##### 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, 2008
 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
 Pedro Richards, Managing Director
Tel: 54 11 4 343 7528 / Fax: 54 11 4 331 9183, prichards@gfgsa.com
Perón 456, 2° Piso C1038AAJ 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
    
    
    281,221,650Class B Ordinary Shares, Ps. 1.00 par value
    
    
    960,185,367
 Yes o No þ
 o þ
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
  U.S. GAAP o
    
    International Financial Reporting Standards
As issued by the International Accounting
Standards Board o
    
    Other þ
 o þ
 o þ




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##### 



TABLE OF CONTENTS
 PageItem 1. Identity of Directors, Senior Management and Advisers
    
    
    4Item 2. Offer Statistics and Expected Timetable
    
    
    4Item 3. Key Information
    
    
    4Item 3.A. Selected Financial Data
    
    
    4Exchange Rate Information
    
    
    7Item 3.B. Capitalization and Indebtedness
    
    
    8Item 3.C. Reasons for the Offer and Use of Proceeds
    
    
    8Item 3.D. Risk Factors
    
    
    8Item 4. Information on the Company
    
    
    21History and Development of the Company
    
    
    21Organizational Structure
    
    
    21History
    
    
    22Business
    
    
    30Competition
    
    
    42Sales and Marketing
    
    
    45Property
    
    
    48Capital Investments and Divestitures
    
    
    49Selected Statistical Information
    
    
    51Government Regulation
    
    
    88Argentine Banking Regulation
    
    
    95Credit Cards Regulation
    
    
    107Concealment and Laundering of Assets of a Criminal Origin
    
    
    107Item 4A. Unresolved Staff Comments
    
    
    110Item 5. Operating and Financial Review and Prospects
    
    
    110Item 5.A. Operating Results
    
    
    110Overview
    
    
    110The Argentine Economy, Financial System and Insurance Industry in the Three Years Ended
December 31, 2008
    
    
    112Inflation
    
    
    116Currency Composition of Our Balance Sheet
    
    
    117Results of Operations for the Fiscal Years Ended December 31, 2008, December 31, 2007 and
December 31, 2006
    
    
    117U.S. GAAP and Argentine Banking GAAP Reconciliation
    
    
    132Results by Segments
    
    
    138Exhibit 2.3Exhibit 11.1Exhibit 11.2Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
   (i)




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TABLE OF CONTENTS
 PageConsolidated Assets
    
    
    143Exposure to the Argentine Public Sector
    
    
    144Securitization of Assets
    
    
    145Funding
    
    
    145Contractual Obligations
    
    
    151Off-Balance Sheet Arrangements
    
    
    153Critical Accounting Policies
    
    
    154U.S. GAAP  Critical Accounting Policies
    
    
    155Principal Trends
    
    
    161Item 5.B. Liquidity and Capital Resources
    
    
    162Liquidity  Holding Company on an Individual Basis
    
    
    162Consolidated Cash Flows
    
    
    163Banco Galicias Liquidity Management
    
    
    168Capital
    
    
    170Capital Expenditures
    
    
    170Item 6. Directors, Senior Management and Employees
    
    
    171Our Board of Directors
    
    
    171Functions of Our Board of Directors
    
    
    174Our Supervisory Committee
    
    
    175Compensation of Our Directors
    
    
    177Management of Grupo Financiero Galicia
    
    
    177Board of Directors of Banco Galicia
    
    
    178Functions of the Board of Directors of Banco Galicia
    
    
    180Banco Galicias Executive Officers
    
    
    183Banco Galicias Supervisory Committee
    
    
    185Compensation of Banco Galicias Directors and Officers
    
    
    186Employees
    
    
    187Nasdaq Corporate Governance Standards
    
    
    188Share Ownership
    
    
    191Item 7. Major Shareholders and Related Party Transactions
    
    
    191Major Shareholders
    
    
    191Related Party Transactions
    
    
    193Item 8. Financial Information
    
    
    195Legal Proceedings
    
    
    195Dividend Policy and Dividends
    
    
    196Significant Changes
    
    
    199Item 9. The Offer and Listing
    
    
    200Shares and ADSs
    
    
    200Argentine Securities Market
    
    
    203Market Regulations
    
    
    204
  (ii)




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TABLE OF CONTENTS
 PageItem 10. Additional Information
    
    
    205Description of Our Bylaws
    
    
    205Exchange Controls
    
    
    214Taxation
    
    
    214Material Contracts
    
    
    221Documents on Display
    
    
    222Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    222General
    
    
    222Interest Rate Risk
    
    
    223Foreign Exchange Rate Risk
    
    
    227Currency Mismatches
    
    
    228Market Risk
    
    
    230Item 12. Description of Securities Other Than Equity Securities
    
    
    231Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    232Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    232Item 15. Controls and Procedures
    
    
    232Item 16. [Reserved]
    
    
    233Item 16A. Audit Committee Financial Expert
    
    
    233Item 16B. Code of Ethics
    
    
    233Item 16C. Principal Accountants Fees and Services
    
    
    234Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    235Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    235Item 17. Financial Statements
    
    
    236Item 18. Financial Statements
    
    
    236Item 19. Exhibits
    
    
    236SIGNATURE
    
    
    238
  (iii)




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PRESENTATION OF FINANCIAL INFORMATION
  
    
    Grupo Financiero Galicia S.A.;
 
    
    Banco de Galicia y Buenos Aires S.A., our largest subsidiary, its wholly-owned
subsidiary Banco Galicia Uruguay S.A., (Galicia Uruguay), Galicia Uruguays subsidiaries
and other subsidiaries and affiliated companies required to be consolidated under Argentine
Banking GAAP (collectively Banco Galicia or the Bank except where otherwise noted);
 
    
    Tarjetas Regionales S.A., a wholly owned subsidiary of the Bank, and its operating
subsidiaries;
 
    
    Sudamericana Holding S.A., and its subsidiaries;
 
    
    Galicia Warrants S.A.;
 
    
    Net Investment S.A., and its subsidiaries;
 
    
    Galval Agente de Valores S.A.; and
 
    
    GV Mandataria de Valores S.A. (GV Mandataria).




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FORWARD LOOKING STATEMENTS
  
    
    changes in general political, legal, social or other conditions in Argentina;
 
    
    changes in capital markets in general that may affect policies or attitudes toward
lending to Argentina or Argentine companies, including expected or unexpected
turbulence or volatility in domestic or international financial markets such as the
ongoing global economic slowdown;
  -2-




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
    
    changes in regional, national and international business and economic conditions,
including inflation;
 
    
    changes in government regulation, including tax regulations and changes in or
failures to comply with banking or other regulations;
 
    
    increased competition in the banking, financial services, credit card services,
insurance, asset management and related industries;
 
    
    changes in interest rates which may, among other things, adversely affect margins;
 
    
    a loss of market share by any of our main businesses;
 
    
    a change in the credit cycle and increased borrowers defaults;
 
    
    our inability to sustain or improve our performance;
 
    
    our inability to obtain additional debt or equity financing on attractive conditions
or at all, which may limit our ability to fund existing operations and to finance new
activities;
 
    
    technological changes, changes in consumer spending and saving habits, our
inability to implement new technologies, and
 
    
    other factors discussed under Item 3. Key Information-Risk Factors in this annual
report.
    -3-




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PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 Item 3.A. Selected Financial Data
     Fiscal Year Ended December 31,2008
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of US Dollars,except as noted)(1)Unaudited
    
    
    (in millions of Pesos, except as noted)(1)Consolidated Income Statement in Accordance with Argentine Banking GAAPFinancial Income
    
    
    741.0
    
    
    
    2,559.3
    
    
    
    1,997.9
    
    
    
    2,229.8
    
    
    
    2,398.6
    
    
    
    1,391.6Financial Expenses
    
    
    411.4
    
    
    
    1,421.0
    
    
    
    1,246.7
    
    
    
    1,851.6
    
    
    
    1,845.9
    
    
    
    1,167.4Net Financial Income (2)
    
    
    329.6
    
    
    
    1,138.3
    
    
    
    751.2
    
    
    
    378.2
    
    
    
    552.7
    
    
    
    224.2Provision for Losses on Loans and Other Receivables
    
    
    114.5
    
    
    
    395.4
    
    
    
    255.5
    
    
    
    110.9
    
    
    
    76.7
    
    
    
    190.2Income / (Loss) before Taxes
    
    
    72.6
    
    
    
    250.8
    
    
    
    117.5
    
    
    
    75.3
    
    
    
    126.5
    
    
    
    (66.1
    )Income Tax
    
    
    (21.4
    )
    
    
    (74.0
    )
    
    
    (71.5
    )
    
    
    (94.2
    )
    
    
    (19.3
    )
    
    
    (43.8
    )Net Income / (Loss)
    
    
    51.2
    
    
    
    176.8
    
    
    
    46.0
    
    
    
    (18.9
    )
    
    
    107.2
    
    
    
    (109.9
    )Earnings / (Loss) per Share (in Pesos)
    
    
    0.041
    
    
    
    0.142
    
    
    
    0.037
    
    
    
    (0.015
    )
    
    
    0.086
    
    
    
    (0.093
    )Cash Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book Value per Share (in Pesos)
    
    
    0.431
    
    
    
    1.487
    
    
    
    1.333
    
    
    
    1.296
    
    
    
    1.310
    
    
    
    1.224
  -4-




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Fiscal Year Ended December 31,2008
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of US Dollars,except as noted)(1)Unaudited
    
    
    (in millions of Pesos, except as noted)(1)Amounts in Accordance with U.S. GAAPNet Income / (Loss)
    
    
    (339.1
    )
    
    
    (1,171.0
    )
    
    
    592.9
    
    
    
    3,524.9
    
    
    
    731.0
    
    
    
    (1.1
    )Basic and Diluted Earnings / (Losses) per Share (in Pesos)
    
    
    (0.273
    )
    
    
    (0.943
    )
    
    
    0.478
    
    
    
    2.841
    
    
    
    0.589
    
    
    
    (0.001
    )Book Value / (Deficit) per Share (in Pesos)
    
    
    (0.176
    )
    
    
    (0.608
    )
    
    
    0.192
    
    
    
    0.117
    
    
    
    (1.714
    )
    
    
    (2.574
    )Financial Income
    
    
    347.9
    
    
    
    1,201.7
    
    
    
    2,433.2
    
    
    
    5,456.4
    
    
    
    2,958.7
    
    
    
    1,448.7Financial Expenses
    
    
    (402.8
    )
    
    
    (1,391.3
    )
    
    
    1,160.1
    
    
    
    1,863.6
    
    
    
    1,845.9
    
    
    
    1,167.4Net Financial Income / (Loss)
    
    
    (54.9
    )
    
    
    (189.6
    )
    
    
    1,273.1
    
    
    
    3,592.8
    
    
    
    1,112.8
    
    
    
    281.3Provision for Losses on Loans and Other Receivables
    
    
    (130.3
    )
    
    
    (450.1
    )
    
    
    203.4
    
    
    
    160.3
    
    
    
    113.5
    
    
    
    210.0Income Tax
    
    
    14.7
    
    
    
    50.9
    
    
    
    (92.5
    )
    
    
    (277.1
    )
    
    
    19.3
    
    
    
    35.4Consolidated Balance Sheet in Accordance with Argentine Banking GAAPCash and Due from Banks
    
    
    985.9
    
    
    
    3,405.1
    
    
    
    2,960.0
    
    
    
    2,294.8
    
    
    
    1,041.2
    
    
    
    988.7Government Securities, Net
    
    
    443.5
    
    
    
    1,531.8
    
    
    
    1,693.0
    
    
    
    3,188.3
    
    
    
    5,967.4
    
    
    
    5,518.0Loans, Net
    
    
    3,409.3
    
    
    
    11,774.6
    
    
    
    11,601.0
    
    
    
    10,525.0
    
    
    
    10,557.6
    
    
    
    8,439.8Total Assets
    
    
    7,162.1
    
    
    
    24,735.8
    
    
    
    22,828.7
    
    
    
    23,615.4
    
    
    
    25,638.1
    
    
    
    23,652.2Deposits
    
    
    4,069.9
    
    
    
    14,056.1
    
    
    
    13,165.6
    
    
    
    10,779.4
    
    
    
    8,421.7
    
    
    
    6,756.9Other Funds (3)
    
    
    2,557.8
    
    
    
    8,834.0
    
    
    
    8,008.6
    
    
    
    11,227.5
    
    
    
    15,589.6
    
    
    
    15,375.8Total Shareholders Equity
    
    
    534.4
    
    
    
    1,845.7
    
    
    
    1,654.5
    
    
    
    1,608.5
    
    
    
    1,626.8
    
    
    
    1,519.5Average Total Assets (4)
    
    
    6,779.0
    
    
    
    23,412.5
    
    
    
    21,332.4
    
    
    
    24,614.5
    
    
    
    24,238.1
    
    
    
    22,725.9Percentage of Period-end Balance Sheet Items
Denominated in Dollars:Loans, Net of Allowances
    
    
    16.97
    
    
    
    16.97
    
    
    
    15.13
    
    
    
    16.66
    
    
    
    9.84
    
    
    
    10.42Total Assets
    
    
    28.85
    
    
    
    28.85
    
    
    
    27.60
    
    
    
    28.94
    
    
    
    26.55
    
    
    
    32.92Deposits
    
    
    16.98
    
    
    
    16.98
    
    
    
    15.53
    
    
    
    14.13
    
    
    
    15.55
    
    
    
    20.89Total Liabilities
    
    
    32.47
    
    
    
    32.47
    
    
    
    32.84
    
    
    
    30.41
    
    
    
    25.81
    
    
    
    29.56Amounts in Accordance with U.S. GAAPTrading Securities
    
    
    286.5
    
    
    
    989.6
    
    
    
    476.2
    
    
    
    208.2
    
    
    
    790.0
    
    
    
    564.7Available-for-Sale Securities
    
    
    593.6
    
    
    
    2,050.0
    
    
    
    3,717.3
    
    
    
    5,214.6
    
    
    
    5,350.3
    
    
    
    3,923.1Total Assets
    
    
    7,284.9
    
    
    
    25,159.7
    
    
    
    24,429.1
    
    
    
    24,107.0
    
    
    
    19,949.3
    
    
    
    17,007.3Total Liabilities
    
    
    7,503.3
    
    
    
    25,914.1
    
    
    
    24,191.0
    
    
    
    23,961.2
    
    
    
    22,077.6
    
    
    
    20,203.0Shareholders Equity (Deficit)
    
    
    (218.4
    )
    
    
    (754.4
    )
    
    
    238.1
    
    
    
    145.8
    
    
    
    (2,128.3
    )
    
    
    (3,195.7
    )
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Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of Pesos, except as noted)(1)Selected Ratios
in Accordance with Argentine Banking GAAPProfitability and EfficiencyNet Yield on Interest Earning Assets (5)
    
    
    5.72
    %
    
    
    4.13
    %
    
    
    1.21
    %
    
    
    2.38
    %
    
    
    1.02
    %Financial Margin (6)
    
    
    5.72
    
    
    
    4.12
    
    
    
    1.74
    
    
    
    2.53
    
    
    
    1.08Return on Average Assets (7)
    
    
    0.91
    
    
    
    0.37
    
    
    
    0.0004
    
    
    
    0.59
    
    
    
    (0.42
    )Return on Average Shareholders Equity (8)
    
    
    10.13
    
    
    
    2.86
    
    
    
    (1.15
    )
    
    
    6.83
    
    
    
    (7.32
    )Net Income
from Services as a Percentage of Operating Income (9)
    
    
    51.07
    
    
    
    54.86
    
    
    
    63.99
    
    
    
    48.65
    
    
    
    66.06Efficiency ratio (10)
    
    
    76.57
    
    
    
    77.29
    
    
    
    92.80
    
    
    
    72.56
    
    
    
    94.46CapitalShareholders Equity as a Percentage of Total Assets
    
    
    7.46
    %
    
    
    7.25
    %
    
    
    6.81
    %
    
    
    6.35
    %
    
    
    6.42
    %Total Liabilities as a Multiple of Shareholders Equity
    
    
    12.40
    x
    
    
    12.80
    x
    
    
    13.68
    x
    
    
    14.76
    x
    
    
    14.56
    xTotal Capital Ratio
    
    
    13.92
    %
    
    
    15.54
    %
    
    
    15.03
    %
    
    
    20.78
    %
    
    
    25.11
    %LiquidityCash and Due from Banks as a Percentage of Total Deposits
    
    
    24.23
    %
    
    
    22.48
    %
    
    
    21.29
    %
    
    
    12.36
    %
    
    
    14.63
    %Loans, Net as a Percentage of Total Assets
    
    
    47.60
    
    
    
    50.82
    
    
    
    44.57
    
    
    
    41.18
    
    
    
    35.68Credit QualityPast Due Loans (11) as a Percentage of Total Loans
    
    
    2.87
    %
    
    
    2.77
    %
    
    
    2.38
    %
    
    
    2.34
    %
    
    
    4.97
    %Non-Accrual Loans (12) as a Percentage of Total Loans
    
    
    3.49
    
    
    
    3.14
    
    
    
    2.58
    
    
    
    3.50
    
    
    
    7.74Allowance for Loan Losses as a Percentage of Non-accrual
Loans (12)
    
    
    123.11
    
    
    
    114.05
    
    
    
    117.16
    
    
    
    111.90
    
    
    
    90.51Net Charge-Offs (13) as a Percentage of Average Loans
    
    
    1.83
    
    
    
    0.65
    
    
    
    1.42
    
    
    
    1.49
    
    
    
    3.77Ratios in Accordance with U.S. GAAPCapitalShareholders Equity (deficit) as a Percentage of Total Assets
    
    
    (3.00)
    %
    
    
    0.97
    %
    
    
    0.60
    %
    
    
    (10.67)
    %
    
    
    (18.79)
    %Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    (34.35)
    x
    
    
    101.61
    x
    
    
    164.33
    x
    
    
    (10.37)
    x
    
    
    (6.32)
    xLiquidityLoans, Net as a Percentage of Total Assets
    
    
    49.59
    %
    
    
    49.36
    %
    
    
    40.10
    %
    
    
    50.15
    %
    
    
    43.91
    %Credit QualityAllowance for Loan Losses as a Percentage of Non-Accrual Loans
    
    
    141.34
    
    
    
    132.13
    
    
    
    168.58
    
    
    
    139.49
    
    
    
    84.75Inflation and Exchange RateWholesale Inflation (14)
    
    
    8.82
    %
    
    
    14.56
    %
    
    
    7.14
    %
    
    
    10.69
    %
    
    
    7.87
    %Consumer Inflation (15)
    
    
    7.24
    
    
    
    8.47
    
    
    
    9.84
    
    
    
    12.33
    
    
    
    6.10Exchange Rate Variation (16) (%)
    
    
    9.61
    
    
    
    2.66
    
    
    
    1.25
    
    
    
    1.94
    
    
    
    1.39CER (17)
    
    
    7.97
    
    
    
    8.50
    
    
    
    10.08
    
    
    
    11.75
    
    
    
    5.48CVS (18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.32
 The ratios disclosed above are considered significant for the Management despite of the fact that
they are not a specific requirement of any GAAP.
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(1)
    
    The exchange rate used to convert the December 31, 2008 amounts into US Dollars was Ps.
3.4537 per US$1.00. All amounts are stated in millions of Pesos, except inflation and exchange
rates, percentages, ratios, multiples and per-share data.(2)
    
    Net financial income primarily represents income from interest on loans and other receivables
resulting from financial brokerage plus net income from government and corporate debt
securities, including gains and losses, minus interest on deposits and other liabilities from
financial intermediation and monetary loss from financial brokerage. It also includes the CER
adjustment.(3)
    
    Includes primarily liabilities with other banks and international entities. Until December
31, 2006, debt with the Argentine Central Bank was also included.(4)
    
    The average balances of assets, including the related interest that is due 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 Financiero
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 excluding minority interest as a percentage of average total assets.(8)
    
    Net income as a percentage of average shareholders equity.(9)
    
    Operating income is defined as net financial income plus net income from services.(10)
    
    Administrative expenses as a percentage of operating income as defined above.(11)
    
    Past-due loans are defined as the aggregate principal amount of a loan plus any accrued
interest that is due and payable for which either the principal or any interest payment is 91
days or more past due.(12)
    
    Non-Accrual loans are defined as those loans in the categories of: (a) Consumer portfolio:
Medium Risk, High Risk, Uncollectible, and Uncollectible Due to Technical Reasons; and
(b) Commercial portfolio: With problems, High Risk of Insolvency, Uncollectible, and
Uncollectible Due to Technical Reasons.(13)
    
    Charge-offs plus direct charge-offs minus bad debts recovered.(14)
    
    As measured by the annual change in the end-of-period Wholesale Price Index (WPI),
published by INDEC.(15)
    
    As measured by the annual change in the end-of-period Consumer Price Index (CPI), published
by INDEC.(16)
    
    Annual change in the end-of-period exchange rate expressed in Pesos per US Dollar.(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.(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. The
percentage disclosed for fiscal year 2004 corresponds to the variation between January 1, 2004
and March 31, 2004. 
 Exchange Rate Information
  Exchange Rate (1)High
    
    
    Low
    
    
    Average (2) (3)
    
    
    Period-End(in Pesos per US Dollar)2004
    
    
    3.0718
    
    
    
    2.8037
    
    
    
    2.9415
    (3)
    
    
    2.97382005
    
    
    3.0523
    
    
    
    2.8592
    
    
    
    2.9233
    (3)
    
    
    3.03152006
    
    
    3.1072
    
    
    
    3.0305
    
    
    
    3.0740
    (3)
    
    
    3.06952007
    
    
    3.1797
    
    
    
    3.0553
    
    
    
    3.1154
    (3)
    
    
    3.15102008
    
    
    3.4537
    
    
    
    3.0128
    
    
    
    3.1623
    (3)
    
    
    3.4537December 2008
    
    
    3.4537
    
    
    
    3.3763
    
    
    
    3.4226
    
    
    
    3.4537January 2009
    
    
    3.4875
    
    
    
    3.4497
    
    
    
    3.4640
    
    
    
    3.4875February 2009
    
    
    3.5595
    
    
    
    3.4860
    
    
    
    3.5115
    
    
    
    3.5595March 2009
    
    
    3.7167
    
    
    
    3.5905
    
    
    
    3.6540
    
    
    
    3.7135April 2009
    
    
    3.7208
    
    
    
    3.6738
    
    
    
    3.6934
    
    
    
    3.7198May 2009
    
    
    3.7465
    
    
    
    3.6928
    
    
    
    3.7245
    
    
    
    3.7465
 (1)
    
    Using closing reference exchange rates as published by the Argentine Central Bank.(2)
    
    Monthly average of daily closing quotations, unless otherwise noted.(3)
    
    Based on monthly averages.  -7-




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Item 3.B. Capitalization and Indebtedness
  
 Item 3.C. Reasons for the Offer and Use of Proceeds
  
 Item 3.D. Risk Factors
 You should carefully consider the risks described below in addition to the other information
contained in this annual report. In addition, most, if not all, of the risks described below must
be evaluated bearing in mind that our most important asset is our equity interest in Banco Galicia,
thus, a material change in Banco Galicias shareholders equity or income statement would also
adversely affect our businesses and results of operations. We may also face risks and uncertainties
that are not presently known to us or that we currently deem immaterial, which may impair our
business. Our operations, property and customers are located mainly in Argentina. Accordingly, the
quality of our customer portfolio, loan portfolio, financial condition and results of operations
depend, to a significant extent, on the macroeconomic and political conditions prevailing in
Argentina. In general, the risk assumed when investing in the securities of issuers from countries
such as Argentina, is higher than when investing in the securities of issuers from developed
countries.
 Risk Factors Relating to Argentina
 A contraction in the domestic economy as well as a deterioration in market conditions could
adversely affect the financial system and Grupo Financiero Galicia
   Argentinas political and economic instability is still high and could continue to affect the
economy and our business
    -8-




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Inflation may rise and undermine the economy and our business
  Instituto Nacional de Estadísticas y Censos
   A significant devaluation of the Peso may adversely affect the Argentine economy and us
     -9-




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Argentinas economy remains vulnerable to external shocks which could have an adverse effect on the
countrys economic growth and on our prospects. In addition, the Argentine economy is vulnerable to
the ongoing economic crisis in the United States of America
      A decline in international prices for Argentinas main commodity exports could have an adverse
effect on Argentinas economic growth and on us
   Argentinas ability to obtain financing from international capital markets and foreign direct
investment is limited, which could adversely affect the economy and our business
   -10-




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Administradora de Fondos de Jubilaciones y Pensiones Administración Nacional de la Seguridad Social
 Préstamos Garantizados Nacionales
 Centro Internacional de Arreglo de Disputas de Inversiones
   The foreign exchange market is subject to controls that restrict our access to foreign currency and
our access to foreign funds and more restrictive measures could be implemented in the future that
would adversely affect our business operations
   -11-




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The 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 such as us and our subsidiaries
  Foreign judgments may not be able to be normally enforced in Argentina
   The reform of the Integrated Retirement and Pension System may limit our ability to obtain funding
 Sistema Integrado Previsional Argentino
  -12-




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Risk Factors Relating to the Argentine Financial System
 The ongoing international financial crisis could intensify and spread, possibly impacting Argentine
banks, including Banco Galicia
  The recovery of the financial system is dependent upon the ability of financial institutions,
including Banco Galicia, to maintain and increase the confidence of depositors
   The negative consequences of the 2001-2002 crisis on the profile and activities of the financial
system, including us, may not be overcome in the short term or at all
   -13-




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Financial institutions asset quality could deteriorate if the economic growth process does not
recover, which would have a negative impact on financial institutions profitability as well as on
ours
     Judgments against financial institutions in connection with the pesification and restructuring of
deposits in 2002 may result in a deterioration of financial institutions deposit base and
liquidity, including ours
 amparo
  -14-




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New limitations on creditors rights in Argentina and to the ability to foreclose on certain
guarantees and collateral may adversely impact financial institutions such as us
  Certain administrative proceedings being initiated by Argentine provincial tax authorities against
financial institutions could generate losses for such institutions, including us
   -15-




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Consumer protection laws may limit some of the rights afforded to us and our subsidiaries
    Risk Factors Relating to Us
 Since we are a holding company, our ability to pay cash dividends depends on the ability of our
subsidiaries to pay dividends to us
   -16-




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Our ability to repay indebtedness at the holding company level may be impaired due to the lack of
liquidity at such level
   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
   -17-




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Our shareholders may be subject to liability for certain votes of their securities
  United States holders of our class B shares may not be able to exercise preemptive and accretion
rights
   -18-




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The concentration of our assets in Argentine public-sector debt instruments is high, which makes
our future financial condition dependent on the Governments credit quality and ability and
willingness to comply with its repayment obligations
  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
   We hold Argentine securities which might be highly volatile
    -19-




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Our net position in CER-adjusted assets exposes us to increases in the real interest rate
  A breach of any of the covenants under the Banks debt agreements and the agreement entered into by
the Bank and us as part of the restructuring of the Banks foreign debt in 2004 could result in the
occurrence of an event of default under these agreements
  It may be difficult for us to fully overcome all of the residual negative effects of the 2001-2002
crisis
 amparo
  -20-




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Item 4. Information on the Company
 
 History and Development of the Company
 sociedad anónima
   th
 
 Organizational Structure
  
    
    Galicia Uruguay, incorporated in Uruguay and currently not an operating financial
institution;
  -21-




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
    
    Galval Agente de Valores S.A. or Galval, incorporated in Uruguay;
 
    
    Galicia Pension Fund Ltd. and Galicia (Cayman) Ltd. or Galicia Cayman, incorporated in
the Cayman Islands;
 
    
    Tarjeta Naranja Dominicana S.A., incorporated in the Dominican Republic.
 
