by classes of shares. There is no restriction regarding cumulative voting in our bylaws.

Under Delaware law, cumulative voting for the election of directors is permitted only if expressly authorized in the certificate of incorporation.

Approval of Corporate Matters by Written Consent

Under Argentine law, a shareholder is not allowed to take action or vote by written consent.

Delaware law permits shareholders to take action by written consent of holders of outstanding shares having more than the minimum number of votes necessary to take the action at a shareholders’ meeting at which all voting shares were present and voted.

Amendment of Certificate of Incorporation

Under Argentine law, it is not possible to amend a company’s certificate of incorporation (acta constitutiva). However, the provisions that govern an Argentine company are contained in each company’s bylaws, which may be amended in the manner described below.

Under Delaware law, a company’s certificate of incorporation generally may be amended by a vote of the majority of shareholders entitled to vote thereon (unless otherwise provided in the certificate of incorporation), subsequent to a resolution of the board of directors proposing such amendment.

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Amendment of Bylaws

Under Argentine law, amending a company’s bylaws requires shareholder approval at an extraordinary shareholders’ meeting. Argentine law requires that at least 60% of the voting shares (unless the bylaws require a higher threshold), at first call, or 30% at second call (unless the bylaws require a higher or lower threshold), which represent the company’s outstanding capital stock, be present at the meeting and that the resolutions be approved by an absolute majority of the present shares (unless the bylaws require a higher threshold).

Under Delaware law, holders of a majority of the voting power of a corporation and, if so provided in the certificate of incorporation, the directors of the corporation, have the power to adopt, amend and repeal the bylaws of a corporation.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

American Depositary Receipts

JPMorgan Chase Bank, N.A., 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 four Class B shares. 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 1 Chase Manhattan Plaza, Floor 58, New York, New York 10005.

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 the holders of ADRs sets out ADR holder rights as well as the rights and obligations of the depositary and us. As an ADR holder you are deemed to be a party to and bound by the terms of the deposit agreement and the ADRs. 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 distribute to you, to the extent practicable, the cash dividends or other distributions it or the custodian receives on the 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 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 on a reasonable basis, and it will distribute such cash to ADR holders on an averaged or other practicable basis, subject to such distribution being impermissible or impracticable with respect to certain ADR holders, and subject to obtaining any required governmental approval or license.

Before making a distribution, the depositary will deduct its expenses in (1) converting foreign currency to U.S. dollars, (2) transferring foreign currency or U.S. dollars to the United States, (3) obtaining any governmental approval or license required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. The depositary will also deduct any withholding taxes that must be paid. See “Taxation.” The depositary will distribute only whole U.S. dollars and cents and fractional cents will be withheld and dealt with by the depositary in accordance with its then current practices. 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.

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 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.

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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 by distributing warrants or other instruments representing such rights. If we do not furnish such evidence and sales of the rights are practicable ,the depositary will sell the rights and distribute the net proceeds in the same way as it does with cash. To the extent we do not furnish such evidence and sales of the rights cannot be practicably accomplished by reason of the nontransferability of the rights, limited markets therefor, their short duration or otherwise, the depositary will allow the rights 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.

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, subject to such procedures as the depositary shall establish in its discretion. 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.

Other Distributions. The depositary will distribute to you any other securities or property we distribute on deposited securities by any means it deems equitable and practical. If it cannot make the distribution in that way, the depositary may sell what we distributed and distribute the net proceeds, in the same way as it does with cash.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders. In such case, the depositary may, after consultation with us, if practicable, make such distribution as it deems practicable, including the distribution of foreign currency, securities or other property or it may retain the same as deposited securities, without liability for interest thereon or the investment thereof, and the outstanding ADSs will also represent such retained currency, securities or property.

We have no obligation to register 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 the ADSs and Our Class B Shares Offered Hereby.” 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 or the depository 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 such deposit of shares, receipt of related documentation and 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. Certificated ADRs will be delivered at the depositary’s office to the persons you request. If ADRs are issued in book-entry form, a statement setting out such ownership interest will be mailed to you by the depositary. Unless an ADR holder specifically requests certificated ADRs, all ADRs will be issued in book-entry form through the depositary's direct registration system and registered holders will receive periodic statements from the depositary showing the number of ADRs in such holder’s name.

How Do ADR Holders Cancel ADRs and Obtain Shares?

If you surrender certificated ADSs to the depositary at its office, or if you deliver proper instructions and documentation in the case of book-entry ADRs, then 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 or, in the case of book-entry ADRs, delivery will be made from the custodian’s office. At your request, risk and expense, the depositary may deliver the deposited securities at such place as you have requested.

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Record Dates

The depositary may fix a record date for the determination of the ADR holders who will be entitled to receive any distribution on or in respect of the deposited securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of other matters and only such ADR holders at such record date will be so entitled or obligated.

Voting Rights

How Do You Vote?

If the depositary asks ADR holders to provide it with voting instructions, you may instruct the depositary to vote the shares underlying your ADRs, subject to any applicable provisions of Argentine law. If we furnish voting materials to the depositary, 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 underlying your ADRs. However, you may not know about the meeting far enough in advance to withdraw the shares. The depositary’s notice will describe the information in the voting materials 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 practicable and permitted under the provisions of or governing the deposited securities, to vote or cause to be voted the shares or other deposited securities as you instruct. If the depositary does not receive voting instructions from you by the specified date, the shares underlying your ADRs will not be voted. If the depositary receives voting instructions which fail to specify the manner in which the depositary is to vote the underlying shares, the depositary will deem you to have instructed it to vote in favor of the items set forth in the voting instructions.

If so requested by us in writing, the depositary will represent all deposited securities at a meeting of the shareholders (whether or not voting instructions have been received from ADR holders in respect of such deposited securities) for the sole purpose of establishing quorum at such meeting; subject to the depositary’s receipt of a legal opinion confirming the legality of, and other matters relating to, its representation of such deposited securities for purposes of establishing a quorum.

The depositary will only vote or attempt to vote as you instruct. The depositary itself will not exercise any voting discretion.

Fees and Expenses

The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances as a result of a distribution of shares, rights and other property, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities in any manner permitted by the deposit agreement or whose ADRs are cancelled or reduced for any other reason, up to $5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a distribution of shares, rights and/or other property prior to such deposit to pay such charge.

The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing Class B shares or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or the deposited securities or a distribution of ADSs), whichever is applicable:

a fee of $1.50 per ADR for transfers of certificated or direct registration ADRs;

a fee of $0.05 or less per ADS for any cash distribution made pursuant to the deposit agreement;

a fee of $0.05 or less per ADS per calendar year (or portion thereof) for services performed by the depositary in administering our ADR program (which fee may be charged on a periodic basis during each

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calendar year and shall be assessed against ADR holders as of the record date or record dates set by the depositary during each calendar year and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions);

a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the fee for the execution and delivery of ADSs that would have been charged as a result of the deposit of such securities (treating all such securities as if they were Class B shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto;

any other charge payable by the depositary, any of the depositary’s agents, including, without limitation, the custodian, or the agents of the depositary’s agents in connection with the servicing of our Class B shares or other deposited securities (which charge shall be assessed against registered holders of our ADRs as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such registered holders or by deducting such charge from one or more cash dividends or other cash distributions);

stock transfer or other taxes and other governmental charges;

cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of Class B shares, ADRs or deposited securities;

transfer or registration fees for the registration or transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;

expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars;

such fees and expenses as are incurred by the depositary (including without limitation expenses incurred in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable laws, rules or regulations; and

any other charge payable by the depositary, its agents (including the custodian) and the agents of the depositary’s agents in connection with the servicing of the Class B shares or other deposited securities.

We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary. The fees described above may be amended from time to time.

Our depositary has agreed to reimburse us for certain expenses we incur that are related to the establishment and maintenance of the ADR program, including investor relations expenses, reasonable legal, audit and accounting fees, initial and ongoing listing fees and certain of our out-of-pocket expenses. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing Class B shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide services to any holder until the fees and expenses owing by such holder for those services or otherwise are paid.

Payment of Taxes

You will be responsible for any taxes or other governmental charges imposed on the depositary or the custodian with respect to the ADRs, any deposited securities or any distribution on the ADRs. The depositary may refuse to effect any registration, registration of transfer, split-up or combination of your ADRs to or allow you to withdraw the deposited securities underlying your ADRs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities underlying your ADRs to pay any taxes owed or other charges owed and

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you will remain liable for any deficiency. 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.

Reclassifications, Recapitalizations and Mergers

If we change the par value of our Class B shares; reclassify, split up, consolidate or cancel any of the deposited securities; distribute securities on the Class B shares that are not distributed to you; or recapitalize, reorganize, merge, consolidate, liquidate, sell all or substantially all of our assets, or go into liquidation, receivership or bankruptcy; then the depositary may choose to either (i) amend the form of ADR, (ii) distribute additional or amended ADRs, (iii) distribute the cash, securities or other property received by the depositary in connection with such actions or (iv) sell any securities or property received and distribute the net proceeds as cash. If the depositary does not choose any of the above, the cash, securities or other property it receives will constitute deposited securities and each ADS will automatically represent its equal share of the new deposited cash, securities or other property, or a combination thereof, as the case may be.

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 transfer or registration fees, facsimile, cable or telex costs, delivery charges or similar items, or prejudices a substantial existing 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.

An amendment can become effective before such notice is given if such amendment is necessary to ensure compliance with a new law, rule or regulation.

No amendment will impair the right of ADR holders to surrender their ADRs and to receive the underlying shares, except in order to comply with mandatory provisions of applicable law.

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. In either case, the depositary must notify you at least 30 days before termination; however such notice may not be provided unless (i) we have not appointed a successor depositary within 45 days, in the case where the depositary has resigned or (ii) we have not appointed a successor depositary within 90 days, in the case where we have removed the depositary.

After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: (i) collect distributions on the deposited securities; (ii) sell rights and other property distributed in respect of deposited securities and (iii) deliver Class B shares and other deposited securities upon cancellation of ADRs. As soon as practicable after the expiration of two months following the termination date, the depositary will sell any remaining deposited securities if lawful to do so. 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 net proceeds and other cash. After termination, we will have no obligations except our obligations under the deposit agreement to the depositary and its agents.

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:

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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 becomes subject to any civil or criminal penalty in connection with any act under the deposit agreement, or is prevented or delayed by reason of any law or regulation, the provisions of or governing the deposited securities, our charter, or circumstances beyond our control from performing our obligations under the deposit agreement;

are not liable if either of us exercises or fails to exercise any discretion permitted under the deposit agreement;

may rely on the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any ADR holder, or any other person believed by to be competent to give such advice or information;

are not liable for any tax consequences that may be incurred by ADR holders and beneficial owners of ADRs on account of their ownership of ADRs or ADSs;

have no obligation to inform ADR holders or any other holders of an interest in an ADS about the requirements of Argentine law, rules or regulations or any changes therein or thereto;

are not liable to ADR holders or beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought; and

may rely upon any written notice, request, direction or other documents we believe in good faith to be genuine and to have been signed or presented by the proper party.

The depositary is not obligated to appear in, prosecute or defend any lawsuit or other proceeding relating to the ADRs or any deposited securities. We are not obligated to appear in, prosecute or defend any lawsuit or other proceeding relating to the ADRs or any deposited securities if, in our opinion, such proceeding may involve us in expense or liability, unless we are indemnified to our satisfaction against all liabilities and expenses including fees and disbursements of counsel.

The depositary is not liable for:

the acts or omissions of any securities depository, clearing agency or settlement system in connection with the book-entry settlement of deposited securities or otherwise;

the insolvency of any custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A.;

any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast or for the effect of any such vote;

the content of any information submitted to it by us for distribution to ADR holders or any inaccuracy of any translation of such information;

any investment risk associated with acquiring an interest in the deposited securities or the validity or worth of the deposited securities;

the credit-worthiness of any third party; and

allowing any rights to lapse under the terms of the deposit agreement or for the failure or timeliness of any notice from us.

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Neither we, the depositary nor the custodian is liable for the failure by any ADR holder or beneficial owner of ADRs to obtain the benefits of credits on the basis of non-U.S. tax paid against such holder’s or beneficial owner’s income tax liability.

The depositary may rely upon instructions from us or our Argentine counsel regarding any Argentine governmental approval or license required for any currency conversion, transfer or distribution. The depositary may own and deal in any class of securities of our company and in our ADRs. The depositary may fully respond to any and all demands or requests made pursuant to lawful authority for information maintained by it in connection with the ADRs, any ADR holders or otherwise related to the deposit agreement.

The depositary and the custodian are not responsible for any errors or omissions made in providing information or services through third parties for matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection with the deposit agreement, or in using local agents to provide extraordinary services, such as attendance at our annual meeting, provided the depositary and the custodian use reasonable care in selecting such service providers and local agents.

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 willful misconduct, and the depositary agrees to indemnify us for losses resulting from its negligence or bad faith.

Requirements for Depositary Actions

Before the depositary will issue, register, or register a transfer of an ADR, effect a split-up or combination of ADRs, make a distribution on an ADR, or permit withdrawal of Class B shares (subject to limitations under U.S. securities laws and Argentine local law), 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;

payment of any applicable charges of the depositary as provided in the deposit agreement;

satisfactory proof of the identity of any signatory and genuineness of any signature or other information it deems necessary or proper, including information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing the deposited securities and terms of the deposit agreement and the ADRs; and

compliance with regulations it may establish consistent with the deposit agreement.

The depositary may suspend the issuance of ADSs, the deposit of Class B shares, the registration, registration of transfer, split-up or combination of ADRs, or the withdrawal of deposited securities (subject to limitations under U.S. securities laws and Argentine local law), generally or in particular circumstances, when the transfer books of the depositary or our transfer books are closed or at any time if the depositary thinks 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 for 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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Pre-Release of ADRs

The depositary may not lend Class B shares or ADSs. However 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. 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: (i) the person to whom the pre-release is being made represents to the depositary in writing that it or its customer (a) owns the Class B shares underlying the pre-released ADSs; (b) agrees to indicate the depositary as the owner of such Class B shares in its records and to hold such shares in trust for the depositary until such shares are delivered to the depositary or the custodian, (c) unconditionally guarantees to deliver to the depositary or the custodian such Class B shares, and (d) agrees to any additional restrictions or requirements that the depositary deems appropriate; (ii) the pre-release is fully collateralized with cash, U.S. government securities or other collateral that the depositary considers appropriate; (iii) the depositary must be able to close out the pre-release on not more than five business days’ notice; and (iv) the pre-release is subject to such further indemnities and credit regulations as the depositary deems appropriate. 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.

Disclosure of Interests

By holding ADRs, you agree to comply with all applicable disclosure requirements and ownership limitations, including without limitation requirements of Argentine law or under the provisions of or governing the deposited securities, and you agree to comply with any reasonable instructions from us in respect thereof. We have the right to instruct you to cancel your ADSs and withdraw the deposited securities so as to permit us to deal directly with you as a holder of Class B shares, and you agree to comply with such instructions. We may from time to time request ADR holders or beneficial owners of an interest in ADRs to provide information as to the capacity in which such holders own ADRs and regarding the identity of any other persons then or previously having a beneficial interest in such ADRs and the nature of such interest and various other matters. You agree to provide any such information requested by us or the depositary.

Available Information

You can inspect the following documents at the offices of the depositary and the custodian: the deposit agreement, the provisions of or governing deposited securities, and written communications which are received from us by the custodian as a holder of deposited securities and which are made generally available to the holders of deposited securities. The depositary will distribute copies of such communications (or English translations or summaries thereof) to you when furnished by us. We are subject to the periodic reporting requirements of the Exchange Act and accordingly we file certain reports with the Commission. Such reports and other information may be inspected and copied at public reference facilities maintained by the Commission. For more information about the Commission’s public reference facilities, see “Where You Can Find More Information.”

JPMorgan Chase Bank, N.A.

The depositary is JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, National Association (“JPMCB”) is a wholly-owned bank subsidiary of JPMorgan Chase & Co., a Delaware corporation. JPMCB is a commercial bank offering a wide range of banking services to its customers both domestically and internationally. It is chartered, and its business is subject to examination and regulation by the Office of the Comptroller of the Currency, a bureau of the United States Department of the Treasury. It is a member of the Federal Reserve System and its deposits are insured by the Federal Deposit Insurance Corporation.

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TAXATION

The following summary contains a description of material Argentine and U.S. federal income tax consequences of the acquisition, ownership and disposition of ADSs or Class B shares, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase ADSs or Class B shares. The summary is based upon the tax laws of Argentina and regulations thereunder and on the tax laws of the United States and regulations thereunder as of the date hereof, which are subject to change, possibly with retroactive effect, and to differing interpretations.

Material Argentine Tax Considerations

The following summary constitutes the opinion of our counsel Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz(h) as to 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 generally subject to Argentine income tax by withholding or otherwise. However, dividends which exceed our taxable accumulated income for the previous fiscal period are subject to a 35% withholding tax on such excess. The 35% withholding tax applies to both resident and non-resident 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 applicable to capital gains taxation are in effect. Opinion No. 351 of the National Treasury General Attorney Office solved the most important matters related to capital gains, and subsequent case law has confirmed this opinion.

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) 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 not be subject to Argentine income tax, as long as they are publicly traded.

Foreign beneficiaries. Capital gains realized by non-resident individuals or non-resident entities from the sale, exchange or other disposition of our Class B shares or ADSs are exempt from income tax, as long as they are publicly traded.

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 only against capital gains arising from the sale of shares.

Personal Assets Tax

Argentine corporations are required to pay the personal assets tax with respect to shares held by individuals, regardless of their residence, and non-resident entities as of December 31 of each year. The applicable tax rate is 0.5% and is levied on the valor patrimonial proporcional, or equity value, of the shares as derived 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 non-resident shareholders, including by withholding or foreclosing the shares, or by withholding dividends. If we pay dividends to a shareholder who held Class B shares or ADSs on December 31 of the preceding calendar year, we intend to withhold from such dividends the shareholder’s applicable share of the Argentine personal assets tax payable by us in that preceding calendar year. We may also seek reimbursement from shareholders in any other permitted manner. For the avoidance of doubt, if

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we pay no dividends in a particular calendar year, we may seek payment from shareholders for their applicable share of the tax and, in the event that a shareholder fails to make such payment, we may foreclose on such shareholder’s shares.

Value Added Tax

The sale, exchange or other disposition of our Class B shares or ADSs and the distribution of dividends are exempt from value added tax.

Tax on Debits and Credits on Bank Accounts

Any credit or debit in a bank account open in an Argentine financial institution shall be subject to a 0.6% tax on the credit or the debit, as the case may be, with the bank acting as withholding agent. Reduced tax rates may be applicable. The account owner may use up to 34% of this tax as a tax credit against income tax and presumed minimum income tax.

Gross Turnover Tax

The proceeds from the sale of our Class B shares or ADSs are not subject to gross turnover tax, as long as such sales are not made on a regular basis by the seller.

Stamp Taxes

Argentine residents may be subject to stamp tax in certain Argentine provinces in the event that the transfer of our Class B shares or ADSs is performed or executed in such jurisdiction by means of written agreements. Agreements for the sale of shares and other securities are subject to stamp tax in the City of Buenos Aires if instrumented and executable. However, there is an exemption for such agreements regarding sale of shares and other securities that are authorized to be publicly offered by the CNV. This exemption will be voided if the public placement of such shares or other securities is not done within 180 days of the granting of the authorization by the CNV. Therefore, no stamp taxes are expected to be levied in the City of Buenos Aires on the sale or exchange of our Class B shares or ADSs.

Province of Buenos Aires Estate and Gift Tax

The Province of Buenos Aires imposes estate and gift tax on recipients who are residents of the Province and on assets located in the Province. Although we are incorporated outside the Province of Buenos Aires, we hold assets in the Province. Accordingly, recipients of our shares may be subject to the estate and gift tax in proportion to the assets we own that are located in the Province. The tax was recently enacted and at the present time few implementing measures have been established. The implementing regulation currently in place requires individuals and entities subject to this tax to obtain a tax identification code from the local tax authorities, to electronically file the tax return and to pay the corresponding tax. In addition, the regulation requires public notaries, succession estate administrators, courts and insurance companies involved with gratuitous transfers to act as withholding agents of the estate and gift tax. The implementing regulation expressly states that these rules will apply until collection and withholding regimes are created. It is still unclear how persons subject to the tax (or public notaries, succession estates’ administrators or courts if intervening as withholding agents) will be able to determine the amount of any such tax, considering that the calculation depends on the amount and value of the assets owned by the relevant corporation that are located in the Province.

Other Taxes

Other than the Province of Buenos Aires estate and gift tax described above, there are no Argentine inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class B shares or ADSs.

The minimum presumed income tax is not applicable to the ownership of our Class B shares or ADSs.

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Tax Treaties

Argentina has tax treaties for the avoidance of double taxation currently in force with Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. There is currently no tax treaty or convention in force between Argentina and the United States. 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, and may be subject to reduced withholding tax rates for dividends paid in excess of our taxable accumulated income for the previous fiscal period.

Material U.S. Federal Income Tax Considerations

In the opinion of Davis Polk & Wardwell LLP, the following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of Class B shares or ADSs, but it does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to acquire the securities. This discussion applies only to a U.S. Holder that holds Class B shares or ADSs as capital assets for tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of the U.S. Holder’s particular circumstances, including state, local and alternative minimum tax consequences and tax consequences applicable to U.S. Holders subject to special rules, such as:

certain financial institutions;

dealers or traders in securities who use a mark-to-market method of tax accounting;

persons holding Class B shares or ADSs as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the Class B shares or ADSs;

persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

entities classified as partnerships for U.S. federal income tax purposes;

tax-exempt entities, including “individual retirement accounts” or “Roth IRAs”;

persons that own or are deemed to own ten percent or more of our voting stock; or

persons holding Class B shares or ADSs in connection with a trade or business conducted outside of the United States.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds Class B shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Partnerships holding Class B shares or ADSs and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of the Class B shares or ADSs.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof, any of which is subject to change, possibly with retroactive effect. It is also based in part on representations by the depositary and assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms.

A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of Class B shares or ADSs and is:

an individual citizen or resident of the United States;

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a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

a trust if (i) a court within the United States is able to exercise primary supervision for the administration of the trust, and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has validly elected under applicable Treasury regulations to be treated as a U.S. person.

In general, a U.S. Holder who owns ADSs will be treated as the owner of the underlying shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying shares represented by those ADSs.

The U.S. Treasury has expressed concern that parties to whom American depositary shares are released before the delivery of shares to the depositary, or intermediaries in the chain of ownership between holders and the issuer of the security underlying the American depositary shares, may be taking actions that are inconsistent with the claiming of foreign tax credits by holders of American depositary shares. These actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends received by certain non-corporate holders. Accordingly, the creditability of Argentine taxes, and the availability of the reduced tax rate for dividends received by certain non-corporate U.S. Holders, each described below, could be affected by actions taken by such parties or intermediaries.

U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and foreign tax consequences of owning and disposing of Class B shares or ADSs in their particular circumstances.

This discussion assumes that we are not, and we will not become, a passive foreign investment company, as described below.

Taxation of Distributions

Distributions paid on Class B shares or ADSs will generally be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions will generally be reported to U.S. Holders as dividends. Dividends paid by qualified foreign corporations to certain non-corporate U.S. Holders in taxable years beginning before January 1, 2013 may be taxable at favorable rates, up to a maximum rate of 15%. A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid on stock that is readily tradable on a securities market in the United States, such as the New York Stock Exchange where we intend to apply to list the ADSs for trading. Non-corporate U.S. Holders of Class B shares or ADSs should consult their tax advisers to determine whether the favorable rate will apply to dividends they receive and whether they are subject to any special rules that limit their ability to be taxed at this favorable rate.

The amount of a dividend will include any amounts withheld in respect of Argentine taxes. The amount of the dividend will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s (or in the case of ADSs, the Depositary’s) receipt of the dividend. The amount of any dividend income paid in pesos will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, U.S. Holders should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.

Subject to applicable limitations, Argentine income taxes, if any, withheld from dividends on Class B shares or ADSs generally will be creditable against the U.S. Holder’s U.S. federal income tax liability. Special rules limiting foreign tax credits apply to non-corporate U.S. Holders who receive dividends eligible for the maximum 15% rate.

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The rules governing foreign tax credits are complex, and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances.

Amounts paid on account of the Argentine personal assets tax, if any, will not be eligible for credit against the U.S. Holder’s U.S. federal income tax liability. U.S. Holders should consult their tax advisers to determine the tax consequences applicable to them as a result of amounts paid on account of the Argentine personal assets tax, including whether such amounts are includible in income or (if reimbursed by the shareholder) are deductible for U.S. federal income tax purposes.

Sale and Other Disposition of Class B Shares or ADSs

For U.S. federal income tax purposes, gain or loss realized on the sale or other disposition of Class B shares or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the Class B shares or ADSs for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the Class B shares or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to limitations.

Passive Foreign Investment Company Rules

Based on proposed Treasury regulations, which are proposed to be effective for taxable years beginning after December 31, 1994, and on management estimates, we do not expect to be a “passive foreign investment company” (a “PFIC”) for U.S. federal income tax purposes for our current taxable year or in the foreseeable future. However, because the proposed Treasury regulations may not be finalized in their current form, because the application of the proposed regulations is not entirely clear, and because the composition of our income and assets will vary over time, it is possible that we could be a PFIC for any taxable year. The determination of whether we are a PFIC is made annually and is based upon the composition of our income and assets (including, among others, entities in which we hold at least a 25% interest), and the nature of our activities.

If we are a PFIC for any taxable year during which a U.S. Holder held Class B shares or ADSs, gain recognized by a U.S. Holder on a sale or other disposition (including certain pledges) of the Class B shares or ADSs would be allocated ratably over the U.S. Holder’s holding period for the Class B shares or ADSs. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the tax on the amount allocated to that taxable year. Further, to the extent that any distribution received by a U.S. Holder on its Class B shares or ADSs exceeds 125 percent of the average of the annual distributions on the Class B shares or ADSs received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, as described immediately above. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the Class B shares or ADSs. U.S. Holders should consult their tax advisers to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances.

In addition, if we are a PFIC in a taxable year in which we pay a dividend or the prior taxable year, the 15% dividend rate discussed above with respect to dividends paid to non-corporate holders would not apply.

Information with Respect to Foreign Financial Assets

Under recently enacted legislation, individuals that own “specified foreign financial assets”, including stock of a non-U.S. corporation owned directly, with an aggregate value in excess of $50,000 in taxable years beginning after March 18, 2010 may be required to file an information report with respect to such assets with their tax returns. U.S. Holders that are individuals are encouraged to consult their tax advisors regarding the application of this legislation to their ownership of Class B shares or ADSs.

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Information Reporting and Backup Withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting and may be subject to backup withholding unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

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RIGHTS OFFERING

In the global offering, we are offering newly issued Class B shares and ADSs, representing newly issued Class B shares.

As a result of the capital increase required for the issuance of Class B shares as part of the global offering, in accordance with Argentine corporate law, each of our shareholders has a preemptive right to subscribe a number of shares sufficient to maintain its proportionate holding of our total capital stock. Our current shareholders will be entitled to exercise preemptive rights, and to subscribe new Class B shares, equivalent to one new Class B share per each shares currently held, during the preemptive subscription period, which we expect will begin on , 2011 and end on , 2011. In addition, our shareholders have accretion rights, which permit them to subscribe any capital increase shares that are not subscribed by other shareholders in proportion with the percentage of shares for which the subscribing shareholder has exercised preemptive rights. These preemptive and accretion rights will be mandatorily attributed to each shareholder for no consideration. Our principal and selling shareholders have assigned all of their preemptive rights to the underwriters, representing 99.3% of such rights, who will exercise such rights to obtain the primary Class B shares and ADSs offered in the global offering. Any preemptive or accretion rights exercised by minority shareholders will be satisfied with Class B shares at the closing of the global offering and at the end of the preeemptive subscription period on , 2011. The maximum number of such shares that may be issued, assuming all minority shareholders exercise their preemptive rights, is Class B shares.

Any shares acquired as a result of the exercise of preemptive and accretion rights shall be issued in the form of Class B shares entitling their holders to the same rights (including voting and economic rights) provided by existing Class B shares (including those being sold by the selling shareholder).

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UNDERWRITING (CONFLICTS OF INTEREST)

Santander Investment Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated (hereinafter “Merrill Lynch”) and J.P. Morgan Securities LLC are acting as representatives of each of the international underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us, the selling shareholder and the international underwriters, we and the selling shareholder have agreed to sell to the international underwriters, and each of the international underwriters has agreed, severally and not jointly, to purchase from us and the selling shareholder, the number of ADSs set forth opposite its name below.

Underwriter		Number of ADSs(1)
Santander Investment Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
J.P. Morgan Securities LLC
Total

(1) Includes ADSs issued by the depositary to the underwriters as a result of (x) the exercise by the underwriters of their right to convert any preferred shares acquired from the selling shareholder into Class B shares and (y) the subsequent deposit with the depositary of Class B shares credited to their account as a result of such conversion, each in accordance with the terms and conditions of the underwriting agreement.

We have entered into an Argentine underwriting agreement with 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.

Subject to the terms and conditions set forth in the underwriting agreement, the international underwriters have agreed, severally and not jointly, to purchase all of the ADSs sold under the underwriting agreement if any of these ADSs are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting international underwriters may be increased or the underwriting agreement may be terminated.

Subject to the terms and conditions set forth in the underwriting agreement, a portion of the ADSs to be sold by the underwriters pursuant to this offering will be initially transferred to the underwriters by the selling shareholder in the form of preferred shares. On the applicable closing date, the international underwriters, in accordance with the conversion right granted to all holders of our preferred shares, will exercise their right to convert, on a one-to-one basis, each such preferred share into a Class B share by filing a notice of conversion with Caja de Valores (the “Conversion”). Following the Conversion, the international underwriters will deposit on the applicable closing date each Class B share credited to their account at Caja de Valores as a result of the Conversion, and the depositary shall register the appropriate number of ADSs in the name of the international underwriters and deliver to them ADRs representing such ADSs. As set forth in the underwriting agreement, it is a condition subsequent to the international underwriters’ purchase of the ADSs that the underwriters receive (i) Class B shares following the Conversion and (ii) ADRs representing such ADSs following the international underwriters’ deposit of such Class B shares with the ADS depositary.

In addition, in connection with the capital increase and pursuant to Argentine corporate law, each of our shareholders has a preemptive right to subscribe a number of shares sufficient to maintain its proportionate holding of our total capital stock. Our current shareholders will be entitled to exercise preemptive rights and to subscribe new shares during the preemptive subscription period, which we expect will begin on , 2011 and will end on , 2011, in proportion with their current shareholding. In addition, our shareholders have accretion rights, which permit them to subscribe any capital increase shares that are not subscribed by other shareholders in proportion with the percentage of shares for which the subscribing shareholder has exercised preemptive rights. These preemptive and accretion rights will be mandatorily attributed to each shareholder for no consideration. Our principal and selling shareholders have assigned all of their preemptive rights to the underwriters, representing 99.3% of such rights, who will exercise such rights to obtain the primary Class B shares and ADSs offered in the global offering.

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We and the selling shareholder have agreed to indemnify the international underwriters against certain liabilities, including liabilities under the Securities Act and liabilities arising out of the consummation of the transactions contemplated by the underwritng agreement, or to contribute to payments the international underwriters may be required to make in respect of those liabilities.

The international underwriters are offering the ADSs, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the ADSs, and other conditions contained in the underwriting agreement, such as the receipt by the international underwriters of officer’s certificates and legal opinions. The international underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Commissions and Discounts

The representatives have advised us and the selling shareholder that the international underwriters propose initially to offer the ADSs to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. After the initial offering, the public offering price, concession or any other term of the offering may be changed.

The following table shows the public offering price, underwriting discount and proceeds before expenses to us and the selling shareholder. The information assumes either no exercise or full exercise by the international underwriters of their over-allotment option.

Per ADSs

Total

Without

Over-allotment

With

Over-allotment

Without

Over-allotment

With

Over-allotment

Public offering price

Underwriting discount and commissions paid by us

Proceeds, before expenses, to the Company

Proceeds, before expenses, to the selling stockholders

The expenses of the offering, not including the underwriting discount, are estimated at $ and are payable by us and the selling shareholder.

Over-allotment Option

The selling shareholder has granted an option to the international underwriters, exercisable for 30 days from the date of commencement of trading of the ADSs, to purchase up to additional ADSs at the public offering price, less the underwriting discount. The international underwriters may exercise this option solely to cover any over-allotments. If the international underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional ADSs proportionate to that underwriter’s initial amount reflected in the above table.

Intersyndicate Agreement

The international underwriters and the Argentine underwriters have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the international underwriters and the Argentine underwriters may sell shares or ADSs to each other for purposes of resale at the initial public offering price, less an amount not greater than the selling concession.

No Sales of Similar Securities

We, the selling shareholder, Banco Santander, BRS Investments S.A., Santander Overseas Bank Inc. and our executive officers and directors, have agreed not to sell or transfer any shares of our capital stock or ADSs representing such shares or any securities convertible into or exercisable or exchangeable for our capital stock or ADSs representing such shares (collectively, the “Lock-Up Securities”), for 180 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch and J.P. Morgan Securities LLC. Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly or indirectly

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issue, offer, pledge, sell or contract to sell any Lock-Up Securities,

sell any option or contract to purchase any Lock-Up Securities,

purchase any option or contract to sell any Lock-Up Securities,

grant any option, right or warrant for the sale of any Lock-Up Securities,

otherwise dispose of or transfer any Lock-Up Securities,

request or demand that we file a registration statement related to the Lock-Up Securities, or

enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any Lock-Up Security whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.

This lock-up provision applies to Lock-Up Securities owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. In the event that either (x) during the last 17 days of the lock-up period referred to above, we issue an earnings release or material news or a material event relating to us occurs or (y) prior to the expiration of the lock-up period, we announce that we will release earnings results or become aware that material news or a material event will occur during the 16-day period beginning on the last day of the lock-up period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

New York Stock Exchange Listing

We expect the ADSs to be approved for listing on the New York Stock Exchange under the symbol “BSAR.” In order to meet the requirements for listing on that exchange, the international underwriters have undertaken to sell a minimum number of ADSs to a minimum number of beneficial owners as required by that exchange.

Before this offering, there has been no public market for our ADSs. The initial public offering price will be determined through negotiations among us, the selling shareholder and the representatives of the international underwriters. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are:

the valuation multiples of publicly traded companies that the representatives believe to be comparable to us;

our financial information;

the history of, and the prospects for, our company and the industry in which we compete;

an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues;

the present state of our development;

the recent market prices of, and demand for, publicly traded ADSs or common stock of generally comparable companies;

the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours; and

other factors deemed relevant by the international underwriters, the selling shareholder and us.

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An active trading market for the ADSs may not develop. It is also possible that after the offering the ADSs will not trade in the public market at or above the initial public offering price.

The international underwriters do not expect to sell more than 5% of the ADSs in the aggregate to accounts over which they exercise discretionary authority.

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of the ADSs is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our ADSs. However, the representatives may engage in transactions that stabilize the price of the ADSs, such as bids or purchases to peg, fix or maintain that price.

In connection with the offering, the international underwriters may purchase and sell our ADSs in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the international underwriters of a greater number of ADSs than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the international underwriters’ over-allotment option described above. The international underwriters may close out any covered short position by either exercising their over-allotment option or purchasing ADSs in the open market. In determining the source of ADSs to close out the covered short position, the international underwriters will consider, among other things, the price of ADSs available for purchase in the open market as compared to the price at which they may purchase ADSs through the over-allotment option. “Naked” short sales are sales 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 our ADSs in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of ADSs made by the international underwriters in the open market prior to the completion of the offering.

The international underwriters may also impose a penalty bid. This occurs when a particular 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 such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the international underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our ADSs or preventing or retarding a decline in the market price of our ADSs. As a result, the price of our ADSs may be higher than the price that might otherwise exist in the open market. The international underwriters may conduct these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.

Neither we nor the selling shareholder, nor any of the international underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our ADSs. In addition, neither we nor any of the international underwriters make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Offer, Sale and Distribution of ADSs

In connection with the offering, certain of the international underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail. In addition, certain of the international underwriters, including Merrill Lynch and Santander Investment Securities Inc., may facilitate Internet distribution for this offering to certain of its Internet subscription customers. Certain of the international underwriters, including Merrill Lynch may allocate a limited number of ADSs for sale to its online brokerage customers. An electronic prospectus is available on the Internet web site maintained by certain of the international underwriters, including Merrill Lynch. Other than the prospectus in electronic format, the information on the website of any of the international underwriters is not part of this prospectus.

