##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20F
  o
    
    Registration Statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
 or
 þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2005
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 or
 o
    
    Shell Company Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number 0-30852
 GRUPO FINANCIERO GALICIA S.A.
  GALICIA FINANCIAL GROUP
 REPUBLIC OF ARGENTINA
 Grupo Financiero Galicia S.A.
Tte. Gral. Juan D. Perón 456
C1038 AAJ-Buenos Aires, Argentina
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
  Class A Ordinary Shares, Ps.1.00 par value
Class B Ordinary Shares, Ps.1.00 par value
    
    281,221,650
960,185,367
 o þ
 o þ
 þ o
  o þ o
 o þ
 o þ




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##### Table of Contents



TABLE OF CONTENTS
 PageItem 1. Identity of Directors, Senior Management and Advisers
    
    
    4Item 2. Offer Statistics and Expected Timetable
    
    
    4Item 3. Key Information
    
    
    4Selected Financial Data
    
    
    7Exchange Rate Information
    
    
    7Risk Factors
    
    
    8Item 4. Information on the Company
    
    
    18Organization
    
    
    18Organizational Structure
    
    
    18History
    
    
    19Capital Investments and Divestitures
    
    
    25Business Overview
    
    
    26Competition
    
    
    39Sales and Marketing
    
    
    40Property
    
    
    42Selected Statistical Information
    
    
    43Government Regulation
    
    
    79Main Regulatory Changes since 2002
    
    
    80Argentine Banking System and Regulation
    
    
    85Item 4A. Unresolved Staff Comments
    
    
    97Item 5. Operating and Financial Review and Prospects
    
    
    97Item 5A. Operating Results
    
    
    97General
    
    
    97Inflation Accounting Adjustments
    
    
    97Main Developments Since the 2001-2002 Crisis
    
    
    98Currency Composition of Our Balance Sheet
    
    
    100The Argentine Economy in 2005
    
    
    101The Argentine Financial System in 2005
    
    
    102Results of Operations for the Fiscal Years Ending December 31, 2005, December 31,
2004 and December 31, 2003
    
    
    104U.S. GAAP and Argentine Banking GAAP Reconciliation
    
    
    119Results by Segments
    
    
    123Consolidated Assets
    
    
    131Exposure to the Argentine Public Sector
    
    
    132Off-Balance Sheet Arrangements
    
    
    133Securitization of Assets
    
    
    135Funding
    
    
    136Contractual Obligations
    
    
    139Other Commitments
    
    
    140Critical Accounting Policies
    
    
    141U.S. GAAP  Critical Accounting Policies
    
    
    142Item 5B. Liquidity and Capital Resources
    
    
    145Liquidity
    
    
    145Capital
    
    
    151Capital Expenditures
    
    
    152Item 6. Directors, Senior Management and Employees
    
    
    153Our Board of Directors
    
    
    153Functions of Our Board of Directors
    
    
    155Our Supervisory Committee
    
    
    156Compensation of Directors
    
    
    157Management of Grupo Galicia
    
    
    157
 (i)




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##### Table of Contents



TABLE OF CONTENTS
 PageBoard of Directors of Banco Galicia
    
    
    158Functions of the Board of Directors of Banco Galicia
    
    
    160Banco Galicias Executive Officers
    
    
    162Banco Galicias Supervisory Committee
    
    
    163Compensation of Banco Galicias Directors and Officers
    
    
    164Employees
    
    
    165Nasdaq Corporate Governance Standards
    
    
    166Share Ownership
    
    
    168Item 7. Major Shareholders and Related Party Transactions
    
    
    169Major Shareholders
    
    
    169Related Party Transactions
    
    
    170Item 8. Financial Information
    
    
    172Legal Proceedings
    
    
    172Dividend Policy and Dividends
    
    
    174Significant Changes
    
    
    175Item 9. The Offer and Listing
    
    
    176Shares and ADSs
    
    
    176Argentine Securities Market
    
    
    178Market Regulations
    
    
    179Item 10. Additional Information
    
    
    180Description of Our Bylaws
    
    
    180Exchange Controls
    
    
    187Taxation
    
    
    187Material Contracts
    
    
    192Documents on Display
    
    
    193Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    193General
    
    
    193Interest Rate Risk
    
    
    194Foreign Exchange Rate Risk
    
    
    199Item 12. Description of Securities Other Than Equity Securities
    
    
    201Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    202Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    202Item 15. Controls and Procedures
    
    
    202Item 16. [Reserved]
    
    
    203Item 16A. Audit Committee Financial Expert
    
    
    203Item 16B. Code of Ethics
    
    
    203Item 16C. Principal Accountants Fees and Services
    
    
    203Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    204Item 16E. Purchases of Equity Securities by the Issuer and affiliated Purchasers
    
    
    204Item 17. Financial Statements
    
    
    205Item 18. Financial Statements
    
    
    205Item 19. Exhibits
    
    
    205EX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONEX-13.2: CERTIFICATION
  (ii)




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##### Table of Contents



PRESENTATION OF FINANCIAL INFORMATION
  -
    
    Grupo Financiero Galicia S.A. (Grupo Galicia);-
    
    Sudamericana Holding S.A. and its subsidiaries;-
    
    Galicia Warrants S.A.;-
    
    Net Investments S.A. and its subsidiaries;-
    
    Galval Agente de Valores S.A. and-
    
    Banco de Galicia y Buenos Aires S.A., its wholly-owned subsidiary,
Banco Galicia Uruguay S.A (Galicia Uruguay) and its subsidiaries
and other subsidiaries and affiliated companies required to be
consolidated under Argentine Banking GAAP (collectively, the
Bank or Banco Galicia).




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##### Table of Contents



Instituto Nacional de Estadística y Censos
 
    Fondo Fiduciario para el Desarrollo Provincial
   -2-




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##### Table of Contents




    
    changes in general economic, business, political, legal, social or other conditions
in Argentina or elsewhere in Latin America;
    
    changes in capital markets in general that may affect policies or attitudes toward
lending to Argentina or Argentine companies;
    
    our inability to obtain additional debt or equity financing on attractive
conditions, which may limit our ability to fund existing operations and to finance new
activities; and
    
    the other factors discussed under Item 3. Key InformationRisk Factors in this
annual report.
   -3-




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##### Table of Contents



PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 Selected Financial Data
 §
    
    The following table presents summary
historical financial and other
information about us as of the dates
and for the periods indicated.
 §
    
    The financial statements for the
fiscal years ended December 31, 2004
and December 31, 2005 do not include
any effect for inflation accounting.
The financial statements for the
fiscal year ended December 31, 2003
include the effects of inflation
accounting through February 28, 2003.
The financial statements as of and for
the fiscal year ended December 31,
2002, and the financial data for prior
periods have been restated in constant
pesos of February 28, 2003.
 §
    
    The selected consolidated financial
information as of December 31, 2005
and December 31, 2004, and for the
fiscal years ending December 31, 2005,
2004 and 2003 has been derived from
our audited consolidated financial
statements included in this annual
report.
 §
    
    The selected consolidated financial
information as of December 31, 2003,
2002 and 2001 has been derived from
our audited consolidated financial
statements not included in this annual
report.
 §
    
    We prepare our financial statements in
accordance with Argentine Banking
GAAP, which differs from Argentine
GAAP and U.S. GAAP. Our audited
consolidated financial statements
contain a description of the principal
differences between Argentine GAAP and
Argentine Banking GAAP and a
reconciliation to U.S. GAAP of our
shareholders equity as of December
31, 2005, 2004 and 2003, and our net
income for the three years ended
December 31, 2005. See notes 40 and 41
to our audited consolidated financial
statements included in this annual
report.
 §
    
    You should read this data in
conjunction with Item 5. Operating
and Financial Review and Prospects
and our audited consolidated financial
statements.
 -4-




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##### Table of Contents



Fiscal Year Ended December 31,2005
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001(in millions
    
    (in millions of pesos, except as noted)(1)
    
    (in millions of Februaryof U.S.
    
    
    
    
    
    
    
    
    
    
    
    
    
    28, 2003, constant pesos,dollars,
    
    
    
    
    
    
    
    
    
    
    
    
    
    except as noted)(1)except asnoted)(1)Consolidated Income Statement in Accordance with Argentine Banking GAAPFinancial Income
    
    
    791.2
    
    
    
    2,398.6
    
    
    
    1,391.6
    
    
    
    1,452.1
    
    
    
    5,757.3
    
    
    
    3,586.8Financial Expenses
    
    
    608.9
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,304.8
    
    
    
    4,560.4
    
    
    
    2,126.1Net Financial Income (2)
    
    
    182.3
    
    
    
    552.7
    
    
    
    224.2
    
    
    
    147.3
    
    
    
    1,196.9
    
    
    
    1,460.7Provision for Losses on Loans and Other Receivables
    
    
    25.3
    
    
    
    76.7
    
    
    
    190.2
    
    
    
    286.4
    
    
    
    1,648.6
    
    
    
    1,008.5Income / (Loss) before Taxes
    
    
    41.8
    
    
    
    126.5
    
    
    
    (66.1
    )
    
    
    (221.6
    )
    
    
    (2,812.9
    )
    
    
    423.7Income Tax
    
    
    (6.4
    )
    
    
    (19.3
    )
    
    
    (43.8
    )
    
    
    (0.6
    )
    
    
    (66.4
    )
    
    
    (159.1
    )Net Income / (Loss) before the Absorption
    
    
    35.4
    
    
    
    107.2
    
    
    
    (109.9
    )
    
    
    (222.2
    )
    
    
    (2,879.3
    )
    
    
    264.6Absorption Approved in the Annual Shareholders Meeting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,370.0
    
    
    
    Net Income / (Loss) after the Absorption
    
    
    35.4
    
    
    
    107.2
    
    
    
    (109.9
    )
    
    
    (222.2
    )
    
    
    (1,509.3
    )
    
    
    264.6Net Income / (Loss) after the Absorption per Share (in Pesos) (*)
    
    
    0.028
    
    
    
    0.086
    
    
    
    (0.093
    )
    
    
    (0.203
    )
    
    
    (1.382
    )
    
    
    0.242Cash Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book Value per Share (in Pesos)
    
    
    0.432
    
    
    
    1.310
    
    
    
    1.224
    
    
    
    1.299
    
    
    
    1.465
    
    
    
    2.841Stock Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amounts in Accordance with U.S. GAAPNet Income / (Loss)
    
    
    241.1
    
    
    
    731.0
    
    
    
    (1.1
    )
    
    
    731.3
    
    
    
    422.5
    
    
    
    (8,638.4
    )Adjusted Net Income (Loss) per Share (in Pesos)
    
    
    0.194
    
    
    
    0.589
    
    
    
    (0.001
    )
    
    
    0.669
    
    
    
    0.386
    
    
    
    (7.907
    )Book Value / (Deficit) per Share (in Pesos)
    
    
    (0.565
    )
    
    
    (1.714
    )
    
    
    (2.574
    )
    
    
    4.077
    
    
    
    (4.964
    )
    
    
    (5.390
    )Financial Income
    
    
    976.0
    
    
    
    2,958.7
    
    
    
    1,448.7
    
    
    
    2,752.0
    
    
    
    2,613.1
    
    
    
    3,569.3Financial Expenses
    
    
    608.9
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,502.9
    
    
    
    4,560.4
    
    
    
    2,125.1Net Financial Income / (Loss)
    
    
    367.1
    
    
    
    1,112.8
    
    
    
    281.3
    
    
    
    1,249.1
    
    
    
    (1,947.3
    )
    
    
    1,444.2Provision for Losses on Loans and Other Receivables
    
    
    37.4
    
    
    
    113.5
    
    
    
    210.0
    
    
    
    274.6
    
    
    
    928.8
    
    
    
    4,731.0Income Tax
    
    
    6.4
    
    
    
    19.3
    
    
    
    35.4
    
    
    
    (38.4
    )
    
    
    66.5
    
    
    
    212.9Consolidated Balance Sheet in Accordance with Argentine Banking GAAPCash and Due from Banks
    
    
    343.5
    
    
    
    1,041.2
    
    
    
    988.7
    
    
    
    826.2
    
    
    
    576.8
    
    
    
    1,139.9Government Securities, Net
    
    
    1,968.5
    
    
    
    5,967.4
    
    
    
    5,518.0
    
    
    
    6,407.1
    
    
    
    1,786.5
    
    
    
    273.3Loans, Net
    
    
    3,481.8
    
    
    
    10,555.2
    
    
    
    8,438.2
    
    
    
    7,506.5
    
    
    
    10,682.1
    
    
    
    20,107.2Total Assets
    
    
    8,456.4
    
    
    
    25,635.7
    
    
    
    23,650.6
    
    
    
    22,822.9
    
    
    
    23,864.1
    
    
    
    27,877.6Deposits
    
    
    2,778.1
    
    
    
    8,421.7
    
    
    
    6,756.9
    
    
    
    5,584.0
    
    
    
    5,209.4
    
    
    
    13,502.8Other Funds (3)
    
    
    5,141.7
    
    
    
    15,587.2
    
    
    
    15,374.2
    
    
    
    15,819.5
    
    
    
    17,053.9
    
    
    
    11,271.3Total Shareholders Equity
    
    
    536.6
    
    
    
    1,626.8
    
    
    
    1,519.5
    
    
    
    1,419.4
    
    
    
    1,600.8
    
    
    
    3,103.5Average Total Assets (4)
    
    
    7,995.4
    
    
    
    24,238.1
    
    
    
    22,725.9
    
    
    
    22,530.3
    
    
    
    29,500.9
    
    
    
    31,967.4Percentage of Period-end Balance Sheet Items
Denominated in Dollars:Loans, Net of Allowances
    
    
    
    
    
    
    9.84
    
    
    
    10.43
    
    
    
    9.36
    
    
    
    9.11
    
    
    
    86.34Total Assets
    
    
    
    
    
    
    26.55
    
    
    
    32.92
    
    
    
    36.39
    
    
    
    43.20
    
    
    
    80.05Deposits
    
    
    
    
    
    
    15.55
    
    
    
    20.89
    
    
    
    29.67
    
    
    
    40.08
    
    
    
    81.15Total Liabilities
    
    
    
    
    
    
    25.81
    
    
    
    29.57
    
    
    
    36.87
    
    
    
    43.98
    
    
    
    74.07Amounts in Accordance with U.S. GAAPTrading Securities
    
    
    251.5
    
    
    
    762.4
    
    
    
    564.7
    
    
    
    328.8
    
    
    
    35.5
    
    
    
    141.9Available-for-Sale Securities
    
    
    1,526.4
    
    
    
    4,627.3
    
    
    
    3,923.1
    
    
    
    3,727.9
    
    
    
    1,380.6
    
    
    
    2,914.3Total Assets
    
    
    6,580.7
    
    
    
    19,949.3
    
    
    
    17,007.3
    
    
    
    14,835.2
    
    
    
    14,821.9
    
    
    
    21,061.8Total Liabilities
    
    
    7,282.7
    
    
    
    22,077.6
    
    
    
    20,203.0
    
    
    
    19,288.5
    
    
    
    20,244.2
    
    
    
    26,949.6Shareholders Equity (Deficit)
    
    
    (702.1
    )
    
    
    (2,128.3
    )
    
    
    (3,195.7
    )
    
    
    (4,453.3
    )
    
    
    (5,422.3
    )
    
    
    (5,887.8
    )
 -5-




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##### Table of Contents



Fiscal Year Ended December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(in millions of pesos, except as noted)(1)
    
    (in millions of February 28,2003, constant pesos, except asnoted)(1)Selected RatiosRatios in Accordance with Argentine Banking GAAPProfitability and EfficiencyNet Yield on Interest Earning Assets (5)
    
    
    2.38
    %
    
    
    1.02
    %
    
    
    0.89
    %
    
    
    3.66
    %
    
    
    6.54
    %Financial Margin (6)
    
    
    2.53
    
    
    
    1.08
    
    
    
    0.71
    
    
    
    4.44
    
    
    
    5.36Return on Average Assets (7)
    
    
    0.59
    
    
    
    (0.42
    )
    
    
    (0.95
    )
    
    
    (6.04
    )
    
    
    0.90Return on Average Shareholders Equity (8)
    
    
    6.83
    
    
    
    (7.32
    )
    
    
    (14.53
    )
    
    
    (62.06
    )
    
    
    8.67Net Income from Services as a Percentage of Operating Income
(9)
    
    
    48.65
    
    
    
    66.06
    
    
    
    73.08
    
    
    
    24.95
    
    
    
    39.22Efficiency ratio (10)
    
    
    72.56
    
    
    
    94.46
    
    
    
    113.91
    
    
    
    61.58
    
    
    
    57.00CapitalShareholders Equity as a Percentage of Total Assets
    
    
    6.35
    %
    
    
    6.42
    %
    
    
    6.22
    %
    
    
    6.71
    %
    
    
    11.13
    %Total Liabilities as a Multiple of Shareholders Equity
    
    
    14.76
    x
    
    
    14.56
    x
    
    
    15.08
    x
    
    
    13.91
    x
    
    
    7.98
    xTotal Capital Ratio (11)
    
    
    20.78
    %
    
    
    25.11
    %
    
    
    
    
    
    
    
    
    
    
    17.18
    %LiquidityCash and Due from Banks as a Percentage of Total Deposits
    
    
    12.36
    %
    
    
    14.63
    %
    
    
    14.80
    %
    
    
    11.07
    %
    
    
    8.44
    %Loans, Net as a Percentage of Total Assets
    
    
    41.17
    
    
    
    35.68
    
    
    
    32.89
    
    
    
    44.76
    
    
    
    72.13Credit QualityPast Due Loans (12) as a Percentage of Total Loans
    
    
    2.34
    %
    
    
    4.97
    %
    
    
    11.70
    %
    
    
    9.93
    %
    
    
    4.96
    %Non-Accrual Loans (13) as a Percentage of Total Loans
    
    
    3.50
    
    
    
    7.74
    
    
    
    15.04
    
    
    
    13.08
    
    
    
    6.74Allowance for Loan Losses as a Percentage of Non-accrual
Loans (13)
    
    
    111.90
    
    
    
    90.51
    
    
    
    90.61
    
    
    
    104.45
    
    
    
    73.93Net Charge-Offs (14) as a Percentage of Average Loans
    
    
    1.49
    
    
    
    3.77
    
    
    
    1.98
    
    
    
    1.89
    
    
    
    2.20Ratios in Accordance with U.S. GAAPCapitalShareholders Equity (deficit) as a Percentage of Total Assets
    
    
    (10.67
    )%
    
    
    (18.79
    )%
    
    
    (30.02
    )%
    
    
    (36.58
    )%
    
    
    (27.96
    )%Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    (10.37
    )x
    
    
    (6.32
    )x
    
    
    (4.33
    )x
    
    
    (3.73
    )x
    
    
    (4.58
    )xLiquidityLoans, Net as a Percentage of Total Assets
    
    
    50.15
    %
    
    
    43.91
    %
    
    
    43.32
    %
    
    
    55.03
    %
    
    
    61.11
    %Credit QualityAllowance for Loan Losses as a Percentage of Non-Accrual Loans
    
    
    139.49
    %
    
    
    84.75
    %
    
    
    85.98
    %
    
    
    101.48
    %
    
    
    136.89
    %Inflation and Exchange RateInflation (Deflation) (15) (16)
    
    
    10.69
    %
    
    
    7.84
    %
    
    
    2.03
    %
    
    
    118.44
    %
    
    
    (4.30
    )%Currency Devaluation Rate (16) (%)
    
    
    1.94
    
    
    
    1.39
    
    
    
    (12.79
    )
    
    
    236.30
    
    
    
    CER (17)
    
    
    11.75
    
    
    
    5.48
    
    
    
    3.66
    
    
    
    40.53
    
    
    
    CVS (18)
    
    
    
    
    
    
    5.32
    
    
    
    15.85
    
    
    
    0.83
    
    
    
    
 -6-




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##### Table of Contents



(*)
    
    Before the loss absorption mechanism established by Argentine Central Bank Communiqué A
3800, net loss per share for fiscal year 2002 was Ps.(2.636).(1)
    
    The exchange rate used to convert the December 31, 2005 amounts into U.S. dollars was Ps.3.0315
per US$1.00. All amounts are stated in millions of pesos, except inflation, percentages, ratios,
multiples and per-share data.(2)
    
    Net financial income represents mainly income from interest on loans and other receivables from
financial brokerage plus net income from government and corporate debt securities, including gains and
losses, less interest on deposits and other liabilities from financial intermediation and monetary
loss from financial brokerage. For fiscal years 2002, 2003, 2004 and 2005, it also includes the CER
adjustment.(3)
    
    Includes mainly liabilities with the Argentine Central Bank, other banks and international
entities.(4)
    
    The average balances of assets and liabilities, including the related interest receivable and
payable are calculated on a daily basis for Banco Galicia and for Galicia Uruguay, as well as for
Tarjetas Regionales S.A consolidated with its operating subsidiaries, and on a monthly basis for Grupo
Galicia and its non-banking subsidiaries.(5)
    
    Net interest earned divided by interest-earning assets. For a description of net interest earned,
see Item 4. Information on the CompanySelected Statistical InformationInterest-Earning AssetsNet
Yield on Interest-Earning Assets.(6)
    
    Financial margin represents net financial income divided by average interest-earning assets.(7)
    
    Net income plus minority interest plus unrealized valuation difference as a percentage of average
total assets. Before the loss absorption mechanism allowed by Argentine Central Bank Communiqué A
3800, this ratio was (10.68)% for fiscal year 2002.(8)
    
    Net income plus unrealized valuation difference as a percentage of average shareholders equity.
Before the loss absorption mechanism allowed by Argentine Central Bank Communiqué A 3800, this ratio
was (118.40) % for fiscal year 2002.(9)
    
    Operating income is defined as net financial income plus net income from services plus monetary
loss from financial intermediation plus the unrealized valuation difference. Excluding from the
calculation the unrealized valuation difference (in accordance with Argentine Central Bank Communiqué
A 3703), this ratio was 278.90% for fiscal year 2002.(10)
    
    Administrative expenses net of the monetary gain (loss) from operating expenses as a percentage
of operating income as defined above. Excluding from the calculation the unrealized valuation
difference (in accordance with Argentine Central Bank Communiqué A 3703), this ratio was 688.34% for
fiscal year 2002.(11)
    
    Compliance with the capital adequacy rules of the Argentine Central Bank was suspended during
2002 and 2003 (including December 31, 2002, and December 31, 2003). See Item 4.Information on the
CompanySelected Statistical InformationRegulatory Capital.(12)
    
    Past-due loans consist of amounts of entire loan principal and interest receivable for those
loans for which either the principal or any interest payment is 91 days or more past due.(13)
    
    Non-Accrual loans are defined as those loans falling into the following categories under the
Argentine Central Banks classification system: (a) consumer: defective fulfillment, difficulty in
recovery, uncollectible or uncollectible for technical reasons and (b) commercial: with problems, high
risk of insolvency, uncollectible or uncollectible for technical reasons.(14)
    
    Charge-offs plus direct charge-offs minus bad debts recovered.(15)
    
    As measured by changes in the WPI in Argentina.(16)
    
    Source: INDEC.(17)
    
    The CER is the Coeficiente de Estabilización de Referencia, an adjustment coefficient based
on changes in the consumer price index, which became effective February 3, 2002. See Item 4.
Information on the CompanyMain Regulatory Changes since 2002.(18)
    
    The CVS is the Coeficiente de Variación Salarial, an adjustment coefficient based on the
variation of salaries, which was effective between October 1, 2002 and March 31, 2004. See Item 4.
Information on the CompanyMain Regulatory Changes since 2002. The percentage disclosed for FY 2004
corresponds to the variation between January 1, 2004 and March 31, 2004.
 
 Exchange Rate Information
 
  -7-




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Exchange Rate(1)High
    
    Low
    
    Average(2)
    
    Period-End2000
    
    
    1.0000
    
    
    
    1.0000
    
    
    
    1.0000
    (3)
    
    
    1.00002001
    
    
    1.0000
    
    
    
    1.0000
    
    
    
    1.0000
    (3)
    
    
    1.00002002
    
    
    3.9000
    
    
    
    1.0000
    
    
    
    3.0724
    (3)
    
    
    3.36302003
    
    
    3.3625
    
    
    
    2.7485
    
    
    
    2.9491
    (3)
    
    
    2.93302004
    
    
    3.0718
    
    
    
    2.8037
    
    
    
    2.9415
    (3)
    
    
    2.97382005
    
    
    3.0523
    
    
    
    2.8592
    
    
    
    2.9233
    (3)
    
    
    3.0315November 2005
    
    
    2.9952
    
    
    
    2.9405
    
    
    
    2.9672
    
    
    
    2.9735December 2005
    
    
    3.0523
    
    
    
    2.9700
    
    
    
    3.0145
    
    
    
    3.0315January 2006
    
    
    3.0637
    
    
    
    3.0305
    
    
    
    3.0460
    
    
    
    3.0637February 2006
    
    
    3.0757
    
    
    
    3.0625
    
    
    
    3.0689
    
    
    
    3.0728March 2006
    
    
    3.0845
    
    
    
    3.0650
    
    
    
    3.0763
    
    
    
    3.0808April 2006
    
    
    3.0828
    
    
    
    3.0367
    
    
    
    3.0663
    
    
    
    3.0438May 2006
    
    
    3.0868
    
    
    
    3.0367
    
    
    
    3.0535
    
    
    
    3.0868
 (1)
    
    Until June 2002, asked closing quotations as quoted by Banco Nación. Since July 2002,
closing reference exchange rate as published by the Argentine Central Bank.(2)
    
    Daily average of closing quotations, unless otherwise noted.(3)
    
    Based on monthly averages.
  
 Risk Factors
 You should carefully consider the risks described below in addition to the other information
contained in this annual report. We also may face risks and uncertainties that are not presently
known to us or that we currently deem immaterial, which may impair our business.
 Risk Factors Relating to Argentina
  The current growth and stabilization may not be sustainable, which could adversely affect the
economy, the financial system and our financial condition and prospects
   -8-




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Inflation may rise from current levels and undermine the economy and our financial condition
    Argentinas ability to obtain financing from international markets and direct-foreign investment is
actually limited, which may have negative effects on the level of economic activity
    -9-




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Significant devaluation of the peso may adversely affect the Argentine economy and our operations
   Argentinas economy and its real, financial and securities market remain vulnerable to external
shocks which could have an adverse effect on the countrys economic growth and on our prospects
    A decline in international prices for Argentinas main commodity exports could have an adverse
effect on Argentinas economic growth and on our prospects
  The foreign exchange market is subject to controls and the Argentine Central Bank could implement
more restrictive measures that could prevent Argentine debtors from repaying their debt with
foreign creditors
  -10-




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Volatility of the regulatory environment in Argentina could continue to be high and future
Argentine governmental policies could adversely affect the Argentine economy as a whole as well as
financial institutions including us
  Government measures may adversely affect the Argentine economy as a whole, as well as different
economic agents, including us
  Risk Factors Relating to the Argentine Financial System
 The recovery of the financial system, of which we are a part, is dependent upon the ability of
financial institutions to maintain and increase depositors confidence
   -11-




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The negative consequences of the 2001-2002 crisis on the profile and activities of the financial
system could not be overcome
     Financial institutions  asset quality deteriorated significantly after the 2001-2002 economic
crisis, and the current improvement could be interrupted if the Argentine economy stops growing
   -12-




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An increasing number of judgments against financial institutions, in connection with the
corralón, may result in further deterioration of financial institutions  deposit base and
liquidity, including ours
 amparo amparo
   New limitations to creditors  rights in Argentina and to the ability to foreclose on certain
guarantees and collateral may adversely impact financial institutions
  Risk Factors Relating to us
 We are a holding company, and our ability to pay cash dividends depends on the ability of our
subsidiaries to pay dividends to us
  -13-




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We may operate finance-related businesses that have little or no regulatory supervision
  We are subject to corporate disclosure and accounting standards that may limit the information
available to our shareholders
    Our shareholders may be subject to liability for certain votes of their securities
  U.S. holders of our class B shares may not be able to exercise preemptive and accretion rights
  -14-




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Our net position in CER-adjusted assets exposes us to increases of the real interest rate
   Our assets are concentrated in Argentine public-sector debt instruments making our future financial
condition strongly dependent on the Argentine Governments credit quality
   We carry a significant portion of our public-sector assets at values that do not reflect their
market value, which is substantially lower than their respective book value
  -15-




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We have recorded our right to receive the Hedge Bond and our right to receive the advance from the
Argentine Central Bank to purchase such Bond, as if we had already received such Bond and if we had
already executed the debt agreement with the Argentine Central Bank
     A breach of any of the covenants under the Banks debt agreements entered into by the Bank as part
of its foreign debt restructuring could result in a default in respect of the related indebtedness
  -16-




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It may be difficult for us to fully overcome all of the residual negative effects of the 2001-2002
crisis
 amparo
  Increased competition and consolidation in the banking industry may adversely affect our operations
  -17-




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Item 4. Information on the Company
 
 Organization
 sociedad anónima )
  
 Organizational Structure
  §
    
    Galicia Uruguay, incorporated in Uruguay and currently not an operating financial institution;
 §
    
    Galval Agente de Valores S.A. (Galval), incorporated in Uruguay;
 §
    
    Galicia Pension Fund Ltd. and Galicia (Cayman) Ltd. (Galicia Cayman), incorporated in the Cayman Islands;
 §
    
    Net Investment BV (in liquidation), incorporated in the Netherlands; and
 §
    
    Tradecom International N.V. (in liquidation), incorporated in the Netherlands.
  -18-




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(1)
    
    Aguas Provinciales de Santa Fe S.A. 12.5%; Inversora Diamante S. A. 12.5%; Electrigal S.A. 12.5%; Inversora Nihuiles S.A. 12.4991%; Correo
Argentino S.A. 11.77%; Aguas Cordobesas S.A. 10.833%; Aguas Argentinas S.A. 8.26%; A.E.C. S.A. 7.059%; Banelco S.A. 18.95%; Galicia
Inmobiliaria S.A. 12.5%; Alfer S.A. (in liquidation) 9.8024%; Interbanking S.A. 9.09%; Finanban S.A. 6.67%; Compensadora Electrónica S.A. 6.2797%;
Seguros de Depósitos S.A. ( Sedesa) 6.1992%; Argencontrol S.A. 5.766%; Visa S.A. 5.0%; Garbin S.A. 4.9085%; Corporación Interamericana para el
Financiamiento de Infraestructura S.A. 1. 79%; Mercado Abierto Electrónico S.A. 1.4851%; Banco Latinoamericano de Exportaciones S.A. 0.10%;
S.W.I.F.T. S.C. 0.02%.
    
 History
  -19-




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Ley de Entidades Financieras
      -20-




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##### Table of Contents



Restructuring of our Subsidiaries Debt
 Banco Galicia
  Approval of the Banks Foreign Debt Restructuring and Argentine Central Bank Debt
Restructuring
 
  
 
 Restructuring of the Foreign Debt of the Banks Head Office in Argentina and its Cayman
Branch
    Terms of the Foreign Debt Restructuring
  -21-




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
    
    cash (at a discount) (the cash offer);
    
    Boden 2012 (at a discount) (the Boden offer);
    
    new long-term debt instruments (at par); or
    
    new medium-term debt instruments (at par) and up to 149 million preferred shares
of our preferred shares (or, instead of such shares, cash, if any, paid to us by
existing shareholders electing to subscribe for our preferred shares in a
preemptive rights offering) (the equity participation option).
     -
    
    We approved a capital increase through the issuance of up to 149 million
preferred shares, each of them mandatorily convertible into one of our class B
shares on May 13, 2005, the first anniversary date of issuance (or, if earlier, on
the occurrence of a change of control of Grupo Galicia). As a result of the
exercises made by the existing shareholders in our preemptive rights offering,
creditors opting for the equity participation offer received 87.8 million preferred
shares and US$30 million in cash and we received US$100 million of subordinated
bonds in exchange for those shares and cash. We issued the 149 million preferred
shares on May 13, 2004, which were converted into ordinary class B shares on May
12, 2005.-
    
    Our controlling shareholders assigned part of their preemptive and accretion
rights to a trust established for the benefit of the Banks creditors.-
    
    We entered into a registration rights agreement for the benefit of the holders
of our preferred shares in the United States in which we agreed to (1) file a shelf
registration statement with the SEC covering the resale of those restricted
preferred shares within 180 days of the issue date of the preferred shares; (2) use
our reasonable best efforts to cause the shelf registration statement to become
effective no later than June 1, 2005; and (3) use our reasonable best efforts to
keep the shelf registration statement effective from on or before June 1, 2005,
until the earlier of the date on which all of the restricted preferred shares have
been sold under the shelf registration statement or September 30, 2005.-
    
    We entered into an agreement with the Banks bank creditors in which we agreed
to maintain certain corporate governance standards and to provide them with certain
financial information and reports on a quarterly and annual basis.
  -22-




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
    
    paid US$13.6 million to creditors participating in the cash offer;
    
    transferred US$36.9 million of nominal value of Boden 2012 to creditors
participating in the Boden offer; and
    
    issued the following new debt instruments:-
    
    US$648.5 million of long-term dollar-denominated debt instruments, of which
US$464.8 million were dollar-denominated negotiable obligations due 2014 issued
under an indenture.-
    
    US$399.8 million of medium-term dollar-denominated debt instruments, of which
US$352.8 million were dollar-denominated negotiable obligations due 2010 issued
under an indenture.-
    
    US$230.0 million of subordinated dollar-denominated debt instruments, of which
US$218.2 million were dollar-denominated negotiable obligations due 2019 issued
under an indenture.
   Principal amount of:
    
    In US$ millionsa) Old debt to be restructured as of December 31, 2003
    
    US$
    1,349.6b) Old debt to be restructured as of April 27, 2004 (1)
    
    
    1,344.7
    (2)c) Old debt participating in the restructuring as of April 27, 2004 (1)
    
    
    1,320.9d) New debt, including past due interest capitalized (3) (4)
    
    
    1,399.6e) New debt issued (4) (5)
    
    
    1,278.3f) Old debt not restructured as of May 18, 2004 (6)
    
    
    22.9
    (7)g) Old debt not restructured as of December 31, 2005
    
    
    7.3
 
 (1)
    
    Expiration date of the exchange offer.(2)
    
    The decrease in the principal amount of debt to be restructured as compared to December 31,
2003, resulted from the fact that, in accordance with Argentine law, borrowers that were also
holders of certain of the Banks debt instruments under restructuring used such holdings to
repay past-due loans granted to them by the Bank.(3)
    
    Interest past due between May 1, 2002, and December 31, 2003, was capitalized at 4.75% per
annum, except for trade debt for a principal amount of US$25.3 million for which interest was
capitalized at Libor plus 1%. Interest past due until April 30, 2002, was paid in cash.(4)
    
    Excludes trade debt.(5)
    
    After having applied US$42.4 million not used in the cash offer to prepay long-term debt
instruments included in (d).(6)
    
    Settlement date of the exchange offer.(7)
    
    Between the expiration date and the settlement date, the amount of debt not restructured
decreased by US$0.9 million as a result of the repayment by borrowers that were also holders
of debt subject to restructuring of past-due loans made to them by the Bank by using their
holdings of such debt and, to a lesser extent, as a result of the renegotiation of debt not
restructured under the terms of the restructuring.  Restructuring of the Banks New York Branch Debt
  -23-




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Capitalization
  
    
    the exchange of debt subject to restructuring for cash and Boden 2012 at a
discount and the capitalization of interest at a rate lower than the contractual
rate recorded in the Banks books, which generated in aggregate a US$48.9 million
increase in shareholders equity; and
    
    the issuance of US$230.0 million of subordinated debt computable as supplemental
capital in accordance with the Argentine Central Banks capital adequacy rules.
   Banco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.
 Galicia Uruguay
     -24-




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Galicia (Cayman) Ltd.
   
 Capital Investments and Divestitures
   
    
    Ps.29.9 million in fixed assets;
    
    Ps.38.1 million in construction in progress; and
    
    Ps.20.3 million in organizational and IT system development expenses.
 -25-




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
    
    Ps.14.9 million in fixed assets;
    
    Ps.9.7 million in construction in progress; and
    
    Ps.17.6 million in organizational and IT system development expenses.
  
    
    Ps.2.6 million in fixed assets;
    
    Ps.10.3 million in construction in progress; and
    
    Ps.8.3 million in organizational and IT system development expenses.
      Construction of the new corporate tower
    
    
    Ps.  81.0 millionHardware, software and system maintenance
    
    35.8 millionOther fixed assets
    
    35.5 millionTotal
    
    
    Ps.152.3 million
   
 Business Overview
 Banco Galicias Operations
   -26-




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Retail Banking
      Individual Banking
   -27-




---



##### Table of Contents



-28-




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Consumer Finance
  
    
    80.0% in Tarjeta Naranja S.A., a company operating in northern, central and
southern Argentina. In March 2001, Tarjetas del Sur S.A., a regional
credit-card company that operated in the southern part of Argentina that was
directly and indirectly controlled by the Bank, was merged into Tarjeta
Naranja. In January 2004, Tarjeta Comfiar S.A., a company that operated mostly
in the province of Santa Fe, was merged into Tarjeta Naranja S.A.
    
    60.0% in Tarjetas Cuyanas S.A., a company operating mainly in the provinces
of the Cuyo region.
    
    99.99% in Tarjetas del Mar S.A., a company operating mainly in the city of
Mar del Plata and the surrounding area and other locations of the Province of
Buenos Aires (excluding the Greater Buenos Aires area).
    -29-




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Traditional Distribution Channels
     -30-




---



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Automated Banking
        -31-




---



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Private Banking
    Wholesale Banking
  Commercial Banking
     -32-




---



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Corporate Banking 
   Middle-Market Banking 
    -33-




---



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Galicia Office
    Investment Banking
     -34-




---



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Foreign Trade
     -35-




---



##### Table of Contents



Treasury and International
  Financial Operations
    Asset Management
   -36-




---



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International
   Internet
  Sudamericana Holding S.A.
       -37-




---



##### Table of Contents



Net Investment S.A.
      Galicia Warrants S.A.
   -38-




---



##### Table of Contents



Galval Agente de Valores S.A.
  
 Competition
  Banking
      Regional Credit-Card Companies
  -39-




---



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Insurance Industry
  rentas vitalicias previsionales
    
 Sales and Marketing
      -40-




---



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-41-




---



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Property
         -42-




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Selected Statistical Information
     -43-




---



##### Table of Contents



Average Balance Sheet and Income from Interest-Earning Assets and Expenses from Interest-Bearing
Liabilities
     Fiscal Year Ended December 31, 2005 (*)Pesos

    
    
    
    
    
    
    Dollars

    
    
    
    
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)AssetsGovernment Securities
    
    Ps
    .4,945.8
    
    
    Ps
    .660.9
    
    
    
    13.36
    
    
    Ps
    .801.9
    
    
    Ps
    .16.4
    
    
    
    2.05
    
    
    Ps
    .5,747.7
    
    
    Ps
    .677.3
    
    
    
    11.78LoansPrivate Sector
    
    
    3,917.2
    
    
    
    610.3
    
    
    
    15.58
    
    
    
    989.9
    
    
    
    39.6
    
    
    
    4.00
    
    
    
    4,907.1
    
    
    
    649.9
    
    
    
    13.24Public Sector
    
    
    4,839.8
    
    
    
    714.9
    
    
    
    14.77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,839.8
    
    
    
    714.9
    
    
    
    14.77Total Loans
    
    
    8,757.0
    
    
    
    1,325.2
    
    
    
    15.13
    
    
    
    989.9
    
    
    
    39.6
    
    
    
    4.00
    
    
    
    9,746.9
    
    
    
    1,364.8
    
    
    
    14.00Other(1)
    
    
    1,584.4
    
    
    
    134.6
    
    
    
    8.50
    
    
    
    4,765.2
    
    
    
    138.7
    
    
    
    2.91
    
    
    
    6,349.6
    
    
    
    273.3
    
    
    
    4.30Total Interest-Earning Assets
    
    
    15,287.2
    
    
    
    2,120.7
    
    
    
    13.87
    %
    
    
    6,557.0
    
    
    
    194.7
    
    
    
    2.97
    %
    
    
    21,844.2
    
    
    
    2,315.4
    
    
    
    10.60
    %Cash and Gold
    
    
    357.1
    
    
    
    
    
    
    
    
    
    
    
    184.2
    
    
    
    
    
    
    
    
    
    
    
    541.3
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    446.7
    
    
    
    
    
    
    
    
    
    
    
    43.5
    
    
    
    
    
    
    
    
    
    
    
    490.2
    
    
    
    
    
    
    
    Other Assets
    
    
    1,901.2
    
    
    
    
    
    
    
    
    
    
    
    89.3
    
    
    
    
    
    
    
    
    
    
    
    1,990.5
    
    
    
    
    
    
    
    Allowances
    
    
    (555.7
    )
    
    
    
    
    
    
    
    
    
    
    (72.4
    )
    
    
    
    
    
    
    
    
    
    
    (628.1
    )
    
    
    
    
    
    
    Total Assets
    
    Ps
    .17,436.5
    
    
    
    
    
    
    
    
    
    
    Ps
    .6,801.6
    
    
    
    
    
    
    
    
    
    
    Ps
    .24,238.1
    
    
    
    
    
    
    
    Liabilities and EquityDepositsCurrent Accounts
    
    
    536.8
    
    
    
    15.3
    
    
    
    2.85
    
    
    
    78.2
    
    
    
    
    
    
    
    
    
    
    
    615.0
    
    
    
    15.3
    
    
    
    2.49Saving Accounts
    
    
    1,023.9
    
    
    
    4.7
    
    
    
    0.46
    
    
    
    364.1
    
    
    
    
    
    
    
    
    
    
    
    1,388.0
    
    
    
    4.7
    
    
    
    0.34Time Deposits
    
    
    3,351.3
    
    
    
    238.9
    
    
    
    7.13
    
    
    
    767.8
    
    
    
    7.9
    
    
    
    1.03
    
    
    
    4,119.1
    
    
    
    246.8
    
    
    
    5.99Total Interest-Bearing Deposits
    
    
    4,912.0
    
    
    
    258.9
    
    
    
    5.27
    
    
    
    1,210.1
    
    
    
    7.9
    
    
    
    0.65
    
    
    
    6,122.1
    
    
    
    266.8
    
    
    
    4.36Argentine Central Bank
    
    
    8,341.3
    
    
    
    1,177.2
    
    
    
    14.11
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    8,341.6
    
    
    
    1,177.2
    
    
    
    14.11Other Financial Entities
    
    
    206.6
    
    
    
    36.8
    
    
    
    17.81
    
    
    
    152.0
    
    
    
    9.8
    
    
    
    6.45
    
    
    
    358.6
    
    
    
    46.6
    
    
    
    12.99Debt Securities
    
    
    101.3
    
    
    
    9.7
    
    
    
    9.58
    
    
    
    3,427.3
    
    
    
    224.4
    
    
    
    6.55
    
    
    
    3,528.6
    
    
    
    234.1
    
    
    
    6.63Other
    
    
    41.2
    
    
    
    6.4
    
    
    
    15.53
    
    
    
    1,045.7
    
    
    
    65.0
    
    
    
    6.22
    
    
    
    1,086.9
    
    
    
    71.4
    
    
    
    6.57Total Interest-Bearing
    
    
    13,602.4
    
    
    
    1,489.0
    
    
    
    10.95
    
    
    
    5,835.4
    
    
    
    307.1
    
    
    
    5.26
    
    
    
    19,437.8
    
    
    
    1,796.1
    
    
    
    9.24
 -44-




---



##### Table of Contents



Fiscal Year Ended December 31, 2005 (*)Pesos

    
    
    
    
    
    
    Dollars

    
    
    
    
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)LiabilitiesDemand deposits
    
    
    1,414.3
    
    
    
    
    
    
    
    
    
    
    
    20.8
    
    
    
    
    
    
    
    
    
    
    
    1,435.1
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,358.0
    
    
    
    
    
    
    
    
    
    
    
    310.0
    
    
    
    
    
    
    
    
    
    
    
    1,668.0
    
    
    
    
    
    
    
    Minority Interests
    
    
    127.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127.9
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,569.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,569.3
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    Ps
    .18,071.9
    
    
    
    
    
    
    
    
    
    
    Ps
    .6,166.2
    
    
    
    
    
    
    
    
    
    
    Ps
    .24,238.1
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.92
    %
    
    
    
    
    
    
    
    
    
    
    (2.29
    )%
    
    
    
    
    
    
    
    
    
    
    1.36
    %Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    9.74
    
    
    
    
    
    
    
    
    
    
    
    4.68
    
    
    
    
    
    
    
    
    
    
    
    8.22Net Yield on Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    4.13
    
    
    
    
    
    
    
    
    
    
    
    (1.71
    )
    
    
    
    
    
    
    
    
    
    
    2.38
 
 (*) Rates include the CER adjustment.(1)
    
    Includes the amounts corresponding to the Compensatory Bond and the Hedge Bond to be received, among others. -45-




---



##### Table of Contents



Fiscal Year Ended December 31, 2004 (*)Pesos

    
    
    
    
    
    
    Dollars

    
    
    
    
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)AssetsGovernment Securities
    
    Ps.
    1,226.7
    
    
    Ps.
    78.5
    
    
    
    6.40
    
    
    Ps.
    2,012.0
    
    
    Ps.
    (87.8
    )
    
    
    (4.36
    )
    
    Ps.
    3,238.7
    
    
    Ps.
    (9.3
    )
    
    
    (0.29
    )LoansPrivate Sector
    
    
    3,213.9
    
    
    
    490.9
    
    
    
    15.27
    
    
    
    907.3
    
    
    
    44.1
    
    
    
    4.86
    
    
    
    4,121.2
    
    
    
    535.0
    
    
    
    12.98Public Sector
    
    
    7,016.7
    
    
    
    564.6
    
    
    
    8.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,016.7
    
    
    
    564.6
    
    
    
    8.05Total Loans
    
    
    10,230.6
    
    
    
    1,055.5
    
    
    
    10.32
    
    
    
    907.3
    
    
    
    44.1
    
    
    
    4.86
    
    
    
    11,137.9
    
    
    
    1,099.6
    
    
    
    9.87Other(1)
    
    
    1,385.8
    
    
    
    92.5
    
    
    
    6.67
    
    
    
    4,973.0
    
    
    
    73.3
    
    
    
    1.47
    
    
    
    6,358.8
    
    
    
    165.8
    
    
    
    2.61Total Interest-Earning Assets
    
    
    12,843.1
    
    
    
    1,226.5
    
    
    
    9.55
    %
    
    
    7,892.3
    
    
    
    29.6
    
    
    
    0.38
    %
    
    
    20,735.4
    
    
    
    1,256.1
    
    
    
    6.06
    %Cash and Gold
    
    
    290.2
    
    
    
    
    
    
    
    
    
    
    
    150.0
    
    
    
    
    
    
    
    
    
    
    
    440.2
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    339.2
    
    
    
    
    
    
    
    
    
    
    
    88.5
    
    
    
    
    
    
    
    
    
    
    
    427.7
    
    
    
    
    
    
    
    Other Assets
    
    
    2,142.9
    
    
    
    
    
    
    
    
    
    
    
    104.0
    
    
    
    
    
    
    
    
    
    
    
    2,246.9
    
    
    
    
    
    
    
    Allowances
    
    
    (840.2
    )
    
    
    
    
    
    
    
    
    
    
    (284.1
    )
    
    
    
    
    
    
    
    
    
    
    (1,124.3
    )
    
    
    
    
    
    
    Total Assets
    
    Ps.
    14,775.2
    
    
    
    
    
    
    
    
    
    
    Ps.
    7,950.7
    
    
    
    
    
    
    
    
    
    
    Ps.
    22,725.9
    
    
    
    
    
    
    
    Liabilities and EquityDepositsCurrent Accounts
    
    
    364.5
    
    
    
    4.8
    
    
    
    1.32
    %
    
    
    69.5
    
    
    
    
    
    
    
    
    
    
    
    434.0
    
    
    
    4.8
    
    
    
    1.11
    %Saving Accounts
    
    
    767.1
    
    
    
    4.2
    
    
    
    0.55
    
    
    
    267.4
    
    
    
    
    
    
    
    
    
    
    
    1,034.5
    
    
    
    4.2
    
    
    
    0.41Time Deposits
    
    
    2,228.9
    
    
    
    116.3
    
    
    
    5.22
    
    
    
    1,088.6
    
    
    Ps.
    18.2
    
    
    
    1.67
    %
    
    
    3,317.5
    
    
    
    134.5
    
    
    
    4.05Total Interest-Bearing Deposits
    
    
    3,360.5
    
    
    
    125.3
    
    
    
    3.73
    
    
    
    1,425.5
    
    
    
    18.2
    
    
    
    1.28
    
    
    
    4,786.0
    
    
    
    143.5
    
    
    
    3.00Argentine Central Bank
    
    
    8,165.6
    
    
    
    698.9
    
    
    
    8.56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,165.6
    
    
    
    698.9
    
    
    
    8.56Other Financial Entities
    
    
    168.2
    
    
    
    47.9
    
    
    
    28.48
    
    
    
    815.4
    
    
    
    66.8
    
    
    
    8.19
    
    
    
    983.6
    
    
    
    114.7
    
    
    
    11.66Debt Securities
    
    
    10.7
    
    
    
    
    
    
    
    
    
    
    
    3,179.9
    
    
    
    27.6
    
    
    
    0.87
    
    
    
    3,190.6
    
    
    
    27.6
    
    
    
    0.87Other
    
    
    95.7
    
    
    
    7.9
    
    
    
    8.25
    
    
    
    1,072.5
    
    
    
    52.5
    
    
    
    4.90
    
    
    
    1,168.2
    
    
    
    60.4
    
    
    
    5.17Total Interest-Bearing
Liabilities
    
    
    11,800.7
    
    
    
    880.0
    
    
    
    7.46
    %
    
    
    6,493.3
    
    
    
    165.1
    
    
    
    2.54
    %
    
    
    18,294.0
    
    
    
    1,045.1
    
    
    
    5.71
    %Demand deposits
    
    
    1,038.2
    
    
    
    
    
    
    
    
    
    
    
    34.0
    
    
    
    
    
    
    
    
    
    
    
    1,072.2
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,197.4
    
    
    
    
    
    
    
    
    
    
    
    558.2
    
    
    
    
    
    
    
    
    
    
    
    1,755.6
    
    
    
    
    
    
    
    Minority Interests
    
    
    103.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103.2
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,500.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500.9
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    Ps.
    15,640.4
    
    
    
    
    
    
    
    
    
    
    Ps.
    7,085.5
    
    
    
    
    
    
    
    
    
    
    Ps.
    22,725.9
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.09
    %
    
    
    
    
    
    
    
    
    
    
    (2.16
    )%
    
    
    
    
    
    
    
    
    
    
    0.35
    %Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.85
    
    
    
    
    
    
    
    
    
    
    
    2.09
    
    
    
    
    
    
    
    
    
    
    
    5.04Net Yield on Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    2.70
    
    
    
    
    
    
    
    
    
    
    
    (1.72
    )
    
    
    
    
    
    
    
    
    
    
    1.02
 
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes the amounts corresponding to the Compensatory Bond and the Hedge Bond to be received, among others. -46-




---



##### Table of Contents



Fiscal Year Ended December 31, 2003 (*)Pesos

    
    
    
    
    
    
    Dollars

    
    
    
    
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)AssetsGovernment Securities
    
    Ps.
    250.5
    
    
    Ps.
    23.3
    
    
    
    9.30
    %
    
    Ps.
    1,832.3
    
    
    Ps.
    48.2
    
    
    
    2.63
    %
    
    Ps.
    2,082.8
    
    
    Ps.
    71.5
    
    
    
    3.43
    %LoansPrivate Sector
    
    
    2,981.0
    
    
    
    705.6
    
    
    