 
 History
 Grupo Financiero Galicia
   -22-




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-23-




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Banco Galicia
 Superintendencia de Entidades Financieras y Cambiarias
     Interior Interior
  -24-




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-25-




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Restructuring of the Foreign Debt of the Banks Head Office in Argentina and its Cayman Branch
    
    
    US$648.5 million of long-term Dollar-denominated debt instruments, of which US$464.8
million were Dollar-denominated negotiable obligations due 2014 (referred to as the Step
Up Notes Due 2014 or the 2014 Notes) issued under an indenture.
  -26-




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
    
    US$399.8 million of medium-term Dollar-denominated debt instruments, of which US$352.8
million were Dollar-denominated negotiable obligations due 2010 (referred to as the
Floating Rate Notes Due 2010 or the 2010 Notes) 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 (referred to as the
Subordinated Notes Due 2019 or the 2019 Notes) issued under an indenture.
  Capitalization as a Result of the Restructuring of the Foreign Debt
 Banco Galicias 2007 Capital Increase
    -27-




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Banco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.
 Casa Bancaria
  Regional Credit Card Companies
    -28-




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Sudamericana
  Net Investment S.A.
 Inspección General de Justicia (
  -29-




---



##### Table of Contents



Galicia Warrants S.A.
  Galval
  GV Mandataria
  
 Business
 Banking
   -30-




---



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Wholesale Banking
    -31-




---



##### Table of Contents



Middle-Market Banking
 
    
    SMEs: annual sales between Ps. 1 million and Ps. 150 million. Service of this sector is
also divided in subcategories.
 
    
    Large companies: annual sales above Ps. 150 million.
 
    
    Agribusinesses: all agribusinesses and those individuals with activity in the
agriculture and livestock sectors with annual revenues above Ps. 200,000 (individuals below
Ps. 200,000 are served by the Retail Banking division).
 Fondo Tecnológico Argentino, )
    -32-




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Corporate Banking
 Capital Markets and Investment Banking
  International Trade.
  -33-




---



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Non-Financial Public Sector
 Corporate and Real Estate Business Development
 Retail Banking
   -34-




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-35-




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Private Banking
  Branch Network
  Geographical Area
    
    Number of BranchesCity of Buenos Aires
    
    
    76Greater Buenos Aires
    
    
    60Rest of the Province of Buenos Aires
    
    
    31Santa Fe
    
    
    15Córdoba
    
    
    14Mendoza
    
    
    9Entre Ríos and Chubut
    
    4 eachRío Negro
    
    
    3Corrientes, La Pampa, Misiones, San Luis, Tierra del
Fuego and Tucumán
    
    2 eachCatamarca, Chaco, Formosa, Jujuy, La Rioja, Neuquén,
Salta, Santa Cruz, Santiago del Estero and San Juan
    
    1 eachTotal
    
    
    238
  -36-




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Alternative Channels
  e-galicia.com
    -37-




---



##### Table of Contents



Customer Contact Center (the CCC)
 Red Galicia 24
   -38-




---



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Galicia Móvil
 Retail Sales Unit
 Real Estate Center
 Treasury Division
 Mercado Abierto Electrónico
 Financial Operations.
   -39-




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Asset Management
 Comisión Nacional de Valores
 International
 Regional Credit Cards
   -40-




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Insurance
    -41-




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Other Businesses
 Galicia Warrants:
 Net Investment:
 Galval:
  
 Competition
   -42-




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Banking
     Argentine Banking System
   -43-




---



##### Table of Contents



Ley de Entidades Financieras,
   Regional Credit Cards
   -44-




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Insurance
    
 Sales and Marketing
  March 2009Branches(number)Bank Branches
    
    
    238Regional Credit Card Cos. Branches
    
    
    152Business Centers and In-House Facilities
    
    
    15Private-Banking Centers
    
    
    12Electronic Banking Terminals(number)ATMs
    
    
    641Self-Service Terminals
    
    
    758Electronic Banking Transactions(thousands per month)ATMs + Self-Service Terminals
    
    
    7,724Phone-Banking
    
    
    457e-banking
    
    
    12,693
  -45-




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-46-




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-47-




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Property
  SquareMetersProperty
    
    Address
    
    (approx.)
    
    
    Main UsesGrupo Financiero Galicia- Owned
    
    -Tte. Gral. Juan D. Perón 456, 2nd floor, Buenos Aires, Argentina
    
    
    191
    
    
    Administrative activities-Maipú 241, Buenos Aires, Argentina(1)
    
    
    1,616
    
    
    Administrative activitiesBanco de Galicia y Buenos Aires S.A.- Owned
    
    -Tte. Gral. Juan D. Perón 407, Buenos Aires, Argentina
    
    
    17,300
    
    
    Administrative activities-Tte. Gral. Juan D. Perón 430, Buenos Aires, Argentina
    
    
    42,000
    
    
    Administrative activities-Florida 361, Buenos Aires, Argentina
    
    
    7,340
    
    
    Administrative activities- Rented
    
    -San Martín 178/200, Buenos Aires, Argentina
    
    
    3,600
    
    
    Administrative activitiesBanco Galicia Uruguay S.A.- Owned
    
    -Dr. Americo Ricaldoni 2468, Montevideo, Uruguay
    
    
    400
    
    
    Administrative activities-Punta del Este, Uruguay
    
    
    
    
    
    Former Branch- Rented
    
    -Montevideo, Uruguay
    
    
    580
    
    
    StorageTarjeta Naranja S.A.- Owned
    
    -Sucre 152, 154 and 541, Córdoba, Argentina
    
    
    6,300
    
    
    Administrative activities-Humberto Primo, Córdoba, Argentina: 7 properties
    
    
    4,900
    
    
    Administrative activities-Ruta Nacional 36, km. 8, Córdoba, Argentina
    
    
    49,200
    
    
    Storage-San Jerónimo 2348 and 2350, Santa Fe, Argentina
    
    
    1,475
    
    
    Administrative activitiesRío Grande, Tierra del Fuego, Argentina
    
    
    300
    
    
    Commercial activities- Rented
    
    -Sucre 145/151, La Rioja 359, 364 and 375, Córdoba, Argentina
    
    
    4,450
    
    
    Administrative
activities, printing
centre and storageTarjetas Cuyanas S.A.- Rented
    
    -Belgrano 1415, Mendoza, Argentina
    
    
    1,740
    
    
    Administrative activities-Belgrano 1462, Mendoza, Argentina
    
    
    1,156
    
    
    Administrative activities-Vicente Zapata 145, Mendoza, Argentina
    
    
    280
    
    
    Printing centre-Olascoaga 348, San José, Mendoza, Argentina
    
    
    580
    
    
    StorageTarjetas del Mar S.A.- Rented
    
    -Luro 3001, Mar del Plata, Buenos Aires, Argentina
    
    
    240
    
    
    Administrative Activities-Luro 2943, Mar del Plata, Buenos Aires, Argentina
    
    
    765
    
    
    Administrative ActivitiesGalicia Seguros S.A.- Owned
    
    -Maipú 241, Buenos Aires, Argentina
    
    
    1,643
    
    
    Administrative activitiesNet Investment S.A.- Rented
    
    -25 de Mayo 702, 3rd floor, Buenos Aires, Argentina
    
    
    290
    
    
    Administrative activitiesGalicia Warrants S.A.- Owned
    
    -Tte. Gral. Juan D. Perón 456, 6th floor, Buenos Aires, Argentina
    
    
    118
    
    
    Administrative activities-Ruta Nacional 18, Km. 209, San Salvador, Entre Ríos, Argentina
    
    
    47,917
    
    
    Storage- Leased
    
    -Alsina 3450, San Miguel de Tucumán, Tucumán, Argentina
    
    
    12,800
    
    
    Storage- Rented
    
    -Lavalle 3272, San Miguel de Tucumán, Tucumán, Argentina
    
    
    3,200
    
    
    Storage-Alto Verde, Chicligasta, Tucumán, Argentina
    
    
    2,000
    
    
    Storage-Pasaje 1° de Mayo Esquina 25 de Mayo, Barrio el Corte Alderete,
Tucumán, Argentina
    
    
    2,000
    
    
    Storage-San Martín 891 PB, San Miguel de Tucumán, Tucumán, Argentina
    
    
    64
    
    
    Administrative activitiesGalval Agente de Valores S.A.- Rented
    
    -Zona Franca, Montevideo, Uruguay
    
    
    120
    
    
    Administrative activitiesGV Mandataria de Valores S.A.- Rented
    
    -25 de Mayo 432, 3rd floor, Buenos Aires, Argentina(2)
    
    
    336
    
    
    Administrative activities
 (1)
    
    We lease six units to the Bank equivalent to 1,159.5 square meters, for Ps. 34,784.1 per month and two units to Galicia Seguros S.A.
equivalent to 413.6 square meters, for Ps. 12,408.3 per month. We hold a 45.4 square meters unit vacant for storage.(2)
    
    Banco Galicia leases a property to GV Mandataria, for US$4,500 per month during the first year, US$4,635 during the second year and US$4,775
during the third year.  -48-




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##### Table of Contents




    
    Banco Galicia: 238 branches located in Argentina, 137 of which were owned and 101 of
which were rented by Banco Galicia, located in all of Argentinas 23 provinces.
 
    
    Tarjeta Naranja S.A.: 114 sales points located in 21 of the 23 Argentine provinces, 113
of which were rented by the company.
 
    
    Tarjetas Cuyanas S.A.: 28 sales points located in the provinces of Mendoza, San Juan,
San Luis, Santiago del Estero, La Pampa, La Rioja, Catamarca, Neuquén, Rio Negro, Salta,
Jujuy and Tucumán. All of them were rented.
 
    
    Tarjetas del Mar S.A.: 8 sales points located in the Province of Buenos Aires, all of
which were rented.
 
 Capital Investments and Divestitures
  
    
    Ps. 103.4 million in fixed assets (real estate, machinery and equipment,
vehicles, furniture and fittings);
 
    
    Ps. 44 million in construction in progress; and
 
    
    Ps. 132.5 million in organizational and IT system development expenses.
  
    
    Ps. 80.5 million in fixed assets (real estate, machinery and equipment,
vehicles, furniture and fittings);
 
    
    Ps. 44.7 million in construction in progress; and
 
    
    Ps. 83.5 million in organizational and IT system development expenses.
  
    
    Ps. 41.7 million in fixed assets (real estate, machinery and equipment,
vehicles, furniture and fittings);
 
    
    Ps. 46.7 million in construction in progress; and
 
    
    Ps. 48.1 million in organizational and IT system development expenses.
  -49-




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(In millions of Pesos)Construction of the New Corporate Tower (construction,
furniture, equipment, phones, etc.)
    
    Ps.
    14.5Fixed Assets
    
    
    94.3Organizational and IT System Development
    
    
    90.8In Subsidiaries
    
    
    8.0Total
    
    Ps.
    207.6
  -50-




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Selected Statistical Information
   Average Balance Sheet and Income from Interest-Earning Assets and Expenses from Interest-Bearing
Liabilities
     -51-




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##### Table of Contents



Fiscal Year Ended December 31, 2008 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Accrued
    
    
    Yield/
    
    
    Average
    
    
    Accrued
    
    
    Yield/
    
    
    Average
    
    
    Accrued
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(in millions of Pesos, except rates)AssetsGovernment Securities
    
    
    1,161.4
    
    
    
    72.2
    
    
    
    6.22
    
    
    
    2,480.8
    
    
    
    76.3
    
    
    
    3.08
    
    
    
    3,642.2
    
    
    
    148.5
    
    
    
    4.08LoansPrivate Sector
    
    
    8,848.1
    
    
    
    1,756.6
    
    
    
    19.85
    
    
    
    1,964.4
    
    
    
    132.6
    
    
    
    6.75
    
    
    
    10,812.5
    
    
    
    1,889.2
    
    
    
    17.47Public Sector
    
    
    1,264.8
    
    
    
    165.7
    
    
    
    13.10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,264.8
    
    
    
    165.7
    
    
    
    13.10Total Loans
    
    
    10,112.9
    
    
    
    1,922.3
    
    
    
    19.01
    
    
    
    1,964.4
    
    
    
    132.6
    
    
    
    6.75
    
    
    
    12,077.3
    
    
    
    2,054.9
    
    
    
    17.01Other
    
    
    2,908.1
    
    
    
    197.0
    
    
    
    6.77
    
    
    
    1,264.9
    
    
    
    15.2
    
    
    
    1.20
    
    
    
    4,173.0
    
    
    
    212.2
    
    
    
    5.09Total Interest-Earning Assets
    
    
    14,182.4
    
    
    
    2,191.5
    
    
    
    15.45
    
    
    
    5,710.1
    
    
    
    224.1
    
    
    
    3.92
    
    
    
    19,892.5
    
    
    
    2,415.6
    
    
    
    12.14Cash and Gold
    
    
    599.2
    
    
    
    
    
    
    
    
    
    
    
    287.9
    
    
    
    
    
    
    
    
    
    
    
    887.1
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    708.4
    
    
    
    
    
    
    
    
    
    
    
    63.8
    
    
    
    
    
    
    
    
    
    
    
    772.2
    
    
    
    
    
    
    
    Other Assets
    
    
    2,211.6
    
    
    
    
    
    
    
    
    
    
    
    218.2
    
    
    
    
    
    
    
    
    
    
    
    2,429.8
    
    
    
    
    
    
    
    Allowances
    
    
    (479.1
    )
    
    
    
    
    
    
    
    
    
    
    (90.0
    )
    
    
    
    
    
    
    
    
    
    
    (569.1
    )
    
    
    
    
    
    
    Total Assets
    
    
    17,222.5
    
    
    
    
    
    
    
    
    
    
    
    6,190.0
    
    
    
    
    
    
    
    
    
    
    
    23,412.5
    
    
    
    
    
    
    
    Liabilities and EquityDepositsCurrent Accounts
    
    
    697.7
    
    
    
    21.6
    
    
    
    3.10
    
    
    
    250.4
    
    
    
    
    
    
    
    
    
    
    
    948.1
    
    
    
    21.6
    
    
    
    2.28Savings Accounts
    
    
    1,849.3
    
    
    
    4.7
    
    
    
    0.25
    
    
    
    738.4
    
    
    
    
    
    
    
    
    
    
    
    2,587.7
    
    
    
    4.7
    
    
    
    0.18Time Deposits
    
    
    5,797.6
    
    
    
    749.9
    
    
    
    12.93
    
    
    
    971.8
    
    
    
    17.8
    
    
    
    1.83
    
    
    
    6,769.4
    
    
    
    767.7
    
    
    
    11.34Total Interest-Bearing Deposits
    
    
    8,344.6
    
    
    
    776.2
    
    
    
    9.30
    
    
    
    1,960.6
    
    
    
    17.8
    
    
    
    0.91
    
    
    
    10,305.2
    
    
    
    794.0
    
    
    
    7.70Argentine Central Bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    Other Financial Entities
    
    
    297.7
    
    
    
    53.8
    
    
    
    18.07
    
    
    
    797.5
    
    
    
    39.3
    
    
    
    4.93
    
    
    
    1,095.2
    
    
    
    93.1
    
    
    
    8.50Debt Securities
    
    
    487.3
    
    
    
    70.5
    
    
    
    14.47
    
    
    
    2,312.5
    
    
    
    209.6
    
    
    
    9.06
    
    
    
    2,799.8
    
    
    
    280.1
    
    
    
    10.00Other
    
    
    224.9
    
    
    
    21.6
    
    
    
    9.60
    
    
    
    1,269.0
    
    
    
    88.9
    
    
    
    7.01
    
    
    
    1,493.9
    
    
    
    110.5
    
    
    
    7.40Total Interest-Bearing Liabilities
    
    
    9,354.5
    
    
    
    922.1
    
    
    
    9.86
    
    
    
    6,340.0
    
    
    
    355.6
    
    
    
    5.61
    
    
    
    15,694.5
    
    
    
    1,277.7
    
    
    
    8.14Demand Deposits
    
    
    2,873.6
    
    
    
    
    
    
    
    
    
    
    
    12.4
    
    
    
    
    
    
    
    
    
    
    
    2,886.0
    
    
    
    
    
    
    
    Other Liabilities
    
    
    2,313.1
    
    
    
    
    
    
    
    
    
    
    
    559.5
    
    
    
    
    
    
    
    
    
    
    
    2,872.6
    
    
    
    
    
    
    
    Minority Interests
    
    
    214.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214.4
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,745.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,745.0
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    
    16,500.6
    
    
    
    
    
    
    
    
    
    
    
    6,911.9
    
    
    
    
    
    
    
    
    
    
    
    23,412.5
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    5.59
    
    
    
    
    
    
    
    
    
    
    
    (1.69
    )
    
    
    
    
    
    
    
    
    
    
    4.00Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.50
    
    
    
    
    
    
    
    
    
    
    
    6.23
    
    
    
    
    
    
    
    
    
    
    
    6.42Net Yield on Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    8.95
    
    
    
    
    
    
    
    
    
    
    
    (2.30
    )
    
    
    
    
    
    
    
    
    
    
    5.72
 (*)
    
    Rates include the CER adjustment.  -52-




---



##### Table of Contents



Fiscal Year Ended December 31, 2007 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Accrued
    
    
    Yield/
    
    
    Average
    
    
    Accrued
    
    
    Yield/
    
    
    Average
    
    
    Accrued
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(in millions of Pesos, except rates)AssetsGovernment Securities
    
    
    1,209.1
    
    
    
    16.9
    
    
    
    1.40
    
    
    
    3,069.7
    
    
    
    129.4
    
    
    
    4.22
    
    
    
    4,278.8
    
    
    
    146.3
    
    
    
    3.42LoansPrivate Sector
    
    
    7,178.8
    
    
    
    1,163.5
    
    
    
    16.21
    
    
    
    1,665.0
    
    
    
    107.1
    
    
    
    6.43
    
    
    
    8,843.8
    
    
    
    1,270.6
    
    
    
    14.37Public Sector
    
    
    1,685.1
    
    
    
    221.2
    
    
    
    13.13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,685.1
    
    
    
    221.2
    
    
    
    13.13Total Loans
    
    
    8,863.9
    
    
    
    1,384.7
    
    
    
    15.62
    
    
    
    1,665.0
    
    
    
    107.1
    
    
    
    6.43
    
    
    
    10,528.9
    
    
    
    1,491.8
    
    
    
    14.17Other(1)
    
    
    2,378.1
    
    
    
    155.2
    
    
    
    6.53
    
    
    
    1,040.1
    
    
    
    29.8
    
    
    
    2.87
    
    
    
    3,418.2
    
    
    
    185.0
    
    
    
    5.41Total Interest-Earning Assets
    
    
    12,451.1
    
    
    
    1,556.8
    
    
    
    12.50
    
    
    
    5,774.8
    
    
    
    266.3
    
    
    
    4.61
    
    
    
    18,225.9
    
    
    
    1,823.1
    
    
    
    10.00Cash and Gold
    
    
    484.6
    
    
    
    
    
    
    
    
    
    
    
    201.6
    
    
    
    
    
    
    
    
    
    
    
    686.2
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    661.0
    
    
    
    
    
    
    
    
    
    
    
    65.2
    
    
    
    
    
    
    
    
    
    
    
    726.2
    
    
    
    
    
    
    
    Other Assets
    
    
    2,010.4
    
    
    
    
    
    
    
    
    
    
    
    126.8
    
    
    
    
    
    
    
    
    
    
    
    2,137.2
    
    
    
    
    
    
    
    Allowances
    
    
    (335.9
    )
    
    
    
    
    
    
    
    
    
    
    (107.2
    )
    
    
    
    
    
    
    
    
    
    
    (443.1
    )
    
    
    
    
    
    
    Total Assets
    
    
    15,271.2
    
    
    
    
    
    
    
    
    
    
    
    6,061.2
    
    
    
    
    
    
    
    
    
    
    
    21,332.4
    
    
    
    
    
    
    
    Liabilities and EquityDepositsCurrent Accounts
    
    
    531.0
    
    
    
    16.4
    
    
    
    3.09
    
    
    
    147.4
    
    
    
    
    
    
    
    
    
    
    
    678.4
    
    
    
    16.4
    
    
    
    2.42Savings Accounts
    
    
    1,647.2
    
    
    
    5.1
    
    
    
    0.31
    
    
    
    605.7
    
    
    
    
    
    
    
    
    
    
    
    2,252.9
    
    
    
    5.1
    
    
    
    0.23Time Deposits
    
    
    5,705.6
    
    
    
    547.0
    
    
    
    9.59
    
    
    
    900.6
    
    
    
    15.4
    
    
    
    1.71
    
    
    
    6,606.2
    
    
    
    562.4
    
    
    
    8.51Total Interest-Bearing Deposits
    
    
    7,883.8
    
    
    
    568.5
    
    
    
    7.21
    
    
    
    1,653.7
    
    
    
    15.4
    
    
    
    0.93
    
    
    
    9,537.5
    
    
    
    583.9
    
    
    
    6.12Argentine Central Bank
    
    
    261.3
    
    
    
    68.8
    
    
    
    26.33
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    261.5
    
    
    
    68.8
    
    
    
    26.31Other Financial Entities
    
    
    186.4
    
    
    
    27.2
    
    
    
    14.59
    
    
    
    352.8
    
    
    
    16.9
    
    
    
    4.79
    
    
    
    539.2
    
    
    
    44.1
    
    
    
    8.18Debt Securities
    
    
    530.0
    
    
    
    77.7
    
    
    
    14.66
    
    
    
    2,830.1
    
    
    
    213.3
    
    
    
    7.54
    
    
    
    3,360.1
    
    
    
    291.0
    
    
    
    8.66Other
    
    
    149.7
    
    
    
    16.5
    
    
    
    11.02
    
    
    
    1,010.8
    
    
    
    66.9
    
    
    
    6.62
    
    
    
    1,160.5
    
    
    
    83.4
    
    
    
    7.19Total Interest-Bearing Liabilities
    
    
    9,011.2
    
    
    
    758.7
    
    
    
    8.42
    
    
    
    5,847.6
    
    
    
    312.5
    
    
    
    5.34
    
    
    
    14,858.8
    
    
    
    1,071.2
    
    
    
    7.21Demand Deposits
    
    
    2,287.6
    
    
    
    
    
    
    
    
    
    
    
    19.9
    
    
    
    
    
    
    
    
    
    
    
    2,307.5
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,872.7
    
    
    
    
    
    
    
    
    
    
    
    513.8
    
    
    
    
    
    
    
    
    
    
    
    2,386.5
    
    
    
    
    
    
    
    Minority Interests
    
    
    172.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172.9
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,606.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,606.7
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    
    14,951.1
    
    
    
    
    
    
    
    
    
    
    
    6,381.3
    
    
    
    
    
    
    
    
    
    
    
    21,332.4
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    4.08
    
    
    
    
    
    
    
    
    
    
    
    (0.73
    )
    
    
    
    
    
    
    
    
    
    
    2.79Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.09
    
    
    
    
    
    
    
    
    
    
    
    5.41
    
    
    
    
    
    
    
    
    
    
    
    5.88Net Yield on Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.41
    
    
    
    
    
    
    
    
    
    
    
    (0.80
    )
    
    
    
    
    
    
    
    
    
    
    4.13
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes, among other amounts, the amounts corresponding to the Compensatory Bond and the Hedge Bond to be received.  -53-




---



##### Table of Contents



Fiscal Year Ended December 31, 2006 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Accrued
    
    
    Yield/
    
    
    Average
    
    
    Accrued
    
    
    Yield/
    
    
    Average
    
    
    Accrued
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(in millions of Pesos, except rates)AssetsGovernment Securities
    
    
    3,501.5
    
    
    
    252.5
    
    
    
    7.21
    
    
    
    1,174.3
    
    
    
    60.0
    
    
    
    5.11
    
    
    
    4,675.8
    
    
    
    312.5
    
    
    
    6.68LoansPrivate Sector
    
    
    5,148.2
    
    
    
    754.0
    
    
    
    14.65
    
    
    
    1,333.3
    
    
    
    75.1
    
    
    
    5.63
    
    
    
    6,481.5
    
    
    
    829.1
    
    
    
    12.79Public Sector
    
    
    4,369.5
    
    
    
    496.3
    
    
    
    11.36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,369.5
    
    
    
    496.3
    
    
    
    11.36Total Loans
    
    
    9,517.7
    
    
    
    1,250.3
    
    
    
    13.14
    
    
    
    1,333.3
    
    
    
    75.1
    
    
    
    5.63
    
    
    
    10,851.0
    
    
    
    1,325.4
    
    
    
    12.21Other(1)
    
    
    1,778.4
    
    
    
    125.5
    
    
    
    7.06
    
    
    
    4,447.4
    
    
    
    158.8
    
    
    
    3.57
    
    
    
    6,225.8
    
    
    
    284.3
    
    
    
    4.57Total Interest-Earning Assets
    
    
    14,797.6
    
    
    
    1,628.3
    
    
    
    11.00
    
    
    
    6,955.0
    
    
    
    293.9
    
    
    
    4.23
    
    
    
    21,752.6
    
    
    
    1,922.2
    
    
    
    8.84Cash and Gold
    
    
    432.7
    
    
    
    
    
    
    
    
    
    
    
    210.0
    
    
    
    
    
    
    
    
    
    
    
    642.7
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    561.1
    
    
    
    
    
    
    
    
    
    
    
    44.2
    
    
    
    
    
    
    
    
    
    
    
    605.3
    
    
    
    
    
    
    
    Other Assets
    
    
    1,970.2
    
    
    
    
    
    
    
    
    
    
    
    80.8
    
    
    
    
    
    
    
    
    
    
    
    2,051.0
    
    
    
    
    
    
    