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Conflicts of Interest

Because Santander Investment Securities Inc., a member of FINRA and an underwriter in this offering, is an affiliate of, and under common control with, the issuer and the selling shareholder, FINRA views the participation of Santander Investment Securities Inc. as an underwriter in this offering as the public distribution of securities issued by a company with which Santander Investment Securities Inc. has a conflict of interest and/or an affiliation, as those terms are defined in FINRA Rule 5121. Because of this relationship, the offering will be conducted in accordance with FINRA Rule 5121. This rule requires, among other things, that a qualified independent underwriter has participated in the preparation of, and has exercised the usual standards of “due diligence” in respect to, the registration statement and this prospectus. Merrill Lynch has agreed to act as qualified independent underwriter for the offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act of 1933, specifically including those inherent in Section 11 of the Securities Act. We have agreed to indemnify Merrill Lynch against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act.

Other Relationships

Some of the international underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial banking and other dealings in the ordinary course of business with us and the selling shareholder. They have received, or may in the future receive, customary fees and commissions for these transactions.

For example, Santander Investment Securities Inc. has in the past provided investment banking, financial advisory and consulting services to European and Latin American members of the Santander Group, including acting as underwriter in the initial public offerings of our affiliates Banco Santander (Brasil) S.A. and Banco Santander Chile. For more information regarding transactions between us and members of the Santander Group, see “Related Party Transactions.” Merrill Lynch has in the past provided, and is currently providing, investment banking, financial advisory and consulting services to our parent company, Banco Santander. Merrill Lynch has acted as a financial advisor to our parent company in the acquisition of the retail operations of SEB AG, the German subsidiary of Skandinaviska Enskilda Banken AB and in the acquisition of a 5% stake in Banco Santander (Brasil) S.A., our affiliate, by Qatar Investment Authority. Merrill Lynch has further advised Sovereign Bank, our parent company’s U.S. banking business, on its merger with M&T Bank. In addition, we have a line of credit with J.P. Morgan Securities LLC in the total approximate amount of $33.7 million pursuant to a standing bank letter of credit and certain trade finance agreements.

In addition, JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities LLC will act as depositary for the ADS and will receive customary fees in connection thereto.

In addition, in the ordinary course of their business activities, the international underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The international underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Notice To Prospective Investors In The European Economic Area

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), including each Relevant Member State that has implemented the 2010 PD Amending Directive with regard to persons to whom an offer of securities is addressed and the denomination per unit of the offer of securities (each, an “Early Implementing Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), no offer of ADSs will be made to the public in that Relevant Member State (other than offers (the “Permitted Public Offers”) where a prospectus will be published in relation to the ADSs that has been approved by the competent authority in a Relevant Member State or, where appropriate, approved in another Relevant Member State

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and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive), except that with effect from and including that Relevant Implementation Date, offers of ADSs may be made to the public in that Relevant Member State at any time:

to “qualified investors” as defined in the Prospectus Directive, including:

(a)

(in the case of Relevant Member States other than Early Implementing Member States), 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, or any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43.0 million and (iii) an annual turnover of more than €50.0 million as shown in its last annual or consolidated accounts; or

(b)

(in the case of Early Implementing Member States), persons or entities that are described in points (1) to (4) of Section I of Annex II to Directive 2004/39/EC, and those who are treated on request as professional clients in accordance with Annex II to Directive 2004/39/EC, or recognized as eligible counterparties in accordance with Article 24 of Directive 2004/39/EC unless they have requested that they be treated as non-professional clients; or

to fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive), as permitted in the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of ADSs shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any ADSs or to whom any offer is made will be deemed to have represented, acknowledged and agreed that (A) it is a “qualified investor”, and (B) in the case of any ADSs acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (x) the ADSs acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of the Subscribers has been given to the offer or resale, or (y) where ADSs have been acquired by it on behalf of persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, the offer of those ADSs to it is not treated under the Prospectus Directive as having been made to such persons.

For the purpose of the above provisions, the expression “an offer to the public” in relation to any ADSs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer of any ADSs to be offered so as to enable an investor to decide to purchase any ADSs, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71 EC (including the 2010 PD Amending Directive, in the case of Early Implementing Member States) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Notice to Prospective Investors in Switzerland

The ADSs may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing

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Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the ADSs or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the issuer or the ADSs have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of ADSs will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA), and the offer of ADSs has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of ADSs.

Notice to Prospective Investors in France

No prospectus (including any amendment, supplement or replacement thereto) prepared in connection with the offering of the ADSs has been approved by the Autorité des marchés financiers or by the competent authority of another State that is a contracting party to the Agreement on the European Economic Area and notified to the Autorité des marchés financiers; no ADSs have been offered or sold nor will be offered or sold, directly or indirectly, to the public in France; the prospectus or any other offering material relating to the ADSs have not been distributed or caused to be distributed and will not be distributed or caused to be distributed to the public in France; such offers, sales and distributions have been and shall only be made in France to (i) persons licensed to provide the investment service of portfolio management for the account of third parties, (ii) qualified investors (investisseurs qualifiés) and/or (iii) a restricted circle of investors (cercle restreint d’investisseurs), in the last two cases provided they are investing for their own account, all as defined in Articles L. 411-2II, D. 411-1, D. 411-2, D. 411-4, D.744-1, D. 754-1 and D. 764-1 of the Code monétaire et financier. The direct or indirect distribution to the public in France of any so acquired ADSs may be made only as provided by Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the Code monétaire et financier and applicable regulations thereunder.

Notice to Prospective Investors in Germany

The ADSs offered by this prospectus have not been and will not be publicly offered within the meaning of the German Securities Prospectus Act (Wertpapierprospektgesetz), the German Sales Prospectus Act (Verkaufsprospektgesetz) or the German Investment Act (Investmentgesetz). No prospectus pursuant to the German Securities Prospectus Act, the German Sales Prospectus Act or the German Investment Act has been or will be published or circulated in Germany or filed with the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) or any other governmental or regulatory authority in Germany. This prospectus does not constitute an offer to the public in Germany and it does not serve for public distribution of the ADSs in Germany. Neither this prospectus, nor any other document issued in connection with this offering, may be issued or distributed to any person in Germany except under circumstances which do not constitute a public offer within the meaning of the German Securities Prospectus Act, the German Sales Prospectus Act and the German Investment Act.

Notice to Prospective Investors in Italy

No prospectus has or will be registered in the Republic of Italy with the Italian Stock Exchange Commission (Commissione Nazionale per le Societá di Borsa) (“Consob”) pursuant to the Prospectus Directive and Italian laws and regulations on financial products. Accordingly, the ADSs may not be offered, sold or delivered in the Republic of Italy, and copies of this prospectus or any other document relating to the ADSs may not be distributed in the Republic of Italy, except to (a) qualified investors (investori qualificati) (the “Qualified Investors”) pursuant to Article 100 of Legislative Decree no. 58 dated February 24, 1998, as amended (the “Financial Act”), as defined in Article 34-ter of Consob Regulation no. 11971 dated May 14. 1999, as amended (“Regulation no. 11971”); or (b) in circumstances where there is an exemption from the rules governing an offer to the public of financial products pursuant to Article 94 et seq. of the Financial Act, and to Regulation no. 11971. Any offer, sale or delivery of the ADSs in the Republic of Italy must be (a) made by an investment firm, a bank or financial intermediary authorized to engage in such activities in Italy, in compliance with the Financial Act and with Legislative Decree no. 385 dated September 1, 1993, as amended and Consob Regulation no. 16190 dated October 29, 2007, as amended, and any other applicable law and regulation; and (b) in compliance with any applicable Italian laws and regulations and any

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other condition or limitation that may be imposed by Consob, the Bank of Italy (Banca d’Italia) and any other relevant Italian authorities.

Notice to Prospective Investors in The Netherlands

The ADSs may not be offered, sold, transferred or delivered, in or from the Netherlands, as part of the initial distribution or as part of any reoffering, and neither this prospectus nor any other document in respect of the offering may be distributed in or from the Netherlands, other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or trade (which includes banks, investment banks, securities firms, insurance companies, pension funds, other institutional investors and treasury departments and finance companies of large enterprises), in which case, it must be made clear upon making the offer and from any documents or advertisements in which a forthcoming offering of ADSs is publicly announced that the offer is exclusively made to such individuals or legal entities.

Notice to Prospective Investors in Spain

No prospectus has or will be approved and registered in Spain with the Spanish National Stock Exchange Commission (Comisión Nacional del Mercado de Valores) (“CNMV”) or by the competent authority of another State that is a contracting party to the Agreement on the European Economic Area and notified to Spain pursuant to the Prospectus Directive and Spanish laws and regulations on financial products. Accordingly, the ADSs may not be offered, sold or delivered to the public in Spain, and copies of this prospectus or any other document relating to the ADSs may not be distributed in Spain, except in the circumstance where there is an exemption from the rules governing an offer to the public of financial products pursuant to article 30 bis of Law 24/1988, July 28th, on Securities Market.

Notice to Prospective Investors in Hong Kong

This prospectus has not been approved by or registered with the Securities and Futures Commission of Hong Kong or the Registrar of Companies of Hong Kong. The securities will not be offered or sold in Hong Kong other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the securities which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) has been issued or will be issued in Hong Kong or elsewhere other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Notice to Prospective Investors in China

The ADSs may not be offered or sold directly or indirectly to the public in the People’s Republic of China (“China”) and neither this prospectus, which has not been submitted to the Chinese Securities and Regulatory Commission, nor any offering material or information contained herein relating to the ADSs, may be supplied to the public in China or used in connection with any offer for the subscription or sale of ADSs to the public in China. The ADSs may only be offered or sold to China-related organizations which are authorized to engage in foreign exchange business and offshore investment from outside of China. Such China-related investors may be subject to foreign exchange control approval and filing requirements under the relevant Chinese foreign exchange regulations.

Notice to Prospective Investors in Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act (Chapter 289) (the

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“SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the securities are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, then securities, debentures and units of securities and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the securities under Section 275 except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.

Notice to Prospective Investors in Japan

The ADSs have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

Notice to Prospective Investors in Australia

No prospectus, disclosure document, offering material or advertisement in relation to the ADSs has been lodged with the Australian Securities and Investments Commission or the Australian Stock Exchange Limited. Accordingly, a person may not (a) make, offer or invite applications for the issue, sale or purchase of ADSs within, to or from Australia (including an offer or invitation which is received by a person in Australia) or (b) distribute or publish this prospectus or any other prospectus, disclosure document, offering material or advertisement relating to the ADSs in Australia, unless (i) the minimum aggregate consideration payable by each offeree is the U.S. dollar equivalent of at least A$500,000 (disregarding moneys lent by the offeror or its associates) or the offer otherwise does not require disclosure to investors in accordance with Part 6D.2 of the Corporations Act 2001 (CWLTH) of Australia; and (ii) such action complies with all applicable laws and regulations.

Notice to Prospective Investors in the Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The securities to which this offering memorandum relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

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EXPENSES OF THE OFFERING

We estimate that our expenses in connection with the international offering, other than underwriting discounts and commissions, will be as follows:

Expenses	Amount (in U.S. dollars)
Securities and Exchange Commission registration fee	$	11,610
NYSE listing fees
Financial Industry Regulatory Authority filing fee
Printing and engraving expenses
Legal fees and expenses
Accountant fees and expenses
Miscellaneous costs
Total	$

All amounts in the table are estimated except the Securities and Exchange Commission registration fee, the NYSE listing fee and the FINRA filing fee. The depositary has agreed to pay some of these expenses on our behalf, subject to the closing of the international offering.

The selling shareholder will pay the underwriting discounts and commissions payable in the international offering. In addition, we expect to launch a campaign upon the closing of the international offering in order to welcome those investors who have purchased our ADRs and class B shares and to establish a closer relationship with the new minority shareholders. We expect this campaign will include the distribution of materials through print and electronic media, a welcome package and certain institutional events and meetings.

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VALIDITY OF THE SECURITIES

The validity of the ADSs and certain matters of U.S. law will be passed upon for us by Davis Polk & Wardwell 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 Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (Jr.), Buenos Aires, Argentina. The underwriters have been represented by Cravath, Swaine & Moore LLP, New York, New York, and Allende & Brea, Buenos Aires, Argentina.

EXPERTS

The consolidated financial statements as of December 31, 2010 and 2009 and for each of the years in the period ended December 31, 2010, included in this prospectus have been audited by Deloitte & Co. S.R.L, an independent registered public accounting firm, as stated in their report appearing herein. Such consolidated financial statements are included in reliance upon the report of such firm given upon their authority 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. All our directors and 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 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, Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (Jr.), 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.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, or 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, including the requirements to prepare and issue quarterly reports, or the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules under Section 16 of the Exchange Act. 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 will file annual reports on Form 20-F within the time period required by the Commission, which is currently four months from December 31, the end of our fiscal year, and will file interim reports on Form 6-K containing an English language version of any reports we file with Argentine securities regulators or stock exchanges, including our quarterly reports.

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.

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INDEX TO FINANCIAL STATEMENTS

Unaudited Condensed Consolidated Financial Statements of Banco Santander Río S.A.

Unaudited Condensed Consolidated Balance Sheets for the three-month period ended March 31, 2011	F-1
Unaudited Condensed Consolidated Statements of Income for the three-month period ended March 31, 2011	F-2
Unaudited Condensed Consolidated Statements of Changes in Total Equity for the three-month period ended March 31, 2011	F-3
Unaudited Condensed Consolidated Statements of Recognized Income and Expense for the three-month period ended March 31, 2011	F-4
Unaudited Condensed Consolidated Statements of Cash Flow for the three-month period ended March 31, 2011	F-5
Notes to the Consolidated Financial Statements of Banco Santander Río S.A. for the the three-month period ended March 31, 2011	F-6


Consolidated Financial Statements of Banco Santander Río S.A.
Report of Independent Registered Public Accounting Firm	F-28
Consolidated Balance Sheets for the Years Ended December 31, 2010, 2009 and January 1, 2009	F-29
Consolidated Statements of Income for the Years Ended December 31, 2010 and 2009	F-31
Consolidated Statements of Changes in Total Equity for the Years Ended December 31, 2010 and 2009	F-32
Consolidated Statements of Recognized Income and Expense for the Years Ended December 31, 2010 and 2009	F-33
Consolidated Statements of Cash Flow for the Years Ended December 31, 2010 and 2009	F-34
Notes to the Consolidated Financial Statements of Banco Santander Río S.A. for the Years Ended December 31, 2010 and 2009 and at January 1, 2009	F-35

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Banco Santander Río S.A.

Unaudited Condensed Consolidated

Financial Statements for the three-month

period ended March 31, 2011

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

BANCO SANTANDER RIO S.A.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2011 AND DECEMBER 31, 2010

ASSETS	Note	03/31/11 (unaudited)	12/31/10 (audited)	LIABILITIES AND EQUITY	Note	03/31/11 (unaudited)	12/31/10 (audited)
				FINANCIAL LIABILITIES HELD FOR	9	5,695	7,058
CASH AND BALANCES WITH THE		9,194,272	8,054,583	TRADING
ARGENTINE CENTRAL BANK
				FINANCIAL LIABILITIES AT AMORTISED	9	31,852,668	28,884,623
FINANCIAL ASSETS HELD FOR TRADING	4	2,505,006	2,944,827	COST

AVAILABLE-FOR-SALE FINANCIAL	4	593,153	691,969	PROVISIONS	10	165,335	158,886
ASSETS
				TAX LIABILITIES:		516,788	506,864
LOANS AND RECEIVABLES	4	22,217,414	20,521,552	Current		387,589	338,230
				Deferred		129,199	168,634
NON-CURRENT ASSETS HELD FOR SALE	5	-	-
				OTHER LIABILITIES		311,048	382,260
INVESTMENTS:	6	48,035	46,763
Investments in Associates		48,035	46,763	TOTAL LIABILITIES		32,851,534	29,939,691

TANGIBLE ASSETS:	7	792,992	756,482	SHAREHOLDERS’ EQUITY:		3,162,601	3,595,029
Property and equipment for own use		791,485	754,968	Share capital		1,078,875	1,078,875
Investment property		1,507	1,514	Reserves		1,716,154	1,155,896
				Profit for the period/year attributable to the		367,572	1,360,258
INTANGIBLE ASSETS:	8	104,163	106,627	Parent
Goodwill		17,520	17,520
Other intangible assets		86,643	89,107	VALUATION ADJUSTMENTS:		237,285	307,351
				Available-for-sale financial assets		237,285	307,351
TAX ASSETS:		344,830	344,679
Current		47,767	44,569
Deferred		297,063	300,110	NON-CONTROLLING INTERESTS		1,143	1,241

OTHER ASSETS		452,698	375,830	TOTAL EQUITY		3,401,029	3,903,621
				TOTAL LIABILITIES AND EQUITY		36,252,563	33,843,312
				MEMORANDUM ACCOUNTS:
				CONTINGENT LIABILITIES	14	341,461	442,840
				CONTINGENT COMMITMENTS	14	357,044	303,889
TOTAL ASSETS		36,252,563	33,843,312

The accompanying explanatory Notes are an integral part of these unaudited condensed consolidated financial statements.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

BANCO SANTANDER RIO S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2011 AND 2010
	Note	03/31/11 (unaudited)	03/31/10 (unaudited)

INTEREST AND SIMILAR INCOME		895,410	727,309
INTEREST EXPENSE AND SIMILAR CHARGES		(266,309)	(193,612)
NET INTEREST INCOME		629,101	533,697
INCOME FROM EQUITY INSTRUMENTS		1,800	1,236
INCOME FROM COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD	6	1,272	-
FEE AND COMMISSION INCOME		544,908	440,161
FEE AND COMMISSION EXPENSE		(120,587)	(110,573)
GAINS ON FINANCIAL ASSETS AND LIABILITIES (net)		4,078	33,879
EXCHANGE DIFFERENCES (net)		58,722	49,021
OTHER OPERATING INCOME		7,197	9,843
OTHER OPERATING EXPENSES		(21,749)	(14,972)
TOTAL INCOME		1,104,742	942,292
ADMINISTRATIVE EXPENSES		(492,421)	(363,803)
Personnel expenses		(258,891)	(181,878)
Other general administrative expenses		(233,530)	(181,925)
DEPRECIATION AND AMORTIZATION		(39,250)	(31,936)
PROVISIONS (net)	10	(17,259)	(22,716)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (net)	4	(60,641)	(71,634)
IMPAIRMENT LOSSES ON OTHER ASSETS (net)		-	(7)
GAINS ON DISPOSAL OF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE		9,722	23
GAINS ON DISPOSAL OF NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED
AS DISCONTINUED OPERATIONS		127	2
OPERATING PROFIT BEFORE TAX		505,020	452,221
INCOME TAXES		(137,438)	(143,253)
CONSOLIDATED PROFIT FOR THE PERIOD		367,582	308,968
Profit attributable to the Parent		367,572	308,946
Profit attributable to non-controlling interests		10	22
EARNINGS PER SHARE:
Basic earnings per share (pesos)	3	0.3407	0.2864
Diluted earnings per share (pesos)	3	0.3407	0.2864

The accompanying explanatory Notes are an integral part of these unaudited condensed consolidated financial statements.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

BANCO SANTANDER RIO S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN TOTAL EQUITY
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2010
	Equity Attributable to the Parent						Non-Controlling Interests	Total Equity
	Shareholders’ Equity				Valuation Adjustments	Total
	Share Capital	Reserves	Profit Attributable to the Parent	Total Shareholders' Equity	Valuation Adjustments	Total
Balances at December 31, 2009 (audited)	1,078,875	928,372	1,050,524	3,057,771	192,758	3,250,529	1,271	3,251,800

Consolidated profit for the period	-	-	308,946	308,946	-	308,946	22	308,968
Other changes in Equity
Appropriation of profit for the period	-	1,050,524	(1,050,524)	-	-	-	-	-
Dividends	-	-	-	-	-	-	(249)	(249)
Other recognized income and expense	-	-	-	-	12,950	12,950	133	13,083
Balances at March 31, 2010 (unaudited)	1,078,875	1,978,896	308,946	3,366,717	205,708	3,572,425	1,177	3,573,602

BANCO SANTANDER RIO S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN TOTAL EQUITY
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2011
	Equity Attributable to the Parent						Non-Controlling Interests	Total Equity
	Shareholders’ Equity				Valuation Adjustments	Total
	Share Capital	Reserves	Profit Attributable to the Parent	Total Shareholders' Equity	Valuation Adjustments	Total
Balances at December 31, 2010 (audited)	1,078,875	1,155,896	1,360,258	3,595,029	307,351	3,902,380	1,241	3,903,621

Consolidated profit for the period	-	-	367,572	367,572	-	367,572	10	367,582
Other changes in Equity
Appropriation of profit for the period	-	1,360,258	(1,360,258)	-	-	-	-	-
Dividends	-	(800,000)	-	(800,000)	-	(800,000)	(108)	(800,108)
Other recognized income and expense	-	-	-	-	(70,066)	(70,066)	-	(70,066)
Balances at March 31, 2011 (unaudited)	1,078,875	1,716,154	367,572	3,162,601	237,285	3,399,886	1,143	3,401,029

The accompanying explanatory Notes are an integral part of these unaudited condensed consolidated financial statements.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

BANCO SANTANDER RIO S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2011 AND 2010

	Note	03/31/11 (unaudited)	03/31/10 (unaudited)

CONSOLIDATED PROFIT FOR THE PERIOD		367,582	308,968

OTHER RECOGNISED INCOME AND EXPENSE:		(70,066)	13,083
Available-for-sale financial assets:
Valuation adjustments	4	(107,278)	12,902

Income tax		37,212	181
TOTAL RECOGNISED INCOME AND EXPENSE		297,516	322,051

Attributable to the Parent		297,506	321,896
Attributable to non-controlling interests		10	155

TOTAL		297,516	322,051

The accompanying explanatory Notes are an integral part of these unaudited condensed consolidated financial statements.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

BANCO SANTANDER RÍO S.A.
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2011 AND 2010
	03/31/2011	03/31/2010
	(unaudited)	(unaudited)
A. CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit for the period	367.582	308.968

Adjustments made to obtain the cash flows from operating activities:	10.919	70.924
Depreciation of tangible assets	21.840	21.502
Amortization of intangible assets	17.410	10.434
Impairment losses on other assets (net)	-	7
Provisions (net)	17.259	22.716
Impairment losses on financial assets (net)	60.641	71.634
Income from companies accounted for using the equity method	(1.272)	-
Gains on disposal of assets not classified as non-current assets held for sale	(9.722)	(23)
Gains on disposal of non-current assets held for sale not classified as discontinued operation	(127)	(2)
Changes in deferred tax assets and liabilities	(36.388)	(6.323)
Exchange differences	(58.722)	(49.021)
Net increase in operating assets:	(1.364.800)	(1.238.135)
Financial assets held for trading	439.821	(432.161)
Available-for-sale financial assets	28.750	(9.014)
Loans and receivables	(1.756.503)	(745.936)
Other assets	(76.868)	(51.024)
Net increase in operating liabilities:	2.215.829	474.314
Financial liabilities held for trading	(1.363)	(578)
Financial liabilities at amortized cost	2.168.045	478.828
Other liabilities	49.147	(3.936)
Total net cash flows provided from/ (used by) operating activities	1.229.530	(383.929)

B. CASH FLOWS FROM INVESTING ACTIVITIES
Investments	(73.505)	275.068
Tangible assets	(58.559)	(14.954)
Intangible assets	(14.946)	(13.998)
Net cash inflow on acquisition of a business	-	304.020
Divestments	10.058	16.472
Tangible assets	10.058	423
Associates and non-controlling	-	16.049
Total net cash flows (used by)/ provided from investing activities	(63.447)	291.540

C. CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid	(108)	-
Total net cash flows used by financing activities	(108)	-

EFFECT OF FOREIGN EXCHANGE RATE CHANGES	(26.286)	67.918

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS	1.139.689	(24.471)

Cash and cash equivalents at beginning of year	8.054.583	7.291.829
Cash and cash equivalents at end of period	9.194.272	7.267.358

Non cash transaction:
Dividends declared but not paid	800.000	249
Assets and liabilities acquired on BNP Paribas Argentine Branch´s business combination	-	596.563

Supplemental information:
Interest received	866.190	720.957
Interest paid	263.937	206.739

The accompanying explanatory Notes are an integral part of these unaudited condensed consolidated financial statements.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

Banco Santander Río S.A.

Explanatory notes to the quarter-yearly unaudited condensed consolidated financial statements for the three-month periods ended March 31, 2011 and 2010, and as of December 31, 2010

1.	Introduction, basis of presentation of the unaudited condensed consolidated financial statements and other information

a)	Introduction

Banco Santander Río S.A. and its subsidiaries (the “Bank”, the “Group” or “Santander Río”), is the first private-sector bank in Argentina based upon loans and deposits, main offices of which are located at Bartolomé Mitre, 480, city of Buenos Aires.

In 1908, the Bank was founded in La Plata, Argentina as an insurance company under the name of Río de la Plata Compañía de Seguros Contra Incendios. As banking transactions increased during the 1930s, the Bank expanded into banking operations in 1932 under the name of Banco de Créditos y Seguros Río de la Plata S.A. In 1935, the Bank changed its name to Banco Río de la Plata S.A. and transferred its insurance activities to a separate, unrelated company. Lately, in 2007, the Bank changed its name to Banco Santander Río S.A.

Since the 1960s, the Bank has expanded through organic growth and by acquiring small and medium-sized banks in Argentina. In 1981, the Bank acquired Banco Delta, a local commercial bank, which marked the beginning of a period of sustained growth that involved the acquisition of Banco Rural, Banco Español, Banco Comercial del Norte and Banco Ganadero Argentino.

The Group is a full-service bank engaged in a wide variety of commercial and wholesale banking activities and related financial services directed towards individuals, small- and medium-sized enterprises, or SMEs, and large corporations.

The Bank is indirectly controlled by Banco Santander, S.A. with headquarters in Spain (“Banco Santander Spain”). To date, Banco Santander Spain owns, directly and through Administración de Bancos Latinoamericanos Santander S.L. (ABLASA) and other Banco Santander Spain Group companies, classes “A”, “B” and “Preferred” shares of Banco Santander Río S.A. (BSR); such shares represent 99.30% of the capital stock equivalent to 99.35% of votes.

On March 16, 2011 the Bank's Shareholders Meeting approved a share capital increase by public subscription up to 145,000 by issuing up to one hundred forty-five million ordinary common shares class "B", scriptural, $ 1 par value, entitled to one vote per share and to dividends from the fiscal year in which they are subscribed. It was delegated to the Board of Directors the methods of underwriting and placement of such shares and the markets where they will be offered.

The Bank’s unaudited condensed consolidated financial statements for the three-month period ended March 31, 2011 (interim financial statements) were prepared and authorized by the Group’s Board of Directors meeting held on May,10 2011. The Bank’s consolidated financial statements as of December 31, 2010 and for the year then ended were approved by the shareholders at the Bank’s Board of Directors on March 14, 2011.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

b)	Basis of presentation of the unaudited condensed consolidated financial statements

These interim financial statements were prepared and are presented in accordance with IAS 34, Interim Financial Reporting from International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (“IASB”), and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

In accordance with IAS 34, the interim financial report is intended only to provide an update on the content of the latest annual consolidated financial statements authorised for issue, focusing on new activities, events and circumstances occurring during the three-month period, and does not duplicate information previously reported in the latest annual consolidated financial statements authorised for issue. Consequently, these interim financial statements do not include all the information required of complete consolidated financial statements prepared in accordance with IFRS as adopted by the IASB and, accordingly, for a proper comprehension of the information included in these interim financial statements, they should be read together with the Group’s consolidated financial statements as of December 31, 2010 and for the year then ended.

The accounting policies and methods used in preparing these unaudited condensed consolidated interim financial statements are the same as those applied in the consolidated financial statements for 2010, taking into account those standards and interpretations effective subsequent as described in the consolidated financial statements as of December 31, 2010 and for the year then ended which did not have a material effect on these unaudited condensed consolidated financial statements.

Unaudited condensed consolidated financial statements as of March 31, 2011 reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented and all such adjustments are of a normal recurring nature.

c)	Use of estimates

The consolidated results and the determination of consolidated equity are sensitive to the accounting policies, measurement bases and estimates used by the directors of the Bank in preparing the three-month financial statements. The main accounting policies and measurement bases are described in Note 2 to the 2010 consolidated financial statements.

These estimates, which were made on the basis of the best information available, relate basically to the following:

The income tax expense, which, in accordance with IAS 34, is recognised in interim periods based on the best estimate of the weighted average tax rate expected by the Group for the full financial year;

The impairment losses on certain assets;

The assumptions used in the calculation of the post-employment benefit liabilities and commitments and other obligations;

The useful life of the tangible and intangible assets;

The measurement of goodwill arising on consolidation; and

The fair value of certain unquoted assets.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

During the three-month period ended March 31, 2011 there were no significant changes in the estimates made at 2010 year-end other than those indicated in these quarter-yearly unaudited condensed consolidated financial statements.

d)	Contingent liabilities and commitments

Note 29 to the Group’s consolidated financial statements as of December 31, 2010 and for the year then ended includes information on the contingent liabilities and commitments at that date. There were no significant changes in the Group’s contingent liabilities and commitments from December 31, 2010 to the date of preparation of these unaudited condensed consolidated financial statements for the three-month period ended March 31, 2011.

e)	Comparative information

The information for 2010 contained in these three-month unaudited condensed consolidated financial statements is presented for comparison purposes only with the information relating to the three-month period ended March 31, 2011.

f)	Seasonality of the Group’s transactions

In view of the business activities in which the Group companies engage, their transactions are not cyclical or seasonal in nature. Therefore, no specific disclosures are included in these explanatory notes to the unaudited condensed consolidated financial statements for the three-month period ended March 31, 2011.

g)	Materiality

In determining the note disclosures to be made on the various items in the financial statements or other matters, the Group, in accordance with IAS 34, took into account their materiality in relation to the interim financial statements.

h)	Events after the interim reporting period

From April 1, 2011 to the date of preparation of these unaudited condensed consolidated financial statements, no significant events have occurred which have to be disclosed in a note to them.

i)	Condensed consolidated statements of cash flows

The following terms are used in the consolidated cash flow statements with the meanings specified:

Cash flows: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments that are subject to an insignificant risk of changes in value.

Operating activities: the principal revenue-producing activities of credit institutions and other activities that are not investing or financing activities.

Investing activities: the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.

Financing activities: activities that result in changes in the size and composition of the equity and liabilities that are not operating or investing activities.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

In preparing the condensed consolidated cash flow statement, short-term highly liquid investments that are subject to an insignificant risk of changes in value were classified as “Cash and cash equivalents”. Accordingly, the Group classifies as cash and cash equivalents the balances recognized under “Cash and balances with Argentine Central Bank” in the condensed consolidated balance sheet.

2.	Basis of consolidation

Appendices I, II and III to the consolidated financial statements for the year ended December 31, 2010 provide relevant information on the Bank companies that were consolidated at that date and on the equity-accounted Group companies.

Also, Note 3 to the aforementioned financial statements includes a description of the most significant acquisitions and disposals of companies performed by the Group in 2010 and 2009.

3.	Dividends paid by the Bank and earnings per share

a)	Dividends paid by the Bank

On March 18, 2011, the Bank obtained the approval of the Superintendence of Financial and Exchange Institutions (SEFyC) of the Argentine Central Bank (BCRA), for the distribution of cash dividends amounting to 800,000. Such cash dividends were made available to shareholders on April 14, 2011.

b)	Earnings per share from continuing and discontinued operations

i. Basic earnings per share

Basic earnings per share are calculated by dividing the net profit attributable to the Group by the weighted average number of shares outstanding during the year, excluding the average number of treasury shares, if any, held in the year.

Accordingly:

	03/31/11 (unaudited)	03/31/10 (unaudited)

Profit attributable to the Parent	367,572	308,946
Profit from continuing operations (net of non-controlling interests)	367,572	308,946
Weighted average number of shares outstanding	1,078,875,015	1,078,875,015
Adjusted number of shares	1,078,875,015	1,078,875,015
Basic earnings per share (Pesos)	0.3407	0.2864
Basic earnings per share from continuing operations (Pesos)	0.3407	0.2864

ii. Diluted earnings per share

In calculating diluted earnings per share, the amount of profit attributable to shareholders and the weighted average number of shares outstanding, net of treasury shares, if any, are adjusted to take into account all the

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

dilutive effects inherent to potential ordinary shares (share options, warrants and convertible debt instruments). However the Bank does not have any of these effects over the diluted earnings per share ratio as of March 31, 2011 and 2010.

4.	Financial assets

Breakdown

The detail, by nature and category for measurement purposes, of the Group’s financial assets, other than the balances relating to Cash and balances with the Argentine Central Bank, at March 31, 2011 and December 31, 2010 is as follows:

	03/31/11 (unaudited)
	Financial assets held for trading	Available-for-sale financial assets	Loans and receivables

Loans and advances to credit institutions	-	-	919,588
Loans and advances to customers	-	-	21,297,826
Debt instruments	2,474,366	570,784	-
Equity instruments	7,049	22,369	-
Trading derivatives	23,591	-	-
	2,505,006	593,153	22,217,414

	12/31/10 (audited)
	Financial assets held for trading	Available-for-sale financial assets	Loans and receivables

Loans and advances to credit institutions	-	-	1,066,855
Loans and advances to customers	-	-	19,454,697
Debt instruments	2,897,343	663,797	-
Equity instruments	6,318	28,172	-
Trading derivatives	41,166	-	-
	2,944,827	691,969	20,521,552

a.1) Loans and advances to credit institutions

The breakdown by type of the balances of “Loans and advances to credit institutions” is as follows:

	03/31/2011 (unaudited)	12/31/2010 (audited)
Type:
Reciprocal accounts	124,485	73,608
Time deposits	684,643	615,596
Unsettled financial transactions	114,087	381,567
Impairment losses	(3,627)	(3,916)
	919,588	1,066,855

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

a.2) Debt instruments

The breakdown by type of the balances of “Debt instruments” is as follows:

	03.31.2011 (unaudited)	12.31.2010 (audited)
Type:
Government debt securities-
Government bonds	1,290,141	1,307,761
Instruments Issued by the BCRA	1,613,373	2,103,280
Other fixed-income securities	141,636	150,099
	3,045,150	3,561,140

a.3) Loans and advances to customers

The breakdown by type and status of the balances of “Loans and advances to customers” is as follows:

	03.31.2011 (unaudited)	12.31.2010 (audited)
Loan type and status:
Public sector – Argentina	34,958	33,305
Commercial, financial and industrial	10,499,408	9,553,678
Real State, construction and other mortgages	1,589,448	1,572,633
Installment loans to individuals	9,366,145	8,494,768
Lease financing	155,240	150,122
Impairment losses	(347,373)	(349,809)
	21,297,826	19,454,697

b)	Valuation adjustments for impairment of financial assets

b.1) Available-for-sale financial assets

As indicated in Note 2 to the consolidated financial statements for the year ended December 31, 2010, as a general rule, changes in the carrying amounts of financial assets and liabilities are recognised with a charge or credit to the consolidated income statement. However, in the case of available-for-sale financial assets the changes in value are recognised temporarily in consolidated equity under Valuation adjustments - Available-for-sale financial assets, unless they relate to exchange differences, in which case they are recognised in Valuation adjustments - Exchange differences (exchange differences arising on monetary financial assets are recognised in Exchange differences in the consolidated income statement).

Items charged or credited to Valuation adjustments - Available-for-sale financial assets and Valuation adjustments - Exchange differences remain in the Group’s consolidated equity until the related assets are derecognised, whereupon they are taken to the consolidated income statement. When there is objective evidence at the date of measurement of these instruments that the aforementioned differences are due to permanent impairment, they are no longer recognised in equity under Valuation adjustments - Available-for-sale financial assets and are reclassified, for the cumulative amount at that date, to the consolidated income statement.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

At March 31, 2011, the Bank analysed the changes in the fair value of the various assets composing this portfolio and did not charged impairment losses to the income statement. Consequently, the changes in value of these assets are presented in equity under Valuation adjustments – Available-for-sale financial assets.

Changes in valuation adjustments in the three-month period are recognised in the consolidated statement of recognised income and expense.

As of March 31, 2011, Valuation Adjustments due to available-for-sale financial assets amount to 237,282 (unrealized gains).

b.2) Loans and receivables

The changes in the balance of the allowances for impairment losses on the assets included under Loans and receivables in the three-month periods ended March 31, 2011 and 2010 were as follows:

	03/31/11 (unaudited)	03/31/10 (unaudited)

Balance at beginning of period	353,725	386,235

Additions (1)	75,010	86,458

Charge off	(77,735)	(69,690)

Balance at end of period	351,000	403,003

(1)	Additions to provisions for loan losses net of loans recovered for 14,369 and 14,824 as of March 31, 2011 and 2010 are recorded under “Impairment losses on financial assets (net)” account on the unaudited condensed consolidated statement of income.