    23.67
    
    
    
    986.2
    
    
    
    89.2
    
    
    
    9.04
    
    
    
    3,967.2
    
    
    
    794.8
    
    
    
    20.03Public Sector
    
    
    7,589.5
    
    
    
    342.6
    
    
    
    4.51
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,589.5
    
    
    
    342.6
    
    
    
    4.51Total Loans
    
    
    10,570.5
    
    
    
    1,048.2
    
    
    
    9.92
    
    
    
    986.2
    
    
    
    89.2
    
    
    
    9.04
    
    
    
    11,556.7
    
    
    
    1,137.4
    
    
    
    9.84Other(1)
    
    
    1,309.3
    
    
    
    61.1
    
    
    
    4.67
    
    
    
    5,776.3
    
    
    
    64.4
    
    
    
    1.11
    
    
    
    7,085.6
    
    
    
    125.5
    
    
    
    1.77Total Interest-Earning Assets
    
    
    12,130.3
    
    
    
    1,132.6
    
    
    
    9.34
    %
    
    
    8,594.8
    
    
    
    201.8
    
    
    
    2.35
    %
    
    
    20,725.1
    
    
    
    1,334.4
    
    
    
    6.44
    %Cash and Gold
    
    
    207.0
    
    
    
    
    
    
    
    
    
    
    
    135.5
    
    
    
    
    
    
    
    
    
    
    
    342.5
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    462.1
    
    
    
    
    
    
    
    
    
    
    
    140.4
    
    
    
    
    
    
    
    
    
    
    
    602.5
    
    
    
    
    
    
    
    Other Assets
    
    
    2,275.1
    
    
    
    
    
    
    
    
    
    
    
    128.2
    
    
    
    
    
    
    
    
    
    
    
    2,403.3
    
    
    
    
    
    
    
    Allowances
    
    
    (1,291.7
    )
    
    
    
    
    
    
    
    
    
    
    (251.4
    )
    
    
    
    
    
    
    
    
    
    
    (1,543.1
    )
    
    
    
    
    
    
    Total Assets
    
    Ps.
    13,782.8
    
    
    
    
    
    
    
    
    
    
    Ps.
    8,747.5
    
    
    
    
    
    
    
    
    
    
    Ps.
    22,530.3
    
    
    
    
    
    
    
    -Liabilities and EquityDepositsCurrent Accounts
    
    Ps.
    185.1
    
    
    Ps.
    3.0
    
    
    
    1.62
    %
    
    Ps.
    30.5
    
    
    
    
    
    
    
    
    
    
    Ps.
    215.6
    
    
    Ps.
    3.0
    
    
    
    1.39
    %Saving Accounts
    
    
    434.6
    
    
    
    3.4
    
    
    
    0.78
    
    
    
    178.5
    
    
    
    
    
    
    
    
    
    
    
    613.1
    
    
    
    3.4
    
    
    
    0.55Time Deposits
    
    
    2,185.4
    
    
    
    230.6
    
    
    
    10.55
    
    
    
    1,422.9
    
    
    Ps.
    26.8
    
    
    
    1.88
    %
    
    
    3,608.3
    
    
    
    257.4
    
    
    
    7.13Total Interest-Bearing Deposits
    
    
    2,805.1
    
    
    
    237.0
    
    
    
    8.45
    
    
    
    1,631.9
    
    
    
    26.8
    
    
    
    1.64
    
    
    
    4,437.0
    
    
    
    263.8
    
    
    
    5.95Argentine Central Bank
    
    
    8,062.0
    
    
    
    473.1
    
    
    
    5.87
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    8,062.7
    
    
    
    473.1
    
    
    
    5.87Other Financial Entities
    
    
    174.4
    
    
    
    69.9
    
    
    
    40.08
    
    
    
    1,900.0
    
    
    
    121.0
    
    
    
    6.37
    
    
    
    2,074.4
    
    
    
    190.9
    
    
    
    9.20Debt Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,710.5
    
    
    
    154.2
    
    
    
    5.69
    
    
    
    2,710.5
    
    
    
    154.2
    
    
    
    5.69Other
    
    
    45.7
    
    
    
    9.6
    
    
    
    21.01
    
    
    
    1,307.4
    
    
    
    58.4
    
    
    
    4.47
    
    
    
    1,353.1
    
    
    
    68.0
    
    
    
    5.03Total Interest-Bearing
Liabilities
    
    
    11,087.2
    
    
    
    789.6
    
    
    
    7.12
    %
    
    
    7,550.5
    
    
    
    360.4
    
    
    
    4.77
    %
    
    
    18,637.7
    
    
    
    1,150.0
    
    
    
    6.17
    %Demand deposits
    
    
    700.6
    
    
    
    
    
    
    
    
    
    
    
    72.2
    
    
    
    
    
    
    
    
    
    
    
    772.8
    
    
    
    
    
    
    
    Other Liabilities
    
    
    939.4
    
    
    
    
    
    
    
    
    
    
    
    561.5
    
    
    
    
    
    
    
    
    
    
    
    1,500.9
    
    
    
    
    
    
    
    Minority Interests
    
    
    89.5
    
    
    
    
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    
    
    
    
    89.5
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,529.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,529.4
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    Ps.
    14,346.1
    
    
    
    
    
    
    
    
    
    
    Ps.
    8,184.2
    
    
    
    
    
    
    
    
    
    
    Ps.
    22,530.3
    
    
    
    
    
    
    
    -Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.22
    %
    
    
    
    
    
    
    
    
    
    
    (2.42
    )%
    
    
    
    
    
    
    
    
    
    
    0.27
    %Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.51
    
    
    
    
    
    
    
    
    
    
    
    4.19
    
    
    
    
    
    
    
    
    
    
    
    5.55Net Yield on Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    2.83
    
    
    
    
    
    
    
    
    
    
    
    (1.85
    )
    
    
    
    
    
    
    
    
    
    
    0.89
 
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes the amounts corresponding to the Compensatory Bond and the Hedge Bond to be received, among others. Changes in Net Interest IncomeVolume and Rate Analysis
  -47-




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##### Table of Contents



Fiscal Year 2005/ Fiscal Year 2004,
    
    Fiscal Year 2004/ Fiscal Year 2003,Increase (Decrease) due to changes in
    
    Increase (Decrease) due to changes inVolume
    
    Rate
    
    Net Change
    
    Volume
    
    Rate
    
    Net Change(in millions of pesos)Interest Earning AssetsGovernment SecuritiesPesos
    
    Ps.
    428.5
    
    
    Ps
    .153.9
    
    
    Ps.
    582.4
    
    
    Ps.
    60.0
    
    
    Ps.
    (4.8
    )
    
    Ps.
    55.2Dollars
    
    
    30.3
    
    
    
    73.9
    
    
    
    104.2
    
    
    
    5.2
    
    
    
    (141.2
    )
    
    
    (136.0
    )Total
    
    
    458.8
    
    
    
    227.8
    
    
    
    686.6
    
    
    
    65.2
    
    
    
    (146.0
    )
    
    
    (80.8
    )LoansPrivate SectorPesos
    
    
    109.4
    
    
    
    10.0
    
    
    
    119.4
    
    
    
    60.7
    
    
    
    (275.4
    )
    
    
    (214.7
    )Dollars
    
    
    4.8
    
    
    
    (9.3
    )
    
    
    (4.5
    )
    
    
    (6.7
    )
    
    
    (38.4
    )
    
    
    (45.1
    )Total
    
    
    114.2
    
    
    
    0.7
    
    
    
    114.9
    
    
    
    54.0
    
    
    
    (313.8
    )
    
    
    (259.8
    )Public SectorPesos
    
    
    (88.7
    )
    
    
    239.0
    
    
    
    150.3
    
    
    
    (23.7
    )
    
    
    245.7
    
    
    
    222.0Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (88.7
    )
    
    
    239.0
    
    
    
    150.3
    
    
    
    (23.7
    )
    
    
    245.7
    
    
    
    222.0OtherPesos
    
    
    14.5
    
    
    
    27.6
    
    
    
    42.1
    
    
    
    3.8
    
    
    
    27.6
    
    
    
    31.4Dollars
    
    
    (2.9
    )
    
    
    68.3
    
    
    
    65.4
    
    
    
    (6.8
    )
    
    
    15.7
    
    
    
    8.9Total
    
    
    11.6
    
    
    
    95.9
    
    
    
    107.5
    
    
    
    (3.0
    )
    
    
    43.3
    
    
    
    40.3Total Interest-Earning AssetsPesos
    
    
    463.7
    
    
    
    430.5
    
    
    
    894.2
    
    
    
    100.8
    
    
    
    (6.9
    )
    
    
    93.9Dollars
    
    
    32.2
    
    
    
    132.9
    
    
    
    165.1
    
    
    
    (8.3
    )
    
    
    (163.9
    )
    
    
    (172.2
    )Total
    
    Ps.
    495.9
    
    
    Ps
    .563.4
    
    
    Ps
    .1,059.3
    
    
    Ps.
    92.5
    
    
    Ps.
    (170.8
    )
    
    Ps.
    (78.3
    )Interest Bearing LiabilitiesDemand AccountPesos
    
    
    3.1
    
    
    
    7.4
    
    
    
    10.5
    
    
    
    2.3
    
    
    
    (0.5
    )
    
    
    1.8Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    3.1
    
    
    
    7.4
    
    
    
    10.5
    
    
    
    2.3
    
    
    
    (0.5
    )
    
    
    1.8Saving AccountPesos
    
    
    1.0
    
    
    
    (0.5
    )
    
    
    0.5
    
    
    
    1.4
    
    
    
    (0.6
    )
    
    
    0.8Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1.0
    
    
    
    (0.5
    )
    
    
    0.5
    
    
    
    1.4
    
    
    
    (0.6
    )
    
    
    0.8Time DepositsPesos
    
    
    71.0
    
    
    
    51.6
    
    
    
    122.6
    
    
    
    4.7
    
    
    
    (119.0
    )
    
    
    (114.3
    )Dollars
    
    
    (4.5
    )
    
    
    (5.8
    )
    
    
    (10.3
    )
    
    
    (5.8
    )
    
    
    (2.8
    )
    
    
    (8.6
    )Total
    
    
    66.5
    
    
    
    45.8
    
    
    
    112.3
    
    
    
    (1.1
    )
    
    
    (121.8
    )
    
    
    (122.9
    )With the Argentine Central BankPesos
    
    
    15.3
    
    
    
    463.0
    
    
    
    478.3
    
    
    
    6.2
    
    
    
    219.6
    
    
    
    225.8Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    15.3
    
    
    
    463.0
    
    
    
    478.3
    
    
    
    6.2
    
    
    
    219.6
    
    
    
    225.8With Other Financial EntitiesPesos
    
    
    17.4
    
    
    
    (28.5
    )
    
    
    (11.1
    )
    
    
    (2.4
    )
    
    
    (19.6
    )
    
    
    (22.0
    )Dollars
    
    
    (45.2
    )
    
    
    (11.8
    )
    
    
    (57.0
    )
    
    
    (108.8
    )
    
    
    54.6
    
    
    
    (54.2
    )Total
    
    
    (27.8
    )
    
    
    (40.3
    )
    
    
    (68.1
    )
    
    
    (111.2
    )
    
    
    35.0
    
    
    
    (76.2
    )Negotiable ObligationsPesos
    
    
    2.5
    
    
    
    7.2
    
    
    
    9.7
    
    
    
    
    
    
    
    
    
    
    
    Dollars
    
    
    2.3
    
    
    
    194.5
    
    
    
    196.8
    
    
    
    33.9
    
    
    
    (160.5
    )
    
    
    (126.6
    )Total
    
    
    4.8
    
    
    
    201.7
    
    
    
    206.5
    
    
    
    33.9
    
    
    
    (160.5
    )
    
    
    (126.6
    )Other liabilitiesPesos
    
    
    2.5
    
    
    
    (4.0
    )
    
    
    (1.5
    )
    
    
    6.4
    
    
    
    (8.1
    )
    
    
    (1.7
    )Dollars
    
    
    (1.3
    )
    
    
    13.8
    
    
    
    12.5
    
    
    
    (12.6
    )
    
    
    6.7
    
    
    
    (5.9
    )Total
    
    
    1.2
    
    
    
    9.8
    
    
    
    11.0
    
    
    
    (6.2
    )
    
    
    (1.4
    )
    
    
    (7.6
    )Total Interest Bearing LiabilitiesPesos
    
    
    112.8
    
    
    
    496.2
    
    
    
    609.0
    
    
    
    18.6
    
    
    
    71.8
    
    
    
    90.4Dollars
    
    
    (48.7
    )
    
    
    190.7
    
    
    
    142.0
    
    
    
    (93.3
    )
    
    
    (102.0
    )
    
    
    (195.3
    )Total
    
    Ps.
    64.1
    
    
    Ps
    .686.9
    
    
    Ps.
    751.0
    
    
    Ps.
    (74.7
    )
    
    Ps.
    (30.2
    )
    
    Ps.
    (104.9
    )
  -48-




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##### Table of Contents



Interest-Earning AssetsNet Yield on Interest-Earning Assets
  Fiscal Year Ended December 31,2005
    
    2004
    
    2003Total Average Interest-Earning AssetsPesos
    
    Ps
    .15,287.2
    
    
    Ps
    .12,843.1
    
    
    Ps
    .12,130.3Dollars
    
    
    6,557.0
    
    
    
    7,892.3
    
    
    
    8,594.8Total
    
    
    21,844.2
    
    
    
    20,735.4
    
    
    
    20,725.1Net Interest Earned (1)Pesos
    
    
    631.7
    
    
    
    346.5
    
    
    
    343.0Dollars
    
    
    (112.4
    )
    
    
    (135.5
    )
    
    
    (158.6
    )Total
    
    
    519.3
    
    
    
    211.0
    
    
    
    184.4Net Yield on Interest-Earning Assets (2) (%)Pesos
    
    
    4.13
    
    
    
    2.70
    
    
    
    2.83Dollars
    
    
    (1.71
    )
    
    
    (1.72
    )
    
    
    (1.85
    )Weighted-Average Yield
    
    
    2.38
    
    
    
    1.02
    
    
    
    0.89Interest Spread, Nominal Basis (3) (%)Pesos
    
    
    2.92
    
    
    
    2.09
    
    
    
    2.22Dollars
    
    
    (2.29
    )
    
    
    (2.16
    )
    
    
    (2.42
    )Weighted-Average Yield
    
    
    1.36
    
    
    
    0.35
    
    
    
    0.27Credit Related Fees Included in Net Interest EarnedPesos
    
    
    26.4
    
    
    
    20.7
    
    
    
    15.7Dollars
    
    
    0.0
    
    
    
    
    
    
    
    Total
    
    
    26.4
    
    
    
    20.7
    
    
    
    15.7
 
 (1)
    
    Net interest earned corresponds to our net financial income plus: 
    
    Credit related fees (included in Income from Services  In Relation to Lending Transactions in the Income Statement)
    
    Contributions to the deposit insurance system, and contributions and taxes on financial income included in the income statement
line Financial Expenses  Other, minus:
    
    Net income from corporate securities included under Financial Income/Expenses- Interest Income and Holdings Gains/Losses from
Government and Corporate Securities, in the income statement, and
    
    Differences in quotation of gold and foreign currency and premiums on foreign currency transactions, included in Financial
Income/Expenses  Other, in the income statement.
 
 (2)
    
    Net interest earned, divided by average interest-earning assets.(3)
    
    Interest spread, nominal basis is the difference between the average nominal interest rate on interest-earning assets and the average
nominal interest rate on interest-bearing deposits. Government and Corporate Securities
  As of December 31,2005
    
    2004(in millions of pesos)Government SecuritiesPesosTrading
    
    Ps
    .14.6
    
    
    Ps
    .5.7Investments
    
    
    
    
    
    
    Available for Sale
    
    
    
    
    
    
    
 -49-




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##### Table of Contents



As of December 31,2005
    
    2004(in millions of pesos)Government
SecuritiesIssued by the Argentine Central Bank
    
    
    704.5
    
    
    
    508.5Without Quotation
    
    
    4,591.1
    
    
    
    3,621.7Total Government Securities in Pesos
    
    Ps
    .5,310.2
    
    
    Ps
    .4,135.9Dollars(1)Trading
    
    
    6.3
    
    
    
    31.1Investments
    
    
    650.9
    
    
    
    601.3Without Quotation
    
    
    
    
    
    
    749.7Total Government Securities in Dollars
    
    Ps.
    657.2
    
    
    Ps
    .1,382.1Total Government Securities
    
    Ps
    .5,967.4
    
    
    Ps
    .5,518.0Corporate Equity Securities (Quoted)Pesos
    
    
    
    
    
    
    Dollars
    
    
    
    
    
    
    Total Corporate Equity Securities
    
    
    
    
    
    
    Total Government and Corporate Equity Securities
    
    Ps
    .5,967.4
    
    
    Ps
    .5,518.0Mutual Funds
    
    
    
    
    
    
    Corporate Debt SecuritiesPesos
    
    Ps.
    3.9
    
    
    Ps.
    0.8Dollars
    
    
    0.5
    
    
    
    15.3Total Corporate Debt Securities
    
    Ps.
    4.4
    
    
    Ps.
    16.1Total Government and Corporate Securities
    
    Ps
    .5,971.8
    
    
    Ps
    .5,534.1
  (i)
    
    under In pesos  Without Quotation, peso-denominated Bogar for Ps.3,823.3
million, peso-denominated Fiscal Credit Certificates for Ps.34.5 million and Discount
Bonds in Pesos for Ps.733.3 million;(ii)
    
    under In pesos  Issued by the Argentine Central Bank, peso-denominated Lebac
for Ps.702.0 million; and(iii)
    
    under In dollars  Investments, Boden 2012 for Ps.650.9 million (held for
investment in the Argentine Central Bank classification system),
   
    
    The market value of the Boden 2012 recorded as government securities held for
investment (face value US$241.4 million) was Ps.577.5 million. This amount represents
the Boden 2012 corresponding to the Compensatory Bond received by the Bank, net of the
amounts transferred to Galicia Uruguay and used by the latter to settle the exchange
offer made to its depositors in early 2004, the amounts used to settle the
restructuring of the Banks foreign debt completed in May 2004 and the amounts sold
under repurchase agreements (the latter being recorded under Other Receivables from
Financial Brokerage as explained below).
    
    The total amount of compensation in Boden 2012 (Compensatory Bond and Hedge
Bond) recorded in the Banks books was Ps.5,142.9 million (face value US$1,638.1
million). In addition to the Boden 2012 recorded as government securities held
for investment, this total comprises the Boden 2012 to be acquired corresponding to the
Hedge Bond, for Ps.4,155.0 million (recorded under Other Receivables
 -50-




---



##### Table of Contents



for Financial Intermediation), and Boden 2012 sold under repurchase agreements, for
Ps.337.3 million. The market value of the Banks position in such Boden 2012,
as of December 31, 2005, was Ps.4,644.5 million. Of this amount, Ps.876.6 million
corresponded to the Compensatory Bond (including interest accrued) and Ps.3,767.9
million corresponded to the Hedge Bond to be acquired, which amount includes the
amortization and interest coupons accrued and not perceived.
    
    The market value of the Bogar was Ps.3,366.8 million. It should be noted that
all of the Banks Bogar have either been granted as collateral for the financial
assistance from the Argentine Central Bank or assigned as collateral for the advance to
be granted by the Argentine Central Bank to purchase the Hedge Bond.
    
    The Banks holdings of Lebac were marked to market.
    
    The market value of the Discount Bonds in pesos (and the GDP-Linked Units) was
Ps.349.3 million.
     Valuation
  -51-




---



##### Table of Contents



-52-




---



##### Table of Contents




    
    It excluded from valuation at present value those public-sector assets
granted as collateral for advances from the Argentine Central Bank to
purchase Boden (both for banks customers and held by banks) set forth
in sections 10, 11 and 12 of Decree No.905/02. These assets may be
recorded at the value determined by the Argentine Central Bank for
their use as collateral;
    
    It established the valuation method for past-due and unpaid
public-sector assets. In this case, in order to calculate the present
value thereof, the cash flow of the Bogar must be used; except if
these assets are applied to the payment of taxes; and
    
    It provided for the reversal of interest accrued on past-due and
unpaid public-sector assets included in the exchange offer to
restructure Argentinas sovereign debt after December 31, 2001, if
applicable.
   January
    
    
   February
    
    
    March
    
    
    April
    
    
    May
    
    
    June
    
    
    July
    
    
    August
    
    
    Sept.
    
    
    October
    
    
    Nov.
    
    
    Dec.2003
    
    
    
    
    
    
    
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.002004
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.29
    
    
    
    3.33
    
    
    
    3.37
    
    
    
    3.41
    
    
    
    3.46
    
    
    
    3.502005
    
    
    3.54
    
    
    
    3.58
    
    
    
    3.62
    
    
    
    3.66
    
    
    
    3.71
    
    
    
    3.75
    
    
    
    3.79
    
    
    
    3.83
    
    
    
    3.87
    
    
    
    3.91
    
    
    
    3.96
    
    
    
    4.002006
    
    
    4.08
    
    
    
    4.15
    
    
    
    4.23
    
    
    
    4.31
    
    
    
    4.39
    
    
    
    4.47
    
    
    
    4.56
    
    
    
    4.64
    
    
    
    4.73
    
    
    
    4.82
    
    
    
    4.91
    
    
    
    5.005% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +2007
    
    0.04xTMC
    
    
   0.04xTMC
    
    
    0.13xTMC
    
    
    0.17xTMC
    
    
    0.21xTMC
    
    
    0.25xTMC
    
    
    0.29xTMC
    
    
    0.33xTMC
    
    
    0.38xTMC
    
    
    0.42xTMC
    
    
    0.46xTMC
    
    
    0.50xTMC5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +
    
    
    5% +2008
    
    0.58xTMC
    
    
    0.66xTMC
    
    
    0.75xTMC
    
    
    0.83xTMC
    
    
    0.92xTMC
    
    
    TM (as from June 2008)
 Where:
 TM = average market rate informed by the Argentine Central Bank based on the internal rates
of return of National Government Securities with similar modified duration.
 TMC = average market rate corrected = TM  5%.
   -53-




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##### Table of Contents



Remaining Maturity and Weighted-Average Yield
  Maturity YieldPast Due/
    
    
    Maturing
    
    
    Maturing after 1 Year
    
    
    Maturing after 5 Years
    
    
    MaturingCallable
    
    
    within 1 Year
    
    
    but within 5 Years
    
    
    but within 10 Years
    
    
    after 10 YearsTotal Book
    
    
    Book
    
    
    Book
    
    
    
    
    
    Book
    
    


    
    
    Book
    
    


    
    
    BookValue
    
    
    Value
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)(in millions of pesos)Government SecuritiesHeld for Trading and Brokerage
Purposes (carried at market
value)Pesos
    
    Ps.
    14.6
    
    
    
    
    
    
    Ps.
    0.7
    
    
    
    4.3
    %
    
    Ps.
    2.7
    
    
    
    4.8
    %
    
    Ps.
    5.6
    
    
    
    4.8
    %
    
    Ps.
    5.6
    
    
    
    5.4
    %Dollars
    
    
    6.3
    
    
    
    
    
    
    
    0.9
    
    
    
    9.0
    %
    
    
    3.6
    
    
    
    9.0
    %
    
    
    1.8
    
    
    
    9.0
    %
    
    
    
    
    
    
    Held for Investment (carried at
amortized cost)Pesos
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dollars
    
    
    650.9
    
    
    
    
    
    
    
    93.0
    
    
    
    9.0
    %
    
    
    371.9
    
    
    
    9.0
    %
    
    
    186.0
    
    
    
    9.0
    %
    
    
    
    
    
    
    Instrument Issued by Argentine
Central BankPesos
    
    
    704.5
    
    
    
    
    
    
    
    524.2
    
    
    
    5.9
    %
    
    
    180.3
    
    
    
    10.2
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    SecuritiesWithout QuotationPesos
    
    
    4,591.1
    
    
    
    
    
    
    
    225.6
    
    
    
    4.4
    %
    
    
    844.3
    
    
    
    4.8
    %
    
    
    1,766.7
    
    
    
    4.8
    %
    
    
    1,754.5
    
    
    
    5.4
    %Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Government Securities
    
    
    5,967.4
    
    
    
    
    
    
    
    844.4
    
    
    
    5.8
    %
    
    
    1,402.8
    
    
    
    6.6
    %
    
    
    1,960.1
    
    
    
    5.2
    %
    
    
    1,760.1
    
    
    
    Corporate Debt Securities
    
    
    4.4
    
    
    
    
    
    
    
    3.3
    
    
    
    11.5
    %
    
    
    0.6
    
    
    
    8.0
    %
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    10.4
    %Mutual Funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Portfolio
    
    Ps.
    5,971.8
    
    
    
    
    
    
    Ps.
    847.7
    
    
    
    5.9
    %
    
    Ps.
    1,403.4
    
    
    
    6.6
    %
    
    Ps.
    1,960.1
    
    
    
    5.2
    %
    
    Ps.
    1,760.6
    
    
    
    
 
 (1)
    
    Effective yield based on December 31, 2005 quoted market values. -54-




---



##### Table of Contents



Government Securities  Net Position
  As of December 31, 2005Spot
    
    SpotForward
    
    Forward
    
    purchases
    
    sales
    
    NetIn millions of pesos
    
    Holdings
    
    Purchases
    
    Sales
    
    to be settled
    
    to be settled
    
    PositionGovernment SecuritiesHeld for investment purposesPesos
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dollar
    
    
    650.9
    
    
    
    337.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    987.9Held for trading purposesPesos
    
    
    14.6
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    0.3
    
    
    
    14.7Dollar
    
    
    6.3
    
    
    
    
    
    
    
    
    
    
    
    1.6
    
    
    
    1.4
    
    
    
    6.5Other(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Securities without QuotationPesos
    
    
    4,591.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,591.1Dollar
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Instruments issued by the Argentine Central BankPesos
    
    
    704.5
    
    
    
    
    
    
    
    293.4
    
    
    
    
    
    
    
    
    
    
    
    411.1Dollar
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28.8Total Government Securities
    
    
    5,967.4
    
    
    
    337.0
    
    
    
    293.4
    
    
    
    2.0
    
    
    
    1.7
    
    
    
    6,041.0Corporate Equity Securities (Quoted)
    
    
    4.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.4Total Government and Corporate Securities
    
    
    5,971.8
    
    
    
    337.0
    
    
    
    293.4
    
    
    
    2.0
    
    
    
    1.7
    
    
    
    6,045.4
 
 (1)
    
    Delivered as collateral. Loan Portfolio
  As of December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in millions of pesos )
    
    
    (in millions of February 28, 2003, constant pesos)Principal and InterestNon-Financial Public Sector
    
    Ps.
    5,187.5
    
    
    Ps.
    4,513.7
    
    
    Ps.
    4,277.7
    
    
    Ps.
    7,634.7
    
    
    Ps.
    8,669.7Local Financial Sector
    
    
    128.2
    
    
    
    150.5
    
    
    
    194.7
    
    
    
    134.8
    
    
    
    190.8Non-Financial Private Sector and Residents Abroad (1)Advances
    
    
    223.6
    
    
    
    199.8
    
    
    
    219.1
    
    
    
    227.0
    
    
    
    811.1Notes
    
    
    1,836.9
    
    
    
    1,099.2
    
    
    
    1,280.1
    
    
    
    1,544.3
    
    
    
    3,888.9Mortgage Loans
    
    
    503.4
    
    
    
    623.9
    
    
    
    719.6
    
    
    
    864.0
    
    
    
    3,298.2Pledge Loans
    
    
    121.1
    
    
    
    92.9
    
    
    
    54.6
    
    
    
    191.5
    
    
    
    841.8Personal Loans
    
    
    258.0
    
    
    
    58.2
    
    
    
    55.2
    
    
    
    120.0
    
    
    
    583.4Credit-Card Loans
    
    
    1,732.1
    
    
    
    1,105.4
    
    
    
    818.8
    
    
    
    585.0
    
    
    
    1,875.3Placements in Correspondent Banks
    
    
    212.9
    
    
    
    379.2
    
    
    
    172.4
    
    
    
    158.3
    
    
    
    377.5
 -55-




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##### Table of Contents



As of December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in millions of pesos )
    
    
    (in millions of February 28, 2003, constant pesos)Other Loans
    
    
    599.8
    
    
    
    393.9
    
    
    
    325.7
    
    
    
    251.4
    
    
    
    196.0Accrued Interest, Adjustment and Quotation Differences
Receivable
    
    
    146.8
    
    
    
    414.4
    
    
    
    523.1
    
    
    
    608.5
    
    
    
    392.1Documented Interest
    
    
    (14.7
    )
    
    
    (5.3
    )
    
    
    (2.5
    )
    
    
    (10.8
    )
    
    
    (55.1
    )Total Non-Financial Private-Sector and Residents Abroad
    
    Ps.
    5,619.9
    
    
    Ps.
    4,361.6
    
    
    Ps.
    4,166.1
    
    
    Ps.
    4,539.2
    
    
    Ps.
    12,209.2Total Gross Loans
    
    Ps.
    10,935.6
    
    
    Ps.
    9,025.8
    
    
    Ps.
    8,638.5
    
    
    Ps.
    12,308.7
    
    
    Ps.
    21,069.7Allowance for Loan Losses
    
    
    (427.9
    )
    
    
    (632.6
    )
    
    
    (1,177.3
    )
    
    
    (1,681.8
    )
    
    
    (1,050.3
    )Total Loans
    
    Ps.
    10,507.7
    
    
    Ps.
    8,393.2
    
    
    Ps.
    7,461.2
    
    
    Ps.
    10,626.9
    
    
    Ps.
    20,019.4Loans with GuaranteesWith Preferred Guarantees (2) (3)
    
    Ps.
    838.5
    
    
    Ps.
    1,190.0
    
    
    Ps.
    1,228.8
    
    
    Ps.
    9,280.5
    
    
    Ps.
    13,389.8Other Guarantees (3)
    
    
    6,317.3
    
    
    
    5,235.8
    
    
    
    5,163.0
    
    
    
    523.0
    
    
    
    1,689.8Total Loans with Guarantees
    
    Ps.
    7,155.8
    
    
    Ps.
    6,425.8
    
    
    Ps.
    6,391.8
    
    
    Ps.
    9,803.5
    
    
    Ps.
    15,079.6
 
 (1)
    
    Categories of above loans include: 
    
    Advances: short-term obligations drawn on by customers through overdrafts.
    
    Notes: endorsed promissory notes, negotiable obligations and other promises to pay signed by one borrower or group of borrowers and factored loans.
    
    Mortgage loans: loans granted to purchase or improve real estate and collateralized by such real estate and commercial loans secured by a real estate mortgage.
    
    Pledge loans: loans secured by collateral (such as cars or machinery) other than real estate, where such collateral is an integral part of the loan documents.
    
    Personal loans: loans to individuals.
    
    Credit Cards Loans: loans granted through credit cards to credit card holders.
    
    Placements in correspondent banks: short-term loans to other banks and short-term loans from Galicia Uruguay to major international banks outside of Uruguay.
    
    Other loans: loans not included in other categories.
    
    Documented interest-discount on notes and bills.
 
 (2)
    
    Preferred guarantees include mortgages on real estate property or pledges on movable property, such as cars or machinery, where the Bank has the priority right, endorsements of the Federal Office of the
Secretary of Finance, pledges of Argentine Government Securities, or gold or cash collateral.(3)
    
    Pursuant to Argentine Central Bank Communiqué A 3918, beginning in April 2003, tax revenues shared by the National Government
and the provinces ceased to be considered Preferred Guarantees.   
 -56-




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##### Table of Contents



Loans by Type of Borrower
  As of December 31,2005
    
    
    2004
    
    
    2003Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total(in millions of pesos )Corporate
    
    Ps.
    1,412.9
    
    
    
    12.92
    %
    
    Ps.
    1,271.9
    
    
    
    14.09
    %
    
    Ps.
    1,820.4
    
    
    
    21.07
    %Middle-Market Companies
    
    
    1,899.9
    
    
    
    17.37
    
    
    
    1,195.2
    
    
    
    13.24
    
    
    
    850.3
    
    
    
    9.84Commercial Loans
    
    
    3,312.8
    
    
    
    30.29
    
    
    
    2,467.1
    
    
    
    27.33
    
    
    
    2,670.7
    
    
    
    30.91Individuals
    
    
    2,091.6
    
    
    
    19.13
    
    
    
    1,512.6
    
    
    
    16.76
    
    
    
    1,324.7
    
    
    
    15.33Financial Sector (1)
    
    
    343.7
    
    
    
    3.14
    
    
    
    532.4
    
    
    
    5.90
    
    
    
    357.4
    
    
    
    4.14Non-Financial Public Sector
    
    
    5,187.5
    
    
    
    47.44
    
    
    
    4,513.7
    
    
    
    50.01
    
    
    
    4,277.7
    
    
    
    49.52Other Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.0
    
    
    
    0.10Total(2)
    
    Ps.
    10,935.6
    
    
    
    100.00
    %
    
    Ps.
    9,025.8
    
    
    
    100.00
    %
    
    Ps.
    8,638.5
    
    
    
    100.00
    %
 
 (1)
    
    Includes local and international financial sector. Financial Sector loans are primarily composed of interbank loans (call
money loans), overnight deposit at international money center banks and loans to provincial banks.(2)
    
    Before the allowance for loan losses. -57-




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##### Table of Contents



Loans by Economic Activity
  As of December 31,2005
    
    
    2004
    
    
    2003Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total(in millions of February 28, 2003,(in millions of pesos, except percentages)
    
    
    
    
    
    
    constant pesos, except percentages)Financial Sector (1)
    
    Ps.
    343.7
    
    
    
    3.14
    %
    
    Ps.
    532.4
    
    
    
    5.90
    %
    
    Ps.
    357.4
    
    
    
    4.14
    %ServicesNon-Financial Public Sector
    
    
    5,187.5
    
    
    
    47.44
    
    
    
    4,513.7
    
    
    
    50.01
    
    
    
    4,277.7
    
    
    
    49.52Comunic., Transportation Health and Others
    
    
    409.7
    
    
    
    3.75
    
    
    
    339.0
    
    
    
    3.76
    
    
    
    320.2
    
    
    
    3.71Electricity, Gas, Water Supply and Sewage
Services
    
    
    154.2
    
    
    
    1.41
    
    
    
    134.3
    
    
    
    1.49
    
    
    
    239.0
    
    
    
    2.77Other Financial Services
    
    
    83.5
    
    
    
    0.76
    
    
    
    46.9
    
    
    
    0.52
    
    
    
    362.2
    
    
    
    4.19Total
    
    
    5,834.9
    
    
    
    53.36
    
    
    
    5,033.9
    
    
    
    55.78
    
    
    
    5,199.1
    
    
    
    60.19Primary ProductsAgriculture and Livestock
    
    
    768.3
    
    
    
    7.02
    
    
    
    518.6
    
    
    
    5.75
    
    
    
    389.6
    
    
    
    4.51Fishing, Forestry and Mining
    
    
    11.9
    
    
    
    0.11
    
    
    
    69.3
    
    
    
    0.77
    
    
    
    93.0
    
    
    
    1.08Total
    
    
    780.2
    
    
    
    7.13
    
    
    
    587.9
    
    
    
    6.52
    
    
    
    482.6
    
    
    
    5.59Consumer
    
    
    1,959.4
    
    
    
    17.92
    
    
    
    1,435.4
    
    
    
    15.90
    
    
    
    1,258.5
    
    
    
    14.57Retail Trade
    
    
    435.8
    
    
    
    3.99
    
    
    
    287.7
    
    
    
    3.19
    
    
    
    278.5
    
    
    
    3.22Wholesale Trade
    
    
    189.0
    
    
    
    1.73
    
    
    
    97.5
    
    
    
    1.08
    
    
    
    67.7
    
    
    
    0.78Construction
    
    
    388.3
    
    
    
    3.55
    
    
    
    372.8
    
    
    
    4.13
    
    
    
    404.2
    
    
    
    4.68ManufacturingFoodstuffs
    
    
    386.0
    
    
    
    3.53
    
    
    
    233.9
    
    
    
    2.59
    
    
    
    166.7
    
    
    
    1.93Transportation Materials
    
    
    68.3
    
    
    
    0.62
    
    
    
    41.2
    
    
    
    0.46
    
    
    
    18.6
    
    
    
    0.22Chemicals and Oil
    
    
    24.8
    
    
    
    0.23
    
    
    
    124.6
    
    
    
    1.38
    
    
    
    109.5
    
    
    
    1.27Manufacturing Industries
    
    
    492.0
    
    
    
    4.50
    
    
    
    229.7
    
    
    
    2.54
    
    
    
    235.0
    
    
    
    2.71Total
    
    
    971.1
    
    
    
    8.88
    
    
    
    629.4
    
    
    
    6.97
    
    
    
    529.8
    
    
    
    6.13Other Loans (2)
    
    
    33.2
    
    
    
    0.30
    
    
    
    48.8
    
    
    
    0.53
    
    
    
    60.7
    
    
    
    0.70Total(3)
    
    Ps.
    10,935.6
    
    
    
    100.00
    %
    
    Ps.
    9,025.8
    
    
    
    100.00
    %
    
    Ps.
    8,638.5
    
    
    
    100.00
    %
 
 (1)
    
    Includes local and international financial sector. Financial Sector loans are primarily composed of interbank loans (call money loans), overnight deposit at international money center
banks and loans to provincial banks.(2)
    
    Other loans is an Argentine Central Bank classification that primarily includes loans in judicial proceedings.(3)
    
    Before the allowance for loan losses.  Maturity Composition of the Loan Portfolio
  After 1 Month but
    
    After 6 Months but
    
    After 1 Year but
    
    After 3 Years but
    
    
    
    
    
    Total atWithin 1 Month
    
    within 6 Months
    
    within 12 Months
    
    within 3 Years
    
    within 5 Years
    
    After 5 Years
    
    December31, 2005(in millions of pesos)Non-Financial Public Sector (1)
    
    Ps.
    0.4
    
    
    Ps.
    3.0
    
    
    Ps.
    3.6
    
    
    Ps.
    103.2
    
    
    Ps.
    3,445.3
    
    
    Ps.
    1,632.0
    
    
    Ps.
    5,187.5Financial Sector (1)
    
    
    109.3
    
    
    
    5.6
    
    
    
    6.7
    
    
    
    6.7
    
    
    
    
    
    
    
    
    
    
    
    128.3Private Sector and Residents Abroad
    
    
    3,283.4
    
    
    
    926.1
    
    
    
    272.2
    
    
    
    585.7
    
    
    
    364.5
    
    
    
    187.9
    
    
    
    5,619.8- Advances
    
    
    174.3
    
    
    
    48.3
    
    
    
    0.5
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    223.6- Promissory Notes
    
    
    399.2
    
    
    
    751.2
    
    
    
    136.8
    
    
    
    248.6
    
    
    
    225.3
    
    
    
    75.8
    
    
    
    1,836.9- Mortgage Loans
    
    
    22.0
    
    
    
    35.9
    
    
    
    46.5
    
    
    
    165.6
    
    
    
    121.6
    
    
    
    111.8
    
    
    
    503.4- Pledge Loans
    
    
    14.3
    
    
    
    16.2
    
    
    
    23.6
    
    
    
    62.7
    
    
    
    4.2
    
    
    
    0.1
    
    
    
    121.1- Personal Loans
    
    
    14.4
    
    
    
    72.6
    
    
    
    63.8
    
    
    
    100.6
    
    
    
    6.6
    
    
    
    
    
    
    
    258.0- Credit-Card Loans
    
    
    1,732.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,732.1- Other Loans
    
    
    795.0
    
    
    
    1.9
    
    
    
    1.0
    
    
    
    7.7
    
    
    
    6.8
    
    
    
    0.2
    
    
    
    812.6- Accrued Interest and Quotation
Differences Receivable (1)
    
    
    146.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146.8- (Documented Interest)
    
    
    (14.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14.7
    )Allowance for Loan Losses (2)
    
    
    (427.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (427.9
    )Total Loans, Net
    
    Ps.
    2,965.2
    
    
    Ps.
    934.7
    
    
    Ps.
    282.5
    
    
    Ps.
    695.6
    
    
    Ps.
    3,809.8
    
    
    Ps.
    1,819.9
    
    
    Ps.
    10,507.7
 
 (1)
    
    Interest and the CER adjustment were assigned to the first month.(2)
    
    Allowances were assigned to the first month as well as past due loans and loans in judicial proceedings. -58-




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##### Table of Contents



Interest Rate Sensitivity of Outstanding Loans as of December 31, 2005
  (in millions of pesos)
    
    As a % of Total LoansVariable Rate (1)(2)Pesos
    
    
    6,198.2
    
    
    
    71.90
    %Dollars
    
    
    547.0
    
    
    
    6.35
    %Total
    
    
    6,745.2
    
    
    
    78.25
    %Fixed Rate (2)(3)Pesos
    
    
    1,356.1
    
    
    
    15.73
    %Dollars
    
    
    519.0
    
    
    
    6.02
    %Total
    
    
    1,875.1
    
    
    
    21.75
    %Past Due LoansPesos
    
    
    239.3
    
    
    
    2.78
    %Dollars
    
    
    7.9
    
    
    
    0.09
    %Total
    
    
    247.2
    
    
    
    2.87
    %
 
 (1)
    
    Includes overdraft loans.(2)
    
    Includes past due loans and excludes interest receivable, differences in quotations and the CER adjustment.(3)
    
    Includes short-term and long-term loans whose rates are determined at the beginning of the loans life. Credit Review Process
     -59-




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##### Table of Contents



Retail Portfolio
       Commercial Portfolio
    -60-




---



##### Table of Contents



Qualitative analysis
    
    assessment of the quality of the corporate
borrower by the line officer to which the
account has been assigned on the basis of
personal knowledge.Economic and financial risk
    
    quantitative analysis of the borrowers
financial statements.Economic sector risk
    
    measurement of the general risk of the
sector in which the borrower operates
(based on statistical information gathered
from internal and external sources).
      
    
    Under Ps.2.0 million: credit extensions are proposed by the business
officers and must be approved by officers of the Corporate Credit
Department in accordance with pre-established credit authority levels.
    
    More than Ps.2.0 million and up to Ps.3.5 million: credit proposals
are jointly approved by the manager of the Credit Division and the
manager of the business department to which the account belongs.
    
    Over Ps.3.5 million: credit extensions must be approved by the Board
of Directors Committee, with the participation of: (i) one or more
directors; (ii) the manager of the Credit Division; and (iii) the
manager of the Wholesale Banking Division. The participation of the
managers of the business departments depends on which of these
departments manages de account subject to approval.
  -61-




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##### Table of Contents



Policy for Requiring Collateral
   Argentine Central Banks Loan Classification and Loan Loss Provisions
 General
        -62-




---



##### Table of Contents



-63-




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##### Table of Contents



-
    
    the possibility to classify as normal, at the financial institutions option, those customers having reached a
restructuring agreement, without repayment percentages being required, and having have enough cash flows to repay the
new debt (this option will be effective until June 2006).-
    
the reduction in the requirements for loan amortization necessary to improve the customers classification.-
    
    the possibility to provide customers with new financial assistance and classify as normal customers classified in a
non-accrual status in the financial system, thereby restricting this financing assistance to pre-established percentages
according to the worst situation a customer registers in the financial system.
 Loan Classification
  Loan Classification
    
    Description(a) Commercial Portfolio1. Normal
    
    Borrower can easily service all financial obligations; shows strong cash flow, liquid
current financial situation, adequate financial structure, punctual payment record, capable
management, timely and precise available information and satisfactory internal controls.
Borrower is determined to be in the top 50.0% of an industry that is performing well and has a
good outlook.2. With Special Follow-Up
    
    Cash flow analysis indicates debt can be serviced, with the
possibility that if not closely observed, future payment capacity could be impaired.This category is divided into two subcategories:(2.a). Under observation;(2.b). Under negotiation or under agreements to refinance.3. With Problems
    
    Cash flow analysis evidences problems in normal servicing of existing debt,
such that if the problems are not solved, they may result in some loss.4. High Risk of Insolvency
    
    Cash flow analysis demonstrates that full repayment of the
borrowers obligations is highly improbable.5. Uncollectible
    
    Debts in this category are considered total losses. Although these assets
could have a possibility of recovery under certain future circumstances, lack of
collectibility is evident as of the date of analysis. Includes loans to insolvent or bankrupt
borrowers.6. Uncollectible due to Technical Reasons
    
    Loans to borrowers indicated by the Argentine Central
Bank to be in arrears to any liquidated or bankrupt financial entity. Also includes loans to
foreign banks and other financial institutions which are not:(i)   classified as normal,(ii)  subject to the supervision of the Argentine
Central Bank or other similar authority of the
country of origin, and
 -64-




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##### Table of Contents



Loan Classification
    
    Description(iii) classified as investment grade by any of
the rating agencies admitted to the Argentine
Central Bank pursuant to Communiqué A 2729.(b) Consumer Portfolio1. Normal Performance
    
    Current Loans and Loans that are up to 31 days past due on principal
and/or interest, including loans that are current.2. Inadequate Performance
    
    Debt payment is occasionally
delinquent, with arrears from 32 to 90 days.3. Deficient Performance
    
    Debt is in arrears at least 91 days and up to 180 days.4. Difficult Collection
    
    Judicial proceedings demanding payment have been initiated against the
borrower, or the borrower is delinquent with arrears greater than 180 days and up to one year
past due.5. Uncollectible
    
    Loans to insolvent or bankrupt borrowers, or borrowers subject to judicial
proceedings, with little or no possibility of collection, or in arrears in excess of one year.6. Uncollectible due to Technical Reasons
    
    Loans to borrowers who fall within the conditions
described above under Commercial PortfolioUncollectible due to Technical Reasons.
 Loan Loss Provision Requirements
 Allocated Provisions
  WithSelf-
    
    With
    
    WithoutLiquidating
    
    Other
    
    PreferredPreferred
    
    Preferred
    
    GuaranteesLoan Classification
    
    Guarantees
    
    Guarantees
    
    or SecurityWith Special Follow Up and Inadequate PerformanceInadequate Performance  Under Observation
    
    
    1.0
    %
    
    
    3.0
    %
    
    
    5.0
    %Inadequate Performance  Under Negotiation or
Agreement to Refinance
    
    
    1.0
    
    
    
    6.0
    
    
    
    12.0With Problems and Deficient Performance
    
    
    1.0
    %
    
    
    12.0
    %
    
    
    25.0
    %High Risk of Insolvency and Difficult Collection
    
    
    1.0
    
    
    
    25.0
    
    
    
    50.0Uncollectible
    
    
    1.0
    
    
    
    50.0
    
    
    
    100.0Uncollectible Due to Technical Reasons
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
   -65-




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##### Table of Contents



General Provisions
   Classification of the Loan Portfolio based on Argentine Central Bank Regulations
    As of December 31, 2005Amounts Not Yet Due(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    10,168.8
    
    
    
    95.22
    %
    
    
    
    
    
    
    
    
    
    Ps.
    10,168.8
    
    
    
    92.99
    %With Special Followup and Inadequate Performance
    
    
    384.4
    
    
    
    3.60
    
    
    
    
    
    
    
    
    
    
    
    384.4
    
    
    
    3.51With Problems and Deficient Performance
    
    
    120.4
    
    
    
    1.13
    
    
    
    206.9
    
    
    
    80.82
    
    
    
    327.3
    
    
    
    2.99High Risk of Insolvency and Difficult Collection.
    