    Allowances
    
    
    (348.8
    )
    
    
    
    
    
    
    
    
    
    
    (88.3
    )
    
    
    
    
    
    
    
    
    
    
    (437.1
    )
    
    
    
    
    
    
    Total Assets
    
    
    17,412.8
    
    
    
    
    
    
    
    
    
    
    
    7,201.7
    
    
    
    
    
    
    
    
    
    
    
    24,614.5
    
    
    
    
    
    
    
    Liabilities and EquityDepositsCurrent Accounts
    
    
    536.8
    
    
    
    21.0
    
    
    
    3.91
    
    
    
    122.0
    
    
    
    
    
    
    
    
    
    
    
    658.8
    
    
    
    21.0
    
    
    
    3.19Savings Accounts
    
    
    1,283.0
    
    
    
    4.4
    
    
    
    0.34
    
    
    
    506.3
    
    
    
    
    
    
    
    
    
    
    
    1,789.3
    
    
    
    4.4
    
    
    
    0.25Time Deposits
    
    
    4,556.3
    
    
    
    405.8
    
    
    
    8.91
    
    
    
    741.6
    
    
    
    9.6
    
    
    
    1.29
    
    
    
    5,297.9
    
    
    
    415.4
    
    
    
    7.84Total Interest-Bearing Deposits
    
    
    6,376.1
    
    
    
    431.2
    
    
    
    6.76
    
    
    
    1,369.9
    
    
    
    9.6
    
    
    
    0.70
    
    
    
    7,746.0
    
    
    
    440.8
    
    
    
    5.69Argentine Central Bank
    
    
    6,083.0
    
    
    
    769.5
    
    
    
    12.65
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    6,083.1
    
    
    
    769.5
    
    
    
    12.65Other Financial Entities
    
    
    265.9
    
    
    
    35.1
    
    
    
    13.20
    
    
    
    172.9
    
    
    
    11.3
    
    
    
    6.54
    
    
    
    438.8
    
    
    
    46.4
    
    
    
    10.57Debt Securities
    
    
    170.7
    
    
    
    24.4
    
    
    
    14.29
    
    
    
    3,261.7
    
    
    
    270.5
    
    
    
    8.29
    
    
    
    3,432.4
    
    
    
    294.9
    
    
    
    8.59Other
    
    
    108.8
    
    
    
    12.2
    
    
    
    11.21
    
    
    
    1,084.9
    
    
    
    96.2
    
    
    
    8.87
    
    
    
    1,193.7
    
    
    
    108.4
    
    
    
    9.08Total Interest-Bearing Liabilities
    
    
    13,004.5
    
    
    
    1,272.4
    
    
    
    9.78
    
    
    
    5,889.5
    
    
    
    387.6
    
    
    
    6.58
    
    
    
    18,894.0
    
    
    
    1,660.0
    
    
    
    8.79Demand Deposits
    
    
    1,735.8
    
    
    
    
    
    
    
    
    
    
    
    20.6
    
    
    
    
    
    
    
    
    
    
    
    1,756.4
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,651.9
    
    
    
    
    
    
    
    
    
    
    
    518.8
    
    
    
    
    
    
    
    
    
    
    
    2,170.7
    
    
    
    
    
    
    
    Minority Interests
    
    
    144.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144.1
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,649.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,649.3
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    
    18,185.6
    
    
    
    
    
    
    
    
    
    
    
    6,428.9
    
    
    
    
    
    
    
    
    
    
    
    24,614.5
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    1.22
    
    
    
    
    
    
    
    
    
    
    
    (2.35
    )
    
    
    
    
    
    
    
    
    
    
    0.05Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    8.60
    
    
    
    
    
    
    
    
    
    
    
    5.57
    
    
    
    
    
    
    
    
    
    
    
    7.63Net Yield on Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    2.41
    
    
    
    
    
    
    
    
    
    
    
    (1.35
    )
    
    
    
    
    
    
    
    
    
    
    1.21
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes, among other amounts, the amounts corresponding to the Compensatory Bond and the Hedge Bond to be received.   -54-




---



##### Table of Contents



Changes in Net Interest Income-Volume and Rate Analysis
  Fiscal Year 2008/ Fiscal Year 2007,
    
    
    Fiscal Year 2007/ Fiscal Year 2006,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
    
    
    (0.6
    )
    
    
    55.9
    
    
    
    55.3
    
    
    
    (105.6
    )
    
    
    (130.0
    )
    
    
    (235.6
    )Dollars
    
    
    (22.0
    )
    
    
    (31.1
    )
    
    
    (53.1
    )
    
    
    77.8
    
    
    
    (8.4
    )
    
    
    69.4Total
    
    
    (22.6
    )
    
    
    24.8
    
    
    
    2.2
    
    
    
    (27.8
    )
    
    
    (138.4
    )
    
    
    (166.2
    )LoansPrivate SectorPesos
    
    
    301.5
    
    
    
    291.6
    
    
    
    593.1
    
    
    
    322.3
    
    
    
    87.2
    
    
    
    409.5Dollars
    
    
    20.0
    
    
    
    5.5
    
    
    
    25.5
    
    
    
    20.4
    
    
    
    11.6
    
    
    
    32.0Total
    
    
    321.5
    
    
    
    297.1
    
    
    
    618.6
    
    
    
    342.7
    
    
    
    98.8
    
    
    
    441.5Public SectorPesos
    
    
    (55.1
    )
    
    
    (0.4
    )
    
    
    (55.5
    )
    
    
    (368.5
    )
    
    
    93.4
    
    
    
    (275.1
    )Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (55.1
    )
    
    
    (0.4
    )
    
    
    (55.5
    )
    
    
    (368.5
    )
    
    
    93.4
    
    
    
    (275.1
    )OtherPesos
    
    
    35.7
    
    
    
    6.1
    
    
    
    41.8
    
    
    
    38.2
    
    
    
    (8.5
    )
    
    
    29.7Dollars
    
    
    8.7
    
    
    
    (23.3
    )
    
    
    (14.6
    )
    
    
    (102.6
    )
    
    
    (26.4
    )
    
    
    (129.0
    )Total
    
    
    44.4
    
    
    
    (17.2
    )
    
    
    27.2
    
    
    
    (64.4
    )
    
    
    (34.9
    )
    
    
    (99.3
    )Total Interest-Earning AssetsPesos
    
    
    281.5
    
    
    
    353.2
    
    
    
    634.7
    
    
    
    (113.6
    )
    
    
    42.1
    
    
    
    (71.5
    )Dollars
    
    
    6.7
    
    
    
    (48.9
    )
    
    
    (42.2
    )
    
    
    (4.4
    )
    
    
    (23.2
    )
    
    
    (27.6
    )Total
    
    
    288.2
    
    
    
    304.3
    
    
    
    592.5
    
    
    
    (118.0
    )
    
    
    18.9
    
    
    
    (99.1
    )Interest Bearing LiabilitiesDemand AccountPesos
    
    
    5.2
    
    
    
    
    
    
    
    5.2
    
    
    
    (0.2
    )
    
    
    (4.4
    )
    
    
    (4.6
    )Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    5.2
    
    
    
    
    
    
    
    5.2
    
    
    
    (0.2
    )
    
    
    (4.4
    )
    
    
    (4.6
    )Savings AccountPesos
    
    
    0.9
    
    
    
    (1.3
    )
    
    
    (0.4
    )
    
    
    1.1
    
    
    
    (0.4
    )
    
    
    0.7Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    0.9
    
    
    
    (1.3
    )
    
    
    (0.4
    )
    
    
    1.1
    
    
    
    (0.4
    )
    
    
    0.7Time DepositsPesos
    
    
    9.0
    
    
    
    193.9
    
    
    
    202.9
    
    
    
    108.4
    
    
    
    32.8
    
    
    
    141.2Dollars
    
    
    1.3
    
    
    
    1.1
    
    
    
    2.4
    
    
    
    2.3
    
    
    
    3.5
    
    
    
    5.8Total
    
    
    10.3
    
    
    
    195.0
    
    
    
    205.3
    
    
    
    110.7
    
    
    
    36.3
    
    
    
    147.0With the Argentine Central BankPesos
    
    
    (34.4
    )
    
    
    (34.4
    )
    
    
    (68.8
    )
    
    
    (1,110.3
    )
    
    
    409.6
    
    
    
    (700.7
    )Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (34.4
    )
    
    
    (34.4
    )
    
    
    (68.8
    )
    
    
    (1,110.3
    )
    
    
    409.6
    
    
    
    (700.7
    )With Other Financial EntitiesPesos
    
    
    19.0
    
    
    
    7.6
    
    
    
    26.6
    
    
    
    (12.2
    )
    
    
    4.3
    
    
    
    (7.9
    )Dollars
    
    
    21.9
    
    
    
    0.5
    
    
    
    22.4
    
    
    
    7.5
    
    
    
    (1.9
    )
    
    
    5.6Total
    
    
    40.9
    
    
    
    8.1
    
    
    
    49.0
    
    
    
    (4.7
    )
    
    
    2.4
    
    
    
    (2.3
    )Negotiable ObligationsPesos
    
    
    (6.2
    )
    
    
    (1.0
    )
    
    
    (7.2
    )
    
    
    52.7
    
    
    
    0.6
    
    
    
    53.3Dollars
    
    
    (42.8
    )
    
    
    39.1
    
    
    
    (3.7
    )
    
    
    (33.8
    )
    
    
    (23.4
    )
    
    
    (57.2
    )Total
    
    
    (49.0
    )
    
    
    38.1
    
    
    
    (10.9
    )
    
    
    18.9
    
    
    
    (22.8
    )
    
    
    (3.9
    )Other liabilitiesPesos
    
    
    6.9
    
    
    
    (1.8
    )
    
    
    5.1
    
    
    
    4.5
    
    
    
    (0.2
    )
    
    
    4.3Dollars
    
    
    17.9
    
    
    
    4.1
    
    
    
    22.0
    
    
    
    (6.2
    )
    
    
    (23.1
    )
    
    
    (29.3
    )Total
    
    
    24.8
    
    
    
    2.3
    
    
    
    27.1
    
    
    
    (1.7
    )
    
    
    (23.3
    )
    
    
    (25.0
    )Total Interest Bearing LiabilitiesPesos
    
    
    0.4
    
    
    
    163.0
    
    
    
    163.4
    
    
    
    (956.0
    )
    
    
    442.3
    
    
    
    (513.7
    )Dollars
    
    
    (1.7
    )
    
    
    44.8
    
    
    
    43.1
    
    
    
    (30.2
    )
    
    
    (44.9
    )
    
    
    (75.1
    )Total
    
    
    (1.3
    )
    
    
    207.8
    
    
    
    206.5
    
    
    
    (986.2
    )
    
    
    397.4
    
    
    
    (588.8
    )
   -55-




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##### Table of Contents



Interest-Earning Assets-Net Yield on Interest-Earning Assets
  Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos, except percentages)Total Average Interest-Earning AssetsPesos
    
    
    14,182.4
    
    
    
    12,451.1
    
    
    
    14,797.6Dollars
    
    
    5,710.1
    
    
    
    5,774.8
    
    
    
    6,955.0Total
    
    
    19,892.5
    
    
    
    18,225.9
    
    
    
    21,752.6Net Interest Earned(1)Pesos
    
    
    1,269.4
    
    
    
    798.1
    
    
    
    355.9Dollars
    
    
    (131.5
    )
    
    
    (46.2
    )
    
    
    (93.7
    )Total
    
    
    1,137.9
    
    
    
    751.9
    
    
    
    262.2Net Yield on Interest-Earning Assets(2)(%)Pesos
    
    
    8.95
    
    
    
    6.41
    
    
    
    2.41Dollars
    
    
    (2.30
    )
    
    
    (0.80
    )
    
    
    (1.35
    )Weighted-Average Yield
    
    
    5.72
    
    
    
    4.13
    
    
    
    1.21Interest Spread, Nominal Basis(3)(%)Pesos
    
    
    5.59
    
    
    
    4.08
    
    
    
    1.22Dollars
    
    
    (1.69
    )
    
    
    (0.73
    )
    
    
    (2.35
    )Weighted-Average Yield
    
    
    4.00
    
    
    
    2.79
    
    
    
    0.05Credit Related Fees Included in Net Interest EarnedPesos
    
    
    69.9
    
    
    
    43.5
    
    
    
    26.4Dollars
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    69.9
    
    
    
    43.5
    
    
    
    26.4
 (1)
    
    Net interest earned corresponds to the net financial income (Financial Income minus Financial Expenses, as set
forth in the Income Statement), plus (i) financial fees included in Income from Services  In Relation to Lending
Transactions in the Income Statement,(ii) contributions to the Deposits Insurance Fund included in the item with the same
denomination that is part of the Financial Expenses caption in the Income Statement, and (iii) contributions and taxes on
financial income included in the Income Statement under Financial Expenses  Others; minus (i) net income from corporate
securities, included under Financial Income/Expenses  Interest Income and Gains/Losses from Holdings of Government and
Corporate Securities, in the Income Statement,(ii) differences in quotation of gold and foreign currency included in the
item with the same denomination that is part of the Financial Expenses/Income caption in the Income Statement, and (iii)
the premiums and adjustments on forward transactions in foreign currency, included in the item Financial Income-Others in
the Income Statement. Net interest earned also includes income from government securities used as security margins in
repurchase transactions. This income/loss is included in Miscellaneous Income/Loss  Others in the Income Statement. Net
income from government securities includes both interest and gains/losses due to the variation of market quotations.(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.  -56-




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##### Table of Contents



Government and Corporate Securities
  Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Government SecuritiesPesosInvestment
    
    
    22.8
    
    
    
    17.1
    
    
    
    Issued by Argentine Central Bank  Lebac and Nobac
    
    
    22.8
    
    
    
    17.1
    
    
    
    Trading
    
    
    233.7
    
    
    
    38.9
    
    
    
    0.1Bonar
    
    
    
    
    
    
    36.7
    
    
    
    Bogar Bonds
    
    
    1.6
    
    
    
    2.1
    
    
    
    Others
    
    
    232.1
    
    
    
    0.1
    
    
    
    0.1Issued by Argentine Central Bank
    
    
    550.2
    
    
    
    331.6
    
    
    
    119.5Lebac Unquoted
    
    
    
    
    
    
    11.0
    
    
    
    Lebac Quoted
    
    
    
    
    
    
    103.3
    
    
    
    17.7Nobac Unquoted
    
    
    520.2
    
    
    
    8.3
    
    
    
    101.8Nobac Quoted
    
    
    30.0
    
    
    
    209.0
    
    
    
    Without Quotation
    
    
    69.8
    
    
    
    1.9
    
    
    
    433.5Bogar
    
    
    
    
    
    
    
    
    
    
    428.6Discount Bonds in Pesos
    
    
    69.8
    
    
    
    1.9
    
    
    
    4.9Total Government Securities in Pesos
    
    
    876.5
    
    
    
    389.5
    
    
    
    553.1DollarsInvestment
    
    
    527.4
    
    
    
    1,303.4
    
    
    
    2,608.8Boden 2012 Bonds
    
    
    525.9
    
    
    
    1,303.4
    
    
    
    2,608.8Boden 2013 Bonds
    
    
    1.5
    
    
    
    
    
    
    
    Trading
    
    
    127.9
    
    
    
    0.1
    
    
    
    26.4Boden 2012 Bonds
    
    
    
    
    
    
    0.1
    
    
    
    26.3Boden 2013-2015 Bonds
    
    
    127.5
    
    
    
    
    
    
    
    Others
    
    
    0.4
    
    
    
    
    
    
    
    0.1Total Government Securities in Dollars
    
    
    655.3
    
    
    
    1,303.5
    
    
    
    2,635.2Total Government Securities
    
    
    1,531.8
    
    
    
    1,693.0
    
    
    
    3,188.3Corporate Securities
    
    
    0.1
    
    
    
    1.0
    
    
    
    0.3Corporate Equity Securities (Quoted) in Pesos
    
    
    0.1
    
    
    
    1.0
    
    
    
    Corporate Equity Securities (Quoted) in Dollars
    
    
    
    
    
    
    
    
    
    
    0.3Total Government and Corporate Securities
    
    
    1,531.9
    
    
    
    1,694.0
    
    
    
    3,188.6
   -57-




---



##### Table of Contents



Government Securities  Net Position
  Bonos de Consolidación en Moneda Nacional Cuarta Serie 2%
 As of December 31, 2008Spot
    
    
    SpotForward
    
    
    Forward
    
    
    purchases
    
    
    sales
    
    
    NetHoldings
    
    
    Purchases
    
    
    Sales
    
    
    to be settled
    
    
    to be settled
    
    
    Position(in millions of Pesos)Government SecuritiesHeld for Investment PurposesPesos
    
    
    22.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22.8Dollar
    
    
    525.9
    
    
    
    1,824.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,350.8Held for Trading PurposesPesos
    
    
    233.7
    
    
    
    
    
    
    
    232.1
    
    
    
    
    
    
    
    
    
    
    
    1.6Dollar
    
    
    129.4
    
    
    
    
    
    
    
    127.5
    
    
    
    
    
    
    
    
    
    
    
    1.9Securities without QuotationPesos
    
    
    69.8
    
    
    
    597.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    666.9Instruments issued by the Argentine Central BankPesos
    
    
    550.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550.2Other
    
    
    
    
    
    
    51.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51.1Total Government Securities
    
    
    1,531.8
    
    
    
    2,473.1
    
    
    
    359.6
    
    
    
    
    
    
    
    
    
    
    
    3,645.3Corporate Equity Securities (Quoted)
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Total Government and Corporate Securities
    
    
    1,531.9
    
    
    
    2,473.1
    
    
    
    359.6
    
    
    
    
    
    
    
    
    
    
    
    3,645.4
  -58-




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##### Table of Contents




    
    The market value of our position in Boden 2012 Bonds was Ps. 1,253.4 million.
This total comprises both our holdings recorded as government securities held for
investment and our forward purchases in connection with repurchase agreements.
    
    The market value of our position in Discount Bonds in Pesos and GDP-Linked
Negotiable Securities was Ps. 196.5 million.
    
    Our holdings of Lebac and Nobac and Bonar Bonds were marked-to-market.
 Valuation
     -59-




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##### Table of Contents



January

    
    February

    
    March

    
    April

    
    May

    
    June

    
    July

    
    August

    
    September

    
    October

    
    November
    
    December2003
    
    
    
    
    
    
    
    
    
    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

    

    5.002007
    
    5% + 0.04xTMC
    
    5% + 0.08xTMC
    
    5% + 0.13xTMC
    
    5% + 0.17xTMC
    
    5% + 0.21xTMC
    
    5% + 0.25xTMC
    
    5% + 0.29xTMC
    
    5% + 0.33xTMC
    
    5% + 0.38xTMC
    
    5% + 0.42xTMC
    
    5% + 0.46xTMC
    
    5% + 0.50xTMC2008
    
    5% + 0.58xTMC
    
    5% + 0.66xTMC
    
    5% + 0.75xTMC
    
    5% + 0.83xTMC
    
    5% + 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 government
securities with similar modified duration.TMC
=


average market rate corrected = TM  5%.  -60-




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##### Table of Contents



Coeficiente de Estabilización de
Referencia
      -61-




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##### Table of Contents



Remaining Maturity and Weighted-Average Yield
   Maturity YieldMaturing after 1
    
    
    Maturing after 5Maturing
    
    
    year but within
    
    
    years but within
    
    
    MaturingTotal
    
    
    within 1 year
    
    
    5 years
    
    
    10 years
    
    
    after 10 yearsBook
    
    
    Book
    
    
    
    
    
    
    Book
    
    
    
    
    
    
    Book
    
    
    
    
    
    
    BookValue
    
    
    Value
    
    

Yield (1)
    
    
    Value
    
    

Yield (1)
    
    
    Value
    
    

Yield (1)
    
    
    Value
    
    

Yield (1)(in millions of Pesos, except percentages)Government SecuritiesHeld for Trading and Brokerage
Purposes (carried at market value)Pesos
    
    
    233.7
    
    
    
    33.2
    
    
    
    69.5
    %
    
    
    166.5
    
    
    
    69.5
    %
    
    
    33.9
    
    
    
    69.2
    %
    
    
    
    
    
    
    Dollars
    
    
    129.5
    
    
    
    16.6
    
    
    
    41.1
    %
    
    
    64.6
    
    
    
    42.1
    %
    
    
    48.3
    
    
    
    37.4
    %
    
    
    
    
    
    
    Held for Investment (carried at amortized cost)Pesos
    
    
    22.7
    
    
    
    0.4
    
    
    
    51.1
    %
    
    
    10.1
    
    
    
    43.9
    %
    
    
    3.1
    
    
    
    51.1
    %
    
    
    9.3
    
    
    
    18.4
    %Dollars
    
    
    525.9
    
    
    
    131.5
    
    
    
    41.5
    %
    
    
    394.4
    
    
    
    41.5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Instruments Issued by the Argentine Central
BankPesos
    
    
    30.0
    
    
    
    
    
    
    
    
    
    
    
    30.0
    
    
    
    22.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Securities Without QuotationPesos
    
    
    590.0
    
    
    
    520.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69.8
    
    
    
    19.0
    %Total Government Securities
    
    
    1,531.8
    
    
    
    701.9
    
    
    
    12.1
    %
    
    
    665.6
    
    
    
    47.7
    %
    
    
    85.3
    
    
    
    50.5
    %
    
    
    79.1
    
    
    
    18.9
    %Corporate Debt Securities
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    8.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Portfolio
    
    
    1,531.9
    
    
    
    701.9
    
    
    
    12.1
    %
    
    
    665.7
    
    
    
    47.7
    %
    
    
    85.3
    
    
    
    50.5
    %
    
    
    79.1
    
    
    
    18.9
    %
 (1)
    
    Effective yield based on December 31, 2008 quoted market values. Loan Portfolio
   -62-




---



##### Table of Contents



As of December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of Pesos)Principal and InterestNon-Financial Public Sector
    
    
    1,319.6
    
    
    
    1,210.5
    
    
    
    2,690.6
    
    
    
    5,187.5
    
    
    
    4,513.7Local Financial Sector
    
    
    148.1
    
    
    
    110.0
    
    
    
    311.6
    
    
    
    128.2
    
    
    
    150.5Non-Financial Private Sector and Residents Abroad (1)Advances
    
    
    594.4
    
    
    
    792.1
    
    
    
    346.3
    
    
    
    223.6
    
    
    
    199.8Promissory Notes
    
    
    2,116.3
    
    
    
    2,911.2
    
    
    
    2,143.7
    
    
    
    1,836.9
    
    
    
    1,099.2Mortgage Loans
    
    
    1,026.8
    
    
    
    945.1
    
    
    
    688.0
    
    
    
    503.4
    
    
    
    623.9Pledge Loans
    
    
    81.0
    
    
    
    94.5
    
    
    
    67.1
    
    
    
    121.1
    
    
    
    92.9Personal Loans
    
    
    1,217.6
    
    
    
    977.9
    
    
    
    563.2
    
    
    
    258.0
    
    
    
    58.2Credit Card Loans
    
    
    4,378.4
    
    
    
    3,630.1
    
    
    
    2,458.6
    
    
    
    1,732.1
    
    
    
    1,105.4Placements in Banks Abroad
    
    
    334.5
    
    
    
    158.0
    
    
    
    608.0
    
    
    
    212.9
    
    
    
    379.2Other Loans
    
    
    883.3
    
    
    
    1,010.8
    
    
    
    794.8
    
    
    
    599.8
    
    
    
    393.9Accrued Interest, Adjustment and Quotation Differences
Receivable
    
    
    185.8
    
    
    
    177.0
    
    
    
    155.0
    
    
    
    146.8
    
    
    
    414.4Documented Interest
    
    
    (38.5
    )
    
    
    (42.5
    )
    
    
    (23.3
    )
    
    
    (12.3
    )
    
    
    (3.7
    )Total Non-Financial Private-Sector and Residents Abroad
    
    
    10,779.6
    
    
    
    10,654.2
    
    
    
    7,801.4
    
    
    
    5,622.3
    
    
    
    4,363.2Total Gross Loans
    
    
    12,247.3
    
    
    
    11,974.7
    
    
    
    10,803.6
    
    
    
    10,938.0
    
    
    
    9,027.4Allowance for Loan Losses
    
    
    (526.8
    )
    
    
    (428.6
    )
    
    
    (327.0
    )
    
    
    (427.9
    )
    
    
    (632.6
    )Total Loans
    
    
    11,720.5
    
    
    
    11,546.1
    
    
    
    10,476.6
    
    
    
    10,510.1
    
    
    
    8,394.8Loans with GuaranteesWith Preferred Guarantees (2)
    
    
    1,332.8
    
    
    
    1,289.8
    
    
    
    1,076.2
    
    
    
    838.5
    
    
    
    1,190.0Other Guarantees
    
    
    2,971.1
    
    
    
    3,180.2
    
    
    
    4,103.6
    
    
    
    6,317.3
    
    
    
    5,235.8Total Loans with Guarantees
    
    
    4,303.9
    
    
    
    4,470.0
    
    
    
    5,179.8
    
    
    
    7,155.8
    
    
    
    6,425.8
 (1)
    
    Categories of loans include: 
    
    Advances: short-term obligations drawn on by customers
through overdrafts.
    
    Promissory 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-Card Loans: loans granted through credit cards to
credit card holders.
    
    Placements in Banks Abroad: short-term loans to banks abroad.
    
