| 1. | The participant companies express their intention to engage in a partial escision by virtue of which Inversiones Escorial S.A. and Popular Securities S.A. (hereinafter the “Escorial and Popular” or the “Original Owners”), carry out an escision in favor of Grupo Aval Acciones y Valores S.A. (hereinafter “Grupo Aval” or the “Beneficiary”) of the shares of stock of Banco Popular of their respective property, as well as of all dividends decreed, accrued but not yet payable, derived from the so referred shares of Banco Popular. |
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|   | As a consequence of the escision, Escorial and Popular will partially split and will continue their legal and economic existence life with the assets and net-worth that they retain. |
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| 2. | The escision project complies with the legal requirements imposed by, amongst other, the Code of Commerce, Law 222 of 1995, External Circulars No. 1 of 23 March 2007 and No. 7 of 2 April 2008 issued by the Superintendency of Corporations, and External Circular No. 5 of 2005 issued by Superintendency of Securities (currently the Financial Superintendency of Colombia). |
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| 3. | The project of escision is subject to the approval of the Shareholders Meetings of the participant companies and to the authorization of the incumbent entities of surveillance and control. The Original Owners fall under the supervision of the Superintendency of Corporations; in turn, Grupo Aval, in its capacity as issuer in the public securities market, is subject to the exclusive control of the Financial Superintendency of Colombia. |
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| 1. | The nature of the project is a partial escision by reason of: |
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| a) | Escorial transfers a portion of its assets and net worth in favor of Grupo Aval, represented by 757,081,997 shares of stock of Banco Popular, corresponding to 9.80% |
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|   | of the capital of said bank, as well as all dividends, decreed, accrued and not yet payable, derived from such shares of Banco Popular. |
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| b) | Popular transfers a portion of its assets and net worth in favor of Grupo Aval, represented by 757,081,997 shares of stock of Banco Popular, corresponding to 9.80% of the capital of said bank, as well as all dividends decreed, accrued and not yet payable derived from such shares of Banco Popular. |
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| 2. | Escorial and Popular will continue their legal existence with the assets and net worth they retain. |
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| 1. | The parties have taken, as basis for the escision, the financial statements at 31 March 2011, with their respective notes, signed by the Legal Representative, the Accountant and the Fiscal Auditor of each participant company, duly certified and with their respective opinions. Between the cut-off date and the date of summons of the Shareholders Meetings there is a time lapse shorter than one month, in compliance with Article 29 of Decree 2649 of 1993 and Numeral 2.8.1 of External Circular No. 7 of 2008 issued by the Superintendency of Corporations. |
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| 2. | The Balance Sheet of the participant companies constitute an integral part of the project, in the form of Annexes No. 1, 1A, 2, 2A, 3 and 3A. |
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| 3. | A breakdown of all assets, liabilities, net worth and capital of the participant companies is attached hereto in the form of Annexes No, 4, 5 and 6, which are an integral part of this document. |
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|        | GRUPO AVAL S.A. | INVERSIONES ESCORIAL S.A. | S.APOPULAR. SECURITIES S.A. |   | TOTAL                |
|-------------|-----------------|---------------------------|-----------------------------|--------|----------------------|
| ASSETS      | 0,00            | 527,481,739,769.81        | 527,481,739,769.81          |   | 1,054,963,479,539.62 |
| LIABILITIES | 0,00            | 0.0                       | 0.00                        |   | 0.00                 |
| NET WORTH   | 0,00            | 527,481,739,769.81        | 527,481,739,769.81          |   | 1,054,963,479,539.62 |
| CAPITAL     | 0,00            | 261,218,468,725.00        | 181,025,086,603.00          |   | 442,243,555,328.00   |

|   | (i)   | Pursuant to the escision Escorial will transfer to Grupo Aval the following assets, with a value of five hundred twenty seven thousand four hundred eighty one million seven hundred thirty nine thousand seven hundred and sixty nine pesos and 81 cents ($527.481.739.769.81) legal currency, as follows: |
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|   | -   | 757,081,997 shares of Banco Popular at historic cost in the amount of three hundred forty thousand six hundred eighty six million eight hundred ninety eight thousand six hundred and fifty pesos ($340,686,898,650.00) legal currency; |