5.	Non-current assets held for sale

The detail, by nature, of the Bank’s non-current assets held for sale at March 31, 2011 and December 31, 2010 is as follows:

	03/31/2011 (unaudited)	12/31/2010 (audited)
Tangible assets held for sale
Value	3,737	3,287
Allowances	(3,737)	(3,287)
	-	-

The total amount of non-current assets held for sale are related to foreclosed assets and intended for sale up to one year through the completion of auctions.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

6.	Investment in associates

a) Breakdown

The breakdown, by company, of the balance of “Investments - Associates” is as follows:

	Participation %		Investments		Results of Investments
	03/31/11 (unaudited)	12/31/10 (audited)	03/31/11 (unaudited)	12/31/10 (audited)	03/31/11 (unaudited)	03/31/10 (unaudited)
Gire, S.A.	58.33%	58.33%	37,196	37,196	-	-
Banelco, S.A.	16.37%	16.37%	10,839	9,567	1,272	-
Total			48,035	46,763	1,272	-

As a result of the shareholders agreement dated May 31, 1991, which set limits for all management decisions taken by Gire S.A.´s directors, the Bank does not have control of Gire S.A., only significant influence.

Although the Bank owns less than 20% of Banelco, S.A., it is deemed to be an associate since the Bank by virtue of the shareholders structure and composition and classes of the shares has significant influence.

b) Changes

The changes in the balance of this item were as follows:

	03/31/11 (unaudited)	12/31/10 (audited)
Balance at beginning of the period/year	46,763	45,952
Income from companies accounted for using the equity method	1,272	19,361
Dividends received	-	(18,550)
Balance at end of period/ year	48,035	46,763

There was no impairment with respect to investments in associates in 2011 or 2010.

7.	Tangible assets

a)	Changes in the period

The changes in “Property and equipment for own use” in the condensed consolidated balance sheets were as follows:

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

	Property and Equipment for own use

Cost:
Balances at December 31, 2010	1,480,200
Additions/Disposals (net)	55,365
Balances at March 31, 2011	1,535,565

Accumulated depreciation:
Balances at December 31, 2010	(725,232)
Disposals	2,986
Charge for the period	(21,834)
Balances at March 31, 2011	(744,080)
Property and Equipment, net:
Balances at December 31, 2010 (audited)	754,968
Balances at March 31, 2011 (unaudited)	791,485

The detail of the balance of “investment property” that includes offices for rent is as follows:

	Investment property
Cost:
Balances at December 31, 2010	1,544
Additions/Disposals (net)	-
Balances at March 31, 2011	1,544

Accumulated depreciation:
Balances at December 31, 2010	(30)
Charge for the period	(6)
Balances at March 31, 2011	(36)
Investment property, net:
Balances at December 31, 2010 (audited)	1,514
Balances at March 31, 2011 (unaudited)	1,507

b)	Impairment losses

There were no impairment losses on tangible assets in the first three-month periods of 2011 and 2010.

c)	Property and equipment purchase commitments

At March 31, 2011 and December 31, 2010, the Bank has no significant commitments to purchase property and equipment items.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

8.	Intangible assets

Goodwill

All of the Bank’s goodwill relates to the contribution of BNP Paribas Argentine Branch, as discussed in Note 3 to the consolidated financial statements for the year ended December 31, 2010.

Goodwill is tested for impairment annually. It is also analyzed at the end of each reporting period when there is any indication that it may be impaired. For the current period, due to the recent incorporation of the before mentioned branch into the group and the results of the related market value calculation and purchase price allocation valuation recently performed, the Bank did not detect, and therefore, did not recognized any impairment losses.

There were no changes in goodwill in the first quarter of 2011.

b)	Other intangible assets

During the three-month period ended March 31, 2011 there were no impairment losses with respect to items classified as other intangible assets.

The amortization expenses of these assets have been included in the line item “Depreciation and amortization” of the unaudited condensed consolidated statements of income.

9.	Financial liabilities

Breakdown

The detail, by nature and category for measurement purposes, of the Group’s financial liabilities as of March 31, 2011 and December 31, 2010 is as follows:

	03/31/11 (unaudited)		12/31/10 (audited)
	Financial liabilities held for trading	Financial liabilities at amortized cost	Financial liabilities held for trading	Financial liabilities at amortized cost
Deposits from credit institutions	-	238,999	-	241,938
Customer deposits	-	27,983,453	-	26,174,375
Marketable debt securities	-	188,506	-	188,590
Trading derivatives	5,695	-	7,058	-
Other financial liabilities	-	3,441,710	-	2,279,720
	5,695	31,852,668	7,058	28,884,623

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

a.1) Deposit from credit institutions

The breakdown by type of the balances of “Deposit from credit institutions” is as follows:

	03/31/2011 (unaudited)	12/31/2010 (audited)
Type:
Reciprocal accounts	824	93
Time deposits	190,489	181,226
Other demand accounts	46,800	59,237
Accrued interest	886	1,382
	238,999	241,938

a.2) Customer deposits

The breakdown by type of the balances of “Customer deposits” is as follows:

	03/31/2011 (unaudited)	12/31/2010 (audited)
Type:
Demand deposits-
Current accounts	8,992,645	9,034,807
Savings accounts	9,560,369	8,982,016
Other demand deposits	396,296	413,224
Time deposits-
Fixed-term deposits	8,934,930	7,650,355
Other time deposits	-	2,879
Accrued interest	99,213	91,094
	27,983,453	26,174,375

b)	Issuance and redemptions of marketable debt securities

Following is the detail at March 31, 2011 and 2010 of the outstanding balance of the marketable debt securities issued by the Bank at those dates and of the changes therein during the first three months of 2011 and 2010:

	03/31/11 (unaudited)	12/31/10 (audited)

Balance at beginning of the period/ year	188,590	258,307
Issues	-	184,300
Redemption	-	(253,580)
Interest	(84)	(437)
Balance at end of period/ year	188,506	188,590

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

As of March 31, 2011, the Bank keeps in force the following corporate bonds:

Amount Global Program (USD)	Series	CNV´s Authorization	Date issued	Nominal Residual Value	Interest Rate	Maturity Date
500,000,000	1	N° 15,860	Nov 1, 2010	184,300	BADLAR + 300 Bps	May 1, 2012

At March 31, 2011 and December 31, 2010, there are no issues that are convertible into Bank shares or which grant privileges or rights which, in certain circumstances, make them convertible into shares.

c)	Other issues guaranteed by the Group

At March 31, 2011 and December 31, 2010, there are no debt instruments issued by associates or non-Group third parties that had been guaranteed by the Bank or any other Group entity.

10.	Provisions

The changes in “Provisions” for the three-month periods ended March 31, 2011 and 2010 were as follows:

	03/31/11 (unaudited)	03/31/2010 (audited)
Balances at beginning of period	158,886	269,083

Net changes (income)/ expense:	17,259	22,716
Decreases – reversals	(1,755)	-
Additions to provisions	19,014	22,716

Charges against provisions	(10,810)	(13,450)
Balances at end of period	165,335	278,349

There were no significant changes in the Bank’s provisions from December 31, 2010 to the date of preparation of these unaudited condensed consolidated financial statements.

Provisions for commitments and other provisions

The Bank and its subsidiaries are parties to judicial and administrative proceedings involving tax, civil, labor and other matters arising in the normal course of their business.

Provisions were recognized based on the nature, complexity and history of the lawsuits, and the opinion of the in-house and outside legal counsel. The Bank’s policy is to accrue the full amount of lawsuits whose likelihood of unfavorable outcome is probable.

Legal obligations - tax and social security were fully recognized in the unaudited condensed consolidated financial statements.

Management understands that the recognized provisions are sufficient to cover probable losses on the lawsuits.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

i) Legal proceedings

The Bank does not record contingency provisions when the risk of loss is remote. When there is a probable risk of loss, the Bank usually attempts to reach settlement with the counterparty. In cases where the Bank litigates a claim, it records a provision for its best estimate of the probable loss based on historical data for similar claims. The Bank records provisions on a case-by-case basis based on the analysis and legal opinion of internal and external counsel. Based on the provisions it has recorded and the legal opinions that have been provided, the Bank believes that any liabilities related to such lawsuits or legal proceedings will not have a material adverse effect on its financial position or results of operations.

ii) Consumer lawsuits

Various consumer associations, claiming to act on behalf of consumers, have initiated mediation processes and “demandas colectivas” (suits similar to class actions) against the Bank and other entities under Consumer Protection Law, seeking reimbursement for certain fees, commissions, charges and interest, which they allege were charged to the bank customers and collected incorrectly over a period of years, and an injunction barring the collection of such fees, commissions, charges and interest. Class action lawsuits are not contemplated under the Argentine legal framework; however, “demandas colectivas” have been admitted by courts under certain circumstances pursuant to the Consumer Protection Law. These claims were brought against the Bank for unspecified amounts. Although the Bank has not admitted to any wrongdoing in connection thereof, it has settled certain of these claims in the last two years, primarily in exchange for reimbursements and changes to some of its business practices including the manner in which the Bank charges and provides notice of its fees and commissions. To date six “demandas colectivas” remain pending against the Bank. The Bank has filed defenses in four of the suits, two of which are in the evidentiary stage. One claim has been dismissed by the court and is currently on appeal by the plaintiff. The remaining suit is at the preliminary pleading stage. The Bank has made provisions in respect of these cases as part of its general provision for legal liabilities in accordance with the internal and external counsel's estimates of the probable outcomes.

iii. Tax contingencies

Different review procedures and official assessments, started by certain provinces and the Autonomous City of Buenos Aires, linked to the Gross Income Tax determination, mainly related to the differences in the criteria considered on the compensation bond established by the Executive Power so as to compensate the Financial Institutions for the losses resulting from the asymmetric pesification and foreign exchange rate differences are under way and with different advance stages. During 2009, the Bank entered into a moratorium whereby it paid the principal amount claimed by the province of Buenos Aires without its related interests.

Additionally, during 2010, the Bank entered into another moratorium whereby it paid the principal amount claimed by the Autonomous City of Buenos Aires without its related interests.

It should be noted that the Bank still keeps its rights to continue these legal proceeding.

The Bank has stated its disagreement as regards the established adjustments with the corresponding administrative and/or judicial procedures, since it considers that the tax obligations have been met in accordance with the regulations in force. Accordingly, the Bank considers that the resolution of the issues which have been previously exhibited will not have a significant impact on its consolidated income and equity.

As of March 31, 2011 the provisions for these matters reached 46,700 approximately.

iv. Other proceedings

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

its foreign currency export proceeds during 2002. The proceeding has not yet reached the evidentiary stage. The Bank believes the probability of being unsuccessful is remote due to legal precedents and its defenses.

In addition to the matters described above, the Bank is from time to time subject to certain claims and parties to certain legal proceedings incidental to the normal course of our business, including in connection with its lending activities, relationships with its employees and other commercial or tax matters. In view of the inherent difficulty of predicting the outcome of legal matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories, involve a large number of parties or are in early stages of discovery, the Bank cannot state with confidence what the eventual outcome of these pending matters will be, what the timing of the ultimate resolution of these matters will be or what the eventual loss, fines or penalties related to each pending matter may be. The Bank believes that it has made adequate reserves related to the costs anticipated to be incurred in connection with these various claims and legal proceedings and believes that liabilities related to such claims and proceedings should not have, in the aggregate, a material adverse effect on its business, financial condition, or results of operations.

As of March 31, 2011 there are 900 cases concerning commercial, civil and labor contingencies. The Bank has analyzed them and estimated a provision by 78,500 for such cases.

Additionally, the Bank recorded provisions related to Constitutional Protection Actions amounting to 21,435 and the sum of 18,700 for other contingencies.

11.	Shareholders´ Equity

During the three-month periods ended March 31, 2011 and 2010 there were no other quantitative or qualitative changes in the Bank’s equity other than those indicated in the unaudited condensed consolidated statements of changes in total equity.

a)	Share capital

During the three-month period ended March 31, 2011, there were no changes in the Bank’s share capital which consisted of 1,078,875 thousand registered shares with a par value of 1 peso.

b)	Reserves – Legal Reserve

According to Law No. 21,526, or the Argentine Financial Institutions Law, as amended, and BCRA regulations, financial institutions are required to maintain a legal reserve of 20% of their 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, the Bank´s yearly net income under BCRA Rules (as adjusted to reflect changes in prior results) is allocated in the following order: (a) to comply with the legal reserve requirement; (b) to pay the accrued fees of the members of the board of directors and statutory supervisory committee; (c) to pay fixed dividends, which shall be applied first to pending and unpaid dividends and holders of preferred shares (if applicable); and (d) to pay any additional dividends to holders of preferred stock and common stock, paid in proportion to the respective subscriptions, or to pay an optional reserve fund or account, to be applied as may be determined at a shareholders’ meeting. Any remaining portion 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.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

than 20% of the corporate capital plus capital adjustment, once this last amount is achieved. As of March 31, 2011 and December 31, 2010 the legal reserve balance amounts to 942,066 and 621,874, respectively.

12.	Operating Segments

The Bank has three operating segments, as described below, which are the Group´s strategic business units:

Commercial Banking: The Commercial Banking segment encompasses the entire commercial banking business. The commercial banking activities include products and services for individuals and SMEs, such as personal and corporate loans, deposit-taking, employee payroll accounts for corporate customers, credit and debit cards and overdraft facilities.

Global Wholesale Banking: this segment reflects the returns on the Corporate Banking business, those on Investment Banking and Markets in Argentina, including all the managed treasury departments and the equities business. The global wholesale banking activities include products and services for our corporate customers, such as investment banking and project finance.

·	Financial Management: this segment includes the centralized management business relating to financial investments.

The Bank does not have any customers that individually accounted for 10% or greater of its interest and similar income for three-month periods ended March 31, 2011 and 2010.

The unaudited condensed consolidated statements of income and other significant data are as follows:

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

For the three-month period ended March 31, 2011 (unaudited)	Commercial Banking	Global Wholesale Banking	Financial Management	Unallocated Amounts	Total
NET INTEREST INCOME	523,938	111,367	(6,204)	-	629,101
Income from equity instruments	1,800	-			1,800
Share of results of entities accounted for using the equity method	-	1,272			1,272
Net fee and commission income	396,695	27,626			424,321
Gains/losses on financial assets and liabilities	30,805	31,479	516		62,800
Other operating income/(expenses)	(11,609)	(2,943)			(14,552)
TOTAL INCOME	941,629	168,801	(5,688)	-	1,104,742
Personnel expenses	(236,818)	(20,834)	(1,239)		(258,891)
Other administrative expenses	(210,032)	(22,828)	(670)		(233,530)
Depreciation and amortization of tangible and intangible assets	(34,694)	(4,395)	(161)		(39,250)
Net impairment losses on financial assets	(60,259)	(382)			(60,641)
Provisions (net)	(17,259)				(17,259)
PROFIT/(LOSS) FROM OPERATIONS	382,567	120,362	(7,758)	-	495,171
Other non-financial gains/(losses)	9,849				9,849
PROFIT/(LOSS) BEFORE TAX	392,416	120,362	(7,758)	-	505,020
Income tax				(137,438)	(137,438)
PROFIT FROM ORDINARY ACTIVITIES					367,582
CONSOLIDATED PROFIT FOR THE PERIOD					367,582
Profit attributable to the Parent					367,572
Attributable to non controlling interest				10	10

As of March 31, 2011 (unaudited)	Commercial Banking	Global Wholesale Banking	Financial Management	Unallocated Amounts	Total
Cash and balances with the Argentine Central Bank	5,911,185	1,550,833	1,732,254		9,194,272
Financial assets held for trading		698,735	1,806,271		2,505,006
Available-for-sale financial assets		22,369	570,784		593,153
Loans and receivables	16,312,432	5,276,722	628,260		22,217,414
Investments	39,127	8,908			48,035
Tangible assets	761,641	31,351			792,992
Intangible assets	97,019	7,144			104,163
Tax assets				344,830	344,830
Other assets	363,993	88,705			452,698
Total assets	23,485,397	7,684,767	4,737,569	344,830	36,252,563

Financial liabilities held for trading		5,695			5,695
Financial liabilities at amortized cost	25,616,823	5,999,819	236,026		31,852,668
Provisions	132,667	32,668			165,335
Tax liabilities				516,788	516,788
Other liabilities	279,725	31,323			311,048
Total liabilities	26,029,215	6,069,505	236,026	516,788	32,851,534

Total Equity				3,401,029	3,401,029
Total liabilities and equity				36,252,563	36,252,563
Shareholders ´equity attributed to the Parent				3,399,886	3,399,886
Non controlling interest				1,143	1,143

F-21

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

For the three-month period ended March 31, 2010 (unaudited)	Commercial Banking	Global Wholesale Banking	Financial Management	Unallocated Amounts	Total
NET INTEREST INCOME	418,571	98,288	16,839	-	533,697
Income from equity instruments	1,228	8			1,236
Net fee and commission income	293,889	35,699			329,588
Gains/losses on financial assets and liabilities	31,301	38,969	12,630		82,900
Other operating income/(expenses)	(4,202)	(927)			(5,129)
TOTAL INCOME	740,787	172,037	29,468	-	942,292
Personnel expenses	(164,692)	(16,648)	(538)		(181,878)
Other administrative expenses	(158,237)	(23,272)	(416)		(181,925)
Depreciation and amortization of tangible and intangible assets	(27,607)	(4,152)	(177)		(31,936)
Net impairment losses on financial assets	(71,921)	287			(71,634)
Provisions (net)	(22,716)				(22,716)
PROFIT FROM OPERATIONS	295,614	128,252	28,337	-	452,203
Net impairment losses on non-financial assets	(6)	(1)			(7)
Other non-financial gains/(losses)	25				25
PROFIT BEFORE TAX	295,633	128,251	28,337	-	452,221
Income tax				(143,253)	(143,253)
PROFIT FROM ORDINARY ACTIVITIES					308,968
CONSOLIDATED PROFIT FOR THE PERIOD					308,968
Profit attributable to the Parent					308,946
Attributable to non controlling interest				22	22

As of December 31, 2010 (audited)	Commercial Banking	Global Wholesale Banking	Financial Management	Unallocated Amounts	Total
Cash and balances with the Argentine Central Bank	4,318,464	1,042,921	2,693,198	-	8,054,583
Financial assets held for trading	-	387,922	2,556,905	-	2,944,827
Available-for-sale financial assets	-	28,172	663,797	-	691,969
Loans and receivables	15,310,201	4,834,525	376,826	-	20,521,552
Investments	37,809	8,954	-	-	46,763
Tangible assets	726,626	29,856	-	-	756,482
Intangible assets	99,426	7,201	-	-	106,627
Tax assets	-	-	-	344,679	344,679
Other assets	302,074	73,756	-	-	375,830
Total assets	20,794,600	6,413,307	6,290,726	344,679	33,843,312

Financial liabilities held for trading	-	7,058	-	-	7,058
Financial liabilities at amortized cost	23,828,816	4,848,229	207,578	-	28,884,623
Provisions	127,272	31,614	-	-	158,886
Tax liabilities	-	-	-	506,864	506,864
Other liabilities	336,371	45,889	-	-	382,260
Total liabilities	24,292,459	4,932,790	207,578	506,864	29,939,691

Total Equity	-	-	-	3,903,621	3,903,621
Total liabilities and equity	-	-	-	33,843,312	33,843,312
Shareholders ´equity attributed to the Parent	-	-	-	3,902,380	3,902,380
Non controlling interest	-	-	-	1,241	1,241

F-22

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

13.	Related party transactions

The Argentine Corporate law and BCRA regulations require that our balances with related parties should be on a market basis, that is, on similar terms to those customarily prevailing in the market. The Bank is required to compare the terms of any such transaction to those prevailing in the market at the date the transaction is entered into.

The parties related to the Bank are deemed to include, in addition to its subsidiaries, associates and jointly controlled entities, the Bank’s key management personnel, as well as all individuals who are related to them by a family relationship of up to the second degree by blood and/or first degree by marriage, and the entities over which the key management personnel may exercise significant influence or control.

Management compensation

Members of the Board of Directors´ and Executive Board’s compensation are as follows:

	At March 31,
	2011	2010
	(unaudited)
Fixed compensation	2,992	2,499
Variable compensation	19,545	17,864
	22,537	20,363

Management´s variable compensation

The Bank has acceded to a variable compensation plan launched by Banco Santander Spain and for a number of officials of the Bank to continue with the policy of permanent stimulus driven in 2008. The Plan is implemented through the granting of a determined number of shares of Banco Santander Spain, according to the previous compliance a series of commercial and institutional objectives.

Pension plan

During the first quarter of 2011 there were no changes in the pension plan as compared with the information reported in Note 38 c) to the consolidated financial statements for the year ended December 31, 2010.

Share-based payments

In the first quarter of 2011 there were no significant changes in the share-based plan as compared with the information reported in Note 38 b) to the consolidated financial statements for the year ended December 31, 2010.

However, in order to attract and retain highly qualified and capable professionals and to promote the success of its business, the Board of Directors may establish a multi-year incentive share plan or a series of share plans payable in the Bank´s Class B shares, within the framework approved at the Shareholders’ Meeting held on March 16, 2011.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

The Bank may establish incentive share plans that include directors, executive officers, certain employees and/or all employees. Award amounts may be determined based on individual performance, total shareholder return and earnings per share growth, or other factors pursuant to the terms determined for the respective share plan. Incentive share plans under consideration may award shares, warrants, restricted shares, restricted share units and performance awards, or a combination thereof, as determined by the Board of Directors.

The maximum number of shares issuable pursuant to the incentive share plans under consideration will be no more than 2.8 million Class B shares, which is less than 0.3% of the Bank´s outstanding capital stock on the date of these interim financial statements.

Loans

The loans granted to key personnel amounts to 6,545 and 6,483 as of March 31, 2011 and December 31, 2010 respectively. They were made on substantially in the same terms, for comparable transactions with other persons. These loans are all on a market basis.

Balances and transactions with related parties

The following table presents information on balances and transactions with related parties whose financial statements are not consolidated with the Bank´s financial statements.

	As of March 31, 2011 (unaudited)			As of December 31, 2010 (audited)
	Associates	Parent	Other Related-Party	Associates	Parent	Other Related-Party
Assets
Loans and receivables	-	50,694	7,731	-	35,404	1,200
Banco Santander S.A.	-	50,694	-	-	35,404	-
Santander Río Asset Management Gerente FCI S.A.	-	-	1,215	-	-	1,200
Santander Investment Securities Inc.	-	-	3,242	-	-	-
Portal Universia Argentina S.A.	-	-	359	-	-	-
Santander Río Servicios S.A.	-	-	554	-	-	-
Other	-	-	2,361	-	-	-

Liabilities
Financial liabilities at amortized cost - Other financial liabilities	-	806,802	38,382	-	20,786	1,581
Banco Santander S.A.	-	107,362 (1)	-	-	20,786	-
Administración de Bancos Latinoamericanos Santander S.L.	-	633,520 (1)	-	-	-	-
BRS Investment S.A.	-	-	29,120	-	-	-
Santander Overseas Bank Inc.	-	65,920 (1)	-	-	-	-
Other	-	-	9,262	-	-	1,581

(1) Correspond mainly to dividends declared but not paid.

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

	As of March 31, 2011 (unaudited)			As of December 31, 2010 (audited)
	Associates	Parent	Other Related-Party	Associates	Parent	Other Related-Party
Financial liabilities at amortized cost - Customer deposits	114,457	-	48,999	105,891	1,171	63,513
Banco Santander S.A.	-	-	-	-	1,171	-
BRS Investments S.A.	-	-	21,188	-	-	20,686
Gire S.A.	114,457	-	-	105,700	-	-
Isban Argentina S.A.	-	-	5,842	-	-	18,815
Santander Río Seguros S.A.	-	-	12,379	-	-	13,584
Santander Merchant S.A.	-	-	5,277	-	-	5,168
Other	-	-	4,313	191	-	5,260

Financial liabilities at amortized cost – Marketable debt securities	-	-	3,008	-	-	3,069
Santander Río Seguros S.A.	-	-	3,008	-	-	3,069

Software Purchases	-	-	47,685	-	-	57,667
Isban Argentina S.A.	-	-	44,178	-	-	54,976
Isban Chile S.A.	-	-	1,685	-	-	2,009
Other	-	-	1,822	-	-	682

	For the three-month period ended March 31, 2011 (unaudited)			For the three-month period ended March 31, 2010 (unaudited)
	Associates	Parent	Other Related-Party	Associates	Parent	Other Related-Party
Income and Expense
Interest and similar income	-	1	74	-	-	5
Santander Río Seguros S.A.	-	-	46	-	-	-
Santander Río Servicios S.A.	-	-	28	-	-	5
Other	-	1	-	-	-	-

Interest expense and similar charges	2,391	64	652	1,030	200	220
Banco Santander S.A.	-	64	-	-	200	-
Gire S.A.	2,391	-	-	1,030	-	-
BRS Investments S.A.	-	-	530	-	-	202
Santander Río Seguros S.A.	-	-	-	-	-	-
Other	-	-	122	-	-	18

Fee and commission income	-	-	50,489	-	-	23,547
Santander Río Seguros S.A.	-	-	42,920	-	-	20,325
Santander Río Asset Management Gerente FCI S.A.	-	-	4,120	-	-	3,044
Santander Investment Securities Inc.	-	-	3,242	-	-	-
Gire S.A.	-	-	196	-	-	-
Other	-	-	11	-	-	178

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

	For the three-month period ended March 31, 2011 (unaudited)			For the three-month period ended March 31, 2010 (unaudited)
	Associates	Parent	Other Related-Party	Associates	Parent	Other Related-Party
Fee and commission expense	-	-	-	-	-	18,089
Santander Río Seguros S.A.	-	-	-	-	-	18,089

Administrative expenses	-	-	18,546	-	-	22,238
Isban Argentina S.A.	-	-	10,231	-	-	11,927
Santander Río Servicios S.A.	-	-	1,838	-	-	10,072
Isban S.A.	-	-	3,179	-	-	-
Isban Mexico S.A.	-	-	1,844	-	-	-
Aquanima Argentina S.A.	-	-	1,024	-	-	-
Other	-	-	430	-	-	239

Contingent liabilities	-	57,407	18,890	-	-	9,687
Banco Santander S.A.	-	57,407	-	-	-	8,335
Banco Santander Chile S.A.	-	-	13,262	-	-	-
Santander Río Seguros S.A.	-	-	4,068	-	-	-
Other	-	-	1,560	-	-	1,352

14.	Other disclosures

a) Notional amounts and market values of trading and hedging derivatives

The breakdown of the notional and/or contractual amounts and the market values of the trading derivatives held by the Group is as follows:

	03/31/2011 (unaudited)		12/31/2010 (audited)
	Notional Amount	Market Value	Notional Amount	Market Value
Trading derivatives:
Interest rate risk-
Interest rate swaps	372,927	2,599	338,573	3,280
Foreign currency risk-
Forward rate agreements	1,076,039	10,979	1,218,635	23,769
Currency swaps	149,612	4,294	163,952	6,680
Securities and commodities derivatives	6,701	52	3,790	379
	1,605,279	17,924	1,724,950	34,108

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BANCO SANTANDER RÍO S.A.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2011 AND 2010 AND AT DECEMBER 31, 2010

(thousands of pesos)

b) Off-balance-sheet funds under management

i)	Assets under management

As indicated in Note 43 b) to the consolidated financial statements for the year ended December 31, 2010, the Bank is the trustee for some trusts and in no case is the Bank liable with its own assets for the commitments undertaken in the performance of the trusts; such liabilities will only be serviced with and up to the sum of the trust corpus assets and the proceeds from such assets.

ii)	Investment funds

As of March 31, 2011 and December 31, 2010, the Bank holds 3,123,045 and 2,577,837, respectively,of items in safekeeping, in its capacity of depositary of mutual funds.

c) Off-balance-sheet third-party items held in custody

At March 31, 2011 and December 31, 2010, the Bank held in custody items including debt securities and equity instruments, among others, for 84,739,087 and 86,765,151, respectively.

d) Memorandum accounts

The breakdown of the balances of “Memorandum Accounts” is as follows:

	03/31/2011 (unaudited)	12/31/2010 (audited)
Contingent liabilities:
Financial guarantees
Guarantees promises	226,308	325,106
Doubtful guarantees	375	375
Documentary Credits	60,467	51,649
Other contingent exposures-
Technical guarantees	21,256	22,977
Doubtful liabilities	332	571
Other	32,723	42,162
Total contingent liabilities	341,461	442,840
Commitments:
Loan commitments drawable by third parties	357,044	303,889
Total commitments	357,044	303,889

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	Consolidated Financial Statements in accordance with International Financial Reporting Standards as of December 31, 2010 and 2009 and January 1, 2009 and for each of the two years in the period ended December 31, 2010

Table of Contents

Deloitte & Co. S.R.L.

Florida 234, 5th floor

C1005AAF

de Buenos Aires

Argentina

Phone: (+54-11) 4320-2700

Fax: (+54-11) 4325-8081/4326-7340

www.deloitte.com/ar

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the President and Board of Directors of

Banco Santander Río S.A.

Bartolomé Mitre 480

(1036) Buenos Aires City,

Argentina

We have audited the accompanying consolidated balance sheets of Banco Santander Río S.A. and its subsidiaries (the "Bank") as of December 31, 2010 and 2009 and January 1, 2009, and the related consolidated statements of income, statements of recognized income and expense, changes in total equity, and cash flows for each of the two years in the period ended December 31, 2010. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. The Bank is not required to have, nor were we engaged to perform, an audit of its 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 consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Bank as of December 31, 2010 and 2009 and January 1, 2009, and the results of its operations, changes in total equity and cash flows for each of the two years in the period ended December 31, 2010, in conformity with International Financial Reporting Standards as issued by the International Accounting Standard Board.

Buenos Aires City, Argentina

March 14, 2011

/s/Deloitte & Co. S.R.L.

Carlos B. Srulevich

(Partner)

Deloitte & Co. S.R.L. Registro de Soc. Com. CPCECABA T°1 Folio 3

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

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BANCO SANTANDER RIO S.A.
CONSOLIDATED BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND JANUARY 1, 2009
(Thousands of Pesos)

ASSETS	Note		12.31.2010	12.31.2009	01.01.2009

CASH AND BALANCES WITH THE ARGENTINE CENTRAL BANK		5	8,054,583	7,291,829	5,440,453

FINANCIAL ASSETS HELD FOR TRADING			2,944,827	2,495,486	707,359
Debt instruments		7	2,897,343	2,431,147	680,624
Equity instruments		8	6,318	4,040	1,489
Trading derivatives		9	41,166	60,299	25,246

AVAILABLE-FOR-SALE FINANCIAL ASSETS			691,969	486,762	175,815
Debt instruments		7	663,797	460,272	155,069
Equity instruments		8	28,172	26,490	20,746

LOANS AND RECEIVABLES			20,521,552	14,687,815	15,067,738
Loans and advances to credit institutions		6	1,066,855	883,287	807,384
Loans and advances to customers		10	19,454,697	13,804,528	14,260,354

HEDGING DERIVATIVES		11	-	8	2,353

NON-CURRENT ASSETS HELD FOR SALE		12	-	-	-

INVESTMENTS			46,763	45,952	36,038
Investments in Associates		13	46,763	45,952	36,038

TANGIBLE ASSETS			756,482	604,880	653,637
Property and equipment for own use		14	754,968	604,880	653,637
Investment property		14	1,514	-	-

INTANGIBLE ASSETS			106,627	24,245	-
Goodwill	3 and 15		17,520	-	-
Other intangible assets		16	89,107	24,245	-

TAX ASSETS			344,679	478,725	578,224
Current			44,569	44,907	8,049
Deferred		24	300,110	433,818	570,175

OTHER ASSETS		17	375,830	195,215	121,918

TOTAL ASSETS			33,843,312	26,310,917	22,783,535

The accompanying Notes and Appendixes are an integral part of these consolidated financial statements.

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BANCO SANTANDER RIO S.A.
CONSOLIDATED BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND JANUARY 1, 2009
(Thousands of Pesos)

LIABILITIES AND EQUITY	Note		12.31.2010	12.31.2009	01.01.2009

FINANCIAL LIABILITIES HELD FOR TRADING			7,058	4,889	126,649
Trading derivatives		9	7,058	4,889	126,649

FINANCIAL LIABILITIES AT AMORTISED COST			28,884,623	21,858,101	19,616,132
Deposits from credit institutions		18	241,938	209,915	401,782
Customer deposits		19	26,174,375	19,342,713	16,894,904
Marketable debt securities		20	188,590	258,307	450,434
Other financial liabilities		21	2,279,720	2,047,166	1,869,012

PROVISIONS		22	158,886	269,083	253,863
Legal provisions, taxes and other provisions			157,341	267,538	252,318
Provisions for contingent liabilities and commitments			1,545	1,545	1,545

TAX LIABILITIES			506,864	572,215	348,694
Current			338,230	408,291	203,071
Deferred		24	168,634	163,924	145,623

OTHER LIABILITIES		23	382,260	354,829	339,680

TOTAL LIABILITIES			29,939,691	23,059,117	20,685,018

SHAREHOLDERS' EQUITY		27
Share capital			1,078,875	1,078,875	1,078,875
Reserves			1,155,896	928,372	1,018,372
Profit for the year attributable to the Parent			1,360,258	1,050,524	-

VALUATION ADJUSTMENTS			307,351	192,758	-
Available-for-sale financial assets		26	307,351	192,753	-
Cash flow hedges		26	-	5	-

NON CONTROLLING INTEREST		25	1,241	1,271	1,270

TOTAL EQUITY			3,903,621	3,251,800	2,098,517
TOTAL LIABILITIES AND EQUITY			33,843,312	26,310,917	22,783,535

MEMORANDUM ACCOUNTS:
CONTINGENT LIABILITIES		29	442,840	418,940	372,255
CONTINGENT COMMITMENTS		29	303,889	216,370	335,522

The accompanying Notes and Appendixes are an integral part of these consolidated financial statements.

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BANCO SANTANDER RÍO S.A.
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Thousands of Pesos)

	Note		2010			2009
Interest and similar income		30		3,075,333			3,030,154
Interest expense and similar charges		31		(856,911	)		(1,007,014	)
NET INTEREST INCOME				2,218,422			2,023,140
Income from equity instruments		32		19,449			13,272
Income from companies accounted for using the equity method		13		19,361			15,159
Fee and commission income		33		1,962,353			1,553,998
Fee and commission expense		34		(496,411	)		(374,396	)
Gains (losses) on financial assets and liabilities (net)		35		203,661			105,461
Held for trading				204,686			80,568
Financial instruments not measured at fair value through profit or loss				(1,528	)		-
Other				503			24,893
Exchange differences (net)		36		208,957			215,812
Other operating income		37		12,119			8,578
Other operating expenses		37		(83,146	)		(70,713	)
TOTAL INCOME				4,064,765			3,490,311
Administrative expenses				(1,723,739	)		(1,337,078	)
Personnel expenses		38		(921,066	)		(688,418	)
Other general administrative expenses		39		(802,673	)		(648,660	)
Depreciation and amortization	14 and 16			(151,169	)		(136,514	)
Provisions (net)		22		24,370			(79,517	)
Impairment losses on financial assets (net)				(177,809	)		(408,437	)
Loans and receivables		10		(177,809	)		(408,437	)
Impairment losses on other assets (net)				(162	)		(323	)
Other assets				(162	)		(323	)
Gains/(losses) on disposal of assets not classified as non-current assets held for sale		40		26,666			19,278
Gains/(losses) on disposal of non-current assets held for sale not classified as discontinued operation				510			3,007
OPERATING PROFIT BEFORE TAX				2,063,432			1,550,727
Income taxes		24		(702,921	)		(499,955	)
CONSOLIDATED PROFIT FOR THE YEAR				1,360,511			1,050,772
Profit attributable to the Parent				1,360,258			1,050,524
Profit attributable to non-controlling interests		25		253			248

EARNINGS PER SHARE
Basic earnings per share (Pesos)		4		1.2608			0.9737
Diluted earnings per share (Pesos)		4		1.2608			0.9737

The accompanying Notes and Appendixes are an integral part of these consolidated financial statements.

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BANCO SANTANDER RIO S.A.
CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Thousands of Pesos)

	Equity Attributable to the Parent																Non-controlling Interests			Total Equity
	Shareholders' Equity											Valuation Adjustments		Total
	Share Capital		Reserves			Profit Attributable to the Parent			Total Shareholders' Equity

Balances at January 1, 2009		1,078,875		1,018,372			-			2,097,247			-		2,097,247			1,270			2,098,517

Consolidated profit for the year		-		-			1,050,524			1,050,524			-		1,050,524			248			1,050,772
Other changes in Equity
Dividends		-		(90,000	)		-			(90,000	)		-		(90,000	)		(195	)		(90,195	)
Other recognized income and expense		-		-			-			-			192,758		192,758			(52	)		192,706
Balances at December 31, 2009		1,078,875		928,372			1,050,524			3,057,771			192,758		3,250,529			1,271			3,251,800

Consolidated profit for the year		-		-			1,360,258			1,360,258			-		1,360,258			253			1,360,511
Other changes in Equity
Appropriation of profit for the year		-		1,050,524			(1,050,524	)		-			-		-						-
Dividends		-		(823,000	)		-			(823,000	)		-		(823,000	)		(249	)		(823,249	)
Other recognized income and expense		-		-			-			-			114,593		114,593			(34	)		114,559
Balances at December 31, 2010		1,078,875		1,155,896			1,360,258			3,595,029			307,351		3,902,380			1,241			3,903,621

The accompanying Notes and Appendixes are an integral part of these consolidated financial statements.