    
    6.0
    
    
    
    0.05
    
    
    
    23.0
    
    
    
    8.98
    
    
    
    29.0
    
    
    
    0.27Uncollectible
    
    
    
    
    
    
    
    
    
    
    22.8
    
    
    
    8.91
    
    
    
    22.8
    
    
    
    0.21Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    1.29
    
    
    
    3.3
    
    
    
    0.03Total
    
    Ps.
    10,679.6
    
    
    
    100.00
    %
    
    Ps.
    256.0
    
    
    
    100.00
    %
    
    Ps.
    10,935.6
    
    
    
    100.00
    %
 -66-




---



##### Table of Contents



As of December 31, 2004Amounts Not Yet Due(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    7,764.4
    
    
    
    90.53
    %
    
    
    
    
    
    
    
    
    
    Ps.
    7,764.4
    
    
    
    86.02
    %With Special Followup and Inadequate Performance
    
    
    562.5
    
    
    
    6.56
    
    
    
    
    
    
    
    
    
    
    
    562.5
    
    
    
    6.23With Problems and Deficient Performance
    
    
    197.1
    
    
    
    2.30
    
    
    Ps.
    251.7
    
    
    
    56.06
    %
    
    
    448.8
    
    
    
    4.97High Risk of Insolvency and Difficult Collection
    
    
    52.8
    
    
    
    0.61
    
    
    
    105.8
    
    
    
    23.56
    
    
    
    158.6
    
    
    
    1.76Uncollectible
    
    
    
    
    
    
    
    
    
    
    85.5
    
    
    
    19.04
    
    
    
    85.5
    
    
    
    0.95Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    1.34
    
    
    
    6.0
    
    
    
    0.07Total
    
    Ps.
    8,576.8
    
    
    
    100.00
    %
    
    Ps.
    449.0
    
    
    
    100.00
    %
    
    Ps.
    9,025.8
    
    
    
    100.00
    %
 As of December 31, 2003Amounts Not Yet Due(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    6,531.3
    
    
    
    85.63
    %
    
    
    
    
    
    
    
    
    
    Ps.
    6,531.3
    
    
    
    75.61
    %With Special Followup and Inadequate Performance
    
    
    807.9
    
    
    
    10.59
    
    
    
    
    
    
    
    
    
    
    
    807.9
    
    
    
    9.35With Problems and Deficient Performance
    
    
    237.9
    
    
    
    3.12
    
    
    Ps.
    426.5
    
    
    
    42.19
    %
    
    
    664.4
    
    
    
    7.69High Risk of Insolvency and Difficult Collection
    
    
    50.4
    
    
    
    0.66
    
    
    
    245.4
    
    
    
    24.27
    
    
    
    295.8
    
    
    
    3.42Uncollectible
    
    
    
    
    
    
    
    
    
    
    324.9
    
    
    
    32.14
    
    
    
    324.9
    
    
    
    3.76Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    14.2
    
    
    
    1.40
    
    
    
    14.2
    
    
    
    0.17Total
    
    Ps.
    7,627.5
    
    
    
    100.00
    %
    
    Ps.
    1,011.0
    
    
    
    100.00
    %
    
    Ps.
    8,638.5
    
    
    
    100.00
    %
 As of December 31, 2002Amounts Not Yet Due(1)
    
    Amounts Past Due
    
    Total Loans(in millions of
February 28, 2003 constant pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    9,758.0
    
    
    
    88.02
    %
    
    
    
    
    
    
    
    
    
    Ps.
    9,758.0
    
    
    
    79.28
    %With Special Followup and Inadequate Performance
    
    
    940.5
    
    
    
    8.48
    
    
    
    
    
    
    
    
    
    
    
    940.5
    
    
    
    7.64With Problems and Deficient Performance
    
    
    321.5
    
    
    
    2.90
    
    
    
    556.3
    
    
    
    45.50
    %
    
    
    877.8
    
    
    
    7.13High Risk of Insolvency and Difficult Collection
    
    
    66.1
    
    
    
    0.60
    
    
    
    453.4
    
    
    
    37.09
    
    
    
    519.5
    
    
    
    4.22Uncollectible
    
    
    
    
    
    
    
    
    
    
    198.2
    
    
    
    16.21
    
    
    
    198.2
    
    
    
    1.61Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    14.7
    
    
    
    1.20
    
    
    
    14.7
    
    
    
    0.12Total
    
    Ps.
    11,086.1
    
    
    
    100.00
    %
    
    Ps.
    1,222.6
    
    
    
    100.00
    %
    
    Ps.
    12,308.7
    
    
    
    100.00
    %
 As of December 31, 2001Amounts Not Yet Due(1)
    
    Amounts Past Due
    
    Total Loans(in millions of February 28, 2003 constant pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    19,287.1
    
    
    
    96.32
    %
    
    
    
    
    
    
    
    
    
    Ps.
    19,287.1
    
    
    
    91.54
    %With Special Followup and Inadequate Performance
    
    
    362.0
    
    
    
    1.81
    
    
    
    
    
    
    
    
    
    
    
    362.0
    
    
    
    1.72With Problems and Deficient Performance
    
    
    198.9
    
    
    
    0.99
    
    
    Ps.
    157.4
    
    
    
    15.05
    %
    
    
    356.3
    
    
    
    1.69High Risk of Insolvency and Difficult Collection
    
    
    175.8
    
    
    
    0.88
    
    
    
    624.7
    
    
    
    59.73
    
    
    
    800.5
    
    
    
    3.80Uncollectible
    
    
    
    
    
    
    
    
    
    
    217.5
    
    
    
    20.79
    
    
    
    217.5
    
    
    
    1.03Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    46.3
    
    
    
    4.43
    
    
    
    46.3
    
    
    
    0.22Total
    
    Ps.
    20,023.8
    
    
    
    100.00
    %
    
    Ps.
    1,045.9
    
    
    
    100.00
    %
    
    Ps.
    21,069.7
    
    
    
    100.00
    %
 (1)
    
    Amounts not yet due represent the portion of a loan that has not yet become due, such as
the future installments of a consumer loan.
 Analysis of Amounts Past Due and Non-Accrual Loans
  -67-




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##### Table of Contents



As of December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(in millions of February 28, 2003,(in millions of pesos, except ratios)
    
    constant pesos, except ratios)Total Loans(1)
    
    Ps.
    10,935.6
    
    
    Ps.
    9,025.8
    
    
    Ps.
    8,638.5
    
    
    Ps.
    12,308.7
    
    
    Ps.
    21,069.7NonAccrual Loans(2)With Preferred Guarantees
    
    
    58.4
    
    
    
    383.7
    
    
    
    496.5
    
    
    
    610.8
    
    
    
    578.4With Other Guarantees
    
    
    6.5
    
    
    
    67.4
    
    
    
    275.8
    
    
    
    282.9
    
    
    
    198.5Without Guarantees
    
    
    317.5
    
    
    
    247.8
    
    
    
    527.0
    
    
    
    716.5
    
    
    
    643.7Total NonAccrual Loans(2)
    
    Ps.
    382.4
    
    
    Ps.
    698.9
    
    
    Ps.
    1,299.3
    
    
    Ps.
    1,610.2
    
    
    Ps.
    1,420.6Past Due Loan PortfolioNonFinancial Public Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Financial Private Sector and Residents AbroadAdvances
    
    
    14.1
    
    
    
    29.9
    
    
    
    93.9
    
    
    
    64.9
    
    
    
    79.8Notes
    
    
    191.6
    
    
    
    253.1
    
    
    
    528.2
    
    
    
    741.0
    
    
    
    307.6Mortgage Loans
    
    
    14.6
    
    
    
    115.1
    
    
    
    211.7
    
    
    
    217.2
    
    
    
    313.6Pledge Loans
    
    
    0.5
    
    
    
    4.2
    
    
    
    28.3
    
    
    
    35.7
    
    
    
    74.0Personal Loans
    
    
    0.8
    
    
    
    4.2
    
    
    
    110.2
    
    
    
    58.6
    
    
    
    94.5CreditCard Loans
    
    
    33.4
    
    
    
    24.9
    
    
    
    30.6
    
    
    
    100.4
    
    
    
    174.5Placements with Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Loans
    
    
    1.0
    
    
    
    17.6
    
    
    
    8.1
    
    
    
    4.8
    
    
    
    1.9Total Past Due Loans
    
    Ps.
    256.0
    
    
    Ps.
    449.0
    
    
    Ps.
    1,011.0
    
    
    Ps.
    1,222.6
    
    
    Ps.
    1,045.9Past Due LoansWith Preferred Guarantees
    
    
    16.1
    
    
    
    308.0
    
    
    
    415.7
    
    
    
    449.3
    
    
    
    388.3With Other Guarantees
    
    
    4.9
    
    
    
    11.4
    
    
    
    235.6
    
    
    
    172.5
    
    
    
    76.1Without Guarantees
    
    
    235.0
    
    
    
    129.6
    
    
    
    359.7
    
    
    
    600.8
    
    
    
    581.5Total Past Due Loans
    
    Ps.
    256.0
    
    
    Ps.
    449.0
    
    
    Ps.
    1,011.0
    
    
    Ps.
    1,222.6
    
    
    Ps.
    1,045.9Allowance for Loan Losses
    
    Ps.
    427.9
    
    
    Ps.
    632.6
    
    
    Ps.
    1,177.3
    
    
    Ps.
    1,681.8
    
    
    Ps.
    1,050.3Ratios (%)As a % of Total Loans: Total Past Due Loans
    
    
    2.34
    
    
    
    4.97
    
    
    
    11.70
    
    
    
    9.93
    
    
    
    4.96 Past Due Loans with Preferred Guarantees
    
    
    0.15
    
    
    
    3.40
    
    
    
    4.81
    
    
    
    3.65
    
    
    
    1.84 Past Due Loans with Other Guarantees
    
    
    0.04
    
    
    
    0.13
    
    
    
    2.73
    
    
    
    1.40
    
    
    
0.36 Past Due Unsecured Amounts
    
    
    2.15
    
    
    
    1.44
    
    
    
    4.16
    
    
    
    4.88
    
    
    
    2.76 NonAccrual Loans (2)
    
    
    3.50
    
    
    
    7.74
    
    
    
    15.04
    
    
    
    13.08
    
    
    
    6.74 NonAccrual Loans (2) (Excluding Interbank
Loans)
    
    
    3.57
    
    
    
    8.10
    
    
    
    15.35
    
    
    
    13.25
    
    
    
    6.87Allowance for Loan Losses as a % of: Total Loans
    
    
    3.91
    
    
    
    7.01
    
    
    
    13.63
    
    
    
    13.66
    
    
    
    4.98 Total Loans Excluding Interbank Loans
    
    
    4.00
    
    
    
    7.33
    
    
    
    13.91
    
    
    
    13.84
    
    
    
    5.08 Total Non-Accrual Loans (2)
    
    
    111.90
    
    
    
    90.51
    
    
    
    90.61
    
    
    
    104.45
    
    
    
    73.93NonAccrual Loans with Guarantees as a Percentage
of Non-Accrual Loans (2)
    
    
    16.97
    
    
    
    64.54
    
    
    
    59.44
    
    
    
    55.50
    
    
    
    54.69NonAccrual Loans as a Percentage of Total Past Due
Loans
    
    
    149.38
    
    
    
    155.66
    
    
    
    128.52
    
    
    
    131.70
    
    
    
    135.83
 (1)
    
    Before the allowance for loan losses.(2)
    
    Non-Accrual loans are defined as those loans in the categories of: (a) consumer portfolio: defective fulfillment, difficulty in recovery, uncollectible and uncollectible due to
technical reasons; (b) commercial portfolio: with problems, high risk of insolvency, uncollectible and uncollectible due to technical reasons.
  -68-




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##### Table of Contents




    
    in the consumer portfolio: defective fulfillment, difficulty in recovery, uncollectible
and uncollectible due to technical reasons.
    
    in the commercial portfolio: with problems, high risk of insolvency, uncollectible and
uncollectible due to technical reasons.
  As of December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(in millions of pesos)Interest Income
that would have
been recorded on
non-accrual loans
on which the
accrual of interest
was discontinued
    
    
    45.9
    
    
    
    32.5
    
    
    
    39.9
    
    
    
    40.4
    
    
    
    119.6Recoveries of
interest on loans
classified as
non-accrual on
which the accrual
of interest had
been discontinued
(1)
    
    
    2.3
    
    
    
    1.6
    
    
    
    2.0
    
    
    
    2.0
    
    
    
    6.0
 (1)
    
    Recorded under Miscellaneous Income.
      -69-




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##### Table of Contents



Analysis of the Allowance for Loan Losses
  Fiscal Year EndedDecember 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(in millions of February 28, 2003,(in millions of pesos, except ratios)
    
    
    
    
    
    constant pesos, except ratios)Total Loans, Average(1)
    
    Ps.
    9,746.9
    
    
    Ps.
    11,137.9
    
    
    Ps.
    11,556.7
    
    
    Ps.
    15,262.4
    
    
    Ps.
    20,002.3Allowance for Loan Losses at Beginning of
Period(4)
    
    
    632.6
    
    
    
    1,177.3
    
    
    
    1,681.8
    
    
    
    1,050.3
    
    
    
    596.0Changes in the Allowance for Loan Losses during
the Period(4)Provisions Charged to Income
    
    
    61.1
    
    
    
    179.3
    
    
    
    217.1
    
    
    
    1,599.5
    
    
    
    922.0Prior Allowances Reversed
    
    
    (96.2
    )
    
    
    (210.3
    )
    
    
    (402.1
    )
    
    
    
    
    
    
    (2.0
    )ChargeOffs (A)
    
    
    (174.5
    )
    
    
    (521.3
    )
    
    
    (267.3
    )
    
    
    (305.7
    )
    
    
    (465.7
    )Inflation and Foreign Exhchange Effect and Other
Adjustments
    
    
    4.9
    
    
    
    7.6
    
    
    
    (52.2
    )
    
    
    (662.3
    )
    
    
    Allowance for Loan Losses at End of Period
    
    Ps.
    427.9
    
    
    Ps.
    632.6
    
    
    Ps.
    1,177.3
    
    
    Ps.
    1,681.8
    
    
    Ps.
    1,050.3Charge to the Income Statement during the Period
Provisions Charged to Income(4)
    
    
    61.1
    
    
    
    179.3
    
    
    
    217.1
    
    
    
    1,599.5
    
    
    
    922.0Direct ChargeOffs, Net of Recoveries (B)
    
    
    (28.9
    )
    
    
    (101.6
    )
    
    
    (38.6
    )
    
    
    (17.2
    )
    
    
    (25.8
    )Recoveries of Provisions
    
    
    (96.2
    )
    
    
    (210.3
    )
    
    
    (402.1
    )
    
    
    
    
    
    
    (2.0
    )Net Charge (Benefit) to the Income Statement
    
    Ps.
    (64.0
    )
    
    Ps.
    (132.6
    )
    
    Ps.
    (223.6
    )
    
    Ps.
    1,582.3
    
    
    Ps.
    894.2Ratios (%)ChargeOffs (A+B) to Average Loans (2)
    
    
    1.49
    
    
    
    3.77
    %
    
    
    1.98
    %
    
    
    1.89
    %
    
    
    2.20
    %Net Charge to the Income Statement to AverageLoans (3)
    
    
    (0.66
    )
    
    
    (1.19
    )
    
    
    (1.93
    )
    
    
    10.37
    
    
    
    4.47
 (1)
    
    Before the allowance for loan losses.(2)
    
    Charge-offs plus direct charge-offs minus bad debts recovered.(3)
    
    Income statement charges consist of net provisions plus net direct charge-offs (direct charge-offs minus bad debts recovered)(4)
    
    Includes quotation difference for Galicia Uruguay and Cayman Branch.
  
  -70-




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##### Table of Contents



Allocation of the Allowance for Loan Losses
  As of December 31,2005
    
    2004
    
    2003Loan
    
    
    
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    
    
    
    LoanCategory
    
    
    
    
    
    % of
    
    Category
    
    
    
    
    
    % of
    
    CategoryAmount
    
    % of Loans
    
    %
    
    Amount
    
    Loans
    
    %
    
    Amount
    
    Loans
    
    %(in millions of pesos, except percentages)NonFinancial Public Sector
    
    
    
    
    
    
    
    
    
    
    47.44
    %
    
    
    
    
    
    
    
    
    
    
    50.01
    %
    
    
    
    
    
    
    
    
    
    
    49.51
    %Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    1.17
    
    
    
    
    
    
    
    
    
    
    
    1.67
    
    
    
    
    
    
    
    
    
    
    
    2.25NonFinancial Private
Sector 
and Residents
AbroadAdvances
    
    Ps.
    12.3
    
    
    
    0.11
    %
    
    
    2.04
    %
    
    Ps.
    22.7
    
    
    
    0.25
    %
    
    
    2.21
    
    
    Ps.
    78.8
    
    
    
    0.91
    %
    
    
    2.54Notes
    
    
    186.4
    
    
    
    1.70
    
    
    
    16.80
    
    
    
    270.9
    
    
    
    3.00
    
    
    
    12.18
    
    
    
    441.9
    
    
    
    5.12
    
    
    
    14.82Mortgage Loans
    
    
    21.6
    
    
    
    0.20
    
    
    
    4.60
    
    
    
    97.6
    
    
    
    1.08
    
    
    
    6.91
    
    
    
    142.6
    
    
    
    1.65
    
    
    
    8.33Pledge Loans
    
    
    0.5
    
    
    
    
    
    
    
    1.11
    
    
    
    3.5
    
    
    
    0.04
    
    
    
    1.03
    
    
    
    22.7
    
    
    
    0.27
    
    
    
    0.63Personal Loans
    
    
    0.9
    
    
    
    0.01
    
    
    
    2.36
    
    
    
    4.0
    
    
    
    0.04
    
    
    
    0.64
    
    
    
    157.6
    
    
    
    1.82
    
    
    
    0.64CreditCard Loans
    
    
    14.0
    
    
    
    0.13
    
    
    
    15.84
    
    
    
    10.8
    
    
    
    0.12
    
    
    
    12.25
    
    
    
    14.5
    
    
    
    0.17
    
    
    
    9.48Placements in
Correspondent 
Banks
    
    
    
    
    
    
    
    
    
    
    1.95
    
    
    
    
    
    
    
    
    
    
    
    4.20
    
    
    
    
    
    
    
    
    
    
    
    2.00Other
    
    
    17.1
    
    
    
    0.16
    
    
    
    6.69
    
    
    
    32.1
    
    
    
    0.36
    
    
    
    8.90
    
    
    
    5.6
    
    
    
    0.06
    
    
    
    9.80Unallocated (1)
    
    
    175.1
    
    
    
    1.60
    
    
    
    
    
    
    
    191.0
    
    
    
    2.12
    
    
    
    
    
    
    
    313.6
    
    
    
    3.63
    
    
    
    Total
    
    Ps.
    427.9
    
    
    
    3.91
    %
    
    
    100.00
    %
    
    Ps.
    632.6
    
    
    
    7.01
    %
    
    
    100.00
    %
    
    Ps.
    1,177.3
    
    
    
    13.63
    %
    
    
    100.00
    %
 As of December 31,2002
    
    2001Amount
    
    % of Loans
    
    Loan Category %
    
    Amount
    
    % of Loans
    
    Loan Category %(in millions of February 28, 2003, constant pesos, except percentages)NonFinancial Public Sector
    
    
    
    
    
    
    
    
    
    
    62.03
    %
    
    
    
    
    
    
    
    
    
    
    41.15
    %Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    1.09
    
    
    
    
    
    
    
    
    
    
    
    0.91NonFinancial Private
Sector and Residents
AbroadAdvances
    
    Ps.
    40.1
    
    
    
    0.33
    %
    
    
    1.84
    
    
    Ps.
    46.1
    
    
    
    0.22
    %
    
    
    3.85Notes
    
    
    569.0
    
    
    
    4.62
    
    
    
    12.55
    
    
    
    219.2
    
    
    
    1.04
    
    
    
    18.46Mortgage Loans
    
    
    122.1
    
    
    
    0.99
    
    
    
    7.02
    
    
    
    154.5
    
    
    
    0.73
    
    
    
    15.65Pledge Loans
    
    
    24.3
    
    
    
    0.20
    
    
    
    1.56
    
    
    
    33.5
    
    
    
    0.16
    
    
    
    4.00Personal Loans
    
    
    48.4
    
    
    
    0.39
    
    
    
    0.97
    
    
    
    64.8
    
    
    
    0.31
    
    
    
    2.77CreditCard Loans
    
    
    55.6
    
    
    
    0.45
    
    
    
    4.75
    
    
    
    83.7
    
    
    
    0.40
    
    
    
    8.90Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    1.29
    
    
    
    
    
    
    
    
    
    
    
    1.79Other
    
    
    
    
    
    
    
    
    
    
    6.90
    
    
    
    3.7
    
    
    
    0.02
    
    
    
    2.52Unallocated (1)
    
    
    822.3
    
    
    
    6.68
    
    
    
    
    
    
    
    444.8
    
    
    
    2.10
    
    
    
    Total
    
    Ps.
    1,681.8
    
    
    
    13.66
    %
    
    
    100.00
    %
    
    Ps.
    1,050.3
    
    
    
    4.98
    %
    
    
    100.00
    %
 (1)
    
    The unallocated reserve consists of the allowances established on the portfolio classified in the normal and normal performance
categories and includes additional reserves in excess of Argentine Central Bank minimum requirements.
 -71-




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##### Table of Contents



Charge-Offs
  Fiscal Year EndedDecember 31,2005
    
    2004
    
    2003(in millions of pesos)Chargeoffs by TypeAdvances
    
    Ps.
    12.5
    
    
    Ps.
    20.0
    
    
    Ps.
    31.3NotesPromissory Notes
    
    
    47.7
    
    
    
    331.3
    
    
    
    65.0Discounted and Purchased Bills
    
    
    2.9
    
    
    
    
    
    
    
    Documentary Credits
    
    
    
    
    
    
    
    
    
    
    Mortgage Loans
    
    
    57.6
    
    
    
    60.5
    
    
    
    34.4Pledge Loans
    
    
    3.5
    
    
    
    20.4
    
    
    
    18.8Personal Loans
    
    
    1.1
    
    
    
    12.5
    
    
    
    36.9CreditCard LoansBanco Galicia
    
    
    8.8
    
    
    
    5.5
    
    
    
    27.9Regional CreditCard Companies
    
    
    22.0
    
    
    
    9.3
    
    
    
    52.9Other Loans
    
    
    18.4
    
    
    
    61.8
    
    
    
    0.1Total
    
    Ps.
    174.5
    
    
    Ps.
    521.3
    
    
    Ps.
    267.3
   Foreign Outstandings
   -
    
    a Ps.349.5 million claim against a United Kingdom financial
institution (1.36% of our total assets), of which Ps.347.8 represented
the right to receive Boden 2012 in connection with agreements to
repurchase such bonds entered into with such bank; and-
    
    Ps.238.6 million of placements with United States financial
institutions (0.93% of our total assets), of which Ps.212.9 million
represented an overnight placement and the remaining amount several
short-term placements.
 -72-




---



##### Table of Contents



-
    
    a Ps.394.4 million claim against a United Kingdom financial
institution (1.67% of our total assets), corresponding to the right to
receive Boden 2012 in connection with agreements to repurchase such
bonds entered into with such bank; and-
    
    Ps.196.4 million of placements with United States financial
institutions (0.83% of our total assets), of which Ps.157.4 million
represented an overnight placement and the remaining amount several
short-term placements.
  Deposits
  As of December 31,2005
    
    2004
    
    2003(in millions of February(in millions of pesos)
    
    28, 2003, constant pesos)Current Accounts and Other Demand Deposits
    
    Ps
    .1.657,6
    
    
    Ps
    .1,210.3
    
    
    Ps
    .917.5Savings Accounts (1)
    
    
    2.213,4
    
    
    
    1,639.5
    
    
    
    1,080.2Time Deposits
    
    
    4.261,9
    
    
    
    3,527.6
    
    
    
    2,838.4Reprogrammed Deposits (Cedros)
    
    
    
    
    
    
    107.3
    
    
    
    381.9Other Deposits
    
    
    192,9
    
    
    
    191.0
    
    
    
    168.7Plus: Interest Payable and Differences in Quotations (2)
    
    
    95,9
    
    
    
    81.2
    
    
    
    197.3Total Deposits
    
    Ps
    .8.421,7
    
    
    Ps
    .6,756.9
    
    
    Ps
    .5,584.0
 
 (1)
    
    Includes remunerated current accounts.(2)
    
    Includes the CER adjustment. amparo
  -73-




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##### Table of Contents



Peso-Denominated
    
    Dollar-Denominated
    
    Total% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofAmount
    
    Total
    
    Amount
    
    Total
    
    Amount
    
    Total(in millions of pesos, except percentages)Current Accounts and Demand Deposits
    
    Ps.
    1,657.6
    
    
    
    23.6
    %
    
    
    
    
    
    
    
    
    
    Ps.
    1,657.6
    
    
    
    19.9
    %Savings Accounts
    
    
    1,664.9
    
    
    
    23.7
    
    
    Ps.
    548.5
    
    
    
    42.0
    %
    
    
    2,213.4
    
    
    
    26.6Time Deposits
    
    
    3,563.4
    
    
    
    50.8
    
    
    
    698.5
    
    
    
    53.4
    
    
    
    4,261.9
    
    
    
    51.2Maturing within 30 Days
    
    
    436.7
    
    
    
    6.2
    
    
    
    123.8
    
    
    
    9.5
    
    
    
    560.5
    
    
    
    6.7Maturing after 31 Days but within 59 Days
    
    
    811.1
    
    
    
    11.6
    
    
    
    116.5
    
    
    
    8.9
    
    
    
    927.6
    
    
    
    11.1Maturing after 60 Days but within 89 Days
    
    
    489.7
    
    
    
    7.0
    
    
    
    70.4
    
    
    
    5.4
    
    
    
    560.1
    
    
    
    6.7Maturing after 90 Days but within 179 Days
    
    
    537.6
    
    
    
    7.7
    
    
    
    74.1
    
    
    
    5.7
    
    
    
    611.7
    
    
    
    7.3Maturing after 180 Days but within 365 Days
    
    
    898.9
    
    
    
    12.8
    
    
    
    66.6
    
    
    
    5.1
    
    
    
    965.5
    
    
    
    11.6Maturing after 365 Days
    
    
    389.4
    
    
    
    5.5
    
    
    
    247.1
    
    
    
    18.8
    
    
    
    636.5
    
    
    
    7.8Reprogrammed Deposits with amparoclaims
    
    
    34.9
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    34.9
    
    
    
    0.4Other Deposits
    
    
    98.4
    
    
    
    1.4
    
    
    
    59.6
    
    
    
    4.6
    
    
    
    158.0
    
    
    
    1.9Maturing within 30 Days
    
    
    98.0
    
    
    
    1.4
    
    
    
    58.9
    
    
    
    4.5
    
    
    
    156.9
    
    
    
    1.9Maturing after 31 Days but within 59 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing after 60 Days but within 89 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing after 90 Days but within 179 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing after 180 Days but within 365 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing after 365 Days
    
    
    0.4
    
    
    
    
    
    
    
    0.7
    
    
    
    0.1
    
    
    
    1.1
    
    
    
    Total Deposits(1)
    
    Ps.
    7,019.2
    
    
    
    100.0
    %
    
    Ps.
    1,306.6
    
    
    
    100.0
    %
    
    Ps.
    8,325.8
    
    
    
    100.0
    %
 
 (1)
    
    Only principal. Excludes the CER adjustment   amparo
  -74-




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##### Table of Contents



Domestic Offices
    
    Foreign Offices(in millions of pesos)Time DepositsWithin 30 Days
    
    Ps.
    231,2
    
    
    
    After 31 Days but within 59 Days
    
    
    617,2
    
    
    
    After 60 Days but within 89 Days
    
    
    222,9
    
    
    
    After 90 Days but within 179 Days
    
    
    355,2
    
    
    
    After 180 Days but within 365 Days
    
    
    767,7
    
    
    
    After 365 Days
    
    
    357,4
    
    
    
    202,0Total Time Deposits
    
    Ps
    .2.551,6
    
    
    Ps
    .202,0Other Deposits
    
    
    
    
    
    
    After 365 Days
    
    
    
    
    
    
    0,6Total Other Deposits
    
    
    
    
    
    
    0,6Total Deposits(1)
    
    Ps
    .2.551,6
    
    
    Ps
    .202,6
 
 (1)
    
    Only principal. Excludes the CER adjustment. Return on Equity and Assets
  Fiscal Year EndedDecember 31,2005
    
    2004
    
    2003(in millions of pesos, except percentages)Net Income / (Loss)
    
    Ps.
    107.2
    
    
    Ps.
    (109.9
    )
    
    Ps.
    (222.2
    )Average Total Assets
    
    
    24,238.1
    
    
    
    22,725.9
    
    
    
    22,530.3Average Shareholders Equity
    
    
    1,569.3
    
    
    
    1,500.9
    
    
    
    1,529.4Shareholders Equity at End of the Period
    
    
    1,626.8
    
    
    
    1,519.5
    
    
    
    1,419.4Net Income / (Loss) as a Percentage of:Average Total Assets
    
    
    0.59
    %
    
    
    (0.42
    )%
    
    
    (0.95
    )%Average Shareholders Equity
    
    
    6.83
    
    
    
    (7.32
    )
    
    
    (14.53
    )Declared Cash Dividends
    
    
    
    
    
    
    
    
    
    
    Dividend Payout Ratio
    
    
    
    
    
    
    
    
    
    
    Average Shareholders Equity as a Percentage of Average Total Assets
    
    
    6.47
    %
    
    
    6.60
    %
    
    
    6.79Shareholders Equity at the End of the Period as a Percentage of
Average Total Assets
    
    
    6.71
    
    
    
    6.69
    
    
    
    6.30
 Short-term Borrowings
  As of December 31,2005
    
    2004
    
    2003(in millions of pesos )Short-Term BorrowingsArgentine Central Bank
    
    
    
    
    
    Ps.
    1.0
    
    
    Ps.
    0.8Other Banks and International Entities (1)Lines of Credit from Domestic Banks
    
    
    60.8
    
    
    
    115.2
    
    
    
    25.1Lines of Credit from Foreign Banks
    
    
    
    
    
    
    
    
    
    
    1,231.8Repos with Domestic Banks
    
    
    
    
    
    
    
    
    
    
    Repos with Foreign Banks
    
    
    220.5
    
    
    
    223.7
    
    
    
    Debt Securities (1)
    
    
    89.7
    
    
    
    13.4
    
    
    
    9.5Total
    
    Ps
    .371.0
    
    
    Ps
    .353.3
    
    
    Ps
    .1,267.2
 
 (1)
    
    For 2003, includes short-term borrowings under restructuring. -75-




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##### Table of Contents



-
    
    the weighted-average interest rate at year-end,-
    
    the maximum balance recorded at the monthly closing dates of the periods,-
    
    the average balances for each period, and-
    
    the weighted-average interest rate for the periods.
 As of December 31,2005
    
    2004
    
    2003(in millions of pesos )Argentine Central BankWeighted-average interest rate at end of period
    
    
    
    
    
    
    7.00
    %
    
    
    9.00
    %Maximum balance recorded at the monthly closing dates
    
    
    
    
    
    Ps.
    1.0
    
    
    Ps.
    0.8Average balances for each period
    
    
    
    
    
    
    0.9
    
    
    
    0.3Weighted-average interest rate for the period
    
    
    
    
    
    
    7.00
    %
    
    
    9.00
    %Lines of Credit from Domestic BanksWeighted-average interest rate at end of period
    
    
    7.0
    %
    
    
    5.2
    %
    
    
    6.8
    %Maximum balance recorded at the monthly closing dates
    
    Ps.
    164.1
    
    
    Ps.
    185.6
    
    
    Ps.
    43.4Average balances for each period
    
    
    96.3
    
    
    
    104.2
    
    
    
    35.4Weighted-average interest rate for the period
    
    
    5.5
    %
    
    
    5.0
    %
    
    
    3.9
    %Lines of Credit from Foreign BanksWeighted average interest rate at end of period
    
    
    
    
    
    
    
    
    
    
    7.1
    %Maximum balance recorded at the monthly closing dates
    
    
    
    
    
    Ps.
    1,231.6
    
    
    Ps.
    1,344.4Average balances for each period
    
    
    
    
    
    
    456.1
    
    
    
    1,239.0Weighted average interest rate for the period
    
    
    
    
    
    
    7.1
    %
    
    
    7.1
    %Repos with Domestic BanksWeighted-average interest rate at end of period
    
    
    
    
    
    
    
    
    
    
    Maximum balance recorded at the monthly closing dates
    
    Ps.
    165.6
    
    
    Ps.
    150.1
    
    
    
    Average balances for each period
    
    
    15.8
    
    
    
    37.9
    
    
    
    Weighted-average interest rate for the period
    
    
    4.9
    %
    
    
    2.8
    %
    
    
    Repos with Foreign BanksWeighted-average interest rate at end of period
    
    
    7.5
    %
    
    
    5.6
    %
    
    
    Maximum balance recorded at the monthly closing dates
    
    Ps.
    220.6
    
    
    Ps.
    224.3
    
    
    
    Average balances for each period
    
    
    216.7
    
    
    
    66.5
    
    
    
    Weighted-average interest rate for the period
    
    
    6.6
    %
    
    
    5.6
    %
    
    
    Negotiable ObligationsWeighted-average interest rate at end of period
    
    
    7.4
    %
    
    
    8.0
    %
    
    
    16.1
    %Maximum balance recorded at the monthly closing dates
    
    Ps.
    123.2
    
    
    Ps.
    13.4
    
    
    Ps.
    128.0Average balances for each period
    
    
    79.5
    
    
    
    11.5
    
    
    
    50.9Weighted-average interest rate for the period
    
    
    6.1
    %
    
    
    8.0
    %
    
    
    16.1
    %
 -76-




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##### Table of Contents



Regulatory Capital
 Ley de
Sociedades Comerciales
 Banco Galicia
    -
    
    The setting of an 8.0% minimum capital requirement on risk-weighted assets consistent with the international standard set
forth by the Basel Committee, which is lower than the former requirement but is applied to the public-sector exposure as
well as to private-sector assets, while the former requirement was applicable to private-sector assets only.-
    
    The establishment of a 100.0% risk-weighting for public-sector assets, the same applicable to loans to the private sector,
while under the prior rules no capital was required on public-sector assets.-
    
    The discontinuation of the requirement of an increasing capital as a function of loans interest rates;-
    
    The incorporation of US dollar as well as the CER-adjusted positions in the determination of the capital required to cover
market and interest-rate risks, which were not considered under the prior rules;-
    
    The discontinuation of the increase or decrease of the capital requirement depending on the rating granted to each
institution by the Financial Superintendency;
  January 1st/ December 31st
    
    Alfa 1
    
    Alfa 22004
    
    
    0.05
    
    
    
    0.202005
    
    
    0.15
    
    
    
    0.402006
    
    
    0.30
    
    
    
    0.702007
    
    
    0.50
    
    
    
    1.002008
    
    
    0.75
    
    
    
    2009
    
    
    1.00
    
    
    
    
  -77-




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##### Table of Contents



As of December 31,2005
    
    2004
    
    2003(*)(in millions of pesos, except percentages)Shareholders Equity
    
    Ps
    .1,389.2
    
    
    Ps
    .1,198.2
    
    
    Ps
    .1,306.8Argentine Central Bank Minimum Capital RequirementsAllocated to Financial Assets
    
    
    477.2
    
    
    
    329.9
    
    
    
    Allocated to Fixed Assets, intangible and unquoted
equity investments
    
    
    138.0
    
    
    
    142.0
    
    
    
    Allocated to Market Risk
    
    
    16.8
    
    
    
    62.6
    
    
    
    Allocated to Interest-Rate Risk
    
    
    87.1
    
    
    
    20.2
    
    
    
    Lending to the Non-Financial Public Sector
    
    
    162.4
    
    
    
    58.6
    
    
    
    Minimum Capital Required by the Argentine Central Bank (A)
    
    Ps.
    881.5
    
    
    Ps.
    613.3
    
    
    
    Capital Calculated Under Argentine Banking GAAPCore Capital
    
    
    1,207.1
    
    
    
    1,339.9
    
    
    
    Supplemental Capital
    
    
    807.5
    
    
    
    580.8
    
    
    
    DeductionsInvestments in Financial Entities
    
    
    (1.5
    )
    
    
    (1.5
    )
    
    
    Organization Expenses
    
    
    (55.6
    )
    
    
    (71.6
    )
    
    
    Goodwill Recorded from June 30, 1997
    
    
    (85.9
    )
    
    
    (111.7
    )
    
    
    Real Estate Properties for Banco Galicias Own Use and
Miscellaneous, for which no title deed has been made
    
    
    (3.5
    )
    
    
    (4.0
    )
    
    
    Other
    
    
    (5.6
    )
    
    
    (5.9
    )
    
    
    Total
    
    
    (152.1
    )
    
    
    (194.7
    )
    
    
    Additional Capital  Market Variation
    
    
    22.7
    
    
    
    20.5Capital Calculated Under Argentine Banking GAAP
    
    Ps
    .1,885.2
    
    
    Ps
    .1,746.5
    
    
    
    Excess CapitalExcess over required Capital (B)-(A)
    
    Ps
    .1,003.7
    
    
    Ps
    .1,133.2
    
    
    
    Excess over Required Capital as a % of Required Capital
    
    
    113.86
    %
    
    
    184.77
    %
    
    
    Total Capital Ratio
    
    
    20.78
    
    
    
    25.11
    
    
    
    
 
 (*)
    
    Submission of information on capital adequacy was suspended by Argentine Central Bank rules.      -78-




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##### Table of Contents



Minimum Capital Requirements of Insurance Companies
 
 a)
    
    By line of insurance: This method establishes a fixed amount by line of insurance. For life
insurance companies, it is Ps.750,000, rising to Ps.3 million for companies that offer
pension-linked life insurance. For annuity providers that do not offer life annuities, or
annuities covering disability and other work-related risks, the requirement is Ps.2 million.
For property insurance companies, the requirement is Ps.5 million, excluding the auto
insurance line of business.b)
    
    By premiums and additional fees: To use this method, the company must calculate the sum of
the premiums written and additional fees earned in the last 12 months. Of the total, the
company must calculate 18% of any result up to Ps.5 million, and 16% of any result over Ps.5
million. Finally, it must add the resulting figures and adjust the total by the ratio of net
paid claims to gross paid claims for the last 36 months. This ratio must be at least 50%.c)
    
    By claims: To use this method, the company must calculate the sum of gross claims paid
during the 36 months prior to the end of the period under analysis. To that amount, it must
add the difference between the balance of unpaid claims as of the end of the period under
analysis and the balance of unpaid claims as of the 36th month prior to the end of the period
under analysis. The resulting figure must be divided by three. Then the company must
calculate 26% of any result up to Ps.3.5 million, and 23% of any result over Ps.3.5 million.
The resulting figure must be adjusted by the ratio of net paid claims to gross paid claims for
the last 36 months. This ratio must be at least 50%.d)
    
    For life insurance companies that offer policies with an investment component, the figures
obtained in b) and c) must be increased by an amount equal to 4% of the technical reserves.
The latter total must be adjusted by the ratio of net claims reserves to gross claims reserves
(at least 85%), plus 0.03% of at-risk capital adjusted by the ratio of net claims reserves to
gross claims reserves (at least 50%).
  
 Government Regulation
   
   -79-




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##### Table of Contents



Main Regulatory Changes since 2002
 General
 
 
    
    ratifying the suspension of payments of Argentinas sovereign debt except for debt
with multilateral credit agencies;
    
    repealing the articles of the Convertibility Law that had established in 1991 the
fixed one-to-one peso-dollar parity, devaluing the peso and subsequently allowing the
peso to float, which resulted in an increase in such parity of approximately 240%
during 2002;
    
    tightening foreign-exchange controls and restrictions on transfers abroad, which
began to be loosened at the end of 2002;
    
    ratifying and tightening the restrictions to cash withdrawals from bank deposits
established in December 2001 (the corralito), which restrictions were lifted in
December 2002;
    
    establishing a compulsory asymmetric conversion of certain dollar-denominated
assets and liabilities into peso-denominated assets and liabilities at different
exchange rates (the asymmetric pesification), as follows:
 -
    
    private sector debt (individual and corporate dollar-denominated debt)
with financial institutions, and other creditors, was converted into
peso-denominated debt at a one-to-one exchange rate;-
    
    dollar-denominated public sector debt instruments in financial
institutions portfolios, both national and provincial, were converted into
peso-denominated instruments at an exchange rate of Ps.1.4 per US$1.0; and-
    
    dollar-denominated bank deposits were converted into peso-denominated
bank deposits at an exchange rate of Ps.1.4 per US$1.0, while public-sector, bank
and corporate debt governed by foreign law remained dollar-denominated;.
 
    
    modifying the yields of assets and the cost of liabilities pesified at the Ps.1.4
per US$1.0 exchange rate, establishing fixed maximum and minimum interest rates,
respectively, and establishing the adjustment of the principal of those assets and
liabilities by the variation of indexes based on the variation of prices or salaries;
    
    restructuring bank peso-denominated time deposits and dollar-denominated deposits,
above certain amounts, and establishing a repayment schedule ending in 2003 and 2005
depending on whether the deposit was originally peso or dollar-denominated (this
restructuring was known as the corralón);
    
    establishing a series of voluntary swaps of deposits in the corralito or of
Reprogrammed Deposits for government bonds, as a response to the inability of the
financial system to return deposits in accordance with their original terms and
conditions. Through Decree No. 739/03 of April 1, 2003, the corralón was eliminated;
    
    amending the charter of the Argentine Central Bank; and
    
    allocating Argentine Government bonds to financial institutions in compensation for
the losses that would otherwise arise from the asymmetric pesification. As of the date
of this annual report, the Argentine Government and the Argentine Central Bank have
provided a series of rules to determine the amount of compensation in connection with
the asymmetric pesification to which each financial institution is entitled. However,
certain situations remain that have not been contemplated by such rules, such as the
provision of compensation for the difference between the amounts paid by banks to
reimburse Reprogrammed Deposits, as a result of judicial actions from depositors
(amparoclaims), and the amounts established by the regulations.
  -80-




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##### Table of Contents



Foreign Exchange Market
       -
    
    Access to the local foreign exchange market is permitted in order to repay
interest and principal on foreign debt of a financial nature by the financial and
non-financial private sectors but such debt can only be repaid after 180 days from the
entry and conversion into pesos in the local foreign exchange market of the related
proceeds.-
    
    Anticipated payment of principal on such debt by the financial and
non-financial private sectors is permitted if made within a certain period from
maturity and after 180 days from the entry and conversion into pesos in the local
foreign exchange market of the related proceeds.-
    
    Transfers of funds abroad by financial institutions with outstanding
indebtedness for financial assistance with the Argentine Central Bank, such as the
Bank, is subject to the prior authorization of
 -81-




---



##### Table of Contents



the Argentine Central Bank. Such prior authorization does not apply to payments in
connection with the foreign debt of the Banks Head Office and Cayman Branch, given that
such restructuring was approved by the Argentine Central Bank.
 -
    
    Access to the foreign exchange local market for the transfer of profits and
dividends is permitted when corresponding to audited and final balance sheets.-
    
    Access to the local foreign exchange market by non-residents (both individuals
and entities) to transfer funds abroad is permitted:
 -
    
    with no limit in the case of proceedings from the principal
amortization of Argentine Government Securities, recoveries from local
bankruptcies and certain other specific cases.-
    
    with a US$2.0 million monthly limit in the case of the aggregate
proceeds from the sale of: (i) direct investments in the private non-financial
sector in Argentina or the final disposition of such investments; and (ii) the
sale of portfolio investments made with foreign exchange having entered the
local foreign exchange market no less than 180 days before. However, access to
the local foreign exchange market for the reason mentioned in clause (i) for a
monthly amount exceeding US$500,000 or for the reasons mentioned in clauses (i)
and (ii) for an aggregate monthly amount exceeding US$2.0 million, requires the
prior authorization of the Argentine Central Bank.-
    
    with a US$5,000 monthly limit in the cases not contemplated
above, unless authorization of the Argentine Central Bank is obtained.
 -
    
    Access to the local foreign exchange market by residents (both individuals and
entities) to make foreign real estate, direct or portfolio investments or buy foreign
exchange or traveler checks is allowed but limited to US$2.0 million per month, with
such limit increased in certain cases.
 Loans to the Private Sector and Asymmetric Indexation
  
    
    certain types of loans originally made in U.S. dollars and then pesified were excluded
from the application of the CER: certain loans secured by residential mortgages on property
representing the borrowers sole family residence made for up to US$250,000; personal loans
originally made for up to Ps.12,000 or US$12,000 or the equivalent amount in foreign
currency; and personal loans secured by a pledge originally made for up to Ps.30,000 or
US$30,000 or the equivalent amount in foreign currency.
    
    the adjustment by the CVS was applicable from October 1, 2002 up to March 31, 2004. The
Bank began to apply the adjustment by the CVS to the principal of eligible loans on
November 2003.
    
    loans to be adjusted by the CER would bear an interest rate ranging from 3.5% to 8%,
depending on the type of debtor, the existence of collateral and the type of loan. Loans to
be adjusted by the CVS would bear an interest rate that would be the lower of the loans
contractual rate and the following maximum interest rates: 12.38% for mortgage loans,
16.41% for loans secured by a pledge and 25.48% for personal loans.
    
    those debtors with obligations not included in the above-mentioned exceptions and with a
total indebtedness in the financial system, as of February 3, 2002, of up to Ps.400,000,
would be able to capitalize the CER adjustment accrued up to September 30, 2002, and to
restructure such loans and the accumulated CER amounts. To allow this restructuring, on
July 25, 2003, the Argentine Central Bank, through its Communiqué A 3987, authorized
financial institutions to grant loans to be adjusted by the CER.
  -82-




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##### Table of Contents



Sistema
de Refinanciación Hipotecaria
 Deposits
 corralito corralito  corralón  corralito
 
 corralito corralón amparo amparo amparo
 corralito corralón Canje
I Canje II
 corralito corralón
  -83-




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##### Table of Contents



Compensation to Financial Institutions
 For the Asymmetric Pesification and its Consequences
  -
    
    the losses caused by the mandatory conversion into pesos of certain liabilities
at the Ps.1.4 per US$1.0 exchange rate, greater than the Ps.1.0 per US$1.0 exchange
rate established for the conversion into pesos of certain dollar-denominated assets.
This was to be achieved through the delivery of a peso-denominated compensatory bond
issued by the Argentine Government (Boden 2007).-
    
    the currency mismatch left in financial institutions balance sheets after the
compulsory pesification of certain of their assets and liabilities. This was to be
achieved through the conversion of the peso-denominated compensatory bond into a
dollar-denominated compensatory bond and, if necessary, through the purchase by
financial institutions of a dollar-denominated hedge bond. For such purpose, the
Argentine Government established the issuance of a dollar-denominated bond bearing
Libor and maturing in 2012 (Boden 2012).
    -84-




---



##### Table of Contents



For the Asymmetric Indexation and for Differences Related to Amparo Claims
  amparo Amparo
 Inflation Accounting
  
 Argentine Banking System and Regulation
 Argentine Banking System
 i.e. sociedades anónimas i.e. bancos
cooperativos limitados
   -85-




---



##### Table of Contents



Argentine Banking Regulation
 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.
 General
 Superintendencia de Entidades Financieras y Cambiarias
   -86-




---



##### Table of Contents



Supervision
    Financial Systems Restructuring Unit (Unidad de Reestructuración del Sistema Financiero or
URSF)
  -87-




---



##### Table of Contents



Examination by the Argentine Central Bank
    BASIC System
  - B (Bonos or ).
 - A (Auditoría or ).
 - S (Supervisión or ).
 - I (Información or ).
 - C (Calificación or ).
 Legal Reserve
  -88-




---



##### Table of Contents



Limitations on Types of Business and Computable Capital
  fondos comunes de inversión
 -
    
    equity shares without quotation excluding (a) stock of companies which provide
services complementary to the services offered by the bank, and (b) certain stock
participations which are necessary in order to obtain the rendering of public services,
if any,-
    
    listed stock and participations in mutual funds which are not included in order
to determine the capital requirements related to market risk; and-
    
    listed stock that does not have a largely publicly available market price
(when daily quotes of relevant transactions are available, which quotes would not be
significantly affected by the disposition of the banks holdings of such stock)
      -89-




---



##### Table of Contents



Treatment of Losses in Connection with Amparo Claims
  amparo amparo
   Legal Reserve Requirements for Liquidity Purposes
      -90-




---



##### Table of Contents



In Pesos
    
    In DollarsDemand deposits: Current accounts (only in pesos)
    
    
    15
    % Savings accounts
    
    
    15
    %
    
    
    30
    %Time deposits (by remaining maturity): up to 29 days
    
    
    14
    %
    
    
    35
    % from 30 to 59 days
    
    
    11
    %
    
    
    28
    % 60 to 89 days
    
    
    7
    %
    
    
    20
    % 90 to 179 days
    
    
    2
    %
    
    
    10
    % 180 to 365 days
    
    
    1
    %
    
    
    6
    % more than 365 days
    
    
    0
    %
    
    
    0
    %
    Capital Adequacy Requirements
  Lending Limits
  i) Limits that refer to the borrowers capital:
 -91-




---



##### Table of Contents



ii) Limits that refer to the Adjusted Shareholders Equity of financial institutions:
 Without Collateral
    
    With CollateralNon-related Customers
    
    
    15
    %
    
    
    25
    %Domestic Financial Institutions (*)
    
    
    25
    %
    
    
    25
    %Foreign Financial Institutions (Investment grade)
    
    
    25
    %
    
    
    25
    %Foreign Financial Institutions (Other)
    
    
    5
    %
    
    
    5
    %Reciprocal Guarantee Entities authorized by the
Argentine Central Bank (**)
    
    
    
    
    
    
    25
    %Public sector (***):i) National
    
    
    50
    %
    
    
    50
    %ii) City of Buenos Aires and Provinces (each)
    
    
    10
    %
    
    
    10
    %iii) Municipalities (each)
    
    
    3
    %
    
    
    3
    %
 
 (*)
    
    For bankers banks, the limit is 100%.(**)
    
    Law 24,467: associations of companies authorized by the Argentine
Central Bank to guarantee loans. In case one of the companies fails to pay,
the other takes responsibility.(***)
    
    Excess over the new limits set in March 2003 will not be computed
if arising from loans granted before March 2003, if determined or increased
by the reception of bonds or promissory notes as compensation for the
asymmetric pesification, or if arising from the rolling over of preexisting
loans.   The limits on equity interests in other companies are the following:
 Limit on a Banks Adjusted
    
    Limit on a Companys NetShareholders Equity
    
    WorthCompanies with
non-complementary activities
    
    
    (*
    )
    
    
    12.5
    %(***)Companies with complementary
activities
    
    
    (*
    )
    
    
    100
    %Total shares
    
    
    50
    %Shares without quotation (**)
    
    
    15
    %
 
 (*)
    
    See previous table.(**)
    
    Includes shares that do not quote frequently and therefore are not
subject capital requirements to cover market risk.(***)
    
    Until December 2004 shares or equity interests could be taken in
payment of credits, up to 20% of the firms capital, without exceeding 20% of
the votes. They had to be sold within one year so as to reach the regulatory
limit.  -92-




---



##### Table of Contents



Loan Classification System and Loan Loss Provisions
  Valuation of Public Sector Assets
  -93-




---



##### Table of Contents



Financial Assistance from the Argentine Central Bank
 Financial Assistance Granted for Liquidity Support Granted After March 10, 2003
  Financial Assistance for Liquidity Support Granted Before April 1, 2003
 
      -94-




---



##### Table of Contents



Foreign Currency Position
  Deposit Insurance System
 Fondo de Garantia de los Depósitos
  
 Priority Rights of Depositors
 
 -95-




---



##### Table of Contents




    
    deposits of individuals or entities up to Ps.50,000 or the equivalent thereof in foreign
currency, enjoying this preference only one person per deposit. For the determination of
this preference, all deposits of the same person registered by the entity shall be computed;
    
    deposits in excess of Ps.50,000 or the equivalent thereof in foreign currency, referred
to above;
    
    liabilities originated on commercial credit lines granted to the financial entity, which
are directly in connection with international trade.
   Financial Institutions with Economic Difficulties
     bis
 -96-




---



##### Table of Contents



Dissolution and Liquidation of Financial Institutions
    
 Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 
 Item 5A. Operating Results
 
 General
  
 Inflation Accounting Adjustments
  For the 12-month period ended December 31,2005
    
    2004
    
    2003Inflation (1)Wholesale Price Index
    
    
    10.69
    %
    
    
    7.84
    %
    
    
    2.03
    %Consumer Price Index
    
    
    12.33
    %
    
    
    6,10
    %
    
    
    3.66
    %Adjustment IndexesCER
    
    
    11.75
    %
    
    
    5.48
    %
    
    
    3.66
    %CVS (through March 31, 2004)
    
    
    
    
    
    
    5.32
    %
    
    
    15.85
    %
 
 (1)
    
    Source: INDEC. -97-




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##### Table of Contents



Main Developments Since the 2001-2002 Crisis
   §
    
    In late 2001, we tendered most of our predominantly dollar-denominated Argentine
National Government debt instruments, which were mainly held by the Bank, into the
exchange to implement the restructuring of such instruments which we exchanged for
Secured Loans, under the provisions of Decree No.1387/01, which loans were subsequently
pesified in 2002. The exchange of those assets representing an exposure to the
provincial governments was not completed until mid 2003 (and under different economic
terms). As a result, as of December 31, 2005, we held Ps.5,187.5 million of Secured
Loans. After the end of the 2005 fiscal year, the balance of these loans decreased due
to sales. See Item 4. Information on the CompanySelected Statistical InformationLoan
Portfolio, Consolidated Assets and Item 8. Financial InformationSignificant
Changes.§
    
    All of our portfolio of dollar-denominated loans to the Argentine provincial
governments, which were mainly held by the Bank, was restructured into Bogar, a process
that began in late 2001 and ended in mid 2003, including the pesification of such loan
portfolio in 2002, under the provisions of Decree No. 1579/02. As a result, as of
December 31, 2005, we held Ps.3,823.3 million of Bogar. After the end of the 2005
fiscal year, the balance of these loans was significantly reduced due to sales. See
Item 4. Information on the CompanySelected Statistical InformationLoan Portfolio,
Consolidated Assets and Item 8. Financial InformationSignificant Changes.§
    
    The Bank became entitled to receive and acquire Boden 2012 as compensation for the
negative effects of the asymmetric pesification. As a result, the total amount of Boden
2012 recorded in our books as of December 31, 2005, net of Boden 2012 already used, was
Ps.5,142.9 million. See Item 4. Information on the CompanySelected Statistical
InformationGovernment and Corporate Securities and Item 4. Information on the
CompanyMain Regulatory Changes since 2002Compensation to Financial Institutions.§
    
    In January 2005, the Bank tendered in the restructuring of the Argentine sovereign
debt its US$281 million holdings of External Notes and opted to receive
Peso-denominated Discount Bonds and GDP-Linked Units. We recorded those bonds for
Ps.733.3 million as of December 31, 2005. See Item 4. Information on the
CompanySelected Statistical Information Government and Corporate Securities.
 -98-




---



##### Table of Contents



§
    
    In addition, the Bank restructured most of its portfolio of commercial loans, after
loans to the private sector were pesified, as explained under Item 4. Information on
the CompanyMain Regulatory Changes since 2002Loans. This process began in 2002,
advanced significantly in 2003 and 2004 and was substantially finalized in 2005.§
    
    As a result of having reimbursed deposits, pursuant to amparoclaims, for amounts
greater than those specified by the Argentine Governments pesification rules, the Bank
incurred losses that have not been compensated by the Argentine Government and recorded
such losses as an asset which, net of accumulated amortization, amounted to Ps.347.8
million as of December 31, 2005. See Argentine Banking System and
RegulationArgentine Banking RegulationTreatment of Losses in Connection with Amparo
Claims.
  §
    
    In 2002, the Bank significantly streamlined its operational structure and reduced
its administrative expenses in order to adapt to the new economic and regulatory
context that resulted from the 2001-2002 crisis. Subsequently, a strict cost-control
policy was applied. In 2004 and 2005, the expansion of the Banks business led to an
increase in our administrative expenses consistent with such expansion. See Results
of Operations for the Fiscal Years Ending December 31, 2005, December 31, 2004 and
December 31, 2003.§
    
    In mid 2002, the Bank restructured the liabilities of its New York Branch, prior to
the orderly winding down of its affairs, which concluded in January 2003. As of
December 31, 2005, US$77 million in aggregate principal amount of two negotiable
obligations issued by the Banks Head Office in Argentina to restructure the New York
Branch debt were outstanding. See Item 4. Information on the
CompanyHistoryRestructuring of Our Subsidiaries DebtBanco GaliciaRestructuring of
the Banks New York Branch Debt.§
    
    During 2002 and 2003, deposits at Galicia Uruguay and Galicia Cayman amounting in
aggregate to US$1.1 billion were restructured. As of December 31, 2005, such debt had
decreased to approximately 12% of its original aggregate amount, as a result of
payments and offers to exchange restructured debt for, mainly, Boden 2012 and cash.
See Item 4. Information on the CompanyHistoryRestructuring of Our Subsidiaries
DebtBanco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.§
    
    The Banks representative offices in São Paulo and London, as well as the Banks
securities business incorporated in the United Kingdom, Galicia y Buenos Aires
Securities (UK) Ltd., were closed on September 30, 2002. After the end of fiscal year
2005, the Cayman Branch was closed.§
    
    On November 25, 2003, the Bank launched the exchange offer to restructure US$1,476
million in principal and past due capitalized interest of foreign debt of its Head
Office in Argentina and its Cayman Branch. This restructuring was successfully
concluded on May 18, 2004, with the participation of creditors holding 98.2% of the
principal amount of the debt subject to restructuring. See Item 4. Information on the
CompanyHistoryRestructuring of Our Subsidiaries DebtBanco GaliciaRestructuring of
the Foreign Debt of the Banks Head Office in Argentina and its Cayman Branch.
  §
    
    In 2002, the Argentine Government restructured banks dollar-denominated deposits
and peso time deposits, including Banco Galicias dollar-denominated deposits and peso
time deposits, and subsequently issued regulations providing for several exchanges of
Reprogrammed Deposits for government bonds. These deposits decreased also by virtue of
the payments made by the Bank in accordance with the schedule established by the
Government, which finalized in August 2005. As of December 31, 2005, the Bank had only
a non-material amount of Reprogrammed Deposits with amparoclaims. See Item
4.Information on the CompanyMain Regulatory Changes since 2002Deposits.
 -99-




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§
    
    In 2003, the Bank began to restructure the financial assistance from the Argentine
Central Bank, received during the 2001-2002 crisis, from a one-month revolving facility
into a long-term CER adjusted facility as explained herein, a process that concluded in
February 2004. As of December 31, 2005, this financial assistance amounted to
Ps.5,314.9 million. During the first quarter of 2006 and in the first days of April,
this liability had been reduced by Ps.2,678.2 million, mainly as a result of
anticipated payments made using the proceeds of public-sector assets granted as
collateral for such liability and also as a result of the scheduled monthly payments.
See Funding, and Item 8. Financial InformationSignificant Changes.§
    
    As a result of the measures undertaken by the Argentine Government to compensate
financial institutions for the asymmetric pesification, as of December 31, 2005, our
balance sheet included Ps.3,296.6 million on account of the advance to be granted to
the Bank by the Argentine Central Bank to fund the acquisition of the Boden 2012
corresponding to the Hedge Bond. See Funding.
     amparo
 
 Currency Composition of Our Balance Sheet
  -100-




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##### Table of Contents




    
    CER mismatch: The Banks peso-denominated assets subject to adjustment by the CER
(mainly Secured Loans and Bogar) exceeded its CER-adjusted peso-denominated liabilities
(mainly the financial assistance from the Argentine Central Bank, the advance to be
provided by the Argentine Central Bank to purchase the Hedge Bond and CER-adjusted
deposits). See Funding below.
    