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|   | -   | Revaluation of the above shares in the amount of one hundred seventy eight thousand four hundred thirty six million six hundred fifty five thousand eight hundred seventy two pesos and 93 cents ($178,436,655,872.93) legal currency; |
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|   | -   | Account receivable by Banco Popular in the amount of eight thousand three hundred fifty eight million, one hundred eighty five thousand two hundred forty six pesos and 88 cents ($8,358,185,246.88) legal currency. |
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|   | -   | Capital: two hundred sixty one thousand two hundred eighteen million four hundred sixty eight thousand seven hundred twenty five pesos (($261,218,468,725.00) legal currency; |
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|   | -   | Reserves: taken from the item “temporary reserves” in the amount of eighty seven thousand eight hundred twenty six million six hundred  fifteen thousand one hundred seventy one pesos and 88 cents ($87,826,615,171.88) legal currency; |
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|   | -   | Revaluation Surplus of Banco Popular shares in the amount of one hundred seventy eight thousand four hundred thirty six million   six hundred fifty five thousand eight hundred seventy two pesos and 93 cents ($178,436,655,872.93) legal currency. |
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|   | (ii)   | Popular will transfer to Grupo Aval, by reason of the escision, the following assets with total value of  five hundred twenty seven thousand four hundred eighty one million seven hundred thirty nine thousand seven hundred sixty nine pesos and 81 cents ($527,481,739,769.81) legal currency, as follows: |
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|   | -   | 757,081,997 shares of Banco Popular at historic cost in the amount of three hundred forty thousand six hundred eighty six million eight hundred ninety eight thousand six hundred and fifty pesos ($340,686,898,650.00) legal currency; |
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|   | -   | Revaluation of the above shares in the amount of one hundred seventy eight thousand four hundred thirty six million six hundred fifty five thousand eight hundred seventy two pesos and 93 cents ($178,436,655,872.93) legal currency; |
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|   | -   | Account receivable by Banco Popular in the amount of eight thousand three hundred fifty eight million, one hundred eighty five thousand two hundred forty six pesos and 88 cents ($8,358,185,246.88) legal currency. |
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|   | -   | Capital: one hundred eighty one thousand twenty five million eighty six thousand six hundred and three pesos ($181,025,086,603.00) legal currency; |
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|   | -   | Capital Surplus: in the form of Premium on Stock Sold in the amount of one hundred thirty eight thousand four hundred thirteen million five hundred eighty one thousand three hundred thirty two pesos and 81 cents ($138,413,581,332.81) legal currency; |
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|   | -   | Reserves: taken from “temporary reserves”, in the amount of twenty five thousand three hundred nineteen million one hundred sixty seven thousand nine hundred sixty two pesos and 43 cents ($25,319,167,962.43) legal currency; |
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|   | -   | Earnings as of 31 March 2011 in the amount of four thousand two hundred eighty seven million two hundred forty seven thousand nine hundred ninety eight pesos and 64 cents ($4,287,247,998.64) legal currency; |
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|   | -   | Revaluation Surplus corresponding to Banco Popular shares in the amount of one hundred seventy eight thousand four hundred  thirty six million six hundred fifty five thousand eight hundred  seventy two pesos and 93 cents ($178,436,655,872.93) legal currency. |
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| 1. | As previously mentioned, this is a partial escision through which (i) Escorial transfers a portion of its assets, represented by shares of Banco Popular corresponding to 9.80% of the capital of said bank; (ii) Popular transfers a portion of its assets represented by 757,081,997 shares of stock of Banco Popular corresponding to 9.80% of the capital of said bank and (iii) an account payable to each of the Original Owners by Banco Popular by reason of dividends decreed, accrued and not yet payable , along with their correlative net worth, in favor of Grupo Aval. |
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| 2. | The shareholders of the Original Owners, by reason of the escision become title holders of 934,669,126 Preferred Shares of the Beneficiary, Grupo Aval. |
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| 1) | Determination is made of the total number of Preferred Shares of Grupo Aval to be issued in favor of the shareholders of Escorial and Popular, through application of the following formula; |
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| 1. | Closing of this escision is subject to approval by the respective Shareholders Meetings of the participant companies and to authorizations by the corresponding control authorities. The transaction will have the legal effects described in the following numerals: |