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BANCO SANTANDER RIO S.A.
CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Thousands of Pesos)

	2010			2009
CONSOLIDATED PROFIT FOR THE YEAR		1,360,511			1,050,772

OTHER RECOGNIZED INCOME AND EXPENSE		114,559			192,706
Available-for-sale financial assets					-
Valuation adjustments		178,815			296,462
Amounts transferred to income statement		(1,668	)		-
Cash flow hedges
Valuation adjustments		-			7
Amounts transferred to income statement		(4	)		-
Income taxes		(62,584	)		(103,763	)
TOTAL RECOGNIZED INCOME AND EXPENSE		1,475,070			1,243,478

Attributable to the Parent		1,474,851			1,243,282
Attributable to non-controlling interests		219			196
TOTAL		1,475,070			1,243,478

The accompanying Notes and Appendixes are an integral part of these consolidated financial statements.

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BANCO SANTANDER RIO S.A.
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Thousands of Pesos)
	2010			2009
1. CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit for the year		1,360,511			1,050,772

Adjustments to profit		(89,142	)		216,877
Depreciation of tangible assets		82,603			80,521
Amortization of intangible assets		68,566			55,993
Impairment losses on other assets (net)		162			323
Provisions (net)		(24,370	)		79,517
Impairment losses on financial assets (net)		177,809			408,437
Income from companies accounted for using the equity method		(19,361	)		(15,159	)
Gains on disposal of assets not classified as non-current assets held for sale		(26,666	)		(19,278	)
Gains on disposal of non-current assets held for sale not classified as discontinued operation		(510	)		(3,007	)
Changes in deferred tax assets and liabilities		(138,418	)		(154,658	)
Exchange differences (net)		(208,957	)		(215,812	)
Net (increase) decrease in operating assets:		(6,514,745	)		(2,006,103	)
Financial assets held for trading		(449,342	)		(1,788,127	)
Available-for-sale financial assets		(90,615	)		(118,189	)
Loans and receivables		(5,795,018	)		(28,512	)
Other assets		(179,770	)		(71,275	)
Net increase (decrease) in operating liabilities:		6,784,688			2,769,738
Financial liabilities held for trading		2,169			(121,760	)
Financial liabilities at amortized cost		6,524,978			2,443,329
Other liabilities		257,541			448,169
Total net cash flows provided from operating activities		1,541,312			2,031,284

2. CASH FLOWS FROM INVESTING ACTIVITIES
Investments		(34,297	)		(137,235	)
Tangible assets		(222,226	)		(56,997	)
Intangible assets		(114,223	)		(80,238	)
Net cash inflow on acquisition of a business		302,152			-
Divestments		55,867			52,710
Tangible assets		37,351			47,517
Associates and non-controlling		18,516			5,193
Total net cash flows provided from / (used by) investing activities		21,570			(84,525	)

3. CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid		(822,468	)		(90,110	)
Issuance of marketable debt securities		184,300			-
Redemption of marketable debt securities		(253,580	)		(201,360	)
Total net cash flows used by financing activities		(891,748	)		(291,470	)

EFFECT OF FOREIGN EXCHANGE RATE CHANGES		91,620			196,087

NET INCREASE IN CASH AND CASH EQUIVALENTS		762,754			1,851,376

Cash and cash equivalents at beginning of year		7,291,829			5,440,453
Cash and cash equivalents at end of year		8,054,583			7,291,829

Non cash transaction:
Dividends declared but not paid		781			85
Swap of Guaranteed loans for Securities		-			663,735
Assets and liabilities acquired on BNP Paribas Argentine Branch´s business combination		597,534			-

Supplemental information:
Interest received		2,750,265			2,814,609
Interest paid		870,037			1,037,014
Income Taxes paid		449,061			358,528

The accompanying Notes and Appendixes are an integral part of these consolidated financial statements.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Notes to the consolidated financial for the years ended December 31, 2010 and 2009 and at January 1, 2009

1.	Introduction, basis of presentation of the consolidated financial statements and other information

a)	Introduction

The Bank is indirectly controlled by Banco Santander, S.A. with headquarters in Spain (“Banco Santander Spain”). To date, Banco Santander Spain owns, directly and through Administración de Bancos Latinoamericanos Santander S.L. (ABLASA) and other Banco Santander Spain Group companies, classes “A”, “B” and “Preferred” shares of Banco Santander Río S.A.; such shares represent 99.30% of the capital stock equivalent to 99.35% of votes.

b)	Basis of presentation of the consolidated financial statements

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

The consolidated financial statements were authorized for issue by the Board of Directors as of March 14, 2011.

The Bank’s accounting policies used to prepare these consolidated financial statements have changed to comply with IFRS. The transition to IFRS is accounted for in accordance with IFRS 1, “First-time Adoption of International Financial Reporting Standards”, with January 1, 2009 as the date of transition. The changes in accounting policies as consequence of the transition to IFRS and the reconciliation of the effects of the transition to IFRS are presented in Note 47. The Bank prepared its opening balance sheet at January 1, 2009, by applying the accounting policies and rules and the measurement bases described in Note 2, with the exemption, as permitted by IFRS 1 and described in Note 47.

The statutory financial statements have been prepared in accordance with accounting principles established by Argentine Corporate Law and standards established by the Argentine Central Bank (“BCRA”). Hereinafter such standards shall be referred to as “Argentine Banking GAAP”.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Note 47 also includes the reconciliation between Argentine Banking GAAP and IFRS of the consolidated balance sheet balances as of December 31, 2009 and statements of income and cash flow for the year ended December 31, 2009.

Notes and Appendixes to the consolidated financial statements contain supplementary information to that presented in the consolidated balance sheets, consolidated statements of income, consolidated statements of changes in total equity, consolidated statements of recognized income and expense and consolidated statements of cash flow. The Notes provide, in a clear, relevant, reliable and comparable manner, narrative descriptions and breakdowns of these consolidated financial statements.

All accounting policies and measurement bases with effect on the consolidated financial statements were applied in their preparation.

Adoption of new standards and interpretations

The following modifications to the IFRS or their interpretations (“IFRIC”), further described below, came into force in 2010. Their adoption in the Group has not had a material impact on these consolidated financial statements.

-	IFRS 2 Amended – “Share-based payment”

The IASB published an amendment to IFRS 2 - "Share-based payment" on how a subsidiary should to account, in its individual financial statements, for share-based payment arrangements of the group (for both creditors and employees) in the event the payment is made with another Group subsidiary or the parent company.

The amendments clarify that the entity receiving the goods and services in a share-based payment transaction must, in its financial statements, account for goods and services in accordance with IFRS 2, regardless of which entity within the group makes the payment or of the payment being made is in shares or in cash.

Furthermore, the contents of IFRIC 8 - "Scope of IFRS 2” and IFRIC 11- “Group and Treasury Share Transactions" are incorporated into IFRS 2, thus nullifying them.

-	IFRS 3 Revised – Business combinations, and Amendment to IAS 27 - Consolidated and separate financial statements

The amendments to IFRS 3 and IAS 27 represent some significant changes to various aspects related to accounting for business combinations. They generally place more emphasis on using the fair value. Some of the main changes are: acquisition costs will be recognized as expense instead of the current practice of considering them as a part of the cost of the business combination; acquisitions achieved in stages, in which at the date of acquisition the acquirer should remeasure its previously held equity interest in the acquiree at fair value or the option of measuring the non-controlling interests in the acquired company at fair value, instead of the current practice of only measuring the proportional share of the fair value of the acquired net assets.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

-	IAS 39 Amended – “Financial instruments: Recognition and valuation. Eligible hedged items”

The amendment to IAS 39 introduces new requirements on eligible hedged items.

The amendment stipulates that:

• Inflation may not be designated as a hedged item unless it is identifiable and the inflation portion is a contractually specified portion of cash flows of an inflation-linked financial instrument, and the rest of the cash flows are not affected by the inflation-linked portion.

• When changes in cash flows or the fair value of an item are hedged above or below a specified price or other variable (a one-side risk) via a purchased option, the intrinsic value and time value components of the option must be separated and only the intrinsic value may be designated as a hedging instrument.

-	IFRIC 17 – “Distributions of non-cash assets to owners”

This new interpretation stipulates that all distributions of non-cash assets to owners must be valued at fair value, clarifying that:

• The dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity.

• An entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss.

STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE AS OF DECEMBER 31, 2010

The Group has not yet adopted the following new or revised IFRS or Interpretations, which have been issued but their effective date is subsequent to the date of these consolidated financial statements. The Group does not expect the adoption of the below-mentioned standards and interpretations to have a material effect on the consolidated financial statements taken as a whole, with the exception of IFRS 9, whose impact has not been analyzed to date.

-	IAS 24 Revised – “Related party disclosures”

This amendment to IAS 24 refers to the disclosures of related parties in the financial statements. There are two main new features. One of them introduces a partial exemption for some disclosures when the relationship is with companies that depend on or are related to the State (or an equivalent governmental institution) and the definition of related party is revised, establishing some relations that were not previously explicit in the standard.

This amendment will apply for years beginning after January 1, 2011. Early adoption is permitted.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

-	IAS 32 Amended – “Financial instruments: Presentation - Classification of preferred subscription rights”

The amendment to IAS 32 clarifies the classification of preferred subscription rights (instruments that entitle the holder to acquire instruments from the entity at a fixed price) when they are in a currency other than the issuer's functional currency. The proposed amendment establishes that the rights to acquire a fixed number of own equity instruments for a fixed amount will be classified as equity regardless of the currency of the exercise price and whether the entity gives the tag-along rights to all of the existing shareholders (in accordance with current standards they must be posted as liability derivatives).

This amendment will apply for years beginning after February 1, 2010. Early adoption is permitted.

-	IFRIC 14 Amended – “Prepayment of Minimum Funding Contributions”

The amendment to IFRIC 14 corrects the fact that, under the current IFRIC 14, in certain circumstances it is not permitted to recognize some prepayments of minimum funding contributions as assets.

This amendment will apply for years beginning after January 1, 2011. Early adoption is permitted.

-	IFRIC 19- “Settlement of financial liabilities through equity instruments”

In the current market situation, some entities are renegotiating conditions regarding financial liabilities with their creditors. There are cases in which creditors agree to receive equity instruments that the debtor has issued to cancel part or all of the financial liabilities. IFRIC 19 clarifies the posting of these transactions from the perspective of the issuer of the instrument, and states that these securities must be valued at fair value.

If this value cannot be calculated, they will be valued at the fair value of the cancelled liability. The difference between the cancelled liability and the issued instruments will be recognized in the income statement.

This amendment will apply for years beginning after July 1, 2010. Early adoption is permitted.

-	IFRS 9 – “Financial Instruments”

On October 28, 2010, the IASB issued amendments to IFRS 9. The amendments address the accounting for financial liabilities, specifically volatility in the statement of income arising from measuring debt at fair value.

On November 12, 2009, the IASB published IFRS 9 – Financial Instruments as the first stage of its plan to replace IAS 39 – Financial Instruments: Recognition and Valuation.

IFRS 9, which introduces new requirements for the classification and valuation of financial assets and liabilities, is mandatory from January 1, 2013 onwards, although early adoption is permitted from December 31, 2009 onwards.

The Group has decided not to adopt IFRS 9 for the time being.

-	IFRS 7 Amended – Disclosures – Transfers of Financial Assets

The amendments to IFRS 7 modify the disclosures that have to be presented on transfers and derecognition in the balance sheets of financial assets.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

IFRS 7 as amended establishes that entities that transfer financial assets must disclose information that enables people to a) understand the relationship between the transferred financial assets that are derecognized in their entirety and the associated liabilities; and b) evaluate the nature of, and the risks associated with, the entity’s continuing involvement in transferred and derecognized financial assets.

Additional disclosures are required for asset transfer transactions when the transfers have not been uniform throughout the reporting period.

This amendment will apply annually beginning after July 1, 2011. Early adoption is permitted.

IAS 12 Amended – Income Taxes – Deferred Taxation: Recovery of Underlying Assets

The IAS 12 establishes that the deferred tax assets and liabilities will be calculated by using the tax base and the tax rate corresponding according to the form in which the entity expects to recover or cancel the corresponding asset or liability: by the use of the asset or by its sale.

The IASB has published a modification to IAS 12 – Deferred Taxes. This includes the assumption when calculating the assets and liabilities for deferred taxes that the recovery of the underlying asset will be carried out through its sale in investment property valued at fair value under NIC 40 Investment Property. However, an exception is admitted if the investment is depreciable and is managed according to a business model whose objective is to use the profits from the investment over time, and not from its sale.

At the same time, IAS 12 includes the content of SIC 21 Deferred Taxes – Recovery of revalued non depreciable assets, which is withdrawn.

This amendment should be applied retrospectively for annual periods beginning on January 1, 2012. Early adoption is permitted.

c)	Accounting Estimates

The consolidated results and the determination of consolidated equity are sensitive to the accounting policies, measurement basis and estimates used by the Directors of the Group in preparing the consolidated financial statements. Accounting estimates are made in order to quantify certain assets, liabilities, income, expenses and commitments reported herein.

These estimates relate basically to the following:

-	Fair value measurement of certain financial instruments (see Notes 2 d) iii and 43 f));

-	The allowance for loan losses (see Note 10);

-	The impairment losses on certain assets other than loans (including goodwill and other intangible assets) (see Notes 15 and 16);

-	The recognition and measurement of deferred tax items (see Note 24).

-	The recognition and measurement of certain contingencies (see Note 22).

d)	Capital management

In July 1988, the Basel Committee on Banking Regulations and Supervisory Practices (the “Basel Committee”), which includes the supervisory authorities of twelve major industrial countries, adopted an international framework (the “Basel Accord”) for capital measurement and capital standards of banking institutions.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The Basel Accord established a risk asset ratio as the principal measure of capital adequacy. The framework provides:

Definitions for Tier I (core) capital (“Tier I Capital”) and Tier II (supplemental) capital (“Tier II Capital”),

A system for weighing assets and off-balance sheet items according to credit risk (this weighted total referred to as the “Basel Risk Weighted Assets”), and

As of the end of 1992, a requirement that banks engaged in international operations maintain

(1)

Tier I Capital at least equal to 4.0% of Basel Risk Weighted Assets; and

(2)

“Total Capital,” equal to Tier I Capital plus up to an equal amount of Tier II Capital, at least equal to 8.0% of Basel Risk Weighted Assets.

In June 2004, the Basel Banking Supervision Committee published the “International convergence of capital measures and rules. “Revised framework” document (“Basel II” or the “New Framework”), which establishes new criteria for determining the regulatory capital of financial entities. The new Framework has an integral vision for the treatment of risks assumed by the entities and at the same time offers greater flexibility with a variety of approaches for measuring regulatory capital. Basel II is structured into three Tiers, the first referred to minimum capital requirements and the second to the supervisor’s revision process and the third deals with market discipline.

With respect to the minimum capital requirements of Tier I, the BCRA has adopted the Simplified Standardized Approach for credit risk, which was become effective as of January 2010. As mentioned in its publication “Route sheet for implementing Basel II,” the BCRA considers that such approach will not imply major modifications or variations in the calculation, or in the global capital requirement for financial entities. As far as the capital requirement for Operational Risk is concerned, the BCRA deems it convenient to continue analyzing the available measuring alternatives in order to identify the one that can be best applied –in its own view- to the local financial system; in spite of which it will encourage the adoption of good practices regarding the administration of this risk. In addition, the BCRA will maintain the scheme for calculating the capital requirement for market risk, which is in line with the provisions set forth by the Basel Committee in 1996, in respect of which no amendments were introduced by Basel II, as well as the capital requirement for interest rate risk, which is incorporated by Basel II within the risks to be quantified in Tier II. The BCRA also foresees the adoption of measures to fully implement Tiers II and III of the New Framework, on a gradual basis and prior to the full enforcement of the capital requirements contained in Tier I, as established by the good practices suggested by the Basel Committee for a healthy implementation of the New Framework.

It should be noted that ratios described below are calculated considering balances accounted for under Argentine Banking GAAP.

Minimum Capital Requirements

Financial entities in Argentina must comply with BCRA rules related to minimum capital requirements. The minimum capital on the last day of each month should equal to the greater of a basic requirement and the total amount of the requirements in respect of credit risks and interest rate, which are based on methodology proposed in 1988 by the Basel Committee on Banking Supervision. In 1995, these guidelines were extended to cover market risks. In October 1998, the BCRA established an additional minimum capital requirement, based on a bank’s interest rate gaps, effective July 1, 1999.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Through Communication “A” 3959 dated June 2, 2003, the BCRA established minimum capital requirements for financial institutions with the following key provisions:

an 8% requirement on risk-weighted assets, consistent with international standards set by the Basel Committee;

equal percentage requirements for exposure of financial institutions to the private and public sectors;

elimination of the requirement that capital increase as a function of interest rates on loans;

introduction of a requirement established to cover the risk inherent in mismatches between the rate of inflation and market interest rates;

capital adequacy requirements to cover market and interest rate risks, designed to incorporate the dollar as well as adjustments by the CER (Stabilization Coefficient or Coeficiente de Estabilización de Referencia, a consumer price inflation coefficient calculated by BCRA );

adjustment risk weightings to take into account, among other factors, the changes introduced in late March 2003 regarding the treatment of public sector assets.

On July 25, 2003, the BCRA added to the regime described above, requiring that financial institutions verify their compliance with the regulations regarding minimum capital requirements. As of the date of these consolidated financial statements, the Group complies with the minimum capital requirements currently required by the BCRA.

Basic Minimum Capital

Pursuant to BCRA Communication A 5168 dated December 30, 2010, the BCRA 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.

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)	50,000; 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 lower than 15,000.

Counterpart Risk

The capital requirement for counterpart risk is defined as:

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

The required capital to assets-at-risk ratio is (“a”) 10% for fixed assets (Ais) and 8% (“r”) for loans (Vrf), other claims from financial intermediation and other financing (Vrani). The same ratio (8%) (“c”) is applied to public-sector loans (Fspn). The “INC” variable refers to incremental minimum capital requirements originated in excesses in other technical ratios (fixed assets, credit risk diversification and rating and limitations on transactions with related customers). The “IP” variable refers to the incremental originated in the general limit extension of the negative foreign currency net global position.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

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		Weightiness
Cash and DVE from banks		0-20%
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%
Assets subject to financial leasing		50%-100%
Other assets		0%-100%
Guarantees and contingent liabilities		0%-100%

Minimum capital requirements also depend on the CAMEL (capital (C), asset quality (A), management (M), earnings (E), and liquidity (L)) rating (1 strongest, 5 weakest) assigned by Superintendence of Financial and Exchange Institutions, 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 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 may treat 50% of demand deposits as long-term maturities (in the case of financial entities with a 3 rating, the assigned maturity cannot exceed 3 years).

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

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 is considered up to the first rate adjustment date.

Market Risk

Overall capital requirements in relation to market risk are 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 U.S. dollar has been included as a risk factor for the calculation of the market risk requirement, considering all assets and liabilities in that currency.

Consequences of a Failure to Meet Minimum Capital Requirements

In the event of non-compliance with capital requirements by an existing financial institution, BCRA Communication A 4771 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

(ii)

noncompliance detected by the Superintendence: the institution must file its defense within 30 calendar days after being served notice by the Superintendence. 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.

Regulatory Capital

Pursuant to the BCRA’s regulations, a bank’s Regulatory Capital is calculated as:

(i)

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

	(ii)	Supplementary capital, which may not exceed the minimum core capital and includes, among others, the following: (a) debt securities contractually subordinated to all other liabilities not computable as core capital, with an average initial maturity of at least five years and which were issued under certain conditions and requirements; plus (b) amounts of reserve funds applied to the payment of interest on subordinated debt securities before December 31, 2012, and as from such date, also those amounts which have not been used, provided they exceed certain limits; plus or minus (c) 100% of net earnings or losses recorded through the most recent audited quarterly financial statements; plus or minus (d) 100% of net earnings or losses for the current year as of the date of the most recent quarterly financial statement; plus or minus (e) 50% of profits or 100% of losses, from the most recent audited quarterly or annual financial statements; minus (f) 100% of losses not shown in the financial statements, arising from quantification of any facts and circumstances reported by the auditor; and plus or minus (g) 50% of loan loss provisions on the loan portfolio classified as “normal” or “normal performance”; minus

	(iii)	Items to be deducted, which include, among others: (a) participation in other financial entities; (b) securities deposited with custodians that are not registered; (c) securities issued by foreign governments with ratings under the rating of the Argentine government; (d) correspondent positive balances with foreign financial institutions with ratings below “investment grade”; (e) unregistered ownership over real property; (f) goodwill; (g) incorporation and development expenses; and (h) provisioning deficiencies as determined by the Superintendence in Argentina.

Financial institutions (together with their branches in Argentina and abroad) must comply with minimum capital requirements both on an individual and a consolidated basis.

The minimum capital requirement for credit risk is the sum of:

(a)

10% of the value of our fixed or illiquid assets;

(b)

8% of the value of certain categories of financial or liquid assets, net of certain allowances and reserves, multiplied by a coefficient based on the perceived risk of such assets; and

(c)

8% of certain assets of the non-financial public sector as accounted for in investment accounts or under special valuation criteria determined by the BCRA.

The sum of (a), (b) and (c) shall then be multiplied by a second coefficient ranging from 0.970 to 1.15 based on the rating that the Superintendence grants to the bank based on the its net worth, asset quality, management, profitability and liquidity. To determine a bank’s risk-weighted assets, the BCRA has assigned to each category of liquid asset a risk value based on the type of asset, borrower, collateral or guarantee, if any. For example, consider the risk values assigned to the following assets:

	·	cash, gold, public securities subject to minimum capital requirements for market risk, and debt instruments issued by the BCRA were assigned a 0% risk value;

	·	correspondents’ accounts and other demand accounts with banks of the country and abroad rated as “investment grade” and bonds issued by governments of member countries of the Organization of Economic Cooperation and Development (“OECD”), which are internationally rated “AA” or higher, were assigned a 20% risk value;

	·	debt instruments issued by Argentine provinces, municipalities or other public sector agencies, which are not expressly guaranteed by the national government, were assigned a 100% risk value;

	·	loans to the non-financial private sector with preferred guarantees in cash, gold or bonds on fixed-term deposit certificates issued by the creditor entity itself and with automatic reimbursements for

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

		export transactions corresponding to multilateral and bilateral foreign trade agreements were assigned a 0% risk value;
	·	loans to the non-financial private sector with preferred guarantees granted by mutual guarantee companies registered with the BCRA, export credit insurance policies and documentary credits in use were assigned a 50% risk value;

	·	purchase money, home mortgage loans and automobile-backed loans were assigned a 50% risk value, provided they do not exceed 75% of their appraisal value;

	·	the amount of a loan exceeding 75% of their appraisal value and most unsecured loans and debt instruments as well as holdings of listed stock were assigned a 100% risk value; and

	·	loans to the non-financial public sector not guaranteed by the national government were assigned a 100% risk value.

As of December 31, 2010 and 2009 and as of January 1, 2009, the Bank complied with all the capital requirements explained above.

e) Environmental impact

In view of the business activities carried on by the Group, the Group does not have any environmental liability, expenses, assets, provisions or contingencies that might be material with respect to its consolidated equity, financial position or results. Therefore, no specific disclosures relating to environmental issues are included in these notes to the consolidated financial statements.

f) Events after the reporting period

No significant events occurred in the Group to the date on which these consolidated financial statements were authorized for issue.

2.	Accounting policies

The accounting policies used in preparing the consolidated financial statements were as follows:

a) Foreign currency transactions

The functional currency used for the operations is the Argentine Peso.

As of December 31, 2010 and 2009 and as of January 1, 2009, US dollar assets and liabilities were translated at the benchmark exchange rate of the Argentine Banking GAAP (3.9758, 3.7967 and 3.4537 as of each date); the balances in other foreign currencies were translated using the swap exchange rates communicated by the BCRA’s operating table, at the transaction closing of the last working day of each fiscal year. Foreign transactions are measured at foreign exchange rate at the date of such transactions. Any exchange differences have been credited / charged to income / (loss) of each fiscal year. The Group does not have any foreign operation.

b) Basis of consolidation

i. Subsidiaries

“Subsidiaries” are defined as entities over which the Bank has the capacity to exercise control; this capacity is, in general but not exclusively, presumed to exist when the parent company owns directly or indirectly

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

half or more of the voting power of the investee or, even if this percentage is lower or zero, when, as in the case of agreements with shareholders of the investee, the Bank is granted control. Control is the power to govern the financial and operating policies of an entity, as stipulated by the law, the bylaws or agreement, so as to obtain benefits from its activities.

The financial statements of the subsidiaries are fully consolidated with those of the Bank. Accordingly, all balances and transactions between consolidated entities are eliminated on consolidation.

On acquisition of a subsidiary, its assets, liabilities and contingent liabilities are recognized at fair value at the date of acquisition. Any positive differences between the acquisition cost and the fair values of the identifiable net assets acquired are recognized as goodwill. Negative differences, if any, are charged to income on the date of acquisition.

Additionally, the share of third parties of the Bank’s equity is presented under “Non controlling interests” in the consolidated balance sheet (see Note 25). Their share of the profit for the year is presented under “Profit attributable to non controlling interest” in the consolidated income statement.

The results of subsidiaries acquired during the year are included in the consolidated income statement from the date of acquisition to year-end. Similarly, the results of subsidiaries disposed of during the year are included in the consolidated income statement from the beginning of the year to the date of disposal.

The Appendix 1 contains significant information on these entities.

ii. Associates

“Associates” are entities over which the Bank is in a position to exercise significant influence, but not control or joint control.

In the consolidated financial statements, investments in associates are accounted for using the equity method, i.e. at the Bank’s share of net assets of the investee, after taking into account the dividends received there from and other equity eliminations. In the case of transactions with an associate, the related profits or losses are eliminated to the extent of the Bank’s investment in the associate.

The Appendix 2 contains significant information on these entities.

iii. Special purpose entities

When the Bank incorporates special purpose entities, or holds ownership interests therein, to enable its customers to access certain investments, or for the transfer of risks or other purposes, it determines, using internal criteria and procedures, and taking into consideration the applicable legislation, whether control (as defined above) exists and, therefore, whether these entities should be consolidated. These criteria and procedures take into account, inter alia, the risks and rewards retained by the Bank and, accordingly, all relevant matters are taken into consideration, including any guarantees granted or any losses associated with the collection of the related assets retained by the Bank. These entities include the securitization special purpose vehicles (SPV), which are fully consolidated in the case of the SPVs over which, based on the aforementioned analysis, it is considered that the Bank continues to exercise control.

The Appendix 3 contains significant information on these entities.

iv. Business combinations, acquisitions and disposals

A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses.

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Business combinations are performed whereby the Bank obtains control over an entity are recognized for accounting purposes as follows:

	-	The Bank measures the cost of the business combination, defined as the fair value of the assets given, the liabilities incurred and the equity instruments issued, if any.

	-	The fair values of the assets, liabilities and contingent liabilities of the acquired entity or business, including any intangible assets which might not have been recognized by the acquiree, are estimated and recognized in the consolidated balance sheet.

	-	Any positive difference between the net fair value of the assets, liabilities and contingent liabilities of the acquiree and the cost of the business combination is recognized as Goodwill based on future economic benefits.

In 2010, the Bank was part of a business combination, as further described in Note 3. In 2009 the Bank was not a part of any business combination, acquisition or disposal with third parties.

c)	Definitions and classification of financial instruments

i. Definitions

A “financial instrument” is any contract that gives rise to a financial asset of one entity and, simultaneously, to a financial liability or equity instrument of another entity.

An “equity instrument” is any agreement that evidences a residual interest in the assets of the issuing entity after deducting all of its liabilities.

A “financial derivative” is a financial instrument whose value changes in response to the change in an observable market variable (such as an interest rate, foreign exchange rate, financial instrument price, market index or credit rating), whose initial investment is very small compared with other financial instruments with a similar response to changes in market factors, and which is generally settled at future date.

“Hybrid financial instruments” are contracts that simultaneously include a non-derivative host contract together with a derivative, known as an embedded derivative, that is not separately transferable and has the effect that some of the cash flows of the hybrid contract vary in a way similar to a stand-alone derivative.

The following transactions are not treated for accounting purposes as financial instruments:

	-	Investments in subsidiaries and associates (see Note 13).

	-	Rights and obligations under employee benefit plans (see Note 38).

ii. Classification of financial assets for measurement purposes

Financial assets are initially classified into the various categories used for management and measurement purposes, unless they have to be presented as “Non-current assets held for sale” or they relate to “Cash and balances with the Argentine central bank”, “Hedging derivatives” and “Investments”, which are reported separately.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Financial assets are included for measurement purposes in one of the following categories:

	-	Financial assets held for trading (at fair value through profit or loss): this category includes the financial assets acquired for the purpose of generating a profit in the near term from fluctuations in their prices and financial derivatives that are not designated as hedging instruments.

	-	Available-for-sale financial assets: this category includes debt instruments not classified as “Held-to-maturity investments”, “Loans and receivables” or “Financial assets at fair value through profit or loss”, and equity instruments issued by entities other than subsidiaries, associates and jointly controlled entities, provided that such instruments have not been classified as “Financial assets held for trading” or as “Other financial assets at fair value through profit or loss”.

	-	Loans and receivables: this category includes financing granted to third parties, based on their nature, irrespective of the type of borrower and the form of financing, including finance lease transactions in which the consolidated entities act as lessors.

The consolidated entities generally intend to hold the loans and credits granted by them until their final maturity and, therefore, they are presented in the consolidated balance sheet at their amortized cost (which includes the required adjustments to reflect estimated impairment losses).

iii. Classification of financial assets for presentation purposes

Financial assets are classified by nature into the following items in the consolidated balance sheet:

	-	Cash and balances with Argentine central bank: cash balances and balances receivable on demand relating to deposits with the BCRA.

	-	Loans and advances: includes the debit balances of loans granted by the Group, other than those represented by securities, as well as finance lease receivables and other debit balances of a financial nature in favor of the Group, such as checks drawn on credit institutions, balances receivable from clearing houses and settlement agencies for transactions on the stock exchange and organized markets, bonds given in cash, capital calls, fees and commissions receivable for financial guarantees and debit balances arising from transactions not originated in banking transactions and services, such as the collection of rentals and similar items.

	-	Loans and advances to credit institutions: credit of any nature in the name of credit institutions.

	-	Loans and advances to customers: includes the debit balances of all the remaining credit and loans granted by the Group, other than those represented by securities, including money market operations through central counterparties.

	-	Debt instruments: bonds and other securities that represent a debt for their issuer, that generate an interest return, and that are in the form of certificates or book entries.

	-	Equity instruments: financial instruments issued by other entities, such as shares, which have the nature of equity instruments for the issuer, unless they are investments in subsidiaries, jointly controlled entities or associates. Investment fund units are included in this item.

	-	Trading derivatives: includes the fair value in favor of the Group of derivatives which do not form part of hedge accounting.

	-	Hedging derivatives: includes the fair value in favor of the Group of derivatives designated as hedging instruments in hedge accounting.

	-	Investments: includes the investments in associates.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

iv. Classification of financial liabilities for measurement purposes

Financial liabilities are classified for measurement purposes into one of the following categories:

	-	Financial liabilities held for trading (at fair value through profit or loss): this category includes the financial liabilities issued for the purpose of generating a profit in the near term from fluctuations in their prices, financial derivatives not considered to qualify for hedge accounting and financial liabilities arising from the outright sale of financial assets purchased under resale agreements or borrowed (“short positions”).

	-	Other financial liabilities at fair value through profit or loss: financial liabilities are included in this category when more relevant information is obtained, either because this eliminates or significantly reduces recognition or measurement inconsistencies (“accounting mismatches”) that would arise from measuring assets or liabilities or recognizing the gains or losses on them on different bases, or because a group of financial liabilities or financial assets and liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided on that basis to the Group’s key management personnel.

	-	Financial liabilities at amortized cost: financial liabilities, irrespective of their instrumentation and maturity, not included in any of the above-mentioned categories which arise from the funding-taking activities carried on by financial institutions.

v. Classification of financial liabilities for presentation purposes

Financial liabilities are classified by nature into the following items in the consolidated balance sheet:

	-	Deposits from credit institutions: deposits of any nature, including credit and money market operations received in the name of credit institutions.

	-	Customer deposits: includes all repayable balances received in cash by the Group, other than those represented by marketable securities, money market operations through central counterparties, subordinated liabilities and deposits from the BCRA and credit institutions.

	-	Marketable debt securities: includes the amount of bonds and other debt represented by marketable securities, other than subordinated liabilities.

	-	Trading derivatives: includes the fair value, with a negative balance for the Group, of derivatives which do not form part of hedge accounting.

	-	Other financial liabilities: includes the amount of payment obligations having the nature of financial liabilities not included in other items, and liabilities under financial guarantee contracts, unless they have been classified as doubtful.

	-	Hedging derivatives: includes the fair value of the Group’s liability in respect of derivatives designated as hedging instruments in hedge accounting.

d) Measurement of financial assets and liabilities and recognition of fair value changes

In general, financial assets are initially recognized at fair value which, in the absence of evidence to the contrary, is deemed to be the transaction price. Financial instruments not measured at fair value through profit or loss is, adjusted by the transaction costs. Financial assets are subsequently measured at each period-end as follows:

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

i. Measurement of financial assets

Financial assets are measured at fair value, without deducting any transaction costs that may be incurred on their disposal, except for loans and receivables, held-to-maturity investments, equity instruments whose fair value cannot be determined in a sufficiently objective manner.

The “fair value” of a financial instrument on a given date is taken to be the amount for which it could be bought or sold on that date by two knowledgeable, willing parties in an arm’s length transaction acting prudently. The most objective and common reference for the fair value of a financial instrument is the price that would be paid for it on an active, transparent and deep market (“quoted price” or “market price”).

If there is no market price for a given financial instrument, its fair value is estimated on the basis of valuation techniques commonly used by the international financial community, taking into account the specific features of the instrument to be measured and, particularly, the various types of risk associated with it.

All derivatives are recognized in the balance sheet at fair value from the trade date. If the fair value is positive, they are recognized as an asset and if the fair value is negative, they are recognized as a liability. The fair value on the trade date is deemed, in the absence of evidence to the contrary, to be the transaction price. The changes in the fair value of derivatives from the trade date are recognized in “Gains/losses on financial assets and liabilities” in the consolidated income statement. Specifically, the fair value of standard financial derivatives included in the portfolios of financial assets or liabilities held for trading is deemed to be their daily quoted price and if for exceptional reasons, the quoted price cannot be determined on a given date, these financial derivatives are measured using methods similar to those used to measure over the counter OTC derivatives. The fair value of OTC derivatives is taken to be the sum of the future cash flows arising from the instrument, discounted to present value at the date of measurement (“present value” or “theoretical close”) using valuation techniques commonly used by the financial markets.

“Loans and receivables” and “Held-to-maturity investments” are measured at amortized cost using the effective interest method. “Amortized cost” is understood to be the acquisition cost of a financial asset or liability plus or minus, as appropriate, the principal repayments and the cumulative amortization (taken to the income statement) of the difference between the initial cost and the maturity amount. In the case of financial assets, amortized cost furthermore includes any reductions for impairment or uncollectability. In the case of loans and receivables hedged in fair value hedges, the changes in the fair value of these assets related to the risk or risks being hedged are recognized.

The “effective interest rate” is the discount rate that exactly matches the initial amount of a financial instrument to all its estimated cash flows of all kinds over its remaining life. For fixed rate financial instruments, the effective interest rate coincides with the contractual interest rate established on the acquisition. In the case of floating rate financial instruments, the effective interest rate coincides with the rate of return prevailing in all connections until the next benchmark interest reset date.

Equity instruments whose fair value cannot be determined in a sufficiently objective manner are measured at acquisition cost adjusted, where appropriate, by any related impairment loss.

The amounts at which the financial assets are recognized represent, in all material respects, the Bank’s maximum exposure to credit risk at each reporting date. Also, the Bank has received collateral and other credit enhancements to mitigate its exposure to credit risk, which consist mainly of mortgage guarantees, cash collateral, and personal security, assets leased out under leasing and renting agreements, assets acquired under repurchase agreements, securities loans and derivatives.

ii. Measurement of financial liabilities

In general, financial liabilities are measured at amortized cost, as defined above.