    Foreign-currency mismatch: The Banks dollar-denominated assets (mainly Boden 2012)
exceeded its dollar-denominated liabilities (debt securities, borrowings from foreign banks
and deposits in foreign branches and subsidiaries). See Item 11. Quantitative and
Qualitative Disclosures About Market Risk-Foreign Exchange Rate Risk.
    
    Peso mismatch: The Banks peso-denominated liabilities (mainly voluntary deposits)
exceeded its assets (mainly liquidity reserves and loans to the private sector), in each
case, bearing market interest rates.
   As of December 31,2005
    
    
    2004
    
    
    2003(In millions of pesos)AssetsIn pesos, unadjusted
    
    Ps.
    7,.977.3
    
    
    Ps.
    5,666.0
    
    
    Ps.
    3,898.5In pesos, adjusted by the CER
    
    
    10,671.5
    
    
    
    10,198.4
    
    
    
    10,302.8In pesos, adjusted by the CVS (1)
    
    
    
    
    
    
    
    
    
    
    317.1In foreign currency (2)
    
    
    6,807.4
    
    
    
    7,786.2
    
    
    
    8,304.5Total Assets
    
    Ps.
    25,456.2
    
    
    Ps.
    23,650.6
    
    
    Ps.
    22,822.9Liabilities and Shareholders EquityIn pesos, unadjusted, including shareholders equity
    
    
    9,350.0
    
    
    Ps.
    7,871.1
    
    
    Ps.
    5,951.6In pesos, adjusted by the CER
    
    
    9,909.4
    
    
    
    9,236.0
    
    
    
    8,979.3In foreign currency (2)
    
    
    6,196.8
    
    
    
    6,543.5
    
    
    
    7,892.0Total Liabilities and Shareholders Equity
    
    Ps.
    25,456.2
    
    
    Ps.
    23.650.6
    
    
    Ps.
    22,822.9
 
 (1)
    
    The Bank began to apply the CVS adjustment to the principal of certain loans, as applicable according
to the regulations, in November 2003. The CVS adjustment was applicable until March 31, 2004. There were no
liabilities adjustable by the CVS.(2)
    
    If adjusted to reflect forward sales and purchases of foreign exchange made by the Bank and
recorded off-balance sheet, assets amounted to Ps.6,819.6 million and liabilities Ps.6,457.3 million.  
 The Argentine Economy in 2005
   -101-




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The Argentine Financial System in 2005
  amparo
  -102-




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-103-




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Results of Operations for the Fiscal Years Ending December 31, 2005, December 31, 2004 and December
31, 2003
 General
  Net Income/Loss
 Fiscal Year EndedDecember 31,2005
    
    
    2004
    
    
    2003(in millions of pesos, except percentages)Consolidated Income StatementFinancial income
    
    Ps.
    2,398.6
    
    
    Ps.
    1,391.6
    
    
    Ps.
    1,452.1Financial expenses
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,304.8Net financial income
    
    
    552.7
    
    
    
    224.2
    
    
    
    147.3Provision for losses on loans and other receivables
    
    
    76.7
    
    
    
    190.2
    
    
    
    286.4Net income from services
    
    
    523.7
    
    
    
    436.3
    
    
    
    361.4Monetary loss from financial intermediation
    
    
    
    
    
    
    
    
    
    
    (14.2
    )Administrative expenses
    
    
    781.0
    
    
    
    623.9
    
    
    
    563.4Monetary gain / (loss) from operating expenses
    
    
    
    
    
    
    
    
    
    
    0.1Minority interest
    
    
    (34.6
    )
    
    
    (14.3
    )
    
    
    (9.2
    )Income / (loss) from equity investments
    
    
    6.7
    
    
    
    3.0
    
    
    
    (22.6
    )Miscellaneous income / (loss), net
    
    
    (64.3
    )
    
    
    98.8
    
    
    
    168.9Monetary loss from other transactions
    
    
    .
    
    
    
    
    
    
    
    (3.5
    )Income tax
    
    
    (19.3
    )
    
    
    (43.8
    )
    
    
    (0.6
    )Net income / (loss)
    
    Ps.
    107.2
    
    
    Ps.
    (109.9
    )
    
    Ps.
    (222.2
    )Return on average assets
    
    
    0.59
    %
    
    
    (0.42
    )%
    
    
    (0.95
    )%Return on average shareholders equity
    
    
    6.83
    
    
    
    (7.32
    )
    
    
    (14.53
    )
 Fiscal
Year 2005 Compared to Fiscal Year 2004
  
    
    a 72.4% increase in financial income, from Ps.1,391.6 million to Ps.2,398.6 million,
    
    a 59.7% reduction in loan loss provisions, from Ps.190.2 million to Ps.76.7 million,
    
    a 20.0% increase in net income for services, to Ps.523.7 million from Ps.436.3 million, and
    
    an income tax charge for Ps.19.3 million, 55.9% less than the Ps.43.8 million
corresponding to the prior fiscal year.
  
    
    a 58.1% increase in financial expenses, from Ps.1,167.4 million to Ps.1,845.9 million,
    
    a reduction in net miscellaneous income, from Ps.98.8 million to Ps.(64.3) million, and
    
    a 25.2% increase in administrative expenses, from Ps.623.9 million to Ps.781.0 million.
 
 -104-




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amparo
 Fiscal Year EndedDecember 31,2005
    
    
    2004
    
    
    2003(in millions of pesos)Net Income
    
    Ps.
    107.2
    
    
    Ps.
    (109.9
    )
    
    Ps.
    (222.2
    )Adjustment to the Valuation of Public-Sector Assets (A)
    
    
    92.3
    
    
    
    (193.3
    )
    
    
    (132.3
    )Profit from the Restructuring of the Banks Foreign Debt (B)
    
    
    
    
    
    
    119.7
    
    
    
    Amortization of Losses from Amparoclaims (C)
    
    
    (122.3
    )
    
    
    (121.0
    )
    
    
    (77.9
    )Net Income Before (A), (B) and (C)
    
    Ps.
    137.2
    
    
    Ps.
    84.7
    
    
    Ps.
    (12.0
    )
   Fiscal Year EndedDecember 31,2005
    
    
    2004
    
    
    2003(in millions of pesos)Net Financial Income
    
    Ps.
    552.7
    
    
    Ps.
    224.2
    
    
    Ps.
    147.3Adjustment to the Valuation of Public-Sector Assets (A)
    
    
    92.3
    
    
    
    (193.3
    )
    
    
    (132.3
    )Profit from the Restructuring of the Banks Foreign Debt (B)
    
    
    
    
    
    
    119.7
    
    
    
    Net Financial Income Before (A) and (B)
    
    Ps.
    460.4
    
    
    Ps.
    297.8
    
    
    Ps.
    279.6Net Income From Services
    
    Ps.
    523.7
    
    
    Ps.
    436.3
    
    
    Ps.
    361.4Total
    
    Ps.
    984.1
    
    
    Ps.
    734.1
    
    
    Ps.
    641.0
 Fiscal Year 2004 Compared to Fiscal Year 2003
  
    
    A 52.2% increase in net financial income mainly due to the 10.5% decrease in
financial expenses. Net financial income includes a Ps.193.3 million loss due to
the valuation of public-sector assets in
 -105-




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##### Table of Contents



accordance with Argentine Central Bank rules and a Ps.119.7 million net gain from the
restructuring of the Banks foreign debt closed in May 2004.
    
    A 20.7% increase in net income from services, as a result of the Banks higher
level of activity in 2004.
    
    A 33.6% decrease in provisions for loan losses and other receivables, which
decreased from Ps.286.4 million in fiscal year 2003 to Ps.190.2 million in 2004.
    
    A 10.7% increase in administrative expenses (Ps.60.5 million), to Ps.623.9
million in 2004 from Ps.563.4 million in the prior fiscal year.
    
    A 41.5% decrease in miscellaneous net income (Ps.70.1 million), mainly as a
result of an increase in the amortization of the difference recorded for amparo
claims.
    
    A Ps.43.2 million increase in the income tax charge.
  amparo
 Financial Income
  Fiscal Year EndedDecember 31,2005
    
    
    2004
    
    
    2003(in millions of pesos)Income on loans and other receivables resulting
from financial intermediation and premiums earned
on reverse repos
    
    Ps.
    899.8
    
    
    Ps.
    746.3
    
    
    Ps.
    880.7Income from government and corporate securities, net
    
    
    333.1
    
    
    
    
    
    
    
    46.2CER adjustment
    
    
    1,091.8
    
    
    
    559.7
    
    
    
    474.1Other (1)
    
    
    73.9
    
    
    
    85.6
    
    
    
    51.1Total
    
    Ps.
    2,398.6
    
    
    Ps.
    1,391.6
    
    
    Ps.
    1,452.1
 
 (1)
    
    Reflects income from financial leases, net, and differences in the quotation of gold and
foreign currency as well as premiums on forward sales of foreign exchange. Also includes CVS
adjustment in the amount of Ps.28.9 million and Ps.35.0 million for fiscal years 2004 and 2003,
respectively. -106-




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As of December 31,2005
    
    2004
    
    2003Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageBalance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate(in millions of pesos, except rates)Interest-Earning Assets
    
    Ps.
    21,844.2
    
    
    
    10.60
    %
    
    Ps.
    20,735.4
    
    
    
    6.06
    %
    
    Ps.
    20,725.1
    
    
    
    6.44
    %Government Securities
    
    
    5,747.7
    
    
    
    11.78
    
    
    
    3,238.7
    
    
    
    (0.29
    )
    
    
    2,082.8
    
    
    
    3.43Loans
    
    
    9,746.9
    
    
    
    14.00
    
    
    
    11,137.9
    
    
    
    9.87
    
    
    
    11,556.7
    
    
    
    9.84Other (1)
    
    
    6,349.6
    
    
    
    4.30
    
    
    
    6,358.8
    
    
    
    2.61
    
    
    
    7,085.6
    
    
    
    1.77Interest-Bearing Liabilities
    
    Ps.
    19,437.8
    
    
    
    9.24
    %
    
    Ps.
    18,294.0
    
    
    
    5.71
    %
    
    Ps.
    18,637.7
    
    
    
    6.17
    %Current accounts
    
    
    615.0
    
    
    
    2.49
    
    
    
    434.0
    
    
    
    1.11
    
    
    
    215.6
    
    
    
    1.39Saving accounts
    
    
    1,388.0
    
    
    
    0.34
    
    
    
    1,034.5
    
    
    
    0.41
    
    
    
    613.1
    
    
    
    0.55Time deposits
    
    
    4,119.1
    
    
    
    5.99
    
    
    
    3,317.5
    
    
    
    4.05
    
    
    
    3,608.3
    
    
    
    7.13Argentine Central Bank (2)
    
    
    8,341.6
    
    
    
    14.11
    
    
    
    8,165.6
    
    
    
    8.56
    
    
    
    8,062.7
    
    
    
    5.87Debt securities
    
    
    3,528.6
    
    
    
    6.63
    
    
    
    3,190.6
    
    
    
    0.87
    
    
    
    2,710.5
    
    
    
    5.69Other interest-bearing liabilities
    
    
    1,445.5
    
    
    
    8.16
    
    
    
    2,151.8
    
    
    
    8.14
    
    
    
    3,427.5
    
    
    
    7.55Spread and Net YieldInterest spread, nominal basis (3)
    
    
    
    
    
    
    1.36
    %
    
    
    
    
    
    
    0.35
    %
    
    
    
    
    
    
    0.27
    %Net yield on interest-earning
assets (4)
    
    
    
    
    
    
    2.38
    
    
    
    
    
    
    
    1.02
    
    
    
    
    
    
    
    0.89Financial margin (5)
    
    
    
    
    
    
    2.53
    
    
    
    
    
    
    
    1.08
    
    
    
    
    
    
    
    0.71
 (1)
    
    Includes amounts corresponding to the Compensatory Bond and the Hedge Bond.(2)
    
    Includes the financial assistance from the Argentine Central Bank and the advance to be granted by the Argentine Central Bank for the subscription of the Hedge Bond.(3)
    
    Reflects the difference between the average nominal interest rate on interest-earning assets and the average nominal interest rate on interest-bearing liabilities.
Interest rates include the CER adjustment.(4)
    
    Net interest earned divided by average interest-earning assets. Interest rates include the CER adjustment.(5)
    
    Represents net financial income, divided by average interest-earning assets.  Fiscal Year 2005 Compared to Fiscal Year 2004
      -107-




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-108-




---



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Fiscal Year 2004 Compared to Fiscal Year 2003
        -109-




---



##### Table of Contents



-110-




---



##### Table of Contents



Financial Expenses
  Fiscal Year EndedDecember 31,2005
    
    2004
    
    2003(in millions of pesos)Interest on deposits
    
    Ps.
    172.3
    
    
    Ps.
    115.7
    
    
    Ps.
    228.6Debt securities
    
    
    234.1
    
    
    
    122.3
    
    
    
    155.6Expenses from Government and Corporate Securities, Net
    
    
    0.0
    
    
    
    7.0
    
    
    
    0.0Contributions and taxes
    
    
    48.8
    
    
    
    48.8
    
    
    
    31.7CER adjustment
    
    
    1,006.8
    
    
    
    501.8
    
    
    
    187.5Other (1)
    
    
    383.9
    
    
    
    371.8
    
    
    
    701.4Total
    
    Ps.
    1,845.9
    
    
    Ps.
    1,167.4
    
    
    Ps.
    1,304.8
 (1)
    
    Includes accrued interest on liabilities resulting from financial brokerage with banks and
international entities and premiums payable on repos. Fiscal Year 2005 Compared to Fiscal Year 2004
        -111-




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##### Table of Contents



Fiscal Year 2004 Compared to Fiscal Year 2003
     
    
    The exchange offer made by Galicia Uruguay, carried out during the first quarter of
2004, of restructured deposits and negotiable obligations for cash and Boden 2012;
    
    The payment by Galicia Uruguay, in September 2004, of the installment set up in its
deposit restructuring schedule.
    
    The completion, in the third quarter of 2004, of the Canje IIset forth by Decree
No.1836/02, in which Reprogrammed Deposits were exchanged for Argentine Government
Securities.
 -112-




---



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Net Financial Income
   -113-




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##### Table of Contents



Provision for Losses on Loans and Other Receivables
 Fiscal Year 2005 Compared to Fiscal Year 2004
    -114-




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##### Table of Contents



Net Income from Services
  Fiscal Year EndedDecember 31,2005
    
    2004
    
    2003(in millions of pesos)Income fromCredit cards
    
    Ps.
    361.5
    
    
    Ps.
    315.1
    
    
    Ps.
    260.9Deposits accounts
    
    
    102.7
    
    
    
    80.3
    
    
    
    66.6Credit-related fees
    
    
    19.6
    
    
    
    21.6
    
    
    
    12.9Check collection
    
    
    12.4
    
    
    
    10.1
    
    
    
    7.5Collection services (taxes and utility bills)
    
    
    9.5
    
    
    
    8.3
    
    
    
    6.6Foreign trade
    
    
    24.5
    
    
    
    19.9
    
    
    
    13.6Insurance
    
    
    34.4
    
    
    
    27.3
    
    
    
    22.0Other (1)
    
    
    81.1
    
    
    
    46.5
    
    
    
    41.7Total Income
    
    Ps.
    645.7
    
    
    Ps.
    529.1
    
    
    Ps.
    431.8Total Expenses
    
    Ps.
    122.0
    
    
    Ps.
    92.8
    
    
    Ps.
    70.4Net Income from Services
    
    Ps.
    523.7
    
    
    Ps.
    436.3
    
    
    Ps.
    361.4
 (1)
    
    Includes fees from market making in government securities, investment banking
activities, asset management, safe deposit boxes and cash management. Fiscal Year 2005 Compared to Fiscal Year 2004
       Fiscal Year 2004 Compared to Fiscal Year 2003
  -115-




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##### Table of Contents



% ChangeDecember 31,
    
    
    December 31,Credit Cards(1)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005/2004
    
    
    2004/2003Visa
    
    
    578,211
    
    
    
    492,918
    
    
    
    413,972
    
    
    
    17.3
    
    
    
    19.1Gold
    
    
    102,669
    
    
    
    81,445
    
    
    
    63,984
    
    
    
    26.1
    
    
    
    27.3International
    
    
    299,269
    
    
    
    278,298
    
    
    
    219,549
    
    
    
    7.5
    
    
    
    26.8Domestic
    
    
    169,434
    
    
    
    131,106
    
    
    
    129,199
    
    
    
    29.2
    
    
    
    1.5Business
    
    
    6,839
    
    
    
    2,069
    
    
    
    1,240
    
    
    
    230.5
    
    
    
    66.9American Express
    
    
    94,869
    
    
    
    89,307
    
    
    
    68,489
    
    
    
    6.2
    
    
    
    30.4Gold
    
    
    43,834
    
    
    
    37,781
    
    
    
    31,858
    
    
    
    16.0
    
    
    
    18.6International
    
    
    51,035
    
    
    
    51,526
    
    
    
    36,631
    
    
    
    (1.0
    )
    
    
    40.7MasterCard
    
    
    13,993
    
    
    
    3,231
    
    
    
    4,420
    
    
    
    333.1
    
    
    
    (26.9
    )Gold
    
    
    2,987
    
    
    
    474
    
    
    
    682
    
    
    
    530.2
    
    
    
    (30.5
    )MasterCard
    
    
    10,817
    
    
    
    2,704
    
    
    
    3,738
    
    
    
    300.0
    
    
    
    (27.7
    )Argencard
    
    
    189
    
    
    
    53
    
    
    
    0
    
    
    
    256.6
    
    
    
    100.0Regional Credit-Card Companies(2)
    
    
    2,444,526
    
    
    
    1,905,423
    
    
    
    1,547,280
    
    
    
    28.3
    
    
    
    23.1Visa
    
    
    594,802
    
    
    
    394,619
    
    
    
    368,088
    
    
    
    50.7
    
    
    
    7.2Local Brands
    
    
    1,849,724
    
    
    
    1,510,804
    
    
    
    1,179,192
    
    
    
    22.4
    
    
    
    28.1Total
    
    
    3,131,599
    
    
    
    2,490,879
    
    
    
    2,034,161
    
    
    
    25.7
    
    
    
    22.5Amount of Purchases
    
    Ps.
    4,943.6
    
    
    Ps.
    3,720.1
    
    
    Ps.
    2,925.7
    
    
    
    32.9
    
    
    
    27.2
 (1)
    
    Issued by Banco Galicia and subsidiaries.(2)
    
    Tarjeta Naranja, Tarjeta Comfiar, Tarjetas Cuyanas and Tarjetas del Mar. Tarjeta Naranja and Tarjeta Comfiar merged on
November 2003. -116-




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Monetary Loss from Financial Intermediation
    Administrative Expenses
  Fiscal Year EndedDecember 31,2005
    
    2004
    
    2003(in millions of pesos)Salaries and social security contributions
    
    Ps.
    330.5
    
    
    Ps.
    242.0
    
    
    Ps.
    198.3Property-related expenses
    
    
    57.7
    
    
    
    55.6
    
    
    
    70.1Personnel services
    
    
    30.0
    
    
    
    27.0
    
    
    
    15.7Advertising and publicity
    
    
    68.2
    
    
    
    37.8
    
    
    
    20.0Amount accrued in relation to directors and syndics compensation
    
    
    5.8
    
    
    
    4.1
    
    
    
    1.9Electricity and communications
    
    
    31.1
    
    
    
    27.0
    
    
    
    27.2Taxes
    
    
    37.4
    
    
    
    40.9
    
    
    
    29.8Other
    
    
    220.3
    
    
    
    189.5
    
    
    
    200.4Total
    
    
    781.0
    
    
    
    623.9
    
    
    
    563.4
 Fiscal Year 2005 Compared to Fiscal Year 2004
   -117-




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##### Table of Contents



Fiscal
Year 2004 Compared to Fiscal Year 2003
   Income/(Loss) from Equity Investments
   .
 Miscellaneous Income/(Loss), Net
 amparo amparo amparo
 amparo
 amparo
 -118-




---



##### Table of Contents



Income Tax
    
 U.S. GAAP and Argentine Banking GAAP Reconciliation
 General
  Allowances for Loan Losses
   Performing Commercial and Consumer Loans
  
    
    Normal and Normal Performance
    
    Potential Risk and Improper Fulfillment
   -119-




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##### Table of Contents



December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Performing Commercial Loans
    
    Ps.
    193.1
    
    
    
    2.1
    
    
    
    159.7
    
    
    
    1.7
    
    
    
    215.2
    
    
    
    24.4Performing Consumer Loans
    
    
    30.3
    
    
    
    22.2
    
    
    
    15.4
    
    
    
    11.1
    
    
    
    23.2
    
    
    
    20.0
 Non-performing Consumer Loan Portfolio
  
    
    Defective Fulfillment
    
    Difficulty in Recovery
    
    Uncollectible
  December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Non-Performing Consumer Loans
    
    Ps.
    48.6
    
    
    
    36.3
    
    
    Ps.
    45.3
    
    
    Ps.
    37.0
    
    
    Ps.
    84.6
    
    
    Ps.
    74.4
 Non-performing Commercial Loans
  
    
    With Problems
    
    High Risk of Insolvency
    
    Uncollectible
   Summary
  December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Performing Commercial Loans
    
    Ps.
    193.1
    
    
    Ps.
    2.1
    
    
    Ps.
    159.7
    
    
    Ps.
    1.7
    
    
    Ps.
    215.2
    
    
    Ps.
    24.4Performing Consumer Loans
    
    
    30.3
    
    
    
    22.2
    
    
    
    15.4
    
    
    
    11.1
    
    
    
    23.2
    
    
    
    20.0Non-Performing Consumer Loans
    
    
    48.6
    
    
    
    36.3
    
    
    
    45.3
    
    
    
    37.0
    
    
    
    84.6
    
    
    
    74.4
 -120-




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##### Table of Contents



December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Non-Performing Commercial Loans
    
    
    397.9
    
    
    
    397.9
    
    
    
    379.5
    
    
    
    379.5
    
    
    
    953.7
    
    
    
    953.7Total
    
    Ps.
    669.9
    
    
    Ps.
    458.5
    
    
    Ps.
    599.9
    
    
    Ps.
    429.3
    
    
    Ps.
    1,276.7
    
    
    Ps.
    1,072.5Loan Loss Reserve under U.S. GAAP
    
    Ps.533.4

    
    

    Ps.592.3
    
    

    Ps.1,117.2
   
    
    Loan loss reserves as a percentage of non-accrual loans,
    
    Loan loss reserves as a percentage of total amounts past due, and
    
    Loan loss reserves as a percentage of past-due unsecured amounts.
 December 31, 2005
    
    December 31, 2004
    
    December 31, 2003Loan loss reserves
as a percentage of
non-accrual loans
    
    
    139.49
    %
    
    
    84.75
    %
    
    
    85.98
    %Loan loss reserves
as a percentage of
total amounts past due
    
    
    208.36
    
    
    
    131.09
    
    
    
    110.50Loan loss reserves
as a percentage of
past-due unsecured
amounts
    
    
    226.98
    
    
    
    454.17
    
    
    
    310.59
 Carrying Value of Secured Loans, Certain Government Securities and Receivables for Government
Securities
     -121-




---



##### Table of Contents



Elements of
Financial Statements
 amparo amparo
 Adjustment to Prior Year Results
  Foreign Debt Restructuring
    Securitizations
   Income Tax
   -122-




---



##### Table of Contents



Summary
  Net Income (Loss)
    
    Shareholders Equity (Deficit)Argentine Banking
    
    
    
    
    
    Argentine BankingGAAP
    
    U.S. GAAP
    
    GAAP
    
    U.S. GAAP(in millions of pesos)Fiscal Year 2005
    
    Ps.
    107.2
    
    
    Ps.
    731.0
    
    
    Ps.
    1,626.8
    
    
    Ps.
    (2,128.3
    )Fiscal Year 2004
    
    
    (109.9
    )
    
    
    (1.1
    )
    
    
    1,519.5
    
    
    
    (3,195.7
    )Fiscal year 2003
    
    
    (222.2
    )
    
    
    731.3
    
    
    
    1,419.4
    
    
    
    (4,453.3
    )
  
    
    Significant losses were recognized in 2001 from the effects of several
Argentine Government actions reflected at the end of that year. With the
improvement in the Argentine economy and business environment, changes in
estimated losses are reflected in the income statement and under other
comprehensive income in 2003, 2004 and 2005.
    
    The Hedge Bond and the liability with the Argentine Central Bank for its
purchase are not recognized, the net effect of which varies significantly in
2003, 2004 and 2005.
    
    The Compensatory Bond in 2005 and the amounts receivable for this Bond in
2003 and 2004 are reflected at market values, with changes in values being
recognized in the income statement in 2003 and under other comprehensive income
since the Compensatory Bond was received, the effect of which varies
significantly in 2003, 2004 and 2005.
    
    Much of the Argentine public-sector debt balances reflect market-value
adjustments recognized from exchange transactions. Accretion of the discount,
considering the amounts estimated to be collected, are recognized as income
after the exchange transaction occurred.
    
    Bogar and Discount Bonds are reflected at market values, with changes from
market values at the time of exchange being recognized as other comprehensive
income. With the improvement in the Argentine economy, market values have
varied significantly.
    
    The Banks foreign debt restructuring completed in 2004 was accounted as a
troubled debt restructuring. Therefore the carrying value of such debt is
higher under U.S. GAAP and no gain was recognized at the time of the
restructuring.
 
 Results by Segments
 General
  -123-




---



##### Table of Contents



-
    
    the Grupo Galicia segment showing Grupo Galicias unconsolidated specific income
and expenses not attributable to its investments in subsidiaries, except for goodwill
amortization;-
    
    the Insurance segment, corresponding to Sudamericanas consolidated results of
operations (including the 12.5% interest owned by the Bank);-
    
    the Other Grupo Businesses segment representing the results of operations of Net
Investment S.A. consolidated and Galicia Warrants (in both cases, including the results
of the 12.5% interests of the Bank), and Galval; and-
    
    Banco Galicias operating segments (see below).
  
    
    the geographical location of each branch or business, or unit;
    
    the similarity of the businesses conducted with or the services provided to Banco
Galicias customers; and
    
    the existence of homogeneous groups of customers to which products and services are
provided.
  Buenos Aires Metropolitan Branches
 Rest of the Country Branches
 Head Office
 Regional Credit Cards
 International
 Other Financial Businesses
 Other Equity Investments
   -124-




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##### Table of Contents



Results by Segments for the Fiscal Year Ending December 31, 2005
 Grupo Galicia
 Insurance .
 Other Grupo Businesses
  Buenos Aires Metropolitan Branches and Rest of the Country Branches
    -125-




---



##### Table of Contents



Head Office
  amparo
 Regional Credit Cards
  International
 Other Financial Businesses
 Other Equity Investments
 -126-




---



##### Table of Contents



Results by Segments for the Fiscal Year Ending December 31, 2004
 Grupo Galicia
 Insurance
 Other Grupo Businesses
  Buenos Aires Metropolitan Branches and Rest of the Country Branches
     -127-




---



##### Table of Contents



Head Office
    amparo
 Regional Credit Cards
   International
 Other Financial Businesses
 Other Equity Investments
 -128-




---



##### Table of Contents



Results by Segments for the Fiscal Year Ending December 31, 2003
 Grupo Galicia
 Insurance
 Other Grupo Businesses
  Buenos Aires Metropolitan Branches Rest of the Country Branches
     -129-




---



##### Table of Contents



Head Office
    amparo
 Regional Credit Cards
     International
 -130-




---



##### Table of Contents



Other Financial Businesses
 Other Equity Investments
 
 Consolidated Assets
  As of December 31,2005
    
    
    %
    
    
    2004
    
    
    %
    
    
    2003
    
    
    %(In millions of pesos, except percentages)Cash and due from banks
    
    Ps.
    1,041.2
    
    
    
    4.1
    %
    
    Ps.
    988.7
    
    
    
    4.2
    %
    
    Ps.
    826.2
    
    
    
    3.6
    %Government and corporate securities
    
    
    5,971.8
    
    
    
    23.3
    
    
    
    5,534.1
    
    
    
    23.4
    
    
    
    6,408.3
    (1)
    
    
    28.1Loans
    
    
    10,555.2
    
    
    
    41.2
    
    
    
    8,438.2
    
    
    
    35.7
    
    
    
    7,506.5
    
    
    
    32.9Hedge Bond to be acquired
    
    
    4,155.0
    
    
    
    16.2
    
    
    
    4,732.3
    
    
    
    20.0
    
    
    
    4,629.6
    
    
    
    20.3Other assets
    
    
    3,912.5
    
    
    
    15.2
    
    
    
    3,957.3
    
    
    
    16.7
    
    
    
    3,452.3
    
    
    
    15.1Total
    
    Ps.
    25,635.7
    
    
    
    100.0
    %
    
    Ps.
    23,650.6
    
    
    
    100.0
    %
    
    Ps.
    22,822.9
    
    
    
    100.0
    %
 (1)
    
    Includes Ps.3,539.6 million of Bogar, that were previously recorded as Loans.      -131-




---



##### Table of Contents




    
    Ps.825.9 million corresponding to bank premises and equipment, miscellaneous assets
and intangible assets (excluding the deferred losses from amparoclaims).
    
    Ps.536.5 million of the Banks holdings of debt securities and subordinated notes
issued by the Galtrust I Financial Trust, as a result of the securitization of loans to
the provincial public sector in late 2000, recorded in our balance sheet under the
caption Other Receivables from Financial Brokerage.
    
    Ps.347.8 million recorded as an intangible asset pursuant to Argentine Central Bank
Communiqué A 3916, corresponding to the difference between the amount paid to
depositors who filed legal actions (amparoclaims) and collected their deposits as
originally denominated in U.S. dollars or at the free market exchange rate, and the
amount established by the pesification rules, net of accumulated amortization, plus the
deferred amortization (pursuant to Argentine Central Banks Communiqué A 4439). The
accumulated amortization between April 2003 and December 31, 2005, was Ps.332.4
million. See Item 4. Information on the CompanyArgentine Banking System and
RegulationArgentine Banking RegulationTreatment of Losses in Connection with Amparo
Claims.
    
    Ps.337.0 million of Boden 2012 sold under repurchase agreements, recorded under the
balance sheet item Other Receivables from Financial Brokerage.
    
    Ps.289.5 million (recorded under the balance sheet item Other Receivables from
Financial Brokerage) corresponding to the Banks interest in the fund jointly formed
by the Bank with other private-sector banks in order to facilitate the recovery of the
assets of former Almafuerte Bank in which restructuring Banco Galicia took part. The
funds assets, made up of Argentine Government Securities, were exchanged for Secured
Loans in late 2001.
    
    Ps.262.1 million, recorded under Other Receivables Resulting from Financial
Brokerage, corresponding to forward purchases of Lebac in connection with reverse repo
transactions.
    
    Ps.203.1 million, recorded under the balance sheet item Other Receivables from
Financial Brokerage, corresponding to the Banks holdings of participation
certificates in, and debt securities of, different financial trusts. See Off-Balance
Sheet Arrangements.
    
    Ps.191.2 million corresponding to Assets under Financial Leases.
    
    Ps.102.8 million corresponding to balances deposited at the Argentine Central Bank
in favor of clearing houses, which are recorded under the caption Other Receivables
from Financial Brokerage.
    
    Ps.85.2 million of equity investments.
    
    Ps.50.8 million, recorded under the balance sheet item Other Receivables from
Financial Brokerage, corresponding to the Banks holdings of participation
certificates issued by the Galicia Financial Trust created in May 2002. See
Off-Balance Sheet Arrangements.
    
    Ps.47.6 million, recorded under item Other Receivables from Financial Brokerage,
of debt securities and participation certificates issued by the Galtrust II and V
Financial Trusts created in late 2001 as a result of the securitization of part of the
Banks mortgage loan portfolio, held by the Bank in Argentina and by Galicia Uruguay.
See Off-Balance Sheet Arrangements.
 
 Exposure to the Argentine Public Sector
  -132-




---



##### Table of Contents



As of December 31, 2005(in millions of pesos)Net Position in Government Securities
    
    Ps.
    6,041.0Trading and Investment Accounts
    
    
    462.0Fiscal Credit Certificates
    
    
    34.5Boden 2012 (Compensatory Bond)
    
    
    987.9Bogar
    
    
    3,823.3Discount Bonds and GDP-Linked Units
    
    
    733.3Loans
    
    Ps.
    5,341.7Financial Sector
    
    
    105.9Secured Loans
    
    
    5,235.8Other Receivables Resulting from Financial Brokerage
    
    Ps.
    5,031.8Boden 2012 (Hedge Bond)
    
    
    4,155.0Trusts Certificates of Participation and Securities
    
    
    876.8Total Assets (2)
    
    Ps.
    16,414.5Liabilities with the Argentine Central Bank
    
    Ps.
    8,611.9Net Exposure
    
    Ps.
    7,802.6
 (1)
    
    Net of amortization.(2)
    
    Does not include deposits with the Argentine Central Bank, which
constitute one of the items by which the Bank complies with the Argentine
Central Banks minimum cash requirements.     
 Off-Balance Sheet Arrangements
   -133-




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##### Table of Contents



Commitments to Extend Credit, Stand-By Letters of Credit and Guarantees Granted
      December 31,2005(In millions of pesos)Commitments to extend credit
    
    Ps.
    397.7Standby letters of credit
    
    
    54.3Guarantees granted
    
    
    223.1Acceptances
    
    
    23.9
   December 31,2005(In millions of pesos)Preferred counter guarantees
    
    Ps.
    32.8Other counter guarantees
    
    
    15.7
  Other
  -134-




---



##### Table of Contents



December 31,2005(In millions of pesos)Checks drawn on the Bank
    
    Ps.
    110.2Checks drawn on other banks
    
    
    193.3Bills and other items for collection
    
    
    896.8
    
 Securitization of Assets
    In millions of pesosTarjetasGalicia
    
    Tarjeta Naranja
    
    Cuyanas
    
    GaliciaPersonales II
    
    Trust II
    
    Trust II
    
    Personales IIIIssue date
    
    
    02.07.06
    
    
    
    03.03.06
    
    
    
    04.12.06
    
    
    
    05.24.06Due date
    
    
    01.07.10
    
    
    
    12.20.07
    
    
    
    02.15.08
    
    
    
    03.15.11Underlying assets
    
    Ps.
    97.3
    
    
    Ps.
    80.0
    
    
    Ps.
    37.7
    
    
    Ps.
    100.0Debt Securities Issued
    
    
    87.6
    
    
    
    74.0
    
    
    
    33.9
    
    
    
    92.5Certificates of Participation
    
    
    9.7
    
    
    
    6.0
    
    
    
    3.8
    
    
    
    7.5
   -135-




---



##### Table of Contents



Funding
  December 31,2005
    
    
    2004
    
    
    2003(In millions of pesos)Deposits (1)
    
    Ps.
    8.421,7
    
    
    Ps.
    6.756,9
    
    
    Ps.
    5.584,0Reprogrammed Deposits (2)
    
    
    63,9
    
    
    
    169,1
    
    
    
    561,4Credit Lines (1)
    
    
    13.414.1
    
    
    
    13.442.4
    
    
    
    13.917.0Argentine Central BankFinancial assistance
    
    
    5.314,9
    
    
    
    5.707,0
    
    
    
    5.663,1Advance to purchase the Hedge Bond
    
    
    3.296,6
    
    
    
    2.720,7
    
    
    
    2.536,1International banks and credit agencies
    
    
    784,6
    
    
    
    789,3
    
    
    
    3.017,1Domestic financial institutions
    
    
    227.9
    
    
    
    199.2
    
    
    
    135.2Repos
    
    
    220,5
    
    
    
    223,7
    
    
    
    Debt securities (1)
    
    
    3.569,6
    
    
    
    3.802,5
    
    
    
    2.565,5Shareholders equity
    
    
    1.626,8
    
    
    
    1.519,5
    
    
    
    1.462,3Total Funding
    
    Ps.
    23,462.6
    
    
    Ps.
    21,718.8
    
    
    Ps.
    20,963.3
 (1)
    
    Includes accrued interest and exchange differences payable, as well as the CER adjustment where applicable.(2)
    
    In 2005, only Reprogrammed Deposits with amparo claims. In 2004 and 2003, also includes Cedros.      -136-




---



##### Table of Contents



-
    
    Ps.234.0 million in negotiable obligations issued by the Bank in Argentina as part of the
restructuring of the liabilities of its former New York Branch, a process that took place in
2002.-
    
    Ps.172.9 million in negotiable obligations issued by Galicia Uruguay to restructure its
deposits, securities that were issued either in connection with the original restructuring
or the exchange offers subsequently made by Galicia Uruguay to its customers.-
    
    Ps.1,059.9 million and Ps.1,391.7 million in negotiable obligations maturing in 2010 and
2014, respectively, and Ps.431.0 million in subordinated negotiable obligations maturing in
2019, all of them issued in 2004 and corresponding to new debt of the Bank resulting from
the foreign debt restructuring completed in May of said year.-
    
    Ps.27.0 million in negotiable obligations maturing in 2006, issued by Tarjeta Naranja
S.A. (IV Class) in 2005.-
    
    Ps.22.1 million in foreign debt past due, including with respect to the restructuring
process completed in May 2004, the holders of which did not participate in such
restructuring.
  -137-
    Table of Contents  Ratings
     -138-
    Table of Contents  Program for Debt Issuance
  
 Contractual Obligations
  Annual
    
    
    
    
    
    
    Past Less than 1
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5Maturity
    
    
    Interest Rate
    
    
    Total
    
    
    Due
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsBanco Galicia:BondsFloating Rate Notes Due 2010 (1) (3) (4)
    
    
    2010
    
    
    Libor + 350
    b.p.

    
    Ps.
    1,059.9
    
    
    
    
    
    
    Ps.
    132.5
    
    
    Ps.
    530.0
    
    
    Ps.
    397.4
    
    
    
    Step-Up Notes Due 2014 (1) (3) (5)
    
    
    2014
    
    
    
    4.0
    %
    
    
    1,391.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    309.3
    
    
    
    1,082.4Subordinated Notes Due 2019 (1) (6) (8)
    
    
    2019
    
    
    
    11.0
    %
    
    
    431.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    431.09% Notes Due 2003 (7)
    
    
    2003
    
    
    
    9.0
    %
    
    
    19.4
    
    
    
    19.4
    (7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4th Series Floating Rate Notes Due
2005 (7)
    
    
    2005
    
    
    
    4.0
    %
    
    
    2.7
    
    
    
    2.7
    (7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.875% Notes Due 2007 (2) (9)
    
    
    2007
    
    
    
    7.9
    %
    
    
    146.8
    
    
    
    
    
    
    Ps.
    73.4
    
    
    
    73.4
    
    
    
    
    
    
    
    7th Series Floating Rate Notes Due
2007 (2) (9)
    
    
    2007
    
    
    Libor + 400
    b.p.
    
    
    87.2
    
    
    
    
    
    
    
    43.6
    
    
    
    43.6
    
    
    
    
    
    
    
    LoansFloating Rate Loans Due 2010(1) (3) (4)
    
    
    2010
    
    
    Libor + 350
    b.p.

    
    
    140.7
    
    
    
    
    
    
    
    17.6
    
    
    
    70.3
    
    
    
    52.8
    
    
    
    Floating Rate Loans Due 2014 (1) (3) (5)
    
    
    2014
    
    
    Libor + 85
    b.p.

    
    
    261.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58.2
    
    
    
    203.7Floating Rate Loans Due 2019 (1) (10)
    
    
    2019
    
    
    Libor+578
    b.p.

    
    
    37.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37.9Step-Up Loans Due 2014 (1) (3) (5)
    
    
    2014
    
    
    
    4.0
    %
    
    
    286.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.7
    
    
    
    223.1Other Financial Loans
    
    
    2005/2007
    
    
    Libor + 400
    b.p.
    
    
    19.6
    
    
    
    
    
    
    
    9.8
    
    
    
    9.8
    
    
    
    
    
    
    
    IFC Financial Loan
    
    Various
    
    
    Libor + 400
    b.p.
    
    
    15.2
    
    
    
    
    
    
    
    
    
    
    
    15.2
    
    
    
    
    
    
    
    BICE Loans (Pesos)
    
    Various
    
    
    CER + 4
    %

    
    
    55.5
    
    
    
    
    
    
    
    29.0
    
    
    
    23.4
    
    
    
    3.1
    
    
    
    BICE Loans (Dollars) (11)
    
    Various
    
    
    
    6.6
    %
    
    
    25.7
    
    
    
    
    
    
    
    8.4
    
    
    
    14.2
    
    
    
    3.0
    
    
    
    0.1Short-Term Interbank Loans
    
    
    2006
    
    
    
    8.1
    %
    
    
    24.4
    
    
    
    
    
    
    
    24.4
    
    
    
    
    
    
    
    
    
    
    
    Argentine
Central Bank  FinancialAssistance (12)
    
    
    2011
    
    
    CER + 3.5
    %

    
    
    5,300.0
    
    
    
    
    
    
    
    420.6
    
    
    
    839.3
    
    
    
    3,455.3
    
    
    
    584.8Argentine Central Bank  Advance to
Purchase the Hedge Bond (13)
    
    
    2012
    
    
    CER + 2.0
    %

    
    
    3,057.6
    
    
    
    
    
    
    
    764.4
    
    
    
    764.4
    
    
    
    764.4
    
    
    
    764.4Loan from Sedesa (14)
    
    
    2007
    
    
    Libor + 300
    b.p.

    
    
    195.6
    
    
    
    
    
    
    
    
    
    
    
    195.6
    
    
    
    
    
    
    
    Peso-Denominated Loan from FFRE (15)
    
    
    2008
    
    
    CER+8.0
    %

    
    
    11.8
    
    
    
    
    
    
    
    3.9
    
    
    
    7.9
    
    
    
    
    
    
    
    Dollar-Denominated Loan from FFRE
    
    
    2008
    
    
    
    8.1
    %
    
    
    20.9
    
    
    
    
    
    
    
    7.0
    
    
    
    13.9
    
    
    
    
    
    
    
    Repos (16)
    
    Various
    
    Libor + 350
    b.p.
    
    
    220.5
    
    
    
    
    
    
    
    220.5
    
    
    
    
    
    
    
    
    
    
    
    
 -139-
    Table of Contents  Annual
    
    
    
    
    
    
    Past Less than 1
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5Maturity
    
    
    Interest Rate
    
    
    Total
    
    
    Due
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsGalicia Uruguay:Negotiable Obligations (17)
    
    Various
    
    Various
    
    
    172.9
    
    
    
    
    
    
    
    24.6
    
    
    
    49.5
    
    
    
    64.1
    
    
    
    34.7Tarjetas Regionales S.A.:Financial Loans with Local Banks
    
    Various
    
    Various
    
    
    121.9
    
    
    
    
    
    
    
    65.5
    
    
    
    56.4
    
    
    
    
    
    
    
    Negotiable Obligations
    
    Various
    
    Various
    
    
    171.8
    
    
    
    
    
    
    
    131.0
    
    
    
    40.8
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    Ps
    .13,279.4
    
    
    Ps
    .22.1
    
    
    Ps
    .1,976.2
    
    
    Ps
    .2,747.7
    
    
    Ps
    .5,171.3
    
    
    Ps
    .3,362.1
 
 Only principal (does not include interest). Includes the CER adjustment, where applicable.(1)
    
    Issued in 2004 as part of the restructuring of the foreign debt of the Banks Head Office and its Cayman Branch.(2)
    
    Issued in 2002 as part of the restructuring of the debt of the Banks former New York Branch.(3)
    
    Interest payable in cash, semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004.(4)
    
    Principal amortizes semiannually, on January 1 and July 1 of each year, beginning on July 1, 2006, in eight equal installments of 12.5% of principal at issuance or incurrence, until maturity on January 1,2010, when the remaining 12.5% is due.(5)
    
    Principal amortizes semiannually, on January 1 and July 1 of each year, beginning on January 1, 2010, in eight equal installments of 11.11% of principal at issuance or incurrence, until maturity, when the remaining 11.12% is due. The rate increases 1% on January 1 of each year, until reaching 7% on January 1, 2008.(6)
    
    Interest paid in cash: 6% per annum from January 1, 2004 until (but not including) January 1, 2014, payable semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004. Unless the notes are previously redeemed, the annual interest rate will increase to 11% per annum from that date until (but not including) January 1, 2019. Interest paid in
additional subordinated negotiable obligations due 2019: 5% per annum from January 1, 2004, to be paid on January 1, 2014 and January 1, 2019. Principal amortizes in full on January 1, 2019, unless the notes are previously redeemed at par plus accrued but unpaid interest, in whole or in part, at the Banks option, at any time after the notes due 2010 and the notes
due 2014 have been repaid in ful and, otherwise, in accordance with the terms of the agreements governing such notes.(7)
    
    The balance represents debt not tendered by its holders to the exchange offered by the Bank to restructure its foreign debt, which was completed in May 2004.(8)
    
    Excludes US$79.3 million of Subordinated Notes due 2019 held by us.(9)
    
    Interest payable in cash, semiannually, in February and August of each year, beginning in February 2003. Principal amortizes in three equal annual installments, beginning on August 3, 2005, until maturity.(10)
    
    Interest payable in cash: Libor+78 b.p., per annum from January 1, 2004, until (but not including) January 1, 2014, payable semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004. Unless the loans are previously redeemed, the annual interest rate will increase to Libor+578 b.p. per annum from that date until (but not including) January
1, 2019. Also pays interest in additional subordinated loan, due 2019: 5% per annum from January 1, 2004, to be paid on January 1, 2014 and January 1, 2019. Principal amortizes in full on January 1, 2019 unless the loans are previously redeemed at part plus accured interest and additional amounts, if any, in whole or in part at the Banks option, in accordance with
the terms of the agreements governing such loans..(11)
    
    Includes: US$2.0 million of principal at incurrence that accrue Libor+400 b.p., with principal and interests payable in 48 equal installments on the 5th of every month, beginning in November 2003 until October 2007, and US$10.0 million of principal at incurrence accruing Libor+550 b.p., with interests payable semiannually, in May and November of each year,
and. principal amortizing in 9 semiannual installments, beginning in May 2005 until May 2009.(12)
    
    Amortization of principal adjusted by the CER, according to Decree No. 739/03 and No. 1,262/03, in 92 monthly equal installments, beginning on March 2004, and interest payable monthly. Given that, after the end of fiscal year 2005, the Bank sold assets granted as collateral for this liability and made payments on this liability using the proceeds of the
sales, the repayment schedule of this liability was modified, with the number of monthly installments becoming 65, as from March 2004.(13)
    
    The terms and conditions of the advance to be granted by the Argentine Central Bank to purchase the Hedge Bond were established by Decree No. 905/02. Principal adjusted by the CER amortizes in 8 equal and annual installments in August of each year, beginning in 2005, until August 2012. Interest payable in August and February of each year, beginning in August
2002. The Bank has not yet executed the debt agreement with the
Argentine Central Bank, which is the reason for which the August 2005 installment is included in the December 31, 2005 amount of this liability. Payment of the installment is subject to such execution.(14)
    
    Granted in 2002 as part of the Galicia capitalization and liquidity plan.(15)
    
    FFRE : Fondo Fiduciario para la Reconstrucción de Empresas.(16)
    
    Includes premiums.(17)
    
    Issued in 2002 as part of the restructuring of Galicia Uruguays deposits. Includes: 
    
    2% Negotiable Obligations Due 2011: principal amortizes in
9 equal annual installments in September of each year, beginning in September 2003, the first 2 installments of 15% of principal, and the remaining 7 of 10% of principal. Interest payable annually in September of each year, beginning in September 2003.
    