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| 2. | By means of the escision procedure, the Original Owners will transfer assets and net worth, as detailed in the charts above and in the annexes, to the Beneficiary. |
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| 3. | Escorial and Popular will continue their legal existence with the assets and net worth they retain. |
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| 4. | Regarding tax effects, the escision implies, for the beneficiary company, the commitment to fulfill all fiscal obligations of the Original Owners as they relate to the assets and liabilities matter of the escision. The Beneficiary will file tax returns for all fiscal periods on the basis of the portion of earnings transferred to it at closing of the escision. It will also include in its accounting and tax returns, all fiscal entries transferred under the escision, such as advances, accounts receivable and accounts payable from and to the tax authority, as well as all withholdings, deductions by excess of presumptive income and accumulated tax losses and excess presumptive income. |
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| 5. | For fiscal purposes, there is no divestiture under the escision, as established in articles 14-1, 14-2 and 428-2 of the Tax Code. |
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| 6. | Guarantees to creditors will not be affected by the escision since, for the Original Owners, liabilities in terms of assets account for 10.53% at Escorial and for 0.80% at Popular and also because Grupo Aval, Beneficiary under the escision, is not assuming any liability. The obligations of the Original Owners are guaranteed in ample and satisfactory manner; on the other hand, the participant companies are jointly liable under article 10 of Law 222 of 1995. |
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| 7. | The escision does not involve any restrictive commercial practices and does not involve technology, markets, patents or rights that in any manner have effects over the markets in which the beneficiary is a participant. |
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|   | In any event, Grupo Aval exercises control of Banco Popular, as stated in the Certificate of Existence and Legal Representation of Grupo Aval. |
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| 8. | The date of accounting cut-off will be the date of closing of the escision, that is, the date of registration of the public deed of escision, date in which the beneficiary company will receive the assets and net worth matter of the escision as provided for in this agreement an in the general balance sheets of the escision at 31 March 2011, duly updated as of the date of accounting cut-off. Once the public deed ofescision is duly filed at the mercantile registry, the bulk transfer of the net worth matter of the escision between the Original Owners and the Beneficiary and before third parties, becomes operative. The Beneficiary becomes proprietor and title holder of the assets and net worth matter of the escision, it being understood that, in accordance with Colombian law, the public deed for the escision is title of transfer over said holdings. |
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| 9. | In terms of tax effects, the assets and net worth matter of the escision retain, for the beneficiary company, the same fiscal cost they have for the Original Owners, at the instance of the escision. |
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| 10. | The Original Owners do not hold any bond issues. Grupo Aval is an issuer of ordinary bonds in the public securities market and, in such regard, application will be made of pertinent stock market and commercial regulations; in consequence, bond holders will have those rights established under Decree 2555 of 2010. |
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| 11. | Final Caital |
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|    | GRUPO AVAL S.A.   | INVERSIONES ESCORIAL S.A. | POPULAR SECURITIES S.A. | TOTAL              |
|---------|-------------------|---------------------------|-------------------------|--------------------|
| CAPITAL | 14,878,649,797.00 | 763,664,232,275.00        | 69,013,397.00           | 778,611,895,469.00 |

| 1. | Once the escision project is approved, the Legal Representatives of the participant companies will make public announcement of such agreement, through publication of an ad in a newspaper of the city of Bogota that fulfills the dual quality of country-wide circulation and ample circulation at the city of domicile of the companies, in the terms of article 5 of Law 222 of 1995 and External Circulars  No. 1 of 23 March 2007 and No. 7 of 2 April 2008 issued by the Superintendency of Corporations and of External Circular No. 5 of 2005 issued by the Superintendency of Securities (currently the Financial Superintendency of Colombia) and will engage in all procedures necessary to secure the approval of the official entities that exercise the functions of control or supervision of the participant companies and will also perform any other required proceeding. |