    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 priority, endorsements of the Federal Office of the Secretary of Finance, pledges of Government securities, or gold or cash as
collateral.    -63-




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##### Table of Contents



Loans by Type of Borrower
  As of December 31,2008
    
    
    2007
    
    
    2006Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total(in millions of Pesos, except percentages)Corporate
    
    
    1,148.6
    
    
    
    9.38
    
    
    
    1,870.0
    
    
    
    15.62
    
    
    
    1,534.7
    
    
    
    14.21Middle-Market Companies
    
    
    3,716.8
    
    
    
    30.35
    
    
    
    3,993.8
    
    
    
    33.35
    
    
    
    2,521.9
    
    
    
    23.34- Agribusiness
    
    
    1,461.4
    
    
    
    11.93
    
    
    
    1,341.9
    
    
    
    11.21
    
    
    
    902.1
    
    
    
    8.35- SMEs
    
    
    2,255.4
    
    
    
    18.42
    
    
    
    2,651.9
    
    
    
    22.14
    
    
    
    1,619.8
    
    
    
    14.99Commercial Loans
    
    
    4,865.4
    
    
    
    39.73
    
    
    
    5,863.8
    
    
    
    48.97
    
    
    
    4,056.6
    
    
    
    37.55Individuals
    
    
    5,578.3
    
    
    
    45.55
    
    
    
    4,631.4
    
    
    
    38.68
    
    
    
    3,131.0
    
    
    
    28.98- Bank
    
    
    3,232.0
    
    
    
    26.39
    
    
    
    2,603.1
    
    
    
    21.74
    
    
    
    1,720.2
    
    
    
    15.92- Regional Credit Card Companies
    
    
    2,346.3
    
    
    
    19.16
    
    
    
    2,028.3
    
    
    
    16.94
    
    
    
    1,410.8
    
    
    
    13.06Financial Sector (1)
    
    
    484.0
    
    
    
    3.95
    
    
    
    269.0
    
    
    
    2.25
    
    
    
    925.4
    
    
    
    8.57Non-Financial Public Sector
    
    
    1,319.6
    
    
    
    10.77
    
    
    
    1,210.5
    
    
    
    10.10
    
    
    
    2,690.6
    
    
    
    24.90Other Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total(2)
    
    
    12,247.3
    
    
    
    100.00
    
    
    
    11,974.7
    
    
    
    100.00
    
    
    
    10,803.6
    
    
    
    100.00
 (1)
    
    Includes local and international financial sector. Financial Sector loans are primarily composed of interbank loans
(call money loans), overnight deposits at international money center banks and loans to provincial banks.(2)
    
    Before the allowance for loan losses.   -64-




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##### Table of Contents



Loans by Economic Activity
  As of December 31,2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(in millions of Pesos, except percentages)Financial Sector(1)
    
    
    484.0
    
    
    
    3.95
    
    
    
    269.0
    
    
    
    2.25
    
    
    
    925.4
    
    
    
    8.57ServicesNon-Financial Public Sector
    
    
    1,319.6
    
    
    
    10.77
    
    
    
    1,210.5
    
    
    
    10.10
    
    
    
    2,690.6
    
    
    
    24.90Communications, Transportation Health and Others
    
    
    838.3
    
    
    
    6.84
    
    
    
    936.7
    
    
    
    7.82
    
    
    
    517.2
    
    
    
    4.79Electricity, Gas, Water Supply and Sewage
Services
    
    
    30.7
    
    
    
    0.25
    
    
    
    198.2
    
    
    
    1.66
    
    
    
    234.8
    
    
    
    2.17Other Financial Services
    
    
    44.5
    
    
    
    0.37
    
    
    
    11.7
    
    
    
    0.10
    
    
    
    35.7
    
    
    
    0.33Total
    
    
    2,233.1
    
    
    
    18.23
    
    
    
    2,357.1
    
    
    
    19.68
    
    
    
    3,478.3
    
    
    
    32.19Primary ProductsAgriculture and Livestock
    
    
    1,274.5
    
    
    
    10.41
    
    
    
    1,217.8
    
    
    
    10.17
    
    
    
    971.8
    
    
    
    9.00Fishing, Forestry and Mining
    
    
    60.9
    
    
    
    0.49
    
    
    
    49.8
    
    
    
    0.42
    
    
    
    29.8
    
    
    
    0.28Total
    
    
    1,335.4
    
    
    
    10.90
    
    
    
    1,267.6
    
    
    
    10.59
    
    
    
    1,001.6
    
    
    
    9.28Consumer
    
    
    5,294.9
    
    
    
    43.23
    
    
    
    4,402.4
    
    
    
    36.76
    
    
    
    2,988.0
    
    
    
    27.65Retail Trade
    
    
    537.2
    
    
    
    4.39
    
    
    
    721.0
    
    
    
    6.02
    
    
    
    524.1
    
    
    
    4.85Wholesale Trade
    
    
    647.0
    
    
    
    5.28
    
    
    
    854.3
    
    
    
    7.13
    
    
    
    333.7
    
    
    
    3.09Construction
    
    
    82.2
    
    
    
    0.67
    
    
    
    268.1
    
    
    
    2.24
    
    
    
    309.7
    
    
    
    2.87ManufacturingFoodstuffs
    
    
    533.6
    
    
    
    4.36
    
    
    
    561.4
    
    
    
    4.69
    
    
    
    406.1
    
    
    
    3.76Transportation Materials
    
    
    81.5
    
    
    
    0.67
    
    
    
    69.3
    
    
    
    0.58
    
    
    
    100.2
    
    
    
    0.93Chemicals and Oil
    
    
    293.2
    
    
    
    2.39
    
    
    
    339.6
    
    
    
    2.84
    
    
    
    177.4
    
    
    
    1.64Manufacturing Industries
    
    
    682.6
    
    
    
    5.57
    
    
    
    836.1
    
    
    
    6.98
    
    
    
    545.7
    
    
    
    5.05Total
    
    
    1,590.9
    
    
    
    12.99
    
    
    
    1,806.4
    
    
    
    15.09
    
    
    
    1,229.4
    
    
    
    11.38Other Loans
    
    
    42.6
    
    
    
    0.36
    
    
    
    28.8
    
    
    
    0.24
    
    
    
    13.4
    
    
    
    0.12Total(2)
    
    
    12,247.3
    
    
    
    100.00
    
    
    
    11,974.7
    
    
    
    100.00
    
    
    
    10,803.6
    
    
    
    100.00
 (1)
    
    Includes local and international financial sectors.(2)
    
    Before the allowance for loan losses.   -65-




---



##### Table of Contents



Maturity Composition of the Loan Portfolio
  After 1
    
    
    After 6
    
    
    
    
    
    After 3Month but
    
    
    Months but
    
    
    After 1 Year
    
    
    Years but
    
    
    
    
    
    
    Total atWithin 1
    
    
    within 6
    
    
    within 12
    
    
    but within 3
    
    
    within 5
    
    
    After 5
    
    
    DecemberMonth
    
    
    Months
    
    
    Months
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    31, 2008(in millions of Pesos)Non-Financial Public Sector(1)
    
    
    1.8
    
    
    
    1,313.5
    
    
    
    0.5
    
    
    
    2.0
    
    
    
    1.8
    
    
    
    
    
    
    
    1,319.6Financial Sector(1)
    
    
    148.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148.1Private Sector and Residents Abroad
    
    
    6,992.9
    
    
    
    1,355.6
    
    
    
    532.4
    
    
    
    1,089.2
    
    
    
    505.0
    
    
    
    304.5
    
    
    
    10,779.6- Advances
    
    
    367.3
    
    
    
    222.0
    
    
    
    4.4
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    594.3- Promissory Notes
    
    
    810.8
    
    
    
    704.0
    
    
    
    175.8
    
    
    
    308.4
    
    
    
    83.4
    
    
    
    33.9
    
    
    
    2,116.3- Mortgage Loans
    
    
    26.5
    
    
    
    89.4
    
    
    
    108.9
    
    
    
    314.9
    
    
    
    218.1
    
    
    
    269.0
    
    
    
    1,026.8- Pledge Loans
    
    
    5.4
    
    
    
    15.5
    
    
    
    17.6
    
    
    
    34.9
    
    
    
    6.0
    
    
    
    1.6
    
    
    
    81.0- Personal Loans
    
    
    71.0
    
    
    
    296.7
    
    
    
    222.1
    
    
    
    430.4
    
    
    
    197.4
    
    
    
    
    
    
    
    1,217.6- Credit-Card Loans
    
    
    4,378.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,378.4- Other Loans
    
    
    1,186.3
    
    
    
    28.0
    
    
    
    3.6
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    1,218.0- Accrued Interest and Quotation
Differences Receivable (1)
    
    
    185.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185.8- (Documented Interest)
    
    
    (38.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38.5
    )- (Unallocated Collections)
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Allowance for Loan Losses(2)
    
    
    (526.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (526.8
    )Total Loans, Net
    
    
    6,616.0
    
    
    
    2,669.1
    
    
    
    532.9
    
    
    
    1,091.2
    
    
    
    506.8
    
    
    
    304.5
    
    
    
    11,720.5
 (1)
    
    Interest and the CER adjustment were assigned to the first month.(2)
    
    Allowances were assigned to the first month as were past due loans and loans in judicial proceedings. Interest Rate Sensitivity of Outstanding Loans
  In millions of Pesos
    
    
    As a % of Total LoansVariable Rate (1)(2)Pesos
    
    
    6,530.0
    
    
    
    57.41Dollars
    
    
    383.0
    
    
    
    3.37Total
    
    
    6,913.0
    
    
    
    60.78Fixed Rate (2)(3)Pesos
    
    
    2,844.1
    
    
    
    25.00Dollars
    
    
    1,617.2
    
    
    
    14.22Total
    
    
    4,461.3
    
    
    
    39.22Past Due LoansPesos
    
    
    452.1
    
    
    
    3.97Dollars
    
    
    15.3
    
    
    
    0.13Total
    
    
    467.4
    
    
    
    4.10
 (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.  -66-




---



##### Table of Contents



Credit Review Process
   Banco Galicia
         -67-




---



##### Table of Contents



Retail Credit.
      -68-




---



##### Table of Contents



Corporate Credit.
  Qualitative analysis
    
    Assessment of the quality of the corporate
borrower performed by the 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).Environmental risk
    
    Environmental impact assessment (required
for all investment projects exceeding Ps.
15 million).
    
    
    Up to Ps. 6.0 million: credit granting proposals are presented by business officers and
approved by officers of the Corporate Credit Department in accordance with pre established
credit authority levels.
    
    Over Ps. 6.0 million and up to Ps. 10.0 million: credit granting proposals are presented
by the manager of the business department to which the account belongs and approved by the
manager of the Credit Division.
    
    Over Ps. 10.0 million: credit granting operations must be approved by the Board of
Directors Committee. The participation of the managers of the business departments depends
on the account under approval.
  -69-




---



##### Table of Contents



Corporate Recovery and Legal Proceedings.
 Policy for Requiring Collateral.
 Regional Credit Card Companies
    -70-




---



##### Table of Contents



Main Argentine Central Banks Rules on Loan Classification and Loan Loss Provisions
 General
       -71-




---



##### Table of Contents




    
    the reduction in the required loan amortization necessary to improve the customers
classification; and
    
    the possibility to provide customers with new financial assistance and classify as
normal customers classified in a non-performing status in the financial system, thereby
restricting this financing assistance to pre-established percentages based on the worst
situation a customer registers in the financial system.
   -72-




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##### Table of Contents




    
    to achieve this better quality status, the client must comply with the rest of the
requirements for the new category;
    
    in case of having refinanced and non-refinanced obligations, the resulting
classification shall be the lowest resulting from the individual analysis of each
transaction;
    
    if a client with a refinanced loan received or had received additional financial
assistance, it will remain within the category for 180 days after the refinancing or the
granting of additional credit, whichever is more recent;
    
    debtors with arrears of over 31 days must be classified within the category resulting
from adding the number of arrear days corresponding to the first refinanced debt unpaid
installment and those of the minimum arrears set forth for the category in which the
debtor is classified at the time default is recorded.
   Loan Classification
  Commercial Portfolio
 Loan Classification
    
    Description1. Normal Situation
    
    The debtor is widely able to meet its financial obligations, demonstrating
a significant cash flow, a liquid financial situation, an adequate financial structure, a
timely payment record, competent management, available information in a timely, accurate
manner and satisfactory internal controls. The debtor is in the upper 50% of a sector of
activity that is operating properly and presents good prospects.2. With Special Follow-up
    
    The cash flow analysis reflects that the debt may be repaid even
though it is possible that the clients future payment ability may deteriorate without a
proper follow-up.This category is divided into two
subcategories:(2.a). Under Observation;(2.b). Under Negotiation or Agreements to
Refinance.3. With Problems
    
    The cash flow analysis evidences problems to repay the debt, and therefore,
should these problems not be solved, there may be some losses.
  -73-




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##### Table of Contents



Loan Classification
    
    Description4. High Risk of Insolvency
    
    The cash flow analysis evidences that repayment of the full debt is
highly unlikely.5. Uncollectible
    
    The amounts in this category are deemed total losses. Even though these assets
may be recovered under certain future circumstances, inability to make payments is evident at
the date of analysis. Includes loans to insolvent or bankrupt borrowers.6. Uncollectible due to Technical Reasons
    
    Includes borrowers indicated by the Argentine Central
Bank to be in non-performing status with financial institutions that have been liquidated or
are being liquidated, or whose authorization to operate has been revoked. It also includes
loans to foreign banks and other institutions that 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(iii) classified as investment grade by any of
the rating agencies admitted to the Argentine
Central Bank pursuant to Communiqué A 2729.
 Consumer Portfolio
 Loan Classification
    
    Description1. Normal Situation
    
    Loans with timely repayment or arrears not exceeding 31 days, both with
respect to principal and interest. In addition, a client classified under category 2, having
been refinanced may be recategorized within this category, as long as he amortizes one
principal installment (whether monthly or bimonthly) or repays 10% of principal.2. Low Risk
    
    Occasional late payments, with a payment in arrears of more than 32 days and up to
90 days. A client classified under category 3 having been refinanced may be recategorized
within this category, as long as he amortizes two principal installments (whether monthly or
bimonthly) or repays 10% of principal.3. Medium Risk
    
    Some inability to make payments, with arrears of more than 91 days and up to 180
days. A client classified under category 4 having been refinanced may be recategorized within
this category, as long as he amortizes three principal installments (whether monthly or
bimonthly) or repays 15% of principal.4. High Risk
    
    Judicial proceedings seeking collection have been initiated or arrears of more
than 180 days and up to one year. A client classified under category 5 having been refinanced
may be recategorized within this category, as long as he amortizes three principal
installments (whether monthly or bimonthly) or repays 20% of principal.5. Uncollectible
    
    Loans to insolvent or bankrupt borrowers, or subject to judicial proceedings,
with little or no possibility of collection, or with 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.
  -74-




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##### Table of Contents



Loan Loss Provision Requirements
 Allocated Provisions
 Minimum Allowances for Loan Losses
 Category
    
    Secured
    
    
    Unsecured1. Normal Situation
    
    
    1.0
    %
    
    
    1.0
    %2. (a) Under Observation and Low Risk
    
    
    3.0
    %
    
    
    5.0
    %2. (b) Under Negotiation or Agreements to Refinance
    
    
    6.0
    %
    
    
    12.0
    %3. With Problems and Medium Risk
    
    
    12.0
    %
    
    
    25.0
    %4. High Risk of Insolvency and High Risk
    
    
    25.0
    %
    
    
    50.0
    %5. Uncollectible
    
    
    50.0
    %
    
    
    100.0
    %6. Uncollectible Due to Technical Reasons
    
    
    100.0
    %
    
    
    100.0
    %
   General Provisions
  Classification of the Loan Portfolio based on Argentine Central Bank Regulations
  As of December 31, 2008Amounts Not Yet Due
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    11,430.6
    
    
    
    96.09
    
    
    
    
    
    
    
    
    
    
    
    11,430.6
    
    
    
    93.332. With Special Follow-up  Under observation and Low Risk
    
    
    388.8
    
    
    
    3.27
    
    
    
    
    
    
    
    
    
    
    
    388.8
    
    
    
    3.183. With Problems and Medium Risk
    
    
    54.1
    
    
    
    0.46
    
    
    
    103.1
    
    
    
    29.29
    
    
    
    157.2
    
    
    
    1.284. High Risk of Insolvency and High Risk
    
    
    21.8
    
    
    
    0.18
    
    
    
    185.4
    
    
    
    52.67
    
    
    
    207.2
    
    
    
    1.695. Uncollectible
    
    
    
    
    
    
    
    
    
    
    62.0
    
    
    
    17.61
    
    
    
    62.0
    
    
    
    0.516. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    0.43
    
    
    
    1.5
    
    
    
    0.01Total
    
    
    11,895.3
    
    
    
    100.00
    
    
    
    352.0
    
    
    
    100.00
    
    
    
    12,247.3
    
    
    
    100.00
  -75-




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##### Table of Contents



As of December 31, 2007Amounts Not Yet Due
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    11,242.7
    
    
    
    96.57
    
    
    
    
    
    
    
    
    
    
    
    11,242.7
    
    
    
    93.892. With Special Follow-up  Under observation and Low Risk
    
    
    356.2
    
    
    
    3.06
    
    
    
    
    
    
    
    
    
    
    
    356.2
    
    
    
    2.973. With Problems and Medium Risk
    
    
    31.7
    
    
    
    0.27
    
    
    
    56.0
    
    
    
    16.87
    
    
    
    87.7
    
    
    
    0.734. High Risk of Insolvency and High Risk
    
    
    12.1
    
    
    
    0.10
    
    
    
    221.0
    
    
    
    66.57
    
    
    
    233.1
    
    
    
    1.955. Uncollectible
    
    
    
    
    
    
    
    
    
    
    48.1
    
    
    
    14.49
    
    
    
    48.1
    
    
    
    0.406. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    6.9
    
    
    
    2.07
    
    
    
    6.9
    
    
    
    0.06Total
    
    
    11,642.7
    
    
    
    100.00
    
    
    
    332.0
    
    
    
    100.00
    
    
    
    11,974.7
    
    
    
    100.00
 As of December 31, 2006Amounts Not Yet Due
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    10,149.9
    
    
    
    96.24
    
    
    
    
    
    
    
    
    
    
    
    10,149.9
    
    
    
    93.942. With Special Follow-up  Under observation and Low Risk
    
    
    374.6
    
    
    
    3.54
    
    
    
    
    
    
    
    
    
    
    
    374.6
    
    
    
    3.473. With Problems and Medium Risk
    
    
    12.2
    
    
    
    0.12
    
    
    
    30.0
    
    
    
    11.69
    
    
    
    42.2
    
    
    
    0.394. High Risk of Insolvency and High Risk
    
    
    10.2
    
    
    
    0.10
    
    
    
    192.7
    
    
    
    75.07
    
    
    
    202.9
    
    
    
    1.885. Uncollectible
    
    
    
    
    
    
    
    
    
    
    28.8
    
    
    
    11.22
    
    
    
    28.8
    
    
    
    0.276. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    5.2
    
    
    
    2.02
    
    
    
    5.2
    
    
    
    0.05Total
    
    
    10,546.9
    
    
    
    100.00
    
    
    
    256.7
    
    
    
    100.00
    
    
    
    10,803.6
    
    
    
    100.00
 As of December 31, 2005Amounts Not Yet Due
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    10,171.2
    
    
    
    95.22
    
    
    
    
    
    
    
    
    
    
    
    10,171.2
    
    
    
    92.992. With Special Follow-up  Under observation and Low Risk
    
    
    384.4
    
    
    
    3.60
    
    
    
    
    
    
    
    
    
    
    
    384.4
    
    
    
    3.513. With Problems and Medium Risk
    
    
    120.4
    
    
    
    1.13
    
    
    
    206.9
    
    
    
    80.82
    
    
    
    327.3
    
    
    
    2.994. High Risk of Insolvency and High Risk
    
    
    6.0
    
    
    
    0.05
    
    
    
    23.0
    
    
    
    8.98
    
    
    
    29.0
    
    
    
    0.275. Uncollectible
    
    
    
    
    
    
    
    
    
    
    22.8
    
    
    
    8.91
    
    
    
    22.8
    
    
    
    0.216. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    1.29
    
    
    
    3.3
    
    
    
    0.03Total
    
    
    10,682.0
    
    
    
    100.00
    
    
    
    256.0
    
    
    
    100.00
    
    
    
    10,938.0
    
    
    
    100.00
  -76-




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##### Table of Contents



As of December 31, 2004Amounts Not Yet Due
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    7,766.0
    
    
    
    90.53
    
    
    
    
    
    
    
    
    
    
    
    7,766.0
    
    
    
    86.022. With Special Follow-up  Under observation and Low Risk
    
    
    562.5
    
    
    
    6.56
    
    
    
    
    
    
    
    
    
    
    
    562.5
    
    
    
    6.233. With Problems and Medium Risk
    
    
    197.1
    
    
    
    2.30
    
    
    
    251.7
    
    
    
    56.06
    
    
    
    448.8
    
    
    
    4.974. High Risk of Insolvency and High Risk
    
    
    52.8
    
    
    
    0.61
    
    
    
    105.8
    
    
    
    23.56
    
    
    
    158.6
    
    
    
    1.765. Uncollectible
    
    
    
    
    
    
    
    
    
    
    85.5
    
    
    
    19.04
    
    
    
    85.5
    
    
    
    0.956. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    1.34
    
    
    
    6.0
    
    
    
    0.07Total
    
    
    8,578.4
    
    
    
    100.00
    
    
    
    449.0
    
    
    
    100.00
    
    
    
    9,027.4
    
    
    
    100.00
 Amounts Past Due and Non-Accrual Loans
  As of December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of Pesos, except ratios)Total Loans(1)
    
    
    12,247.3
    
    
    
    11,974.7
    
    
    
    10,803.6
    
    
    
    10,938.0
    
    
    
    9,027.4Non-Accrual Loans(2)With Preferred Guarantees
    
    
    42.0
    
    
    
    43.5
    
    
    
    40.2
    
    
    
    58.4
    
    
    
    383.7With Other Guarantees
    
    
    10.3
    
    
    
    5.0
    
    
    
    5.1
    
    
    
    6.5
    
    
    
    67.4Without Guarantees
    
    
    375.6
    
    
    
    327.3
    
    
    
    233.8
    
    
    
    317.5
    
    
    
    247.8Total Non-Accrual Loans(2)
    
    
    427.9
    
    
    
    375.8
    
    
    
    279.1
    
    
    
    382.4
    
    
    
    698.9Past Due Loan PortfolioNon-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Financial Private Sector and Residents AbroadAdvances
    
    
    25.9
    
    
    
    23.0
    
    
    
    20.9
    
    
    
    14.1
    
    
    
    29.9Promissory Notes
    
    
    24.5
    
    
    
    134.5
    
    
    
    135.2
    
    
    
    191.6
    
    
    
    253.1Mortgage Loans
    
    
    24.9
    
    
    
    30.0
    
    
    
    28.4
    
    
    
    14.6
    
    
    
    115.1Pledge Loans
    
    
    1.1
    
    
    
    0.8
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    4.2Personal Loans
    
    
    45.7
    
    
    
    17.6
    
    
    
    4.1
    
    
    
    0.8
    
    
    
    4.2Credit-Card Loans
    
    
    215.0
    
    
    
    115.4
    
    
    
    62.7
    
    
    
    33.4
    
    
    
    24.9Placements with Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Loans
    
    
    14.9
    
    
    
    10.7
    
    
    
    5.1
    
    
    
    1.0
    
    
    
    17.6Total Past Due Loans
    
    
    352.0
    
    
    
    332.0
    
    
    
    256.7
    
    
    
    256.0
    
    
    
    449.0Past Due
LoansWith Preferred Guarantees
    
    
    26.0
    
    
    
    30.8
    
    
    
    28.9
    
    
    
    16.1
    
    
    
    308.0With Other Guarantees
    
    
    9.0
    
    
    
    4.2
    
    
    
    4.3
    
    
    
    4.9
    
    
    
    11.4Without Guarantees
    
    
    317.0
    
    
    
    297.0
    
    
    
    223.5
    
    
    
    235.0
    
    
    
    129.6Total Past Due Loans
    
    
    352.0
    
    
    
    332.0
    
    
    
    256.7
    
    
    
    256.0
    
    
    
    449.0Allowance for Loan Losses
    
    
    526.8
    
    
    
    428.6
    
    
    
    327.0
    
    
    
    427.9
    
    
    
    632.6Ratios (%)As a % of Total Loans:- Total Past Due Loans
    
    
    2.87
    
    
    
    2.77
    
    
    
    2.38
    
    
    
    2.34
    
    
    
    4.97- Past Due Loans with Preferred Guarantees
    
    
    0.21
    
    
    
    0.26
    
    
    
    0.27
    
    
    
    0.15
    
    
    
    3.40
  -77-




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##### Table of Contents



As of December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of Pesos, except ratios)- Past Due Loans with Other Guarantees
    
    
    0.07
    
    
    
    0.03
    
    
    
    0.04
    
    
    
    0.04
    
    
    
    0.13- Past Due Unsecured Amounts
    
    
    2.59
    
    
    
    2.48
    
    
    
    2.07
    
    
    
    2.15
    
    
    
    1.44- Non-Accrual Loans (2)
    
    
    3.49
    
    
    
    3.14
    
    
    
    2.58
    
    
    
    3.50
    
    
    
    7.74- Non-Accrual Loans (2) (Excluding Interbank Loans)
    
    
    3.60
    
    
    
    3.18
    
    
    
    2.79
    
    
    
    3.57
    
    
    
    8.10Non-Accrual Loans (2) as a Percentage of Loans to the
Private Sector
    
    
    3.95
    
    
    
    3.53
    
    
    
    3.49
    
    
    
    6.77
    
    
    
    15.92Allowance for Loan Losses as a % of:- Total Loans
    
    
    4.30
    
    
    
    3.58
    
    
    
    3.03
    
    
    
    3.91
    
    
    
    7.01- Total Loans Excluding Interbank Loans
    
    
    4.44
    
    
    
    3.63
    
    
    
    3.27
    
    
    
    4.00
    
    
    
    7.33- Total Non-Accrual Loans (2)
    
    
    123.11
    
    
    
    114.05
    
    
    
    117.16
    
    
    
    111.90
    
    
    
    90.51Non-Accrual Loans with Guarantees as a Percentage
of Non-Accrual Loans (2)
    
    
    12.22
    
    
    
    12.91
    
    
    
    16.23
    
    
    
    16.97
    
    
    
    64.54Non-Accrual Loans as a Percentage of Total Past Due
Loans
    
    
    121.56
    
    
    
    113.20
    
    
    
    108.73
    
    
    
    149.38
    
    
    
    155.66
 (1)
    
    Before the allowance for loan losses.(2)
    
    Non-Accrual loans are defined as those loans in the categories of: (a) Consumer portfolio: Medium Risk, High Risk,
Uncollectible, and Uncollectible Due to Technical Reasons; and (b) Commercial portfolio: With problems, High Risk of
Insolvency, Uncollectible, and Uncollectible Due to Technical Reasons.    As of December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of Pesos)Interest Income
that Would Have
Been Recorded on
Non-Accrual Loans
on which the
Accrual of Interest
was Discontinued
    
    
    35.4
    
    
    
    35.9
    
    
    
    23.7
    
    
    
    45.9
    
    
    
    32.5Recoveries of
Interest on Loans
Classified as
Non-Accrual on
which the Accrual
of Interest had
been Discontinued
(1)
    
    
    1.8
    
    
    
    1.8
    
    
    
    1.2
    
    
    
    2.3
    
    
    
    1.6
 (1)
    
    Recorded under Miscellaneous Income.  -78-




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##### Table of Contents



Loan Loss Experience
  Fiscal Year EndedDecember 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in millions of Pesos, except ratios)Total Loans, Average(1)
    
    
    12,077.3
    
    
    
    10,528.9
    
    
    
    10,851.0
    
    
    