    Floating Rate (Libor+300 b.p., and a 7% cap)
Negotiable Obligations Due 2011: principal amortizes in 3 annual
installments in December of each year, beginning in December 2009, the first 2 installments of 30% of principal, and the remaining one of 40% of principal. Interest payable semiannually in June and December of each year, beginning in December
2003.
    
    2% Negotiable Obligations Due 2005: principal amortized
fully in December 2005. Interest paid semiannually in June and December of each year, beginning in December 2003.
    
    2% Negotiable Obligations Due 2008: principal amortizes in
3 annual installments in December of each year, beginning in
December 2006, the first 2 installments of 30% of principal, and the remaining one of 40% of principal. Interest payable semiannually in June and December of each year, beginning in December 2003.
 
 Other Commitments
   -140-
    Table of Contents  concurso preventivo
  Other Commitments  Operating Leases
  In millions of
pesos(
    1)2006
    
    
    19.72007
    
    
    18.62008
    
    
    18.02009
    
    
    17.52010
    
    
    16.92011 and after
    
    
    17.7Total
    
    Ps
    .108.4
 (1)
    
    Future lease payments include the CER adjustment until December 31, 2005,
only. 
 Critical Accounting Policies
  Allowance for Loan Losses
   -141-
    Table of Contents  Other Receivables from Financial Brokerage and Miscellaneous Receivables
  Minimum Presumed Income Tax
 
 Hedge Bond
 
 Goodwill
  
 U.S. GAAP  Critical Accounting Policies
  -142-
    Table of Contents  Allowance for Loan Losses
  Fair Value Estimates
     Cost Estimates
   Impairment of Assets Other Than Loans
   -143-
    Table of Contents  Deferred Tax Asset Valuation Allowance
    Assets Not Recognized Under U.S. GAAP
 Elements of Financial Statements
  amparo amparo
 -144-
    Table of Contents  Financial Guarantees
   Securitizations
    
 Item 5B. Liquidity and Capital Resources
 
 Liquidity
     -145-
    Table of Contents  Consolidated Cash Flows
 Statement of Cash Flows
  
 -
    
    To determine the amount of funds provided/used by operating activities, all income
statement items that did not imply a use of funds (decrease of cash) and all income
statement items not representing an origin of funds (increase of cash) were added and
subtracted, respectively, from the Ps.107.2 million net income for fiscal year 2005.Items not representing a decrease in cash were: i) depreciation of bank premises and
equipment and miscellaneous assets and amortization of intangibles assets, for
Ps.219.7million, and ii) loan loss provisions, net of reversals, for Ps.48.2 million. Items
not representing an increase in cash corresponded to the net CER adjustment of all assets
and liabilities, accrued but not perceived, which amounted to Ps.484.8 million in 2005.In addition, net income has to be adjusted for items generating cash movements. Therefore,
the following amounts must be added: (i) a Ps.490.0 million increase in cash in connection
with government securities, which represents mainly proceeds from Bogar bonds (monthly
coupons of principal and interest) and with a decrease in the Banks holdings of Lebac and
Nobac, as compared to the prior year; (ii) a Ps.476.9 million
 -146-
    Table of Contents  increase in other assets, mainly attributable to proceeds from Boden 2012, for Ps.178.0
million (amortization and interest coupons on Boden 2012 recorded under Other Receivables
Resulting from Financial Brokerage, representing the portion of the Compensatory Boden 2012
that was pending receipt at the end of 2004, and therefore was recorded in such account as
of that date, and which was received by the Bank in late 2005, and Boden 2012 sold under
agreements to repurchase), and Galtrust I securities, for Ps.239 million (associated to a
partial sale and to interest); and (iii) Ps.1.3 million for all other items taken as a
whole.
All of these adjustments to the Ps.107.2 million net income, add up to a total of Ps.856.0
million of cash generated by operating activities.
 -
    
    Investing activities meant the net use of cash in the amount of Ps.767.5 million, mainly
attributable to the effect of:
  amparo
  -
    
    Financing activities meant the net use of cash in the amount of Ps.41.4 million, mainly
attributable to:
       Fiscal year 2004
  -
    
    the net use of cash by operating activities in the amount of Ps.215.6 million. This
amount results from adding or subtracting to the Ps.109.9 million net loss for the fiscal
year: (i) all of the income statement items that did not represent a decrease or increase,
respectively, in cash and (ii) all transactions related to operating activities that involve
an increase or a decrease in cash. During 2004, the items that did not represent a decrease
in cash available and that therefore must be added to the fiscal year net loss were: (i)
depreciation and amortization of fixed assets and intangible assets for Ps.235.3 million and
(ii) an increase in allowances for loans and other losses, net of reversals, for Ps.69.1
million. The items that did not represent an increase in cash and that therefore must be
subtracted to the fiscal years net loss were the Ps.142.5 million increase in income from
the restructuring of the Banks foreign debt completed in May 2004. In addition, the
following items generated cash movements: (i) a Ps.273.3 million decrease in other
liabilities, mainly comprised of lower interest on foreign debt subject to restructuring
(for Ps.77.0 million),
 -147-
    Table of Contents  payments on restructured trade loans (for Ps.41.6 million), payments on the loan with the
FFRE (for Ps.54.5 million), and lower other contingencies (for Ps.50.0 million), (ii)
Ps.91.6 million decrease in government securities, generated by proceeds from Bogar (monthly
interest payments) and Boden 2012 (semiannual interest payments) and (iii) a Ps.74.8 million
increase in other assets mainly attributable to greater leasing activity.
 -
    
    the net use of cash by investing activities in the amount of Ps.240.2 million, mainly
attributable to the net effect of: (i) a Ps.112.4 million decrease in cash as a result of a
net increase in the Banks loan portfolio and (ii) a Ps.131.8 million net use of cash
applied to intangible assets (mainly in connection with the payment of deposits pursuant to
amparoclaims).
 -
    
    the net generation of cash by financing activities in the amount of Ps.618.3 million,
mainly attributable to: (i) a Ps.1,415.0 million increase in cash generated by the increase
in deposits which is net of the payment by Galicia Uruguay and Galicia Cayman, during 2004
of the amounts contemplated in the deposit restructuring agreements reached with its
depositors and of the settlement of the exchange offer made to its depositors in early 2004,
(ii) amortization of long term indebtedness, for Ps.289.7 million, reflecting mainly the
payments by Galicia Uruguay of negotiable obligations (Ps.183 million) issued by it to
restructure its deposits, which payments corresponded to the above-mentioned restructuring
agreement reached with depositors, with the remaining amount corresponding to payments on a
credit line from a domestic bank, (iii) payments of principal and interest made by the Bank
in connection with the financial assistance from the Argentine Central Bank, for Ps.453.8
million, with the remaining Ps.107.2 million corresponding to payments on debt of the
regional credit-card companies, (iv) a Ps.261.7 million increase in cash generated by the
repurchase agreement with Boden 2012 and (v) Ps.207.6 million principal and interest
payments on the debt restructured, which was completed in May 2004, made to settle the
exchange.
 Fiscal Year 2003
  -
    
    the net use of cash by operating activities in the amount of Ps.344.0 million. This
amount results from adding or subtracting to the Ps.222.2 million net loss for the fiscal
year (i) all of the income statement items that did not represent a decrease or increase,
respectively, in cash and (ii) all transactions related to operating activities that involve
an increase or a decrease in cash. During 2003, the items that did not represent a decrease
in cash available and that therefore must be added to the fiscal year net loss were (i)
depreciation and amortization of fixed assets and intangible assets for Ps.215.9 million and
(ii) an increase in allowances for loans and other losses, net of reversals, for Ps.118.9
million. The items that did not represent an increase in cash and that therefore must be
subtracted to the fiscal years net loss were (i) a Ps.324.1 million increase in assets due
to the CER adjustment accrued and (ii) the Ps.90.2 million decrease in the receivable for
the Compensatory Bond related to the adjustment that the Bank made to the carrying value of
compensation to be received for the asymmetric pesification. In addition, Ps.314.3 million
was used to increase government securities (Lebac).-
    
    the net generation of cash by investing activities in the amount of Ps.629.8 million,
mainly attributable to the net effect of: (i) the increase in available cash for Ps.734.7
million as a result of a net decrease in the Banks loan portfolio, reflecting primarily a
decrease in Galicia Uruguays loan portfolio and (ii) a Ps.124.5 million net use of cash
applied to an increase in intangible assets.-
    
    the net use of cash by financing activities in the amount of Ps.31.6 million, mainly
attributable to: (i) a Ps.782.7 million increase in cash generated by an increase in
deposits which is net of the payment by Galicia Uruguay and Galicia Cayman, during 2003, of
the first and second installments contemplated in the deposit restructuring agreements
reached with depositors, (ii) a Ps.537.1 million amortization of long term indebtedness,
reflecting mainly the payments by Galicia Uruguay of negotiable obligations issued by this
company to restructure its deposits, which payments corresponded to the above mentioned
first and second installments contemplated in the deposit restructuring agreement reached
with depositors, and the payment made by Galicia Uruguay to settle the exchange offered to
its customers in 2003 of restructured deposits for
 -148-
    Table of Contents  different alternatives, including a cash payment, and (iii) the payments made by the Banks
Argentine operation in connection with the financial assistance from the Argentine Central
Bank, mainly corresponding to the payment of interest, in the amount of Ps.252.6 million.
 Banco Galicia Consolidated Liquidity Gaps
    Less than
    
    
    
    
    
    As of December 31, 2005(1)one Year
    
    
    1  5 Years
    
    
    5  10 Years
    
    
    Over 10 Years
    
    
    Past Due
    
    
    Total(in millions of pesos, except ratios)AssetsCash and Due from Banks
    
    
    626.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    626.3Argentine Central Bank  Escrow Accounts
    
    
    516.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    516.4Overnight Placements
    
    
    212.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212.9Loans  Public Sector
    
    
    65.2
    
    
    
    3,555.3
    
    
    
    1,625.3
    
    
    
    0.1
    
    
    
    
    
    
    
    5,245.9Loans  Private Sector
    
    
    3,788.7
    
    
    
    981.7
    
    
    
    150.4
    
    
    
    23.7
    
    
    
    
    
    
    
    4,944.5Government Securities (1)
    
    
    1,748.9
    
    
    
    3,329.2
    
    
    
    3,007.0
    
    
    
    1,019.6
    
    
    
    
    
    
    
    9,104.7Corporate Debt Securities
    
    
    12.5
    
    
    
    11.4
    
    
    
    19.0
    
    
    
    0.6
    
    
    
    
    
    
    
    43.5Financial Trusts
    
    
    57.4
    
    
    
    136.1
    
    
    
    385.2
    
    
    
    224.8
    
    
    
    
    
    
    
    803.5Special Fund Former Almafuerte Bank
    
    
    321.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321.9Assets under Financial Lease
    
    
    65.0
    
    
    
    125.4
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    191.2Total Assets
    
    
    7,415.2
    
    
    
    8,139.1
    
    
    
    5,187.7
    
    
    
    1,268.8
    
    
    
    
    
    
    
    22,010.8LiabilitiesSaving Accounts
    
    
    2,205.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,205.8Demand Deposits
    
    
    1,811.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,811.7Time Deposits
    
    
    3,936.2
    
    
    
    349.4
    
    
    
    42.4
    
    
    
    
    
    
    
    
    
    
    
    4,328.0Reprogrammed Deposits (2)
    
    
    59.3
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    59.8Argentine Central Bank
    
    
    1,183.8
    
    
    
    5,811.2
    
    
    
    1,347.6
    
    
    
    
    
    
    
    
    
    
    
    8,342.6Negotiable Obligations
    
    
    441.0
    
    
    
    1479.4
    
    
    
    1110.0
    
    
    
    703.4
    
    
    
    22.1
    (4)
    
    
    3,755.9International Banks and Credit Agencies
    
    
    42.6
    
    
    
    254.9
    
    
    
    426.7
    
    
    
    37.9
    
    
    
    
    
    
    
    762.1Loans From Domestic Financial Institutions
    
    
    117.4
    
    
    
    110.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227.5Other Liabilities (3)
    
    
    1,038.0
    
    
    
    223.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,261.3Total Liabilities
    
    
    10,835.8
    
    
    
    8,228.6
    
    
    
    2,927.0
    
    
    
    741.3
    
    
    
    22.1
    
    
    
    22,754.7Asset / Liability Gap
    
    
    (3,420.6
    )
    
    
    (89.5
    )
    
    
    2,260.7
    
    
    
    527.5
    
    
    
    (22.1
    )
    
    
    (743.9
    )Cumulative Gap
    
    
    (3,420.6
    )
    
    
    (3,510.1
    )
    
    
    (1,249.4
    )
    
    
    (721.9
    )
    
    
    (743.9
    )
    
    
    (743.9
    )Ratio of Cumulative Gap to Cumulative
Liabilities
    
    
    (31.6
    )%
    
    
    (18.4
    )%
    
    
    (5.7
    )%
    
    
    (3.2
    )%
    
    
    (3.3
    )%Ratio of Cumulative Gap to Total Liabilities
    
    
    (15.0
    )%
    
    
    (15.4
    )%
    
    
    (5.5
    )%
    
    
    (3.2
    )%
    
    
    (3.3
    )%
 
 Principal only. Principal includes the CER adjustment. Does not include interest.(1)
    
    Includes Boden 2012 to be received corresponding to the Hedge Bond.(2)
    
    Reprogrammed Deposits with amparo claims only.(3)
    
    Includes, mainly, debt with retailers in connection with
credit-card operations, liabilities in connection with repos and debt with Sedesa.(4)
    
    Represents debt held by creditors that did not participate in the exchange offer to restructure the foreign debt of the Banks Head Office in Argentina and its Cayman Branch completed in May, 2004. -149-
    Table of Contents  Banco Galicia (Unconsolidated) Liquidity Management
    As of December 31, 2005(in millions of pesos)Legal Requirement
    
    Ps.
    1,173.6Excess Liquidity
    
    
    888.6Total Liquidity (1)
    
    Ps.
    2,032.2
 
 (1)
    
    Excludes cash of Galicia Uruguay, the Cayman Branch, and
other related companies.      -150-
    Table of Contents  Capital
    
    As of December 31,2005
    
    
    2004
    
    
    2003(in millions of pesos, except ratios, multiples and percentages)Shareholders Equity
    
    Ps.
    1,626.8
    
    
    Ps.
    1,519.5
    
    
    Ps.
    1,419.4Shareholders Equity as a Percentage of Total Assets
    
    
    6.35
    %
    
    
    6.42
    %
    
    
    6.22
    %Total Liabilities as a Multiple of Total Shareholders Equity
    

    
    14.76
    x
    

    
    14.56
    x
    
    
    15.08
    xTangible Shareholders Equity(1) as a Percentage of Total Assets
    
    
    4.43
    %
    
    
    3.73
    %
    
    
    3.03
    %Total Capital Ratio
    
    

    na
    (2)

    
    

    na
    

    
    

    naExcess Capital over Required Minimum Capital
    
    

    na
    

    
    
    na
    
    
    

    na
 
 (1)
    
    Tangible shareholders equity represents shareholders equity minus intangible assets.(2)
    
    Not applicable.  -151-
    Table of Contents  Capital Expenditures
   -152-
    Table of Contents  Item 6. Directors, Senior Management and Employees
 
 Our Board of Directors
  Principal
    
    Member
    
    CurrentName
    
    Position
    
    Date of Birth
    
    Occupation
    
    Since
    
    Term EndsAntonio Garcés
    
    Chairman of the
Board and Chief
Executive Officer
    
    May 30, 1942
    
    Banker
    
    April 2002
    
    December 2007Federico Braun
    
    Vice Chairman
    
    February 4, 1948
    
    Businessman
    
    September 1999
    
    December 2007Abel Ayerza
    
    Director
    
    May 27, 1939
    
    Businessman
    
    September 1999
    
    December 2008Eduardo Escasany
    
    Director
    
    June 30, 1950
    
    Businessman
    
    April 2005
    
    December 2006Enrique Martin
    
    Director
    
    October 19, 1945
    
    Businessman
    
    April 2006
    
    December 2008Luis Oddone
    
    Director
    
    May 11, 1938
    
    Businessman
    
    April 2005
    
    December 2006Pedro Richards
    
    Director
    
    November 14, 1952
    
    Businessman
    
    April 2005
    
    December 2006Silvestre Vila Moret
    
    Director
    
    April 26, 1971
    
    Businessman
    
    June 2002
    
    December 2007Eduardo Zimmermann
    
    Director
    
    January 3, 1931
    
    Businessman
    
    April 2000
    
    December 2008Pablo Gutierrez
    
    Alternate Director
    
    December 9, 1959
    
    Banker
    
    April 2003
    
    December 2008María Ofelia Hordeñana
de Escasany
    
    Alternate Director
    
    December 30, 1920
    
    Businesswoman
    
    April 2000
    
    December 2007Sergio Grinenco
    
    Alternate Director
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2008Alejandro Rojas Lagarde
    
    Alternate Director
    
    July 17, 1937
    
    Lawyer
    
    April 2000
    
    December 2008Luis Monsegur
    
    Alternate Director
    
    August 15, 1936
    
    Accountant
    
    April 2000
    
    December 2007
  Antonio Garcés:
 Federico Braun
 Abel Ayerza
 -153-
    Table of Contents  Eduardo Escasany
 Enrique Martin
 Luis Oddone
 Pedro Richards
 Silvestre Vila Moret:
 Eduardo Zimmermann
 Pablo Gutierrez
 María Ofelia Hordeñana de Escasany
 Sergio Grinenco
 -154-
    Table of Contents  Alejandro Rojas Lagarde
 Luis Monsegur
    
 Functions of Our Board of Directors
  Audit Committee:
  Disclosure Committee:
 -155-
    Table of Contents  Our Supervisory Committee
   Principal
    
    Current TermName
    
    Position
    
    Occupation
    
    EndsNorberto Corizzo
    
    Syndic
    
    Accountant
    
    December 2006Raúl Estevez
    
    Syndic
    
    Accountant
    
    December 2006Adolfo Melián
    
    Syndic
    
    Lawyer
    
    December 2006Miguel Armando
    
    Alternate Syndic
    
    Lawyer
    
    December 2006Fernando Noetinger
    
    Alternate Syndic
    
    Lawyer
    
    December 2006Horacio Tedín
    
    Alternate Syndic
    
    Lawyer
    
    December 2006
  Norberto Corizzo:
 Raúl Estevez:
 Adolfo Melián:
 Miguel Armando
 Fernando Noetinger
 -156-
    Table of Contents  Horacio Tedín
 
 Compensation of Our Directors
    
 Management of Grupo Galicia
   e.g.
   -157-
    Table of Contents  Board of Directors of Banco Galicia
  Date of
    
    Principal
    
    Member
    
    Current TermName
    
    Position
    
    Birth
    
    Occupation
    
    Since
    
    EndsAntonio R. Garcés
    
    Chairman of the Board
    
    May 30, 1942
    
    Banker
    
    September 2001
    
    December 2008Sergio Grinenco
    
    Vice Chairman and
Chief Financial
Officer
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2008Enrique M. Garda Olaciregui
    
    Director and Secretary
    
    April 29, 1946
    
    Banker
    
    April 2003
    
    December 2007Daniel A. Llambías
    
    Director
    
    February 8, 1947
    
    Banker
    
    September 2001
    
    December 2006Luis M. Ribaya
    
    Director
    
    July 17, 1952
    
    Banker
    
    September 2001
    
    December 2007Guillermo J. Pando
    
    Director
    
    October 23, 1948
    
    Banker
    
    April 2003
    
    December 2007Pablo Gutierrez (3)
    
    Director
    
    December 9, 1959
    
    Banker
    
    April 2005
    
    December 2008Eduardo O. Del Piano (1)
    
    Director
    
    May 12, 1938
    
    Accountant
    
    April 2004
    
    December 2006Pablo M. Garat (1)
    
    Director
    
    January 12, 1953
    
    Lawyer
    
    April 2004
    
    December 2006Eduardo A. Fanciulli
    
    Alternate Director
    
    April 10, 1951
    
    Banker
    
    September 2001
    
    December 2008Raúl Héctor Seoane (3)
    
    Alternate Director
    
    July 18, 1953
    
    Banker
    
    April 2005
    
    December 2008Juan C. Fossatti (2)
    
    Alternate Director
    
    September 11, 1955
    
    Lawyer
    
    June 2002
    
    December 2008Osvaldo H. Canova (2)
    
    Alternate Director
    
    December 8, 1934
    
    Accountant
    
    April 2004
    
    December 2006Julio P. Naveyra (2)
    
    Alternate Director
    
    March 24, 1941
    
    Accountant
    
    April 2004
    
    December 2006
 
 (1)
    
    In accordance with the rules of the CNV, and pursuant to the classifications adopted by the
CNV, Messrs. Eduardo O. Del Piano and Pablo M. Garat are independent and were elected at the
ordinary shareholders meeting held on April 29, 2004, as members of the audit committee. Messrs.
Del Piano and Garat are also independent directors in accordance with the new Nasdaq rules.(2)
    
    In accordance with the rules of the CNV, and pursuant to the classifications adopted by the
CNV, Mr. Fossatti, Mr. Canova and Mr. Naveyra are independent alternate directors. They would
replace the independent directors in case of vacancy. They are also independent directors in
accordance with the new Nasdaq rules.(3)
    
    Authorization from the Argentine Central Bank to assume their positions is pending.  Antonio Roberto Garcés
 Sergio Grinenco
 Enrique M. Garda Olaciregui
 Daniel Antonio Llambías
 -158-
    Table of Contents  Luis María Ribaya
 Guillermo Juan Pando
 Pablo Gutierrez
 Eduardo Oscar Del Piano
 Pablo María Garat
 Eduardo Antonio Fanciulli
 Raúl Héctor Seoane
 Juan Carlos Fossatti
 Osvaldo Héctor Canova:
 Julio Pedro Naveyra:
 -159-
    Table of Contents  Functions of the Board of Directors of Banco Galicia
    Risk Management Committee
 Credit Committee
 Financial Risk Policy Committee
 Systems Committee
 Audit Committee Régimen de Transparencia de la Oferta Pública
 -160-
    Table of Contents  Committee for the Control and Prevention of Money Laundering and for the Financing of
Terrorism
 Disclosure Committee
 Human Resources Committee:
 Assets and Liabilities Committee (Alco):
 Customer Assistance Committee:
 -161-
    Table of Contents  Banco Galicias Executive Officers
  Division
    
    ManagerTreasury
    
    Pablo GutierrezWholesale Banking
    
    Juan Miguel WoodyattRetail Banking
    
    Daniel A. Llambías (in charge)Corporative Services
    
    Miguel Angel PeñaCredit
    
    Juan Carlos LAfflitto
 Treasury
 Wholesale Banking
 Retail Banking
 Corporate Services
 Credit
   -162-
    Table of Contents  Pablo Gutierrez:
 Juan Miguel Woodyatt
 Daniel Llambías:
 Miguel Angel Peña: Asociación Argentina de
Usuarios de la Informática y las Comunicaciones
 Juan Carlos LAfflitto
 Raúl Héctor Seoane:
 Luis Alberto Díaz:
 Benito Silva:
 Enrique Carlos Behrends:
 Diego Francisco Videla:
 Nicolás Dujovne
 
 Banco Galicias Supervisory Committee
  -163-
    Table of Contents  Year of
    
    
    
    Principal
    
    Current TermName
    
    Appointment
    
    Position
    
    Occupation
    
    EndsAdolfo Héctor Melián
    
    2006
    
    Syndic
    
    Lawyer
    
    December 31, 2006Norberto Daniel Corizzo
    
    2006
    
    Syndic
    
    Accountant
    
    December 31, 2006Raúl Estevez
    
    2006
    
    Syndic
    
    Accountant
    
    December 31, 2006Fernando Noetinger
    
    2006
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2006Miguel N. Armando
    
    2006
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2006Ricardo Adolfo Bertoglio
    
    2006
    
    Alternate Syndic
    
    Accountant
    
    December 31, 2006
  Ricardo Adolfo Bertoglio
 
 Compensation of Banco Galicias Directors and Officers
  
    
    total compensation, including salaries, variable compensation and other social
benefits for the directors that are also employees and for the technical and
administrative functions they perform, in accordance with section 25, subsection 2 of
the Banks bylaws; and
    
    compensation for the independent directors.
      -164-
    Table of Contents  Employees
  As of December 31,2005
    
    
    2004
    
    
    2003Grupo
Financiero Galicia S.A
    
    
    8
    
    
    
    8
    
    
    
    8Banco de
Galicia y Buenos Aires S.A
    
    
    4,118
    
    
    
    3,946
    
    
    
    3,831Branches
    
    
    2,121
    
    
    
    1,871
    
    
    
    1,837Head Office
    
    
    1,997
    
    
    
    2,075
    
    
    
    1,994Galicia Uruguay
    
    
    18
    
    
    
    19
    
    
    
    40Regional Credit-Card Companies
    
    
    2,586
    
    
    
    2,216
    
    
    
    1,951Sudamericana consolidated
    
    
    85
    
    
    
    129
    
    
    
    132Other Subsidiaries
    
    
    34
    
    
    
    46
    
    
    
    73Total
    
    
    6,849
    
    
    
    6,364
    
    
    
    6,035
  -165-
    Table of Contents  Nasdaq Corporate Governance Standards
  (i)
    
    Rule 4350(b)(1)(A)  Distribution of Annual and Interim Reports. In lieu of the
requirements of Rule 4350(b)(1)(A), we follow Argentine law, which requires that companies
make public a Spanish language annual report, including annual audited consolidated
financial statements, by filing such annual report with the CNV and the BASE, within 70
calendar days of the end of the companys fiscal year. Interim reports must be filed with
the CNV and the BASE within 42 calendar days of the end of each fiscal quarter. The BASE
publishes the annual reports and interim reports in the BASE bulletin and makes the
bulletin available for inspection at its offices. In addition, our shareholders can receive
copies of annual reports and any interim reports upon such shareholders request. English
language translations of our annual reports and interim reports are furnished to the SEC.
We also post the English language translation of our annual reports and quarterly press
releases on our website. Furthermore, under the terms of the Second Amended and Restated
Deposit Agreement, dated as of June 22, 2000, among us, The Bank of New York, as
depositary, and owners of ADSs issued thereunder, we are required to furnish The Bank of
New York with, among other things, English language translations of our annual reports and
each of our quarterly press releases. Annual reports and quarterly press releases are
available for inspection by ADR holders at the offices of The Bank of New York located at,
101 Barclay Street, 22nd Floor, New York, New York. Finally, Argentine law
requires that 20 calendar days before the date of a shareholders meeting, the board of
directors must provide to the shareholders, at the companys executive office or through
electronic means, all information relevant to the shareholders meeting, including copies
of any documents to be considered by the shareholders (which includes the annual report),
as well as proposals of the companys board of directors.(ii)
    
    Rule 4350(c)(1)  Majority of Independent Directors. In lieu of the requirements of
Rule 4350(c)(1), we follow Argentine law which does not require that a majority of the
board of directors be comprised of independent directors. Argentine law instead requires
that public companies in Argentina such as us must have a sufficient number of independent
directors to be able to form an audit committee of at least three members, the majority of
which must be independent pursuant to the criteria established by the CNV. In addition,
because we are a controlled company as defined in Rule 4350(c)(5), we are relying on the
exemption provided thereby for purposes of complying with Rule 4350(c)(1).(iii)
    
    Rule 4350(c)(2)  Executive Sessions of the Board of Directors. In lieu of the
requirements of Rule 4350(c)(2), we follow Argentine law which does not require independent
directors to hold regularly
 -166-
    Table of Contents  scheduled meetings at which only such independent directors are present (i.e., executive
sessions). Our board of directors as a whole is responsible for monitoring our affairs.
In addition, under Argentine law, the Board of Directors may approve the delegation of
specific responsibilities to designated directors or non-director managers of the company.
Also, it is mandatory for public companies to form a supervisory committee (composed of
syndics) which is responsible for monitoring the legality of the companys actions under
Argentine law and the conformity thereof with its by-laws. Finally, our audit committee
has regularly scheduled meetings and, as such, such meetings will serve a substantially
similar purpose as executive sessions.(iv)
    
    Rule 4350(c)(3)  Compensation of Officers. In lieu of the requirements of Rule
4350(c)(3), we follow Argentine law which does not require companies to form a compensation
committee comprised solely of independent directors. It also is not required in Argentina
for the compensation of the chief executive officer and all other executive officers to be
determined by either a majority of the independent directors or a compensation committee
comprised solely of independent directors. Under Argentine law, the board of directors is
the corporate body responsible for determining the compensation of the chief executive
officer and all other executive officers, so long as they are not directors. In addition,
under Argentine law, the audit committee shall give its opinion about the reasonableness of
managements proposals on fees and option plans for directors or managers of the company.
Finally, because we are a controlled company as defined in Rule 4350(c)(5), we are
relying on the exemption provided thereby for purposes of complying with Rule 4350(c)(3).(v)
    
    Rule 4350(c)(4)  Nomination of Directors. In lieu of the requirements of Rule
4350(c)(4), we follow Argentine law which requires that directors be nominated directly by
the shareholders at the shareholders meeting and that they be selected and recommended by
the shareholders themselves. Under Argentine law, it is the responsibility of the ordinary
shareholders meeting to appoint and remove directors and to set their compensation. In
addition, because we are a controlled company as defined in Rule 4350(c)(5), we are
relying on the exemption provided thereby for purposes of complying with Rule 4350(c)(4).(vi)
    
    Rule 4350(d)(1)  Audit Committee Charter. In lieu of the requirements of Rule
4350(d)(1), we follow Argentine law which requires that audit committees have a charter but
does not require that companies certify as to the adoption of the charter nor does it
require an annual review and assessment thereof. Argentine law instead requires that
companies prepare a proposed plan or course of action with respect to those matters which
are the responsibility of the companys audit committee. Such plan or course of action
could, at the discretion of our audit committee, include a review and assessment of the
audit committee charter.(vii)
    
    Rule 4350(d)(2)  Audit Committee Composition. Argentine law does not require that
companies have an audit committee comprised solely of independent directors and it is
equally not customary business practice in Argentina to have such a committee. Argentine
law instead requires that companies establish an audit committee with at least three
members comprised of a majority of independent directors as defined by Argentine law.
Nonetheless, although not required by Argentine law, we have a three member audit committee
comprised of entirely independent directors, as independence is defined in Rule
10(A)-3(b)(1), one of which the Board has determined to be an audit committee financial
expert. In addition, we have a supervisory committee (comisión fiscalizadora) composed
of three syndics which are in charge of monitoring the legality, under Argentine law, of
the actions of our board of directors and the conformity of such actions with our by-laws.(viii)
    
    Rule 4350(f)  Quorum. In lieu of the requirements of Rule 4350(f), we follow Argentine
law and our bylaws, which distinguish between ordinary meetings and extraordinary meetings
and require, in connection with ordinary meetings, that a quorum consist of a majority of
stock entitled to vote. If no quorum is present at the first meeting, a second meeting may
be called at which the shareholders present, whatever their number, constitute a quorum and
resolutions may be adopted by an absolute majority of the votes present. Argentine law,
and our bylaws, require in connection with extraordinary meetings, that a quorum consist of
60% of the stock entitled to vote. However, if such quorum is not present at the first
meeting, our bylaws provide that a second meeting may be called which may be held with the
number of
 -167-
    Table of Contents  shareholders present. In both ordinary and extraordinary meetings, decisions are adopted
by an absolute majority of votes present at the meeting, except for certain fundamental
matters (such as mergers and spin-offs (when we are not the surviving entity and the
surviving entity is not listed on any stock exchange), anticipated liquidation, change in
our domicile to outside of Argentina, total or partial recapitalization of our statutory
capital following a loss, any transformation in our corporate legal form or a substantial
change in our corporate purpose) which require an approval by vote of the majority of all
the stock entitled to vote (all stock being entitled to only one vote).(ix)
    
    Rule 4350(g)  Solicitation of Proxies. In lieu of the requirements of Rule 4350(g),
we follow Argentine law which requires that notices of shareholders meetings be published,
for five consecutive days, in the Official Gazette and in a widely circulated newspaper in
Argentina no earlier than 45 calendar days prior to the meeting and at least 20 calendar
days prior to such meeting. In order to attend a meeting and be listed on the meeting
registry, shareholders are required to submit evidence of their book-entry share account
held at Caja de Valores up to three business days prior to the scheduled meeting date. If
entitled to attend the meeting, a shareholder may be represented by proxy (properly
executed and delivered with a certified signature) granted to any other person, with the
exception of a director, syndic, member of the surveillance committee (consejo de
vigilancia), manager or employee of the issuer, which are prohibited by Argentine law from
acting as proxies. In addition, our ADS holders receive, prior to the shareholders
meeting, a notice listing the matters on the agenda, a copy of the annual report and a
voting card.(x)
    
    Rule 4350(h)  Conflicts of Interest. In lieu of the requirements of Rule 4350(h), we
follow Argentine law which requires that related party transactions be approved by the
audit committee when the transaction exceeds one percent (1%) of the corporations net
worth, measured pursuant to the last audited balance sheet, so long as the relevant
transaction exceeds the equivalent of three hundred thousand Argentine Pesos (Ps.300,000).
Directors can contract with the corporation only on terms consistent with prevailing market
terms. If the contract is not in accordance with prevailing market terms, such transaction
must be pre-approved by the board of directors (excluding the interested director). In
addition, under Argentine law, a shareholder is required to abstain from voting on a
business transaction in which its interests may be in conflict with the interests of the
company. In the event such shareholder votes on such business transaction and such
business transaction would not have been approved without such shareholders vote, such
shareholder may be liable to the company for damages and the resolution may be declared
void.
  
 Share Ownership
  -168-
    Table of Contents  Item 7. Major Shareholders and Related Party Transactions
 
 Major Shareholders
    Class A Shares
 Name
    
    Class A Shares
    
    % of Class A Shares
    
    % of Total VotesEBA Holding S.A.
    
    281,221,650 class A shares
    
    
    100
    
    
    
    59.4
 Class B Shares
 Name
    
    Class B Shares
    
    % of Class B Shares
    
    % of Total VotesThe Bank of New York(1)
    
    395,653,520 class B shares
    
    
    41.2
    
    
    
    16.7Members of the families that are shareholders
of EBA Holding S.A.
    
    106,453,926 class B shares
    
    
    11.1
    
    
    
    4.5Banco Santander Central Hispano(2)
    
    82,741,540 class B shares
    
    
    8.6
    
    
    
    3.5M.V.B.A.(3)
    
    63,101,221 class B shares
    
    
    6.6
    
    
    
    2.7
 
 (1)
    
    Pursuant to the requirements of Argentine law, all class B shares represented by ADSs are
owned of record by The Bank of New York, as Depositary. The address for the Bank of New York
is 101 Barclay Street, 22nd Floor, New York 10286, and the country of organization is the
United States. Includes the holdings of Banco Santander Central Hispano.(2)
    
    Information is based on a Schedule 13 G filed by Banco Santander Central Hispano dated
February 16, 2001. However, we have confirmed the amount with information provided by third
party companies. The address for Banco Santander Central Hispano is Plaza de Canalejas 28014,
Madrid, Spain, and the country of organization is the Kingdom of Spain. The holding is in
ADRs.(3)
    
    Information is based on Caja de Valores files. MVBA (Mercado de Valores de Buenos Aires)
acts as custodian for individual shareholders when they deposit the shares as a guarantee for
cash advances. As of March 31, 2006, the shares deposited with MVBA corresponded to 1,333
individual accounts. The address for MVBA is 25 de Mayo 367, 9th Floor, Buenos
Aires, Argentina, and the country of organization is Argentina.  -169-
    Table of Contents  Name
    
    Total Shares
    
    % of Total Capital
    
    % of Total VotesMembers of the controlling shareholders:EBA Holding S.A.
    
    281,221,650 class A shares
    
    
    22.7
    
    
    
    59.4Members of the families that are shareholders of EBA Holding
S.A.
    
    106,453,926  class B shares
    
    
    8.6
    
    
    
    4.5Others:The Bank of New York (1)
    
    395,653,520 class B shares
    
    
    31.9
    
    
    
    16.7Banco Santander Central Hispano
    
    82,741,540 class B shares
    
    
    6.7
    
    
    
    3.5M.V.B.A.
    
    63,101,221 class B shares
    
    
    5.1
    
    
    
    2.7
 
 (1)
    
    Pursuant to the requirements of Argentine law, all class B shares represented by ADSs are
owned of record by The Bank of New York, as Depositary.      
 Related Party Transactions
   -170-
    Table of Contents  Product
    
    As of December 31, 2005
    
    As of April 30, 2006In millions of pesos, except
    
    
    
    Number of
    
    Interest
    
    
    
    
    
    Number of
    
    Interestpercentages
    
    
    
    Recipients
    
    Rate
    
    Balance
    
    Recipients
    
    Rate
    
    BalanceMarín S.A.
    
    Loan (1)
    
    
    
    
    
    
    7.2
    %
    
    Ps.
    19.3
    
    
    
    
    
    
    
    7.2
    %
    
    Ps.
    19.8Total
    
    
    1
    
    
    
    
    
    
    
    19.3
    
    
    
    1
    
    
    
    
    
    
    
    19.8Inversora en Servicios S.A.
    
    Loan (1)
    
    
    
    
    
    
    6.0
    
    
    
    13.3
    
    
    
    
    
    
    
    6.0
    
    
    
    13.6Total
    
    
    1
    
    
    
    
    
    
    
    13.3
    
    
    
    1
    
    
    
    
    
    
    
    13.6Guarantee Granted
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4S.A. Importadora y Exportadora
    
    Negotiable Obligations(1)
    
    
    
    
    
    
    8.9
    
    
    
    4.1
    
    
    
    
    
    
    
    8.9
    
    
    
    3.5de la Patagonia
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Total
    
    
    1
    
    
    
    
    
    
    
    4.5
    
    
    
    1
    
    
    
    
    
    
    
    4.0Hidroeléctrica Diamante S.A.
    
    Guarantee Granted
    
    
    
    
    
    
    
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    2.0Total
    
    
    1
    
    
    
    
    
    
    
    2.0
    
    
    
    1
    
    
    
    
    
    
    
    2.0Santiago de Compostela
    
    (2)
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    Promotora de Seguros S.A.
    
    Total
    
    
    1
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    Fabrinor Argentina S.R.L.
    
    Loan (1)
    
    
    
    
    
    
    8.9
    %
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
 -171-
    Table of Contents  Product
    
    As of December 31, 2005
    
    As of April 30, 2006In millions of pesos, except
    
    
    
    Number of
    
    Interest
    
    
    
    
    
    Number of
    
    Interestpercentages
    
    
    
    Recipients
    
    Rate
    
    Balance
    
    Recipients
    
    Rate
    
    BalanceTotal
    
    
    1
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    Other Companies
    
    Various
    
    
    38
    
    
    
    
    
    
    
    0.9
    
    
    
    40
    
    
    
    
    
    
    
    0.8Related Individuals
    
    Various
    
    
    160
    
    
    
    
    
    
    
    2.3
    
    
    
    175
    
    
    
    
    
    
    
    2.5Total
    
    Various
    
    
    204
    
    
    
    
    
    
    
    43.8
    
    
    
    219
    
    
    
    
    
    
    
    42.7
 
 (1)
    
    Restructured after the 2001-2002 crisis.(2)
    
    Amount paid for the purchase of a system, for which the transfer of property was completed after the fiscal year end.     
 Item 8. Financial Information
  
 Legal Proceedings
  Cámara Nacional de Apelaciones en
lo Comercial
 et al.
 -172-
    Table of Contents  i.e.
  Banco Galicia
  amparo corralito corralón amparo
  
 -173-
    Table of Contents  Dividend Policy and Dividends
 Dividend Policy
        -174-
    Table of Contents  Dividends
    
 Significant Changes
  
    
    During the first four months of 2006, the Bank made payments on the financial assistance
from the Argentine Central Bank for Ps.2,678.2 million, reducing this debt to Ps.2,768.8
million as of April 30, 2006, from Ps.5,314.9 million as of December 31, 2005. The payment
amounts include mainly payments made in advance on such liability (Ps.2,550.4 million, which
were made using the proceeds from the sale of public-sector assets granted as collateral for
this liability, which proceeds continued to serve as collateral until applied), as well as
the installments paid in accordance with the amortization schedule, until April 30, 2006.
Given that the sales modified the cash flow of the assets granted as collateral and that the
payments made modified the amounts due, the repayment schedule of this liability was also
modified, the number of monthly installments becoming 65, from March 2004.
    
    After the end of fiscal year 2005, the Bank sold Bogar and Secured Loans, as a result of
which our exposure to the Argentine public sector decreased as compared to the fiscal
years end. A Ps.15.0 million loss was associated to these sales due to differences between
the selling price and the respective book value of the assets sold and, also, to the time
lag existing between the sale transactions and the application of their proceeds to the
repayment of the liability. As of April 30, 2006 the balance of Secured Loans and Bogar in
our books amounted to Ps.4,199.9 million and Ps.2,756.2 million, respectively.
 -175-
    Table of Contents  Item 9. The Offer and Listing
 
 Shares and ADSs
    Grupo Galicia  Class B Shares- Buenos Aires Stock Exchange (in Pesos)
 Average Daily VolumeHigh
    
    Low
    
    (in thousands of Class B shares)Calendar Year2000(from July 24, 2000)
    
    Ps.
    1.78
    
    
    Ps.
    1.15
    
    
    
    940.62001(1)
    
    
    2.19
    
    
    
    0.40
    
    
    
    2,908.72002
    
    
    0.74
    
    
    
    0.12
    
    
    
    3,358.02003
    
    
    2.02
    
    
    
    0.69
    
    
    
    4,175.32004(2)
    
    
    2.61
    
    
    
    1.42
    
    
    
    5,571.52005
    
    
    2.81
    
    
    
    2.06
    
    
    
    4,784.6Two Most Recent Fiscal Years2004First Quarter
    
    
    2.61
    
    
    
    1.96
    
    
    
    5,199.9Second Quarter (2)
    
    
    2.39
    
    
    
    1.42
    
    
    
    5,887.6Third Quarter
    
    
    1.96
    
    
    
    1.42
    
    
    
    4,667.6Fourth Quarter
    
    
    2.57
    
    
    
    1.94
    
    
    
    6,534.02005First Quarter
    
    
    2.81
    
    
    
    2.13
    
    
    
    6,232.6Second Quarter (2)
    
    
    2.60
    
    
    
    2.06
    
    
    
    5,238.9Third Quarter
    
    
    2.53
    
    
    
    2.19
    
    
    
    4,050.2Fourth Quarter
    
    
    2.51
    
    
    
    2.06
    
    
    
    3,592.82006First Quarter
    
    
    2.40
    
    
    
    2.11
    
    
    
    2,471.0Second Quarter (through May 31, 2006)
    
    
    2.32
    
    
    
    1.81
    
    
    
    2,336.9Most Recent Six MonthsNovember 2005
    
    
    2.48
    
    
    
    2.16
    
    
    
    3,243.6December 2005
    
    
    2.19
    
    
    
    2.06
    
    
    
    3,556.5January 2006
    
    
    2.24
    
    
    
    2.11
    
    
    
    2,629.3February 2006
    
    
    2.27
    
    
    
    2.18
    
    
    
    2,398.0March 2006
    
    
    2.40
    
    
    
    2.24
    
    
    
    2,379.2April 2006
    
    
    2.32
    
    
    
    2.15
    
    
    
    1,952.7May 2006
    
    
    2.27
    
    
    
    1.81
    
    
    
    2,666.3
 
 (1)
    
    On March 23, 2001, our class B shares began trading ex-dividend. The value of each class B
share was reduced by the amount of the stock dividend of Ps.0.0296 per class B share.(2)
    
    On April 28, 2004, our class B shares began trading ex-coupon, which coupon related to the
right to subscribe for the preferred shares as part of the preemptive rights offering. The value
of each class B share was reduced by the value of the coupon of Ps.0.101 per class B share.  -176-
    Table of Contents  Grupo Galicia  Preferred Shares Buenos Aires Stock Exchange (in Pesos)
 Average Daily VolumeHigh
    
    Low
    
    (in thousands of preferred shares)Calendar Year2004(from May 13, 2004)
    
    Ps.
    2.48
    
    
    Ps.
    1.29
    
    
    
    490.02005(through May 11, 2005)
    
    
    2.72
    
    
    
    2.03
    
    
    
    183.4Most Recent Fiscal Year2004Second Quarter (from May 13, 2004)
    
    
    1.59
    
    
    
    1.29
    
    
    
    345.6Third Quarter
    
    
    1.87
    
    
    
    1.33
    
    
    
    681.4Fourth Quarter
    
    
    2.48
    
    
    
    1.88
    
    
    
    376.12005First Quarter
    
    
    2.72
    
    
    
    2.10
    
    
    
    230.9Second Quarter (through May 11, 2005)
    
    
    2.34
    
    
    
    2.03
    
    
    
    81.8Most Recent Six MonthsNovember 2004
    
    
    2.40
    
    
    
    1.89
    
    
    
    333.4December 2004
    
    
    2.48
    
    
    
    1.99
    
    
    
    275.2January 2005
    
    
    2.44
    
    
    
    2.26
    
    
    
    146.0February 2005
    
    
    2.69
    
    
    
    2.37
    
    
    
    184.3March 2005
    
    
    2.72
    
    
    
    2.10
    
    
    
    360.3April 2005
    
    
    2.25
    
    
    
    2.03
    
    
    
    100.4May 2005 (through May 11, 2005)
    
    
    2.34
    
    
    
    2.15
    
    
    
    32.9
 Grupo Galicia  ADSs  Nasdaq National Market / Nasdaq Capital Market (in US$)
 Average Daily VolumeHigh
    
    Low
    
    (in thousands of ADRs)Calendar Year2000(from July 24, 2000)
    
    US$
    17.69
    
    
    US$
    11.88
    
    
    
    192.72001(1)
    
    
    22.00
    
    
    
    3.13
    
    
    
    672.92002
    
    
    3.45
    
    
    
    0.22
    
    
    
    242.82003
    
    
    6.73
    
    
    
    2.05
    
    
    
    238.12004
    
    
    8.85
    
    
    
    4.65
    
    
    
    324.22005
    
    
    9.62
    
    
    
    6.87
    
    
    
    347.3Two Most Recent Fiscal Years2004First Quarter
    
    
    8.85
    
    
    
    6.81
    
    
    
    294.6Second Quarter
    
    
    8.51
    
    
    
    4.83
    
    
    
    303.6Third Quarter
    
    
    6.59
    
    
    
    4.65
    
    
    
    273.6Fourth Quarter
    
    
    8.78
    
    
    
    6.52
    
    
    
    423.52005First Quarter
    
    
    9.62
    
    
    
    7.28
    
    
    
    518.5Second Quarter
    
    
    9.05
    
    
    
    6.99
    
    
    
    281.4Third Quarter
    
    
    8.90
    
    
    
    7.70
    
    
    
    262.8Fourth Quarter
    
    
    8.72
    
    
    
    6.87
    
    
    
    334.42006First Quarter
    
    
    7.84
    
    
    
    6.91
    
    
    
    237.4Second Quarter (through May 31, 2006)
    
    
    7.70
    
    
    
    6.00
    
    
    
    212.8Most Recent Six MonthsNovember 2005
    
    
    8.24
    
    
    
    7.16
    
    
    
    357.6December 2005
    
    
    7.31
    
    
    
    6.87
    
    
    
    267.2January 2006
    
    
    7.27
    
    
    
    6.91
    
    
    
    294.9February 2006
    
    
    7.48
    
    
    
    7.09
    
    
    
    197.1March 2006
    
    
    7.84
    
    
    
    7.37
    
    
    
    220.8April 2006
    
    
    7.70
    
    
    
    7.28
    
    
    
    133.2May 2006
    
    
    7.63
    
    
    
    6.00
    
    
    
    281.5
 
 (1)
    
    On March 27, 2001, our ADSs began trading ex-dividend. The value of each ADS was
reduced by the amount of the stock dividend of US$0.2835 per ADS.   -177-
    Table of Contents  Banco Galicia  Class B Shares  Buenos Aires Stock Exchange (in Pesos)
 Average Daily Trading VolumeHigh
    
    Low
    
    (in thousand Class B shares)Calendar Year2001
    
    
    3.16
    
    
    
    1.39
    
    
    
    14.272002
    
    
    1.63
    
    
    
    0.45
    
    
    
    0.962003
    
    
    3.85
    
    
    
    1.58
    
    
    
    1.062004
    
    
    5.10
    
    
    
    3.30
    
    
    
    1.222005
    
    
    4.30
    
    
    
    3.60
    
    
    
    1.96Two Most Recent Fiscal Years2004First Quarter
    
    Ps.
    5.10
    
    
    Ps.
    3.70
    
    
    
    1.12Second Quarter
    
    
    5.00
    
    
    
    3.85
    
    
    
    0.53Third Quarter
    
    
    4.30
    
    
    
    3.30
    
    
    
    1.76Fourth Quarter
    
    
    4.00
    
    
    
    3.57
    
    
    
    1.452005First Quarter
    
    
    4.30
    
    
    
    3.65
    
    
    
    1.34Second Quarter
    
    
    3.90
    
    
    
    3.60
    
    
    
    2.08Third Quarter
    
    
    4.20
    
    
    
    3.64
    
    
    
    2.05Fourth Quarter
    
    
    4.25
    
    
    
    3.85
    
    
    
    2.382006First Quarter
    
    
    4.25
    
    
    
    3.65
    
    
    
    1.06Second Quarter (through May 31, 2006)
    
    
    3.65
    
    
    
    3.38
    
    
    
    1.06Most Recent Six MonthsNovember 2005
    
    
    4.15
    
    
    
    4.05
    
    
    
    1.28December 2005
    
    
    4.20
    
    
    
    4.00
    
    
    
    0.59January 2006
    
    
    4.25
    
    
    
    4.20
    
    
    
    0.52February 2006
    
    
    4.17
    
    
    
    3.98
    
    
    
    1.07March 2006
    
    
    4.03
    
    
    
    3.65
    
    
    
    1.59April 2006
    
    
    3.65
    
    
    
    3.48
    
    
    
    1.11May 2006
    
    
    3.45
    
    
    
    3.38
    
    
    
    1.01
  Banco Galicia  ADSs  Nasdaq National Market (in US$)
 Average Daily Trading VolumeCalendar Year
    
    High
    
    Low
    
    (in thousands of Class B Shares)(1)2000
    
    US$
    22.44
    
    
    US$
    12.75
    
    
    
    1,889.97
 
 (1)
    
    One ADS equaled four class B shares. 
 Argentine Securities Market
  Sistema Integrado de Negociación Asistida por Computación
 -178-
    Table of Contents  fondos comunes de inversión
 
 Market Regulations
     -179-
    Table of Contents  Item 10. Additional Information
 
 Description of Our Bylaws
 General
  sociedad anónima Inspección General de
Justicia
 
 Outstanding Capital Stock
  As of December 31, 2005Shares
    
    Number of Shares
    
    % of Capital Stock
    
    % of Voting RightsClass A shares
    
    
    281,221,650
    
    
    
    22.7
    %
    
    
    59.4
    %Class B shares
    
    
    960,185,367
    
    
    
    77.3
    
    
    
    40.6Total
    
    
    1,241,407,017
    
    
    
    100.0
    %
    
    
    100.0
    %
 Registration and Transfer
  -180-
    Table of Contents  Voting Rights
  
    
    a merger or spin-off in which we are not the surviving corporation, unless the
acquirers shares are authorized to be publicly offered or listed on any stock exchange;
    
    a transformation in our legal corporate form;
    
    a fundamental change in our corporate purpose;
    
    a change of our domicile to outside Argentina;
    
    a voluntary termination of our public offering or listing authorization;
    
    our continuation following a delisting or a mandatory cancellation of our public
offering or listing authorization;
    
    a total or partial recapitalization of our statutory capital following a loss; or
    
    the appointment of syndics.
  