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

iii. Valuation techniques

The following table shows a summary of the fair values, at December 31, 2010 and 2009 of the financial assets and liabilities indicated below, classified on the basis of the various measurement methods used by the Bank to determine their fair value:

	2010			2009
	Market Value	Internal Models	Total	Market Value	Internal Models	Total
Financial assets held for trading	2,760,648	184,179	2,944,827	2,331,926	163,560	2,495,486
Available-for-sale financial assets	3,644	688,325	691,969	2,621	484,141	486,762
Hedging Derivatives	-	-	-	-	8	8
Financial liabilities held for trading	-	7,058	7,058	-	4,889	4,889

Financial instruments at fair value, determined on the basis of public price quotations in active government debt securities, private-sector debt securities, securitized assets, shares, short positions issued.

In cases where price quotations cannot be observed, management makes its best estimate of the price that the market would set using its own internal models. In most cases, these models use data based on observable market parameters as significant inputs (Level 2). In order to make these estimates, various techniques are employed, including the extrapolation of observable market data and extrapolation techniques. The best evidence of the fair value of a financial instrument on initial recognition is the transaction price, unless the fair value of the instrument can be obtained from other market transactions performed with the same or similar instruments or can be measured by using a valuation technique in which the variables used include only observable market data, mainly interest rates.

The main techniques used at December 31, 2010 and 2009 by the Bank’s internal models to determine the fair value of the financial instruments detailed in the foregoing table is as follows:

	-	In the valuation of financial instruments permitting static hedging (basically forwards and swaps) and in the valuation of loans and advances to customers, the “present value” method is used. Estimated future cash flows are discounted using the interest rate curves of the related currencies. The interest rate curves are generally observable market data.

	-	In the valuation of financial instruments requiring dynamic hedging (basically structured options and other structured instruments), the Black-Scholes model is normally used.

	-	In the valuation of certain financial instruments exposed to interest rate risk, such as interest rate futures, the present value method.

The fair value of the financial instruments arising from the afore mentioned internal models takes into account, inter alia, the contract terms and observable market data, which include interest rates, exchange rates, the quoted market price of and shares, and volatility. The valuation models are not significantly subjective, since these methodologies can be adjusted and gauged, as appropriate, through the internal calculation of fair value and the subsequent comparison with the related actively traded price.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Set forth below are the financial instruments at fair value whose measurement was based on internal models (Level 2) at December 31, 2010 and 2009:

					Assumptions (1)
	Fair Values Calculated Using Internal Models		Valuation Techniques	Main Assumptions	More favorable	Less favorable
	2010	2009
ASSETS:
Financial assets held for trading	184,179	163,560
Debt instruments	136,695	99,221	Present Value Method	Observable Market Data	440	(440)
Equity instruments	6,318	4,040	Equity Method	Observable Market Data	-	-
Trading derivatives	41,166	60,299
Swaps	11,362	19,646	Present Value Method	Observable Market Data	940	(1,080)
Exchange rate futures	29,425	40,653	Present Value Method	Observable Market Data	1,000	(1,060)
Others	379	-	Black-Scholes Model	Observable Market Data, liquidity	-	-

Available-for-sale financial assets	688,325	484,141
Debt instruments	663,797	460,272	Present Value Method	Observable Market Data	10,370	(10,370)
Equity instruments	24,528	23,869	Equity Method	Observable Market Data	-	-

Hedging Derivatives	-	8	Present Value Method	Observable Market Data	-	-

LIABILITIES:
Financial liabilities held for trading	7,058	4,889
Trading derivatives	7,058	4,889
Swaps	1,402	2,581	Present Value Method	Observable Market Data	60	(90)
Exchange rate futures	5,656	2,308	Present Value Method	Observable Market Data	130	(150)

(1) Corresponds to assumptions used for 2010 fair values to calculate liquidity and credit valuation adjustments..

For positions bearing market liquidity risk, Liquidity Valuation Adjustments are calculated in each bucket as 50% of the average spread between bid and offer prices of the last 15 days times the basis point sensitivity in that bucket. Additionally, when market liquidity determines that the position can not be closed by the average market price within 1 day, this calculation is multiplied by the square root of days in excess and by the square root of year fraction of the tenor.

In the case of OTC derivatives, Credit Valuation Adjustments are considered to incorporate a measure of the credit quality of the counterparty. The calculation is as follows:

	-	Grouping companies by rating. For companies without internal rating, an average rating between the two worst rated companies is assumed.

	-	Estimating expected exposures, as a fraction of the peak exposures.

	-	Calculating Conditional Default Probabilities (based on internal models). A Recovery rate of 25% is assumed.

	-	The valuation adjustment is calculated as the present value of the exposures that are not recovered (weighted by the conditional probability of default of the counterparties).

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The credit charge for a single operation must be equal to the replacement cost of the operation multiplied by the probability of occurrence of a credit event at any future moment, since that such event has not happened before.

Credit risk arises when in case of default, the replacement cost of the derivative is positive, so credit exposures are always non negative. Whatever the operation is, the calculation of the credit charge should be based on the expected exposure.

The peak exposure is the value of the exposure in the event of default assuming an adverse market scenario for the counterparty; at a level of confidence of the 97.5%, the loss will be less than the maximum exposure; given this level of confidence, and assuming normal distribution for the replacement cost, the peak exposure is twice the standard deviation of that cost. Current replacement value of the derivative is then included on the peak exposure estimation.

The expected exposure is the mean value of exposure in the event of default. It is calculated as the mean of the distribution of exposures.

The use of observable market data assumes that the markets in which the Bank operates are functioning efficiently and therefore, that these data are representative.

iv. Recognition of fair value changes

As a general rule, changes in the carrying amount of financial assets and liabilities are recognized in the consolidated income statement, distinguishing between those arising from the accrual of interest and similar items -which are recognized under “Interest and similar income” or “Interest expense and similar charges”, as appropriate- and those arising for other reasons, which are recognized at their net amount under “Gain/losses on financial assets and liabilities”.

Adjustments due to changes in fair value arising from Available-for-sale financial assets are recognized temporarily in equity under “Valuation adjustments-Available-for-sale financial assets”. Items charged or credited to this account remain in the Bank’s consolidated equity until the related assets are derecognized, whereupon they are charged to the consolidated income statement.

v. Hedging transactions

The consolidated entities use financial derivatives for the following purposes: i) to facilitate these instruments to customers who request them in the management of their market and credit risks; ii) to use these derivatives in the management of the risks of the Group entities own positions and assets and liabilities (“hedging derivatives”); and iii) to obtain gains from changes in the prices of these derivatives (“trading derivatives”).

Financial derivatives that do not qualify for hedge accounting are treated for accounting purposes as trading derivatives.

A derivative qualifies for hedge accounting if all the following conditions are met:

The derivative hedges one of the following three types of exposure:

Changes in the fair value of assets and liabilities due to fluctuations, among others, in the interest rate and/or exchange rate to which the position or balance to be hedged is subject (“fair value hedge”);

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

	b.	Changes in the estimated cash flows arising from financial assets and liabilities, commitments and highly probable forecast transactions (“cash flow hedge”); and

	c.	The net investment in a foreign operation (“hedge of a net investment in a foreign operation”).

It is the effective in offsetting exposure inherent in the hedged item or position throughout the expected term of the hedge, which means that:

	a.	At the date of arrangement the hedge is expected, under normal conditions, to be highly effective (“prospective effectiveness”).

	b.	There is sufficient evidence that the hedge was actually effective during the whole life of the hedged item or position (“retrospective effectiveness”).

There must be adequate documentation evidencing the specific designation of the financial derivative to hedge certain balances or transactions and how this effective hedge vas expected to be achieved and measured, provided that this is consistent with the Bank’s management of own risks.

The changes in value of financial instruments qualifying for hedge accounting are recognized as follows:

	a.	In fair value hedges, the gains or losses arising on both the hedging instruments and the hedged items (attributable to the type of risk being hedged) are recognized directly in the consolidated income statement.

	b.	In cash flow hedges, the effective portion of the change in value of the hedging instrument is recognized temporarily in equity under “Valuation adjustments-Cash flow hedges” until the forecast transactions occur, when it is recognized in the consolidated income statement, unless, if the forecast transactions result in the recognition of non-financial assets or liabilities, it is included in the cost of the non-financial asset or liability. The ineffective portion of the change in value of hedging derivatives is recognized directly in the consolidated income statement.

	c.	The ineffective portion of the gains and losses on the hedging instruments of cash flow hedges and hedges of a net investment in a foreign operation are recognized directly under “Gains/losses on financial assets and liabilities” in the consolidated income statement.

If derivative designated as a hedge no longer meets the requirements described above due to expiration, ineffectiveness or for any other reason, the derivative is classified as a trading derivative.

When fair value hedge accounting is discontinued, the adjustments previously recognized on the hedged item are transferred to profit or loss at the effective interest rate re-calculated at the date of hedge discontinuation. The adjustments must be fully amortized at maturity.

When cash flow hedges are discontinued, any cumulative gain or loss on the hedging instrument recognized in equity under “Valuation adjustments” (from the period when the hedge vas effective) remains recognized in equity until the forecast transaction occurs at which time it is recognized in profit or loss, unless the transaction is no longer expected to occur, in which case any cumulative gain or loss is recognized immediately in profit or loss.

e) Derecognition of financial assets and liabilities

The accounting treatment of transfers of financial assets depends on the extent to which the risks and rewards associated with the transferred assets are transferred to third parties:

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

If the Group transfers substantially all the risks and rewards to third parties -unconditional sale of financial assets, sale of financial assets under an agreement to repurchase them at their fair value at the date of repurchase, sale of financial assets with a purchased call option or written put option that is deeply out of the money, securitization of assets in which the transferor does not retain a subordinated debt or grant any credit enhancement to the new holders, and other similar cases-, the transferred financial asset is derecognized and any rights or obligations retained or created in the transfer are recognized simultaneously.

If the Group retains substantially all the risks and rewards associated with the transferred financial asset -sale of financial assets under an agreement to repurchase them at a fixed price or at the sale price plus interest, a securities lending agreement in which the borrower undertakes to return the same or similar assets, and other similar cases-, the transferred financial asset is not derecognized and continues to be measured by the same criteria as those used before the transfer. However, the following items are recognized:

	a.	An associated financial liability, for an amount equal to the consideration received: this liability is subsequently measured at amortized cost.

	b.	The income from the transferred financial asset not derecognized and any expense incurred on the new financial liability.

If the Group neither transfers nor retains substantially all the risks and rewards associated with the transferred financial asset sale of financial assets with a purchased call option or written put option that is not deeply in or out of the money, securitization of assets in which the transferor retains a subordinated debt or other type of credit enhancement for a portion of the transferred asset, and other similar cases-, the following distinction is made:

	a.	If the transferor does not retain control of the transferred financial asset, the asset is derecognized and any rights or obligations retained or created in the transfer are recognized.

	b.	If the transferor retains control, it continues to recognize the transferred financial asset for an amount equal to its exposure to changes in value and recognizes a financial liability associated with the transferred financial asset. The net carrying amount of the transferred asset and the associated liability is the amortized cost of the rights and obligations retained, if the transferred asset is measured at amortized cost, or the fair value of the rights and obligations retained, if the transferred asset is measured at fair value.

Accordingly, financial assets are only derecognized when the rights on the cash flows they generate have been extinguished or when substantially all the inherent risks and rewards have been transferred to third parties. Similarly, financial liabilities are only derecognized when the obligations they generate have been extinguished or when they are acquired, with the intention either to cancel them or to resell them.

f) Regular way purchases of financial asset

Regular way purchases of financial assets are recognized on trade date. The assets are derecognized when the rights to receive cash flows have expired or the Group has transferred substantially all the risks and rewards of ownership.

g) Impairment of financial assets

i. Definition

A financial asset is considered to be impaired -and therefore its carrying amount is adjusted to reflect the effect of impairment- when there is objective evidence that events have occurred which:

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

	-	In the case of debt instruments (loans and debt securities), give rise to an adverse impact on the future cash flows that were estimated at the transaction date.

	-	In the case of equity instruments, mean that their carrying amount cannot be fully recovered.

As a general rule, the carrying amount of impaired financial instruments is adjusted with a charge to the consolidated income statement for the period in which there is objective evidence that an impairment loss has occurred, and the reversal, if any, of previously recognized impairment losses is recognized in the consolidated statement of income for the period in which the impairment is reversed or reduced.

Balances are deemed to be impaired, and the interest accrual is suspended, when there are reasonable doubts as to their fill recovery and/or the collection of the related interest for the amounts and on the dates initially agreed upon, after taking into account the guarantees received by the consolidated entities to secure (fully or partially) collection of the related balances. Collections relating to impaired loans and advances are used to recognize the accrued interest and the remainder, if any, to reduce the principal amount outstanding. The amount of the financial assets that would be deemed to be impaired had the conditions thereof not been renegotiated is not material with respect to the Group’s consolidated financial statements taken as a whole.

When the recovery of any recognized amount is considered unlikely, the amount is written off, without prejudice to any actions that the consolidated entities may initiate to seek collection until their contractual rights are extinguished.

ii. Debt instruments carried at amortized cost

The amount of an impairment loss incurred on a debt instrument measured at amortized cost is equal to the difference between its carrying amount and the present value of its estimated future cash flows, and is presented as a reduction of the balance of the asset adjusted.

In estimating the future cash flows of debt instruments the following factors are taken into account:

	-	All the amounts that are expected to be obtained over the remaining life of the instrument: including, where appropriate, those which may result from the collateral provided for the instrument (less the costs for obtaining and subsequently selling the collateral). The impairment loss takes into account the likelihood of collecting accrued interest receivable;

	-	The various types of risk to which each instrument is subject; and

The circumstances in which collections will foreseeable be made.

These cash flows are subsequently discounted using the instruments effective interest rate (if its contractual rate is fixed) or the effective contractual rate at the discount date (if it is variable).

Specifically in regards to impairment losses resulting from materialization of the insolvency risk of the obligors (credit risk), a debt instrument is impaired due to insolvency when there is evidence of a deterioration of the obligors’ ability to pay, either because it is in arrears or for other reasons.

The Group has certain policies, methods and procedures for covering its credit risk arising both from insolvency allocable to counterparties.

These policies, methods and procedures are applied in the granting, examination and documentation of debt instruments, and contingent liabilities and commitments, the identification of their impairment and the calculation of the amounts necessary to cover the related credit risk.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

With respect to the allowance for loss arising from credit risk, the Bank makes the following distinction:

a. Specific allowance:

The Bank uses a proxy for specific allowance, as further explained below. These rules are used to calculate the minimum allowance requirements. We then evaluate the need for further provision, as considered necessary, following the requirements of IAS 39, based on our historical experience of impairment and other circumstances known at the time of assessment.

We classify our credit transactions based on their level of risk and the number of days such transaction is past due.

Our rating and risk management systems may be reviewed by both the BCRA and the Santander Group’s internal auditors. Our management has not had any disputes with the BCRA or the Santander Group regarding our risk management operations.

The loss is calculated by using statistical models considering the method denominated “Roll Rates”.

b. Allowance for incurred losses not specifically identified:

The Bank covers its losses inherent in debt instruments not measured at fair value through profit or loss and in contingent liabilities taking into account the historical experience of impairment and other circumstances known at the time of assessment. For these purposes, inherent losses are losses incurred at the reporting date, calculated using statistical methods that have not yet been allocated to specific transactions.

The Bank uses the concept of incurred loss to quantify the cost of the credit risk and include it in the calculation of the risk adjusted return of its transactions.

The loss is calculated by using statistical models considering the method denominated “Roll Rates”.

The “Roll Rates” method consists in the estimation, for different monthly doubtful buckets the percentage over the total amount that will continue to flow through delinquent buckets as they have in the past. Dividing the current month's delinquency bucket by the prior delinquency bucket, it calculates the month's roll rates in the previous month.

This percentage represents the best estimation of the incurred loss and it is used as the percentage of allowance to apply to each type of counterparties in each bucket that are in the same situation. In this sense this percentage represents, conceptually, the same concept as the loss arising in the event of default (LGD), although the methodology applied in this model is operatively different from the LGD.

It has been estimated a specific “Roll Rate” curve to each type of portfolio.

Our methodology for determining the loans allowance for incurred losses intends to identify the amount of incurred losses as of the balance sheet date of loans that we estimate based on our past history and specific facts that have manifested as of the balance sheet date. That is, what we call inherent losses in the context of our internal models in which loan loss allowances are calculated.

This method described above is used as a general rule. However, in certain cases, as a result of its particular characteristics, this approach is not applied and alternative approaches are used, as it is explain below.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Low default portfolios.

Our loan acceptance policy is tailored to our two types of loans: standardized loans and portfolioed loans. Standardized loans are those that carry a total risk exposure of less than 750,000, whereas portfolioed loans carry a total risk exposure of more 750,000.

The Portfolioed Loan Department manages loan applications in excess of 750,000 and is in charge of monitoring segments that require an individual analysis based on an assumed risk level.

For portfolioed loans, an individual risk analyst is assigned to a customer or business group whose total risk exposure exceeds 750,000.

We classify our credit transactions analyzing their level of risk and the number of days such transaction is past due. Such credit classifications for the portfolios of big companies and large corporations are determined in accordance with:

	-	The conditions of the debtor and any guarantor, such as their economic and financial situation, level of indebtedness, capacity for generating profits, cash flow, administration, corporate governance and quality of internal controls, payments history, the sector in which they are active, contingencies and credit limits; and

	-	The characteristics of the transaction, such as its nature and purpose, type, sufficiency and level of liquidity of collateral and the total amount of the credit.

In these portfolios, the amount of clients and the number of defaults observed is insufficient to make statistical estimations using the methodology of Roll Rates, based on historical information. For that reason:

i) When those counterparties are in Situation 1 (Normal) and considering IAS 39.AG.89, we apply the estimated percentages of allowances calculated to the SMEs II portfolio (an internal segment of SMEs), because we consider it as representative enough of such counterparties.

This consideration is made taking into account the IAS 39.64, that states “…If an entity determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment…”

SMEs II are companies with annual sales from 2,5 MM to 20MM, while we consider big companies and large corporations as those that are over 20MM of revenue per year.

In both cases, macroeconomic conditions (GDP growth, commodities prices, inflation, unemployment, exchange rate, interest rate, etc) have a similar influence on business environment and therefore the ability to repay loans.

Our policy of risk approval and monitoring of both segments is also comparable.

ii) In the cases that these counterparties were in Situation 2 or worst (non performing loans or performing loans with an objective evidence of impairment), in accordance with the “Situations” defined by the BCRA, the Bank opted to use the individually estimated information to each type of counterparty considering an analysis of future cash flows.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The “Situations” defined by BCRA are as follows:

Commercial Loans Classification

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 any interest or principal payment 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).
Technically non-recoverable		(a) Borrower has defaulted on its payment obligations under a loan for more than 180 calendar days according to the report provided by the Central Bank, which report includes (i) financial institutions liquidated by the Central Bank; (ii) residual entities created as a result of the privatization of public financial institutions, or in the privatization or dissolution process; (iii) financial institutions whose licenses have been revoked by the Central Bank and find themselves subject to judicial liquidation or bankruptcy proceedings and (iv) trusts in which Seguro de Depósitos Sociedad Anónima 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; and/or (c) customers in the non-financial private-sector, whose debt (in every respect) plus the amount of the requested funding, upon the granting of it, exceeds the lower of 2.5% of the RC of the entity on the last day of the preceding month or Ps. 2,000,000, and have not submitted a statement about whether they are related or not to the financial entity, with the exception of debtors under court or out-of-court restructuring proceedings, for a period of up to 540 days from the beginning of such proceedings, provided that legal counsel to the relevant financial institution issues an opinion on the reasonableness of the chances of recovery of amounts due.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Consumer and Housing Loans Classification

Under Central Bank’s 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.
Low Risk		Loans with payment obligations overdue for a period of more than 31, but less than 90 calendar days.
Medium Risk		Loans with payment obligations overdue for a period of more than 90, but less than 180 calendar days.
High Risk		Includes, among other cases, customers with payment delays of more than 180 days to one year. It also includes debtors who have (i) applied for a court-supervised debt reorganization proceeding; (ii) entered into a pre-packaged reorganization agreement (pending court approval) or (iii) been subject to a bankruptcy petition (pending bankruptcy declaration by the court), in respect of obligations that are equal to or greater than 20% of the net worth of the customer. If the bankruptcy petition remains undismissed for 90 days after filing, this percentage is reduced to 5% to 20% of the customer’s net worth.
Non-recoverable loans		Includes, among others, insolvent debtors or debtors with bankruptcy declared by a court, with very low repayment capacity. It also includes debtors with loans overdue for more than one year.
Technically non-recoverable		Same criteria as for commercial loans in the technically non-recoverable category.

The Bank’s charge-off policy for Consumer and Housing Loans (borrowers with obligations under 750,000) is as follows:

- Unsecured debts or collateral: 180 days overdue

- Debts secured by mortgages: 360 days overdue

In the case of commercial loans (clients with debt in excess of 750,000) the charge-off is made in accordance with BCRA guidelines. The BCRA determines that when a debtor is ranked in position 5 (unrecoverable) and fully provisioned, and from the 7th month of being in this situation, it should be charge-off. However, the Bank could decide to anticipate (not delay) this situation on behalf of the situation of the debtor. Factors that are taken into account in this decision are the same as those used in the different phases of the credit cycle for such companies:

- The conditions of the debtor and any guarantor, such as their economic and financial situation, level of indebtedness, capacity for generating profits, cash flow, administration, corporate governance and quality of internal controls, payments history, the sector in which they are active, contingencies and credit limits; and

- The characteristics of the transaction, such as its nature and purpose, type, sufficiency and level of liquidity of collateral and the total amount of the credit.

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

iii. Debt or equity instruments classified as available for sale

The amount of the impairment losses on these instruments is the positive difference between their acquisition cost (net of any principal repayment or amortization in the case of debt instruments) and their fair value, less any impairment loss previously recognized in the consolidated income statement.

When there is objective evidence at the date of measurement of these instruments that the aforementioned differences are due to permanent impairment, they are no longer recognized in equity under “Valuation adjustments - Available-for-sale financial assets” and are reclassified, for the cumulative amount at that date, to the consolidated income statement.

If all or part of the impairment losses is subsequently reversed, the reversed amount is recognized, in the case of debt instruments, in the consolidated income statement for the year in which the reversal occurred (or in equity “Valuation adjustments- Available-for-sale financial assets” in the case of equity instruments).

iv. Equity instruments measured at cost

The impairment loss on equity instruments measured at cost is the difference between the carrying amount and the present value of the expected future cash flows discounted at the market rate of return for similar securities.

Impairment losses are recognized in the consolidated income statement for the period in which they arise as a direct reduction of the cost of the instrument. These losses can only be reversed subsequently if the related assets are sold.

h) Repurchase agreements and reverse repurchase agreements

Purchases (sales) of financial assets under a non-optional resale (repurchase) agreement at a fixed price (“repos”) are recognized in the consolidated balance sheet as financing granted (received), based on the nature of the debtor (creditor), under “Balances with the Central Bank”, Loans and advances to credit institutions” or Loans and advances to customers” (“Deposits from the Argentine Central Bank”, “Deposits from credit institutions” or “Customer deposits”).

Differences between the purchase and sale prices are recognized as interest over the contract term.

i) Non-current assets held for sale

Non-current assets held for sale” includes the carrying amount of individual items or disposal groups or items forming part of a business unit earmarked for disposal (“Discontinued operations”), whose sale in their present condition is highly probable and is expected to occur within one year from the reporting date.

Therefore, the carrying amount of these items which can be of a financial nature or otherwise- will foreseeable be recovered through the proceeds from their disposal. Specifically, property or other non-current assets received by the consolidated entities as total or partial settlement of their debtor’s payment obligations to them are deemed to be non-current assets held for sale.

Non-current assets held for sale are generally measured at the lower of fair value less costs to sell and their carrying amount at the date of classification in this category. Non-current assets held for sale are not depreciated as long as they remain in this category.

Impairment losses on an asset or disposal group arising from a reduction in its carrying amount to its fair value (less costs to sell) are recognized under “Gains/ (losses) on non-current assets held for sale not classified as discontinued operations” in the consolidated income statement. The gains on a non-current asset held for sale resulting from subsequent increases in fair value (less costs to sell) increase its carrying

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

amount and are recognized in the consolidated income statement up to an amount equal to the impairment losses previously recognized.

j) Residual maturity periods and average interest rates

The analysis of the maturities of the balances of certain items in the consolidated balance sheets and the average interest rates at 2010 and 2009 year-ends are provided in Note 43 d). The Group early applied the exemption in IFRS 1 that allows an entity not to provide comparative information for periods ending before December 31, 2009 in respect of the liquidity disclosures below.

k) Tangible assets

Items of tangible assets are measured at cost less accumulated depreciation and accumulated impairment losses. As of January 1, 2009, the Bank elected to use its previous GAAP cost at the date of transition to IFRS as deemed cost for tangible assets (see Note 14).

“Tangible assets” includes the amount of buildings, land, furniture, vehicles, computer hardware and other fixtures owned by the consolidated entities, including tangible assets received by the Group in full or partial satisfaction of financial assets representing receivables from third parties which are intended to be held for continuing use and tangible assets acquired under finance leases are presented at acquisition cost, less the related accumulated depreciation and any impairment losses (net carrying amount higher than recoverable amount).

Depreciation is calculated, using the straight-line method, on the basis of the acquisition cost of the assets less their residual value. The land on which the buildings and other structures stand has an indefinite life and, therefore, is not depreciated.

The tangible asset depreciation charge is recognized in the consolidated income statement and is calculated basically using the following depreciation rates (based on the average years of estimated useful life of the various assets):

	Annual Rate %

Buildings	2
Furniture	10
Fixtures	10
Office and IT equipment	Between 20 and 33,3
Vehicles	20
Leasehold improvements	33,3 (*)
(*) Or up to contractual maturity.

The consolidated entities assess at the reporting date whether there is any indication that an asset may be impaired (i.e. its carrying amount exceeds its recoverable amount). If this is the case, the carrying amount of the asset is reduced to its recoverable amount and future depreciation charges are adjusted in proportion to the revised carrying amount and to the new remaining useful life (if the useful life has to be re-estimated).

Similarly, if there is an indication of a recovery in the value of a tangible asset, the consolidated entities recognize the reversal of the impairment loss recognized in prior periods and adjust the future depreciation charges accordingly. In no circumstances may the reversal of an impairment loss on an asset raise its

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

carrying amount above that which it would have if no impairment losses had been recognized in prior years.

The estimated useful lives of the items of property and equipment for own use are reviewed at least at the end of the reporting period with a view to detecting significant changes therein. If changes are detected, the useful lives of the assets are adjusted by correcting the depreciation charge to be recognized in the consolidated income statement in future years on the basis of the new useful lives.

Upkeep and maintenance expenses relating to property and equipment for own use are recognized as an expense in the period in which they are incurred.

Investment property reflects the net values of the land, buildings and other structures held either to earn rentals or for capital appreciation. The criteria used to recognize the acquisition cost of investment property, to calculate its depreciation and its estimated useful life and to recognize any impairment losses thereon are consistent with those described in relation to property and equipment for own use.

l) Accounting for leases

i. Finance leases

Finance leases are leases that transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee.

When the consolidated entities act as the lessors of an asset, the sum of the present value of the lease payments receivable from the lessee plus the guaranteed residual value -which is generally the exercise price of the purchase option of the lessee at the end of the lease term- is recognized as lending to third parties and is therefore included under “Loans and receivables” in the consolidated balance sheet.

ii. Operating leases

In operating leases, ownership of the leased asset and substantially all the risks and rewards incidental thereto remain with the lessor.

When the consolidated entities act as the lessors, they include the acquisition cost of the leased assets in “Tangible assets”. The depreciation policy for these assets is consistent with that for similar items of property, plant and equipment for own use and income from operating leases is recognized on a straight-line basis under “Other operating income” in the consolidated income statement.

When the consolidated entities act as the lessees, the lease expenses, including any incentives granted by the lessor, are charged on a straight-line basis to “Other general administrative expenses” in their consolidated statements of income.

m) Intangible assets

Intangible assets are identifiable non-monetary assets (separable from other assets) without physical substance which arise as a result of a legal transaction or which are developed internally by the consolidated entities. Only assets whose cost can be estimated reliably and from which the consolidated entities consider it probable that future economic benefits will be generated are recognized.

Intangible assets are recognized initially at acquisition or production cost and are subsequently measured at cost less any accumulated amortization and any accumulated impairment losses.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

i. Goodwill

An investment in an associate is accounted for using the equity method from the date on which it becomes an associate. On acquisition of the investment any difference between the cost of the investment and the investor´s share of the net fair value of the associates’ identifiable assets, liabilities and contingent liabilities is accounted for as follows:

	-	goodwill relating to an associate is included in the carrying amount of the investment. However, amortization of that goodwill is not permitted and is therefore not included in the determination of the investor’s share of the associates´ profits or losses.

	-	any excess of the investors share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the investors share of the associates profit or loss in the period in which the investment is acquired.

Goodwill - which is only recognized when it has been acquired for consideration - represents, therefore, a payment made by the acquirer in anticipation of future economic benefits from assets of the acquired entity that are not capable of being individually identified and separately recognized.

At the end of each reporting period goodwill is reviewed for impairment (i.e. a reduction in its recoverable amount to below its carrying amount) and any impairment is written down with a charge to “Impairment losses on other assets (net) — Goodwill and other intangible assets” in the consolidated income statement.

An impairment loss recognized for goodwill is not reversed in a subsequent period.

ii. Other intangible assets

As of January, 1 2009, there were no other intangible assets. As of December 31 2010 and 2009, other intangible assets (see Note 16) are measured at cost less accumulated depreciation and accumulated impairment losses.

Other intangible assets can have an indefinite useful life -when, based on an analysis of all the relevant factors, it is concluded that there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the consolidated entities- or a finite useful life, in all other cases. These assets with indefinite useful lives are not amortized, but rather at the end of each reporting period the consolidated entities review the remaining useful lives of the assets in order to determine whether they continue to be indefinite and, if this is not the case, to take the appropriate steps. It should be noted that there is no other intangible assets with an indefinite useful life at the end of each year presented in these consolidated financial statements.

“Other intangible assets” includes the amount of identifiable intangible assets (such as purchased customer lists and computer software).

Intangible assets with finite useful lives are amortized over those useful lives using methods similar to those used to depreciate tangible assets.

The intangible asset amortization charge is recognized under “Depreciation and amortization” in the consolidated income statement.

In both cases the consolidated entities recognize any impairment loss on the carrying amount of these assets with a charge to “Impairment losses on goodwill and other intangible assets” in the consolidated income statement. The criteria used to recognize the impairment losses on these assets and, where applicable, the reversal of impairment losses recognized in prior years are similar to those used for tangible assets (see Note 14).

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Internally developed computer software

Internally developed computer software is recognized as an intangible asset if, among other requisites (basically the Group’s ability to use or sell it), it can be identified and its ability to generate future economic benefits can be demonstrated.

Expenditure on research activities is recognized as an expense in the year in which it is incurred and cannot be subsequently capitalized.

n) Other assets

This item includes the balance of all prepayments and accrued income (excluding accrued interest), and the amount of any other assets not included in other items.

o) Other liabilities

“Other liabilities” includes the balance of all accrued expenses and deferred income, excluding accrued interest, and the amount of any other liabilities not included in other categories.

p) Provisions and contingent assets and liabilities

The directors of the consolidated entities, in preparing their respective financial statements, made a distinction between:

	-	Provisions: credit balances covering present obligations at the balance sheet date arising from past events which could give rise to a loss for the consolidated entities, which is considered to be likely to occur and certain as to its nature but uncertain as to its amount and/or timing.

	-	Contingent liabilities: possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the control of the consolidated entities. They include the present obligations of the consolidated entities when it is not probable that an outflow of resources embodying economic benefits will be required to settle them.

Contingent assets: possible assets that arise from past events and whose existence is conditional on, and will be confirmed only by, the occurrence or non-occurrence of events beyond the control of the Group. Contingent assets are not recognized in the consolidated balance sheet or in the consolidated income statement, but rather are disclosed in the notes, provided that it is probable that these assets will give rise to an increase in resources embodying economic benefits.

The Group’s consolidated financial statements include all the material provisions with respect to which it is considered that it is probable that the obligation will have to be settled. In accordance with accounting standards, contingent liabilities must not be recognized in the consolidated financial statements, but must rather be disclosed in the notes.

Provisions, which are quantified on the basis of the best information available on the consequences of the event giving rise to them and are reviewed and adjusted at the end of each year, are used to cater for the specific obligations for which they were originally recognized. Provisions are fully or partially reversed when such obligations cease to exist or are reduced.

Provisions are classified according to the obligations covered as follows:

Provisions for contingent liabilities and commitments

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Legal obligations, taxes and other provisions: include the amount of the provisions recognized to cover tax and legal contingencies and labor and civil litigation and the other provisions recognized by the consolidated entities.

q)	Share-based payments

See Note 38.b).

r)	Recognition of income and expenses

The most significant criteria used by the Group to recognize its income and expenses are summarized as follows:

i. Interest income, interest expenses and similar items

Interest income, interest expenses and similar items are generally recognized on an accrual basis using the effective interest method. Dividends received from other companies are recognized as income when the consolidated entities right to receive them arises.

However, the recognition of accrued interest in the consolidated income statement is suspended for debt instruments individually classified as impaired and for the instruments for which impairment losses have been assessed collectively because they have payments more than two months past due. This interest is recognized as income, when collected, as a reversal of the related impairment losses.

ii. Commissions, fees and similar items

Fee and commission income and expenses are recognized in the consolidated income statement using criteria that vary according to their nature. The main criteria are as follows:

	-	Fee and commission income and expenses relating to financial assets and financial liabilities measured at fair value through profit or loss are recognized when paid.

	-	Those arising from transactions or services that are performed over a period of time are recognized over the life of these transactions or services.

Those relating to services provided in a single act are recognized when the single act is carried out.

iii. Non —finance income and expenses

These are recognized for accounting purposes on an accrual basis.

iv. Deferred collections and payments

These are recognized for accounting purposes at the amount resulting from discounting the expected cash flows at market rates.

v. Loan arrangement fees

Loan arrangement fees, mainly loan origination and application fees, are accrued and recognized in income over the term of the loan. In the case of loan origination fees, the portion relating to the associated direct costs incurred in the loan arrangement is recognized immediately in the consolidated income statement.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

s) Financial guarantees

“Financial guarantees” are defined as contracts whereby an entity undertakes to make specific payments for a third party if the latter does not do so, irrespective of the various legal forms they may have, such as guarantees, irrevocable documentary credits issued or confirmed by the entity, etc.

The Group initially recognizes the financial guarantees provided on the liability side of the consolidated balance sheet at fair value, which is generally the present value of the fees, commissions and similar interest receivable from these contracts over the term thereof and simultaneously the Group recognizes, on the asset side of the consolidated balance sheet, the amount of the fees, commissions and interest received at the start of the transactions and the amounts receivable at the present value of the fees, commissions and interest receivable (see Note 29).

Financial guarantees, regardless of the guarantor, instrumentation or other circumstances, are reviewed periodically so as to determine the credit risk to which they are exposed and, inappropriate, to consider whether a provision is required. The credit risk is determined by application of criteria similar to those established for quantifying impairment losses on debt instruments measured at amortized cost. The provisions made for these transactions are recognized under “Provisions - Provisions for contingent liabilities and commitments” in the consolidated balance sheet (see Note 22).

If a specific provision is required for financial guarantees, the related unearned commissions recognized under “Financial liabilities at amortized cost — Other financial liabilities” in the consolidated balance sheet are reclassified to the appropriate provision.

t) Assets under management and investment funds in custody

Assets managed by the consolidated entities are not presented in the Group’s consolidated balance sheet since such assets are owned by third parties. The fees and commissions earned in the year for the services rendered by the Group entities to these funds (asset management and custody services) are recognized under “Fee and commission income” in the consolidated income statement. See Note 43 b) and c).

u) Pension Plan

The Bank has undertaken to supplement the public social security system benefits accruing to certain employees (see Note 38 c)).

The Bank’s pension plan to its employees are deemed to be “defined contribution plans” when the Bank makes pre-determined contributions (recognized in “Personnel expenses” in the consolidated income statement) to a separate entity and will have no legal or effective obligation to make further contributions if the separate entity cannot pay the employee benefits relating to the service rendered in the current and prior periods.

v) Income taxes

Income Tax expense for the year arises from applying the tax rate of 35% on the profit or loss (after applying the deductions and / or tax exemptions granted) and from the change in deferred tax assets and liabilities.

Deferred income tax assets and liabilities include temporary differences (differences between the tax base of an asset or liability and its carrying amount in the consolidated balance sheet). Deferred tax liabilities are defined as the amounts of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are defined as the amounts of income taxes recoverable in future periods in respect of:

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Ø	deductible temporary differences;

Ø	the carry-forward of unused tax losses; and

Ø	the carry-forward of unused tax credits.

Deferred tax assets are only recognized if it is probable that future taxable profit will be available against which they can be utilized.

