REQUERIMIENTOS

The Central Bank establishes guidelines for classifying debtors from the point of view of their credit quality and compliance with their commitments, according to the evaluation performed for that purpose by the financial institution, criteria that are applied by the Bank.

1. The guidelines vary depending on whether commercial loans are involved, or consumer and housing loans. Commercial loans of up to Ps.2,500,000 (Ps.1,500,000 until September 2014 and Ps.750,000 until May 2012) may be considered, for classification purposes, as consumption loans at the bank’s discretion, and treated as such. The Bank has used that option.

2. Debtors and all their loans are included in one of six categories or situations of decreasing credit quality:

Commercial Loans Consumer or Housing Loans Arrears

1. Normal (1) up to 31 days

2. Special Tracking (2) 2. Low risk up to 90 days

3. Problem 3. Medium risk up to 180 days

4. High Insolvency Risk (3) 4. High risk up to 1 year

5. Irrecoverable (4) more than a year

6. Irrecoverable for Technical Decision (5)

(1) In the case of consumer or housing loans, current account overdrafts are considered to be performing until 61 days have elapsed from the date granted. (2) Commercial loans in situation 2 are divided into:

a) under observation, include those debtors up to 90 days past due in situations that if not controlled or corrected in a timely manner, could compromise their repayment capacity, and

b) those under negotiation or with refinancing agreements, which include debtors that although unable to pay their obligations under the agreed conditions, have declared their intention of refinancing their debts no later than 60 days after becoming past due. The borrower must enter into an agreement with the lender within 90 days (if up to two lenders are involved) or 180 days (if more than two lenders are involved) after the date on which the obligations become overdue. If no agreement has been reached within the established deadline, the borrower must be reclassified to the next category below according to the indicators established for each level.

(3) This category includes debtors that have filed for creditor protection or an out-of-court preventive measure, or for which payment has been demanded in court. In the case of the consumer portfolio, debtors that have filed for creditor protection or are covered by out-of-court measures can record arrears of up to 540 days.

(4) Includes mainly debtors facing bankruptcy or liquidation processes if they are insolvent.

(5) This category includes debtors with arrears in excess of 180 days that are customers of banks that have been wound up or had their license revoked by the BCRA, residual entities of privatized banks, or trusts of which SEDESA is a beneficiary.

3. The basic criterion for the evaluation of the clients is the repayment capacity in relation to the debt or the commitments that are the object of the financial institution guarantee.

a) For the commercial portfolio, evaluation is made on the basis of repayment capacity and debtor cash flows. Indicators used in the case of commercial loans include liquidity, financing structure, compliance with payment of obligations, quality of management and administration, IT systems, prospects for the client’s business sector, its position within the sector, its legal standing and the existence of refinancing or debt discounts.

b) For the consumer and housing loans portfolio, evaluation is based on debt payment compliance and the legal status of the debtor. The evaluation criteria for the consumer and housing portfolios is exclusively objective – the degree of compliance with obligations, legal situation of the debtor and the existence of refinancing or debt discounts.

5. Minimum classification frequency. a) Consumer portfolio clients: monthly

b) Commercial portfolio clients: annually. However classification should be performed:

 During the course of each quarter for clients whose debts are equivalent to 5% or more of the financial institution’s RC;  During the course of each half-year in the case of clients whose debt at some moment has totaled between 1% or the

equivalent to $4,000,000 whichever is lower, and less than 5% of the financial institution’s RC.

 In addition, the bank should review a debtor’s situation when any of the following circumstances take place:

a) when a debtor has debts equivalent to at least 10% of the total notified to the Credit Information Debtor Base in another financial institution, and that institution lowers the client’s rating on the mentioned database;

b) when there are changes to any of the objective classification criteria (arrears or legal situation);

c) when a credit rating agency lowers the rating of securities issued by the client by more than one level; or

d) when there is more than a one-level discrepancy between the classification assigned by the financial institution and at least two other institutions, and certain requirements have been met.

Re-appraisal must be immediate in the case of clients with debts totaling 1% or more of the financial institution’s RC or the equivalent to $4,000,000, whichever is lower.

6. Mandatory reclassification of clients

Only a one-level discrepancy is allowed in relation to the information submitted by financial institutions to the Credit Information Data Base. If there is a greater discrepancy between the rating of the bank and the lower classification awarded by at least two other banks, and total loans from such banks account for 40% or more of the total informed, the bank will be required to reclassify the debtor to at least the level immediately above that registering the highest level of indebtedness with the comparison institutions.

7. Criterion for an improving situation

In a normal situation, up to two refinancings are allowed for the last twelve months with arrears of less than 31 days. Counting starts as of the date of the last refinancing. For all other situations, the basic criterion is that the greatest penalty must be applied to the borrower who delays the refinancing, for which reason:

 Once the Refinancing Agreement has been signed, the previous framework applies, unless the borrower partially amortizes his debt in advance.

 The borrower must accumulate a greater number of downpayments (as shown in table (i) below) or increase his percentage of cancellation (as shown in table (ii) below) in order to improve his situation. The BCRA regulations provide that those clients whose debts have been refinanced via obligations subject to regular payments (monthly or bi-monthly) may be reclassified at the immediately upper level if they have complied punctually (or with delays not exceeding 31 days) with the payment of the established installments (in the case of single, regular above bi-monthly or irregular payments) or who have cancelled at least a certain specified percentage of their refinanced principal obligations, plus the number of installments or the accumulated percentage which may be applicable, respectively, if the refinancing was granted to a debtor included in lower levels.

Table (i) – Enhanced situation by the payment of quotas. The following table applies (*) Quantity of payments Change of category from Irrecoverable from High Risk from Medium Risk from Low Risk

Change to High Risk 3 — — —

Change to Medium Risk 6 3 — —

Change to Low Risk 8 5 2 —

Change to Normal 9 6 3 1

(*) _{The refinancing requires a punctual payment or with delays of not more than 31 days according to the German or French Amortization} System. Regularity may be monthly or bimonthly.

Table (ii) – Enhanced situation by cancellation percentage of capital (also applicable to the commercial portfolio) (**)

Percentage of cancellation Change of category from Irrecoverable from High Risk from Medium Risk from Low Risk

Change to High Risk 15% — — —

Change to Medium Risk 25% 10% — —

Change to Low Risk 30% 15% 5% —

Change to Normal 35% 20% 10% 5%

(**)

For amortization systems with periods greater than bimonthly or irregular. The choice must be for a single parameter depending on the refinancing mode:

 Refinancings with regular monthly or bimonthly payments: by the timely payment of installments. This is the criterion adopted by BBVA Francés.

 All other forms: by capital amortization.

Collections are not applied and rebates may not be counted in order to improve the situation (they belong to the debt preceding the signing of the Refinancing Agreement), so no quantification was made. Such treatment is consistent with U.S. GAAP. Up-front payments may be computed as per their equivalent in installments or amortization percentage in order to improve borrower’s situation.

8. Refinancing. Criterion for deteriorating the situation by noncompliance with the refinancing. Arrears are considered to exist in refinancing if a delay exceeding 31 days occurs.

The criteria determining the situation of a refinanced client are as follows:

a) Tranches of arrears are allocated in any applicable situation according to the table below:

Situation

Minimum delay time (in days)

Normal 0

Low Risk 32

Medium Risk 91

High Risk 181

Irrecoverable More than 1 year

b) To the above must be added the refinancing arrears, and according to this the situation in which the refinanced client must be placed is determined.