    9,746.9
    
    
    
    11,137.9Allowance for Loan Losses at Beginning of Period(2)
    
    
    428.6
    
    
    
    327.0
    
    
    
    427.9
    
    
    
    632.6
    
    
    
    1,177.3Changes in the Allowance for Loan Losses During the Period (2)Provisions Charged to Income
    
    
    384.6
    
    
    
    248.4
    
    
    
    105.3
    
    
    
    61.1
    
    
    
    179.3Prior Allowances Reversed
    
    
    (6.5
    )
    
    
    (21.5
    )
    
    
    (32.5
    )
    
    
    (96.2
    )
    
    
    (210.3
    )Charge-Offs (A)
    
    
    (289.2
    )
    
    
    (125.4
    )
    
    
    (200.8
    )
    
    
    (174.5
    )
    
    
    (521.3
    )Inflation and Foreign Exchange Effect and Other Adjustments
    
    
    9.3
    
    
    
    0.1
    
    
    
    27.1
    
    
    
    4.9
    
    
    
    7.6Allowance for Loan Losses at End of Period
    
    
    526.8
    
    
    
    428.6
    
    
    
    327.0
    
    
    
    427.9
    
    
    
    632.6Charge to the Income Statement during the PeriodProvisions Charged to Income (2)
    
    
    384.6
    
    
    
    248.4
    
    
    
    105.3
    
    
    
    61.1
    
    
    
    179.3Direct Charge-Offs, Net of Recoveries (B)
    
    
    (68.4
    )
    
    
    (57.2
    )
    
    
    (46.4
    )
    
    
    (28.9
    )
    
    
    (101.6
    )Recoveries of Provisions
    
    
    (6.5
    )
    
    
    (21.5
    )
    
    
    (32.5
    )
    
    
    (96.2
    )
    
    
    (210.3
    )Net Charge (Benefit) to the Income Statement
    
    
    309.7
    
    
    
    169.7
    
    
    
    26.4
    
    
    
    (64.0
    )
    
    
    (132.6
    )Ratios (%)Charge-Offs (A+B) to Average Loans (3)
    
    
    1.83
    
    
    
    0.65
    
    
    
    1.42
    
    
    
    1.49
    
    
    
    3.77Net Charge
to the Income Statement to Average Loans (3)
    
    
    2.56
    
    
    
    1.61
    
    
    
    0.24
    
    
    
    (0.66
    )
    
    
    (1.19
    )
 (1)
    
    Before the allowance for loan losses.(2)
    
    Includes quotation differences for Galicia Uruguay and Cayman Branch.(3)
    
    Charge-offs plus direct charge-offs minus bad debts recovered.  Allocation of the Allowance for Loan Losses
 
 As of December 31,2008
    
    
    2007
    
    
    2006Loan
    
    
    
    
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    
    
    
    
    Loan% of
    
    
    Category
    
    
    
    
    
    
    % of
    
    
    Category
    
    
    
    
    
    
    % of
    
    
    CategoryAmount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %(in millions of Pesos, except percentages)Non-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    10.77
    
    
    
    
    
    
    
    
    
    
    
    10.11
    
    
    
    
    
    
    
    
    
    
    
    24.90Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    1.21
    
    
    
    
    
    
    
    
    
    
    
    0.92
    
    
    
    
    
    
    
    
    
    
    
    2.88Non-Financial Private
Sector and Residents
AbroadAdvances
    
    
    14.5
    
    
    
    0.12
    
    
    
    4.85
    
    
    
    16.2
    
    
    
    0.13
    
    
    
    6.61
    
    
    
    16.3
    
    
    
    0.15
    
    
    
    3.21Promissory Notes
    
    
    34.9
    
    
    
    0.28
    
    
    
    17.28
    
    
    
    119.8
    
    
    
    1.00
    
    
    
    24.31
    
    
    
    151.1
    
    
    
    1.40
    
    
    
    19.84Mortgage Loans
    
    
    21.9
    
    
    
    0.18
    
    
    
    8.38
    
    
    
    26.5
    
    
    
    0.22
    
    
    
    7.89
    
    
    
    25.0
    
    
    
    0.23
    
    
    
    6.37Pledge Loans
    
    
    0.5
    
    
    
    
    
    
    
    0.66
    
    
    
    0.3
    
    
    
    
    
    
    
    0.79
    
    
    
    0.4
    
    
    
    
    
    
    
    0.62Personal Loans
    
    
    37.8
    
    
    
    0.31
    
    
    
    9.94
    
    
    
    14.0
    
    
    
    0.12
    
    
    
    8.17
    
    
    
    3.7
    
    
    
    0.03
    
    
    
    5.21
  -79-




---



##### Table of Contents



As of December 31,2008
    
    
    2007
    
    
    2006Loan
    
    
    
    
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    
    
    
    
    Loan% of
    
    
    Category
    
    
    
    
    
    
    % of
    
    
    Category
    
    
    
    
    
    
    % of
    
    
    CategoryAmount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %(in millions of Pesos, except percentages)Credit-Card Loans
    
    
    111.4
    
    
    
    0.91
    
    
    
    35.75
    
    
    
    56.0
    
    
    
    0.47
    
    
    
    30.31
    
    
    
    28.5
    
    
    
    0.26
    
    
    
    22.76Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    2.73
    
    
    
    
    
    
    
    
    
    
    
    1.32
    
    
    
    
    
    
    
    
    
    
    
    5.63Other
    
    
    7.4
    
    
    
    0.06
    
    
    
    8.43
    
    
    
    7.9
    
    
    
    0.07
    
    
    
    9.57
    
    
    
    1.0
    
    
    
    0.01
    
    
    
    8.58Unallocated (1)
    
    
    298.4
    
    
    
    2.44
    
    
    
    
    
    
    
    187.9
    
    
    
    1.57
    
    
    
    
    
    
    
    101.0
    
    
    
    0.95
    
    
    
    Total
    
    
    526.8
    
    
    
    4.30
    
    
    
    100.00
    
    
    
    428.6
    
    
    
    3.58
    
    
    
    100.00
    
    
    
    327.0
    
    
    
    3.03
    
    
    
    100.00
 As of December 31,2005
    
    
    2004Loan
    
    
    
    
    
    
    
    
    Loan% of
    
    
    Category
    
    
    
    
    
    % of
    
    
    CategoryAmount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %(in millions of Pesos, except percentages)Non-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    47.43
    
    
    
    
    
    
    
    
    
    
    
    50.00Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    1.17
    
    
    
    
    
    
    
    
    
    
    
    1.67Non-Financial Private
Sector and Residents
AbroadAdvances
    
    
    12.3
    
    
    
    0.11
    
    
    
    2.04
    
    
    
    22.7
    
    
    
    0.25
    
    
    
    2.21Promissory Notes
    
    
    186.4
    
    
    
    1.70
    
    
    
    16.79
    
    
    
    270.9
    
    
    
    3.00
    
    
    
    12.18Mortgage Loans
    
    
    21.6
    
    
    
    0.20
    
    
    
    4.60
    
    
    
    97.6
    
    
    
    1.08
    
    
    
    6.91Pledge Loans
    
    
    0.5
    
    
    
    
    
    
    
    1.11
    
    
    
    3.5
    
    
    
    0.04
    
    
    
    1.03Personal Loans
    
    
    0.9
    
    
    
    0.01
    
    
    
    2.36
    
    
    
    4.0
    
    
    
    0.04
    
    
    
    0.64Credit-Card Loans
    
    
    14.0
    
    
    
    0.13
    
    
    
    15.84
    
    
    
    10.8
    
    
    
    0.12
    
    
    
    12.24Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    1.95
    
    
    
    
    
    
    
    
    
    
    
    4.20Other
    
    
    17.1
    
    
    
    0.16
    
    
    
    6.71
    
    
    
    32.1
    
    
    
    0.36
    
    
    
    8.92Unallocated (1)
    
    
    175.1
    
    
    
    1.60
    
    
    
    
    
    
    
    191.0
    
    
    
    2.12
    
    
    
    Total
    
    
    427.9
    
    
    
    3.91
    
    
    
    100.00
    
    
    
    632.6
    
    
    
    7.01
    
    
    
    100.00
 (1)
    
    The unallocated reserve consists of the allowances established on the portfolio classified in the normal situation
category and includes additional reserves in excess of Argentine Central Bank minimum requirements. Charge-Offs
  Fiscal Year EndedDecember 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Charge-offs by TypeAdvances
    
    
    17.3
    
    
    
    6.1
    
    
    
    2.1Promissory Notes
    
    
    92.3
    
    
    
    35.1
    
    
    
    155.2Mortgage Loans
    
    
    7.9
    
    
    
    5.4
    
    
    
    6.4Pledge Loans
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.2Personal Loans
    
    
    27.5
    
    
    
    6.6
    
    
    
    1.5Credit-Card LoansBanco Galicia
    
    
    31.6
    
    
    
    9.2
    
    
    
    3.0Regional Credit-Card Companies
    
    
    107.7
    
    
    
    60.6
    
    
    
    31.9Other Loans
    
    
    4.8
    
    
    
    2.2
    
    
    
    0.5Total
    
    
    289.2
    
    
    
    125.4
    
    
    
    200.8
  -80-




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##### Table of Contents



Foreign Outstandings
  Fiscal Year EndedDecember 31,Country
    
    2008
    
    
    2007
    
    
    2006(in millions of Pesos)United KingdomDemand Deposits
    
    
    6.0
    
    
    
    2.0
    
    
    
    0.7Forward Purchases of Boden 2012 Bonds
    
    
    829.0
    
    
    
    1,244.8
    
    
    
    355.1Forward Purchases of Discount Bonds in Pesos
    
    
    603.2
    
    
    
    600.6
    
    
    
    723.9Total
    
    
    1,438.2
    
    
    
    1,847.4
    
    
    
    1,079.7United StatesDemand Deposits
    
    
    353.4
    
    
    
    532.1
    
    
    
    234.0Overnight Placements
    
    
    317.3
    
    
    
    159.3
    
    
    
    608.1Other
    
    
    0.7
    
    
    
    
    
    
    
    Total
    
    
    671.4
    
    
    
    691.4
    
    
    
    842.1GermanyDemand Deposits
    
    
    3.0
    
    
    
    0.9
    
    
    
    Forward Purchases of Boden 2012 Bonds
    
    
    1,087.9
    
    
    
    240.8
    
    
    
    Forward Purchases of Discount Bonds in Pesos
    
    
    
    
    
    
    105.9
    
    
    
    Total
    
    
    1,090.9
    
    
    
    347.6
    
    
    
    
  
    
    Ps. 1,438.2 million (5.8% of our total assets) with United Kingdom financial
institutions, of which Ps. 829.0 million represent three forward purchases of Boden
2012 Bonds and Ps. 603.2 million represent two forward purchases of Discount Bonds in
Pesos, both in connection with repurchase transactions with such financial
institutions, and Ps. 6.0 million correspond to demand deposits with such
institutions; all are one-year term transactions and bear market floating interest
rates based on Libor plus a fixed spread.
    
    Ps. 671.4 million (2.7% of our total assets) representing liquid placements with
United States financial institutions, of which Ps. 353.4 million correspond to demand
deposits and Ps. 317.3 million represent overnight placements.
  -81-




---



##### Table of Contents




    
    Ps. 1,090.9 million (4.4% of our total assets) with a German financial
institution, of which Ps. 1,087.9 million represent three forward purchases of Boden
2012 Bonds in connection with repurchase transactions with the applicable financial
institution, and Ps. 3.0 million correspond to demand deposits with such institution;
two repurchase transactions are for a two-year term and one is for a one-year term;
all bear market floating interest rates based on Libor plus a fixed spread.
  Deposits
  As of December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Current Accounts and Other Demand Deposits
    
    
    3,105.4
    
    
    
    2,675.4
    
    
    
    2,011.4Savings Accounts
    
    
    4,035.0
    
    
    
    3,380.1
    
    
    
    2,589.5Time Deposits
    
    
    6,548.0
    
    
    
    6,704.8
    
    
    
    5,831.5Other Deposits(1)
    
    
    263.2
    
    
    
    291.6
    
    
    
    215.6Plus: Accrued Interest, Quotation
Differences and CER Adjustment
    
    
    104.5
    
    
    
    113.7
    
    
    
    131.4Total Deposits
    
    
    14,056.1
    
    
    
    13,165.6
    
    
    
    10,779.4
 (1)
    
    Includes among other, deposits originated by Decree No. 616/05, Reprogrammed
Deposits under judicial proceedings and other demand deposits.     -82-




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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.
    3,105.4
    
    
    
    26.9
    %
    
    
    
    
    
    
    
    %
    
    Ps.
    3,105.4
    
    
    
    22.3
    %Savings Accounts
    
    
    2,815.6
    
    
    
    24.3
    
    
    Ps.
    1,219.4
    
    
    
    51.1
    
    
    
    4,035.0
    
    
    
    28.9Time Deposits
    
    
    5,513.2
    
    
    
    47.7
    
    
    
    1,034.9
    
    
    
    43.4
    
    
    
    6,548.1
    
    
    
    46.9Maturing Within 30 Days
    
    
    1,414.1
    
    
    
    12.2
    
    
    
    279.2
    
    
    
    11.7
    
    
    
    1,693.3
    
    
    
    12.1Maturing After 31 Days but Within 59 Days
    
    
    1,930.3
    
    
    
    16.7
    
    
    
    238.7
    
    
    
    10.0
    
    
    
    2,169.0
    
    
    
    15.6Maturing After 60 Days but Within 89 Days
    
    
    671.7
    
    
    
    5.8
    
    
    
    116.7
    
    
    
    4.9
    
    
    
    788.4
    
    
    
    5.7Maturing After 90 Days but Within 179 Days
    
    
    539.1
    
    
    
    4.7
    
    
    
    224.1
    
    
    
    9.4
    
    
    
    763.2
    
    
    
    5.5Maturing After 180 Days but Within 365 Days
    
    
    877.2
    
    
    
    7.6
    
    
    
    129.0
    
    
    
    5.4
    
    
    
    1,006.2
    
    
    
    7.2Maturing After 365 Days
    
    
    80.8
    
    
    
    0.7
    
    
    
    47.2
    
    
    
    2.0
    
    
    
    128.0
    
    
    
    0.8Other Deposits
    
    
    131.0
    
    
    
    1.1
    
    
    
    132.2
    
    
    
    5.5
    
    
    
    263.2
    
    
    
    1.9Maturing Within 30 Days
    
    
    122.8
    
    
    
    1.1
    
    
    
    91.7
    
    
    
    3.8
    
    
    
    214.5
    
    
    
    1.5Maturing 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
    
    
    8.2
    
    
    
    
    
    
    
    40.5
    
    
    
    1.7
    
    
    
    48.7
    
    
    
    0.4Total Deposits(1)
    
    Ps.
    11,565.2
    
    
    
    100.0
    %
    
    Ps.
    2,386.5
    
    
    
    100.0
    %
    
    Ps.
    13,951.7
    
    
    
    100.0
    %
 (1)
    
    Only principal. Excludes the CER adjustment amparo
  Domestic Offices
    
    
    Foreign Offices(in millions of Pesos)Time DepositsWithin 30 Days
    
    
    961.6
    
    
    
    After 31 Days but Within 59 Days
    
    
    1,533.1
    
    
    
    After 60 Days but Within 89 Days
    
    
    450.9
    
    
    
    After 90 Days but Within 179 Days
    
    
    415.9
    
    
    
    After 180 Days but Within 365 Days
    
    
    736.5
    
    
    
    After 365 Days
    
    
    177.9
    
    
    
    12.5Total Time Deposits
    
    
    4,275.9
    
    
    
    12.5Other Deposits
    
    
    
    
    
    
    Total Deposits(1)
    
    
    4,275.9
    
    
    
    12.5
 (1)
    
    Only principal. Excludes the CER adjustment.  -83-




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##### Table of Contents



Return on Equity and Assets
  Fiscal Year EndedDecember 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos, except percentages)Net Income / (Loss)
    
    
    176.8
    
    
    
    46.0
    
    
    
    (18.9
    )Average Total Assets
    
    
    23,412.5
    
    
    
    21,332.4
    
    
    
    24,614.5Average Shareholders Equity
    
    
    1,745.0
    
    
    
    1,606.7
    
    
    
    1,649.3Shareholders Equity at End of the Period
    
    
    1,845.7
    
    
    
    1,654.5
    
    
    
    1,608.5Net Income / (Loss) as a Percentage of:Average Total Assets
    
    
    0.91
    
    
    
    0.37
    
    
    
    Average Shareholders Equity
    
    
    10.13
    
    
    
    2.86
    
    
    
    (1.15
    )Declared Cash Dividends
    
    
    
    
    
    
    
    
    
    
    Dividend Payout Ratio
    
    
    
    
    
    
    
    
    
    
    Average Shareholders Equity as a Percentage of Average Total Assets
    
    
    7.45
    
    
    
    7.53
    
    
    
    6.70Shareholders Equity at the End of the Period as a Percentage of
Average Total Assets
    
    
    7.88
    
    
    
    7.76
    
    
    
    6.53
 Short-term Borrowings
  As of December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Short-Term BorrowingsArgentine Central Bank
    
    
    1.7
    
    
    
    0.7
    
    
    
    0.4Other Banks and International EntitiesCredit Lines from Domestic Banks
    
    
    43.6
    
    
    
    33.2
    
    
    
    134.5Credit Lines from Foreign Banks
    
    
    354.6
    
    
    
    258.0
    
    
    
    45.4Repurchases with Domestic Banks
    
    
    34.7
    
    
    
    
    
    
    
    522.9Negotiable Obligations
    
    
    108.9
    
    
    
    36.3
    
    
    
    65.1Total
    
    
    543.5
    
    
    
    328.2
    
    
    
    768.3
   -84-




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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 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos, except percentages)Argentine Central BankWeighted-average Interest Rate at End of Period
    
    
    
    
    
    
    
    
    
    
    Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    1.7
    
    
    Ps.
    0.9
    
    
    Ps.
    0.9Average Balances for Each Period
    
    Ps.
    1.1
    
    
    Ps.
    0.6
    
    
    Ps.
    0.5Weighted-average Interest Rate for the Period
    
    
    
    
    
    
    
    
    
    
    Credit Lines from Domestic BanksWeighted-average Interest Rate at End of Period
    
    
    24.7
    %
    
    
    14.2
    %
    
    
    9.1
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    261.5
    
    
    Ps.
    92.6
    
    
    Ps.
    378.7Average Balances for Each Period
    
    Ps.
    72.9
    
    
    Ps.
    57.5
    
    
    Ps.
    142.0Weighted-average Interest Rate for the Period
    
    
    13.7
    %
    
    
    9.5
    %
    
    
    8.0
    %Credit Lines from Foreign BanksWeighted-average Interest Rate at End of Period
    
    
    5.4
    %
    
    
    5.6
    %
    
    
    6.1
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    457.4
    
    
    Ps.
    258.0
    
    
    Ps.
    45.4Average Balances for Each Period
    
    Ps.
    373.6
    
    
    Ps.
    106.7
    
    
    Ps.
    9.7Weighted-average Interest Rate for the Period
    
    
    4.5
    %
    
    
    5.8
    %
    
    
    6.1
    %Repurchases with Domestic BanksWeighted-average Interest Rate at End of Period
    
    
    10.5
    %
    
    
    
    %
    
    
    9.3
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    400.6
    
    
    Ps.
    317.4
    
    
    Ps.
    525.9Average Balances for Each Period
    
    Ps.
    132.8
    
    
    Ps.
    138.3
    
    
    Ps.
    101.6Weighted-average Interest Rate for the Period
    
    
    10.5
    %
    
    
    8.9
    %
    
    
    7.6
    %Repurchases with Foreign BanksWeighted-average Interest Rate at End of Period
    
    
    
    
    
    
    
    
    
    
    
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    
    
    
    
    
    
    
    
    Ps.
    223.5Average Balances for Each Period
    
    
    
    
    
    
    
    
    
    Ps.
    145.7Weighted-average Interest Rate for the Period
    
    
    
    
    
    
    
    %
    
    
    8.3
    %Negotiable ObligationsWeighted-average Interest Rate at End of Period
    
    
    12.1
    %
    
    
    8.2
    %
    
    
    9.9
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    108.9
    
    
    Ps.
    65.7
    
    
    Ps.
    65.1Average Balances for Each Period
    
    Ps.
    49.8
    
    
    Ps.
    50.8
    
    
    Ps.
    49.6Weighted-average Interest Rate for the Period
    
    
    9.9
    %
    
    
    9.3
    %
    
    
    7.5
    %
 Regulatory Capital
 Grupo Financiero Galicia
 Ley de Sociedades Comerciales
  -85-




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##### Table of Contents



Banco Galicia
    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
    
    
    
    
    -86-




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##### Table of Contents



As of December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos, except percentages)Shareholders Equity
    
    
    1,954.7
    
    
    
    1,759.4
    
    
    
    1,263.0Argentine Central Bank Minimum Capital Requirements(1)Allocated to Financial Assets
    
    
    1,014.1
    
    
    
    845.3
    
    
    
    597.1Allocated to Fixed Assets, Intangible and Unquoted Equity
Investments
    
    
    169.5
    
    
    
    153.2
    
    
    
    143.5Allocated to Market Risk
    
    
    5.4
    
    
    
    20.4
    
    
    
    12.3Allocated to Interest-Rate Risk
    
    
    50.7
    
    
    
    52.4
    
    
    
    61.6Lending to the Non-Financial Public Sector
    
    
    324.8
    
    
    
    231.5
    
    
    
    269.8Total (A)
    
    
    1,564.5
    
    
    
    1,302.8
    
    
    
    1,084.3Computable Regulatory Capital Calculated Under Argentine Banking
GAAPCore Capital
    
    
    1,789.1
    
    
    
    1,756.4
    
    
    
    1,395.0Supplemental Capital
    
    
    994.7
    
    
    
    757.1
    
    
    
    608.4DeductionsInvestments in Financial Entities
    
    
    (1.7
    )
    
    
    (1.5
    )
    
    
    (1.5
    )Organization Expenses
    
    
    (191.3
    )
    
    
    (100.6
    )
    
    
    (64.2
    )Goodwill Recorded from June 30, 1997
    
    
    (28.5
    )
    
    
    (47.6
    )
    
    
    (66.8
    )Real Estate Properties for Banco Galicias Own Use and
Miscellaneous, for which No Title Deed has been Made
    
    
    (6.3
    )
    
    
    (2.8
    )
    
    
    (5.2
    )Other
    
    
    (17.0
    )
    
    
    (7.0
    )
    
    
    (6.1
    )Total
    
    
    (244.8
    )
    
    
    (159.5
    )
    
    
    (143.8
    )Additional Capital  Market Variation
    
    
    13.3
    
    
    
    3.1
    
    
    
    2.0Total (B)
    
    
    2,552.3
    
    
    
    2,357.1
    
    
    
    1,861.6Excess CapitalExcess Over Required Capital (B)-(A)
    
    
    987.8
    
    
    
    1,054.3
    
    
    
    777.3Excess Over Required Capital as a % of Required Capital
    
    
    63.14
    
    
    
    80.93
    
    
    
    71.69Total Capital Ratio
    
    
    13.92
    
    
    
    15.54
    
    
    
    15.03
 (1)
    
    In accordance with Argentine Central Bank rules applicable at each date.    Regional Credit Card Companies
   -87-




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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. 4 million, increasing to Ps. 5 million for companies that offer
pension-linked life insurance. For providers of retirement insurance that do not offer
pension-linked annuities, the requirement is Ps. 3 million (increasing to Ps. 5 million for
companies that offer pension-linked annuities). For companies that offer property insurance
that includes damage coverage (excluding those related to vehicles) the requirement is Ps. 1.5
million (increasing to Ps. 8 million for companies that offer all P&C products).(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. Based on the total, the
company must calculate 16%. Finally, it must 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 23%.
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
adjusted by the ratio of net technical reserves to gross technical reserves (at least 85%),
plus 0.3% of at-risk capital adjusted by the ratio of retained at-risk capital to total
at-risk capital (at least 50%).
   
 Government Regulation
 General
   -88-




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Régimen de la Transparencia
de la Oferta Pública
 Ley de Defensa de la Competencia Ley
de Lealtad Comercial Ley de Defensa del
Consumidor
     Ley de Tarjetas de Crédito
    -89-




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Foreign Exchange Market
    (a)
    
    Foreign exchange flows into and from the local foreign exchange market and all
resident new debt transactions that may imply future foreign exchange payments to
nonresidents must be registered with the Argentine Central Bank.(b)
    
    All new debt of the private sector with non-residents must be for a minimum term of
365 days, except for international trade financing and primary issuances of debt
securities, if such securities public offering and listing on self-regulated markets in
Argentina has been duly authorized.(c)
    
    All inflows of foreign exchange resulting from such indebtedness, with the exceptions
mentioned in the previous item and those regulated by the Argentine Central Bank which are
detailed below, and all inflows of foreign exchange by non-residents, excluding direct
foreign investments and certain portfolio investments (subscriptions of primary issuances
of debt and equity securities, which public offering and listing in self-regulated markets
in Argentina has been duly authorized, and government securities acquired in the secondary
market), must be for a term of at least 365 days and will be subject to a 30% deposit
requirement.(d)
    
    Such deposit requirement will be held in a local financial institution as an
unremunerated Dollar-denominated time deposit maturing in at least 365 days; such funds
will not be available as a guarantee for any kind of debt and, upon the deposit maturity
date, such funds will become available within the country and, therefore, will be subject
to the applicable restrictions on foreign exchange transfers abroad.(e)
    
    The 30% deposit is not required for, among other things, inflows of foreign currency:
 (i)
    
    resulting from loans granted to residents by local financial institutions in
foreign currency;(ii)
    
    resulting from capital contributions to local institutions, when the
contributor owns, previously or as a result of such contributions, 10% or more of the
companys capital or votes, subject to compliance with certain requirements;(iii)
    
    resulting from sales of interests in local entities to direct investors;(iv)
    
    to be applied to real estate acquisitions;
  -90-




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(v)
    
    resulting from an indebtedness with multilateral and bilateral credit agencies
and with official credit agencies;(vi)
    
    resulting from other foreign indebtedness of the local non-financial private
sector, with an average life of no less than two years, the proceeds of which will be
applied to the acquisition of non-financial investments (as defined by the Argentine
Central Bank);(vii)
    
    resulting from other foreign indebtedness where the proceeds will be applied
to the settlement of foreign debt principal amortization or long term investments in
foreign assets;(viii)
    
    that will be utilized within 10 business days from their liquidation in the local
foreign exchange market for purposes listed as current transactions within the
international accounts by the International Monetary Fund, among others, within such
purposes are the payment by non-Argentine residents of certain local taxes; or(ix)
    
    resulting from the sale of foreign assets of residents in order to subscribe to
primary issuances of public debt issued by the Government; and
 (f)
    
    The proceeds of sales of foreign assets brought into the country by residents
(capital repatriation) will be subject to the 30% deposit requirement noted in (c)
above, which will apply to any amounts exceeding US$ 2.0 million per month if certain
other operative requirements are met.
    (a)
    
    With no limit in the case of: (i) proceeds from the principal amortization of
government securities; (ii) recoveries from local bankruptcies; (iii) proceeds from the
sale of direct investments in the non-financial private sector in Argentina or the final
disposition of such investments if they were made with foreign currency that entered the
local foreign exchange market no less than 365 days before; and (iv) certain other specific
cases.(b)
    
    With a US$ 500,000 monthly limit in the case of the aggregate proceeds of the sale of
portfolio investments made with foreign currency that entered the local foreign exchange
market no less than 365 days before.(c)
    
    With a US$ 5,000 monthly limit in cases not contemplated above, unless authorization
from the Argentine Central Bank is obtained.
  -91-




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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, which exchange rate was 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 Government.
    
    the currency mismatch left on financial institutions balance sheets after the
compulsory pesification of certain of their assets and liabilities after the
conversion of the Peso-denominated compensatory bond into a Dollar-denominated
compensatory bond. This would be achieved by the purchase by financial institutions of
a Dollar-denominated hedge bond. For such purpose, the Government established the
issuance of a Dollar-denominated bond bearing Libor and maturing in 2012 (Boden 2012
Bonds).
    -92-




---



##### Table of Contents



-93-




---



##### Table of Contents



For Differences Related to Amparo Claims
       -94-




---



##### 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
   
  -95-




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Supervision
    Examination by the Argentine Central Bank
    -96-




---



##### Table of Contents



BASIC System
  
    
    B (Bonos or Bonds). On an annual basis, all financial institutions in Argentina were
required to engage in certain debt issuing transactions in order to expose them to scrutiny
and analysis by third parties with high standards. This requirement was eliminated by the
Argentine Central Bank effective March 1, 2002.
    