Tax on Minimum Presumed Income

Law No. 25,063 enacted in 1998 and for a period of ten fiscal years, provided for the determination of tax on minimum presumed income at the rate of 1% on taxable assets. Today, after successive extensions, the said tax is valid until 31st December 2019 inclusive. In the case of financial institutions regulated by the Financial Institutions Act provides that the same should be considered as taxable income the tax on 20% of their taxable assets after deduction of those defined as non-computable. This tax complements income tax and the tax liability of the Bank in each fiscal year coincides with the greatest of these taxes. However, if the tax on minimum presumed income exceeds a given fiscal year income tax, such excess may be computed as prepayment of any tax excess profits tax on minimum presumed income that may arise in any of the following ten years.

As of December 31, 2010 and 2009 and as of January 1, 2009, the amounts determined by income tax were higher than those for the Tax on minimum presumed income.

w) Consolidated statements of cash flow

The following terms are used in the consolidated statements of cash flow with the meanings specified:

	-	Cash flows: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments that are subject to an insignificant risk of changes in value.

	-	Operating activities: the principal revenue-producing activities of credit institutions and other activities that are not investing or financing activities.

	-	Investing activities: the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.

	-	Financing activities: activities that result in changes in the size and composition of the equity and liabilities that are neither operating nor investing activities.

In preparing the consolidated statement of cash flow, short-term highly liquid investments that are subject to an insignificant risk of changes in value were classified as “Cash and cash equivalents”. Accordingly, the Group classifies as cash and cash equivalents the balances recognized under “Cash and balances with Argentine central bank” in the consolidated balance sheet.

x) Consolidated statements of changes in total equity

The consolidated statements of changes in total equity presented in these consolidated financial statements show the total changes in total consolidated equity in the year. This information is in turn presented in two statements: the consolidated statement of recognized income and expense and the consolidated statement of changes in total equity. The main characteristics of the information contained in the two parts of the statement are explained below:

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Consolidated statement of recognized income and expense

This part of the consolidated statement of changes in equity presents the income and expenses generated by the Group as a result of its business activity in the year, and a distinction is made between the income and expenses recognized in the consolidated income statement for the year and the other income and expenses recognized directly in consolidated equity.

Accordingly, this statement presents:

	a.	Consolidated profit for the year.

	b.	The net amount of the income and expenses recognized temporarily in consolidated equity under “Valuation Adjustments”.

	c.	The net amount of the income and expenses transferred definitively to the consolidated statement of income.

	d.	The income tax incurred by the items indicated in b) and c) above, except for the valuation adjustments arising from investments in associates accounted for using the equity method, which are presented net.

Total consolidated recognized income and expense, calculated as the sum of the items in a) to d) above, presenting separately the amount attributable to the Parent and non controlling interests.

The amount of the income and expenses relating to entities accounted for using the equity method recognized directly in equity is presented in this statement, irrespective of its nature, under Entities accounted for using the “equity method”.

Statement of changes in total equity

This part of the statement of changes in total equity presents all the changes in equity, including those arising from changes in accounting policies and from the correction of errors. Accordingly, this statement presents a reconciliation of the carrying amount at the beginning and end of the year of ah the consolidated equity items, and any changes are grouped together on the basis of their nature into the following items:

	a.	Adjustments due to changes in accounting policy and adjustments made to correct errors: include the changes in consolidated equity arising as a result of the retrospective restatement of the balances in the consolidated financial statements due to changes in accounting policy or to the correction of errors.

	b.	Income and expense recognized in the year: includes, in aggregate form, the total of the aforementioned items recognized in the consolidated statement of recognized income and expense.

Other changes in equity: includes the remaining items recognized in equity, distribution of profit, transactions involving own equity instruments, transfers between equity items and any other increases or decreases in consolidated equity.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

3.	Business combination

3.1 Acquired Business

On August 21, 2009, the Bank and BNP Paribas Argentine Branch signed a transfer of business agreement by which the Bank acquired BNP Paribas’s retail banking in Argentina. The mentioned transaction was approved by the Management of the BCRA through Resolution No. 43 dated February 19, 2010 and the acquired business transfer was performed on March 12, 2010, the date of acquisition.

Resulting from this transaction, the Bank joined a network of 17 branches along with its employees, including the support areas. The acquired branches represent an increase of an approximate 20% in the number of branches that the Bank currently has in the Autonomous City of Buenos Aires.

Expenses related to this operation have not been significant.

Included in the Operating profit before tax for the year there is approximately 26,900 attributable to the additional operations generated by the acquired business. Interest and similar income for the year includes approximately 56,000 in respect of this acquisition.

Had these business combinations been effective at January 1, 2010, the interest and similar income of the Group would have been approximately 70,000 higher and the Operating profit before tax for the year would have been 33,700 higher. The Directors of the Group consider these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualized basis and to provide a reference point for comparison in future periods.

3.2 Fair value of net assets at the date of acquisition

Current assets:				556,176
Cash and cash equivalents				338,652
Loans and other receivables				216,525
Other Assets				999

Non-current assets:				41,358
Tangible Assets				22,153
Intangible Assets (1)				19,205

Current liabilities:				578,554
Customer Deposits				570,823
Other liabilities				7,731

Net assets acquired				18,980

(1)

As a result of the aforementioned business combination, the Bank has recognized 18,980 as an intangible asset with identifiable useful life corresponding to BNP´s customer database. Although the future economic benefits from a customer database do not arise from legal rights, it meets the separable criterion and the Bank expects that it will be able to derive benefit from the information on the database for at least ten years.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

3.3 Goodwill arising on acquisition

Consideration transferred	36,500
Less: fair value of identifiable net assets acquired	(18,980)
Goodwill arising on acquisition	17,520

Goodwill has arisen in the acquisition of certain assets and liabilities from BNP because the consideration paid for the business combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. None of the goodwill arising on these acquisitions is expected to be deductible for tax purposes.

3.4 Net cash inflow on acquisition

Consideration paid in cash	(36,500)
Less: cash and cash equivalent balances acquired	338,652
Net Cash inflow on acquisition	302,152

4.	Earnings per share

4.1 Basic earnings per share

Accordingly:

	2010	2009

Profit attributable to the Bank	1,360,258	1,050,524
Profit from continuing operations (net of non-controlling interests)	1,360,258	1,050,524
Weighted average number of shares outstanding	1,078,875,015	1,078,875,015
Adjusted number of shares	1,078,875,015	1,078,875,015
Basic earnings per share (Pesos)	1.2608	0.9737
Basic earnings per share from continuing operations (Pesos)	1.2608	0.9737

4.2 Diluted earnings per share

In calculating diluted earnings per share, the amount of profit attributable to shareholders and the weighted average number of shares outstanding, net of treasury shares, are adjusted to take into account all the dilutive effects inherent to potential ordinary shares (share options, warrants and convertible debt instruments). However the Bank does not have any of these effects over the diluted earnings per share ratio in 2010 and 2009.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

5.	Cash and balances with Argentine Central Bank

The breakdown, by type, of the balances of “Cash and balances with Argentine Central Bank” is as follows:

	12.31.2010	12.31.2009	01.01.2009
Cash	1,481,176	1,301,128	849,213
Interbank investments:
Repurchased agreements	1,706,735	2,697,108	1,985,251
Interbank deposits	4,713,546	3,161,388	2,493,340
Deposit Guarantee (1)	146,779	127,611	108,998
BCRA Compulsory deposits (2)	6,347	4,594	3,651
	8,054,583	7,291,829	5,440,453

(1)	Other guarantee deposits relates to special accounts opened in the BCRA for clearing and other similar transactions, which are not restricted.

(2)	BCRA compulsory deposits relates to the minimum balance financial institutions are required to maintain with the BCRA based on a percentage of deposits received from third parties. Such deposits do not represent restricted cash.

Note 43 d) includes a detail of the residual maturity periods of cash and balances with Argentine central bank and of the related average interest rates.

6.	Loans and advances to credit institutions

The breakdown, by classification, type and currency, of the balances of “Loans and advances to credit institutions” in the consolidated balance sheets is as follows:

	12.31.2010	12.31.2009	01.01.2009
Classification:
Loans and receivables	1,066,855	883,287	807,384
	1,066,855	883,287	807,384
Type:
Reciprocal accounts	73,608	174,053	417,860
Time deposits	615,596	413,311	365,046
Unsettled financial transactions	381,567	299,406	27,544
Impairment losses	(3,916)	(3,483)	(3,066)
	1,066,855	883,287	807,384
Currency:
Argentinean Pesos	773,823	672,084	331,189
Euro	38,971	47,829	40,665
US dollar	240,350	145,450	429,412
Other currencies	17,627	17,407	9,184
Impairment losses	(3,916)	(3,483)	(3,066)
	1,066,855	883,287	807,384

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The detail and movements of the impairment losses on financial assets classified as loans and receivables to credit institutions are disclosed in Note 10.

Note 43 d) includes a detail of the residual maturity periods of loans and receivables and of the related average interest rates. Additionally, Note 43 f) includes the fair value amounts of these assets classified as loans and receivables to credit institutions.

7.	Debt instruments

The breakdown, by classification, type and currency, of the balances of “Debt instruments” is as follows:

	12.31.2010	12.31.2009	01.01.2009

Classification:
Financial assets held for trading	2,897,343	2,431,147	680,624
Available-for-sale financial assets	663,797	460,272	155,069
	3,561,140	2,891,419	835,693
Type:
Government debt securities
Government bonds	1,307,761	799,997	218,676
Instruments Issued by the BCRA	2,103,280	1,984,489	542,003
Other fixed-income securities	150,099	106,933	75,014
	3,561,140	2,891,419	835,693
Currency:
Argentinean Pesos	3,529,107	2,873,829	796,327
US dollar	32,033	17,590	39,366
	3,561,140	2,891,419	835,693

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The breakdown of “Financial assets held for trading” is as follows:

Financial assets held for trading	12.31.2010
BOND OF THE ARGENTINEAN NATION IN ARS BADLAR + 275 Pbs	473,088
BOND OF THE ARGENTINEAN NATION IN ARS PRIVATE BADLAR + 300 Pbs maturing 2015	151,912
BCRA BILLS (LEBAC) maturing 2011	1,602,410
BCRA NOTES (NOBAC) maturing 2011	92,005
Other	577,928
TOTAL	2,897,343

Financial assets held for trading	12.31.2009
BOND OF THE ARGENTINEAN NATION IN ARS + BADLAR 275 Pbs	288,633
BCRA BILLS (LEBAC) maturing 2010	1,211,704
BCRA BILLS (LEBAC) maturing 2011	480,242
Other	450,568
TOTAL	2,431,147

Financial assets held for trading	01.01.2009
BOND OF THE NATIONAL GOVERNMENT IN US DOLLARS - BODEN 2012 maturing 2012	31,997
BCRA NOTES (NOBAC) maturing 2009	508,550
Other	140,077
TOTAL	680,624

“Available for sale financial assets” corresponds to Guaranteed Bonds issued by the Argentine government and maturing as of April 10, 2020 (BOGAR 2020), with a fixed interest rate of 2%.

The Bank recognized unrealized gains amounting to 170,451 and 295,373 as of December 31, 2010 and 2009, respectively, related to the difference in the fair value of the bond BOGAR 2020.

There were no unrealized losses recognized as of such dates.

Note 43 d) contains a detail of the residual maturity periods of available-for-sale financial assets and of loans and receivables and of the related average interest rates.

8.	Equity instruments

The breakdown, by classification and type, of the balances of “Equity instruments” is as follows:

	12.31.2010	12.31.2009	01.01.2009

Classification:
Financial assets held for trading	6,318	4,040	1,489
Available-for-sale financial assets	28,172	26,490	20,746
Total	34,490	30,530	22,235

Type:
Shares of Argentinean companies	30,661	27,734	19,849
Shares of foreign companies	3,829	2,796	2,386
Total	34,490	30,530	22,235

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The breakdown of “Financial assets held for trading” by Companies ´shares is as follows:

Description	12.31.2010	12.31.2009	01.01.2009
Siderar S.A.I.C.	2,640	1,205	-
Telecom Argentina S.A.	1,000	1,755	-
ADR Inversiones y Representaciones S.A.	887	-	716
Petroleo Brasilero S.A.	629	-	451
ADR Banco Frances S.A.	616	-	-
Banco Frances S.A.	537	-	-
China Petroleum & Chemical Corp.	9	-	-
Pampa Energia S.A.	-	1,080	-
Pampa Holding S.A.	-	-	322
	6,318	4,040	1,489

The breakdown of “Available-for-sale financial assets” is as follows:

Description	12.31.2010	12.31.2009	01.01.2009
Visa Argentina S.A.	16,805	11,256	5,908
Mercado de Valores de Buenos Aires S.A.	4,800	6,400	8,000
Bladex S.A.	3,645	2,621	2,226
Other	2,922	6,213	4,612
	28,172	26,490	20,746

The changes in the balance of “Available-for-sale financial assets” are as follows:

		2010	2009
Balance at beginning of year		26,490	20,746

Net additions /disposals		(1,894)	4,687
Of which:
	Visa Argentina SA	(293)	2,953
	Gennets SA	(501)	138

Valuation adjustments (*)		3,576	1,057

Balance at end of year		28,172	26,490

(*) Correspond to the recognized unrealized gains related to the difference in the fair value of the equity instruments. There were no unrealized losses recognized as of December 31, 2010 y 2009.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

9.	Trading derivatives (assets and liabilities)

a) Trading derivatives

The detail, by type of inherent risk, of the fair value of the trading derivatives arranged by the Group is as follows (see Note 43 a)):

	12.31.2010		12.31.2009		01.01.2009
	Debit Balance	Credit Balance	Debit Balance	Credit Balance	Debit Balance	Credit Balance
Interest rate risk	3,626	(346)	3,830	(2,146)	3,787	(11,346)
Foreign currency risk	37,161	(6,712)	56,469	(2,743)	21,459	(115,303)
Others	379	-	-	-	-	-
	41,166	(7,058)	60,299	(4,889)	25,246	(126,649)

I. As of December 31, 2010:

Interest rate risk: Interest – rate barter swap transactions (BADLAR(1)/C.E.R. versus Fixed Rate) for the amount of 3,626 recorded as "Financial assets held for trading - Trading derivatives" and 346 accounted as "Financial liabilities held for trading - trading derivates", for which the Bank shall pay/receive a variable flow according to the BADLAR rate, survey rate and CER variation and shall /pay a fixed flow, calculated on the agreed notional.

Foreign currency risk: i) Cross Currency Swap amounting 7,791 included under "Financial assets held for trading - Trading derivatives" account and 1,107 recorded as "Financial liabilities held for trading - trading derivates", through these operations the entity receives or pays fixed or variable flows in argentine pesos, U.S. dollars or euros; ii) Buying and selling term market operations of foreign currency settled into pesos without the delivery of the underlying asset negotiated for an amount of 29,371 recorded as "Financial assets held for trading - Trading derivatives" and 5,605 recorded as "Financial liabilities held for trading - trading derivates".

c)	Price risk: Call options purchased in 379 through which the Bank has the right to perceive a variable performance depending on the evolution of the price of the Soya.

II. As of December 31, 2009:

Interest rate risk: Interest – rate barter swap transactions (BADLAR/CER versus fixed rate) for the amount of 3.830 recorded as "Financial assets held for trading - Trading derivatives" and 2,146 accounted as "Financial liabilities held for trading - trading derivates", for which the Bank shall pay/receive a variable flow according to the BADLAR, survey rate and CER variation and shall receive/pay a fixed flow, calculated on the agreed notional.

Foreign currency risk: i) Cross Currency Swap amounting 15,816 included under "Financial assets held for trading - Trading derivatives" account and 435 recorded as "Financial liabilities held for trading - trading derivates", through these operations the entity receives or pays fixed or variable flows in argentine pesos, U.S. dollars or euros; ii) Buying and selling term market operations of foreign currency settled into pesos without the delivery of the underlying asset negotiated for an amount of 40,653 recorded as "Financial assets held for trading - Trading derivatives" and 2,308 recorded as "Financial liabilities held for trading - trading derivates".

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

III. As of January 1, 2009:

Interest rate risk: Interest – rate barter swap transactions (BADLAR/C.E.R. versus Fixed Rate) for the amount of 3,787 recorded as "Financial assets held for trading - Trading derivatives" and 11,346 accounted as "Financial liabilities held for trading - trading derivates", for which the Bank shall pay/receive a variable flow according to the BADLAR rate, survey rate and CER variation and shall receive/pay a fixed flow, calculated on the agreed notional.

Foreign currency risk: i) Cross Currency Swap amounting 5,388 included under "Financial assets held for trading - Trading derivatives" account and 39,495 recorded as "Financial liabilities held for trading - trading derivates", through these operations the entity receives or pays fixed or variable flows in argentine pesos, U.S. dollars or euros; ii) Buying and selling term market operations of foreign currency settled into pesos without the delivery of the underlying asset negotiated for an amount of 16,071 recorded as "Financial assets held for trading - Trading derivatives" and 75,808 recorded as "Financial liabilities held for trading - trading derivates".

(1) BADLAR (Buenos Aires Deposits of Large Amount Rate): the average daily interest rate paid by private sector banks on deposits over 1,000 with a maturity of 30 to 35 days.

10.	Loans and advances to customers

The breakdown, by classification, of the balances of “Loans and advances to customers” in the consolidated balance sheets is as follows:

	12.31.2010	12.31.2009	01.01.2009
Loans and receivables	19,454,697	13,804,528	14,260,354
Of which:
Impairment losses	(349,809)	(382,752)	(311,687)
Loans and advances to customers disregarding impairment losses	19,804,506	14,187,280	14,572,041

Note 43 d) includes a detail of the residual maturity periods of loans and receivables and of the related average interest rates.

There are no loans and advances to customers for material amounts without fixed maturity dates.

Following is a detail, by loan type and status, borrower sector, and interest rate formula, of the loans and advances to customers, which reflect the Group’s exposure to credit risk in its core business:

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

	12.31.2010	12.31.2009	01.01.2009
Loan type and status:
Public sector - Argentina	33,305	126,494	846,526
Commercial, financial and industrial	9,553,678	6,230,953	6,477,838
Real estate, construction and other mortgages	1,572,633	1,495,411	1,581,864
Installment loans to individuals	8,494,768	6,156,327	5,371,786
Lease financing	150,122	178,095	294,027
Impairment losses	(349,809)	(382,752)	(311,687)
	19,454,697	13,804,528	14,260,354
Borrower sector:
Public sector - Argentina	33,305	126,594	846,526
Households	8,723,491	6,566,232	6,436,050
Energy	1,151,750	991,194	981,881
Construction	359,885	293,660	301,420
Manufacturing	3,382,935	1,942,628	2,228,621
Services	5,803,331	3,884,220	3,465,856
	19,454,697	13,804,528	14,260,354

Interest rate formula:
Fixed interest rate	13,400,734	9,359,750	9,999,705
Floating rate	6,053,963	4,444,778	4,260,649
	19,454,697	13,804,528	14,260,354

The changes in the allowances for the impairment losses on the assets making up the balances of “Loans and receivables - Loans and advances to customers” and “Loans and receivables - Loans and advances to credit institutions” (see Note 6) were as follows:

	2010	2009
Balance at beginning of year	386,235	314,753

Additions (1)	256,357	471,236

Charge off	(288,867)	(399,754)

Balance at end of year	353,725	386,235

(1) Additions of provisions for loan losses net of loans recovered for 78,548 and 62,799 as of December 31, 2010 and 2009 are recorded under “Impairment of losses on financial assets (net)” account on the statement of income.

Note 43 f) contains the fair value amounts of these assets classified as loans and receivables to customers.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

11.	Hedging derivatives

The detail, by type of risk hedged, of the fair value of the derivatives qualifying for hedge accounting is as follows (see Note 43 a):

	12.31.2010		12.31.2009		01.01.2009
	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
Cash flow hedges	-	-	8	-	2,353	-

Both balances include interest rate swaps (fixed rate versus CER) for which the institution pays a variable flow connected to the variation of CER and receive a fixed flow rate. These transactions were made to cover certain assets adjusted by CER.

During 2010 and 2009 all the hedge transactions were considered effective so consequently, any amount has been charged to the consolidated income statement.

12.	Non-current assets held for sale

The breakdown of “Non-current assets held for sale” is as follows:

	12.31.2010	12.31.2009	01.01.2009
Tangible assets held for sale
Value	3,287	3,730	7,900
Allowances	(3,287)	(3,730)	(7,900)
	-	-	-

Non-current assets held for sale are measured at the lower of fair value less costs to sell and their carrying amount at the date of classification in this category. The amount includes properties acquired on behalf of credits.

The total amount of non-current assets held for sale are related to foreclosed assets and intended for sale up to one year through the completion of auctions.

13. Investments in Associates

The breakdown, by company, of the balance of “Investments - Associates” (see Note 2.c) is as follows:

	Participation %			Investments			Income from companies accounted for the equity method
	12/31/2010	12/31/2009	01/01/2009	12/31/2010	12/31/2009	01/01/2009	12/31/2010	12/31/2009
Gire S.A.	58.33%	58.33%	58.33%	37,196	37,270	27,584	17,425	12,464
Banelco S.A.	16.37%	16.37%	16.37%	9,567	8,682	8,454	1,936	2,695
Total				46,763	45,952	36,038	19,361	15,159

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

As a result of a shareholders agreement dated May 31, 1991, the Bank does not have control of Gire S.A., only significant influence.

The changes in the balance of this item were as follows:

	2010	2009
Balance at beginning of year	45,952	36,038
Income from companies accounted for using the equity method	19,361	15,159
Dividends received	(18,550)	(5,245)
Balance at end of year	46,763	45,952

There was no impairment with respect to investments in associates in 2010 or 2009.

Following is a summary of the financial information on the associates:

	12.31.2010	12.31.2009	01.01.2009
Total assets	475,878	359,388	275,317
Total liabilities	345,514	234,319	175,187
Total revenues	431,289	345,810	264,801
Total profit	49,295	37,439	23,671

As of December 31, 2010 and 2009 and as of January 1, 2009 there were no restrictions on the ability of both associates to transfer any type of funds to the investor.

14.	Tangible assets

a) Property and equipment for own use

The changes in “Property and equipment for own use” in the consolidated balance sheets were as follows:

	Property and Equipment
Cost:
Balances at January 1, 2009	1,238,987
Additions/Disposals (net)	22,084
Balances at December 31, 2009	1,261,071
Additions/Disposals (net)	219,129
Balances at December 31, 2010	1,480,200

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Accumulated depreciation:
Balances at January 1, 2009	(585,350)
Disposals	9,680
Charge for the year	(80,521)
Balances at December 31, 2009	(656,191)
Disposals	13,532
Charge for the year	(82,573)
Balances at December 31, 2010	(725,232)
Tangible assets, net:
Balances at January 1, 2009	653,637
Balances at December 31, 2009	604,880
Balances at December 31, 2010	754,968

As of December 31, 2010 and 2009 and as of January 1, 2009 and during 2010 and 2009 the Bank did not recognized any impairment related to assets classified as Property and equipment.

The amortization expenses has been included in the line item “Depreciation and amortization” of the consolidated income statement.

As of December 31, 2010 and 2009 and as of January 1, 2009 the Bank did not pledge any tangible asset as collateral.

The detail, by class of asset, of the balance of “Property and equipment for own use” in the consolidated balance sheets is as follows:

	Cost	Accumulated Depreciation	Net Balance
Land and buildings	716,067	(240,137)	475,930
IT equipment and fixtures	297,942	(208,494)	89,448
Furniture and vehicles	142,031	(98,229)	43,802
Other items	82,947	(38,490)	44,457
Balances at January 01, 2009	1,238,987	(585,350)	653,637

Land and buildings	695,160	(245,057)	450,103
IT equipment and fixtures	328,941	(244,531)	84,410
Furniture and vehicles	146,089	(104,604)	41,485
Other items	90,881	(61,999)	28,882
Balances at December 31, 2009	1,261,071	(656,191)	604,880

Land and buildings	749,308	(246,395)	502,913
IT equipment and fixtures	404,251	(287,115)	117,136
Furniture and vehicles	196,609	(112,802)	83,807
Other items	130,032	(78,920)	51,112
Balances at December 31, 2010	1,480,200	(725,232)	754,968

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

b) Investment property

The detail of the balance of “Investment property” that includes offices for rent is as follows:

	Investment property

Cost:
Balances at December 31, 2009	-
Additions/Disposals (net)	1,544
Balances at December 31, 2010	1,544

Accumulated depreciation:
Balances at December 31, 2009	-
Charge for the year	(30)
Balances at December 31, 2010	(30)
Tangible assets, net:
Balances at December 31, 2010	1,514

As of December 31, 2010 and 2009 and as of January 1, 2009 and during 2010 and 2009 the Bank did not recognized any impairment related to assets classified as Investment Property.

The amortization expenses has been included in the line item “Depreciation and amortization” of the consolidated income statement.

15.	Intangible assets – Goodwill

The breakdown of “Goodwill”, based on the companies giving rise thereto, is as follows:

	12.31.2010	12.31.2009
BNP Paribas - Argentine Branch	17,520	-

Total	17,520	-

At least once per year (or whenever there is any indication of impairment), the Group reviews goodwill for impairment. For this purpose, it analyses certain macroeconomic variables that might affect its investments such as population data, political situation, economic situation, among others, as well as cash flow projections on reasonable and supportable assumptions that represent management's best estimate of the range of economic conditions that will exist over the remaining useful life of the asset. Management assesses the reasonableness of the assumptions by examining the causes of differences between past cash flow projections and actual cash flows.

As of December 31, 2010 the Bank has performed an impairment test of the goodwill and no indication of impairment loss has arisen.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

16.	Intangible assets - Other intangible assets

The breakdown of the balance of “Other intangible assets” is as follows:

	Estimated Useful Life	12.31.2010	12.31.2009
With finite useful life:
IT developments	Until 3 years	146,255	80,238
Customer list	10 years	18,980	-
Accumulated amortization		(76,128)	(55,993)
		89,107	24,245

The changes in “Other intangible assets” were as follows:

	2010	2009
Balance at beginning of year	24,245	-
Additions/Disposals (net)	114,448	80,238
Other additions (Note 3)	18,980	-
Amortization	(68,566)	(55,993)
Balance at end of year	89,107	24,245

As of December 31, 2010 and 2009 and as of January 1, 2009 and during 2010 and 2009 the Bank did not recognized any impairment related to assets classified as Intangible assets.

The amortization expenses has been included in the line item “Depreciation and amortization” of the consolidated income statement.

17.	Other assets

The breakdown of the balance of “Other assets” is as follows:

	12.31.2010	12.31.2009	01.01.2009
Transactions in transit	8,437	2,384	2,702
Prepayments and accrued income	86,962	33,517	34,532
Guarantee deposits	164,077	106,662	56,674
Miscellaneous receivable	56,383	21,822	10,796
Receivables by benefit programms	51,011	26,393	15,314
Other	8,960	4,437	1,900
	375,830	195,215	121,918

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

18.	Deposits from credit institutions

The breakdown, by classification, counterparty, type and currency, of the balances of these items is as follows:

	12.31.2010	12.31.2009	01.01.2009

Financial liabilities at amortized cost	241,938	209,915	401,782
	241,938	209,915	401,782
Type:
Reciprocal accounts	93	15	1,045
Time deposits	181,226	152,017	338,011
Other demand accounts	59,237	56,442	57,954
Accrued interest	1,382	1,441	4,772
	241,938	209,915	401,782
Currency:
Argentinean Pesos	80,984	113,687	145,932
Euro	2,920	898	642
US dollar	156,121	93,674	249,180
Other currencies	1,913	1,656	6,028
	241,938	209,915	401,782

Note 43 d) includes a detail of the residual maturity periods of financial liabilities at amortized cost and of the related average interest rates. In addition, Note 43 f) contains the fair value amounts of these liabilities classified as Deposits from credit institutions.

19.	Customer deposits

The breakdown, by classification and type, of the balance of “Customer deposits” is as follows:

	12.31.2010	12.31.2009	01.01.2009

Classification:
Financial liabilities at amortized cost	26,174,375	19,342,713	16,894,904
	26,174,375	19,342,713	16,894,904
Type:
Demand deposits-
Current accounts	9,034,807	6,944,131	5,710,592
Savings accounts	8,982,016	5,696,186	4,335,077
Other demand deposits	413,224	323,856	240,922
Time deposits-
Fixed-term deposits	7,650,355	6,273,386	6,502,061
Other time deposits	2,879	-	5,000
Accrued interest	91,094	105,154	101,252
	26,174,375	19,342,713	16,894,904

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

20.	Marketable debt securities

The breakdown, by classification and type, of the balance of “Marketable debt securities” is as follows:

	12.31.2010	12.31.2009	01.01.2009

Classification:
Financial liabilities at amortized cost	188,590	258,307	450,434
Total	188,590	258,307	450,434

Type:
Corporate bonds	188,590	258,307	450,434
Total	188,590	258,307	450,434

The breakdown, by currency of issue, of the balance of “Marketable debt securities” is as follows

				Average Interest Rate (%)
Currency:	12.31.2010	12.31.2009	01.01.2009	2010	2009

Argentinean Pesos	188,590	258,307	336,304	10.93%	11.38%
US dollar	-	-	114,130	-	6.00%
Total	188,590	258,307	450,434

The changes in “Marketable debt securities” were as follows:

	2010	2009

Balance at beginning of year	258,307	450,434
Issues	184,300	-
Redemptions	(253,580)	(201,360)
Interest	(437)	(1,750)
Foreign exchange and others	-	10,983
Balance at end of year	188,590	258,307

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Issuance and redemption of corporate bonds

The Bank keeps in force the corporate bonds corresponding to the Corporate Bonds Global Issuance Program (Term Securities Program) of USD 250,000,000 authorized by Stockholders' Meeting and the CNV (National Securities Commission) for a nominal residual value of 253,580 which breaks down as follows:

Amount Global Program (USD)	Series	CNV´s Authorization	Date issued	Nominal Residual Value	Interest Rate	Maturity Date
250,000,000	1	Nº 14,428	May 2, 2007	253,580	(1) (2)	May 2, 2010

(1)	Accrues interest at 11,375% nominal annual half-yearly payable.

(2)	Between December 2007 and 2009, the Bank cancelled in advance bonds for a nominal value of 196,420 of which 76,570 were cancelled during 2009.

On December 15, 2009, the maturity and cancellation for a total amount of USD 16,970,408.75 (USD 16,476,125 on account of amortization and USD 494,283.75 on account of income of those Corporate Bonds corresponding to the Term Securities Program for USD 1,000,000,000, Classes 10, 12 and 14, with C.N.V’s authorization, number 263 (these classes were unified resulting from the authorization of the Buenos Aires Stock Exchange (B.C.B.A.) under “Step-Up Corporate Bonds”) took place.

The amount on account of capitals as regards the corporate bonds as of December 31, 2009 and January 1, 2009 amounts to 253,580 and 443,957, respectively and their accrued interest payable to 4,727 and 6,477, respectively, and they were applied so as to finance personal and mortgage loans and those companies situated within the country for investment in physical assets, working capital integration or liability refinancing, inter-financial loans and purchase of government securities in accordance with that established by the Argentine Banking GAAP in force at the moment of issuance of such corporate bond series.

On May, 3, 2010, the Bank cancelled the total amount of corporate bonds corresponding to the Corporate Bonds Global Issuance Program (Term Securities Program) of USD 250,000,000 authorized by Stockholders' Meeting and the CNV- by resolution N° 14.428; for a nominal residual value of 253,580.

Additionally dated November 1, 2010, the Bank proceeded to the issuance of Corporate Bonds amounting 184,300 for a period of 18 months, which breaks down as follows:

Amount Global Program (USD)	Series	CNV´s Authorization	Date issued	Nominal Residual Value	Interest Rate	Maturity Date
500,000,000	1	Nº 15,860	November 1, 2010	184,300	BADLAR + 300Bps	May 1, 2012

At December 31, 2010, the amount by way of interest payable for the same rises to 4,290.

At December 31, 2010 and 2009 and at January 1, 2009, none of these issues was convertible into Bank shares or granted privileges or rights which, in certain circumstances, make them convertible into shares.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

21. Other financial liabilities

The breakdown of the balances of these items is as follows:

	12.31.2010	12.31.2009	01.01.2009
Trade payables	25,737	13,780	11,482
Clearing houses	7,706	4,601	3,308
Collection accounts:
Tax payables	194,238	138,123	80,285
Other collection accounts	758,950	602,254	517,117
Unsettled financial transactions	112,420	27,091	27,581
Other financial liabilities	397,951	337,589	432,371
Retentions on salaries	14,814	10,306	8,912
Foreign currency payment orders	767,904	913,422	787,956
Total	2,279,720	2,047,166	1,869,012

Note 43 d) contains a detail of the residual maturity periods of subordinated liabilities at each year-end of the related average interest rates. In addition, Note 43 f) contains the fair value amounts of these liabilities classified as Other financial liabilities.

22.	Provisions

The changes in “Provisions” for the year ended December 31, 2010 and 2009 were as follows:

	2010	2009
Balances at beginning of year	269,083	253,863

Net changes (income)/ expense:	(24,370)	79,517
Decreases - reversals	(37,300)	-
Additions to provisions	12,930	79,517

Charges against provisions	(85,827)	(64,297)
Balances at end of year	158,886	269,083

Provisions for commitments and other provisions

The Bank and its subsidiaries are parties to judicial and administrative proceedings involving tax, civil, labor and other matters arising in the normal course of their business.

Provisions were recognized based on the nature, complexity and history of the lawsuits, and the opinion of the in-house and outside legal counsel.

The Bank’s policy is to accrue the full amount of lawsuits whose likelihood of unfavorable outcome is probable.

Legal obligations - tax and social security were fully recognized in the consolidated financial statements.

Management understands that the recognized provisions are sufficient to cover probable losses on the lawsuits.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

i) Legal proceedings

ii) Consumer lawsuits

Various consumer associations, claiming to act on behalf of consumers, have initiated mediation processes and “demandas colectivas” (suits similar to class actions) against the Bank and other entities under Consumer Protection Law, seeking reimbursement for certain fees, commissions, charges and interest, which they allege were charged to the bank customers and collected incorrectly over a period of years, and an injunction barring the collection of such fees, commissions, charges and interest. Class action lawsuits are not contemplated under the Argentine legal framework; however, “demandas colectivas” have been admitted by courts under certain circumstances pursuant to the Consumer Protection Law. These claims were brought against the Bank for unspecified amounts. Although the Bank has not admitted to any wrongdoing in connection thereof, it has settled certain of these claims in the last two years, primarily in exchange for reimbursements and changes to some of its business practices including the manner in which the Bank charges and provides notice of its fees and commissions. As of the date of issuance of these financial statements six “demandas colectivas” remain pending against the Bank. The Bank has filed defenses in four of the suits, two of which are in the evidentiary stage. One claim has been dismissed by the court and is currently on appeal by the plaintiff. The remaining suit is at the preliminary pleading stage. The Bank has made provisions in respect of these cases as part of its general provision for legal liabilities in accordance with the internal and external counsel's estimates of the probable outcomes.

iii. Tax contingencies

Additionally, during 2010, the Bank entered into another moratorium whereby it paid the principal amount claimed by the Autonomous City of Buenos Aires without its related interests.

It should be noted that the Bank still keeps its rights to continue these legal proceeding.

Accordingly, the Bank considers that the resolution of the issues which have been previously exhibited will not have a significant impact on its consolidated income and equity.

As of December 31, 2010 the provisions for these matters reached 47,200 approximately.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

iv. Other proceedings

The Bank is subject to various Central Bank proceedings, including those based on alleged breaches of foreign exchange reporting obligations. In the most significant one, the Central Bank initiated an administrative proceeding against the Bank and some of its executives based on an alleged breach of certain foreign exchange reporting regulations related to that reported as “cumplida“ or fulfilled certain oil and gas exporter’s repatriation of its foreign currency export proceeds during 2002. The proceeding has not yet reached the evidentiary stage. The Bank believes the probability of being unsuccessful is remote due to legal precedents and its defenses.

As of December 31, 2010 there are 880 cases concerning commercial, civil and labor contingencies. The Bank has analyzed them and estimated a provision of 77,000 for such cases.

Additionally, the Bank recorded provisions related to Constitutional Protection Actions (See Note 41) that amount 17,380, and recorded 17,300 for other contingencies.