    
    EBA Holding sells 100% of its class A shares;
    
    EBA Holding sells a portion of our class A shares to a third person who, when
aggregating all our class A shares with our class B shares owned by such person, if any,
obtains 50% plus one vote of our total votes; or
    
    the current shareholders of EBA Holding sell shares of EBA Holding that will allow the
buyer to exercise more than 50% of the voting power of EBA Holding at any general
shareholders meeting of EBA Holding shareholders, except for transfers to other current
shareholders of EBA Holding or to their heirs or their legal successors or to entities
owned by any of them.
 Limited Liability of Shareholders
  Directors
   -181-
    Table of Contents  Appointment of Directors and Syndics by Cumulative Voting
  Compensation of Directors
    Syndics
  Shareholders Meetings
  -182-
    Table of Contents  
    
    approval of the financial statements and general performance of the management for the
preceding fiscal year;
    
    appointment and remuneration of directors and members of the supervisory committee;
    
    allocation of profits; and
    
    any other matter the board of directors decides to submit to the shareholders meeting
concerning the companys business administration. Matters which may be discussed at these
or other ordinary meetings include resolutions regarding the responsibility of directors
and members of the supervisory committee, as well as capital increases and the issuance of
negotiable obligations.
         -183-
    Table of Contents  Dividends
       Capital Increases and Reductions
  Preemptive Rights
   -184-
    Table of Contents  Appraisal Rights
  
    
    a merger or spin-off in which we are not the surviving corporation, unless the
acquirers shares are authorized to be publicly offered or listed on any stock exchange,
    
    a transformation in our legal corporate form,
    
    a fundamental change in our corporate purpose,
    
    a change of our domicile to outside Argentina,
    
    a voluntary termination of our public offering or listing authorization,
    
    our continuation following a delisting or a mandatory cancellation of our public
offering or listing authorization, or
    
    a total or partial recapitalization of our statutory capital following a loss,
     Preferred Stock
  -185-
    Table of Contents  Conflicts of Interest
  Redemption or Repurchase
 sociedad anónima
  Liquidation
  Other Provisions
  -186-
    Table of Contents  Exchange Controls
  
 Taxation
  Argentine Taxes
 Taxation of Dividends
    Taxation of Capital Gains
 
   Procurador del Tesoro
 -187-
    Table of Contents  Transfer Taxes
  Tax on Minimum Notional Income
    Personal Assets Tax
 
 
  -188-
    Table of Contents  Other Taxes
  Deposit and Withdrawal of Class B Shares in Exchange for ADSs
  United States Taxes
      -189-
    Table of Contents  Ownership of ADSs in General
  Taxation of Cash Dividends and Distribution of Stock
   -190-
    Table of Contents  Taxation of Capital Gains
 i.e.
    Passive Foreign Investment Company Considerations
     -191-
    Table of Contents  Backup Withholding and Information Reporting
    THE ABOVE SUMMARIES ARE NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES
RELATING TO THE OWNERSHIP OF THE CLASS B SHARES OR ADSs.
 
 Material Contracts
    -192-
    Table of Contents  Documents on Display
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 
 General
  Comité de Posición Financiera
  -193-
    Table of Contents  Interest Rate Risk
      As of December 31, 2005(1)Less than
    
    
    
    
    
    5 - 10
    
    Over 10
    
    Non-(in millions of pesos)
    
    one Year
    
    1 - 5 Years
    
    Years
    
    Years
    
    Sensitive
    
    Past Due
    
    TotalAssetsPesos  Adjustable by CER
    
    
    10,609.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,609.7Government Securities
    
    
    4,036.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,036.1Financial Trusts
    
    
    906.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    906.7Loans  Public Sector
    
    
    5,181.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,181.0Loans  Private Sector
    
    
    470.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470.7Assets under Financial Lease
    
    
    15.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.2Pesos
    
    
    3,545.8
    
    
    
    601.7
    
    
    
    125.8
    
    
    
    17.5
    
    
    
    614.6
    
    
    
    
    
    
    
    4,905.4Cash and Due from Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    614.6
    
    
    
    
    
    
    
    614.6Government Securities
    
    
    230.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230.1Corporate Debt Securities
    
    
    1.5
    
    
    
    4.1
    
    
    
    8.8
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    15.0Financial Trusts
    
    
    89.7
    
    
    
    80.9
    
    
    
    36.0
    
    
    
    11.9
    
    
    
    
    
    
    
    
    
    
    
    218.5Loans  Public Sector
    
    
    64.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64.9Loans  Private Sector
    
    
    2,983.5
    
    
    
    516.7
    
    
    
    81.0
    
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    
    3,586.2Assets under Financial Lease
    
    
    176.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176.1Dollars
    
    
    1,939.4
    
    
    
    2,750.9
    
    
    
    1,277.3
    
    
    
    
    
    
    
    528.1
    
    
    
    
    
    
    
    6,495.7Cash and Due from Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    528.1
    
    
    
    
    
    
    
    528.1Overnight Placements
    
    
    212.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212.9
 -194-
    Table of Contents  As of December 31, 2005(1)Less than
    
    
    
    
    
    5 - 10
    
    Over 10
    
    Non-(in millions of pesos)
    
    one Year
    
    1 - 5 Years
    
    Years
    
    Years
    
    Sensitive
    
    Past Due
    
    TotalGovernment Securities (1)
    
    
    1,109.2
    
    
    
    2,486.2
    
    
    
    1,243.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,838.5Corporate Debt Securities
    
    
    10.9
    
    
    
    7.3
    
    
    
    10.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28.4Loans  Private Sector
    
    
    606.4
    
    
    
    257.4
    
    
    
    24.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    887.8Total Assets
    
    
    16,094.9
    
    
    
    3,352.6
    
    
    
    1,403.1
    
    
    
    17.5
    
    
    
    1,142.7
    
    
    
    
    
    
    
    22,010.8LiabilitiesPesos  Adjustable by CER
    
    
    9,507.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,507.9Time Deposits
    
    
    1,038.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,038.6Reprogrammed Deposits (2)
    
    
    59.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59.4Other Liabilities
    
    
    11.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.8Loans from Domestic Financial Institutions
    
    
    55.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55.5Argentine Central Bank
    
    
    8,342.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,342.6Pesos
    
    
    6,877.5
    
    
    
    116.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,993.8Saving Accounts
    
    
    1,665.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,665.2Demand Deposits
    
    
    1,750.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,750.8Time Deposits
    
    
    2,570.4
    
    
    
    9.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,580.0Reprogrammed Deposits (2)
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Negotiable Obligations
    
    
    104.0
    
    
    
    40.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144.8Loans from Domestic Financial Institutions
    
    
    80.4
    
    
    
    65.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146.3Other Liabilities
    
    
    706.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706.3Dollars
    
    
    1,813.9
    
    
    
    2,096.5
    
    
    
    1,579.2
    
    
    
    741.3
    
    
    
    
    
    
    
    22.1
    (3)
    
    
    6,253.0Saving Accounts
    
    
    540.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    540.6Demand Deposits
    
    
    60.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60.8Time Deposits
    
    
    497.4
    
    
    
    169.6
    
    
    
    42.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    709.4Loans from Domestic Financial Institutions
    
    
    7.7
    
    
    
    18.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.7Negotiable Obligations
    
    
    352.1
    
    
    
    1,423.4
    
    
    
    1,110.1
    
    
    
    703.4
    
    
    
    
    
    
    
    22.1
    (3)
    
    
    3,611.1International Banks and Credit Agencies
    
    
    27.4
    
    
    
    270.1
    
    
    
    426.7
    
    
    
    37.9
    
    
    
    
    
    
    
    
    
    
    
    762.1Other Liabilities
    
    
    327.9
    
    
    
    215.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    543.3Total Liabilities
    
    
    18,199.3
    
    
    
    2,212.8
    
    
    
    1,579.2
    
    
    
    741.3
    
    
    
    
    
    
    
    22.1
    (3)
    
    
    22,754.7Asset / Liability Gap
    
    
    (2,104.4
    )
    
    
    1,139.8
    
    
    
    (176.1
    )
    
    
    (723.8
    )
    
    
    1,142.7
    
    
    
    (22.1
    )
    
    
    (743.9
    )Cumulative Gap
    
    
    (2,104.4
    )
    
    
    (964.6
    )
    
    
    (1,140.7
    )
    
    
    (1,864.5
    )
    
    
    (721.8
    )
    
    
    (743.9
    )Ratio of Cumulative Gap to Cumulative Assets
    
    
    (13.1
    )%
    
    
    (5.0
    )%
    
    
    (5.5
    )%
    
    
    (8.9
    )%
    
    
    (3.3
    )%
    
    
    (3.4
    )%Ratio of Cumulative Gap to Total Assets
    
    
    (9.6
    )%
    
    
    (4.4
    )%
    
    
    (5.2
    )%
    
    
    (8.5
    )%
    
    
    (3.3
    )%
    
    
    (3.4
    )%Asset / Liability Gap CER
    
    
    1,101.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,101.8Asset / Liability Gap Interest Rate Pesos
    
    
    (3,331.7
    )
    
    
    485.4
    
    
    
    125.8
    
    
    
    17.5
    
    
    
    614.6
    
    
    
    
    
    
    
    (2,088.4
    )Asset / Liability Gap Interest Rate Dollars (4)
    
    
    125.5
    
    
    
    654.4
    
    
    
    (301.9
    )
    
    
    (741.3
    )
    
    
    528.1
    
    
    
    (22.1
    )
    
    
    242.7
 Principal only. Principal includes the CER adjustment. Does not include interest.
 
 (1)
    
    Includes Boden 2012 to be received corresponding to the Hedge Bond.(2)
    
    Reprogrammed deposits with amparo claims only.(3)
    
    Represents debt held by creditors that did not participate in the exchange offer to restructure the foreign debt of the Banks Head Office in Argentina and its Cayman Branch completed
in May 2004.(4)
    
    Adjusted to reflect forward purchases and sales of foreign exchange without delivery of the underlying asset, registered in memorandum accounts, this gap amounted to Ps.38.0 million as
of December 3, 2005.    -195-
    Table of Contents  As of December 31, 2005Net Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    907.1
    
    
    Ps.
    (1.2
    )
    
    
    (0.13
    )%
    
    Ps.
    348.9
    
    
    Ps.
    82.6
    
    
    
    31.00
    %150
    
    
    907.4
    
    
    
    (0.9
    )
    
    
    (0.10
    )
    
    
    328.3
    
    
    
    62.0
    
    
    
    23.30100
    
    
    907.8
    
    
    
    (0.5
    )
    
    
    (0.06
    )
    
    
    307.9
    
    
    
    41.6
    
    
    
    15.6150
    
    
    908.0
    
    
    
    (0.3
    )
    
    
    (0.03
    )
    
    
    287.4
    
    
    
    21.1
    
    
    
    7.94Static
    
    
    908.3
    
    
    
    
    
    
    
    
    
    
    
    266.3
    
    
    
    
    
    
    
    (50)
    
    
    908.6
    
    
    Ps.
    0.3
    
    
    
    0.03
    %
    
    
    245.7
    
    
    Ps.
    (20.6
    )
    
    
    (7.72
    )%(100)
    
    
    908.9
    
    
    
    0.6
    
    
    
    0.07
    
    
    
    219.2
    
    
    
    (47.1
    )
    
    
    (17.70
    )(150)
    
    
    909.2
    
    
    
    0.9
    
    
    
    0.10
    
    
    
    193.7
    
    
    
    (72.6
    )
    
    
    (27.27
    )(200)
    
    
    909.6
    
    
    
    1.3
    
    
    
    0.14
    
    
    
    169.9
    
    
    
    (96.4
    )
    
    
    (36.20
    )
 
 (1)
    
    Net interest income of the first year. -196-
    Table of Contents  As of December 31, 2005Net Trading Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    721.8
    
    
    Ps.
    (3.5
    )
    
    
    (0.48
    )%
    
    Ps.
    61.2
    
    
    Ps.
    10.6
    
    
    
    20.95
    %150
    
    
    722.7
    
    
    
    (2.6
    )
    
    
    (0.36
    )
    
    
    58.6
    
    
    
    8.0
    
    
    
    15.81100
    
    
    723.6
    
    
    
    (1.7
    )
    
    
    (0.23
    )
    
    
    55.9
    
    
    
    5.3
    
    
    
    10.4750
    
    
    724.5
    
    
    
    (0.8
    )
    
    
    (0.11
    )
    
    
    53.2
    
    
    
    2.6
    
    
    
    5.14Static
    
    
    725.3
    
    
    
    
    
    
    
    
    
    
    
    50.6
    
    
    
    
    
    
    
    (50)
    
    
    726.2
    
    
    Ps.
    0.9
    
    
    
    0.12
    %
    
    
    47.9
    
    
    Ps.
    (2.7
    )
    
    
    (5.34
    )%(100)
    
    
    727.1
    
    
    
    1.8
    
    
    
    0.25
    
    
    
    45.2
    
    
    
    (5.4
    )
    
    
    (10.67
    )(150)
    
    
    728.0
    
    
    
    2.7
    
    
    
    0.37
    
    
    
    42.6
    
    
    
    (8.0
    )
    
    
    (15.81
    )(200)
    
    
    728.9
    
    
    
    3.6
    
    
    
    0.50
    
    
    
    39.9
    
    
    
    (10.7
    )
    
    
    (21.15
    )
 
 (1)
    
    Net interest income of the first year. As of December 31, 2005Net Non-Trading Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    185.3
    
    
    Ps.
    2.3
    
    
    
    1.26
    %
    
    Ps.
    287.7
    
    
    Ps.
    72.0
    
    
    
    33.38
    %150
    
    
    184.7
    
    
    
    1.7
    
    
    
    0.93
    
    
    
    269.7
    
    
    
    54.0
    
    
    
    25.03100
    
    
    184.2
    
    
    
    1.2
    
    
    
    0.66
    
    
    
    252.0
    
    
    
    36.3
    
    
    
    16.8350
    
    
    183.5
    
    
    
    0.5
    
    
    
    0.27
    
    
    
    234.2
    
    
    
    18.5
    
    
    
    8.58Static
    
    
    183.0
    
    
    
    
    
    
    
    
    
    
    
    215.7
    
    
    
    
    
    
    
    (50)
    
    
    182.4
    
    
    Ps.
    (0.6
    )
    
    
    (0.33
    )%
    
    
    197.8
    
    
    Ps.
    (17.9
    )
    
    
    (8.30
    )%(100)
    
    
    181.8
    
    
    
    (1.2
    )
    
    
    (0.66
    )
    
    
    174.0
    
    
    
    (41.7
    )
    
    
    (19.33
    )(150)
    
    
    181.2
    
    
    
    (1.8
    )
    
    
    (0.98
    )
    
    
    151.1
    
    
    
    (64.6
    )
    
    
    (29.95
    )(200)
    
    
    180.7
    
    
    
    (2.3
    )
    
    
    (1.26
    )
    
    
    130.0
    
    
    
    (85.7
    )
    
    
    (39.73
    )
 
 (1)
    
    Net interest income of the first year. -197-
    Table of Contents  As of December 31, 2004Net Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    949.9
    
    
    Ps.
    (1.3
    )
    
    
    (0.14
    )%
    
    Ps.
    146.8
    
    
    Ps.
    69.7
    
    
    
    90.34
    %150
    
    
    950.2
    
    
    
    (1.0
    )
    
    
    (0.11
    )
    
    
    129.2
    
    
    
    52.1
    
    
    
    67.60100
    
    
    950.5
    
    
    
    (0.7
    )
    
    
    (0.07
    )
    
    
    111.8
    
    
    
    34.7
    
    
    
    44.9750
    
    
    950.8
    
    
    
    (0.4
    )
    
    
    (0.04
    )
    
    
    94.4
    
    
    
    17.3
    
    
    
    22.43Static
    
    
    951.2
    
    
    
    
    
    
    
    
    
    
    
    77.1(50)
    
    
    951.6
    
    
    Ps.
    0.4
    
    
    
    0.04
    %
    
    
    59.9
    
    
    Ps.
    (17.2
    )
    
    
    (22.33
    )%(100)
    
    
    952.0
    
    
    
    0.8
    
    
    
    0.08
    
    
    
    42.7
    
    
    
    (34.4
    )
    
    
    (44.57
    )(150)
    
    
    952.3
    
    
    
    1.1
    
    
    
    0.12
    
    
    
    17.6
    
    
    
    (59.5
    )
    
    
    (77.21
    )(200)
    
    
    952.8
    
    
    
    1.6
    
    
    
    0.17
    
    
    
    (7.5
    )
    
    
    (84.6
    )
    
    
    (109.71
    )
 
 (1)
    
    Net interest income of the first year. As of December 31, 2004Net Trading Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    525.7
    
    
    Ps.
    (2.3
    )
    
    
    (0.44
    )%
    
    Ps.
    37.5
    
    
    Ps.
    10.0
    
    
    
    36.36
    %150
    
    
    526.3
    
    
    
    (1.7
    )
    
    
    (0.32
    )
    
    
    35.0
    
    
    
    7.5
    
    
    
    27.27100
    
    
    526.8
    
    
    
    (1.2
    )
    
    
    (0.23
    )
    
    
    32.5
    
    
    
    5.0
    
    
    
    18.1850
    
    
    527.4
    
    
    
    (0.6
    )
    
    
    (0.11
    )
    
    
    30.0
    
    
    
    2.5
    
    
    
    9.09Static
    
    
    528.0
    
    
    
    
    
    
    
    
    
    
    
    27.5
    
    
    
    
    
    
    
    (50)
    
    
    528.6
    
    
    Ps.
    0.6
    
    
    
    0.11
    %
    
    
    25.0
    
    
    Ps.
    (2.5
    )
    
    
    (9.09
    )%(100)
    
    
    529.2
    
    
    
    1.2
    
    
    
    0.23
    
    
    
    22.5
    
    
    
    (5.0
    )
    
    
    (18.18
    )(150)
    
    
    529.7
    
    
    
    1.7
    
    
    
    0.32
    
    
    
    20.0
    
    
    
    (7.5
    )
    
    
    (27.27
    )(200)
    
    
    530.3
    
    
    
    2.3
    
    
    
    0.44
    
    
    
    17.5
    
    
    
    (10.0
    )
    
    
    (36.36
    )
 
 (1)
    
    Net interest income of the first year. As of December 31, 2004Net Non-Trading Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    424.2
    
    
    Ps.
    1.0
    
    
    
    0.24
    %
    
    Ps.
    109.3
    
    
    Ps.
    59.7
    
    
    
    120.36
    %150
    
    
    423.9
    
    
    
    0.7
    
    
    
    0.17
    
    
    
    94.2
    
    
    
    44.6
    
    
    
    89.92100
    
    
    423.7
    
    
    
    0.5
    
    
    
    0.12
    
    
    
    79.3
    
    
    
    29.7
    
    
    
    59.8850
    
    
    423.4
    
    
    
    0.2
    
    
    
    0.05
    
    
    
    64.4
    
    
    
    14.8
    
    
    
    29.84Static
    
    
    423.2
    
    
    
    
    
    
    
    
    
    
    
    49.6
    
    
    
    
    
    
    
    (50)
    
    
    423.0
    
    
    Ps.
    (0.2
    )
    
    
    (0.05
    )%
    
    
    34.9
    
    
    Ps.
    (14.7
    )
    
    
    (29.64
    )%(100)
    
    
    422.8
    
    
    
    (0.4
    )
    
    
    (0.09
    )
    
    
    20.2
    
    
    
    (29.4
    )
    
    
    (59.27
    )(150)
    
    
    422.6
    
    
    
    (0.6
    )
    
    
    (0.14
    )
    
    
    (2.4
    )
    
    
    (52.0
    )
    
    
    (104.84
    )(200)
    
    
    422.5
    
    
    
    (0.7
    )
    
    
    (0.17
    )
    
    
    (25.0
    )
    
    
    (74.6
    )
    
    
    (150.40
    )
 
 (1)
    
    Net interest income of the first year.  -198-
    Table of Contents  As of December 31, 2003Net Portfolio
    
    Fair Value
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    Variation
    
    % Change
    
    Amount
    
    Variation
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    990,6
    
    
    Ps.
    (155,3
    )
    
    
    (13,55
    )%
    
    Ps.
    130,9
    
    
    Ps.
    4,2
    
    
    
    3,30
    %150
    
    
    1.028,9
    
    
    
    (117,0
    )
    
    
    (10,21
    )
    
    
    129.8
    
    
    
    3,1
    
    
    
    2,47100
    
    
    1.068,6
    
    
    
    (77,3
    )
    
    
    (6,75
    )
    
    
    128,8
    
    
    
    2,1
    
    
    
    1,6450
    
    
    1.107,5
    
    
    
    (38,4
    )
    
    
    (3,35
    )
    
    
    127,7
    
    
    
    1,0
    
    
    
    0,82Static
    
    
    1.145,9
    
    
    
    
    
    
    
    
    
    
    
    126,7
    
    
    
    
    
    
    
    (50)
    
    
    1.184,7
    
    
    Ps.
    38,8
    
    
    
    3,39
    %
    
    
    125,8
    
    
    Ps.
    (0,9
    )
    
    
    (0,72
    )%(100)
    
    
    1.224,2
    
    
    
    78,3
    
    
    
    6,83
    
    
    
    124,9
    
    
    
    (1,8
    )
    
    
    (1,43
    )(150)
    
    
    1.263,6
    
    
    
    117,7
    
    
    
    10,27
    
    
    
    118
    
    
    
    (8,7
    )
    
    
    (6,89
    )(200)
    
    
    1.303,1
    
    
    
    157,2
    
    
    
    13,72
    
    
    
    111,4
    
    
    
    (15,3
    )
    
    
    (12,06
    )
 
 (1)
    
    Net interest income of the first year.    
 Foreign Exchange Rate Risk
    -199-
    Table of Contents  Value of Foreign Currency Net Position as ofDecember 31, 2005Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    Absolute Variation
    
    % Change(in millions of pesos, except percentages)40%
    
    
    53,2
    
    
    
    15,2
    
    
    
    40,030%
    
    
    49,4
    
    
    
    11,4
    
    
    
    30,020%
    
    
    45,6
    
    
    
    7,6
    
    
    
    20,010%
    
    
    41,8
    
    
    
    3,8
    
    
    
    10,0Static
    
    
    38,0
    (2)
    
    
    
    
    
    
    (10)%
    
    
    34,2
    
    
    
    (3,8
    )
    
    
    (10,0
    )(20)%
    
    
    30,4
    
    
    
    (7,6
    )
    
    
    (20,0
    )(30)%
    
    
    26,6
    
    
    
    (11,4
    )
    
    
    (30,0
    )(40)%
    
    
    22,8
    
    
    
    (15,2
    )
    
    
    (40,0
    )
 
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales without delivery of the underlying asset, registered in memorandum accounts. Value of Foreign Currency Net Position as ofDecember 31, 2004Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    Absolute Variation
    
    % Change(in millions of pesos, except percentages)40%
    
    Ps.
    1,086.8
    
    
    Ps.
    310.5
    
    
    
    40.0
    %30%
    
    
    1,009.2
    
    
    
    232.9
    
    
    
    30.020%
    
    
    931.6
    
    
    
    155.3
    
    
    
    20.010%
    
    
    853.9
    
    
    
    77.6
    
    
    
    10.0Static
    
    
    776.3
    
    
    
    
    
    
    
    (10)%
    
    
    698.7
    
    
    
    (77.6
    )
    
    
    (10.0
    )(20)%
    
    
    621.0
    
    
    
    (155.3
    )
    
    
    (20.0
    )(30)%
    
    
    543.4
    
    
    
    (232.9
    )
    
    
    (30.0
    )(40)%
    
    
    465.8
    
    
    
    (310.5
    )
    
    
    (40.0
    )
 
 (1)
    
    Devaluation / (Revaluation). Value of Foreign Currency Net Position as ofDecember 31, 2003Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    Absolute Variation
    
    % Change(in millions of pesos, except percentages)40%
    
    Ps.
    359.4
    
    
    Ps.
    102.7
    
    
    
    40.0
    %30%
    
    
    333.7
    
    
    
    77.0
    
    
    
    30.020%
    
    
    308.0
    
    
    
    51.3
    
    
    
    20.010%
    
    
    282.4
    
    
    
    25.7
    
    
    
    10.0Static
    
    
    256.7
    
    
    
    
    
    
    
    
 -200-
    Table of Contents  Value of Foreign Currency Net Position as ofDecember 31, 2003Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    Absolute Variation
    
    % Change(in millions of pesos, except percentages)(10)%
    
    
    231.0
    
    
    
    (25.7
    )
    
    
    (10.0
    )(20)%
    
    
    205.4
    
    
    
    (51.3
    )
    
    
    (20.0
    )(30)%
    
    
    179.7
    
    
    
    (77.0
    )
    
    
    (30.0
    )(40)%
    
    
    154.0
    
    
    
    (102.7
    )
    
    
    (40.0
    )
 
 (1)
    
    Devaluation / (Revaluation).   
 Item 12. Description of Securities Other Than Equity Securities
  -201-
    Table of Contents  PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
    
    9% Notes due 2003 issued under the Indenture dated November 8, 1993, among the Bank,
The Bank of New York, as trustee, co-registrar, principal paying agent and registrar.
As of June 22, 2006, the total principal amount in default was US$5.2 million and the
total accrued and unpaid interest was US$2.4 million.
    
    Floating Rate Notes issued under a global medium term note program and a purchase
agreement, dated June 7, 2001, among the Bank, Santander Central Hispano Investment
Securities Inc., New York, as arranger and syndication agent, Banco Santander Central
Hispano S.A., acting through its New York branch, as administrative and PRI Agent, the
initial purchasers and The Bank of New York, New York, as principal paying agent. As
of June 22, 2006, the total principal amount in default is US$0.9 million and the total
accrued and unpaid interest was US$0.2 million.
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
     -202-
    Table of Contents  Item 16. [Reserved]
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  
 Item 16C. Principal Accountants Fees and Services
  2005
    
    2004(In thousands of pesos)Audit fees
    
    
    3,177
    
    
    
    2,673Audit related fees
    
    
    819
    
    
    
    680Tax fees
    
    
    126
    
    
    
    136All other fees
    
    
    256
    
    
    
    403Total
    
    
    4,378
    
    
    
    3,892
 Audit Fees
  Audit-Related Fees
  Tax Fees
  -203-
    Table of Contents  All Other Fees
  Audit Committee Preapproval
  
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and affiliated Purchasers
  -204-
    Table of Contents  PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
        
 Item 19. Exhibits
 Exhibit
    
    Description1.1
    
    Unofficial English language
translation of the By-laws (estatutos sociales). ****2.1
    
    Form of Deposit Agreement between The Bank of New York and the registrant, including the form
of American Depositary Receipt.*2.2
    
    Indenture, dated as of May 18, 2004, among the Bank, The Bank of New York and Banco Rio de la
Plata S.A.**4.1
    
    English translation of form of Financial Trust Contract, dated April 16, 2002, among the
Bank, Banco Provincia de Buenos Aires and BAPRO Mandatos y Negocios S.A.***4.2
    
    English translation of form of Loan Agreement, dated March 21, 2002, by and between Seguro de
Depositos S.A. and the Bank.***4.4
    
    Form of restructured loan facility (as evidenced by the Note Purchase Agreement, dated as of
April 27, 2004, among the Bank, Barclays Bank PLC, the holders party thereto and Deutsche Bank
Trust Company Americas).**4.5
    
    Form of Amendment No. 1 and Waiver to Restructured Loan Facility (as evidenced by the
Amendment No. 1 and Waiver to Note Purchase Agreement, dated as of December 20, 2004, among
Banco de Galicia y Buenos Aires S.A., the holders party thereto and Deutsche Bank Trust
Company Americas). ****8.1
    
    For a list of our subsidiaries as of the end of the fiscal year covered by this annual
report, please see Item 4. Information on the Company  Organizational Structure.
 -205-
    Table of Contents  Exhibit
    
    Description12.1
    
    Certification of the principal executive officer required under Rule 13a-14(a) or Rule
15d-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.12.2
    
    Certification of the principal financial officer required under Rule 13a-14(a) or Rule
15d-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.13.1
    
    Certification of the principal executive officer required pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.13.2
    
    Certification of the principal financial officer required pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
 
 *
    
    Incorporated by reference from our Registration Statement on Form F-4 (333-11960).**
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2003.***
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2002.****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2004. -206-
    Table of Contents  SIGNATURE
  GRUPO FINANCIERO GALICIA S.A.By:

    /s/ Antonio GarcésName:

    Antonio GarcésTitle:

    Chairman of the Board, Chief Executive Officer
  -207-
    Table of Contents  GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of the Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    F-3Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003
    
    
    F-6Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    F-8Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2005, 2004 and 2003
    
    
    F-10Notes to the Consolidated Financial Statements
    
    
    F-11
 F-1
    Table of Contents  Report of Independent Registered Public Accounting Firm
 
      
 
 F-2
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Balance Sheets
As of December 31, 2005 and 2004
  December 31,2005
    
    
    2004ASSETSA. Cash and due from banksCash
    
    
    552,495
    
    
    
    442,494Banks and correspondents
    
    
    488,663
    
    
    
    546,175Ps.
    1,041,158
    
    
    Ps.
    988,669B. Government and corporate securitiesHoldings of investment account securities
    
    
    650,924
    
    
    
    601,264Holdings of trading securities
    
    
    21,229
    
    
    
    37,105Government securities without quotation
    
    
    4,591,071
    
    
    
    4,371,716Securities issued by the Argentine Central Bank
    
    
    704,467
    
    
    
    508,544Investments in quoted corporate securities
    
    
    4,418
    
    
    
    16,086Allowances
    
    
    (353
    )
    
    
    (618
    )Ps.
    5,971,756
    
    
    Ps.
    5,534,097C. LoansTo the non-financial public sector
    
    
    5,235,869
    
    
    
    4,558,873To the financial sector
    
    
    128,203
    
    
    
    150,530To the non-financial private sector and residents abroad
    
    
    5,619,015
    
    
    
    4,361,393Overdrafts
    
    
    222,779
    
    
    
    199,668Promissory notes
    
    
    1,836,887
    
    
    
    1,099,243Mortgage loans
    
    
    503,397
    
    
    
    623,944Pledge loans
    
    
    121,095
    
    
    
    92,889Consumer loans
    
    
    258,015
    
    
    
    58,161Credit card loans
    
    
    1,732,114
    
    
    
    1,105,386Other
    
    
    812,587
    
    
    
    772,996Accrued Interest, adjustments and quotation differences receivable
    
    
    146,839
    
    
    
    414,400(Document interest)
    
    
    (14,684
    )
    
    
    (5,286
    )(Unallocated collections)
    
    
    (14
    )
    
    
    (8
    )Allowances
    
    
    (427,911
    )
    
    
    (632,619
    )Ps.
    10,555,176
    
    
    Ps.
    8,438,177D. Other receivables resulting from financial brokerageArgentine Central Bank
    
    
    108,819
    
    
    
    78,463Amounts receivable for spot and forward sales to be settled
    
    
    264,170
    
    
    
    56,209Securities receivable under spot and forward purchases to be settled
    
    
    270,476
    
    
    
    313,462Negotiable obligations without quotation
    
    
    41,403
    
    
    
    20,384Balances from forward transactions without delivery of underlying asset to
be settled
    
    
    709
    
    
    
    Compensation to be received from the national government
    
    
    4,154,989
    
    
    
    4,732,288Other
    
    
    1,357,057
    
    
    
    1,524,593Allowances
    
    
    (35,242
    )
    
    
    (27,711
    )Ps.
    6,162,381
    
    
    Ps.
    6,697,688
 The accompanying Notes are an integral part of these consolidated financial statements
 F-3
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Balance Sheets  Continued
As of December 31, 2005 and 2004
 December 31,2005
    
    
    2004ASSETS (Continued)E. Assets under financial leasesAssets under financial leases
    
    
    193,697
    
    
    
    103,443Allowances
    
    
    (2,521
    )
    
    
    (2,493
    )Ps.
    191,176
    
    
    Ps.
    100,950F. Equity investmentsIn financial institutions
    
    
    3,088
    
    
    
    3,029Other
    
    
    113,336
    
    
    
    108,714Allowances
    
    
    (31,304
    )
    
    
    (28,924
    )Ps.
    85,120
    
    
    Ps.
    82,819G. Miscellaneous receivablesReceivables for assets sold
    
    
    85
    
    
    
    879Tax on minimum presumed income  Tax credit
    
    
    170,989
    
    
    
    138,010Other
    
    
    360,050
    
    
    
    353,507Accrued interest on receivables for assets sold
    
    
    6
    
    
    
    33Other accrued interest and adjustments receivable
    
    
    65
    
    
    
    64,263Allowances
    
    
    (77,626
    )
    
    
    (36,911
    )Ps.
    453,569
    
    
    Ps.
    519,781H. Bank premises and equipment
    
    Ps.
    484,198
    
    
    Ps.
    489,182I. Miscellaneous assets
    
    Ps.
    199,152
    
    
    Ps.
    160,033J. Intangible assetsGoodwill
    
    
    85,003
    
    
    
    115,080Organization and development expenses
    
    
    405,357
    
    
    
    522,924Ps.
    490,360
    
    
    Ps.
    638,004K. Unallocated items
    
    
    1,678
    
    
    
    1,154Total Assets
    
    Ps.
    25,635,724
    
    
    Ps.
    23,650,554
 The accompanying Notes are an integral part of these consolidated financial statements
 F-4
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Balance Sheets  Continued
As of December 31, 2005 and 2004
 December 31,2005
    
    
    2004LIABILITIES AND SHAREHOLDERS EQUITYL. DepositsNon-financial public sector
    
    Ps.
    90,341
    
    
    Ps.
    131,932Financial sector
    
    
    6,201
    
    
    
    17,157Non-financial private sector and residents abroad
    
    
    8,325,118
    
    
    
    6,607,824Current accounts
    
    
    1,639,766
    
    
    
    1,192,474Saving accounts
    
    
    2,211,436
    
    
    
    1,638,694Time deposits
    
    
    4,186,018
    
    
    
    3,415,788Investment accounts
    
    
    158
    
    
    
    383Other
    
    
    192,584
    
    
    
    280,220Accrued interest and quotation differences payable
    
    
    95,156
    
    
    
    80,265Ps.
    8,421,660
    
    
    Ps.
    6,756,913M. Other liabilities resulting from financial brokerageArgentine Central Bank
    
    
    8,611,909
    
    
    
    8,428,717Financial assistance Decrees No. 739/03 and 1262/03
    
    
    4,981,287
    
    
    
    5,321,697Other
    
    
    3,630,622
    
    
    
    3,107,020Banks and international entities
    
    
    762,055
    
    
    
    772,393Unsubordinated negotiable obligations
    
    
    3,052,434
    
    
    
    3,348,652Amounts payable for spot and forward purchases to be settled
    
    
    222,729
    
    
    
    229,537Securities to be delivered under spot and forward sales to be settled
    
    
    266,071
    
    
    
    56,155Loans from domestic financial institutions
    
    
    220,422
    
    
    
    191,195Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    418
    
    
    
    Other
    
    
    1,152,433
    
    
    
    909,926Accrued interest and quotation differences payable
    
    
    125,242
    
    
    
    119,992Ps.
    14,413,713
    
    
    Ps.
    14,056,567N. Miscellaneous liabilitiesDividends payable
    
    
    
    
    
    
    5Directors and Syndics fees
    
    
    3,438
    
    
    
    3,676Other
    
    
    331,324
    
    
    
    294,888Adjustments and accrued interest payable
    
    
    1
    
    
    
    2,043Ps.
    334,763
    
    
    Ps.
    300,612O. Provisions
    
    
    258,374
    
    
    
    517,806P. Subordinated negotiable obligations
    
    
    431,024
    
    
    
    380,077Q. Unallocated items
    
    
    3,915
    
    
    
    5,574R. Minority interests
    
    
    145,499
    
    
    
    113,467Total Liabilities
    
    Ps.
    24,008,948
    
    
    Ps.
    22,131,016SHAREHOLDERS EQUITY
    
    
    1,626,776
    
    
    
    1,519,538Total Liabilities and Shareholders Equity
    
    Ps.
    25,635,724
    
    
    Ps.
    23,650,554
 The accompanying Notes are an integral part of these consolidated financial statements
 F-5
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Income
For the fiscal years ended December 31, 2005, 2004 and 2003
  December 31,2005
    
    
    2004
    
    
    2003A. Financial incomeInterest on cash and due from banks
    
    Ps.
    68
    
    
    Ps.
    44
    
    
    Ps.
    68Interest on loans granted to the financial sector
    
    
    2,823
    
    
    
    5,189
    
    
    
    101,107Interest on overdrafts
    
    
    39,957
    
    
    
    28,254
    
    
    
    38,801Interest on promissory notes
    
    
    119,017
    
    
    
    97,544
    
    
    
    192,816Interest on mortgage loans
    
    
    74,052
    
    
    
    67,935
    
    
    
    94,832Interest on pledge loans
    
    
    10,806
    
    
    
    6,706
    
    
    
    11,714Interest on credit card loans
    
    
    222,657
    
    
    
    163,054
    
    
    
    127,522Interest on other loans
    
    
    35,705
    
    
    
    26,050
    
    
    
    28,888Interest on other receivables resulting from financial brokerage
    
    
    165,895
    
    
    
    90,017
    
    
    
    98,663Net income from government and corporate securities
    
    
    333,107
    
    
    
    
    
    
    
    46,221Net income from secured loans  Decree No. 1387/01
    
    
    203,487
    
    
    
    186,038
    
    
    
    178,708Consumer price index adjustment (CER / CVS)
    
    
    1,091,832
    
    
    
    588,653
    
    
    
    509,077Other
    
    
    99,226
    
    
    
    132,101
    
    
    
    23,657Ps.
    2,398,632
    
    
    Ps.
    1,391,585
    
    
    Ps.
    1,452,074B. Financial expensesInterest on current account deposits
    
    
    15,301
    
    
    
    4,858
    
    
    
    3,039Interest on savings account deposits
    
    
    4,557
    
    
    
    4,124
    
    
    
    3,045Interest on time deposits
    
    
    142,051
    
    
    
    90,511
    
    
    
    201,766Interest on financing from the financial sector
    
    
    4,581
    
    
    
    6,146
    
    
    
    6,756Interest on other liabilities resulting from financial brokerage
    
    
    269,276
    
    
    
    172,558
    
    
    
    340,567Other interest
    
    
    334,398
    
    
    
    323,245
    
    
    
    408,764Net loss from government and corporate securities
    
    
    
    
    
    
    7,027
    
    
    
    Consumer price index adjustment
    
    
    1,006,752
    
    
    
    501,831
    
    
    
    187,532Other
    
    
    69,013
    
    
    
    57,144
    
    
    
    153,347Ps.
    1,845,929
    
    
    Ps.
    1,167,444
    
    
    Ps.
    1,304,816C. Gross brokerage margin
    
    
    552,703
    
    
    
    224,141
    
    
    
    147,258Loan loss provisions
    
    
    76,730
    
    
    
    190,232
    
    
    
    286,428D. Income from servicesIn relation to lending transactions
    
    
    185,825
    
    
    
    157,084
    
    
    
    136,075In relation to borrowing transactions
    
    
    175,907
    
    
    
    140,375
    
    
    
    116,165Other commissions
    
    
    14,898
    
    
    
    8,035
    
    
    
    9,347Other
    
    
    269,106
    
    
    
    223,558
    
    
    
    170,170Ps.
    645,736
    
    
    Ps.
    529,052
    
    
    Ps.
    431,757E. Expenses for servicesCommissions
    
    
    53,906
    
    
    
    40,899
    
    
    
    35,237Other
    
    
    68,065
    
    
    
    51,860
    
    
    
    35,121Ps.
    121,971
    
    
    Ps.
    92,759
    
    
    Ps.
    70,358
 The accompanying Notes are an integral part of these consolidated financial statements
 F-6
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Statements of Income  Continued
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004
    
    
    2003F. Monetary result of financial brokerage
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    (14,157
    )G. Administrative expensesPersonnel expenses
    
    
    392,308
    
    
    
    296,733
    
    
    
    243,501Directors and syndics fees
    
    
    5,793
    
    
    
    4,040
    
    
    
    1,917Other fees
    
    
    32,314
    
    
    
    19,808
    
    
    
    21,294Advertising and publicity
    
    
    68,132
    
    
    
    37,796
    
    
    
    20,020Taxes
    
    
    37,349
    
    
    
    40,872
    
    
    
    29,806Other operating expenses
    
    
    187,223
    
    
    
    179,983
    
    
    
    204,599Other
    
    
    57,849
    
    
    
    44,708
    
    
    
    42,227Ps.
    780,968
    
    
    Ps.
    623,940
    
    
    Ps.
    563,364H. Monetary result of operating expenses
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    84Net Income / (Loss) from financial brokerage
    
    Ps.
    218,770
    
    
    Ps.
    (153,738
    )
    
    Ps.
    (355,208
    )I. Minority interests result
    
    Ps.
    (34,609
    )
    
    Ps.
    (14,302
    )
    
    Ps.
    (9,232
    )J. Miscellaneous incomeNet income from equity investments
    
    
    6,662
    
    
    
    2,990
    
    
    
    Default interests
    
    
    835
    
    
    
    895
    
    
    
    3,183Loans recovered and allowances reversed
    
    
    163,608
    
    
    
    366,645
    
    
    
    563,838Other
    
    
    111,061
    
    
    
    134,348
    
    
    
    97,805Consumer price index adjustment (CER)
    
    
    7,341
    
    
    
    9,728
    
    
    
    54,381Ps.
    289,507
    
    
    Ps.
    514,606
    
    
    Ps.
    719,207K. Miscellaneous lossesNet loss on long-term investments
    
    
    
    
    
    
    
    
    
    
    22,570Default interests and charges in favor of the Argentine Central Bank
    
    
    16
    
    
    
    19
    
    
    
    125Loan loss provisions for miscellaneous receivables and other provisions
    
    
    99,754
    
    
    
    134,135
    
    
    
    315,167Amortization of differences arising from court resolution
    
    
    122,279
    
    
    
    121,010
    
    
    
    77,880Other
    
    
    124,538
    
    
    
    157,119
    
    
    
    155,311Consumer price index adjustment
    
    
    541
    
    
    
    336
    
    
    
    1,827Ps.
    347,128
    
    
    Ps.
    412,619
    
    
    Ps.
    572,880L. Monetary Result of other operations
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    (3,517
    )Net Income / (Loss) before tax
    
    
    126,540
    
    
    
    (66,053
    )
    
    
    (221,630
    )M. Income tax
    
    Ps.
    19,302
    
    
    Ps.
    43,818
    
    
    Ps.
    590Net Income / (Loss) for the fiscal year
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )
    
    Ps.
    (222,220
    )Net Income / (Loss) per common share (basic and assuming full dilution)
    
    
    0.086
    
    
    
    (0.093
    )
    
    
    (0.203
    )
 The accompanying Notes are an integral part of these consolidated financial statements
 F-7
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Cash Flows
For the fiscal years ended December 31, 2005, 2004 and 2003
  December 31,2005
    
    
    2004
    
    
    2003Cash Flow from operating activities:Net Income / (Loss) for the year
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )
    
    Ps.
    (222,220
    )Adjustments to reconcile net income to net cash from Operating activities:Depreciation of bank premises and equipment and Miscellaneous assets
    
    
    36,962
    
    
    
    41,567
    
    
    
    52,496Amortization of intangible assets
    
    
    182,713
    
    
    
    193,744
    
    
    
    163,390Increase in allowances for loan and other losses, net of reversals
    
    
    48,209
    
    
    
    69,132
    
    
    
    118,920Equity (gain) loss of unconsolidated subsidiaries
    
    
    (6,662
    )
    
    
    (3,580
    )
    
    
    8,095(Gain) loss on sale of premises and equipment
    
    
    (1,355
    )
    
    
    (391
    )
    
    
    11,486Gain on trouble debt restructuring
    
    
    
    
    
    
    (141,610
    )
    
    
    Monetary loss
    
    
    
    
    
    
    
    
    
    
    17,939Adjustment of Compensatory Bond to be received
    
    
    
    
    
    
    
    
    
    
    90,243Consumer price index adjustment (CER/CVS)
    
    
    (484,834
    )
    
    
    (26,447
    )
    
    
    (324,073
    )Unrealized foreign exchange (loss) / gain
    
    
    (13,569
    )
    
    
    13,940
    
    
    
    83,234Decrease (Increase) in government securities  trading
    
    
    490,050
    
    
    
    91,557
    
    
    
    (314,324
    )Decrease (Increase) in other assets
    
    
    476,928
    
    
    
    (75,634
    )
    
    
    54,599Increase (Decrease) in other liabilities
    
    
    20,321
    
    
    
    (273,297
    )
    
    
    (47,614
    )Net cash provided by / (used in) operating activities
    
    Ps.
    856,001
    
    
    Ps.
    (220,890
    )
    
    Ps.
    (307,829
    )Cash Flow from investing activities:(Increase)/Decrease in loans, net
    
    
    (628,259
    )
    
    
    (112,368
    )
    
    
    734,720Decrease in deposits at the Argentine Central Bank
    
    
    (30,356
    )
    
    
    (8,617
    )
    
    
    (13,938
    )Additions to
bank premises and equipment, miscellaneous, And intangible assets
    
    
    (127,252
    )
    
    
    (131,807
    )
    
    
    (124,469
    )Proceeds of sales of premises and equipment
    
    
    18,350
    
    
    
    12,599
    
    
    
    33,520Net cash ( used in) / provided by investing activities
    
    Ps.
    (767,517
    )
    
    Ps.
    (240,193
    )
    
    Ps.
    629,833Cash Flow from financing activities:Increase in deposits, net
    
    
    1,696,266
    
    
    
    1,415,052
    
    
    
    782,718Borrowings under credit facilities  long term
    
    
    179,181
    
    
    
    
    
    
    
    Payments on credit facilities  long term
    
    
    (418,483
    )
    
    
    (289,719
    )
    
    
    (537,074
    )Decrease in short-term borrowings, net
    
    
    (1,239,176
    )
    
    
    (561,018
    )
    
    
    (252,600
    )(Decrease)/Increase in repurchase agreements
    
    
    (259,142
    )
    
    
    261,654
    
    
    
    (24,601
    )Repayment of principal and interest on restructured debt
    
    
    
    
    
    
    (207,639
    )
    
    
    Net cash (used in) / provided by financing activities
    
    Ps.
    (41,354
    )
    
    Ps.
    618,330
    
    
    Ps.
    (31,557
    )
 The accompanying Notes are an integral part of these consolidated financial statements F-8
    Table of Contents   Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Statements of Cash Flows  Continued
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004
    
    
    2003Increase in cash and cash equivalents, net
    
    Ps.
    47,130
    
    
    Ps.
    157,247
    
    
    Ps.
    290,447Cash and cash equivalents at the beginning of the year
    
    
    988,669
    
    
    
    826,150
    
    
    
    576,838Effect of exchange rate changes on cash
    
    
    5,359
    
    
    
    5,272
    
    
    
    (36,216
    )Monetary effect on cash and cash equivalent
    
    
    
    
    
    
    
    
    
    
    (4,919
    )Cash and cash equivalents at the end of the year
    
    Ps.
    1,041,158
    
    
    Ps.
    988,669
    
    
    Ps.
    826,150Supplemental disclosures relative to cash flows:Interest paid
    
    Ps.
    516,429
    
    
    Ps.
    509,901
    
    
    Ps.
    621,162Income tax paid
    
    Ps.
    44,625
    
    
    Ps.
    528
    
    
    Ps.
    Minimum Presumed Income Tax .(*)
    
    Ps.
    42,419
    
    
    Ps.
    24,886
    
    
    Ps.
    48,436
    The accompanying Notes are an integral part of these consolidated financial statements
 F-9
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Changes in Shareholderss Equity
For the years ended December 31, 2005, 2004 and 2003
  Inflationadjustments toCapital Stock
    
    
    
    
    
    
    
    
    
    
    (Accumulated
    
    
    TotalPaid in
    
    
    and Paid in
    
    
    Profit reserves
    
    
    deficit)/ Retained
    
    
    ShareholdersCapital Stock
    
    
    Capital
    
    
    Capital
    
    
    Legal
    
    
    Other
    
    
    earnings
    
    
    EquityBalance at December 31, 2002
    
    Ps.
    1,092,407
    
    
    Ps.
    79,251
    
    
    Ps.
    1,410,048
    
    
    Ps.
    29,493
    
    
    Ps.
    492,339
    
    
    Ps.
    (1,502,694
    )
    
    Ps.
    1,600,844Adjustment to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,759
    
    
    
    40,759Absorption approved by the
shareholders meeting on April 23,2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (492,339
    )
    
    
    492,339
    
    
    
    Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (222,220
    )
    
    
    (222,220
    )Balance at December 31, 2003
    
    Ps.
    1,092,407
    
    
    Ps.
    79,251
    
    
    Ps.
    1,410,048
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    (1,191,816
    )
    
    Ps.
    1,419,383Capital Increase
    
    
    149,000
    
    
    
    61,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,026Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109,871
    )
    
    
    (109,871
    )Balance at December 31, 2004
    
    Ps.
    1,241,407
    
    
    Ps.
    140,277
    
    
    Ps.
    1,410,048
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    (1,301,687
    )
    
    Ps.
    1,519,538Absorption approved by the
shareholders meeting on April 28,2005
    
    
    
    
    
    
    (140,277
    )
    
    
    (1,131,917
    )
    
    
    (29,493
    )
    
    
    
    
    
    
    1,301,687
    
    
    
    Net Income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107,238
    
    
    
    107,238Balance at December 31, 2005
    
    Ps.
    1,241,407
    
    
    Ps.
    
    
    
    Ps.
    278,131
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    107,238
    
    
    Ps.
    1,626,776
 The accompanying Notes are an integral part of these consolidated financial statements
 F-10
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  1. Basis of Presentation.
     Company
    
    December 31, 2005
    
    December 31, 2004B2Agro S.A.
    
    
    99.99
    %
    
    
    99.99
    %
  Company
    
    December 31, 2005
    
    December 31, 2004Galicia Retiro Cía. de Seguros S.A.
    
    
    99.99
    %
    
    
    99.99
    %Galicia Vida Cía. de Seguros S.A.
    
    
    99.99
    %
    
    
    99.99
    %Sudamericana Asesores de Seguros S.A.
    
    
    99.97
    %
    
    
    99.97
    %Galicia Patrimoniales Cía. de Seguros S.A.
    
    
    99.99
    %
    
    
    99.99
    %
  F-11
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Company
    
    December 31, 2005
    
    December 31, 2004Banco Galicia Uruguay S.A.
    
    
    100.00
    %
    
    
    100.00
    %Tarjetas Regionales S.A.
    
    
    100.00
    %
    
    
    100.00
    %Galicia Factoring y Leasing S.A.
    
    
    99.98
    %
    
    
    99.98
    %Galicia Valores S.A. Sociedad de Bolsa
    
    
    99.99
    %
    
    
    99.99
    %Galicia Capital Markets S.A. (in liquidation)
    
    
    
    
    
    
    99.99
    %Agro Galicia S.A. (in liquidation)
    
    
    
    
    
    
    100.00
    %
        Company
    
    December 31, 2005
    
    December 31, 2004Tarjetas Cuyanas S.A.
    
    
    60.000
    %
    
    
    60.000
    %Tarjetas del Mar S.A.
    
    
    99.999
    %
    
    
    99.999
    %Tarjeta Naranja S.A.
    
    
    80.000
    %
    
    
    80.000
    %
   F-12
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  2. Significant Accounting Policies.
     2.1 Presentation of financial statements in Constant Argentine Pesos.
    F-13
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 2.2 Foreign Currency.
    2.3 Government and Corporate Securities.
   Valuation of government securities under Argentine Banking GAAP.
    .
  F-14
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
         National Secured loans and Provincial Secured Bonds.
   F-15
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
    2.4 Financial trust debt securities and participation certificates.
  2.5 Interest Income (Expense) Recognition.
    2.6 Allowance for Loan Losses and Provision for Contingencies.
  F-16
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
    2.7 Equity Investments.
   