    A (Auditoría or Audit). The Argentine Central Bank requires a set of external audit
procedures that include: (a) the creation of a registry of auditors; (b) the implementation
of strict accounting procedures to be complied with by external auditors; (c) the payment
of a performance guarantee by those auditors to induce their compliance with the
procedures, and (d) the creation of a department within the Argentine Central Bank liable
for verifying that the procedures are followed. The purpose of this requirement is to
assure accurate disclosure by the financial institutions to both the Superintendency and
the public.
    
    S (Supervisión or Supervision). The Argentine Central Bank has the right to inspect
financial institutions from time to time.
    
    I (Información or Information). Financial institutions are required to file on a
monthly basis certain daily, weekly, monthly and quarterly statistical information.
    
    C (Calificación or Rating). The Argentine Central Bank established a system that
required the periodic credit evaluation of financial entities by internationally recognized
rating agencies, which was suspended by Communiqué A 3601 in May 2002.
 Legal Reserve
  Limitations on Types of Business
 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,
  -97-




---



##### Table of Contents




    
    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)
   Computable Regulatory Capital
  i)
    
    the core capital, which includes permanent capital, non-equity contributions,
net worth adjustments, surplus reserves, audited retained earnings (of closed fiscal
years) and, effective October 1, 2006, long-term debt instruments, as long as such
instruments fulfill certain requirements (maturity of more than 30 years, accrual of
recognized return per year not exceeding issuer financial entitys profits, with
unpaid services not being cumulative, so that they cannot be deferred and accumulated
to be paid after its maturity date) and do not exceed certain core capital
percentages, equal to 30% until December 31, 2008, subject to a schedule that
converges with the 15% international standard on January 1, 2013; plusii)
    
    the supplemental capital, which may not exceed the core capital, consisting
of 50% of unaudited profits and 100% of unaudited losses, and 100% of audited profits
or losses for the current fiscal year, 50% of the reserves on the loan portfolio
classified as normal (general reserves), subordinated debt not exceeding 50% of core
capital and with a maturity of at least 5 years, and, effective October 1, 2006, debt
instruments which fulfill the requirements to be considered as core capital but exceed
the above-mentioned limits, debt instruments with a remaining maturity of less than 10
years and those for which unpaid services are cumulative. In this case, the limit is
50% of the core capital; minusiii)
    
    the following deductions: (a) demand deposits with banks abroad not rated as
investment grade; (b) securities deposited with custodians that were not authorized by
the Argentine Central Bank; (c) sovereign bonds issued by a foreign government with a
rating lower than that assigned to Argentine sovereign bonds; (d) share holdings in
other financial institutions; (e) unregistered real estate; (f) goodwill; (g)
organizational and development expenses; and (h) provisioning deficiencies as
determined by the Superintendency.
   -98-




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##### Table of Contents



Capital Adequacy Requirements
  Capitalization of Debt Instruments
  Profit Distribution
  Treatment of Losses in Connection with Amparo Claims
  amparo amparo
  -99-




---



##### Table of Contents



amparo Amparo
 Legal Reserve Requirements for Liquidity Purposes
 amparo
     
    
    Demand deposits:
 
    
    Peso-denominated current accounts and savings accounts: 19%.
    
    Dollar-denominated savings accounts: 20%.
 
    
    Time deposits, including those adjusted by CER (by remaining maturity):
 
    
    Peso-denominated: up to 29 days: 14%; from 30 to 59 days: 11%; from 60 to 89
days: 7%; from 90 to 179 days: 2%; from 180 to 365 days: 0%.
    
    Dollar-denominated: up to 29 days: 20%; from 30 to 59 days: 15%; from 60 to 89
days: 10%; from 90 to 179 days: 5%; from 180 to 365 days: 2%; and more than 365
days: 0%.
   -100-




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##### Table of Contents



Lending Limits
  i) Limits to financial assistance that refer to the borrowers capital
 ii) Limits that refer to the financial institutions RPC
 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 the purpose of these limits, business groups shall be considered as a one client.(**)
    
    For second floor financial institutions, 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 receipt of bonds or
promissory notes as compensation for the asymmetric pesification, or if arising from the
rolling over of preexisting loans.   -101-




---



##### Table of Contents



The limits on equity interests in other companies are the following:
 Limit based on a Banks RPC
    
    

Limit based on Customers Net WorthCompanies with Non-complementary
Activities
    
    
    
    
    
    
    12.5
    % (**)Companies with Complementary Activities
    
    
    
    
    
    
    100
    %Total Shares
    
    
    50
    %Shares Without Quotation (*)
    
    
    15
    %
 (*)
    
    Includes shares that do not quote frequently and therefore are not subject capital requirements to cover market risk.(**)
    
    Shares or equity interests can be accepted for the payment of credits, up to 20% of the firms capital, without
exceeding 20% of the votes. They must be sold within one year so as to reach the regulatory limit.      -102-




---



##### Table of Contents



Loan Classification System and Loan Loss Provisions
  Valuation of Public Sector Assets
  Financial Assistance from the Argentine Central Bank
 Financial Assistance for Liquidity Support Granted After March 10, 2003
   -103-




---



##### Table of Contents



Financial Assistance for Liquidity Support Granted Before April 1, 2003
  Foreign Currency Position
  Deposit Insurance System
 Fondo de Garantía de los Depósitos
   -104-




---



##### Table of Contents



Priority Rights of Depositors
   
    
    deposits of individuals or entities up to Ps. 50,000 or the equivalent thereof in
foreign currency, with only one person per deposit being able to use this preference.
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 related with international trade.
   Financial Institutions with Economic Difficulties
   -105-




---



##### Table of Contents



Dissolution and Liquidation of Financial Institutions
   -106-




---



##### Table of Contents



Credit Cards Regulation
  
    
    places the supervision of credit and debit card companies in the hands of the
Argentine Central Bank for financial matters and of the National Undersecretary of
Industry and Trade for business and commercial matters;
    
    sets a 3% cap on the rate a credit card company can charge merchants with which it
has entered into card acceptance agreements for processing customer card holders
transactions with such merchants, calculated as a percentage of the customers
purchases;
    
    establishes that credit card companies must provide the Argentine Central Bank with
the information on their loan portfolio that such entity requires, and
    
    sets a cap on the interest rate a credit card company can charge a card holder,
which cannot exceed by more than 25% the average interest rate charged by the issuer on
personal loans and, for non-bank issuers, it cannot exceed by more than 25% the
financial systems average interest rate on personal loans published by the Argentine
Central Bank.
  
 Concealment and Laundering of Assets of a Criminal Origin
 Unidad de Información Financiera
  -107-




---



##### Table of Contents



i)
    
    Any person who converts, transfers, administers, sells, encumbers or uses money
or any other asset derived from any crime in which he was not involved, with the
possible result of giving those original or secondary assets the appearance of having a
legal origin and as long as their value is greater than Ps. 50,000, whether through a
single act or through a series of related events, will be imprisoned for two to ten
years and will be fined an amount that will be between two and ten times the amount of
the transaction.ii)
    
    Any person that was not involved in a crime committed by another person but
that (a) helps a person to elude or escape from an investigation by the relevant
authority; (b) hides, alters or destroys any trail, evidence or object related to the
crime or helps the perpetrator of the crime or any participant to hide them, alter them
or make them disappear; (c) acquires, receives or hides money or objects arising from a
crime; (d) does not report a crime or does not identify a perpetrator of or participant
in a crime that is known to him when obligated to do so in order to promote the
criminal prosecution of a crime of such nature; (e) secures or helps the perpetrator of
or participant in a crime to secure the product or profit of a crime, will be
imprisoned for six months to three years.
     -108-




---



##### Table of Contents



Consejo de Profesionales de
Ciencias Económica
      -109-




---



##### Table of Contents



Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 
 Item 5.A. Operating Results
  
 Overview
  
    
    Expand the volume of our business with the private sector;
    
    Progressively strengthen our balance sheet by consistently reducing the Banks high
exposure to the public sector, as well as those liabilities incurred by the Bank as a
consequence of the 2001-2002 crisis, and
    
    Capitalize the Bank.
     -110-




---



##### Table of Contents



-111-




---



##### Table of Contents



The Argentine Economy, Financial System and Insurance Industry in the Three Years Ended December
31, 2008
   -112-




---



##### Table of Contents



-113-




---



##### Table of Contents



-114-




---



##### Table of Contents



The Argentine Financial System
       -115-




---



##### Table of Contents



The Argentine Insurance Industry
  
 Inflation
  For the 12-month period ended December 31,(in percentages)
    
    2008
    
    
    2007
    
    
    2006Price Indices (1)WPI
    
    
    8.82
    
    
    
    14.56
    
    
    
    7.14CPI
    
    
    7.24
    
    
    
    8.47
    
    
    
    9.84Adjustment IndicesCER
    
    
    7.97
    
    
    
    8.50
    
    
    
    10.08
 (1) Source: INDEC
   -116-




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##### Table of Contents



Currency Composition of Our Balance Sheet
  As of December 31,2008
    
    
    2007
    
    
    2006(In millions of Pesos)AssetsIn Pesos, Unadjusted
    
    
    15,165.1
    
    
    
    14,177.0
    
    
    
    12,510.4In Pesos, Adjusted by the CER
    
    
    2,439.2
    
    
    
    2,350.7
    
    
    
    4,271.5In Foreign Currency (1)
    
    
    7,131.5
    
    
    
    6,301.0
    
    
    
    6,833.5Total Assets
    
    
    24,735.8
    
    
    
    22,828.7
    
    
    
    23,615.4Liabilities and Shareholders EquityIn Pesos, Unadjusted, Including Shareholders Equity
    
    
    17,262.1
    
    
    
    15,597.3
    
    
    
    13,096.4In Pesos, Adjusted by the CER
    
    
    50.3
    
    
    
    277.3
    
    
    
    3,826.2In Foreign Currency (1)
    
    
    7,423.4
    
    
    
    6,954.1
    
    
    
    6,692.8Total Liabilities and Shareholders Equity
    
    
    24,735.8
    
    
    
    22,828.7
    
    
    
    23,615.4
 (1)
    
    If adjusted to reflect forward sales and purchases of foreign exchange made
by the Bank and recorded off-balance sheet, assets amounted to Ps. 10,495.4
million and liabilities Ps. 10,228.3 million.  
 Results of Operations for the Fiscal Years Ended December 31, 2008, December 31, 2007 and December
31, 2006
  Net Income/Loss
 Fiscal Year Ended
    
    

ChangeDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
        
    2007/2006(in millions of Pesos, except percentages)Consolidated Income StatementFinancial Income
    
    
    2,559.3
    
    
    
    1,997.9
    
    
    
    2,229.8
    
    
    
    561.4
    
    
    
    (231.9
    )Financial Expenses
    
    
    1,421.0
    
    
    
    1,246.7
    
    
    
    1,851.6
    
    
    
    174.3
    
    
    
    (604.9
    )Net financial Income
    
    
    1,138.3
    
    
    
    751.2
    
    
    
    378.2
    
    
    
    387.1
    
    
    
    373.0Provision for Losses on Loans and Other Receivables
    
    
    395.4
    
    
    
    255.5
    
    
    
    110.9
    
    
    
    139.9
    
    
    
    144.6Net income from Services
    
    
    1,187.9
    
    
    
    913.1
    
    
    
    672.0
    
    
    
    274.8
    
    
    
    241.1Administrative Expenses
    
    
    1,781.1
    
    
    
    1,286.3
    
    
    
    974.6
    
    
    
    494.8
    
    
    
    311.7Minority Interest
    
    
    (35.8
    )
    
    
    (32.1
    )
    
    
    (19.0
    )
    
    
    (3.7
    )
    
    
    (13.1
    )Income / (Loss) from Equity Investments
    
    
    56.8
    
    
    
    2.0
    
    
    
    (14.4
    )
    
    
    54.8
    
    
    
    16.4Miscellaneous Income / (Loss), Net
    
    
    80.1
    
    
    
    25.1
    
    
    
    144.0
    
    
    
    55.0
    
    
    
    (118.9
    )Income Tax
    
    
    (74.0
    )
    
    
    (71.5
    )
    
    
    (94.2
    )
    
    
    (2.5
    )
    
    
    22.7Net income / (Loss)
    
    
    176.8
    
    
    
    46.0
    
    
    
    (18.9
    )
    
    
    130.8
    
    
    
    64.9Return on Average Assets (1)
    
    
    0.91
    
    
    
    0.37
    
    
    
    0.0004
    
    
    
    0.54
    
    
    
    0.3696Return on Average Shareholders Equity
    
    
    10.13
    
    
    
    2.86
    
    
    
    (1.15
    )
    
    
    7.27
    
    
    
    4.01
 (1)
    
    For the calculation of the return on average assets, profits or losses corresponding to minority interests are excluded from
net income.  -117-




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Fiscal Year 2008 Compared to Fiscal Year 2007
  
    
    a 30.1% increase in net income from services, from Ps. 913.1 million to Ps. 1,187.9
million,
    
    a 28.1% increase in financial income, from Ps. 1,997.9 million to Ps. 2,559.3 million,
    
    a Ps. 55.0 million increase in miscellaneous net income, from Ps. 25.1 million to Ps.
80.1 million, and
    
    a Ps. 54.8 million increase in income from equity investments, from Ps. 2.0 million to
Ps. 56.8 million.
  
    
    a 38.5% increase in administrative expenses, which increased from Ps. 1,286.3 million to
Ps. 1,781.1 million,
    
    a 14.0% increase in financial expenses, from Ps. 1,246.7 million to Ps. 1,421.0 million,
and
    
    a Ps. 139.9 million increase in provisions for losses on loans, from Ps. 255.5 million
to Ps. 395.4 million.
 Fiscal Year 2007 Compared to Fiscal Year 2006
  
    
    a 32.7% reduction in financial expenses, from Ps. 1,851.6 million to Ps. 1,246.7
million,
    
    a 35.9% increase in net income from services, from Ps. 672.0 million to Ps. 913.1
million, and
    
    a Ps. 22.7 million decrease in income tax charges, 24.1% lower than the Ps. 94.2 million
corresponding to the previous fiscal year.
  
    
    a 32% increase in administrative expenses, which increased from Ps. 974.6 million to Ps.
1,286.3 million,
    
    a 10.4% reduction in financial income, from Ps. 2,229.8 million to Ps. 1,997.9 million,
    
    a Ps. 144.6 million increase in provisions for losses on loans, from Ps. 110.9 million
to Ps. 255.5 million, and
    
    a Ps. 118.9 million reduction in miscellaneous net income, from Ps. 144.0 million to Ps.
25.1 million.
  -118-




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Financial Income
  Fiscal Year EndedDecember 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Income on Loans and Other Receivables Resulting
from Financial Brokerage and Premiums Earned on
Reverse Repurchases
    
    
    1,930.3
    
    
    
    1,413.2
    
    
    
    1,149.1Income from Government and Corporate Securities, Net
    
    
    238.1
    
    
    
    241.3
    
    
    
    235.3CER Adjustment
    
    
    123.9
    
    
    
    205.1
    
    
    
    736.0Other (1)
    
    
    267.0
    
    
    
    138.3
    
    
    
    109.4Total
    
    
    2,559.3
    
    
    
    1,997.9
    
    
    
    2,229.8
 (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.  As of December 31,2008
    
    
    2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate(in millions of Pesos, except rates)Interest-Earning Assets
    
    
    19,892.5
    
    
    
    12.14
    
    
    
    18,225.9
    
    
    
    10.00
    
    
    
    21,752.6
    
    
    
    8.84Government Securities
    
    
    3,642.2
    
    
    
    4.08
    
    
    
    4,278.8
    
    
    
    3.42
    
    
    
    4,675.8
    
    
    
    6.68Loans
    
    
    12,077.3
    
    
    
    17.01
    
    
    
    10,528.9
    
    
    
    14.17
    
    
    
    10,851.0
    
    
    
    12.21Other (1)
    
    
    4,173.0
    
    
    
    5.09
    
    
    
    3,418.2
    
    
    
    5.41
    
    
    
    6,225.8
    
    
    
    4.57Interest-Bearing Liabilities
    
    
    15,694.5
    
    
    
    8.14
    
    
    
    14,858.8
    
    
    
    7.21
    
    
    
    18,894.0
    
    
    
    8.79Current Accounts
    
    
    948.1
    
    
    
    2.28
    
    
    
    678.4
    
    
    
    2.42
    
    
    
    658.8
    
    
    
    3.19Savings Accounts
    
    
    2,587.7
    
    
    
    0.18
    
    
    
    2,252.9
    
    
    
    0.23
    
    
    
    1,789.3
    
    
    
    0.25Time Deposits (2)
    
    
    6,769.4
    
    
    
    11.34
    
    
    
    6,606.2
    
    
    
    8.51
    
    
    
    5,297.9
    
    
    
    7.84Argentine Central Bank (3)
    
    
    0.4
    
    
    
    
    
    
    
    261.5
    
    
    
    26.31
    
    
    
    6,083.1
    
    
    
    12.65Debt Securities
    
    
    2,799.8
    
    
    
    10.00
    
    
    
    3,360.1
    
    
    
    8.66
    
    
    
    3,432.4
    
    
    
    8.59Other Interest-bearing Liabilities
    
    
    2,589.1
    
    
    
    7.86
    
    
    
    1,699.7
    
    
    
    7.50
    
    
    
    1,632.5
    
    
    
    9.48Spread and Net YieldInterest Spread, Nominal Basis (4)
    
    
    
    
    
    
    4.00
    
    
    
    
    
    
    
    2.79
    
    
    
    
    
    
    
    0.05Net Yield on Interest-earning Assets (5)
    
    
    
    
    
    
    5.72
    
    
    
    
    
    
    
    4.13
    
    
    
    
    
    
    
    1.21Financial Margin (6)
    
    
    
    
    
    
    5.72
    
    
    
    
    
    
    
    4.12
    
    
    
    
    
    
    
    1.74
 (1)
    
    Includes amounts corresponding to the Compensatory Bond and the Hedge Bond.(2)
    
    Includes restructured deposits certificates and restructured deposits with amparo claims.(3)
    
    Includes the financial assistance from the Argentine Central Bank and the advance from the Argentine Central Bank for the subscription of the Hedge Bond.(4)
    
    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.(5)
    
    Net interest earned divided by average interest-earning assets. Interest rates include the CER adjustment.(6)
    
    Represents net financial income, divided by average interest-earning assets. Fiscal Year 2008 Compared to Fiscal Year 2007
    -119-




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-120-




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Fiscal Year EndedDecember 31,(in percentages)
    
    2008
    
    
    2007
    
    
    2006Total Deposits
    
    
    5.93
    
    
    
    6.32
    
    
    
    6.18Private-Sector DepositsTotal
    
    
    7.61
    
    
    
    8.23
    
    
    
    8.43Deposits in Current and Savings Accounts and Non-Restructured Time Deposits
    
    
    7.87
    
    
    
    8.55
    
    
    
    8.78Total Loans
    
    
    6.16
    
    
    
    7.41
    
    
    
    8.13Private-Sector Loans
    
    
    6.12
    
    
    
    7.75
    
    
    
    7.22
 Banco de Galicia y Buenos Aires S.A., only, within the Argentine financial system. Based on daily information on
deposits and loans prepared by the Argentine Central Bank using-end of month balances. Beginning on December
2008, deposits from AFJPs were transferred to the ANSES, which implied a transfer of deposits from the private
sector to the public sector.
 Fiscal Year 2007 Compared to Fiscal Year 2006
    -121-




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-122-




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-123-




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##### Table of Contents



Financial Expenses
  Fiscal Year EndedDecember 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Interest on Deposits
    
    
    786.1
    
    
    
    547.3
    
    
    
    346.1Negotiable Obligations
    
    
    288.8
    
    
    
    335.2
    
    
    
    294.9Contributions and Taxes
    
    
    135.9
    
    
    
    86.4
    
    
    
    68.6CER Adjustment
    
    
    9.2
    
    
    
    67.0
    
    
    
    697.7Other (1)
    
    
    201.0
    
    
    
    210.8
    
    
    
    444.3Total
    
    
    1,421.0
    
    
    
    1,246.7
    
    
    
    1,851.6
 (1)
    
    Includes accrued interest on liabilities resulting from
financial brokerage with banks and international entities and
premiums payable on repurchases. Fiscal Year 2008 Compared to Fiscal Year 2007
        -124-




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Fiscal Year 2007 Compared to Fiscal Year 2006
    -125-




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-126-




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##### Table of Contents



Net Financial Income
     Provision for Losses on Loans and Other Receivables
    Net Income from Services
  Fiscal Year Ended
    
    
    % ChangeDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
    
    
    2007/2006(in millions of Pesos)
    
    
    (in percentages)Income FromCredit Cards
    
    
    952.6
    
    
    
    669.5
    
    
    
    473.6
    
    
    
    42.3
    
    
    
    41.4Deposits Accounts
    
    
    201.7
    
    
    
    160.5
    
    
    
    125.7
    
    
    
    25.7
    
    
    
    27.7Financial Fees
    
    
    42.0
    
    
    
    28.8
    
    
    
    19.4
    
    
    
    45.8
    
    
    
    48.5Credit-related Fees
    
    
    95.7
    
    
    
    79.1
    
    
    
    53.4
    
    
    
    21.0
    
    
    
    48.1Check Collection
    
    
    33.9
    
    
    
    27.3
    
    
    
    18.3
    
    
    
    24.2
    
    
    
    49.2Collection Services (Taxes and Utility Bills)
    
    
    19.5
    
    
    
    14.1
    
    
    
    11.2
    
    
    
    38.3
    
    
    
    25.9International Trade
    
    
    46.1
    
    
    
    39.5
    
    
    
    31.9
    
    
    
    16.7
    
    
    
    23.8Insurance
    
    
    65.5
    
    
    
    60.8
    
    
    
    45.0
    
    
    
    7.7
    
    
    
    35.1Other (1)
    
    
    115.1
    
    
    
    91.1
    
    
    
    74.6
    
    
    
    26.3
    
    
    
    22.1Total Income
    
    
    1,572.1
    
    
    
    1,170.7
    
    
    
    853.1
    
    
    
    34.3
    
    
    
    37.2Total Expenses
    
    
    384.2
    
    
    
    257.6
    
    
    
    181.1
    
    
    
    49.1
    
    
    
    42.2Net Income from Services
    
    
    1,187.9
    
    
    
    913.1
    
    
    
    672.0
    
    
    
    30.1
    
    
    
    35.9
 (1)
    
    Includes, among others, fees from investment banking activities, asset management, safe deposit boxes and cash management.  -127-




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Fiscal Year 2008 Compared to Fiscal Year 2007
       Fiscal Year 2007 Compared to Fiscal Year 2006
     -128-




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##### Table of Contents



% ChangeDecember 31,
    
    
    December 31,Credit Cards
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
    
    
    2007/2006(number of credit cards, except otherwise noted)
    
    
    (percentages)Visa
    
    
    936,267
    
    
    
    855,708
    
    
    
    721,105
    
    
    
    9.41
    
    
    
    18.67Gold
    
    
    203,464
    
    
    
    172,830
    
    
    
    124,287
    
    
    
    17.72
    
    
    
    39.06International
    
    
    470,709
    
    
    
    433,000
    
    
    
    387,485
    
    
    
    8.71
    
    
    
    11.75Domestic
    
    
    227,785
    
    
    
    229,174
    
    
    
    198,409
    
    
    
    (0.61
    )
    
    
    15.51Business
    
    
    20,976
    
    
    
    15,962
    
    
    
    10,877
    
    
    
    31.41
    
    
    
    46.75Corporate
    
    
    960
    
    
    
    295
    
    
    
    47
    
    
    
    225.42
    
    
    
    527.66Platinum
    
    
    12,373
    
    
    
    4,447
    
    
    
    
    
    
    
    178.23
    
    
    
    Galicia Rural
    
    
    6,215
    
    
    
    5,841
    
    
    
    5,049
    
    
    
    6.40
    
    
    
    15.69American Express
    
    
    241,145
    
    
    
    195,360
    
    
    
    131,660
    
    
    
    23.44
    
    
    
    48.38Gold
    
    
    99,970
    
    
    
    79,829
    
    
    
    56,563
    
    
    
    25.23
    
    
    
    41.13International
    
    
    133,644
    
    
    
    115,531
    
    
    
    75,097
    
    
    
    15.68
    
    
    
    53.84Platinum
    
    
    7,531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    MasterCard
    
    
    54,916
    
    
    
    50,577
    
    
    
    41,271
    
    
    
    8.58
    
    
    
    22.55Gold
    
    
    16,790
    
    
    
    13,203
    
    
    
    10,437
    
    
    
    27.17
    
    
    