23.	Other liabilities

The breakdown of the balance of “Other Liabilities” is as follows:

	12.31.2010	12.31.2009	01.01.2009
Transactions in transit	3,312	2,123	1,941
Accrued expenses and deferred income	49,923	39,240	31,584
Credit balances on operations with credit cards	42,958	35,814	28,365
Collection of values for non-account holders	41,763	49,256	72,283
Bonus and social security costs	203,284	185,242	164,736
Other payables	11,720	1,383	7,160
Other	29,300	41,771	33,611
Total	382,260	354,829	339,680

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

24.	Tax matters

a) Income Tax

The total charge for each year can be reconciled to accounting profit as follows:

	2010	2009
Operating profit before tax	2,063,432	1,550,727
Total income tax at the tax rate (35%)	722,201	542,754

Permanent differences:	(19,280)	(42,799)
Of which:
Tax exempt income	(11,325)	(14,341)
Non-deductible expenses	10,310	3,263
Investment in associates	(11,753)	(11,491)
True up Income Tax return	(8,052)	(24,808)
Other adjustments	1,540	4,578

Income tax	702,921	499,955
Of which:
Current tax	627,087	449,060
Deferred taxes	75,834	50,895
	702,921	499,955

b) Effective tax rate calculation

The effective tax rate is as follows:

	2010	2009
Operating profit before tax	2,063,432	1,550,727
Income Taxes	702,921	499,955
Effective tax rate	34%	32%

c) Deferred taxes

The detail of the balances of "Tax assets-deferred" and "Tax liabilities-deferred" is as follows:

	12.31.2010	12.31.2009	01.01.2009
Tax assets	300,110	433,818	570,175
Of which:
Debt instruments	95,834	155,267	287,842
Allowance for loan losses	79,007	104,959	150,721
Provisions	51,695	118,450	19,781
Other liabilities	27,293	18,432	26,002
Other temporary differences	46,281	36,710	85,829

Tax liabilities	(168,634)	(163,924)	(145,623)
Of which:
Property and equipment	(130,277)	(113,738)	(114,352)
Other temporary differences	(38,357)	(50,186)	(31,271)

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The change in the balances of "Tax assets-deferred" and "Tax liabilities-deferred" in the last two years was as follows:

	Balances at	(Charge)/Credit	(Charge)/Credit	Balances at
	December 31, 2009	to Income	to Valuation Adjustment	December 31, 2010
Deferred tax assets	433,818	(74,050)	(59,658)	300,110
Deferred tax liabilities	(163,924)	(1,784)	(2,926)	(168,634)
Total	269,894	(75,834)	(62,584)	131,476


	Balances at	(Charge)/Credit	(Charge)/Credit	Balances at
	January 1, 2009	to Income	to Valuation Adjustment	December 31, 2009
Deferred tax assets	570,175	(32,977)	(103,380)	433,818
Deferred tax liabilities	(145,623)	(17,918)	(383)	(163,924)
Total	424,552	(50,895)	(103,763)	269,894

d) Tax recognized in equity

As of December 31, 2010 and 2009 and as of January 1, 2009 there is no income tax recognized in equity.

25.	Non-controlling interests

“Non-controlling interests” include the net amount of the equity of subsidiaries attributable to equity instruments that do not belong, directly or indirectly, to the Group, including the portion attributed to them of profit for the year.

Breakdown

The entire balance of “Equity – Non controlling interest” relates to Santander Río Sociedad de Bolsa S.A.

	12.31.2010	12.31.2009	01.01.2009

Non controlling interest	1,241	1,271	1,270
	1,241	1,271	1,270

Profit for the year attributed to non controlling interest	253	248
	253	248

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b) Changes

The changes in the balance of “Non-controlling interests” are summarized as follows:

	2010	2009

Balance at beginning of year	1,271	1,270
Valuation adjustments	219	196
Dividends paid to non controlling interests	(249)	(195)
Balance at end of year	1,241	1,271

26.	Valuation adjustments

The balances of “Valuation adjustments” include the amounts, net of the related tax effect, of the adjustments to assets and liabilities recognized temporarily in equity through the statement of changes in equity (recognized income and expense) until they are extinguished or realized, when they are recognized definitively as shareholders’ equity through the consolidated income statement. The amounts arising from subsidiaries are presented, on a line by line basis, in the appropriate items according to their nature.

It should be noted that the statement of recognized income and expense includes the changes to “Valuation adjustments” as follows:

		Revaluation gains/ (losses): includes the amount of the income, net of the expenses incurred in the year, recognized directly in equity. The amounts recognized in equity in the year remain under this item, even if in the same year they are transferred to the income statement or to the initial carrying amount of the assets or liabilities or are reclassified to another line item.

		Amounts transferred to income statement: includes the amount of the revaluation gains and losses previously recognized in equity, even in the same year, which are recognized in the income statement.

		Amounts transferred to the initial carrying amount of hedged items: includes the amount of the revaluation gains and losses previously recognized in equity, even in the same year, which are recognized in the initial carrying amount of assets or liabilities as a result of cash flow hedges.

		Other reclassifications: includes the amount of the transfers made in the year between the various valuation adjustment items.

The amounts of these items are recognized gross, including the amount of the valuation adjustments relating to non controlling interests, and the corresponding tax effect is presented under a separate item, except in the case of entities accounted for using the equity method, the amounts for which are presented net of the tax effect.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

a)	Available-for-sale financial assets

This item includes the net amount of unrealized changes in the fair value of assets classified as available-for-sale financial assets.

The changes in the balance at December 31, 2010 with respect to the previous year relate mainly to the recovery in the equities markets and the debts instruments.

b) Cash flow hedges

This item includes the gains or losses attributable to hedging instruments that qualify as effective hedges. These amounts will remain under this heading until they are recognized in the consolidated income statement in the periods in which the hedged items affect it.

Accordingly, amounts representing valuation losses will be offset in the future by gains generated by the hedged instruments.

27.	Shareholders’ equity

Compliance with the provisions required by law No. 25,738

The Banks is a corporation incorporated under the Argentine Republic Corporation law whose shareholders limit their responsibility to the integration of the subscribed shares in accordance with Law No. 19,550. Accordingly, and in compliance with Law No. 25,738, neither the major foreign capital stockholders nor the other local or foreign stockholders are liable for the excess of their share integration, for the obligations arising from transactions made by the Bank.

a) Share capital

Authorized capital is represented by 1,078,875 thousand registered shares with one peso par value, being 440,174 thousands of ordinary shares and 638,701 thousands of preferred shares. Since 1997, the Bank lists its stock on the Buenos Aires Stock Exchange (B.C.B.A.) and, since 1999, on the Latin-American Euro Stock Exchange (Latibex) in Spain.

The fully paid-up capital is composed as presented below:

	Shares in Thousands
	12.31.2010				12.31.2009				01.01.2009
	Common "A"	Common "B"	Preferred	Total	Common "A"	Common "B"	Preferred	Total	Common "A"	Common "B"	Preferred	Total

Argentinean Residents	36,730	2,539	-	39,269	36,730	2,539	-	39,269	36,730	2,539	-	39,269
Foreign Residents	105,181	291,432	635,448	1,032,061	105,181	291,432	635,448	1,032,061	105,181	291,432	635,448	1,032,061
Non controlling interests	543	3,749	3,253	7,545	553	3,739	3,253	7,545	553	3,739	3,253	7,545
Total	142,454	297,720	638,701	1,078,875	142,464	297,710	638,701	1,078,875	142,464	297,710	638,701	1,078,875

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Preferred shares: Non-redeemable notaries preferred shares for a nominal value of 1 peso, with no right to vote (except under the assumptions established by Section 217 of Law No. 19,550 of Business Associations), with no premiums on the issuance of shares and with right to dividends on equal basis than common shares.

b) Reserves

b.1) Legal Reserve

According to Law No. 21,526, or the Argentine Financial Institutions Law, as amended, and BCRA regulations, financial institutions are required to maintain a legal reserve of 20% of their 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 under BCRA Rules (as adjusted to reflect changes in prior results) is allocated in the following order: (a) to comply with the legal reserve requirement; (b) to pay the accrued fees of the members of the board of directors and statutory supervisory committee; (c) to pay fixed dividends, which shall be applied first to pending and unpaid dividends and holders of preferred shares (if applicable); and (d) to pay any additional dividends to holders of preferred stock and common stock, paid in proportion to the respective subscriptions, or to pay an optional reserve fund or account, to be applied as may be determined at a shareholders’ meeting. Any remaining portion 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.

The reserve can only be used during periods in which a financial institution has incurred in losses and has exhausted all other reserves. Banks may not pay dividends if the legal reserve has been impaired. However, as of April 24, 2006, the BCRA has established by Communication “A” 4526 that whenever the Legal Reserve is used to absorb losses, profits could be distributed if the balance prior to absorption were greater than 20% of the corporate capital plus capital adjustment, once this last amount is achieved. As of December 31, 2010 and 2009 and as of January 1, 2009 the legal reserve balance amounts to 621,874, 386,730 and 268,956, respectively.

b.2) Retained Earnings

It includes the accumulated profit not distributed to stockholders and the impact of the valuation adjustments as a consequence of the transition to IFRS as it is explained in note 47.

b.3) Dividend Policy and Payment of Dividends

Although the Bank has no current plans to adopt a formal dividend policy governing the amount and payment of dividends, it currently intends to pay dividends subject to approval by a majority vote of our shareholders. The Bank does not have any agreements containing contractual restrictions on the payment of dividends. All shares of its capital stock rank pari passu with respect to the payment of dividends.

In accordance with Argentine corporate law, the declaration and payment of annual dividends are determined by the shareholders at the annual ordinary shareholders’ meeting. Generally, the board of directors submits the statutory financial statements for the preceding fiscal year, together with reports thereon by the supervisory committee, for approval at the annual ordinary shareholders’ meeting, which must be held within four months of the end of each fiscal year. Dividends may be lawfully declared and paid only out of the retained earnings stated in its yearly statutory financial statements. The retained earnings reported at the annual shareholders’ meetings are calculated in accordance with Argentine Banking GAAP and may differ from the retained earnings calculated in accordance with IFRS.

As a financial institution, the Bank must request the approval of the Superintendence of Financial and Exchange Institutions of the BCRA (SEFyC), for dividends to be distributed at least 30 business days prior to a shareholders’ meeting.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

In 2010, cash dividends were made available to shareholders as of June 4, 2010 for fiscal year 2009 in the amount of 823,000 or 0.762831 per share. In 2009, cash dividends were made available to shareholders as of September 15, 2009 for fiscal year 2008 in the amount of 90,000 or 0.08342 per share.

28.	Minimum capital requirements

Financial institutions are required to maintain regulatory capital consistent with their activities.

The minimum capital requirements calculated using the Argentine Banking GAAP as explained in Note 1 d) is as follows:

	12.31.2010	12.31.2009	01.01.2009
Computable Capital (RPC)	3,566,948	2,887,518	1,942,885
- Core capital	2,261,151	1,908,439	1,620,025
- Supplementary capital	1,439,566	1,029,808	437,675
- Deductible items	(133,769)	(50,729)	(114,815)

Capital requirements	2,093,780	1,479,815	1,486,448
- counterpart risk	1,887,639	1,351,424	1,362,848
- interest rate and market risk	206,141	128,391	123,600

Excess of capital requirements	1,473,168	1,407,703	456,437

Risk-weighted assets	23,143,641	16,592,158	16,733,415

29.	Memorandum accounts

The Bank provides a variety of guarantees to its customers to improve their credit standing and allow them to compete. The following table summarizes at December 31, 2010 and January 1, 2009 all of the guarantees.

	12.31.2010	12.31.2009	01.01.2009
Contingent liabilities:
Financial guarantees
Guarantees promises	325,106	285,939	226,972
Doubtful guarantees	375	375	1,485
Documentary Credits	51,649	61,035	42,682
Other contingent exposures-
Technical guarantees	22,977	27,042	27,355
Doubtful liabilities	571	9	1,272
Other	42,162	44,540	72,489
Total contingent liabilities	442,840	418,940	372,255
Contingent commitments:
Loan commitments drawable by third parties	303,889	216,370	335,522
Total contingent commitments	303,889	216,370	335,522

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Performance guarantees are issued to guarantee customers obligations such as to make contractually specified investments, to supply specified products, commodities, or maintenance or warranty services to a third party, completion of projects in accordance with contract terms, etc. Financial standby letters of credit include guarantees of payment of loans, credit facilities, promissory notes and trade acceptances. The Group always requires collateral to grant this kind of financial guarantees. In Documentary Credits, the Group acts as a payment mediator between trading companies located in different countries (import-export transactions).

Under a documentary credit transaction, the parties involved deal with the documents rather than the commodities to which the documents may relate. Usually the traded commodities are used as collateral to the transaction and the Group may provide some credit facilities. Loan commitments draw-able by third parties include mostly credit card lines and commercial commitments. Credit card lines are unconditionally cancelable by the issuer. Commercial commitments are mostly 1 year facilities subject to information requirements to be provided by our customers.

The risk criteria followed to issue all kinds of guarantees, financial standby letters of credit, documentary credits and any risks of signature are in general the same as those used for other products of credit risk, and therefore subject to the same admission and tracking standards. The guarantees granted on behalf of our customers are subject to the same credit quality review process as any other risk product. On a regular basis, at least once a year, the solvency of the mentioned customers is checked as well as the probability of those guarantees to be executed. In case that any doubt on the customer’s solvency may arise we create allowances with charge to net income, by the amount of the inherent losses even if there is no claim to us.

Additionally, the liability for the premium received for providing the above guarantees, which is being amortized into income over the life of the related guarantee, as of December 2010 and 2009 amounts to 4,623 and 4,002 respectively.

30.	Interest and similar income

“Interest and similar income” in the consolidated income statement comprises the interest accruing in the year on all financial assets with an implicit or explicit return, calculated by applying the effective interest method, irrespective of measurement at fair value; and the rectifications of income as a result of hedge accounting.

The breakdown of the main interest and similar income items earned in 2010 and 2009 is as follows:

	2010	2009
Loans and advances to credit institutions	88,123	142,017
Debt instruments	370,094	322,984
Loans and advances to customers	2,584,852	2,526,536
Other interest	32,264	38,617
Total	3,075,333	3,030,154

31.	Interest expense and similar charges

“Interest expense and similar charges” in the consolidated income statement includes the interest accruing in the year on all financial liabilities with an implicit or explicit return, including remuneration in kind, calculated by applying the effective interest method, irrespective of measurement at fair value; the rectifications of cost as a result of hedge accounting; and the interest cost attributable to pension funds.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The breakdown of the main items of interest expense and similar charges accrued in 2010 and 2009 is as follows:

	2010	2009
Deposits and other instruments from credit institutions	13,850	13,236
Customer deposits	824,521	952,495
Marketable debt securities	18,540	41,283
Total	856,911	1,007,014

32.	Income from equity instruments

“Income from equity instruments” includes the dividends and payments on equity instruments out of profits generated by investees after the acquisition of the equity interest.

The breakdown of the balance of this item is as follows:

	2010	2009
Equity instruments classified as:
Available-for-sale financial assets	19,449	13,272
Of which:
Visa Argentina S.A.	16,776	12,694
Interbanking S.A.	2,400	-
Santander Río Servicios S.A.	98	172
Bladex S.A.	121	123
Mercado de Valores de Buenos Aires S.A.	33	210
Santander Río Trust S.A.	21	12
Other	-	61
	19,449	13,272

33.	Fee and commission income

“Fee and commission income” comprises the amount of all fees and commissions accruing in favor of the Group in the year, except those that form an integral part of the effective interest rate on financial instruments.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The breakdown of the balance of this item is as follows:

	2010	2009
Collection and payment services:
Bills	76,774	67,003
Demand accounts	524,895	428,155
Cards	647,211	486,470
Checks and other	109,218	90,583
	1,358,098	1,072,211
Marketing of non-banking financial products:
Investment funds	1,979	1,878
Insurance	276,335	240,993
	278,314	242,871
Securities services:
Securities trading	32,458	28,848
Administration and custody	6,348	5,271
	38,806	34,119
Other:
Foreign exchange	92,352	74,196
Financial guarantees	2,858	2,599
Cash in valuables transportation	72,504	51,029
Safety boxes	71,769	50,704
Other fees and commissions	47,652	26,269
	287,135	204,797
Total	1,962,353	1,553,998

34.	Fee and commission expense

“Fee and commission expense” shows the amount of all fees and commissions paid or payable by the Group in the year, except those that forms an integral part of the effective interest rate on financial instruments.

The breakdown of the balance of this item is as follows:

	2010	2009
Credit and debit card	193,009	134,268
Collections and transactional services	94,663	69,486
Commission expense for sale of insurance	96,599	81,359
Commission expenses - Benefit Programs	87,274	72,264
Others	24,866	17,019
Total	496,411	374,396

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

35.	Gains/losses on financial assets and liabilities (net)

“Gains/losses on financial assets and liabilities” includes the amount of the valuation adjustments of financial instruments, except those attributable to interest accrued as a result of application of the effective interest method and to allowances, and the gains or losses obtained from the sale and purchase thereof.

The breakdown of the balance of this item, by type of instrument, is as follows:

	2010	2009
Financial instruments not measured at fair value through profit or loss	(1,528)	-
Of which: Available-for-sale financial assets
Equity instruments	(1,376)	-


Hedging derivatives and other	503	24,893

Other financial assets and liabilities held for trading (*)	204,686	80,568
	203,661	105,461

(*) It includes the net gain or loss arising from transactions involving debt securities, equity instruments and derivatives. It should be noted that the Group manages its risk in these instruments on a global basis.

36.	Exchange differences (net)

“Exchange differences” shows basically the gains or losses on currency dealings, the differences that arise on translations of monetary items in foreign currencies to the functional currency.

37.	Other operating income and other operating expenses

These items in the consolidated income statement include:

	2010	2009
Other operating income	12,119	8,578
Recovered expenses	7,309	2,500
Other operating income	4,810	6,078

Other operating expenses	83,146	70,713
Contribution to the guarantee fund (1)	37,385	30,864
Agreement out of court	27,543	24,540
Cost for constitutional protection actions	4,051	3,317
Other operating expenses	14,167	11,992

(1) See Note 42 a).

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

38.	Personal expenses

Breakdown

The breakdown of “Personal Expenses” is as follows:

	2010	2009
Wages and salaries	571,988	414,962
Social security costs	147,065	105,992
Additions to provisions for defined contribution pension plans	10,000	-
Share-based payment costs	7,365	4,039
Other staff costs	23,652	15,815
Bonus and benefits granted to employees	160,996	147,610
Total	921,066	688,418

b)	Share-based payments

The Bank has adhered a multiannual incentive plan payable in shares of Banco Santander Spain for the benefit of its group’s executive officers and other members of management and any other executives designated by the board of directors or, when so delegated by the board of directors, the executive committee, based on compliance a series of commercial and institutional objectives. The beneficiaries of the plan use will receive shares of Banco Santander Spain.

The expenses associated with this plan and managers are borne by the Bank and are part of the overall compensation of the beneficiaries of the plan. They are recorded as an expense in the Consolidated Statement of Income under the “Personnel expenses” item.

Long-term incentive policy

In 2007, the Parent Company’s Board of Directors approved a long-term incentive plan consisting of granting stock options on Bank’s shares for the 2008-2010 periods. This plan focuses on the Santander Group’s executive directors and certain executive employees in Spain and other Santander Group companies. This plan will involve successive three-year cycles of share deliveries to the beneficiaries, so that each year one cycle will begin and, from 2009 onwards, another cycle will also end.

These benefits do not generate diluting effects, since they are based on shares of Banco Santander Spain.

On August 4, 2008, the Bank’s board of directors adopted Banco Santander Spain’s incentive plan payable in shares of Banco Santander Spain for 187 managers. The plan was implemented through the granting of a certain number of shares of Banco Santander Spain depending on the position, performance and trajectory of the beneficiary and is composed of two cycles: one during 2007 and 2008 (Plan I09 by 178,731 total shares), and the other during 2007, 2008 and 2009. (Plan I10 by 270,338 total shares.) Those at December 31, 2010 have been paid. The cost of both cycles of the plan at January 1, 2009, allocated to the Group Bank was 12,336.

On May 17, 2010, the board adopted another similar incentive plan composed of one cycle during 2008, 2009 and 2010. (Plan I11 by 275,106 total shares) The total cost of the plan for the Group was 7,950, of which 7,365 were recorded under “Personal expenses” at December 31, 2010. This plan is in force at December 31, 2010.

For each cycle, each beneficiary who keeps working with us for the duration of the plan is entitled to a maximum number of shares based on the achievement of certain performance targets by the Banco

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

Santander Spain. The targets are defined by comparing the Banco Santander Spain’s performance with that of a benchmark group of financial institutions and are linked to two parameters: total shareholder return, or TSR, and growth in earnings per share, or EPS. The relevant performance targets are considered as of the third anniversary of the commencement of each cycle (with the exception of the first cycle, for which the second anniversary was considered). Shares awarded in each cycle are delivered within seven months from the end of the cycle.

At the end of each year, TSR and the EPS growth is calculated for the Banco Santander Spain and each of the benchmark entities and the results are ranked. Each of the two criteria (TSR and EPS growth) is weighted at 50% in the calculation of the percentage of shares to be delivered, based on the following scale and in accordance with the Banco Santander Spain’s relative position among the group of benchmark financial institutions:

Banco Santander Spain’s place in the TSR ranking	Percentage of maximum shares to be delivered	Banco Santander Spain’s place in the EPS ranking	Percentage of maximum shares to be delivered
1st to 6th	50%	1st to 6th	50%
7th	43%	7th	43%
8th	36%	8th	36%
9th	29%	9th	29%
10th	22%	10th	22%
11th	15%	11th	15%
12th and below	0%	12th and below	0%

If Banco Santander, S.A. is within the first quartile (including the 25th percentile) for each of the measures considered (TSR and EPS growth), the maximum percentage of shares will be earned; if it is at the median (including the 50th percentile), 30% of the maximum percentage of shares will be earned. If it is below the median, all the share distributions will be voided.

The cost of share-based payments is calculated at the inception date and accrued in a pro-rata basis. In 2009 pro-rata expenses of 4,039 were recorded related to the initial costs on the related grant dates for the above-mentioned cycles. The changes in fair value between the grant date and the settlement date are hedged by the Parent company. This fair value was calculated as described below:

The fair value of the 50% which is linked to the TSR was determined by the Parent on the basis of the Monte Carlo valuation model with 10,000 simulations run to determine the TSR for each of the reference Group companies, considering the aforementioned variables. The results (each of which represents the distribution of a number of shares) are classified in descending order through the calculation of the weighted average, and this amount is discounted at the risk-free interest rate.

	PI09	PI10	PI11
Expected volatility (*)	16.25%	15.67%	19.31%
Historical annual dividend return	3.23%	3.24%	3.47%
Risk-free interest rate	4.47%	4.49%	4.83%

(*) Determined on the basis of the historical volatility over the course of the period (two or three years).

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

The simulation model’s application yields a percentage value of 42.7% for PI09, 42.3% for PI10 and 44.9% for PI11, applied to 50% of the value of the granted shares to determine the carrying amount of the incentive’s TSR-based portion. Since this valuation is related to a market condition, it cannot be adjusted after the date on which the shares are granted.

In view of the high correlation between TSR and EPS, it was considered feasible to extrapolate that, in a high percentage of cases, the TSR value is also valid for EPS. Therefore, it was initially determined that the fair value of the portion of the plans linked to the Bank’s relative EPS position, i.e. of the remaining 50% of the options granted, was the same as that of the 50% corresponding to the TSR. Since this valuation refers to a non-market condition, it is reviewed and adjusted on a yearly basis.

c) Pension Plan

On March 22, 2010 the Board of Directors has approved a pension plan addressed to 74 key managers with the aim of improving long-term benefits of key staff, helping and motivating in this way the retention of human capital.

Participation in this plan is free and voluntary for the beneficiaries, and consists of a defined contribution system composed of the contributions of each beneficiary and the Bank, which will accumulate and invest to access the benefit accordingly. The beneficiaries will access the plan in cases of retirement, total and permanent incapacity or death. The plan is designed based on local market practices.

At December 31, 2010, the contributions made by the Bank amounted to 10,000.

39.	Other general administrative expenses

a) Breakdown

The breakdown of the balance of this item is as follows:

	2010	2009
Property, fixtures and supplies	106,173	83,087
Technology and systems	107,564	87,989
Advertising	95,687	82,197
Communications	81,829	65,037
Technical reports	25,441	21,338
Per diems and travel expenses	9,545	8,002
Taxes other than income tax	133,350	90,697
Surveillance and cash courier services	58,446	53,630
Insurance premiums	4,347	3,627
Court and attorneys	26,027	18,604
Security	58,453	44,673
Other administrative expenses	95,811	89,779
Total	802,673	648,660

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

40.	Gains/ (losses) on disposal of assets not classified as non-current assets held for sale

The breakdown of the balance of this item is as follows:

	2010	2009

Gains:
On disposal of tangible assets (1)	26,666	19,278
	26,666	19,278

(1) Gains from tangible assets come from the disposal of vehicles and property

41. Constitutional protection actions

The pesification and the rescheduling of deposits established by Decree No. 1570/01, Law No. 25,561, Decree No. 214/02 and other supplementary regulation, which the government ordered in response to the 2001-2002 crisis, triggered a significant number of legal actions by individuals and legal institutions, mainly through protection claims (“acción de amparo” or “amparos”) against financial institutions, including the Bank, on the basis that these measures violated constitutional and other rights. Claimants have demanded, among other things, to recover their deposits in cash and in their original currency. As a result of such claims, Argentine courts have entered judgments (some of which are subject to pending appeals) ordering financial institutions to reimburse the relevant dollar-denominated deposits, or their equivalent in pesos, at market exchange rates. These rulings resulted in significant losses for financial institutions, including the Bank, as these institutions had to reimburse the deposits in Argentina, which had been “pesified” and rescheduled by the Argentine government (mostly dollar-denominated deposits before pesification), at market exchange rates, higher than the Ps. 1.40 rate at which the deposits were pesified and recorded. As of December 31, 2010, December 31, 2009 and January 1, 2009, the Bank had incurred cumulative cash losses of 1,110,000, 1,079,900 and 1,041,000 as a result of such judgments.

The Supreme Court has handed down several decisions in relation to the claims filed as a result of the 2001-2002 crisis. On December 27, 2006, in Massa, Juan Agustin v Poder Ejecutivo Nacional – Dto No. 1570 y Otro s/ Amparo Ley No. 16,986, which it refers to as the Massa Case, the Supreme Court confirmed the constitutionality of the emergency legislation during 2001 and 2002 regarding the pesification of the Argentine economy and determined the method of calculating the applicable restitution of the deposits in the financial system pursuant to such legislation. The Bank has filed administrative claims through the Argentine Banking Association requesting compensation from the Argentine government for losses in connection with these claims and has reserved all of our legal rights in connection therewith. The authorities have not ruled on possible compensation to financial institutions in relation to these matters, and the Bank cannot assure that amounts will be reimbursed for such amounts. The ruling in the Massa case considerably reduced the number of injunctions and judgments filed against financial institutions. The Bank does not expect to incur significant further losses related to the pesification and rescheduling of deposits.

See Note 22.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

42. Bank Deposit guarantee insurance system and Bank liquidity fund.

a) Bank Deposit Guarantee Insurance System

Law No. 24,485, published on April 18, 1995 and Decree No. 540/95 of the same date provided for the creation of a Bank Deposit Guarantee Insurance System, characterized as being limited, mandatory, and for value. This system was designed to provide further coverage for risks inherent in bank deposits, as a subsidiary and complementary protection to that afforded by the system of bank deposit privileges and protection created by the Financial Institutions Law.

This law provided for the creation of a company named "Seguros de Depósitos Sociedad Anónima" (SEDESA, Deposit Insurance Corporation) for the exclusive purpose of managing the Deposits Guarantee Fund. As required by the amendments made by Decree 1292/96, the shareholders of the newly created company are the BCRA (with a minimum of one share) and the trustees appointed in the trust agreement made by financial institutions in such individual proportions as determined by the BCRA in terms of their respective contributions to the Deposits Guarantee Fund.

The current guarantee of deposit system does not include deposits made by other financial institutions (this includes certificates of deposits acquired in the secondary market), deposits made by individuals related to the bank either directly or indirectly, certificates of deposit in securities, acceptances or guarantees and, lastly, deposits made at a rate two or more percentage points per annum above the rolling average for the last five days of deposit rates for an equivalent term as found by the survey conducted by the BCRA Communication "A" 2399 of the BCRA of December 15, 1995 extended the stated grounds for exclusion from the system to include negotiable certificates of deposits acquired by endorsement and deposits obtained through systems offering other incentives in addition to agreed-upon interest rates.

The above trust was created in August, 1995. As of December 31, 2009, the Bank has an 11.7228% interest in it. The Federal Executive, by Decree No 1127/98 dated September 24, 1998, increased the reimbursement guaranty provided by Decree 540/95 to the amount of 30, regardless of the term for which the deposit is made. Deposit for amounts exceeding 30 are also covered by the guaranty system but only up to such amount. By means of Communication “A” 4271, the BCRA lowered from 0.02% to 0.015% the monthly contribution that Financial Entities shall destine for the Guarantee Fund, effective as from January, 2005.

b) Bank Liquidity Fund

On December 26, 2001, Decree No. 32/01 provided for the creation of the Bank Liquidity Fund in order to inject liquidity into the banking system, according to the scope established therein.

Therefore, on January 2, 2002, the Bank contributed USD 306,581 to the above Fund. In virtue of the fact that, finally, the Fund was not constituted, the amount originally deposited by the Bank was refunded in pesos at ARS 1.40 per dollar, but without having been either adjusted by CER as established by Decree 214/02 or determined any retribution for the time which interceded between the original disbursement and the subsequent devolution.

In such sense, the Bank has claimed the BCRA, the CER credit plus the interests owed related to the retribution of such contribution. The determination of this retribution finds itself pending collection as the date of issuance of these consolidated financial statements.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

43.	Other disclosures

a) Notional amounts and market values of trading and hedging derivatives

The breakdown of the notional and/or contractual amounts and the market values of the trading and hedging derivatives held by the Group is as follows:

	12.31.2010		12.31.2009
	Notional Amount	Market Value	Notional Amount	Market Value
Trading derivatives:
Interest rate risk-
Interest rate swaps	338,573	3,280	347,500	1,684
Foreign currency risk-
Forward rate agreements	1,218,635	23,769	870,028	38,345
Currency swaps	163,952	6,680	359,511	15,381
Others	3,790	379	-	-
	1,724,950	34,108	1,577,039	55,410
Hedging derivatives:
Interest rate risk-
Interest rate swaps	-	-	1,250	8
	-	-	1,250	8
Total	1,724,950	34,108	1,578,289	55,418

The notional and/or contractual amounts of the contracts entered into do not reflect the actual risk assumed by the Group, since the net position in these financial instruments is the result of offsetting and/or combining them. The net position is used by the Group basically to hedge the interest rate, underlying asset price or foreign currency risk; the results on these financial instruments are recognized under “Gains/losses on financial assets and liabilities (net)” in the consolidated statements of income and increase or offset, as appropriate, the gains or losses on the investments hedged.

Additionally, in order to interpret correctly the results on the “Securities and Commodities Derivatives” shown in the foregoing table, it should be considered that these items relate mostly to securities options for which a premium has been received which offsets their negative market value. Also, this market value is offset by positive market values generated by symmetrical positions in the Group’s held-for-trading portfolio.

The Group manages the credit risk exposure of these contracts through netting arrangements with its main counterparties and by receiving assets as collateral for its risk positions.

The detail of the cumulative credit risk exposure, by financial derivative, is as follows:

	12.31.2010	12.31.2009

Currency derivatives	64,715	123,395
Interest rate derivatives	20,879	13,819
Total	85,594	137,214

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

b) Off-balance-sheet funds under management

i) Assets under management

The Bank is the trustee for the trusts described below and in no case is the Bank liable with its own assets for the commitments undertaken in the performance of the trusts; such liabilities will only be serviced with and up to the sum of the trust corpus assets and the proceeds from such assets.

"EDIFICIO LA NACION” Financial Trust

The Financial Trust named “EDIFICIO LA NACION” organized as a Direct Investment Fund was set up by The Bank as trustee; and approved through Resolution No. 13,503 dated August 10, 2000 by the National Securities Commission (CNV). In addition, the CNV approved through such Resolution the issuance of Debt Securities and Participation Certificates under “EDIFICIO LA NACION Financial Trust– Direct Investment Fund” for a nominal amount of USD 27,000,000 and USD 18,000,000, respectively, which were subscribed on January 29, 2001.

The entrepreneurship consisted in the construction and commercialization of the Bouchard Plaza building and the trust term was of 7 (seven) years, renewable up to a maximum of 10 (ten) years.

On March 15, 2007, the Fiduciary proceeded to settle the total capital balance corresponding to Debt Securities Class I and Class II.

On March 15 and May 14, 2007, the Fiduciary proceeded to make partial payments to the holders of Participation Certificates Class I and Class II, on account of the final settlement to be performed by the Trust. As of the issuance of these consolidated financial statements, Debt Securities Class I and Class II have been totally cancelled pending the distribution of the possible fund remainder once the Trust has been definitely settled between the Participation Certificates Class I and Class II and Debt Securities Class II with Extraordinary Contingent Interest Coupon (CICE) .

Other trusts

As of December 31, 2010, the Bank is also trustee of the following trusts:

Description	Trust inception date	Underlying Assets	Amount of the Underlying Assets	Kind of Trust

Complejo Penitenciario II	05.08.98	Marcos Paz Penitentiary Complex of Buenos Aires Province	59,734	Administration Trust
Caminos de las Sierras S.A.	08.07.98	Rights stemming from toll collection	92,290	Guaranty Trust
Correo Argentino S.A.	09.17.99	Shares and rights	99,000	Collection Rights Assignment Trust
Turbine Power Co. S.A	11.12.98	Rights and guarantees	50,000	Guaranty Trust
Pla S.A.	12.18.09	Custody of checks	1,540	Check in Guaranty Trust
Petrobrás S.A.	02.24.06	Funds administration	(1)	Administration Trust
Fideicomiso Grimoldi II	06.23.09	Assignment of collection rights	30,000	Guaranty Trust
Fideicomiso Grimoldi III	12.02.10	Assignment of collection rights	27,000	Guaranty Trust
Benito Roggio e Hijos S.A. II	12.17.09	Assignment of collection rights	78,000	Guaranty Trust
David Rosental S.A.	07.05.07	Assignment of collection rights	3,000	Guaranty Trust
Ecoayres Argentina S.A.	10.22.07	Assignment of collection rights	19,000	Guaranty Trust

(1) Without a certain and specific amount.

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BANCO SANTANDER RIO S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND AT JANUARY 1, 2009

(Thousands of Pesos)

ii) Investment funds

According to the financial statements as of September 30, 2010, latest available to date, prepared under Argentine GAAP, the Bank holds the following items in safekeeping, in its capacity of depositary of mutual funds:

Mutual Fund	Total equity as of September 30, 2010
Superfondo Acciones	47,442
Super Ahorro	1,230,595
Super Ahorro US	47,002
Superfondo 2000	509
Superfondo 2001	17,526
Superfondo 2002	8,409
Superfondo US Plus	16,942
Super Bonos Internacionales (Ex MIX I)	40,860
Supergestión Brasil (Ex Superfondo MIX II )	15,918
Superfondo BRIC (Ex Superfondo MIX V )	30,871
Super Renta Futura	38,444
Supergestión Internacional (Ex Mix III)	14,732
Superfondo Renta Variable	34,433
Superfondo Renta Latinoamérica	10,473
Superfondo Renta	69,860
Superfondo Latinoamérica	84,631
Superfondo Ahorro US	756
Superfondo América	14,655
Superfondo Europa	8,191
Superfondo Acciones Brasil	91,400
Superfondo Renta Plus	13,914
Supergestión Mix VI	737,712
Supergestión Internacional Europa	2,488
Superfondo Inmobiliario	74
Total	2,577,837

c) Off-balance-sheet third-party items held in custody

At December 31, 2010 and 2009 and January 1, 2009 the Group held in custody items including debt securities and equity instruments, among others, for 86,765,151; 64,098,498 and 52,464,980, respectively.

d) Residual maturity periods and average interest rates

The breakdown by maturity of the balances of certain items in the consolidated balance sheet as follows:

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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 Number)

	Banco Santander Río S.A. Bartolomé Mitre 480 (1036) Ciudad de Buenos Aires Republic of Argentina (54 11) 4341-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered	Proposed maximum aggregate offering price(2)(3)	Amount of registration fee
Class B shares in the form of ADSs, par value(1)	$ 100,000,000	$ 11,610.00

Global Coordinators and Joint Bookrunners
Santander		BofA Merrill Lynch
Joint Bookrunner
J.P. Morgan

ALCO	Asset and Liability Committee, which manages our ALCO portfolio.

ALCO portfolio	Our investment portfolio, which is composed primarily of Central Bank and government bonds.

Amparos	Protection claims or acciones de amparo, legal actions against financial institutions relating to the pesification of deposits during the 2001-2002 crisis.

ANSES	National Administration of Social Security or Administración Nacional de la Seguridad Social.

Argentine Banking GAAP	Accounting rules of the Argentine Central Bank, which prescribes the generally accepted accounting principles for all financial institutions in Argentina.

BADLAR	The average daily interest rate paid by private sector banks on deposits over Ps. 1 million with a maturity of 30 to 35 days.

BASE	Buenos Aires Stock Exchange or Bolsa de Comercio de Buenos Aires.

Basel Accord	An international framework adopted by the Basel Committee for capital measurement and capital standards of banking institutions.