    
    Ownership of a portion of a related companys capital granting the voting power necessary to influence the approval of
such companys financial statements and profits distribution.
    
    Representation in the related companys Board of Directors or corporate governance body.
    
    Participation in the definition of the related companys policies.
    
    Existence of significant transactions between the company holding the interest and the related company (for example,
when the former is the latters only supplier or by far its most important client).
    
    Interchange of senior officers among companies.
    
    Technical dependence of one of the companies on the other.
  2.8 Bank Premises and Equipment and Miscellaneous Assets.
  F-17
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
    2.9 Intangible Assets.
     2.10 Shareholders Equity.
   F-18
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 2.11 Minimum Presumed Income Tax and Income Tax.
     Tax credit
    
    Date of generation
    
    
    Probable offsetting date11.702
    
    2001
    
    
    201145.158
    
    2002
    
    
    201143.004
    
    2003
    
    
    201142.037
    
    2004
    
    
    201126.496
    
    2005
    
    
    2011
    2.12 Statements of Cash Flows.
 Statement of Cash Flows
 F-19
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 2.13 Use of estimates.
  3. Restricted Assets and Other Contingent Liabilities.
   December 31,2005
    
    2004Peso balances
    
    Ps.
    758,124
    
    
    Ps.
    738,056Foreign currency balances
    
    
    418,710
    
    
    
    367,582
  December 31,2005
    
    
    2004Funds and securities pledged under various arrangements
    
    Ps.
    217,090
    
    
    Ps.
    190,681Share on equity investments (*)
    
    
    24,094
    
    
    
    24,094Deposits in the Argentine Central Bank, frozen under Argentine Central Bank
regulations
    
    
    1,450
    
    
    
    2,018Loans granted as collateral
    
    
    5,483,982
    
    
    
    5,890,424Loans pledged and real property as collateral-Banco Galicia Uruguay S.A.(**)
    
    
    497,281
    
    
    
    607,274Total
    
    Ps.
    6,223,897
    
    
    Ps.
    6,714,491
 
 (*)
    
    Shares the transferability of which is subject to the prior approval of the National or
Provincial authorities, as applicable, under the terms of certain concession contracts signed.    F-20
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
             F-21
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
     4. Interest-Bearing Deposits with Other Banks
  5. Government and Corporate Securities
   December 31,2005
    
    
    2004Government SecuritiesWith quotation:Recorded at market valueFor trading purposes:Government Bonds
    
    Ps.
    20,873
    
    
    Ps.
    31,488Argentine Treasury Bonds
    
    
    
    
    
    
    5,268Other
    
    
    356
    
    
    
    349Less: Valuation allowances
    
    
    (353
    )
    
    
    (346
    )Total trading securities
    
    Ps.
    20,876
    
    
    Ps.
    36,759Recorded at amortized cost
In investment accounts
Government Bonds (Boden 2012)
    
    
    650,924
    
    
    
    601,264Total securities in investment accounts
    
    Ps.
    650,924
    
    
    Ps.
    601,264Securities issued by the Argentine Central BankSecurities with quotation
    
    
    699,041
    
    
    
    456,359Securities without quotation
    
    
    5,426
    
    
    
    52,185Total Securities issued by the Argentine Central Bank
    
    Ps.
    704,467
    
    
    Ps.
    508,544
 F-22
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004Without quotationFiscal Tax Credit Certificate (*)
    
    
    34,458
    
    
    
    78,232Government Bonds
    
    
    4,556,613
    
    
    
    3,543,751Argentine Treasury Bonds
    
    
    
    
    
    
    749,729Other
    
    
    
    
    
    
    4Less: Valuation allowances
    
    
    
    
    
    
    (272
    )Total Without quotation securities
    
    
    4,591,071
    
    
    
    4,371,444Total government securities
    
    Ps.
    5,967,338
    
    
    Ps.
    5,518,011Corporate SecuritiesShares
    
    
    376
    
    
    
    Marketable Negotiable obligations
    
    
    4,042
    
    
    
    16,086Less: Valuation allowances
    
    
    
    
    
    
    Total corporate securities
    
    Ps.
    4,418
    
    
    Ps.
    16,086Total government and corporate securities
    
    Ps.
    5,971,756
    
    
    Ps.
    5,534,097
 
 (*)
    
    Government securities collateralized by future tax payments. 6. Loans.
  -
 -
 -
 Overdrafts
 Promissory Notes
 Mortgage loans
 Pledge loans
 Credit card loans
 Consumer loans
 Others
   F-23
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004Non-financial public sector
    
    Ps.
    5,235,869
    
    
    Ps.
    4,558,873Financial sector (Argentine)
    
    
    128,203
    
    
    
    150,530Non-financial private sector and residents abroad
    
    
    5,619,015
    
    
    
    4,361,393- With preferred guarantees
    
    
    838,540
    
    
    
    1,190,024- With other guarantees
    
    
    1,024,542
    
    
    
    601,513- Unsecured
    
    
    3,755,933
    
    
    
    2,569,856Subtotal
    
    
    10,983,087
    
    
    
    9,070,796Allowance for uncollectibility risks (See Note 7)
    
    
    (427,911
    )
    
    
    (632,619
    )Total
    
    Ps.
    10,555,176
    
    
    Ps.
    8,438,177
  December 31,2005
    
    
    2004Financial services industry
    
    
    3,13
    %
    
    
    5,87
    %Public sector
    
    
    47,67
    %
    
    
    50,26
    %Agriculture and livestock
    
    
    7,00
    %
    
    
    5,72
    %Consumer
    
    
    17,84
    %
    
    
    15,82
    %
   7. Allowance for Loan Losses.
  December 31,2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    Ps.
    632,619
    
    
    Ps.
    1,177,315
    
    
    Ps.
    1,681,836Provision charged to income
    
    
    61,071
    
    
    
    179,335
    
    
    
    217,057Prior allowances reverse
    
    
    (96,240
    )
    
    
    (210,284
    )
    
    
    (402,049
    )Inflation and foreign exchange effect and other adjustments
    
    
    4,957
    
    
    
    7,580
    
    
    
    (52,230
    )Loans charged off
    
    
    (174,496
    )
    
    
    (521,327
    )
    
    
    (267,299
    )Balance at end of year
    
    Ps.
    427,911
    
    
    Ps.
    632,619
    
    
    Ps.
    1,177,315
 F-24
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   December 31,2005
    
    
    2004
    
    
    2003Provisions charged to income
    
    Ps.
    61,071
    
    
    Ps.
    179,335
    
    
    Ps.
    217,057Direct charge-offs
    
    
    6,068
    
    
    
    8,951
    
    
    
    14,020Other receivables losses
    
    
    8,430
    
    
    
    993
    
    
    
    52,913Financial leases
    
    
    1,161
    
    
    
    953
    
    
    
    2,438Ps.
    76,730
    
    
    Ps.
    190,232
    
    
    Ps.
    286,428
   8. Other Receivables Resulting from Financial Brokerage.
  December 31,2005
    
    
    2004Preferred guarantees, including deposits with The Argentine Central Bank
    
    Ps.
    137,379
    
    
    Ps.
    91,735Other guarantees
    
    
    483
    
    
    
    1,009Unsecured (1) (2)
    
    
    6,059,761
    
    
    
    6,632,655Less: Allowance for doubtful accounts
    
    
    (35,242
    )
    
    
    (27,711
    )Ps.
    6,162,381
    
    
    Ps.
    6,697,688
 
 (1)
    
    Includes Ps. 4,154,989 and Ps 4,732,288. as of December 31, 2005 and 2004, respectively, of
Compensation to be received from the National Government.(2)
    
    Includes Ps. 279,033 and Ps. 326,455 of reverse repos of Boden 2012 as of December 31, 2005
and 2004, respectively.   F-25
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004Mutual funds
    
    Ps.
    33,402
    
    
    Ps.
    35,108Galtrust I
    
    
    536,509
    
    
    
    665,102Other financial trust participation certificates
    
    
    453,850
    
    
    
    492,434Accrued commissions
    
    
    14,818
    
    
    
    14,411Others
    
    
    318,478
    
    
    
    317,538Ps.
    1,357,057
    
    
    Ps.
    1,524,593
 9. Equity Investments.
  December 31,2005
    
    
    2004In Financial Institutions, complementary and
authorized activitiesBanelco S.A.
    
    Ps.
    7,219
    
    
    Ps.
    4,972Visa Argentina S.A.
    
    
    951
    
    
    
    951Mercado de Valores de Buenos Aires S.A.
    
    
    8,190
    
    
    
    6,920Banco Latinoamericano de Exportaciones S.A.
    
    
    1,572
    
    
    
    1,542Other
    
    
    2,288
    
    
    
    2,255Total equity investments in Financial Institutions,
complementary and authorized activities
    
    Ps.
    20,220
    
    
    Ps.
    16,640In Non-financial InstitutionsAguas Argentinas S.A.
    
    Ps.
    23,370
    
    
    Ps.
    23,370Inversora Diamante S.A.
    
    
    12,944
    
    
    
    12,944Inversora Nihuiles S.A.
    
    
    15,750
    
    
    
    15,750Electrigal S.A.
    
    
    5,455
    
    
    
    5,455Aguas Provinciales de Santa Fe S.A.
    
    
    10,771
    
    
    
    10,771A.E.C. S.A.
    
    
    6,139
    
    
    
    6,139Aguas Cordobesas S.A.
    
    
    8,911
    
    
    
    8,911Tradecom International N.V.
    
    
    6,683
    
    
    
    8,040Other
    
    
    6,181
    
    
    
    3,723Total
equity investments in non-financial institutions
    
    Ps.
    96,204
    
    
    Ps.
    95,103Allowances
    
    Ps.
    (31,304
    )
    
    Ps.
    (28,924
    )Total Equity investments
    
    Ps.
    85,120
    
    
    Ps.
    82,819
 10. Fixed Assets and Intangible Assets.
  December 31,2005
    
    
    2004Land and buildings
    
    Ps.
    558,317
    
    
    Ps.
    553,384Furniture and fixtures
    
    
    132,874
    
    
    
    127,135Machinery and equipment
    
    
    213,056
    
    
    
    198,091Vehicles
    
    
    507
    
    
    
    407Others
    
    
    6,424
    
    
    
    6,050Accumulated depreciation
    
    
    (426,980
    )
    
    
    (395,885
    )Ps.
    484,198
    
    
    Ps.
    489,182
 F-26
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   December 31,2005
    
    
    2004Goodwill, net of accumulated
amortization of Ps.  174,884 and
Ps.  154,214, respectively
    
    Ps.
    85,003
    
    
    Ps.
    115,080Organization and development
expenses, net of accumulated
amortization of Ps. 187,064 and Ps. 239,402 respectively
    
    
    57,580
    
    
    
    71,496Legal actions related to the
payment of deposits (amparo
claims), net of accumulated
amortization of Ps.  332,425 and
Ps.  198,890 respectively (see
Note 2.9)
    
    
    347,777
    
    
    
    451,428Ps.
    490,360
    
    
    Ps.
    638,004
    December 31,2005
    
    
    2004Investment
    
    Ps.
    684
    
    
    Ps.
    5,096Banking
    
    
    54,706
    
    
    
    70,731Regional Credit Card companies
    
    
    29,613
    
    
    
    39,253Ps.
    85,003
    
    
    Ps.
    115,080
 11. Miscellaneous Assets.
  December 31,2005
    
    
    2004Construction in progress
    
    Ps.
    114,652
    
    
    Ps.
    77,088Deposits on fixed asset purchases
    
    
    5,546
    
    
    
    3,153Stationery and supplies
    
    
    3,170
    
    
    
    2,654Real estate held for sale
    
    
    16,328
    
    
    
    12,835Assets acquired through foreclosures
    
    
    
    
    
    
    5,020Others
    
    
    59,456
    
    
    
    59,283Ps.
    199,152
    
    
    Ps.
    160,033
 F-27
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 12. Allowances and Provisions.
  December 31,2005
    
    
    2004Allowances against asset accounts:Government and Corporate securities
    
    Ps.
    353
    
    
    Ps.
    618Other receivables resulting from financial brokerage, for collection risk (a)
    
    
    35,242
    
    
    
    27,711Assets under financial leases (a)
    
    
    2,521
    
    
    
    2,493Equity
investments in other companies (b)
    
    
    31,304
    
    
    
    28,924Miscellaneous receivables, for collection risk (a)
    
    
    77,626
    
    
    
    36,911Reserves for contingencies:For severance payments (c)
    
    
    1,648
    
    
    
    2,551Litigations (d)
    
    
    40,567
    
    
    
    27,230Related to commitments undertaken with public services companies (e)
    
    
    13,000
    
    
    
    83,909Claims related to pesification disputes and other contingencies (f)
    
    
    177,503
    
    
    
    375,442Sundry liabilities arising from credit card activities (g)
    
    
    16,909
    
    
    
    8,543Other commitments (h)
    
    
    8,747
    
    
    
    20,131Total reserves for contingencies
    
    Ps.
    258,374
    
    
    Ps.
    517,806
 
         F-28
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 13.
Other Liabilities Resulting from Financial Brokerage Argentine Central Bank.
  December 31,2005
    
    
    2004DescriptionContractual Long-term liabilities:Advance for the acquisition of national government bonds in U.S. Dollars (*)
    
    Ps.
    3,057,572
    
    
    Ps.
    2,571,125Argentine Central Banks financial assistance (*)
    
    
    5,299,994
    
    
    
    5,690,864Total long-term liabilities
    
    Ps.
    8,357,566
    
    
    Ps.
    8,261,989Contractual Short-term liabilities:Other Central Bank Obligations
    
    
    319
    
    
    
    986Total short-term liabilities
    
    Ps.
    319
    
    
    Ps.
    986Accrued interest (**)
    
    
    254,024
    
    
    
    165,742Ps.
    8,611,909
    
    
    Ps.
    8,428,717
 
 (*)
    
    See Note 32 Compensation to financial institutions.(**)
    
    Accrued interest on the advance for the purchase of the hedge bond was Ps. 239,077 and
Ps.149,618 at December 31, 2005 and 2004, respectively. The maturity of this advance will be
determined when the Hedge Bond is received.  2006
    
    
    420,5972007
    
    
    305,2082008
    
    
    534,0832009
    
    
    2,482,4142010
    
    
    972,876Thereafter
    
    
    584,816Ps.
    5,299,994
 F-29
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 14.
    
    Other Liabilities Resulting from Financial Brokerage- Banks and International Entities,
and Loans from Domestic Financial Institutions.
  December 31,2005
    
    
    2004DescriptionBank and International EntitiesLong Term LiabilitiesFloating Rates Banks Loans 2010 (i)
    
    Ps.
    140,720
    
    
    Ps.
    137,378Floating Rates Banks Loans 2014 (ii)
    
    
    261,877
    
    
    
    256,181Commodity Credit Corp (C.C.C) 2014 (iii)
    
    
    286,779
    
    
    
    280,543Floating Rates Banks Loans 2019 (iv)
    
    
    37,903
    
    
    
    35,279Trade A
    
    
    
    
    
    
    32,574New York
    
    
    19,618
    
    
    
    30,233Other lines of foreign banks
    
    
    15,158
    
    
    
    205Total long-term liabilities
    
    Ps.
    762,055
    
    
    Ps.
    772,393Total Banks and International Entities
    
    Ps.
    762,055
    
    
    Ps.
    772,393Domestic and Financial InstitutionsLong term liabilities:BICE (Banco de inversión y Comercio Exterior)
    
    
    70,056
    
    
    
    75,978Other lines of domestic banks
    
    
    89,603
    
    
    
    Total long term liabilities
    
    Ps.
    159,659
    
    
    Ps.
    75,978Short-term liabilities:BICE (Banco de inversión y Comercio Exterior)
    
    
    
    
    
    
    38,586Other lines of credit from domestic banks
    
    
    60,763
    
    
    
    76,631Total Domestic and Financial Institutions
    
    Ps.
    220,422
    
    
    Ps.
    191,195TOTAL
    
    Ps.
    982,477
    
    
    Ps.
    963,588
    (i)
    
    Ps. 140,720 Libor plus 350 basis points loans due in 2010 with 8 bianually payments,
starting from July 1, 2006.
 F-30
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 (ii)
    
    Ps. 261,877 Libor plus 85 basis points loans due in 2014 with bianually payments
starting from January 1, 2010.(iii)
    
    Ps. 286,779 interest rate set up loans due in 2014 with bianually payments, starting
from July,1st, 2010. The interest rate will increase 100 basis points annually starting
with 3% in 2004, through 7% in 2008 and thereafter:(iv)
    
    Ps. 37,903 Libor plus 578 basis points loans due in 2019 with a bullet payment.
  Long Term Liabilities2006
    
    
    90,5392007
    
    
    105,2442008
    
    
    80,9152009
    
    
    39,9242010
    
    
    140,457Thereafter
    
    
    464,635Ps.
    921,714
  15. Other Liabilities Resulting from Financial Brokerage  Negotiable Obligations.
  F-31
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 AnnualInterest
    
    
    December 31,Maturity
    
    
    Rate
    
    
    2005
    
    
    2004Negotiable Obligations (1)Long-term liabilities:9% Notes Due 2003
    
    
    2003
    
    
    
    9.00
    %
    
    
    19,356
    
    
    
    34,649(Semi-annual interest, principal payable at maturity)4th Series Floating Rate Notes Due 2005
    
    
    2005
    
    
    
    4.00
    %
    
    
    2,695
    
    
    
    2,399(Semi-annual interest, principal payable every six
months)6th Series 7.875% Notes Due 2007
    
    
    2007
    
    
    
    7.88
    %
    
    
    146,795
    
    
    
    216,049(Semi-annual
interest, principal payable at maturity)7th Series Floating Rate Notes Due 2007
    
    
    2007
    
    
    
    7.95
    %
    
    
    87,229
    
    
    
    128,449(Semi-annual interest, principal payable at maturity)Tarjeta Naranja Class I
    
    
    2007
    
    
    CER+1.68%
    
    
    40,781
    
    
    
    (Quarterly interest, principal payable at maturity)Banco Galicia  Due 2010- Libor +350 PB
    
    
    2010
    
    
    
    7,19
    %
    
    
    1,059,917
    
    
    
    1,035,295(Semi-annual interest payments)Banco Galicia Uruguay S.A. Unsubordinated
    
    Various
    
    Various
    
    
    
    172,935
    
    
    
    556,430(restructured deposits)
(Annual interest, principal payable every year)Banco Galicia  Due 2014
    
    
    2014
    
    
    
    4.00
    %
    
    
    1,391,707
    
    
    
    1,361,999(Semi  annual interest)Banco Galicia  Subordinated Due 2019
    
    
    2019
    
    
    
    11.00
    %
    
    
    431,024
    
    
    
    380,077(Semi-annual interest, principal payable at maturity)Total long-term liabilities
    
    
    
    
    
    
    
    
    
    Ps.
    3,352,439
    
    
    Ps.
    3,715,347Short-term liabilities:Tarjetas del Mar
    
    
    2002
    
    
    
    14.92
    %
    
    Ps.
    
    
    
    Ps.
    10(Fixed Interest, principal payable at maturity)Tarjeta Cuyanas S.A.
    
    
    2005
    
    
    
    8.00
    %
    
    
    
    
    
    
    13,372(Fixed Interest, principal payable at maturity)Tarjeta Naranja Class II.
    
    
    2006
    
    
    
    11.00
    %
    
    
    41,433
    
    
    
    (Semi-annual interest, principal payable at
maturity)Tarjeta Naranja Class III.
    
    
    2006
    
    
    CER + 1.75%
    
    
    41,020
    
    
    
    (Bimonthly interest, principal payable in july
2006, september 2006 and november 2006)Tarjeta Naranja Class IV
    
    
    2006
    
    
    
    6.50
    %
    
    
    27,034
    
    
    
    (Semi-annual interest, principal payable at
maturity)Tarjeta Cuyanas S.A. S XVI
    
    
    2006
    
    
    CER + 1.50%
    
    
    21,532(Quarterly Interest, principal payable at
maturity)Total short-term liabilities
    
    
    
    
    
    
    
    
    
    
    131,019
    
    
    
    13,382Ps.
    3,483,458
    
    
    Ps.
    3,728,729
 
 (1)
    
    Only principal, except Subordinated Obligations including interests for Ps. 22,937.  F-32
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   (i)
    
    Ps. 146,795 of fixed rate debt and Ps. 87,229 of floating rate debt, corresponding to the
banks former New York branch restructured debt
 (ii)
    
    Ps. 22,051 of hold out debt corresponding to 9% notes due 2003 and 4th series floating
rate notes due 2005.
 (iii)
    
    Ps. 172,935 of Uruguay negotiable obligations issued to restructure deposits , due 2008
and 2011.
 (iv)
    
    Ps. 1,059,917 and Ps. 1,391,707 of the Bank reestructured foreign debt, due 2010 and 2014
respectively.
 (v)
    
    Ps. 431,024 of debt issued as subordinated negotiable obligations, due 2019, corresponding to
the Banks restructured foreign debt.
 (vi)
    
    Ps. 40,781 of Tarjeta Naranja S.A. negotiable obligations, due 2007.
   Hold Outs
    
    
    22,0512006
    
    
    274,1352007
    
    
    447,4072008
    
    
    289,8552009
    
    
    297,0072010
    
    
    473,786Thereafter
    
    
    1,548,198Total
    
    Ps.
    3,352,439
 16. Directors and Syndics Fees.
  December 31,2005
    
    
    2004
    
    
    2003GFG directors fees
    
    Ps.
    210
    
    
    Ps.
    80
    
    
    Ps.
    GFG syndics
fees
    
    
    454
    
    
    
    169
    
    
    
    123Banco
Galicia directors fees
    
    
    390
    
    
    
    260
    
    
    
    200Banco Galicia syndics fees
    
    
    550
    
    
    
    425
    
    
    
    410Subsidiary companies directors and syndics fees
    
    
    4,189
    
    
    
    3,106
    
    
    
    1,184Ps.
    5,793
    
    
    Ps.
    4,040
    
    
    Ps.
    1,917
 F-33
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  17. Contributions to the Bank Employees Social Services Institute (the ISSB).
    F-34
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 18. Balances in Foreign Currency.
  December 31,2005
    
    
    2004Assets:Cash and due from banks
    
    Ps.
    514,267
    
    
    Ps.
    284,806Government and corporate securities
    
    
    657,708
    
    
    
    1,397,351Loans
    
    
    1,038,424
    
    
    
    879,809Other receivables resulting from financial brokerage
    
    
    4,504,840
    
    
    
    5,132,504Equity investments in other companies
    
    
    4,823
    
    
    
    3,072Miscellaneous receivables
    
    
    74,825
    
    
    
    76,639Bank premises and equipment
    
    
    11,362
    
    
    
    11,945Intangible assets
    
    
    898
    
    
    
    Miscellaneous assets
    
    
    39
    
    
    
    39In process items
    
    
    239
    
    
    
    80Total
    
    Ps.
    6,807,425
    
    
    Ps.
    7,786,245Liabilities:Deposits
    
    Ps.
    1,309,353
    
    
    Ps.
    1,411,162Other liabilities resulting from financial brokerage
    
    
    4,439,786
    
    
    
    4,744,901Sundry liabilities
    
    
    12,662
    
    
    
    1,512Subordinated Negotiable Obligations
    
    
    431,024
    
    
    
    380,077Provisions
    
    
    831
    
    
    
    In process items
    
    
    3,219
    
    
    
    5,893Total
    
    Ps.
    6,196,875
    
    
    Ps.
    6,543,545
 19. Transactions with Related Parties.
  December 31,2005
    
    
    2004
    
    
    2003Revenues recognized(*)
    
    Ps.
    32,342
    
    
    Ps.
    34,162
    
    
    Ps.
    2,974Expenses incurred
    
    
    1,078
    
    
    
    959
    
    
    
    797
 
 (*)
    Interests and adjustments from time deposits of Banco Galicia Ps. 622 and Ps. 171 as of
december 31, 2005 and 2004, interests from negotiable obligations of Banco Galicia Ps. 30,898 and
Ps. 32,584 as of december 31, 2005 and 2004, and interest from negotiable obligations of Galicia
Uruguay Ps. 1,258 as of december 31, 2004.  F-35
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 20. Breakdown of Captions Included in the Income Statement.
 December 31,2005
    
    
    2004
    
    
    2003Financial IncomeInterest on other receivables resulting from
financial brokerage:Interest on purchased certificates of deposits
    
    
    4,367
    
    
    
    3,006
    
    
    
    11,839Compensatory Bond
    
    
    133,446
    
    
    
    69,541
    
    
    
    70,340Additional interest on current accounts and
special accounts with the Argentine Central
Bank
    
    
    16,453
    
    
    
    6,816
    
    
    
    4,294Other
    
    
    11,629
    
    
    
    10,654
    
    
    
    12,190Ps.
    165,895
    
    
    Ps.
    90,017
    
    
    Ps.
    98,663OtherDifference in quotation of gold and foreign currency
transactions
    
    
    58,734
    
    
    
    51,426
    
    
    
    12,613Premiums on foreign currency transactions
    
    
    3,865
    
    
    
    
    
    
    
    Interest on pre-export and export financing
    
    
    21,501
    
    
    
    12,514
    
    
    
    7,580Result from other credits by financial brokerage
    
    
    
    
    
    
    62,876
    
    
    
    Other
    
    
    15,126
    
    
    
    5,285
    
    
    
    3,464Ps.
    99,226
    
    
    Ps.
    132,101
    
    
    Ps.
    23,657Financial ExpensesInterest on other liabilities resulting from financial
brokerage:Discounts on negotiable obligations
    
    
    102
    
    
    
    352
    
    
    
    672Interest on negotiable obligations
    
    
    182,394
    
    
    
    38,956
    
    
    
    139,595Interest on other liabilities resulting from financial
brokerage from other banks and international entities
    
    
    86,780
    
    
    
    133,250
    
    
    
    200,300Ps.
    269,276
    
    
    Ps.
    172,558
    
    
    Ps.
    340,567Other interest:Interest on Argentine Central Bank loans
    
    
    193,426
    
    
    
    
    
    
    
    15Interests on financial assistance
    
    
    
    
    
    
    199,079
    
    
    
    336,305CER adjustment on Argentine Central Bank advances
    
    
    79,124
    
    
    
    56,582
    
    
    
    50,442Other
    
    
    61,848
    
    
    
    67,584
    
    
    
    22,002Ps.
    334,398
    
    
    Ps.
    323,245
    
    
    Ps.
    408,764Other:Contributions to the deposit insurance system
    
    
    12,059
    
    
    
    15,176
    
    
    
    12,715Premiums on repo transactions
    
    
    16,235
    
    
    
    4,423
    
    
    
    Contributions and taxes on financial income
    
    
    36,700
    
    
    
    33,656
    
    
    
    18,939Difference in quotation of gold and foreign currency
    
    
    
    
    
    
    
    
    
    
    111,182Charge for impairment of loans
    
    
    
    
    
    
    3,720
    
    
    
    10,511Other
    
    
    4,019
    
    
    
    169
    
    
    
    Ps.
    69,013
    
    
    Ps.
    57,144
    
    
    Ps.
    153,347
 F-36
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004
    
    
    2003Income from servicesOtherCommissions on credit cards
    
    
    198,086
    
    
    
    167,831
    
    
    
    126,441Safety rental
    
    
    7,928
    
    
    
    6,230
    
    
    
    5,111Other
    
    
    63,092
    
    
    
    49,497
    
    
    
    38,618Ps.
    269,106
    
    
    Ps.
    223,558
    
    
    Ps.
    170,170Expenses for servicesOtherGross revenue taxes
    
    Ps.
    25,269
    
    
    Ps.
    23,960
    
    
    Ps.
    13,340Linked with credit cards
    
    
    33,609
    
    
    
    21,996
    
    
    
    17,275Other
    
    
    9,187
    
    
    
    5,904
    
    
    
    4,506Ps.
    68,065
    
    
    Ps.
    51,860
    
    
    Ps.
    35,121Administrative expensesOther operating expensesRentals
    
    
    21,036
    
    
    
    17,141
    
    
    
    19,577Electricity and communications
    
    
    31,115
    
    
    
    27,082
    
    
    
    27,234Amortization of organization and
development expenses
    
    
    36,480
    
    
    
    47,235
    
    
    
    59,547Depreciation of bank premises and equipment
    
    
    36,450
    
    
    
    38,091
    
    
    
    50,542Maintenance and repair expenses
    
    
    27,905
    
    
    
    24,929
    
    
    
    22,724Other operating expenses
    
    
    34,237
    
    
    
    25,505
    
    
    
    24,975Ps.
    187,223
    
    
    Ps.
    179,983
    
    
    Ps.
    204,599Miscellaneous incomeOtherInterest on miscellaneous
receivables
    
    
    15,426
    
    
    
    15,461
    
    
    
    6,922Premiums and commissions from insurance business
    
    
    64,913
    
    
    
    89,315
    
    
    
    44,422Other
    
    
    30,722
    
    
    
    29,572
    
    
    
    46,461Ps.
    111,061
    
    
    Ps.
    134,348
    
    
    Ps.
    97,805Miscellaneous lossesOtherClaims
    
    
    1,303
    
    
    
    1,270
    
    
    
    775Amortization of goodwill
    
    
    24,574
    
    
    
    25,499
    
    
    
    25,963Commissions and expenses on insurance business
    
    
    54,476
    
    
    
    78,511
    
    
    
    52,367Other
    
    
    44,185
    
    
    
    51,839
    
    
    
    76,206Ps.
    124,538
    
    
    Ps.
    157,119
    
    
    Ps.
    155,311
 21. Income Taxes.
   F-37
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 22. Shareholders Equity and Restrictions Imposed on the Distribution of Profits.
          F-38
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   23. Minimum Capital.
     Computable CapitalMinimum Capital.
    
    
    Computable Capital.
    
    

as a % of Minimum Capital.December 31, 2005
    
    Ps.
    881,546
    
    
    Ps.
    1,885,211
    
    
    
    213.85December 31, 2004
    
    
    613,339
    
    
    
    1,746,553
    
    
    
    284.76
    24. Earnings per Share.
    F-39
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 25. Contribution to the Deposit Insurance System.
         26. Galicia 2004 and Galicia 2005 Trusts.
   F-40
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 27. Statements of Income and Balance Sheets.
  December 31,2005
    
    
    2004
    
    
    2003Interest income:Interest and fees on loans (*)
    
    Ps.
    1,377,432
    
    
    Ps.
    1,133,195
    
    
    Ps.
    968,086Interest and dividends on investment securities:Tax-exempt
    
    
    185,854
    
    
    
    (5,008
    )
    
    
    32,504Interest on interest bearing deposits with other banks
    
    
    68
    
    
    
    44
    
    
    
    68Interest on other receivables from financial brokerage
    
    
    261,488
    
    
    
    133,150
    
    
    
    93,060Government securities and other trading gains (loss),
net
    
    
    491,404
    
    
    
    (4,337
    )
    
    
    243,850Total interest income
    
    
    2,316,246
    
    
    
    1,257,044
    
    
    
    1,337,568Interest expenseInterest on deposits
    
    
    266,759
    
    
    
    143,533
    
    
    
    263,760Interest on securities sold under agreements to
repurchase
    
    
    16,235
    
    
    
    4,423
    
    
    
    Interest on short-term liabilities from financial
intermediation
    
    
    42,806
    
    
    
    27,543
    
    
    
    417,644Interest on long-term liabilities from financial
intermediation (*)
    
    
    1,470,250
    
    
    
    869,571
    
    
    
    468,658Monetary Loss from financial intermediation
    
    
    
    
    
    
    
    
    
    
    14,157Total interest expense
    
    
    1,796,050
    
    
    
    1,045,070
    
    
    
    1,164,219Net interest income
    
    
    520,196
    
    
    
    211,974
    
    
    
    173,349Provision for loan losses Net
    
    
    (54,512
    )
    
    
    (130,651
    )
    
    
    (168,277
    )Net interest income /(expense) after provision for
loan losses
    
    
    574,708
    
    
    
    342,625
    
    
    
    341,626
 
 (*)
    
    Includes CER/CVS adjustments. F-41
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004
    
    
    2003Non-interest income:Service charges on deposit accounts
    
    Ps.
    102,606
    
    
    Ps.
    80,364
    
    
    Ps.
    68,048Credit card service charges and fees
    
    
    253,688
    
    
    
    225,654
    
    
    
    194,483Other commissions
    
    
    325,988
    
    
    
    250,134
    
    
    
    206,327Income from equity in other companies
    
    
    6,662
    
    
    
    2,990
    
    
    
    Premiums and commissions on insurance
business
    
    
    64,913
    
    
    
    91,776
    
    
    
    44,422Other
    
    
    131,410
    
    
    
    132,856
    
    
    
    200,301Monetary gain (loss) on other transactions
    
    
    
    
    
    
    
    
    
    
    (3,517
    )Total non-interest income
    
    Ps.
    885,267
    
    
    Ps.
    783,774
    
    
    Ps.
    710,064Non-interest expense:Commissions
    
    
    90,720
    
    
    
    65,351
    
    
    
    54,063Salaries and social security charges
    
    
    330,428
    
    
    
    241,980
    
    
    
    198,288Fees and external administrative services
    
    
    82,910
    
    
    
    62,127
    
    
    
    63,077Depreciation of bank premises and equipment
    
    
    36,450
    
    
    
    38,091
    
    
    
    50,542Personnel services
    
    
    30,018
    
    
    
    27,037
    
    
    
    15,665Rentals
    
    
    21,036
    
    
    
    17,141
    
    
    
    19,577Electricity and communications
    
    
    31,115
    
    
    
    27,082
    
    
    
    27,234Advertising and publicity
    
    
    68,132
    
    
    
    37,796
    
    
    
    20,020Taxes
    
    
    113,005
    
    
    
    113,754
    
    
    
    74,825Amortization of organization and development expenses
    
    
    36,480
    
    
    
    47,235
    
    
    
    59,547Loss from equity in other companies
    
    
    
    
    
    
    
    
    
    
    22,570Maintenance and repair expenses
    
    
    27,905
    
    
    
    24,929
    
    
    
    22,724Minority interest
    
    
    34,609
    
    
    
    14,302
    
    
    
    9,232Commissions and expenses on insurance business
    
    
    60,903
    
    
    
    80,939
    
    
    
    59,725Amortization of Amparo claims
    
    
    122,279
    
    
    
    121,010
    
    
    
    77,880Other Provisions and reserves
    
    
    99,754
    
    
    
    134,135
    
    
    
    315,167Other
    
    
    147,691
    
    
    
    139,543
    
    
    
    183,268Monetary result from operating expenses
    
    
    
    
    
    
    
    
    
    
    (84
    )Total non-interest expense
    
    Ps.
    1,333,435
    
    
    Ps.
    1,192,452
    
    
    Ps.
    1,273,320Income before tax expense
    
    
    126,540
    
    
    
    (66,053
    )
    
    
    (221,630
    )Income tax expense
    
    
    (19,302
    )
    
    
    (43,818
    )
    
    
    (590
    )Net Loss
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )
    
    Ps.
    (222,220
    )
 F-42
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  December 31,2005
    
    
    2004Assets:Cash and due from banks
    
    Ps.
    1,045,735
    
    
    Ps.
    996,600Interest-bearing deposits in other banks
    
    
    212,851
    
    
    
    379,192Federal funds sold and securities purchased under
resale agreements or similar agreements
    
    
    284,787
    
    
    
    77,665Trading account assets
    
    
    762,417
    
    
    
    564,109Available for sale securities
    
    
    6,633,100
    
    
    
    6,339,961Loans
    
    
    11,067,481
    
    
    
    8,915,248Allowances for loan losses
    
    
    (539,894
    )
    
    
    (640,603
    )Fixed assets
    
    
    484,198
    
    
    
    489,182Compensatory and Hedge Bonds to be received
    
    
    4,154,989
    
    
    
    4,732,288Other assets
    
    
    1,750,235
    
    
    
    1,987,762Total assets
    
    Ps.
    25,855,899
    
    
    Ps.
    23,841,404Liabilities and Shareholders Equity:Deposits
    
    Ps.
    8,370,590
    
    
    Ps.
    6,716,425Short-term borrowing
    
    
    446,125
    
    
    
    295,327Other liabilities
    
    
    2,376,816
    
    
    
    1,853,134Long-term debt
    
    
    12,631,719
    
    
    
    12,825,707Commitments and contingent liabilities
    
    
    258,374
    
    
    
    517,806Minority interest in Consolidated Subsidiaries
    
    
    145,499
    
    
    
    113,467Common stock
    
    
    1,241,407
    
    
    
    1,241,407Other shareholders equity
    
    
    385,369
    
    
    
    278,131Total liabilities and shareholders equity
    
    Ps.
    25,855,899
    
    
    Ps.
    23,841,404
  December 31, 2005
    
    
    December 31, 2004Unrealized
    
    
    
    
    
    
    
    
    
    
    UnrealizedCarrying value
    
    
    Gains/(Losses)
    
    
    Market value
    
    
    Carrying value
    
    

Gains/(Losses)
    
    
    Market valueExternal Notes
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    749,729
    
    
    Ps.
    
    
    
    Ps.
    207,389BODEN 2012 - Compensatory Bond
    
    
    987,951
    
    
    
    104,757
    
    
    
    876,661
    
    
    
    976,056
    
    
    
    269,009
    
    
    
    814,764Fiscal Credit Certificate (1)
    
    
    34,458
    
    
    
    
    
    
    
    34,458
    
    
    
    78,232
    
    
    
    
    
    
    
    78,232BOGAR
    
    
    3,823,299
    
    
    
    1,531,789
    
    
    
    3,366,792
    
    
    
    3,543,751
    
    
    
    1,010,200
    
    
    
    2,822,668GalTrust I
    
    
    536,509
    
    
    
    (74,673
    )
    
    
    253,418
    
    
    
    665,102
    
    
    
    (7,335
    )
    
    
    401,116Discount Bonds
    
    
    733.314
    
    
    
    56,581
    
    
    
    349,346
    
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    517,569
    
    
    
    (10,204
    )
    
    
    507,365
    
    
    
    327,091
    
    
    
    
    
    
    
    327,091TOTAL
    
    Ps.
    6,633,100
    
    
    Ps.
    1,608,250
    
    
    Ps.
    5,388,040
    
    
    Ps.
    6,339,961
    
    
    Ps.
    1,271,874
    
    
    Ps.
    4,651,260
 
 (1)
    
    These instruments can be used to repay taxes, including the value-added tax F-43
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  December 31, 2005Maturing after 1
    
    
    Maturing afterMaturing within
    
    
    year but within
    
    
    5 years but within
    
    
    Maturing afterCarrying Value
    
    
    1 year
    
    
    5 years
    
    
    10 years
    
    
    10 yearsBODEN 2012 - Compensatory Bond
    
    
    987,951
    
    
    
    141,136
    
    
    
    564,543
    
    
    
    282,272
    
    
    
    Fiscal Credit Certificate (1)
    
    
    34,458
    
    
    
    34,458
    
    
    
    
    
    
    
    
    
    
    
    BOGAR
    
    
    3,823,299
    
    
    
    191,165
    
    
    
    844,312
    
    
    
    1,766,683
    
    
    
    1,021,139GalTrust I
    
    
    536,509
    
    
    
    
    
    
    
    
    
    
    
    323,615
    
    
    
    212,894Discount Bonds
    
    
    733.314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    733,314Other assets
    
    
    517,569
    
    
    
    517,569
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    Ps.
    6,633,100
    
    
    Ps.
    884,328
    
    
    Ps.
    1,408,855
    
    
    Ps.
    2,372,570
    
    
    Ps.
    1,967,347
 28. Operations by Geographical Segment.
  December 31,2005
    
    2004
    
    2003Total revenues:(*)Republic of Argentina
    
    Ps.
    3,196,626
    
    
    Ps.
    2,313,069
    
    
    Ps.
    2,379,016Republic of Uruguay
    
    
    136,240
    
    
    
    119,812
    
    
    
    213,318Grand Cayman Island
    
    
    1,009
    
    
    
    2,362
    
    
    
    10,704Net income (loss), net
of monetary effects
allocable to each
country:Republic of Argentina
    
    
    4,639
    
    
    
    (76,207
    )
    
    
    (142,995
    )Republic of Uruguay
    
    
    99,804
    
    
    
    (33,953
    )
    
    
    (63,380
    )Grand Cayman Island
    
    
    2,795
    
    
    
    289
    
    
    
    (15,845
    )Total assets:Republic of Argentina
    
    
    25,035,273
    
    
    
    22,927,642
    
    
    
    21,859,395Republic of Uruguay
    
    
    584,189
    
    
    
    707,252
    
    
    
    908,137Grand Cayman Island
    
    
    16,262
    
    
    
    15,660
    
    
    
    55,322Fixed assetsRepublic of Argentina
    
    
    472,832
    
    
    
    477,227
    
    
    
    504,742Republic of Uruguay
    
    
    11,366
    
    
    
    11,955
    
    
    
    12,790Miscellaneous assetsRepublic of Argentina
    
    
    199,113
    
    
    
    159,994
    
    
    
    156,084Republic of Uruguay
    
    
    39
    
    
    
    39
    
    
    
    2,014GoodwillRepublic of Argentina
    
    
    85,003
    
    
    
    115,080
    
    
    
    139,681Other intangible assetsRepublic of Argentina
    
    
    404,459
    
    
    
    522,924
    
    
    
    587,373Republic of Uruguay
    
    
    898
    
    
    
    
    
    
    
    3Geographical segment
assets as a percentage
of total assetsRepublic of Argentina
    
    
    97.66
    %
    
    
    96.94
    %
    
    
    95.78
    %Republic of Uruguay
    
    
    2.28
    %
    
    
    2.99
    %
    
    
    3.98
    %Grand Cayman Island
    
    
    0.06
    %
    
    
    0.07
    %
    
    
    0.24
    %
 
 (*)
    
    The caption Revenues includes financial income, income from services and miscellaneous
income. 29. Financial Instruments with Off-Balance Sheet Risk.
  F-44
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
    December 31,2005
    
    2004Commitments to extend credit
    
    Ps.
    397,714
    
    
    Ps.
    285,824Standby letters of credit
    
    
    54,299
    
    
    
    38,140Guarantees granted
    
    
    223,055
    
    
    
    122,539Acceptances
    
    
    23,938
    
    
    
    18,967
     December 31,2005
    
    
    2004Preferred counter guarantees
    
    Ps.
    32,788
    
    
    Ps.
    44,759Other counter guarantees
    
    
    15,658
    
    
    
    17,676
  December 31,2005
    
    2004Checks drawn on the Bank
    
    Ps.
    110,211
    
    
    Ps.
    108,290Checks drawn on the other Bank
    
    
    193,267
    
    
    
    172,296Bills and other items for collection
    
    
    896,801
    
    
    
    519,222
 F-45
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
    30. Derivative Financial Instruments.
  Memorandum Accounts
    
    
    Fair ValueDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Option contracts:Written put options (1)
    
    Ps.
    184,801
    
    
    Ps.
    173,069
    
    
    Ps.
    7,977
    
    
    Ps.
    8,802
 
 (1)
    
    As established by Section 4, subsection a and Section 6 of Decree 1836/02 and Argentine
Central Bank Communiqué A 3828, in connection with the second Exchange offered by the government
to exchange restructured deposits for government bonds , the Bank granted an option to sell
coupons to the holders of restructured deposits certificates who had opted to receive BODEN 2013,
BODEN 2006, BODEN 2012 or BODEN 2005 in exchange for their certificates.     F-46
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  31. Disclosure about Fair Value of Financial Instruments.
     2005
    
    2004Book Value
    
    Fair Value
    
    Book Value
    
    Fair ValueDerivative activities: (see Note 30)Assets
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    Liabilities
    
    
    184,801
    
    
    
    7,977
    
    
    
    173,069
    
    
    
    8,802Non derivative activities:Assets:Cash and due from banks (1)
    
    Ps.
    1,041,158
    
    
    Ps.
    1,041,158
    
    
    Ps.
    988,669
    
    
    Ps.
    988,669Government securities (2)Trading
    
    
    725,343
    
    
    
    725,345
    
    
    
    545,031
    
    
    
    545,604Without quotation Securities
    
    
    4,591,071
    
    
    
    3,750,597
    
    
    
    4,371,716
    
    
    
    3,180,905Investment
    
    
    650,924
    
    
    
    577,599
    
    
    
    601,264
    
    
    
    506,803Loans (3)
    
    
    10,555,176
    
    
    
    9,717,621
    
    
    
    8,438,177
    
    
    
    7,515,344Compensatory and Hedge Bond to be received (4)
    
    
    4,154,989
    
    
    
    3,792,416
    
    
    
    4,732,288
    
    
    
    4,011,265Others (5)
    
    
    2,113,060
    
    
    
    1,774,363
    
    
    
    2,263,163
    
    
    
    1,855,262Liabilities:Deposits (6)
    
    Ps.
    8,421,660
    
    
    Ps.
    8,368,522
    
    
    Ps.
    6,756,913
    
    
    Ps.
    6,614,881Other liabilities resulting from financial
Intermediation :Argentine Central Bank (7)
    
    
    8,850,986
    
    
    
    7,675,211
    
    
    
    8,428,717
    
    
    
    6,553,636Banks and international entities and Loans
from Domestic Financial Institutions (8) and
Negotiable obligations (9)
    
    
    4,580,435
    
    
    
    4,120,395
    
    
    
    4,796,562
    
    
    
    3,739,333Others (10)
    
    
    1,413,316
    
    
    
    1,403,830
    
    
    
    1,211,365
    
    
    
    1,207,227
  F-47
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 (1) Cash and due from banks:
 (2) Government securities:
 (3) Loans:
 (4) Compensatory and hedge bonds to be received:
 (5) Others:
 (6) Deposits:
 (7) Argentine Central Bank: Central Bank
 (8) Banks and international entities and loans from domestic financial institutions:
 (9)Negotiable obligations:
 F-48
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  (10) Others:
 32. Pending events derived from the systems crisis in late 2001.
 Deposits with the financial system  Legal actions requesting protection of Constitutional
guarantees
      F-49
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   Claims due to foreign exchange differences arising from the repayment of financial assistance
during foreign-exchange market holidays in January 2002
         Compensation to financial institutions
  F-50
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
      Situation of Banco Galicia Uruguay S.A. and Galicia (Cayman) Limited
       F-51
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
      33. Preferred Liabilities of the former Banco Almafuerte Coop. Ltdo.
   F-52
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements  For the fiscal years ended December 31, 2005, 2004 and 2003
 34. Setting up of Financial Trusts.
  Conditions
    
    Galtrust I
    
    Galtrust II
    
    Galtrust V
    
    GaliciaCreation date
    
    
    10.13.00
    
    
    
    12.17.01
    
    
    
    12.17.01
    
    
    
    04.16.02Due date
    
    
    10.10.15
    
    
    
    12.10.10
    
    
    
    01.10.16
    
    
    
    05.06.32Trustee
    
    First Trust of New
York N.A.
    
    First Trust of New
York N.A.
    
    First Trust of New
York N.A.
    
    Bapro Mandatos y
Negocios S.A.Rate (*)
    
    C.E.R. + 10 % T.N.A.
    
    C.E.R. + 9.75 %
T.N.A. fixed
    
    C.E.R. + 9.75 %
T.N.A. fixed
    
    C.E.R. + 4 %Trust assets
    
    Loans to provincial
governments
    
    Mortgage loans
    
    Mortgage loans
    
    Secured loansTotal portfolio
transferred
    
    US$
    490,224
    
    
    US$
    61,191
    
    
    US$
    57,573
    
    
    Ps.
    108,000Subscribed debt
securities
    
    Participation
certificates for a face value of Ps.
200,000
    
    Participation
certificates for a
face value of Ps.16,191
    
    Debt securities for
a face value of Ps.
11,000 Debt
securities for a
face value of Ps.
31,000, held by  Banco Galicia
Uruguay S.A. Participation
certificates
for a
face value
of Ps. 15,573
    
    Participation
certificates for a
face value of Ps.
27,000Balance as of
12.31.2005
    
    Ps.
    536,509
    
    
    Ps.
    21,411
    
    
    Ps.
    27,100
    
    
    Ps.
    50,758Balance as of
12.31.2004
    
    Ps.
    665,102
    
    
    Ps.
    27,559
    
    
    Ps.
    34,029
    
    
    Ps.
    44,294
 
 (*)
    
    Applicable to debt securities only. Galicia Personal
    
    Galicia Commercial
    
    Real Estate Loans
    
    Real Estate LoansConditions
    
    loans
    
    Mortgages
    
    Galicia I
    
    Galicia IICreation date
    
    
    12.20.04
    
    
    
    02.22.05
    
    
    
    08.17.05
    
    
    
    10.12.05Due date
    
    
    11.10.08
    
    
    
    07.12.13
    
    
    
    03.15.15
    
    
    
    12.15.25Trustee
    
    Deustche Bank S.A.
    
    Deustche Bank S.A
    
    Deustche Bank S.A
    
    Deustche Bank S.ARate (*)
    
    Class A debt
securities, 8 %
T.N.A. Class B
debt securities, 12
% T.N.A.
    
    C.E.R. + 0.05 %
T.N.A.
    
    Minimum 8 % T.N.A.
and maximum 18 %
T.N.A.
    
    Minimum 8 % T.N.A.
and maximum 18 %
T.N.A.Trust assets
    
    Personal loans
    
    Commercial mortgage
loans
    
    Mortgage loans
    
    Mortgage loansTotal portfolio
transferred
    
    Ps.
    41,529
    
    
    Ps.
    29,059
    
    
    Ps.
    91,000
    
    
    Ps.
    150,000Subscribed debt
securities
    
    Class B debt
securities for a
face value of Ps.2,927 Participation
certificate
for a
face value of Ps.3,115
    
    Participation
certificate for a
face value of Ps.4,940
    
    Participation
certificate for a
face value of Ps.18,200
    
    Participation
certificate for a
face value of Ps.40,999Balance as of
12.31.2005
    
    Ps.
    9,793
    
    
    Ps.
    5,946
    
    
    Ps.
    17,632
    
    
    Ps.
    39,860Balance as of
12.31.2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (*)
    
    Applicable to debt securities only. F-53
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 b)
    
    Financial trust received as loan repayment:
 Conditions
    
    Hydro ICreation date
    
    
    10.12.05Due date
    
    
    09.05.17Trustor
    
    Consorcio de Empresas Mendocinas para
Potrerillos S.A.Trustee
    
    Banco de Galicia y Buenos Aires S.A.Trust assets
    
    Loans for power supply, loans for subsidies,
royalties and interestsRate (*)
    
    7 % T.N.A. until 09.05.06 and thereafter,
variable T.N.A. equal to T.E.C. + 5 % (**)Subscribed debt securities
    
    Class B debt securities for a face value of
Ps. 25,523Balance as of 12.31.2005
    
    Ps.
    25,655Balance as of 12.31.2004
    
    
    
 
 (*)
    
    Applicable to debt securities only.(**)
    
    T.E.C. stands for adjusted survey rate. c)
    
    Financial trusts acquired as investments:
 Conditions
    
    Italcred I
    
    Bouchard Plaza buildingCreation date
    
    
    08.26.05
    
    
    
    12.20.05Due date
    
    
    08.26.06
    
    
    
    06.29.08Trustor
    
    Italcred S.A.
    
    Ludwing Investments S.A.Trustee
    
    Nación Fideicomisos S.A.
    