    26.50MasterCard
    
    
    36,531
    
    
    
    35,684
    
    
    
    29,765
    
    
    
    2.37
    
    
    
    19.89Argencard
    
    
    1,595
    
    
    
    1,690
    
    
    
    1,069
    
    
    
    (5.62
    )
    
    
    58.09Regional Credit-Card Companies
    
    
    4,742,816
    
    
    
    4,283,770
    
    
    
    3,383,483
    
    
    
    10.72
    
    
    
    26.61Local Brands
    
    
    2,864,709
    
    
    
    2,479,788
    
    
    
    2,192,098
    
    
    
    15.52
    
    
    
    13.12Visa
    
    
    1,628,185
    
    
    
    1,599,046
    
    
    
    1,068,702
    
    
    
    1.82
    
    
    
    49.63MasterCard
    
    
    217,090
    
    
    
    182,237
    
    
    
    122,683
    
    
    
    19.13
    
    
    
    48.54American Express
    
    
    32,832
    
    
    
    22,699
    
    
    
    
    
    
    
    44.64
    
    
    
    Total
    
    
    5,981,359
    
    
    
    5,391,256
    
    
    
    4,282,568
    
    
    
    10.95
    
    
    
    25.89Total
Amount of Purchases(in millions of Pesos)
    
    Ps.
    14,949
    
    
    Ps.
    11,566
    
    
    Ps.
    8,305
    
    
    
    29.24
    
    
    
    39.27
  -129-




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##### Table of Contents



Administrative Expenses
  Fiscal Year Ended
    
    
    % ChangeDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
    
    
    2007/2006(in millions of Pesos)
    
    
    (in percentages)Salaries and Social Security Contributions
    
    
    805.2
    
    
    
    540.6
    
    
    
    415.4
    
    
    
    48.9
    
    
    
    30.1Property-related Expenses
    
    
    113.2
    
    
    
    89.9
    
    
    
    65.1
    
    
    
    25.9
    
    
    
    38.1Personnel Services
    
    
    90.8
    
    
    
    75.7
    
    
    
    46.6
    
    
    
    19.9
    
    
    
    62.4Advertising and Publicity
    
    
    146.5
    
    
    
    113.8
    
    
    
    84.5
    
    
    
    28.7
    
    
    
    34.7Amount Accrued in Relation to Directors and Syndics Compensation
    
    
    8.2
    
    
    
    6.4
    
    
    
    6.0
    
    
    
    28.1
    
    
    
    6.7Electricity and Communications
    
    
    72.7
    
    
    
    57.2
    
    
    
    41.1
    
    
    
    27.1
    
    
    
    39.2Taxes
    
    
    104.0
    
    
    
    70.4
    
    
    
    50.5
    
    
    
    47.7
    
    
    
    39.4Other
    
    
    440.5
    
    
    
    332.3
    
    
    
    265.4
    
    
    
    32.6
    
    
    
    25.2Total
    
    
    1,781.1
    
    
    
    1,286.3
    
    
    
    974.6
    
    
    
    38.5
    
    
    
    32.0
 Fiscal Year 2008 Compared to Fiscal Year 2007
  Fiscal Year 2007 Compared to Fiscal Year 2006
  Income/(Loss) from Equity Investments
   -130-




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##### Table of Contents



Miscellaneous Income/(Loss), Net
 amparo
 amparo amparo
 Income Tax
      -131-




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##### Table of Contents



U.S. GAAP and Argentine Banking GAAP Reconciliation
 General
  Allowances for Loan Losses
   December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006(in millions of Pesos)Argentine Banking GAAP
    
    
    526.8
    
    
    
    428.6
    
    
    
    327.0U.S. GAAPSFAS 114Allowance for Loan Losses
    
    
    134.5
    
    
    
    246.3
    
    
    
    291.9Effect of BG Trust Securitization
- Treated as a Secured Borrowing
for U.S. GAAP Purposes
    
    
    (40.9
    )
    
    
    (64.9
    )
    
    
    (89.7
    )SFAS 5
    
    
    452.9
    
    
    
    240.9
    
    
    
    170.6U.S. GAAP Shareholders Equity Adjustment
    
    
    (19.7
    )
    
    
    6.3
    
    
    
    (45.8
    )
 SFAS 114 Analysis
  
    
    With Problems
    
    High Risk of Insolvency
    
    Uncollectible
  December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006(in millions of Pesos)Loan Loss Reserve Under U.S. GAAP  SFAS 114 Analysis
    
    
    134.5
    
    
    
    246.3
    
    
    
    291.9
  -132-




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##### Table of Contents



SFAS 5 Analysis
  December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006(in millions of Pesos)Loan Loss Reserve Under
U.S. GAAP  SFAS 5 Analysis
    
    
    452.9
    
    
    
    240.9
    
    
    
    170.6
  
    
    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, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Loan Loss Reserves as a Percentage of Non-accrual Loans
    
    
    141.34
    %
    
    
    132.13
    %
    
    
    168.58
    %Loan Loss Reserves as a Percentage of Total Amounts Past Due
    
    
    171.81
    %
    
    
    149.57
    %
    
    
    183.29
    %Loan Loss Reserves as a Percentage of Past-due Unsecured Amounts
    
    
    190.78
    %
    
    
    167.19
    %
    
    
    210.51
    %
 Carrying Value of Secured Loans, Certain Government Securities and Receivables for Government
Securities
   -133-




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##### Table of Contents



Elements of Financial Statements
 amparo amparo
 Foreign Debt Restructuring
   -134-




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##### Table of Contents



Securitizations
    Transfers of financial assets consolidated  Variable Interest Entities
   -135-




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##### Table of Contents




    
    determine whether the entity meets the criteria to qualify as a VIE and;
 
    
    determine whether Grupo Financiero Galicia is the primary beneficiary of the
VIE.
  
    
    the design of the entity, including the nature of its risks and the purpose for
which the entity was created, to determine the variability that the entity was
designed to create and distribute to its interest holders;
 
    
    the nature of the involvement with the entity;
 
    
    whether control of the entity may be achieved through arrangements that do not
involve voting equity;
 
    
    whether there is sufficient equity investment at risk to finance the activities
of the entity and;
 
    
    whether parties other than the equity holders have the obligation to absorb
expected losses or the right to received residual returns.
  
    
    whether the variable interest absorbs the majority of the VIEs expected losses;
 
    
    whether the variable interest receives the majority of the
VIEs expected
returns and;
 
    
    whether Grupo Financiero Galicia has the ability to make decisions that
significantly affect the VIEs results and activities.
   (In millions of Pesos)
    
    December 31, 2008Cash and due from banks
    
    Ps.
    33.4Loans (net of allowances)
    
    
    939.9Other assets
    
    
    21.2Total Assets
    
    
    994.5Debt Securities
    
    
    722.0Certificates of Participation
    
    
    247.7Other liabilities
    
    
    24.8Total Liabilities
    
    
    994.5
 Income Tax
    -136-




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##### 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 2008
    
    
    176.8
    
    
    
    (1,171.0
    )
    
    
    1,845.7
    
    
    
    (754.4
    )Fiscal Year 2007
    
    
    46.0
    
    
    
    592.9
    
    
    
    1,654.5
    
    
    
    238.1Fiscal Year 2006
    
    
    (18.9
    )
    
    
    3,524.9
    
    
    
    1,608.5
    
    
    
    145.8
  
    
    Since 2005, given that the Compensatory Bond was received in full in that year, the
corresponding Boden 2012 Bonds are reflected at market value, with changes in values
being recognized under other comprehensive income, the effect of which varies
significantly in 2006 and 2007. As of December 31, 2008, Grupo Financiero Galicia had
recorded an other-than-temporary impairment for U.S. GAAP purposes, which resulted in a
significant decrease in its net income for fiscal year 2008 under U.S. GAAP.
 
    
    The Hedge Bond and the liability with the Argentine Central Bank for its purchase were
not recognized under U.S. GAAP in 2005, while they were recognized in 2006. With the
delivery to the Bank of 90.8% of the Hedge Bond in 2006, as the Bank acquired control of
90.8% of the asset that previously was not recognized as such, the adjustment made in the
prior year (to reflect that the asset, recognized under Argentine Banking GAAP, was not
recognized under U.S. GAAP) was reversed in the same proportion which generated a
significant increase in our net income for fiscal year 2006 under U.S. GAAP.
 
    
    Discount Bonds in Pesos are reflected at market values, with changes from market
values at the time of exchange being recognized as other comprehensive income. As of
December 31, 2008, Grupo Financiero Galicia had recorded an other-than-temporary
impairment for U.S. GAAP purposes, which resulted in a significant decrease in its net
income for fiscal year 2008 under U.S. GAAP.
 
    
    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.
  -137-




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##### Table of Contents




    
    Certain of our securitization transactions are considered sales under U.S. GAAP, with
the valuation of retained interests reflecting fair values, with changes in unrealized
gains and losses charged to equity through other comprehensive income. As of December 31,
2008, Grupo Financiero Galicia had recorded an other-than-temporary impairment of the
certificates of participation in Galtrust I, in Nues Trust and in Almafuerte Special
Fund, based on a variety of factors, mostly including the period of time and extent to
which the market value had been lower than the cost and the weakening of the global and
local markets. The fair value of these retained interests in the trusts is determined
based upon an estimate of cash flows to be collected by Grupo Financiero Galicia as the
holder of the retained interests, discounted at an estimated market rate and will
constitute the new cost basis of these securities.
 
 Results by Segments
    
    
    Banking: our banking business segment represents Banco de Galicia y Buenos Aires S.A.
consolidated line by line with Galicia Uruguay and its subsidiaries and the results of
other small banking-related subsidiaries.
 
    
    Regional Credit Cards: our regional credit cards business segment represents the
accounts of Tarjetas Regionales S.A. consolidated with its subsidiaries.
 
    
    Insurance: our insurance business segment represents the accounts of Sudamericana and
its subsidiaries.
 
    
    Other Grupo Businesses: this segment includes the results of Net Investment, Galicia
Warrants, GV Mandataria and Galval.
   -138-




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##### Table of Contents



Banking
  As of December 31,In millions of Pesos, except percentages
    
    2008
    
    
    2007
    
    
    2006Net Financial Income
    
    
    847.3
    
    
    
    516.2
    
    
    
    66.0Net Income from Services
    
    
    655.0
    
    
    
    520.4
    
    
    
    377.3Net Operating Revenue
    
    
    1,502.3
    
    
    
    1,036.6
    
    
    
    443.3Provisions for Loan Losses
    
    
    214.9
    
    
    
    159.2
    
    
    
    57.6Administrative Expenses
    
    
    1,166.5
    
    
    
    875.1
    
    
    
    681.4Net Operating Income
    
    
    120.9
    
    
    
    2.3
    
    
    
    (295.7
    )Income from Equity InvestmentsTarjetas Regionales SA
    
    
    76.4
    
    
    
    88.2
    
    
    
    70.9Sudamericana
    
    
    2.9
    
    
    
    1.9
    
    
    
    1.1Others
    
    
    58.1
    
    
    
    3.5
    
    
    
    (14.8
    )Income from Equity Investments
    
    
    137.4
    
    
    
    93.6
    
    
    
    57.2Other Income (Loss)
    
    
    (63.0
    )
    
    
    (65.5
    )
    
    
    112.3Pre-tax Income
    
    
    195.3
    
    
    
    30.4
    
    
    
    (126.2
    )Net Income
    
    
    195.3
    
    
    
    30.4
    
    
    
    (126.2
    )Net Income as a % of Grupo Financiero Galicias Net Income
    
    
    110
    %
    
    
    66
    %
    
    
    667
    %Average Loans
    
    
    8,707.5
    
    
    
    7,140.6
    
    
    
    5,332.3Average Deposits
    
    
    13,199.0
    
    
    
    11,857.0
    
    
    
    9,506.0
      -139-




---



##### Table of Contents



amparo amparo
  -140-




---



##### Table of Contents



Regional Credit Cards
  As of December 31,In millions of Pesos, except percentages
    
    2008
    
    
    2007
    
    
    2006Net Financial Income
    
    
    296.2
    
    
    
    203.2
    
    
    
    157.5Net Income from Services
    
    
    571.8
    
    
    
    409.0
    
    
    
    289.8Net Operating Revenue
    
    
    868.0
    
    
    
    612.2
    
    
    
    447.3Provisions for Loan Losses
    
    
    180.4
    
    
    
    96.3
    
    
    
    53.2Administrative Expenses
    
    
    554.5
    
    
    
    369.5
    
    
    
    263.9Net Operating Income
    
    
    133.1
    
    
    
    146.4
    
    
    
    130.2Other Income (Loss)
    
    
    45.2
    
    
    
    41.3
    
    
    
    20.7Minority Interests
    
    
    (20.6
    )
    
    
    (27.5
    )
    
    
    (24.1
    )Pre-tax Income
    
    
    157.7
    
    
    
    160.2
    
    
    
    126.8Income Tax Provision
    
    
    81.3
    
    
    
    72.1
    
    
    
    55.9Net Income
    
    
    76.4
    
    
    
    88.1
    
    
    
    70.9Net Income as a % of Grupo Financiero Galicias Net Income
    
    
    43
    %
    
    
    192
    %
    
    
    (375
    )%Average Loans
    
    
    2,105.0
    
    
    
    1,703.1
    
    
    
    1,149.3
          -141-




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##### Table of Contents



Insurance
  As of September 30,In millions of Pesos, except percentages
    
    2008
    
    
    2007
    
    
    2006Net Financial Income
    
    
    20.2
    
    
    
    16.6
    
    
    
    17.0Net Operating Revenue
    
    
    20.2
    
    
    
    16.6
    
    
    
    17.0Administrative Expenses
    
    
    30.0
    
    
    
    16.1
    
    
    
    11.2Net Operating Income
    
    
    (9.8
    )
    
    
    0.5
    
    
    
    5.8Other Income (Loss)
    
    
    43.5
    
    
    
    22.0
    
    
    
    6.9Pre-tax Income
    
    
    33.7
    
    
    
    22.5
    
    
    
    12.7Income Tax Provision
    
    
    11.1
    
    
    
    7.9
    
    
    
    3.7Net Income
    
    
    22.6
    
    
    
    14.6
    
    
    
    9.0Net Income as a % of Grupo Financiero Galicias Net Income
    
    
    12.8
    %
    
    
    32
    %
    
    
    (48
    )%
      -142-




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##### Table of Contents



Other Grupo Businesses
    
 Consolidated Assets
  As of December 31,2008
    
    
    2007
    
    
    2006Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %(in millions of Pesos, except percentages)Cash and Due from Banks
    
    
    3,405.1
    
    
    
    13.8
    
    
    
    2,960.0
    
    
    
    13.0
    
    
    
    2,294.8
    
    
    
    9.7Government and Corporate Securities
    
    
    1,531.9
    
    
    
    6.2
    
    
    
    1,694.0
    
    
    
    7.4
    
    
    
    3,188.6
    
    
    
    13.5Loans to the Non Financial Public Sector
    
    
    11,774.6
    
    
    
    47.6
    
    
    
    11,601.0
    
    
    
    50.8
    
    
    
    10,525.0
    
    
    
    44.6Hedge Bond to be Acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    401.3
    
    
    
    1.7Other Receivables  Argentine Central Bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,733.3
    
    
    
    7.3Other Assets
    
    
    8,024.2
    
    
    
    32.4
    
    
    
    6,573.7
    
    
    
    28.8
    
    
    
    5,472.4
    
    
    
    23.2Total
    
    
    24,735.8
    
    
    
    100.0
    
    
    
    22,828.7
    
    
    
    100.0
    
    
    
    23,615.4
    
    
    
    100.0
      -143-




---



##### Table of Contents




    
    Ps. 1,824.9 million of forward purchases of Boden 2012 Bonds in connection with
repurchase agreements (including the corresponding security margins recorded as
Miscellaneous Receivables in the balance sheet).
 
    
    Ps. 1,164.9 million recorded under Bank Premises and Equipment, Miscellaneous Assets
and Intangible Assets, excluding from the latter the deferred losses from amparoclaims.
 
    
    Ps. 634.0 million corresponding to our holdings of debt securities and participation
certificates issued by the Galtrust I Financial Trust, resulting from the securitization of
loans to the provincial public sector in late 2000.
 
    
    Ps. 597.1 million of forward purchases of Discount Bonds in Pesos in connection with
repurchase agreements (including the corresponding security margins recorded as
Miscellaneous Receivables in the balance sheet).
 
    
    Ps. 445.2 million corresponding to Assets under Financial Leases.
 
    
    Ps. 408.9 million corresponding to holdings of the participation certificate in, and
debt securities of, the special fund (referred to as Special Fund Former Almafuerte Bank)
jointly formed by the Bank with other private-sector banks in order to facilitate the
recovery of the assets of former Almafuerte Bank.
 
    
    Ps. 365.3 million corresponding to participation certificates in, and debt securities
of, different financial trusts, created by the Bank or by third parties.
 
    
    Ps. 316.9 million recorded as an intangible asset, which reflect deferred losses in
connection with amparoclaims due to the difference between the amount paid to depositors
(the deposits original contractual amount, collected by depositors in US Dollars or at the
free market exchange rate) as a consequence of court orders, and the amount established by
the pesification rules (conversion at the Ps. 1.40 per US Dollar exchange rate, plus CER
adjustment and interest), net of the accumulated amortization, plus the amount of deferred
amortization.
 
    
    Ps. 283.5 million corresponding to the minimum presumed income tax recorded under
Miscellaneous Receivables.
 
    
    Ps. 258.4 million corresponding to balances deposited at the Argentine Central Bank as
guarantees in favor of clearing houses.
 
    
    Ps. 57.3 million corresponding to equity investments.
 
    
    Ps. 46.6 million corresponding to debt securities, mostly of the Bank (Ps. 39.8 million)
and the rest corresponding to securities issued by other companies.
 
 Exposure to the Argentine Public Sector
  As of December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Net Position in Government Securities
    
    
    3,345.3
    
    
    
    3,877.8
    
    
    
    4,832.7Trading and Investment Accounts
    
    
    627.6
    
    
    
    435.8
    
    
    
    164.3Boden 2012 Bonds
    
    
    2,350.8
    
    
    
    2,744.3
    
    
    
    3,582.9Bogar Bonds
    
    
    
    
    
    
    
    
    
    
    366.5Discount Bonds in Pesos and GDP-Linked Negotiable Securities
    
    
    666.9
    
    
    
    697.7
    
    
    
    719.0Loans
    
    
    1,481.5
    
    
    
    1,372.9
    
    
    
    2,846.7Financial Sector
    
    
    107.9
    
    
    
    107.4
    
    
    
    107.4Secured Loans and Others
    
    
    1,373.6
    
    
    
    1,265.5
    
    
    
    2,739.3
  -144-




---



##### Table of Contents



As of December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Other Receivables Resulting from Financial Brokerage
    
    
    927.5
    
    
    
    870.1
    
    
    
    1,218.6Boden 2012 Bonds (Hedge Bond)
    
    
    
    
    
    
    
    
    
    
    401.3Trusts Certificates of Participation and Securities
    
    
    927.5
    
    
    
    870.1
    
    
    
    817.3Total Assets(1)
    
    
    6,054.3
    
    
    
    6,120.8
    
    
    
    8,898.0Liabilities with the Argentine Central Bank
    
    
    
    
    
    
    
    
    
    
    3,026.0Net Exposure
    
    
    6,054.3
    
    
    
    6,120.8
    
    
    
    5,872.0
 (1)
    
    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.  
 Securitization of Assets
   
 Funding
   -145-




---



##### Table of Contents



-146-




---



##### Table of Contents



December 31,2008
    
    
    2007
    
    
    2006Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %(in millions of Pesos, except percentages)Deposits
    
    
    14,056.1
    
    
    
    56.8
    
    
    
    13,165.6
    
    
    
    57.8
    
    
    
    10,779.4
    
    
    
    45.6Current Accounts and Other Demand Deposits
    
    
    3,105.4
    
    
    
    12.6
    
    
    
    2,675.4
    
    
    
    11.7
    
    
    
    2,011.4
    
    
    
    8.5Savings Accounts
    
    
    4,035.0
    
    
    
    16.3
    
    
    
    3,380.1
    
    
    
    14.8
    
    
    
    2,589.5
    
    
    
    11.0Time Deposits
    
    
    6,548.0
    
    
    
    26.5
    
    
    
    6,708.8
    
    
    
    29.5
    
    
    
    5,831.5
    
    
    
    24.6Other Deposits
    
    
    263.2
    
    
    
    1.1
    
    
    
    291.6
    
    
    
    1.3
    
    
    
    215.6
    
    
    
    0.9Accrued Interest, Quotation Differences and CER Adjustment
    
    
    104.5
    
    
    
    0.4
    
    
    
    113.7
    
    
    
    0.5
    
    
    
    131.4
    
    
    
    0.6Debt with Financial Institutions(1)
    
    
    2,172.9
    
    
    
    8.8
    
    
    
    2,307.8
    
    
    
    10.1
    
    
    
    5,217.2
    
    
    
    22.1Argentine Central BankFinancial Assistance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,688.7
    
    
    
    11.4Advance for the Acquisition of the Hedge Bond
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    336.8
    
    
    
    1.4Domestic Financial Institutions
    
    
    248.6
    
    
    
    1.0
    
    
    
    318.5
    
    
    
    1.4
    
    
    
    287.7
    
    
    
    1.2International Banks and Credit Agencies
    
    
    941.5
    
    
    
    3.8
    
    
    
    733.3
    
    
    
    3.2
    
    
    
    870.5
    
    
    
    3.7Repurchases
    
    
    982.8
    
    
    
    4.0
    
    
    
    1,256.0
    
    
    
    5.5
    
    
    
    1,033.5
    
    
    
    4.4Negotiable Obligations (Unsubordinated and Subordinated)(1)
    
    
    2,932.5
    
    
    
    11.9
    
    
    
    3,105.6
    
    
    
    13.6
    
    
    
    3,676.0
    
    
    
    15.6Other obligations
    
    
    3,728.6
    
    
    
    15.0
    
    
    
    2,595.2
    
    
    
    11.3
    
    
    
    2,334.3
    
    
    
    9.9Shareholders Equity
    
    
    1,845.7
    
    
    
    7.5
    
    
    
    1,654.5
    
    
    
    7.2
    
    
    
    1,608.5
    
    
    
    6.8Total Funding
    
    
    24,735.8
    
    
    
    100.0
    
    
    
    22,828.7
    
    
    
    100.0
    
    
    
    23,615.4
    
    
    
    100.0
 (1)
    
    Includes accrued interest, quotation differences, and CER adjustment where applicable.      -147-




---



##### Table of Contents




    
    Ps. 353.7 million and Ps. 934.0 million of 2010 Notes and 2014 Notes, respectively,
and Ps. 987.0 million of 2019 Notes, 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. 55.7 million of negotiable obligations issued by Galicia Uruguay to refinance its
deposits, which securities were issued either in connection with the original
restructuring or with the exchange offers subsequently made by Galicia Uruguay to its
customers.
 
    
    Ps. 62.5 million and Ps. 69.1 million of Class VII and Class VIII Negotiable
Obligations, respectively, maturing in 2009, issued by Tarjeta Naranja S.A.
 
    
    Ps. 39.8 million of Series XIX Negotiable Obligations, maturing in 2009, issued by
Tarjetas Cuyanas S.A.
 
    
    Ps. 5.8 million of past due foreign debt included in the Banks 2004 debt
restructuring, the holders of which did not participate in such restructuring.
   -148-




---



##### Table of Contents



Ratings
       -149-




---



##### Table of Contents



Standard &
    
    
    
    EvaluadoraPoors
    
    Fitch Argentina
    
    Latinoamericana
    
    MoodysLOCAL RATINGSGrupo Financiero Galicia S.A.Rating of Shares
    
    1Short-/Medium Term Debt(1)
    
    
    
    
    
    A+Banco de Galicia y Buenos Aires S.A.Counterparty Rating
    
    raAMedium-/Long-Term Debt (2) (3)
    
    raA
    
    
    
    A+
    
    Aa3.arSubordinated Debt (2) (4)
    
    raA-
    
    
    
    A
    
    Aa3.arDeposits (Long Term / Short Term)
    
    raA / raA-1Deposits (Local Currency / Foreign Currency)
    
    
    
    
    
    
    
    Aa2.ar / Ba1.arTarjeta Naranja S.A.Medium-/Long-Term Debt (2) (5)
    
    
    
    AA-(arg)Short-Term Debt (2) (6)
    
    
    
    AA-(arg)Tarjetas Cuyanas S.A.Long-Term Debt (2) (7)
    
    
    
    A(arg)Short-Term Debt (2) (8)
    
    
    
    A(arg)INTERNATIONAL RATINGSTarjeta Naranja S.A.Medium-/Long-Term Debt (2) (9)
    
    
    
    B-Tarjetas Cuyanas S.A.Long-Term Debt (2) (7)
    
    
    
    B-Short-Term Debt (2) (8)
    
    
    
    B-
 (1)
    
    Negotiable Obligations Due in 2010 and 2011, issued on June 4, 2009.(2)
    
    See -Contractual Obligations.(3)
    
    Negotiable Obligations Due in 2010 and Negotiable Obligations Due in
2014.(4)
    
    Subordinated Negotiable Obligations Due in 2019.(5)
    
    Classes IV and VII Negotiable Obligations.(6)
    
    Class VIII Negotiable Obligations.(7)
    
    Series XVIII Negotiable Obligations.(8)
    
    Series XIX Negotiable Obligations.(9)
    
    Class IV Negotiable Obligations. Debt Programs
    -150-




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Contractual Obligations
  Annual
    
    
    
    
    
    Less than 1
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5Maturity
    
    Interest Rate
    
    Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsBanco GaliciaDepositsTime Deposits (including Other Deposits) (Pesos/US$)
    
    Various
    
    Various
    
    
    6,698.3
    
    
    
    6,651.1
    
    
    
    47.2
    
    
    
    
    
    
    
    Bonds2010 Notes (US$) (1) (2) (3)
    
    2010
    
    Libor + 350 b.p.
    
    Ps.
    365.9
    
    
    Ps.
    248.0
    
    
    Ps.
    117.9
    
    
    
    
    
    
    
    2014 Notes (US$) (1) (2) (4)
    
    2014
    
    7.00%
    
    
    966.9
    
    
    
    32.9
    
    
    
    442.4
    
    
    Ps.
    442.4
    
    
    Ps.
    49.22019 Notes (US$) (1) (5)
    
    2019
    
    11.00%
    
    
    987.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    987.09% Notes Due 2003 (US$) (6)
    
    2003
    
    9.00%
    
    
    9.5
    
    
    
    9.5
    
    
    
    
    
    
    
    
    
    
    
    LoansFloating
Rate Loans Due 2010 (US$)(1) (2) (3)
    
    2010
    
    Libor + 350 b.p.
    