Basel Committee	Basel Committee on Banking Regulations and Supervisory Practices, which includes the supervisory authorities of twelve major industrial countries.

BIS	Bank for International Settlements.

CER or CER Index	Stabilization Coefficient or Coeficiente de Estabilización de Referencia, a consumer price inflation coefficient calculated by the Central Bank.

CNV	National Securities Commission or Comisión Nacional de Valores, the Argentine securities market regulator.

CPI	Consumer price index, as calculated by INDEC.

CRYL	Central Securities Registry and Clearinghouse or Central de Registro y Liquidación de Pasivos Públicos y Fideicomisos Financieros, a public debt securities clearing system in Argentina.

CVS	Wage Variation Coefficient or Coeficiente de Variación de Salarios.

GEP	General exchange position, which includes all the liquid foreign currency assets of an institution, such as gold and foreign currency reserves maintained in Argentina and abroad, deposits and investments, regardless of their term, in foreign banks, investments in foreign government securities (OECD members and sovereign debt rated not less than “AA”), certificates of time deposits in foreign institutions (rated not less than “AA”), other liquid investments abroad, correspondents’ debit and credit balances, 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, and third-party funds pending settlement. It does not include third parties’ foreign currency held in custody, term sales and purchases of foreign currency or securities nor direct investments abroad.

ICSID	International Centre for Settlement of Investment Disputes, where foreign shareholders of several Argentine companies have filed claims alleging that certain government measures were inconsistent with the fair and equitable treatment standards set forth in various bilateral investment treaties to which Argentina is a party.

IFRS	International Financial Reporting Standards, accounting standards issued by the International Accounting Standards Board.

IGJ	Superintendency of Legal Entities or the Inspección General de Justicia of the City of Buenos Aires.

INDEC	National Statistics and Census Institute or Instituto Nacional de Estadísticas y Censos, which publishes Argentine economic data, including the CPI.

INPI	National Institute of Intellectual Property or Instituto Nacional de Propiedad Industrial, the agency responsible for registering trademarks, patents and designs in Argentina.

Latibex	Latin American Stock Exchange or Bolsa de Valores Latinoamericanos en Euros.

Lebacs	Central Bank notes with maturities of less than one year.

MAE	The Argentine over-the-counter market or Mercado Abierto Electrónico.

Mercosur	Southern Common Market or Mercado Común del Sur, an economic and political agreement between Argentina, Brazil, Paraguay and Uruguay.

MERVAL	A corporation whose 133 shareholders are the sole individuals or entities authorized to trade, either as principals or agents, in the securities listed on the BASE.

MVE	Market value of equity.

NIM	Net interest margin is net interest income (including income on equity investments) divided by average interest earning assets, which are loans, receivables, debt instruments and other financial assets which yield interest or similar income.

Nobacs	Central Bank notes with maturities of more than one year.

NPL	Non-performing loan, which we define as:

With copies to:
Nicholas A. Kronfeld Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017		David Mercado Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019

	Per Share	Per ADS	Total
Public offering price	$	$	$
Underwriting discount	$	$	$
Proceeds, before expenses, to us	$	$	$
Proceeds, before expenses, to the selling shareholder	$	$	$

	Page

Presentation of Financial and Other Information	ii
Glossary of Selected Terms	iv
Special Note Regarding Forward-Looking Statements	vii
Prospectus Summary	1
The Offering	9
Summary Financial and Operating Data	14
Risk Factors	18
Use of Proceeds	36
Exchange Rates and Exchange Controls	37
Market Information	42
Capitalization	45
Dilution	46
Dividends and Dividend Policy	47
Selected Financial and Operating Data	49
Management's Discussion and Analysis of Financial Condition and Results of Operations	55
The Argentine Banking Industry	100
Business	111
Selected Statistical Information	141
Argentine Banking Regulatory Framework	166
Management	191
Principal and Selling Shareholders	203
Related Party Transactions	205
Description of Capital Stock	208
Description of American Depositary Shares	217
Taxation	225
Rights Offering	231
Underwriting (Conflicts of Interest)	232
Expenses of the Offering	241
Validity of the Securities	242
Experts	242
Enforcement of Judgments Against Foreign Persons	242
Where You Can Find More Information	243
Index to Financial Statements	245

	●	Loans to individual customers or loans to SME or global wholesale banking customers under Ps. 750,000, which have been delinquent for more than 90 days; and
	●	Loans to SME or global wholesale banking customers over Ps. 750,000, which have determined to be delinquent following an analysis of the customer’s payment capacity, based on its financial statements and projected cash flows.


OR	Operational risk.

RC	Regulatory capital or Responsabilidad Patrimonial Computable.

Rofex	Rosario Futures Exchange.

RORAC	Return on risk adjusted capital is a risk-based profitability measurement framework for analyzing risk-adjusted financial performance.

SEFyC	Superintendency of Financial and Exchange Institutions of the Central Bank or Superintendencia de Entidades Financieras y Cambiarias.

SINAC	Computer-Assisted Integrated Negotiation System or Sistema Integrado de Negociación Asistida por Computación, a computer trading system that permits trading in both debt and equity securities and is accessed by brokers directly from workstations located in their offices.

SME	Small and medium-sized enterprises, which we define as enterprises and corporations which are not global wholesale banking customers.

SSGD	Deposit Insurance System or Sistema de Seguro de Garantía de los Depósitos Bancarios, a mandatory insurance system for bank deposits implemented by the Central Bank.

Total Income	Total income includes interest income, fee and commission income, gains/losses on financial assets and liabilities (net) and exchange differences (net).

UIF	The Financial Information Unit or Unidad de Información Financiera, a regulatory institution that enacts regulations regarding money laundering matters in Argentina.

VaR	Value at risk, an estimate of the expected maximum loss in the market value of a given portfolio over a one-day time horizon at a 99% confidence interval.

	As of and for the year ended December 31, 2010
	Santander Río(1)			Average(2)			Market Share			Private-Sector Rank
	(in millions of pesos, except operating data and percentages)
Total private-sector loans	Ps.	19,660.8		Ps.	11,062.2			9.9	%		1
Personal loans		3,253.2			1,945.1			8.4			2
Credit card loans		4,743.4			2,050.8			16.3			1
Commercial loans(3)		8,902.1			5,848.5			9.1			1
Total private-sector deposits		25,564.0			14,428.7			9.9			1
Private-sector demand deposits		17,978.3			8,357.4			12.6			1
Private-sector savings accounts		9,865.9			4,325.3			12.8			1
Private-sector term deposits		7,057.9			5,734.9			6.6			4
Net income		1,601.0			655.3			13.0			1
Shareholders’ equity		3,862.1			2,700.7			6.7			2
Return on average equity		46.1	%		24.7	%		—			1
Efficiency ratio(4)		44.3			63.1			—			1
Fee income as a percentage of expenses		85.3			54.5			—			1
Credit and debit card accounts		5,419,860			2,211,129			14.8			1
Branch network		285			189			7.0			2
ATMs		917			742			7.2			2

Issuer	Banco Santander Río S.A.

Selling Shareholder	Administración de Bancos Latinoamericanos Santander, S.L.

Securities offered	We and the selling shareholder are offering ADSs, evidenced by ADRs and each representing four Class B shares, through the international underwriters in the United States and in other jurisdictions outside of the United States and Argentina. Of the ADSs offered in this offering, are being offered by us and are being offered by the selling shareholder. We refer to this offering as the “international offering.”

Argentine offering	Concurrently with the international offering, we are offering Class B shares through the Argentine underwriters to investors in Argentina by means of a prospectus in Spanish, substantially similar to this prospectus. We refer to this offering as the “Argentine offering.” The Argentine offering is comprised solely of primary shares. We refer to the international offering together with the Argentine offering as the “global offering.” The closings of the international and Argentine offerings are conditioned upon each other.

Capital increase and preemptive rights assignment	As a result of the capital increase required for the issuance of Class B shares as part of the global offering, in accordance with Argentine corporate law, each of our shareholders has a preemptive right to subscribe a number of shares sufficient to maintain its proportionate holding of our total capital stock. Our current shareholders will be entitled to exercise preemptive rights, and to subscribe at the same price per share as the Argentine offering, for one new Class B share per each shares currently held, during the preemptive subscription period, which we expect will begin on , 2011 and end on , 2011. In addition, our shareholders have accretion rights, which permit them to subscribe any capital increase shares that are not subscribed by other shareholders in proportion with the percentage of shares for which the subscribing shareholder has exercised its preemptive rights. Our principal shareholders, including the selling shareholder, which collectively hold 99.3% of our shares, will assign their preemptive rights in the capital

	increase underlying the primary shares offered in the global offering to the underwriters. Any preemptive or accretion rights exercised by minority shareholders will be satisfied with Class B shares at the closing of the global offering and at the end of the preeemptive subscription period on , 2011. The maximum number of such shares that may be issued, assuming all minority shareholders exercise their preemptive rights, is Class B shares. See “Rights Offering.”

Conflicts of interest	Because Santander Investment Securities Inc., a member of the U.S. Financial Industry Regulatory Authority (“FINRA”) and an underwriter in this offering, is an affiliate of, and under common control with, the issuer and the selling shareholder, FINRA views the participation of Santander Investment Securities Inc. as an underwriter in this offering as the public distribution of securities issued by a company with which Santander Investment Securities Inc. has a conflict of interest and/or an affiliation, as those terms are defined in FINRA Rule 5121. Because of this relationship, the offering will be conducted in accordance with FINRA Rule 5121. This rule requires, among other things, that a qualified independent underwriter has participated in the preparation of, and has exercised the usual standards of “due diligence” in respect to, the registration statement and this prospectus. Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to act as qualified independent underwriter for the international offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act of 1933, specifically including those inherent in Section 11 of the Securities Act. We have agreed to indemnify Merrill Lynch, Pierce, Fenner & Smith Incorporated against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act.

Over-allotment option	The selling shareholder has granted the international underwriters an option, exercisable within 30 days from the date of commencement of trading of the ADSs, to purchase up to an additional ADSs to cover over-allotments of shares in connection with the international offering, if any.

The ADSs	Each ADS will represent four Class B shares. The ADSs will be evidenced by ADRs. The ADSs will be issued under a deposit agreement among us, JPMorgan Chase Bank, N.A., as depositary, and the registered holders and beneficial owners from time to time of ADSs issued thereunder.

Listing	We intend to apply to list the ADSs on the NYSE, under the symbol “BSAR.” Our Class B shares are currently listed on the BASE, under the symbol “BRIO,” and on the Latibex, under the symbol “XBRSB.”

Share capital before and after global offering	Our share capital is divided into Class A shares, Class B shares and preferred shares. Each Class A share and Class B share represents the same economic interest in us. Preferred shares have priority collection rights in case of liquidation. Holders of Class A shares or preferred shares are permitted to convert their shares into Class B shares on a one-to-one basis at the option of the holder. See “Description of Capital Stock.” As of the date of this prospectus, our share capital consists of 142,450,159 Class A shares, 297,724,088 Class B shares and 638,700,768 preferred shares. We do not have any shares in treasury. After giving effect to the global offering, our share capital will consist of Class A shares, Class B shares and preferred shares outstanding (or Class A shares, Class B shares and preferred shares outstanding, assuming full exercise of the over-allotment option). Assuming the conversion of all preferred shares held by minority shareholders to Class B shares and full exercise of preemptive rights by minority shareholders, after giving effect to the global offering, our share capital will consist of Class A shares, Class B shares and preferred shares outstanding (or Class A shares, Class B shares and preferred shares outstanding, assuming full exercise of the over-allotment option). As of the date of this prospectus, Banco Santander beneficially owns 99.62% of our Class A shares, 98.74% of our Class B shares and 99.49% of our preferred shares. See “Principal and Selling Shareholders.” After giving effect to the global offering, Banco Santander will beneficially own % of our Class A shares, % of our Class B shares and % of our preferred shares (or %, % and %, respectively, assuming full exercise of the over-allotment option). Assuming the conversion of all preferred shares held by minority shareholders to Class B shares and full exercise of preemptive rights by minority shareholders, after giving effect to the global offering, Banco Santander will beneficially own % of our Class A shares, % of our Class B shares and % of our preferred shares (or %, % and %, respectively, assuming full exercise of the over-allotment option).

Use of proceeds	We expect to receive total estimated net proceeds from the global offering of approximately $ , based on the midpoint of the price range set forth on the cover page of this prospectus after deducting estimated underwriting discounts and commissions and expenses of the global offering that are payable by us. Each $1.00 increase (decrease) in the public offering price per ADS would increase (decrease) our net proceeds, after deducting estimated underwriting discounts and commissions and expenses, by $ . We will not receive any of the net proceeds from the sale of ADSs offered by the selling shareholder. We intend to use the net proceeds of the global offering for general corporate purposes, including to expand our distribution network pursuant to our expansion plan, which contemplates opening approximately 100 new branches and 200 new ATMs

	by 2013, increase our loan portfolio, and to fund inorganic growth to the extent we are able to complete appropriate acquisitions. We are actively seeking to make material acquisitions in the near to medium term which we believe may offer additional value and are consistent with or complementary to our business strategy.

Dividends and Dividend Policy	Although we have no current plans to adopt a formal dividend policy governing the amount and payment of dividends, we currently intend to declare and pay dividends on an annual basis, subject to approval by a majority vote of our shareholders and the Central Bank. All shares of our capital stock rank pari passu with respect to the payment of dividends. Prior authorization of the Superintendencia de Entidades Financieras y Cambiarias, or the Superintendency of Financial and Exchange Institutions of the Central Bank, or the SEFyC, is required for the distribution of dividends. In accordance with Argentine law, we may pay dividends in pesos out of retained earnings, if any, as set forth in our financial statements prepared in accordance with Argentine Banking GAAP and filed with the Comisión Nacional de Valores, or CNV. Dividends shall be paid through Caja de Valores S.A., which is designated as our registrar and paying agent in Argentina. Holders of 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 such Class B shares. Cash dividends, if any, 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.” We are subject to certain exchange controls and transfer restrictions limiting, under certain circumstances, our ability to make dividend payments abroad. See “Risk Factors—Risks Relating to the ADSs and Our Class B Shares Offered Hereby—Holders of the ADSs and our Class B shares may not receive any dividends” and “Exchange Rates and Exchange Controls—Exchange Controls.” On April 14, 2011, we paid a dividend of Ps. 800 million, equal to Ps. 0.742 per share, with respect to fiscal year 2010. As such, purchasers of ADSs or Class B shares in this offering will not be entitled to receive any portion of the dividend for 2010. As the dividend

	was declared in the first quarter of 2011, it was recognized in our total equity for the three months ended March 31, 2011.

Voting rights	All holders of the Class B shares are entitled to one vote per share. Subject to Argentine corporate law, our bylaws and the terms of the deposit agreement among us, the depositary and the holders of the ADSs, will be entitled to instruct the depositary to vote or cause to be voted the number of shares represented by such ADSs. Holders of Class A shares, which are not being offered hereby, are entitled to five votes per share. Holders of preferred shares are not entitled to vote, except in specific cases required by Argentine corporate law. See “Description of Capital Stock” and “Description of American Depositary Shares.”

ADR depositary	JPMorgan Chase Bank, N.A.

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, including the possibility that holders of our Class B shares or the ADSs may be subject to estate and gift tax in the Province of Buenos Aires, and that we may seek reimbursements from holders in any permitted manner for amounts owed under the Argentine personal assets tax, see “Taxation.”

Lock-up agreements	We have agreed with the international underwriters, subject to certain exceptions, not to offer, sell, or dispose of any shares of our capital stock (or ADSs representing such shares) or any securities convertible into or exercisable or exchangeable for our capital stock (or ADSs representing such shares) during the 180-day period following the date of this prospectus. Each of our principal shareholders, including the selling shareholder, and our executive officers and directors have each agreed to substantially similar lock-up agreements.

Risk factors	Investing in our ADSs and in the underlying Class B shares involves risks. See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in the ADSs and the underlying Class B shares.

Proposed New York Stock Exchange Symbol	“BSAR”.

	As of January 1,		As of December 31,				As of March 31,
	2009		2009		2010		2011		2011
	(in thousands of pesos)								(in thousands of U.S. dollars)(2)
Assets
Cash and balances with the Central Bank	Ps.	5,440,453	Ps.	7,291,829	Ps.	8,054,583	Ps.	9,194,272	$	2,269,070
Financial assets held for trading		707,359		2,495,486		2,944,827		2,505,006		618,215
Available-for-sale financial assets		175,815		486,762		691,969		593,153		146,385
Loans and receivables		15,067,738		14,687,815		20,521,552		22,217,414		5,483,074
Hedging derivatives		2,353		8		—		—		—
Investments		36,038		45,952		46,763		48,035		11,855
Tangible assets		653,637		604,880		756,482		792,992		195,704
Intangible assets		—		24,245		106,627		104,163		25,706
Tax assets		578,224		478,725		344,679		344,830		85,101
Other assets		121,918		195,215		375,830		452,698		111,722
Total assets	Ps.	22,783,535	Ps.	26,310,917	Ps.	33,843,312	Ps.	36,252,563	$	8,946,832

Liabilities
Financial liabilities held for trading	Ps.	126,649		Ps. 4,889	Ps.	7,058	Ps.	5,695	$	1,406
Deposits from credit institutions		401,782		209,915		241,938		238,999		58,983
Customer deposits		16,894,904		19,342,713		26,174,375		27,983,453		6,906,084
Marketable debt securities		450,434		258,307		188,590		188,506		46,522
Other financial liabilities		1,869,012		2,047,166		2,279,720		3,441,710		849,386
Financial liabilities at amortized cost		19,616,132		21,858,101		28,884,623		31,852,668		7,860,974
Provisions(6)		253,863		269,083		158,886		165,335		40,803
Tax liabilities		348,694		572,215		506,864		516,788		127,539
Other liabilities		339,680		354,829		382,260		311,048		76,764
Total liabilities	Ps.	20,685,018	Ps.	23,059,117	Ps.	29,939,691	Ps.	32,851,534	$	8,107,486

Shareholders’ equity
Share capital	Ps.	1,078,875	Ps.	1,078,875	Ps.	1,078,875	Ps.	1,078,875	$	266,257
Reserves		1,018,372		928,372		1,155,896		1,716,154		423,533
Profit for the year attributable to the parent		—		1,050,524		1,360,258		367,572		90,714
Valuation adjustment(7)		—		192,758		307,351		237,285		58,560
Non-controlling interests		1,270		1,271		1,241		1,143		282

	As of and for the years ended December 31,						For the three months ended March 31,
	2009			2010			2010			2011
Profitability and performance
Net interest margin(9)		10.6	%		9.9	%		10.3	%		8.9	%
Total margin(10)		16.7			16.3			16.7			14.9
Return on average total assets (ROAA)(11)		4.3			4.7			4.7			4.2
Return on average shareholders’ equity (ROAE)(11)		38.4			40.2			36.0			37.0
Efficiency ratio(12)		42.2			46.1			42.0			48.1
Net fee and commission income as a percentage of operating expenses(13)		80.0			78.2			83.3			79.8
Capital adequacy
Average shareholders’ equity as a percentage of average total assets		11.2	%		11.7	%		13.0	%		11.5	%
Basel capital adequacy ratio(14)		15.6			13.6			16.5			11.1
Asset quality
Non-performing loans as a percentage of total loans(15)		2.0	%		1.3	%		1.8	%		1.0	%
Non-performing loans as a percentage of computable credit risk(16)		2.0			1.3			1.8			1.0
Net loan charge-offs as a percentage of computable credit risk(16)		2.7			1.4			1.7			1.4
Impairment losses on financial assets as a percentage of average total loans		2.9			1.1			2.0			1.2
Allowance for credit losses as a percentage of non-performing loans(15)		126.8			133.2			138.1			153.8
Allowance for credit losses as a percentage of net loan charge-offs		96.6			122.5			144.6			112.9
Allowance for credit losses as a percentage of total loans		2.6			1.7			2.6			1.6
Liquidity
Liquid assets as a percentage of deposits(17)		37.7	%		30.8	%		36.2	%		32.9	%
Loans and financial leases, net of allowances as a percentage of deposits		75.1			77.7			76.6			78.7
Total loans, net as a percentage of total funding		67.2			71.0			68.0			69.7
Deposits as a percentage of total funding		89.4			91.4			88.7			88.6
Operations
Branches		258			282			276			290
Employees (full-time equivalent)		5,688			6,281			5,832			6,402

	Period-End		Average for Period		Low		High
	(pesos per U.S. dollar)
Year Ended December 31:
2010	Ps.	3.9758	Ps.	3.9226	Ps.	3.7942	Ps.	3.9857
2009		3.7967		3.7478		3.4497		3.8545
2008		3.4537		3.1797		3.0128		3.4537
2007		3.1510		3.1196		3.0553		3.1797
2006		3.0695		3.0784		3.0305		3.1072
Quarter Ended:
March 31, 2011		4.0520		4.0123		3.9715		4.0520
Month Ended:
May 2011 (through May 24)		4.0865		4.0831		4.0788		4.0865
April 2011		4.0850		4.0655		4.0495		4.0837
March 2011		4.0520		4.0376		4.0288		4.0520
February 28, 2011		4.0305		4.0220		4.0088		4.0305
January 31, 2011		4.0008		3.9813		3.9715		4.0008
December 31, 2010		3.9758		3.9776		3.9732		3.9857
November 30, 2010		3.9840		3.9676		3.9567		3.9840

	Ps. per Class B share				$ equivalent per ADS(1)				Average daily trading volume of Class B shares
	High		Low		High		Low		(in thousands)
Year
2010	Ps.	13.25	Ps.	4.94	$	13.33	$	4.97		48.1
2009		5.47		1.95		5.73		2.04		23.4
2008		4.33		2.30		5.01		2.66		4.1
2007		6.81		3.15		8.64		4.00		55.1
2006		3.39		1.56		4.42		2.03		14.7
Quarter
First Quarter 2011		16.10		13.20		15.89		13.03		99.9
Fourth Quarter 2010		13.25		8.70		13.33		8.75		109.3
Third Quarter 2010		9.40		6.14		9.49		6.20		39.4
Second Quarter 2010		6.45		5.12		6.56		5.21		19.8
First Quarter 2010		5.98		4.94		6.17		5.10		25.2
Fourth Quarter 2009		5.47		4.22		5.73		4.42		40.2
Third Quarter 2009		5.05		2.39		5.26		2.49		32.4
Second Quarter 2009		2.50		1.95		2.63		2.06		18.5
First Quarter 2009		2.43		1.98		2.62		2.13		2.8
Month
May 2011 (through May 24)		14.40		12.90		14.10		12.63		27.5
April 2011		14.50		13.10		14.21		12.84		57.9
March 2011		16.00		13.20		15.79		13.03		44.6
February 2011		16.10		14.20		15.98		14.09		118.7
January 2011		14.95		12.30		14.95		12.30		132.0
December 2010		12.80		11.75		12.88		11.82		52.3
November 2010		13.25		11.30		13.30		11.35		130.5

	As of March 31, 2011
	Actual				As adjusted
	(In thousands of pesos or U.S. dollars, as indicated)
	Pesos		U.S. dollars(1)		Pesos		U.S. dollars(1)
Liabilities
Financial liabilities held for trading	Ps.	5,695	Ps.	1,406	Ps.	5,695	Ps.	1,406
Financial liabilities at amortized cost		31,852,668		780,974		61,852,668		7,860,974
Deposits from credit institutions		238,999		58,983		238,999		58,983
Customer deposits		27,983,453		6,906,084		27,983,453		6,906,084
Marketable debt securities		188,506		46,522		188,506		46,522
Other financial liabilities		3,441,711		849,386		3,441,711		849,386
Provisions(2)		165,335		40,803		165,335		40,803
Tax liabilities		516,788		127,539		516,788		127,539
Other liabilities		311,048		76,764		311,048		76,764
Total liabilities		32,851,534		8,107,486		32,851,534		8,108,486
Shareholders’ equity		3,162,601		780,504
Share capital		1,078,875		266,257
Reserves		1,716,154		423,533
Profit attributable to the Parent		367,572		90,714		367,572		90,714
Valuation adjustment(3)		237,285		58,560
Non-controlling interests		1,143		282		1,143		282
Total equity		3,401,029		839,346
Total capitalization(4)	Ps.	36,252,563	$	8,946,832	Ps.		$

Dilution to purchasers assuming no exercise of preemptive rights by minority shareholders
Assumed initial public offering price per ADS	$
Net tangible book value per ADS as of March 31, 2011		3.02
Increase in net tangible book value per ADS attributable to new investors
Pro forma net tangible book value per ADS after this offering
Dilution per ADS to new investors(1)	$

Dilution to purchasers assuming full exercise of preemptive rights by minority shareholders
Assumed initial public offering price per ADS	$
Net tangible book value per ADS as of March 31, 2011		3.02
Increase in net tangible book value per ADS attributable to new investors
Pro forma net tangible book value per ADS after this offering
Dilution per ADS to new investors(1)	$

	For the years ended December 31,															For the years ended ended March 31,
	2006			2007			2008			2009			2010			2010			2011
	(In thousands of pesos)
Interest income	Ps.	1,225,598		Ps.	1,468,645		Ps.	2,431,666		Ps.	3,403,497		Ps.	3,492,311		Ps.	783,965		Ps.	910,675
Interest expense		(529,092	)		(687,485	)		(1,265,778	)		(1,012,280	)		(852,320	)		(192,223	)		(267,959	)
Foreign exchange results		72,232			106,236			193,265			167,734			181,659			43,563			60,073
Contribution to deposits guarantee fund		(18,492	)		(23,432	)		(27,211	)		(30,865	)		(37,385	)		(8,411	)		(11,469	)
Taxes on interest income		(44,850	)		(71,354	)		(104,611	)		(157,545	)		(190,353	)		(42,085	)		(59,400	)
Net interest income		705,396			792,610			1,227,331			2,370,541			2,593,912			584,809			631,920
Net fee income		650,266			857,478			1,055,986			1,279,407			1,577,233			358,406			454,094
Provisions for loan losses		(74,548	)		(188,337	)		(302,965	)		(531,285	)		(274,123	)		(71,662	)		(55,719	)
Total income		1,281,114			1,461,751			1,980,352			3,118,663			3,897,022			871,553			1,030,295
Administrative expenses		(787,411	)		(1,038,197	)		(1,306,331	)		(1,522,556	)		(1,846,518	)		(399,691	)		(535,212	)
Other income/expenses		(255,729	)		(118,040	)		62,918			28,676			177,541			(61	)		12,559
Income before tax		237,974			305,514			736,939			1,624,783			2,228,045			471,801			507,642
Income tax		(8,117	)		(1,909	)		(358,528	)		(449,061	)		(627,088	)		(147,527	)		(136,613	)
Net income	Ps.	229,857		Ps.	303,605		Ps.	378,411		Ps.	1,175,722		Ps.	1,600,957		Ps.	324,274		Ps.	371,029

	As of December 31,										As of March 31,
	2006		2007		2008		2009		2010		2011
	(In thousands of pesos)
Assets
Cash and due from banks	Ps.	2,712,670	Ps.	4,152,410	Ps.	3,765,843	Ps.	4,641,164	Ps.	6,274,677	Ps.	4,718,794
Government and private securities		2,399,932		1,225,009		2,769,647		5,781,694		5,299,996		7,479,489
Loans and financial leases		9,233,840		12,392,079		14,560,802		14,037,151		19,855,711		21,661,814
Other financial assets		567,778		589,918		2,376,143		3,540,306		2,646,323		5,309,997
Investments in other companies		37,049		37,793		47,117		61,687		57,677		58,819
Premises and equipment		551,068		588,928		600,578		567,845		650,366		644,176
Other assets		624,857		779,249		439,968		537,191		982,477		1,205,535
Total assets	Ps.	16,127,194	Ps.	19,765,386	Ps.	24,560,098	Ps.	29,167,038	Ps.	35,767,227	Ps.	41,078,624

Liabilities
Deposits	Ps.	12,572,009	Ps.	15,136,007	Ps.	16,962,134	Ps.	19,396,424	Ps.	26,230,039	Ps.	28,043,592
Banks and international organizations		119,116		142,910		242,772		84,743		135,319		158,276
Non subordinated corporate bonds		303,441		613,815		443,957		253,580		184,300		184,300
Other financial liabilities		1,169,199		1,427,437		4,029,973		5,261,495		4,340,658		7,375,374
Other liabilities		654,764		660,189		882,823		1,086,635		1,014,793		1,883,935
Total liabilities	Ps.	14,818,529	Ps.	17,980,358	Ps.	22,561,659	Ps.	26,082,877	Ps.	31,905,109	Ps.	37,645,477
Shareholders’ equity	Ps.	1,308,665	Ps.	1,785,028	Ps.	1,998,439	Ps.	3,084,161	Ps.	3,862,118	Ps.	3,433,147

	2010
	(in millions of pesos)
International reserves acquisitions	Ps.	46,285
Credit to the financial system		1,168
Credit to the public sector		19,477
Total expansion		66,931
Lebac and Nobac notes	Ps.	20,269
Reverse repurchase agreements		6,473
Reserve requirements		11,589
Others		2,130
Total absorption		40,461
Net Monetary Expansion	Ps.	26,469

	Commercial Banking						Global Wholesale Banking						Financial Management
	For the three months ended March 31,
	2010			2011			2010			2011			2010			2011
	(in millions of pesos)
Net interest income	Ps.	419		Ps.	524		Ps.	98		Ps.	111		Ps.	17		Ps.	(6	)
Income from equity instruments		1			2			—			—			—			—
Income from companies accounted for using the equity method		—			—			—			1			—			—
Net fee and commission income		294			397			36			28			—			—
Gains/losses on financial assets and liabilities (net)		31			31			39			31			132			—
Other operating income (expenses)		(4	)		(12	)		(1	)		(2	)		—			—
Total income		741			942			172			169			29			(6	)
Administrative expenses		(323	)		(447	)		(40	)		(45	)		(1	)		(2	)
Depreciation and amortization		(28	)		(35	)		(4	)		(4	)		—			—
Provisions (net)		(22	)		(17	)		—			—			—			—
Impairment losses on financial assets (net)		(72	)		(60	)		—			—			—			—
Impairment losses on other assets (net)		—			—			—			—			—			—
Gains/losses on disposal of assets not classified as non-current assets held for sale		—			10			—			—			—			—
Profit before tax		296			393			128			120			28			(8	)
Income tax(1)		(94	)		(107	)		(40	)		(32	)		(9	)		2
Net income	Ps.	202		Ps.	286		Ps.	88		Ps.	88		Ps.	19		Ps.	(6	)

	Commercial Banking				Global Wholesale Banking				Financial Management
	As of March 31,
	2010		2011		2010		2011		2010		2011
	(in millions of pesos)
Assets
Cash and balances with the Central Bank	Ps.	5,008	Ps.	5,911	Ps.	1,286	Ps.	1,551	Ps.	973	Ps.	1,732
Financial assets held for trading		—		—		331		699		2,597		1,806
Available-for-sale financial assets		—		—		26		22		483		572
Loans and receivables		11,522		16,312		3,756		5,277		300		628
Investments		26		39		4		9		—		—
Tangible assets		595		762		25		31		—		—
Intangible assets		58		97		4		7		—		—
Tax assets		—		—		—		—		—		—
Other assets		216		364		36		89		—		—
Total assets	Ps.	17,425	Ps.	23,485	Ps.	5,468	Ps.	7,685	Ps.	4,353	Ps.	4,738

Liabilities
Financial liabilities held for trading	Ps.	—	Ps.	—	Ps.	4	Ps.	6	Ps.	—	Ps.	—
Financial liabilities at amortized cost		17,612		25,617		5,013		6,000		283		236
Provisions(1)		223		132		55		33		—		—
Tax liabilities		—		—		—		—		—		—
Other liabilities		239		280		32		31		—		—
Total liabilities	Ps.	18,074	Ps.	26,029	Ps.	5,104	Ps.	6,070	Ps.	283	Ps.	236

Total equity	Ps.	(649)	Ps.	(2,544)	Ps.	364	Ps.	1,615	Ps.	4,070	Ps.	4,502

	IFRS
Short - Term Borrowings	As of December 31,										As of March 31,
	2009					2010					2011
	Amount		Average rate			Amount		Average rate			Amount		Average rate
	(in thousands of pesos, except percentages)
Securities sold under repurchase agreements (principally Argentine government securities)
At period end	Ps.	—	—			Ps.	—	—			Ps.	—	—
Average during period		2,615		10.7	%		49,007		9.7	%		29,316		9.8	%
Maximum month-end balance		—		—			142,124		2.5			—		—
Total short-term borrowings at period end(1)	Ps.	—		—		Ps.	—		—		Ps.	—		—

	Minimum			Average			Maximum			Last
	(in thousands of pesos)
Total Trading
Total VaR	Ps.	2,390		Ps.	4,993		Ps.	7,654		Ps.	2,390
Diversification effect		(661	)		(1,638	)		(1,977	)		(661	)
Fixed-income VaR		2,430			4,810			7,610			2,430
Equity VaR		376			376			303			376
Foreign exchange VaR	Ps.	246		Ps.	1,445		Ps.	1,719		Ps.	246

	Fixed Income			Equities		Exchange Rate			Volatility		Total
	(in thousands of pesos)
Structured derivatives portfolio	Ps.	(4.59	)	Ps.	0.29	Ps.	(0.01	)	Ps.	—	Ps.	(4.27	)

	Total			0-1 Months			1-3 Months			3-6 Months			6-12 Months			1-3 Years			3-5 Years			> 5 Years			Not Sensitive
	(in millions of pesos)
Money market	Ps.	8,721		Ps.	3,440		Ps.	342		Ps.	66		Ps.	2,205		Ps.	28		Ps.	—		Ps.	—		Ps.	2,639
Loans		19,755			3,127			1,981			2,784			6,868			3,780			937			301			(22	)
Securities		3,089			1,322			1,022			476			40			100			116			426			(413	)
Permanent		743			—			—			—			—			—			—			—			743
Other		3,649			—			—			—			—			—			—			—			3,648
Total Assets		35,957			7,889			3,345			3,326			9,113			3,908			1,053			727			6,595
Money market		—			—			—			—			—			—			—			—			—
Deposits		(26,551	)		(10,999	)		(2,231	)		(436	)		(12,672	)		(200	)		—			—			(14	)
Equity and other		(9,406	)		(5	)		—			—			—			—			—			—			(9,401	)
Total Liabilities		(35,957	)		(11,003	)		(2,231	)		(436	)		(12,672	)		(200	)		—			—			(9,415	)
Balance sheet gap		—			(3,114	)		1,114			2,890			(3,559	)		3,708			1,053			727			(2,820	)
Off-balance sheet gap		—			—			—			—			—			—			—			—			—
Total Structural gap	Ps.	—		Ps.	(3,114	)	Ps.	1,114		Ps.	2,890		Ps.	(3,559	)	Ps.	3,708		Ps.	1,053		Ps.	727		Ps.	(2,820	)
Accumulated gap		—			—			3,114			2,000			(890	)		2,669			(1,039	)		(2,093	)		(2,820	)

	Public-sector banks			Domestic-owned banks			Foreign-owned banks			Non-bank financial institutions			All financial institutions(1)
Branches		35.5	%		40.3	%		22.3	%		2.0	%		4,064
Assets		43.2			29.8			25.4			0.26		Ps.	511,038
Public risk(2)		65.0			19.3			15.4			0.3			145,936
Private-sector loans		27.9			37.0			32.0			3.2			199,202
Mortgages loans		63.2			24.2			12.4			0.2			21,101
Pledge loan		20.6			14.4			35.1			29.9			9,836
Personal loans		30.1			42.7			22.8			4.4			38,688
Credit cards		17.3			38.8			42.2			1.7			29,160
Commercial loans		23.0			39.5			36.4			1.1			97,716
Public-sector deposits		79.3			17.7			3.1			0.0			116,895
Private-sector deposits		32.3			33.9			33.4			0.5			258,531
Checking accounts		28.9			31.9			39.1			0.0			66,105
Saving accounts		32.2			29.7			37.9			0.3			77,013
Time deposits		33.6			38.4			27.2			0.9			107,515
Other demand deposit and accrued interests		43.9			30.0			25.8			0.3			7,898

Private-Sector Loans			Millions of Ps.		Market Share			Rank Among Private-Sector Banks
	1	Banco de la Nación Argentina(1)	Ps.	26,710		13.4	%		—
	2	Banco Santander Río		19,661		9.9			1
	3	Banco de Galicia y Buenos Aires		16,586		8.3			2
	4	Banco Macro		15,915		8.0			3
	5	BBVA Banco Francés		14,285		7.2			4
	6	Banco de la Provincia de Buenos Aires(1)		11,821		5.9			–
	7	HSBC Bank Argentina		10,429		5.2			5
	8	Banco de la Ciudad de Buenos Aires(1)		7,849		3.9			–
	9	Banco Credicoop Cooperativo Limitado		7,765		3.9			6
	10	Citibank N.A., Argentine Branch		7,195		3.6			7
		Total financial sector	Ps.	199,202		100.0	%