    Nación Fideicomisos S.A.Trust assets
    
    Cash flow
    
    Loans transferredRate (*)
    
    9 % annual
    
    Private bank T.E.C.+
6.25 % T.N.A (**)Subscribed debt securities
    
    Senior debt securities
for a face value of Ps.
668,000
    
    Additional debt
securities Ps. 10,500Balance as of 12.31.2005
    
    Ps.
    450
    
    
    Ps.
    10,546Balance as of 12.31.2004
    
    
    
    
    
    
    
 
 (*)
    
    Applicable to debt securities only.(**)
    
    T.E.C. stands for adjusted survey rate. BG Financial Trust
  F-54
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  Tarjeta NevadaTrust Fund
    
    Tarjeta Nevada I (*)
    
    Tarjeta Nevada II
    
    Tarjeta Nevada III
    
    Trust ICreation date
    
    
    07.21.04
    
    
    
    12.01.04
    
    
    
    05.24.05
    
    
    
    11.23.05Due date
    
    
    09.30.05
    
    
    
    11.22.06
    
    
    
    07.25.07
    
    
    
    11.30.07Interest rate
    
    D.S.: A 7%
D.S.: B: 10%
    
    D.S.: A CER plus
3% (min. 8% and
max. 15%
T.N.A.)
D.S.: B: CER
plus 5% (min. 10%
and max. 20%
T.N.A.)
    
    CER plus margin
(min. 10% and max.
20%)
    
    D.S.: A 10.95%
D.S.: B 13.50%Placement
    
    
    15,000
    
    
    
    16,000
    
    
    
    25,000
    
    
    
    26,784A Debt Securities
    
    
    12,000
    
    
    
    12,000
    
    
    
    19,000
    
    
    
    21,427B Debt Securities
    
    
    1,500
    
    
    
    2,400
    
    
    
    
    
    
    
    2,678Participation
Certificates
    
    
    1,500
    
    
    
    1,600
    
    
    
    6,000
    
    
    
    2,679
 
 (*)  As of December 31, 2005, all Participation Certificates had been fully settled and the
Trust has started to be terminated, but this process has not ended yet.
As of December 31, 2005, Tarjetas Cuyanas S.A.s holdings of class B Debt Securities amounted to
Ps. 2,084 and Participation Certificates amounted to Ps. 9,182; as of December 31, 2004 its
holdings amounted to Ps. 547 and Ps. 3,595, respectively.  Tarjeta NaranjaTrust Fund
    
    Tarjeta Naranja I (*)
    
    Tarjeta Naranja II
    
    Tarjeta Naranja III
    
    Naranja Trust ICreation date
    
    
    08.26.04
    
    
    
    10.22.04
    
    
    
    03.08.05
    
    
    
    11.07.05Due date
    
    
    08.01.05
    
    
    
    04.22.06
    
    
    
    01.25.06
    
    
    
    02.20.08Interest rate
    
    D.S.: A 8%
D.S.: B: 11%
    
    D.S.: A Var.
CER Plus 3
% With a maximun
of 15 % and a
minimum of 8%
D.S.: B: Var. CER Plus 5%
With a maximun of
20 % and a minimum
of 11 %
    
    D.S.: A 7%
D.S.: B: 9%
    
    D.S.: A Var.
C.E.R. + 1.18% or
T.E. + 2% With a
maximum of 18% and
a minimum of 9%

D.S.: B:Var. C.E.R. +2.4%
or T.E. +3% With a
maximum of 20% and
a minimum of 11%Placement
    
    
    40,000
    
    
    
    50,009
    
    
    
    64,001
    
    
    
    94,500A Debt Securities
    
    
    32,000
    
    
    
    40,000
    
    
    
    54,401
    
    
    
    80,000B Debt Securities
    
    
    4,000
    
    
    
    5,000
    
    
    
    6,400
    
    
    
    7,000Participation
Certificates
    
    
    4,000
    
    
    
    5,009
    
    
    
    3,200
    
    
    
    7,500
 
 (*)
    On September 14, 2005, Tarjeta Naranja S.A., as beneficiary of the Participation
certificates, requested Banco Patagonia S.A., as trustee of the Tarjeta Naranja I Trust, that the
trust be early and finally terminated on September 30, 2005; also, Banco Patagonia S.A. was
instructed to redeem the Participation Certificates through the reimbursement of the remaining
trust credits at their residual value, net of allowances for uncollectibility risk and therefore,
to initiate the Financial Trusts early liquidation.   F-55
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Trust Fund
    
    Tarjeta del Mar- Serie ICreation date
    
    12.13.05Due date
    
    12.10.06Interest rate
    
    A DS 13.00%B DS 14.00%C DS 15.00%D DS 15.95%Total portfolio transferred
    
    3,800A Debt Securities
    
    750B Debt Securities
    
    750C Debt Securities
    
    750D Debt Securities
    
    750Participation Certificates
    
    800
  35. Situation of certain companies consolidated with Banco Galicia.
 Merger between Tarjetas del Mar S.A. and Tarjeta Naranja S.A.:
  Tax issues
   36. Segment Reporting.
   F-56
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
           F-57
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
    F-58
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  Grupo GaliciaBuenos
    
    Rest of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OverheadAires
    
    the
    
    
    
    
    
    Regional
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    andGrupo
    
    Metropolitan
    
    Country
    
    Head
    
    Credit
    
    Interna-
    
    Financial
    
    Other Equity
    
    
    
    
    
    Other Grupo
    
    Corporate
    
    ConsolidatedYear ended December 31, 2005:
    
    Galicia
    
    Branches
    
    Branches
    
    Office
    
    Cards
    
    tional
    
    Businesses
    
    Investments
    
    Insurance
    
    Businesses
    
    Adjustments
    
    TotalNet Financial Income
/ (Loss)
    
    
    9,889
    
    
    
    158,176
    
    
    
    106,411
    
    
    
    11,344
    
    
    
    134,773
    
    
    
    107,382
    
    
    
    (1,316
    )
    
    
    
    
    
    
    17,249
    
    
    
    148
    
    
    
    8,647
    
    
    
    552,703Net Income / (Loss) from
Services
    
    
    
    
    
    
    189,877
    
    
    
    109,930
    
    
    
    69,731
    
    
    
    206,122
    
    
    
    1,254
    
    
    
    2,743
    
    
    
    
    
    
    
    (6,853
    )
    
    
    5,287
    
    
    
    (54,326
    )
    
    
    523,765Provision for Loan Losses
    
    
    
    
    
    
    14,019
    
    
    
    1,172
    
    
    
    (80,857
    )
    
    
    28,196
    
    
    
    3,634
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,473
    
    
    
    76,730Operating Income
    
    
    9,889
    
    
    
    334,034
    
    
    
    215,169
    
    
    
    161,932
    
    
    
    312,699
    
    
    
    105,002
    
    
    
    1,334
    
    
    
    
    
    
    
    10,396
    
    
    
    5,435
    
    
    
    (156,152
    )
    
    
    999,738Operating Expenses
    
    
    12,881
    
    
    
    251,552
    
    
    
    170,943
    
    
    
    139,545
    
    
    
    179,294
    
    
    
    18,347
    
    
    
    1,459
    
    
    
    
    
    
    
    11,641
    
    
    
    4,382
    
    
    
    (9,076
    )
    
    
    780,968Other Income / (Loss)
    
    
    (137,684
    )
    
    
    1,504
    
    
    
    893
    
    
    
    (171,976
    )
    
    
    7,693
    
    
    
    195,448
    
    
    
    3,943
    
    
    
    16
    
    
    
    12,839
    
    
    
    (2,043
    )
    
    
    31,746
    
    
    
    (57,621
    )Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,180
    )
    
    
    (3,995
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (9,433
    )
    
    
    (34,609
    )Pre-tax Income / (Loss)
    
    
    (140,676
    )
    
    
    83,986
    
    
    
    45,119
    
    
    
    (149,589
    )
    
    
    119,918
    
    
    
    278,108
    
    
    
    3,818
    
    
    
    16
    
    
    
    11,593
    
    
    
    (990
    )
    
    
    (124,763
    )
    
    
    126,540Income tax provision
    
    
    (32,383
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,807
    
    
    
    
    
    
    
    300
    
    
    
    
    
    
    
    342
    
    
    
    584
    
    
    
    (6,348
    )
    
    
    19,302Net Income / (Loss)
    
    
    (108,293
    )
    
    
    83,986
    
    
    
    45,119
    
    
    
    (149,589
    )
    
    
    63,111
    
    
    
    278,108
    
    
    
    3,518
    
    
    
    16
    
    
    
    11,251
    
    
    
    (1,574
    )
    
    
    (118,415
    )
    
    
    107,238Net Income as a
Percentage of
Consolidated Net Income
    
    
    (101
    %)
    
    
    78
    %
    
    
    42
    %
    
    
    (139
    %)
    
    
    59
    %
    
    
    259
    %
    
    
    3
    %
    
    
    
    
    
    
    10
    %
    
    
    (1
    %)
    
    
    (110
    %)
    
    
    100
    %Average Loans of private
sector
    
    
    
    
    
    
    1,352,655
    
    
    
    1,333,721
    
    
    
    893,892
    
    
    
    801,553
    
    
    
    525,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,907,129Average Deposits
    
    
    
    
    
    
    2,975,161
    
    
    
    1,945,808
    
    
    
    2,077,205
    
    
    
    
    
    
    
    572,871
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,874
    )
    
    
    7,557,171
 F-59
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Grupo GaliciaBuenos
    
    Rest of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OverheadAires
    
    the
    
    
    
    
    
    Regional
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    andGrupo
    
    Metropolitan
    
    Country
    
    Head
    
    Credit
    
    Interna-
    
    Financial
    
    Other Equity
    
    
    
    
    
    Other Grupo
    
    Corporate
    
    ConsolidatedYear
ended December 31, 2004:
    
    Galicia
    
    Branches
    
    Branches
    
    Office
    
    Cards
    
    tional
    
    Businesses
    
    Investments
    
    Insurance
    
    Businesses
    
    Adjustments
    
    TotalNet Financial Income
/ (Loss)
    
    
    13,085
    
    
    
    93,812
    
    
    
    75,320
    
    
    
    (158,612
    )
    
    
    93,752
    
    
    
    190,407
    
    
    
    24
    
    
    
    
    
    
    
    11,889
    
    
    
    275
    
    
    
    (95,811
    )
    
    
    224,141Net Income / (Loss) from
Services
    
    
    
    
    
    
    159,087
    
    
    
    85,641
    
    
    
    54,156
    
    
    
    188,783
    
    
    
    761
    
    
    
    2,751
    
    
    
    
    
    
    
    (4,697
    )
    
    
    4,176
    
    
    
    (54,365
    )
    
    
    436,293Provision for Loan Losses
    
    
    
    
    
    
    (24,872
    )
    
    
    (22,889
    )
    
    
    (169,419
    )
    
    
    20,515
    
    
    
    86,748
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,078
    
    
    
    190,232Operating Income / (Loss)
    
    
    13,085
    
    
    
    277,771
    
    
    
    183,850
    
    
    
    (64,963
    )
    
    
    262,020
    
    
    
    104,420
    
    
    
    2,704
    
    
    
    
    
    
    
    7,192
    
    
    
    4,451
    
    
    
    450,254
    
    
    
    470,202Operating Expenses
    
    
    13,462
    
    
    
    224,267
    
    
    
    150,609
    
    
    
    74,719
    
    
    
    125,430
    
    
    
    20,491
    
    
    
    3,442
    
    
    
    
    
    
    
    13,535
    
    
    
    5,626
    
    
    
    (7,641
    )
    
    
    623,940Other Income / (Loss)
    
    
    (2,904
    )
    
    
    4,134
    
    
    
    3,030
    
    
    
    (242,381
    )
    
    
    11,982
    
    
    
    58,449
    
    
    
    8,394
    
    
    
    154
    
    
    
    11,154
    
    
    
    (424
    )
    
    
    250,399
    
    
    
    101,987Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,893
    )
    
    
    (16,099
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,687
    
    
    
    (14,302
    )Pre-tax Income / (Loss)
    
    
    (3,281
    )
    
    
    57,638
    
    
    
    36,271
    
    
    
    (252,137
    )
    
    
    125,679
    
    
    
    126,279
    
    
    
    7,659
    
    
    
    154
    
    
    
    4,811
    
    
    
    (1,599
    )
    
    
    (167,257
    )
    
    
    (66,053
    )Income tax provision
    
    
    12,973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,589
    
    
    
    
    
    
    
    215
    
    
    
    
    
    
    
    565
    
    
    
    476
    
    
    
    
    
    
    
    43,818Net Income / (Loss)
    
    
    (16,524
    )
    
    
    57,638
    
    
    
    36,271
    
    
    
    (252,137
    )
    
    
    96,090
    
    
    
    126,279
    
    
    
    7,444
    
    
    
    154
    
    
    
    4,246
    
    
    
    (2,075
    )
    
    
    (167,527
    )
    
    
    (109,871
    )Net Income / (Loss) as a
Percentage of
Consolidated Net Loss
    
    
    15
    %
    
    
    (53
    %)
    
    
    (33
    %)
    
    
    230
    %
    
    
    (87
    %)
    
    
    (115
    %)
    
    
    (7
    %)
    
    
    
    
    
    
    (4
    %)
    
    
    2
    %
    
    
    152
    %
    
    
    100
    %Average Loans of private
sector
    
    
    
    
    
    
    1,000,728
    
    
    
    1,009,655
    
    
    
    718,201
    
    
    
    574,293
    
    
    
    818,296
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,121,173Average Deposits
    
    
    
    
    
    
    2,383,718
    
    
    
    1,657,770
    
    
    
    1,284,934
    
    
    
    
    
    
    
    538,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,399
    )
    
    
    5,858,350
 F-60
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Grupo GaliciaBuenos
    
    Rest of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OverheadAires
    
    the
    
    
    
    
    
    Regional
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    andYear ended December
    
    Grupo
    
    Metropolitan
    
    Country
    
    Head
    
    Credit
    
    Interna-
    
    Financial
    
    Other Equity
    
    
    
    
    
    Other Grupo
    
    Corporate
    
    Consolidated31, 2003:
    
    Galicia
    
    Branches
    
    Branches
    
    Office
    
    Cards
    
    tional
    
    Businesses
    
    Investments
    
    Insurance
    
    Businesses
    
    Adjustments
    
    TotalNet Financial Income
/ (Loss)
    
    
    (18,124
    )
    
    
    60,872
    
    
    
    49,962
    
    
    
    (373,175
    )
    
    
    55,456
    
    
    
    186,504
    
    
    
    (3,313
    )
    
    
    
    
    
    
    33,226
    
    
    
    (672
    )
    
    
    156,522
    
    
    
    147,258Net Income / (Loss) from
Services
    
    
    
    
    
    
    135,074
    
    
    
    73,412
    
    
    
    48,472
    
    
    
    159,514
    
    
    
    482
    
    
    
    2,053
    
    
    
    
    
    
    
    (3,103
    )
    
    
    3,985
    
    
    
    (58,490
    )
    
    
    361,399Provision for Loan Losses
    
    
    
    
    
    
    55,148
    
    
    
    48,268
    
    
    
    (40,434
    )
    
    
    35,954
    
    
    
    186,100
    
    
    
    1,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286,428Monetary Results
    
    
    (1,126
    )
    
    
    
    
    
    
    
    
    
    
    (12,908
    )
    
    
    
    
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,157
    )Operating Income / (Loss)
    
    
    (19,250
    )
    
    
    140,798
    
    
    
    75,106
    
    
    
    (297,177
    )
    
    
    179,016
    
    
    
    886
    
    
    
    (2,775
    )
    
    
    
    
    
    
    30,123
    
    
    
    3,313
    
    
    
    98,032
    
    
    
    208,072Operating Expenses
    
    
    4,766
    
    
    
    192,973
    
    
    
    133,007
    
    
    
    81,445
    
    
    
    102,301
    
    
    
    30,971
    
    
    
    4,529
    
    
    
    
    
    
    
    15,564
    
    
    
    5,226
    
    
    
    (7,418
    )
    
    
    563,364Monetary results of
operating expenses
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84Other Income (Loss)
    
    
    1,912
    
    
    
    12,858
    
    
    
    13,079
    
    
    
    292,937
    
    
    
    (4,467
    )
    
    
    65,707
    
    
    
    (23,378
    )
    
    
    (11,958
    )
    
    
    (10,203
    )
    
    
    (3,632
    )
    
    
    (186,528
    )
    
    
    146,327Monetary results of
other income
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    9,103
    
    
    
    (592
    )
    
    
    (16
    )
    
    
    (376
    )
    
    
    
    
    
    
    (11,673
    )
    
    
    29
    
    
    
    
    
    
    
    (3,517
    )Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,219
    )
    
    
    1,162
    
    
    
    34
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    11,790
    
    
    
    (9,232
    )Pre-tax Income
    
    
    (22,095
    )
    
    
    (39,317
    )
    
    
    (44,822
    )
    
    
    (76,499
    )
    
    
    49,437
    
    
    
    36,768
    
    
    
    (31,024
    )
    
    
    (11,958
    )
    
    
    (7,316
    )
    
    
    (5,516
    )
    
    
    (69,288
    )
    
    
    (221,630
    )Income tax provision
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    573
    
    
    
    
    
    
    
    
    
    
    
    590Net Income / (Loss)
    
    
    (22,112
    )
    
    
    (39,317
    )
    
    
    (44,822
    )
    
    
    (76,499
    )
    
    
    49,437
    
    
    
    36,768
    
    
    
    (31,024
    )
    
    
    (11,958
    )
    
    
    (7,889
    )
    
    
    (5,516
    )
    
    
    (69,288
    )
    
    
    (222,220
    )Net Income as a
Percentage of
Consolidated Net Loss
    
    
    10
    %
    
    
    18
    %
    
    
    20
    %
    
    
    34
    %
    
    
    (22
    %)
    
    
    (17
    %)
    
    
    14
    %
    
    
    5
    %
    
    
    4
    %
    
    
    2
    %
    
    
    32
    %
    
    
    100
    %Average Loans of private
sector
    
    
    
    
    
    
    941,002
    
    
    
    976,312
    
    
    
    488,360
    
    
    
    429,504
    
    
    
    1,132,046
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,967,224Average Deposits
    
    
    
    
    
    
    1,805,663
    
    
    
    1,286,810
    
    
    
    1,321,546
    
    
    
    
    
    
    
    806,981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,268
    )
    
    
    5,209,732
 F-61
    Table of Contents  Grupo
Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 37. Capital Increase.
  38. Prior Fiscal Year Adjustments.
        Adjustment to priorAssets
    
    year resultsBOGAR
    
    
    61,585External Notes
    
    
    (32,673
    )CER/CVS compensation
    
    
    (71,866
    )Total
    
    
    (42,954
    )
 F-62
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 39. Subsequent events.
           F-63
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
     To Legal Reserve:
    
    Ps
    .
    
    
    
    90,515 To Discretionary Reserve:
    
    Ps
    .
    
    
    
    100,457
 40. Differences between the Argentine Central Banks regulations and Argentine GAAP in the
Autonomous City of Buenos Aires.
    Investment securities
  F-64
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Compensation to be received from the national government
  Secured loans
       Accounting disclosure of effects generated by court decisions on deposits
  F-65
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  Conversion of financial statements
     Allowance for loan losses  Non-financial public sector
  Discount Bonds and GDP-Linked Units
  Accounting for income tax according to the deferred tax method
   Restatement to constant currency
  F-66
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   2 %,
 41. Summary of Significant Differences between Argentine Central Bank Rules and United States
Accounting Principles.
   a. Income tax
   F-67
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  December 31, 2005SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.,S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    138,896
    
    
    
    (1,257
    )
    
    
    137,639Allowance for loan losses  public sector
    
    
    
    
    
    
    
    
    
    
    Compesation and Hedge Bond
    
    
    
    
    
    
    339,371
    
    
    
    339,371Amortization of intangible assets
    
    
    62,914
    
    
    
    
    
    
    
    62,914Compensation to be received related to the payment of deposits
    
    
    
    
    
    
    121,722
    
    
    
    121,722Provincial public debt / Discount Bond
    
    
    (334,983
    )
    
    
    294,166
    
    
    
    (40,817
    )Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    Allowance for equity in other companies
    
    
    
    
    
    
    
    
    
    
    Impairment
of fixed assets and foreclosed assets
    
    
    
    
    
    
    22,040
    
    
    
    22,040Liabilities
    
    
    (9,831
    )
    
    
    
    
    
    
    (9,831
    )Debt restructure
    
    
    
    
    
    
    135,441
    
    
    
    135,441Provision for contingencies
    
    
    57,323
    
    
    
    
    
    
    
    57,323Others
    
    
    55,674
    
    
    
    (15,695
    )
    
    
    39,979Loss carry forward
    
    
    871,093
    
    
    
    
    
    
    
    871,093Total gross deferred tax assets
    
    Ps.
    841,086
    
    
    Ps.
    895,788
    
    
    Ps.
    1,736,874Deferred tax liabilities:Investments
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    Depreciation of fixed assets
    
    
    
    
    
    
    
    
    
    
    Total gross deferred tax liabilities
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    Net deferred income tax asset before valuation allowance
    
    Ps.
    841,086
    
    
    Ps.
    895,788
    
    
    Ps.
    1,736,874Valuation allowance
    
    
    (789,257
    )
    
    
    (895,788
    )
    
    
    (1,685,045
    )Net deferred income tax
    
    Ps.
    51,829
    
    
    Ps.
    
    
    
    Ps.
    51,829
 December 31, 2004SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.,S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    127,416
    
    
    
    (14,124
    )
    
    
    113,292Allowance for loan losses  public sector
    
    
    
    
    
    
    344,773
    
    
    
    344,773Compesation and Hedge Bond
    
    
    (480,009
    )
    
    
    633,076
    
    
    
    153,067Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    Impairment of intangible assets
    
    
    
    
    
    
    2,508
    
    
    
    2,508Allowance for equity in other companies
    
    
    20,317
    
    
    
    
    
    
    
    20,317Impairment
of fixed assets and foreclosed assets
    
    
    
    
    
    
    22,528
    
    
    
    22,528Liabilities
    
    
    (27,981
    )
    
    
    
    
    
    
    (27,981
    )Provision for contingencies
    
    
    151,154
    
    
    
    
    
    
    
    151,154Others
    
    
    12,237
    
    
    
    295,373
    
    
    
    307,610Loss carry forward
    
    
    383,519
    
    
    
    
    
    
    
    383,519Total gross deferred tax assets
    
    Ps.
    186,653
    
    
    Ps.
    1,284,134
    
    
    Ps.

1,470,787Deferred tax liabilities:Investments
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.Amortization of intangible assets
    
    
    69,611
    
    
    
    (10,121
    )
    
    
    59,490Depreciation of fixed assets
    
    
    9,956
    
    
    
    
    
    
    
    9,956Total gross deferred tax liabilities
    
    Ps.
    79,567
    
    
    Ps.
    (10,121
    )
    
    Ps.
    69,446
 F-68
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31, 2004SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.,S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Net deferred income tax asset before valuation allowance
    
    Ps.
    266,220
    
    
    Ps.
    1,274,013
    
    
    Ps.
    1,540,233Valuation allowance
    
    
    (249,469
    )
    
    
    (1,274,013
    )
    
    
    (1,523,482
    )Net deferred income tax
    
    Ps.
    16,751
    
    
    Ps.
    
    
    
    Ps.
    16,751
  December 31,2005
    
    
    2004
    
    
    2003Statutory income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Tax provision computed by applying the statutory rate to the income before taxation
calculated in accordance with U. S. GAAP
    
    Ps.
    262,499
    
    
    Ps.
    12,018
    
    
    Ps.
    242,530Tax exempt income
    
    
    20,494
    
    
    
    (266,452
    )
    
    
    (827,978
    )Reversal of deferred income taxes under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    Reversal of deferred tax set-up under Argentine GAAP
    
    
    
    
    
    
    
    
    
    
    Valuation allowance
    
    
    
    
    
    
    289,858
    
    
    
    623,800Other
    
    
    
    
    
    
    
    
    
    
    Actual tax provision under U.S. GAAP
    
    Ps.
    282,993
    
    
    Ps.
    35,424
    
    
    Ps.
    38,352
  F-69
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   b. Commissions on loans
  c. Intangible assets
 Amortization of deferred expenses for setting up branches
  Goodwill
 
   Software costs
  Organization costs related to the exchange offer
  F-70
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   d. Loan loss reserves
  (i) Loan charge offs and recoveries
  (ii) Loans  Non-financial national public sector
     F-71
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  (iii) Loans/Bonds  Non-financial provincial public sector
       F-72
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  (iv) Impaired Loans  Non-financial private sector and residents abroad
    December 31,2005
    
    2004
    
    2003Total impaired loans
    
    Ps.
    626,013
    
    
    Ps.
    776,973
    
    
    Ps.
    1,852,711Average impaired loans during the year
    
    
    722,172
    
    
    
    1,421,478
    
    
    
    2,110,583Total impaired loans with no allowance under US GAAP
    
    
    31,718
    
    
    
    35,051
    
    
    
    49,492Cash payments received for interest on impaired loans,
recognized as income
    
    
    584
    
    
    
    4,341
    
    
    
    3,339Allowance for impaired loans under SFAS 114
    
    
    397,875
    
    
    
    379,484
    
    
    
    953,767
  (v) Credit card loans
  F-73
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 e. Government securities and other investments
 (i) Investment securities
   (ii) Hedge bonds to be issued in connection with the compensation for foreign currency
position, compensatory bonds received and to be received in connection with the
compensation for asymmetric pesification.
      F-74
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
      (iii) External Notes / Discount Bonds and GDP-Linked Units
      F-75
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  ,
   f. Items in process of collection
   g. Derivative instruments
     
    
    GDP-linked Unit described in Note 29
    
    Guarantee granted under BG Financial Trust described in Note 34
 F-76
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
   h. Adjustment to prior year results
  i. Compensation related to the payment of deposits
     j. Transfers of financial assets
 Financial trust Galtrust I
  F-77
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
     Discount rate for:
 December 31,
    
    December 31,
    
    December 31,2005
    
    2004
    
    2003Galtrust I Class B Debt Securities
    
    
    2
    %
    
    
    6
    %
    
    
    11
    %Galtrust I Participation Certificates
    
    
    2
    %
    
    
    7
    %
    
    
    11.5
    %
  Financial
trust Galtrust II, Galtrust V and Galicia Mortgage
Loans
    F-78
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Financial Trust Secured Loans
   F-79
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 BG Financial Trust
    k. Acceptances
   l. Year 2000 costs
  m. Impairment of real estate properties and foreclosed assets
 Impairment of Long-lived Assets
  F-80
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
     n. Equity investments in other companies
    o. Guarantees
 Financial guarantee  Exchange of deposits with the financial system II
  F-81
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Other Financial Guarantees
   Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    Amount2005
    
    Payments (*)
    
    
    Recourse
    
    
    LiabilityExchange of deposits with the financial system II
    
    Ps.
    184,801
    
    
    
    
    
    
    Ps.
    7,977Other Financial guarantees
    
    Ps.
    16,019
    
    
    Ps.
    1,685
    
    
    Ps.
    8,584Ps.
    200,820
    
    
    Ps.
    1,685
    
    
    Ps.
    16,561
 Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    Amount2004
    
    Payments (*)
    
    
    Recourse
    
    
    LiabilityExchange of deposits with the financial system II
    
    Ps.
    173,069
    
    
    
    
    
    
    Ps.
    8,802Other Financial guarantees
    
    Ps.
    34,712
    
    
    Ps.
    5,844
    
    
    Ps.
    6,661Ps.
    207,781
    
    
    Ps.
    5,844
    
    
    Ps.
    15,463
 
 (*)
    
    The maximum potential payments represent a worse-case scenario, and do not necessarily
reflect expected results. Estimated proceeds from collateral and recourse represent the anticipated
value of assets that could be liquidated or received from other parties to offset the Companys
payments under guarantees.   p. Minority Interest
  q. Foreign Debt Restructuring
  F-82
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
     r. Repurchase Agreements and Reverse Repurchase Agreements (Repos and Reverse Repos)
   F-83
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Consolidated net income
 December 31,2005
    
    
    2004
    
    
    2003Net income (loss) as stated
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )
    
    Ps.
    (222,220
    )Prior years adjustments recorded under Argentine GAAP (Note 41 h)
    
    
    
    
    
    
    (42,954
    )
    
    
    5,161Loan
origination fees and costs (Note 41 b)
    
    
    (4,899
    )
    
    
    1,092
    
    
    
    (46
    )Intangible assets (Note 41 c.):Amortization of deferred expenses for setting up of branches
    
    
    (1,238
    )
    
    
    4,827
    
    
    
    9,290Goodwill amortization
    
    
    26,374
    
    
    
    20,988
    
    
    
    32,701Goodwill impairment
    
    
    3,703
    
    
    
    3,613
    
    
    
    4,705Software costs
    
    
    (1,266
    )
    
    
    (350
    )
    
    
    2,285Equity investments in other companies  Impairment (Note 41 n.)
    
    
    (22,117
    )
    
    
    
    
    
    
    (37,879
    )Loss on exchange of National Public Debt (Note 41 d (ii))
    
    
    144,050
    
    
    
    129,200
    
    
    
    176,778Provincial Public Debt (Note 41 d(iii))
    
    
    (257,013
    )
    
    
    (129,396
    )
    
    
    (344,900
    )Loan impairment  private sector (Note 41 d(iv))
    
    
    (34,820
    )
    
    
    (20,122
    )
    
    
    (14,652
    )Loan impairment  credit cards (Note 41 d(v))
    
    
    (1,946
    )
    
    
    395
    
    
    
    26,943Amortization of organization costs on exchange offer (Note 41 c)
    
    
    
    
    
    
    
    
    
    
    15,433Organization costs related to the exchange offer (Note 41 c)
    
    
    
    
    
    
    
    
    
    
    (24,804
    )Impairment / loss on available for sale securities (Note 41 j)
    
    
    48,233
    
    
    
    
    
    
    
    Government Securities:Compensatory Bond received (Note 41 e (ii))
    
    
    214,254
    
    
    
    256,117
    
    
    
    (305,832
    )Compensatory Bond to be received (Note 41 e (ii))
    
    
    159,814
    
    
    
    176,796
    
    
    
    1,250,872Hedge Bond (Note 41 e(ii))
    
    
    177,915
    
    
    
    117,435
    
    
    
    616,258Compensation related to the payment of deposits (Note 41 i)
    
    
    103,651
    
    
    
    35,592
    
    
    
    (40,264
    )Impairment of other available for sale securities (Note 41 e(iii))
    
    
    91,095
    
    
    
    (162,771
    )
    
    
    (377,867
    )GDP  Linked Units (Note 41 e(iii))
    
    
    10,123
    
    
    
    
    
    
    
    Real estate properties asset amortization (Note 41 m.)
    
    
    1,395
    
    
    
    1,395
    
    
    
    1,395Recognition for the fair value of obligations assumed under
Financial guarantees issued (Note 41 o)
    
    
    (4,146
    )
    
    
    62,846
    
    
    
    (71,759
    )Year 2000
costs (Note 41 l)
    
    
    
    
    
    
    3,005
    
    
    
    17,288Troubled Debt restructuring (Note 41 q)
    
    
    (28,425
    )
    
    
    (287,304
    )
    
    
    Reversal of deferred taxes under Argentine GAAP (Note 41 a)
    
    
    
    
    
    
    8,394
    
    
    
    38,942Minimum Presumed Income Tax (Note 41 a )
    
    
    (32,979
    )
    
    
    (87,543
    )
    
    
    (38,663
    )Minority interest (Note 41 p)
    
    
    32,032
    
    
    
    17,530
    
    
    
    12,131Net income (loss) in accordance with U.S. GAAP
    
    
    731,028
    
    
    
    (1,086
    )
    
    
    731,296Basic net income (loss) per share in accordance with U.S. GAAP
(Note 24)
    
    
    0.589
    
    
    
    (0.001
    )
    
    
    0.669Average number of shares outstanding (in thousands) (Note 24)
    
    
    1,241,407
    
    
    
    1,185,227
    
    
    
    1,092,407Diluted net income (loss) per share in accordance with U.S. GAAP
(Note 24)
    
    
    0.589
    
    
    
    (0.001
    )
    
    
    0.669
 F-84
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Consolidated shareholders equity
 December
31,2005
    
    
    2004Shareholders equity as stated
    
    Ps.
    1,626,776
    
    
    Ps.
    1,519,538Loan origination fees and costs (Note 41 b.)
    
    
    (2,052
    )
    
    
    2,847Intangible assets (Note 41 c.):Amortization of deferred expenses for setting up of branches
    
    
    (9,533
    )
    
    
    (8,295
    )Goodwill amortization
    
    
    55,292
    
    
    
    28,918Goodwill impairment
    
    
    (3,463
    )
    
    
    (7,166
    )Software costs
    
    
    (1,757
    )
    
    
    (491
    )Equity investments in other companies  Impairment (Note 41 n.)
    
    
    (59,996
    )
    
    
    (37,879
    )Loans  non Financial Public Sector  Secured loans (Note 43 d(ii))
    
    
    (868,693
    )
    
    
    (1,012,743
    )Loans / Bonds  non Financial Provincial Public Sector  BOGARS
(Note 41 d(iii))
    
    
    (456,507
    )
    
    
    (721,083
    )Loan impairment  private sector (Note 41 d(iv))
    
    
    10,126
    
    
    
    44,946Loan impairment  credit cards (Note 41 d(v))
    
    
    (6,536
    )
    
    
    (4,590
    )Government securities:Compensatory Bond received (Note 41 e(ii))
    
    
    (111,290
    )
    
    
    (161,292
    )Compensatory Bond to be received (Note 41 e(ii))
    
    
    
    
    
    
    (159,814
    )Hedge Bond (Note 41 e(ii))
    
    
    (858,340
    )
    
    
    (1,036,255
    )Compensation related to the payment of deposits (Note 41 i.)
    
    
    (347,777
    )
    
    
    (451,428
    )Discount Bonds (Note 41 e(iii)))
    
    
    (394,091
    )
    
    
    (541,767
    )GDP  Linked Units (Note 41 e(iii))
    
    
    10,123
    
    
    
    Financial assets transferred (Note 41 j)
    
    
    (293,295
    )
    
    
    (263,986
    )Minority interest (Note 41 p)
    
    
    145,499
    
    
    
    113,467Impairment of real estate properties and foreclosed assets (Note
41m)
    
    
    (67,155
    )
    
    
    (67,155
    )Real Estate
properties amortization (Note 41 m)
    
    
    4,185
    
    
    
    2,790Minimum Presumed Income Tax (Note 41 a)
    
    
    (170,989
    )
    
    
    (138,010
    )Recognition for the fair value of obligations assumed under
Financial guarantees issued (Note 41 o)
    
    
    (13,059
    )
    
    
    (8,913
    )Foreign debt restructuring (Note 41 q)
    
    
    (315,729
    )
    
    
    (287,304
    )Consolidated shareholders equity (deficit) in accordance with
U.S. GAAP
    
    Ps.
    (2,128,261
    )
    
    Ps.
    (3,195,665
    )
 F-85
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
  Grupo GaliciaAdjustments to
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCapital
    
    
    Paid
    
    
    Shareholders
    
    
    Profit Reserves
    
    
    Comprehensive
    
    
    Retained
    
    
    ShareholdersStock
    
    
    in Capital
    
    
    Equity
    
    
    Legal
    
    
    Other
    
    
    Income (loss)
    
    
    Earnings
    
    
    EquityBalance at December 31, 2002
    
    Ps.
    1,092,407
    
    
    Ps.
    86,568
    
    
    Ps.
    1,418,854
    
    
    Ps.
    29,493
    
    
    Ps.
    492,339
    
    
    Ps.
    (14,548
    )
    
    Ps.
    (8,527,436
    )
    
    Ps.
    (5,422,323
    )Distribution of retained earnings:Unrealized appreciation of
available-for-sale securities, net of
minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237,691
    
    
    
    
    
    
    
    237,691Absorption approved by the
shareholders meeting on April 23, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (492,339
    )
    
    
    
    
    
    
    492,339
    
    
    
    Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731,296
    
    
    
    731,296Balance at December 31, 2003
    
    Ps.
    1,092,407
    
    
    Ps.
    86,568
    
    
    Ps.
    1,418,854
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    223,143
    
    
    Ps.
    (7,303,801
    )
    
    Ps.
    (4,453,336
    )Distribution of retained earnings:Unrealized appreciation of
available-for-sale securities, net of
tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,048,731
    
    
    
    
    
    
    
    1,048,731Capital Increase
    
    
    149,000
    
    
    
    61,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,026Net loss for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,086
    )
    
    
    (1,086
    )Balance at December 31, 2004
    
    Ps.
    1,241,407
    
    
    Ps.
    147,594
    
    
    Ps.
    1,418,854
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    1,271,874
    
    
    Ps.
    (7,304,887
    )
    
    Ps.
    (3,195,665
    )Distribution of retained earnings:Unrealized appreciation of
available-for-sale securities, net of
tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    336,376
    
    
    
    
    
    
    
    336,376Absorption approved by the
shareholders meeting on April 28, 2005
    
    
    
    
    
    
    (147,594
    )
    
    
    (1,124,600
    )
    
    
    (29,493
    )
    
    
    
    
    
    
    
    
    
    
    1,301,687
    
    
    
    Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731,028
    
    
    
    731,028Balance at December 31, 2005
    
    Ps.
    1,241,407
    
    
    Ps.
    
    
    
    Ps.
    294,254
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    1,608,250
    
    
    Ps.
    (5,272,172
    )
    
    Ps.
    (2,128,261
    )
 Comprehensive income
   F-86
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 December 31,2005
    
    
    2004
    
    
    2003Income StatementFinancial Income
    
    Ps.
    2,958,678
    
    
    Ps.
    1,448,708
    
    
    Ps.
    2,752,014Financial Expenditures
    
    
    1,845,929
    
    
    
    1,167,444
    
    
    
    1,502,904Net Financial Income
    
    
    1,112,749
    
    
    
    281,264
    
    
    
    1,249,110Provision for Loan Losses
    
    
    113,496
    
    
    
    209,959
    
    
    
    274,550Income from Services
    
    
    628,968
    
    
    
    530,144
    
    
    
    431,695Expenditures from Services
    
    
    121,305
    
    
    
    92,759
    
    
    
    70,358Monetary result of financial brokerage
    
    
    
    
    
    
    
    
    
    
    (68,840
    )Administrative Expenses
    
    
    770,874
    
    
    
    615,063
    
    
    
    541,954Monetary result of operating expenses
    
    
    
    
    
    
    
    
    
    
    (439
    )Net Income (Loss) from Financial Brokerage
    
    
    736,042
    
    
    
    (106,373
    )
    
    
    724,664Minority Interests
    
    
    (2,577
    )
    
    
    3,228
    
    
    
    2,545Miscellaneous Income
    
    
    282,845
    
    
    
    514,606
    
    
    
    719,207Miscellaneous Losses
    
    
    265,980
    
    
    
    377,123
    
    
    
    745,644Monetary results of other operations
    
    
    
    
    
    
    
    
    
    
    (7,828
    )Net Income (Loss) before Income tax
    
    
    750,330
    
    
    
    34,338
    
    
    
    692,944Income Tax
    
    
    (19,302
    )
    
    
    (35,424
    )
    
    
    38,352Net income (loss) under U.S. GAAP
    
    
    731,028
    
    
    
    (1,086
    )
    
    
    731,296Other comprehensive income (loss):Unrealized gains (losses) on securities
    
    
    336,376
    
    
    
    1,048,731
    
    
    
    237,691Other comprehensive income (loss)
    
    
    336,376
    
    
    
    1,048,731
    
    
    
    237,691Comprehensive income (loss)
    
    Ps.
    1,067,404
    
    
    Ps.
    1,047,645
    
    
    Ps.
    968,987
  December 31,2005
    
    
    2004
    
    
    2003BODEN 2012
 Compensatory Bond
    
    
    104,757
    
    
    
    269,009
    
    
    
    113,076BOGAR
    
    
    1,531,789
    
    
    
    1,010,200
    
    
    
    244,724GalTrust I
    
    
    (74,673
    )
    
    
    (7,335
    )
    
    
    (134,657
    )Discount Bonds
    
    
    56,581
    
    
    
    
    
    
    
    Other assets
    
    
    (10,204
    )
    
    
    
    
    
    
    Accumulated other comprehensive income
    
    Ps.
    1,608,250
    
    
    Ps.
    1,271,874
    
    
    Ps.
    223,143
 F-87
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Concentration of risk  Total exposure to the public sector  Argentine government and
provinces
  December 31, 2005
    
    
    
    December 31, 2004Argentine
    
    
    
    
    
    
    
    ArgentineBanking
    
    
    
    
    
    
    
    BankingGAAP
    
    
    U.S. GAAP
    
    
    
    GAAP
    
    
    U.S. GAAPArgentine national
government loans
    
    Ps.
    5,341,756
    
    
    Ps.
    4,492,662
    
    
    
    Ps.
    4,682,654
    
    
    Ps.
    3,703,633Argentine provincial debt
    
    
    3,823,299
    
    
    
    3,366,792
    
    
    
    
    3,543,751
    
    
    
    2,822,668Other Argentine
public-sector receivables
    
    
    340,270
    
    
    
    320,673
    
    
    
    
    486,875
    
    
    
    453,153Galtrust I (securitization
of Provincial Loans)
    
    
    536,509
    
    
    
    253,418
    
    
    
    
    665,102
    
    
    
    401,116Compensatory bond received
    
    
    987,951
    
    
    
    876,661
    
    
    
    
    976,056
    
    
    
    814,764Bonds to be received (1) (2)
    
    
    4,154,989
    
    
    
    
    
    
    
    
    4,732,288
    
    
    
    656,148Other (3)
    
    
    1,229,763
    
    
    
    845,797
    
    
    
    
    1,318,692
    
    
    
    776,925Total
    
    Ps.
    16,414,537
    
    
    Ps.
    10,156,003
    
    
    
    Ps.
    16,405,418
    
    
    Ps.
    9,628,407
 
 (1)
    
    The advance to be requested from the Argentine Central Bank for the subscription of the
hedge bond, was recorded in Other Liabilities Resulting from Financial Brokerage  Other,
for Ps. 3,296,649 as of December 31, 2005. The above mentioned advance was Ps. 2,720,743 as of
December 31, 2004. Under U.S.GAAP, the hedge bond and that advance have been eliminated.(2)
    
    As of December 31, 2005, includes the hedge bond to be received and as of December 31, 2004,
includes the compensatory bond to be received related to the asymmetric pesification and
indexation and the hedge bond, net of unfavorable effects on resolution of matters challenged
by the Argentine Central Bank, which were in process.(3)
    
    Includes bonds such as Fiscal Credit Certificates and other national government bonds. Risks and Uncertainties
     F-88
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 U.S. GAAP estimates
  42. Parent only Financial Statements
  F-89
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Balance sheet (Parent Company only)
 December 31,2005
    
    
    2004ASSETSA. Cash and due from banksCash
    
    Ps.
    581
    
    
    Ps.
    463Banks and correspondents
    
    
    69
    
    
    
    77Ps.
    650
    
    
    Ps.
    540B. Government and corporate securitiesHoldings of trading securities
    
    
    
    
    
    
    2,148Investments in listed corporate securities
    
    
    
    
    
    
    14,666Ps.
    
    
    
    Ps.
    16,814D. Other receivables resulting from financial brokerageWithout quotation negotiable obligations
    
    
    
    
    
    
    126,585Other receivables not included in the debtor
classification Regulations
    
    
    238,901
    
    
    
    232,521Other receivables included in the debtor
classification Regulations
    
    
    7,197
    
    
    
    20,043Accrued interest receivable included in the debtor
Classification regulations
    
    
    26
    
    
    
    112Ps.
    246,124
    
    
    Ps.
    379,261F. Equity investment in other companiesIn financial institutions
    
    
    1,316,602
    
    
    
    1,138,210Other
    
    
    42,117
    
    
    
    33,090Allowances
    
    
    
    
    
    
    (585
    )Ps.
    1,358,719
    
    
    Ps.
    1,170,715G. Miscellaneous receivablesOther accrued interest receivables
    
    
    8
    
    
    
    102Other
    
    
    44,644
    
    
    
    4,767Ps.
    44,652
    
    
    Ps.
    4,869H. Fixed assets
    
    
    3,066
    
    
    
    3,229J. Intangible assetsGoodwill
    
    
    684
    
    
    
    3,745Organization and development expenses
    
    
    19
    
    
    
    54Ps.
    703
    
    
    Ps.
    3,799Total Assets
    
    Ps.
    1,653,914
    
    
    Ps.
    1,579,227
 December 31,2005
    
    
    2004LIABILITIES AND SHAREHOLDERS EQUITYM. Miscellaneous liabilitiesDirectors and syndics fees payable
    
    Ps.
    158
    
    
    Ps.
    140Other
    
    
    26,980
    
    
    
    59,54927,138
    
    
    
    59,689Total Liabilities
    
    Ps.
    27,138
    
    
    Ps.
    59,689SHAREHOLDERS EQUITY
    
    Ps.
    1,626,776
    
    
    Ps.
    1,519,538Total Liabilities and Shareholders Equity
    
    Ps.
    1,653,914
    
    
    Ps.
    1,579,227
 F-90
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Statement of Income (Parent Company only)
 December 31,2005
    
    
    2004
    
    
    2003A. Financial incomeInterest income from other receivables resulting
from financial brokerage
    
    Ps.
    9,700
    
    
    Ps.
    6,911
    
    
    Ps.
    2,338Net income from government and corporate securities
    
    
    238
    
    
    
    
    
    
    
    Adjustment by application of adjusting index
    
    
    6
    
    
    
    9
    
    
    
    Other
    
    
    279
    
    
    
    6,548
    
    
    
    126Ps.
    10,223
    
    
    Ps.
    13,468
    
    
    Ps.
    2,464B. Financial expensesNet income from government and corporate securities
    
    
    
    
    
    Ps.
    383
    
    
    Ps.
    1,367Other
    
    
    334
    
    
    
    
    
    
    
    19,221Ps.
    334
    
    
    Ps.
    383
    
    
    Ps.
    20,588Gross brokerage margin
    
    
    9,889
    
    
    
    13,085
    
    
    
    (18,124
    )Monetary loss from financial intermediation
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    (1,126
    )G. Administrative expensesPersonnel expenses
    
    
    2,446
    
    
    
    998
    
    
    
    754Directors and syndics fees
    
    
    664
    
    
    
    249
    
    
    
    123Other fees
    
    
    2,762
    
    
    
    1,059
    
    
    
    2,181Taxes
    
    
    865
    
    
    
    9,392
    
    
    
    693Other operating expenses
    
    
    1,754
    
    
    
    1,384
    
    
    
    369Other
    
    
    4,390
    
    
    
    380
    
    
    
    646Ps.
    12,881
    
    
    Ps.
    13,462
    
    
    Ps.
    4,766Monetary gain from operating expenses
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    1Net income from financial brokerage
    
    Ps.
    (2,992
    )
    
    Ps.
    (377
    )
    
    Ps.
    (24,015
    )H. Miscellaneous incomeNet income on long term investments
    
    
    215,531
    
    
    
    
    
    
    
    Loans recovered and allowances reversed
    
    
    1,384
    
    
    
    811
    
    
    
    Other
    
    
    129
    
    
    
    991
    
    
    
    8,935Ps.
    217,044
    
    
    Ps.
    1,802
    
    
    Ps.
    8,935I. Miscellaneous lossesNet income on long term investments (1)
    
    
    
    
    
    
    93,617
    
    
    
    200,108Other
    
    
    139,197
    
    
    
    4,706
    
    
    
    7,023Ps.
    139,197
    
    
    Ps.
    98,323
    
    
    Ps.
    207,131Monetary gain (loss) on other transactions
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    8Income tax
    
    Ps.
    (32,383
    )
    
    Ps.
    12,973
    
    
    Ps.
    17Net income (loss) for the period
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )
    
    Ps.
    (222,220
    )
 
 (1)
    
    Includes the foreign currency position compensation. F-91
    Table of Contents  Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2005, 2004 and 2003
 Statement of cash flows (Parent Company only)
 December 31,2005
    
    
    2004
    
    
    2003CHANGES IN CASHCash at the beginning of the period
    
    Ps.
    540
    
    
    Ps.
    1,164
    
    
    Ps.
    1,293Increase / (decrease) in cash
    
    
    110
    
    
    
    (624
    )
    
    
    (129
    )Cash at end of period
    
    
    650
    
    
    
    540
    
    
    
    1,164Cash provided by (used in) operating activitiesLess:Operating expenses paid
    
    
    (68,228
    )
    
    
    (9,347
    )
    
    
    (7,118
    )Plus:Other operating income received
    
    
    23,732
    
    
    
    10,301
    
    
    
    3,382Cash provided by (used in) operating activities
    
    Ps.
    (44,496
    )
    
    Ps.
    954
    
    
    Ps.
    (3,736
    )Other sources of cashDividends
    
    
    350
    
    
    
    438
    
    
    
    Increase in short-term investment
    
    
    46,825
    
    
    
    1,030
    
    
    
    17,104Other sources of cash
    
    
    161
    
    
    
    32
    
    
    
    357Other sources of cash
    
    Ps.
    47,336
    
    
    Ps.
    1,500
    
    
    Ps.
    17,461Other uses of cashIncrease in short-term loans
    
    
    (635
    )
    
    
    (2,223
    )
    
    
    Increase in fixed assets
    
    
    (17
    )
    
    
    (65
    )
    
    
    Increase in long-term investments
    
    
    (2,078
    )
    
    
    (790
    )
    
    
    (11,096
    )Other uses of cash
    
    
    
    
    
    
    
    
    
    
    (2,758
    )Total other uses of cash
    
    Ps.
    (2,730
    )
    
    Ps.
    (3,078
    )
    
    Ps.
    (13,854
    )Increase / (decrease) in cash
    
    Ps.
    110
    
    
    Ps.
    (624
    )
    
    Ps.
    (129
    )
 New authoritative pronouncements
   F-92
    Table of Contents  EXHIBIT
INDEX
 Exhibit
    
    Description1.1
    
    Unofficial English language
translation of the By-laws (estatutos sociales). ****2.1
    
    Form of Deposit Agreement between The Bank of New York and the registrant, including the form
of American Depositary Receipt.*2.2
    
    Indenture, dated as of May 18, 2004, among the Bank, The Bank of New York and Banco Rio de la
Plata S.A.**4.1
    
    English translation of form of Financial Trust Contract, dated April 16, 2002, among the
Bank, Banco Provincia de Buenos Aires and BAPRO Mandatos y Negocios S.A.***4.2
    
    English translation of form of Loan Agreement, dated March 21, 2002, by and between Seguro de
Depositos S.A. and the Bank.***4.4
    
    Form of restructured loan facility (as evidenced by the Note Purchase Agreement, dated as of
April 27, 2004, among the Bank, Barclays Bank PLC, the holders party thereto and Deutsche Bank
Trust Company Americas).**4.5
    
    Form of Amendment No. 1 and Waiver to Restructured Loan Facility (as evidenced by the
Amendment No. 1 and Waiver to Note Purchase Agreement, dated as of December 20, 2004, among
Banco de Galicia y Buenos Aires S.A., the holders party thereto and Deutsche Bank Trust
Company Americas). ****8.1
    
    For a list of our subsidiaries as of the end of the fiscal year covered by this annual
report, please see Item 4. Information on the Company  Organizational Structure.12.1
    
    Certification of the principal executive officer required under Rule 13a-14(a) or Rule
15d-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.12.2
    
    Certification of the principal financial officer required under Rule 13a-14(a) or Rule
15d-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.13.1
    
    Certification of the principal executive officer required pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.13.2
    
    Certification of the principal financial officer required pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
 
 *
    
    Incorporated by reference from our Registration Statement on Form F-4 (333-11960).**
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2003.***
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2002.****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2004.