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| 2. | They will also deliver a letter to each and all creditors of the participant companies, informing about the agreement, per second paragraph of article 5 of Law 222 of 1995. |
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| 3. | Once the ad is published and once the required authorizations are secured, the escision agreement is to be formalized by means of conversion of the escision project and its annexes into a public deed that will include abstracts of the minutes of the shareholders meetings approving  the escision. |
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| 4. | During the period from approval of the escision through and including the date of closing of the escision, the participant companies will continue their regular operation. |
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| 5. | The Legal Representatives of the participant companies are empowered to carry-out all transactions and adjustments for the escision and in terms of accounting, as motivated by the resulting changes in the general balance sheets as of 31 March 2011, basis for the agreement, and those of the date of closing. |
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| 6. | The Legal Representatives are also authorized to carry-out, in the name of the participant companies, all procedures that may be required for due closing of the escision. In exercising the authorization so granted, they may execute documents, public deeds and titles as required for closing of the agreement; likewise, they may also request or carry-out any required filing. |
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| 7. | The date of accounting cut-off is the date of closing of the escision; that is, the date of registration of the public deed of escision at the Chamber of Commerce. The underlying transfer will take place on the basis of accounting figures on the date of closing of the escision. |
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| 8. | Exercise of the right of withdrawal is subject to articles 12 and subsequent of Law 222 of 1995. |
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| CHART I: | Assets, Liabilities, Net Worth and Capital matter of the escision |
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| CUADRO II: | Final Capital |
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| ANNEX 1: | Balance Sheet of Grupo Aval prior to the escision |
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| ANNEX 1-A: | Income Statement of Grupo Aval prior to the escision |
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| ANNEX 2: | Balance Sheet of Inversiones Escorial prior to the escision |
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| ANNEX 2-A: | Income Statement of Inversiones Escorial prior to the escision |
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| ANNEX 3: | Balance Sheet of Popular Securities prior to the escision |
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| ANNEX 3-A: | Income Statement of Popular Securities prior to the escision |
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| ANNEX 4: | Assets, Liabilities, Net Worth and Capital of Grupo Aval prior to the escision |
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| ANNEX 5: | Assets, Liabilities and Net Worth of Inversiones Escorial prior to the escision |
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| ANNEX 6: | Assets, Liabilities and Net Worth of Popular Securities prior to the escision |
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| ANNEX 7: | Transfer of Assets, Liabilities and Net Worth from Inversiones Escorial and Popular Securities to Grupo Aval |
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| ANNEX 8: | Exchange Ratio and Number of Preferred Shares to be issued |
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| ANNEX 9: | Balance Sheet of Grupo Aval prior to the escision |
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| ANNEX 9-A: | Income Statement of Grupo Aval prior to the escision |
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| ANNEX 10: | Balance Sheet of Inversiones Escorial after the escision |
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| ANNEX 10-A: | Income Statement of Inversiones Escorial after the escision |
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| ANNEX 11: | Balance Sheet of Popular Securities after the escision |
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| ANNEX 11-A: | Income Statement of Popular Securities after the escision |
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|                                             |                                |
|--------------------------------------------------|-------------------------------------|
|                                             |                                |
| /s/ Gabriel Mesa Zuleta                          | /s/ Luis Carlos Sarmiento Gutierrez |
|                                             |                                |
| President - SADINSA S.A.Legal Representative of  | President                           |
| POPULAR SECURITIES S.A.INVERSIONES ESCORIAL S.A. | GRUPO AVAL ACCIONES Y VALORES S.A.  |

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