    
    5.7
    
    
    
    3.9
    
    
    
    1.8
    
    
    
    
    
    
    
    Floating
Rate Loans Due 2014 (US$) (1) (2) (4)
    
    2014
    
    Libor + 85 b.p.
    
    
    87.9
    
    
    
    1.8
    
    
    
    40.8
    
    
    
    40.8
    
    
    
    4.5Floating Rate Loans Due 2019 (US$) (1) (7)
    
    2019
    
    Libor + 578 b.p.
    
    
    6.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.5IBD Financial Loans (US$)
    
    Various
    
    Various
    
    
    1.4
    
    
    
    0.1
    
    
    
    1.3
    
    
    
    
    
    
    
    IFC Financial Loans (US$)
    
    Various
    
    Libor + 350 b.p.
    
    
    267.9
    
    
    
    54.7
    
    
    
    102.0
    
    
    
    89.4
    
    
    
    21.8Other Financial Loans (US$) (8)
    
    Various
    
    Various
    
    
    365.2
    
    
    
    358.5
    
    
    
    6.7
    
    
    
    
    
    
    
    Merrill
Lynch Intl. Financial Loan (US$) (9)
    
    2009
    
    7.8%
    
    
    220.4
    
    
    
    220.4
    
    
    
    
    
    
    
    
    
    
    
    BID Financial Loans (Pesos)
    
    Various
    
    Various
    
    
    87.0
    
    
    
    15.8
    
    
    
    30.2
    
    
    
    20.6
    
    
    
    20.4Fontar Financial Loans (Pesos)
    
    Various
    
    Various
    
    
    61.0
    
    
    
    11.1
    
    
    
    24.5
    
    
    
    17.1
    
    
    
    8.3BICE Loans (CER Adjusted Pesos)
    
    Various
    
    CER+4.0%
    
    
    3.0
    
    
    
    3.0
    
    
    
    
    
    
    
    
    
    
    
    BICE Loans (US$) (10)
    
    Various
    
    Libor + 550 b.p.
    
    
    3.5
    
    
    
    3.5
    
    
    
    
    
    
    
    
    
    
    
    Repurchases (US$) (11)
    
    Various
    
    Various
    
    
    982.8
    
    
    
    692.0
    
    
    
    290.8
    
    
    
    
    
    
    
    Galicia UruguayNegotiable Obligations (US$) (12)
    
    Various
    
    Various
    
    
    54.5
    
    
    
    9.0
    
    
    
    45.5
    
    
    
    
    
    
    
    Tarjetas Regionales S.A.Financial Loans with Local Banks (Pesos)
    
    Various
    
    Various
    
    
    242.9
    
    
    
    93.3
    
    
    
    136.2
    
    
    
    13.4
    
    
    
    Negotiable Obligations (Pesos/US$)
    
    Various
    
    Various
    
    
    549.7
    
    
    
    316.8
    
    
    
    222.9
    
    
    
    10.0
    
    
    
    Total
    
    
    
    
    
    Ps.
    11,967.0
    
    
    Ps.
    8,725.4
    
    
    Ps.
    1,510.2
    
    
    Ps.
    633.7
    
    
    Ps.
    1,097.7
 Principal and 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)
    
    Interest payable in cash, semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004.(3)
    
    Floating Rate Notes Due 2010: 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.(4)
    
    Step-Up Rate Notes Due 2014: 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 4.86% is due (during 2007, the Bank made a cancellation in advance which was applied to the
last installment, which modified the original cash flow). The rate increased 1% on January 1 of each year, until
it reached 7% on January 1, 2008.(5)
    
    Subordinated Notes Due 2019: 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 2010 Notes and the 2014 Notes have been repaid in
full and, otherwise, in accordance with the terms of the agreements governing such notes.(6)
    
    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.  -151-




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##### Table of Contents



(7)
    
    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 loans, 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 accrued 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.(8)
    
    Borrowings to finance international trade operations to Bank customers.(9)
    
    Borrowing from Grupo Financiero Galicia to fund part of the subscription of the Banks shares issued as part
of its August 2007 capital increase. The principal of the loan amounts to US$80 million. Interest accrues at a
fixed rate of 7.75% per annum in the first year and in the second year it accrues at the 3-month Libor+350 b.p.
Principal will be amortized as follows: US$18 million are due in July 2008 and the remaining principal amount is
due in July 2009.(10)
    
    Corresponds to US$10.0 million of principal at incurrence accruing Libor+550 b.p., with interest payable
semiannually, in May and November of each year, and. principal amortizing in 9 semiannual installments, beginning
in May 2005 and ending in May 2009.(11)
    
    Includes premiums.(12)
    
    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 are of 15% of principal, and the
remaining 7 are of 10% of principal. Interest is payable annually in September of each year, beginning in
September 2003 and accrues at a fixed rate of 2% per annum.
    
    Floating Rate Negotiable Obligations Due 2011: principal amortizes in 3 annual installments in
December of each year, beginning in December 2009, the first 2 installments are of 30% of principal, and
the remaining one is 40% of principal. Interest is payable semiannually in June and December of each year,
beginning in December 2003, and accrues at Libor+300 b.p., and has a 7% cap.
 Off- Balance Sheet Contractual Obligations
 Operating Leases
  (In millions of Pesos)2009
    
    
    44.812010
    
    
    49.442011
    
    
    52.772012
    
    
    56.132013
    
    
    58.602014 and After
    
    
    60.25Total
    
    
    322.00
 Other
    -152-




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Off-Balance Sheet Arrangements
   Commitments to Extend Credit, Stand-By Letters of Credit and Guarantees Granted
      December 31, 2008(in millions of Pesos)Commitments to Extend Credit
    
    
    1,003.4Standby Letters of Credit
    
    
    157.1Guarantees Granted
    
    
    208.9Acceptances
    
    
    69.5
   -153-




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December 31, 2008(in millions of Pesos)Preferred Counter Guarantees
    
    
    34.7Other Counter Guarantees
    
    
    43.3
  Other
  December 31, 2008(in millions of Pesos)Checks Drawn on the Bank
    
    
    439.8Checks Drawn on Other Banks
    
    
    369.5Bills and Other Items for Collection
    
    
    1,322.1
   
 Critical Accounting Policies
  Allowance for Loan Losses
   -154-




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Other Receivables Resulting from Financial Brokerage and Miscellaneous Receivables
  Goodwill
  
 U.S. GAAP  Critical Accounting Policies
  Other-than-temporary impairment
   -155-




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Allowance for Loan Losses
         -156-




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##### Table of Contents



Fair Value Estimates
    Fair Value Hierarchy
   
    
    Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
    
    Level 2: inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the asset or
liability.Inputs include the following:
 (a)
    
    Quoted prices for similar assets or liabilities in active markets;(b)
    
    Quoted prices for identical or similar assets or liabilities in
non-active markets;(c)
    
    Pricing models whose inputs are observable for substantially the full
term of the asset or liability; and(d)
    
    Pricing models whose inputs are derived principally from or corroborated
by observable market data through correlation or other means.
 
    
    Level 3: inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
  -157-




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Determination of Fair Value
   Impairment of Assets Other Than Loans
      -158-




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Deferred Tax Asset Valuation Allowance
     Assets Not Recognized Under U.S. GAAP
   -159-




---



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amparo amparo
 Securitizations
     -160-




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Principal Trends
 Related to Argentina
    Related to Us
    -161-




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Item 5.B. Liquidity and Capital Resources
 
 Liquidity  Holding Company on an Individual Basis
  the
       -162-




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##### Table of Contents



Consolidated Cash Flows
 
    December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos)Funds (1) at the Beginning of the Fiscal Year
    
    Ps.
    3,766.2
    
    
    Ps.
    4,988.2
    
    
    Ps.
    2,046.8Funds Provided (Used) by Operating Activities
    
    
    888.6
    
    
    
    2,449.8
    
    
    
    3,548.1- Funds Provided by the Sale Of or Proceeds From Government Securities
    
    
    839.2
    
    
    
    1,589.5
    
    
    
    1,267.5- CER Adjustment
    
    
    (113.2
    )
    
    
    485.6
    
    
    
    891.9- Other
    
    
    162.6
    
    
    
    374.7
    
    
    
    1,388.7Funds Provided (Used) by Investing Activities
    
    
    1,057.1
    
    
    
    (1,715.7
    )
    
    
    689.3- Net Increase/Decrease in Loans
    
    
    1,501.3
    
    
    
    (1,410.8
    )
    
    
    894.1Loans to the Private Sector
    
    
    1,444.6
    
    
    
    (2,027.8
    )
    
    
    (27.3
    )Loans to the Public Sector
    
    
    56.7
    
    
    
    617.0
    
    
    
    921.4- Other
    
    
    (444.2
    )
    
    
    (304.9
    )
    
    
    (204.9
    )Funds Provided (Used) by Financing Activities
    
    
    (1,065.6
    )
    
    
    (2,003.9
    )
    
    
    (1,302.4
    )- Net Increase in Deposits
    
    
    (57.0
    )
    
    
    1,752.5
    
    
    
    1,894.3- Funds Provided/Used by Repurchases
    
    
    (376.6
    )
    
    
    229.9
    
    
    
    934.4- Funds Raised by the Regional Credit Card Companies
    
    
    269.5
    
    
    
    174.9
    
    
    
    418.0- Payments on Long-term Debt
    
    
    (743.5
    )
    
    
    (1,770.3
    )
    
    
    (656.5
    )- Payments on Long-term Debt by Galicia Uruguay
    
    
    0.0
    
    
    
    (53.2
    )
    
    
    (30.5
    )- Payments on Debt with the Argentine Central Bank
    
    
    1.0
    
    
    
    (2,713.0
    )
    
    
    (4,034.7
    )- Other
    
    
    (159.0
    )
    
    
    375.3
    
    
    
    172.6- Effect of Exchange Rate on Cash and Cash Equivalents
    
    
    149.2
    
    
    
    47.9
    
    
    
    6.4Funds at the End of the Fiscal Year
    
    Ps.
    4,795.4
    
    
    Ps.
    3,766.2
    
    
    Ps.
    4,988.2
 (1)
    
    Cash and cash equivalents.  -163-




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-164-




---



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Cash Flows from Operating Activities
     -165-




---



##### Table of Contents



Cash Flows from Investing Activities
 amparo
 amparo
 amparo
 Cash Flows from Financing Activities
  (i)
    
    a Ps. 474.0 million net decrease in long term credit facilities, mainly
corresponding to: (a) payments of interest on restructured debt for US$ 49 million, (b)
the payment
of two amortization installments on debt due 2010 for US$ 68.4 million, (c) the
prepayment of the Banks 2014 Notes for US$ 30.2 million, (d) a reduction of US$ 24.6
million of Banco Galicia Uruguays restructured debt structured as negotiable
obligations, (e) an increase of Ps. 153.6 million of IFC loans and (f) a Ps. 80.5
million net decrease in funds obtained by the regional credit card companies through
the issuance of negotiable obligations;
 (ii)
    
    a Ps. 376.6 million net decrease in repurchase transactions;
  -166-




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##### Table of Contents



(iii)
    
    a Ps. 156.6 million net decrease in short-term borrowings, mainly due to: (a)
the decrease in borrowings from local and foreign banks, for Ps. 81.0 million and (b)
the payment of US$ 24.0 million as part of a US$ 80 million loan granted to us in last
year; and(iv)
    
    a Ps. 57.0 million decrease in deposits, corresponding to: (a) a decrease of
Ps. 908.4 million in time deposits and (b) an increase of Ps. 868.1 million in demand
deposits.
  (i)
    
    a Ps. 1,823.5 million decrease in long-term liabilities, mainly corresponding
to: (a) payments of interest on restructured debt for Ps. 280.0 million, (b) principal
amortization of the 2007 Notes for Ps. 121.6 million, (c) payments by the regional
credit card companies on negotiable obligations for Ps. 151.0 million, (d) repurchases
of loans due 2010 and 2014 for Ps. 593.3 million, (e) payment of two amortization
installments on debt due 2010 for Ps. 277.9 million, (f) prepayment of 2010 Notes for
Ps. 155.9 million and of 2014 Notes for Ps. 119.1 million, (g) prepayment of 2014 Notes
triggered by the cash subscription for the Banks capital increase under our
restructured foreign debt agreements, for Ps. 71.5 million, and (i) settlement by
Galicia Uruguay of restructured debt, for Ps. 53.2 million, and(ii)
    
    a Ps. 2,332.5 million decrease of short-term borrowings, mainly due to the full
repayment of financial assistance from the Argentine Central Bank, for Ps. 2,713.0
million, partially offset by an increase in borrowings from local banks, for Ps. 102.9
million.
  (i)
    
    a Ps. 687.0 million decrease in long-term liabilities, mainly due to: (a)
payments of interest on restructured debt for Ps. 326.2 million, (b) principal
amortization on 2007 Notes for Ps. 118.5 million, (c) payments by the regional credit
card companies on negotiable obligations for Ps. 178.9 million, and (d) settlement by
Galicia Uruguay of restructured debt, for Ps. 30.5 million, and(ii)
    
    a Ps. 3,856.8 million decrease in short-term borrowings due to payments on
short-term borrowings, mainly financial assistance from the Argentine Central Bank, for
Ps. 2,665.0 million (including both scheduled payments and amounts settled in advance),
and on the advance from such entity for the acquisition of the Hedge Bond, for Ps.
1,369.7 million, net of increased borrowings (short-term call loans) from local banks
for Ps. 75.5 million and increased financing from the IFC, for Ps. 64.0 million.
  -167-




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##### Table of Contents



Banco Galicias Liquidity Management
 Banco Galicia Consolidated Liquidity Gaps
   As of December 31, 2008 (1)Less than one Year
    
    
    1  5 Years
    
    
    5  10 Years
    
    
    Over 10 Years
    
    
    Total(in millions of Pesos, except ratios)AssetsCash and Due from Banks
    
    
    1,368.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,368.4Argentine Central Bank  Escrow Accounts
    
    
    2,294.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,294.6Overnight Placements
    
    
    334.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    334.5Loans  Public Sector
    
    
    1,378.9
    
    
    
    3.8
    
    
    
    
    
    
    
    
    
    
    
    1,382.7Loans  Private Sector
    
    
    7,984.7
    
    
    
    1,530.7
    
    
    
    286.9
    
    
    
    22.1
    
    
    
    9,824.4Government Securities
    
    
    1,463.6
    
    
    
    1,544.9
    
    
    
    
    
    
    
    
    
    
    
    3,008.5Negotiable Obligations and Corporate Securities
    
    
    1.0
    
    
    
    37.2
    
    
    
    6.8
    
    
    
    0.4
    
    
    
    45.4Financial Trusts
    
    
    265.4
    
    
    
    339.2
    
    
    
    630.9
    
    
    
    0.3
    
    
    
    1,235.8Special Fund Former Almafuerte Bank
    
    
    230.5
    
    
    
    154.9
    
    
    
    
    
    
    
    
    
    
    
    385.4Assets under Financial Lease
    
    
    161.1
    
    
    
    259.4
    
    
    
    65.7
    
    
    
    6.5
    
    
    
    492.7Other  Argentine Central Bank
    
    
    359.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    359.4Total Assets
    
    
    15,842.1
    
    
    
    3,870.1
    
    
    
    990.3
    
    
    
    29.3
    
    
    
    20,731.8LiabilitiesSavings Accounts
    
    
    4,056.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,056.6Demand Deposits
    
    
    3,312.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,312.3Time Deposits
    
    
    6,587.6
    
    
    
    47.2
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    6,635.0Negotiable Obligations
    
    
    552.3
    
    
    
    1,284.0
    
    
    
    989.3
    
    
    
    
    
    
    
    2,825.6International Banks and Credit Agencies
    
    
    412.1
    
    
    
    282.9
    
    
    
    76.7
    
    
    
    
    
    
    
    771.7Domestic Banks
    
    
    123.6
    
    
    
    242.0
    
    
    
    28.7
    
    
    
    
    
    
    
    394.3Other Liabilities (1)
    
    
    2,392.9
    
    
    
    290.8
    
    
    
    
    
    
    
    
    
    
    
    2,683.7Total Liabilities
    
    
    17,437.4
    
    
    
    2,146.9
    
    
    
    1,094.8
    
    
    
    0.1
    
    
    
    20,679.2Asset / Liability Gap
    
    
    (1,595.3
    )
    
    
    1,723.2
    
    
    
    (104.5
    )
    
    
    29.2
    
    
    
    52.6Cumulative Gap
    
    
    (1,595.3
    )
    
    
    127.9
    
    
    
    23.4
    
    
    
    52.6
    
    
    
    52.6Ratio of Cumulative Gap to Cumulative Liabilities
    
    
    (9.2
    )%
    
    
    0.7
    %
    
    
    0.1
    %
    
    
    0.3
    %Ratio of Cumulative Gap to Total Liabilities
    
    
    (7.7
    )%
    
    
    0.6
    %
    
    
    0.1
    %
    
    
    0.3
    %
 Principal plus CER adjustment. Does not include interest.(1)
    
    Includes, mainly, debt with retailers due to credit card operations,
liabilities in connection with repurchase transactions, debt with domestic
credit agencies and collections for third parties. The Less than One Year
bucket also includes Ps. 5.8 million corresponding to the Banks foreign debt
not tendered by its holders in the exchange offered to restructure such foreign
debt, which was completed in May 2004.  -168-




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##### Table of Contents



Banco Galicia (Unconsolidated) Liquidity Management
   As of December 31, 2008(in millions of Pesos)Legal Requirement
    
    Ps.
    3,207.3Excess Liquidity
    
    
    1,497.9Total Liquidity (1)
    
    Ps.
    4,705.2
 (1)
    
    Excludes cash and due from banks of consolidated companies.    -169-




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##### Table of Contents



Capital
  As of December 31,2008
    
    
    2007
    
    
    2006(in millions of Pesos, except ratios, multiples and percentages)Shareholders Equity
    
    Ps.
    1,845.7
    
    
    Ps.
    1,654.5
    
    
    Ps.
    1,608.5Shareholders Equity as a Percentage of Total Assets
    
    
    7.46
    %
    
    
    7.25
    %
    
    
    6.81
    %Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    12.40
    x

    
    
    12.80
    x

    
    
    13.68
    xTangible Shareholders Equity (1) as a Percentage of Total Assets
    
    
    5.17
    %
    
    
    5.28
    %
    
    
    4.68
    %
 (1)
    
    Tangible shareholders equity represents shareholders equity minus intangible assets.  
 Capital Expenditures
   -170-




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Item 6. Directors, Senior Management and Employees
 
 Our Board of Directors
  Principal
    
    Member
    
    CurrentName
    
    Position
    
    Date of Birth
    
    Occupation
    
    Since
    
    Term EndsAntonio R. Garcés
    
    Chairman of the Board and Chief Executive Officer
    
    May 30, 1942
    
    Banker
    
    April 2002
    
    December 2010Federico Braun
    
    Vice Chairman
    
    February 4, 1948
    
    Businessman
    
    September 1999
    
    December 2010Abel Ayerza
    
    Director
    
    May 27, 1939
    
    Businessman
    
    September 1999
    
    December 2011Eduardo Escasany
    
    Director
    
    June 30, 1950
    
    Businessman
    
    April 2005
    
    December 2009Enrique Martin
    
    Director
    
    October 19, 1945
    
    Businessman
    
    April 2006
    
    December 2011Luis O. Oddone
    
    Director
    
    May 11, 1938
    
    Businessman
    
    April 2005
    
    December 2009Pedro A. Richards
    
    Director
    
    November 14, 1952
    
    Businessman
    
    April 2005
    
    December 2009Silvestre Vila Moret
    
    Director
    
    April 26, 1971
    
    Businessman
    
    June 2002
    
    December 2010Eduardo J. Zimmermann
    
    Director
    
    January 3, 1931
    
    Businessman
    
    April 2000
    
    December 2011Pablo Gutierrez
    
    Alternate Director
    
    December 9, 1959
    
    Banker
    
    April 2003
    
    December 2011María Ofelia Hordeñana de Escasany
    
    Alternate Director
    
    December 30, 1920
    
    Businesswoman
    
    April 2000
    
    December 2010Sergio Grinenco
    
    Alternate Director
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2011Alejandro Rojas Lagarde
    
    Alternate Director
    
    July 17, 1937
    
    Lawyer
    
    April 2000
    
    December 2010Luis S. Monsegur
    
    Alternate Director
    
    August 15, 1936
    
    Accountant
    
    April 2000
    
    December 2010
  Antonio Garcés:
 Federico Braun:
  -171-




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##### Table of Contents



Abel Ayerza:
 Eduardo Escasany:
 Enrique Martin:
 Luis Omar Oddone:
  -172-




---



##### Table of Contents



Pedro Alberto Richards:
 Silvestre Vila Moret
 Eduardo Jesús Zimmermann:
 Pablo Gutiérrez:
 María Ofelia Hordeñana de Escasany:
 Sergio Grinenco
  -173-




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##### Table of Contents



Alejandro María Rojas Lagarde:
 Luis Sila Monsegur:
    
 Functions of Our Board of Directors
  Audit Committee
  -174-




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##### Table of Contents



Disclosure Committee:
 
 Our Supervisory Committee
   Principal
    
    CurrentName
    
    Position
    
    Occupation
    
    Term EndsNorberto Corizzo
    
    Syndic
    
    Accountant
    
    December 2009Luis A. Díaz
    
    Syndic
    
    Accountant
    
    December 2009Adolfo Melián
    
    Syndic
    
    Lawyer
    
    December 2009Miguel Armando
    
    Alternate Syndic
    
    Lawyer
    
    December 2009Fernando Noetinger
    
    Alternate Syndic
    
    Lawyer
    
    December 2009Horacio Tedín
    
    Alternate Syndic
    
    Lawyer
    
    December 2009
  Norberto Corizzo:
  -175-




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##### Table of Contents



Luis Díaz:
 Adolfo Melián:
 Miguel Armando
 Fernando Noetinger
 Horacio Tedín
  -176-




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##### Table of Contents



Compensation of Our Directors
     
 Management of Grupo Financiero Galicia
      -177-




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##### Table of Contents



Board of Directors of Banco Galicia
  Date of
    
    Principal
    
    Member
    
    CurrentName
    
    Position
    
    Birth
    
    Occupation
    
    Since
    
    Term EndsAntonio R. Garcés
    
    Chairman of the Board
    
    May 30, 1942
    
    Banker
    
    September 2001
    
    December 2011Sergio Grinenco
    
    Vice Chairman and Chief Financial Officer
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2011Enrique M. Garda Olaciregui
    
    Secretary Director
    
    April 29, 1946
    
    Banker
    
    April 2003
    
    December 2010Daniel A. Llambías
    
    Director
    
    February 8, 1947
    
    Banker
    
    September 2001
    
    December 2009Luis M. Ribaya
    
    Director
    
    July 17, 1952
    
    Banker
    
    September 2001
    
    December 2010Guillermo J. Pando
    
    Director
    
    October 23, 1948
    
    Banker
    
    April 2003
    
    December 2010Pablo Gutierrez
    
    Director
    
    December 9, 1959
    
    Banker
    
    April 2005
    
    December 2011Eduardo O. Del Piano (1)
    
    Director
    
    May 12, 1938
    
    Accountant
    
    April 2004
    
    December 2009Pablo M. Garat (1)
    
    Director
    
    January 12, 1953
    
    Lawyer
    
    April 2004
    
    December 2009Enrique García Pinto
    
    Alternate Director
    
    August 10, 1948
    
    
    
    April 2009
    
    December 2011Raúl Héctor Seoane
    
    Alternate Director
    
    July 18, 1953
    
    Banker
    
    April 2005
    
    December 2011Juan C. Fossatti (2)
    
    Alternate Director
    
    September 11, 1955
    
    Lawyer
    
    June 2002
    
    December 2011Osvaldo H. Canova (2)
    
    Alternate Director
    
    December 8, 1934
    
    Accountant
    
    April 2004
    
    December 2009Julio P. Naveyra (2)
    
    Alternate Director
    
    March 24, 1941
    
    Accountant
    
    April 2004
    
    December 2009
 (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 reelected at the ordinary shareholders meeting held on April 26, 2007. The Board of Directors meeting held on April 27, 2007 reelected them as members of the Audit Committee. Messrs. Del Piano and Garat are also independent directors in accordance with the 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 Nasdaq rules.  -178-




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##### Table of Contents



Antonio Roberto Garcés
 Sergio Grinenco
 Enrique M. Garda Olaciregui
 Daniel Antonio Llambías
 Luis María Ribaya
 Guillermo Juan Pando
 Pablo Gutierrez
 Eduardo Oscar Del Piano
 Pablo María Garat
  -179-




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##### Table of Contents



Raúl Héctor Seoane
 Enrique García Pinto:
 Juan Carlos Fossatti
 Osvaldo Héctor Canova:
 Julio Pedro Naveyra:
 
 Functions of the Board of Directors of Banco Galicia
    -180-




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##### Table of Contents



Risk Management Committee:
 Credit Committee:
 Financial Risk Policy Committee:
 Systems Committee:
 Audit Committee:
  -181-




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##### Table of Contents



Committee for the Control and Prevention of Money Laundering and Financing of Terrorist Activities:
 Disclosure Committee:
 Human Resources Committee:
 Assets and Liabilities Committee (Alco):
  -182-




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##### Table of Contents



Customer Assistance Committee:
  
 Banco Galicias Executive Officers
  Division
    
    ManagerWholesale Banking
    
    To be appointedRetail Banking
    
    Daniel A. Llambías (in charge)Treasury
    
    To be appointedDistribution
    
    Juan SarquísCredit
    
    Juan Carlos LAfflittoCorporative Services
    
    Miguel Angel Peña
 Wholesale Banking
 Retail Banking
 Treasury
  -183-




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##### Table of Contents



Credit
 Corporate Services
 Distribution
   Juan H. Sarquis:
 Miguel Angel Peña: Asociación Argentina de Usuarios de la
Informática y las Comunicaciones
 Juan Carlos LAfflitto
 Omar Severini:
 Enrique Carlos Behrends:
  -184-




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##### Table of Contents



Diego Francisco Videla:
 Nicolás Dujovne
 
 Banco Galicias Supervisory Committee
   Year of
    
    
    
    Principal
    
    CurrentName
    
    Appointment
    
    Position
    
    Occupation
    
    Term EndsAdolfo H. Melián
    
    
    2008
    
    
    Syndic
    
    Lawyer
    
    December 31, 2009Norberto D. Corizzo
    
    
    2008
    
    
    Syndic
    
    Accountant
    
    December 31, 2009Luis A. Díaz
    
    
    2009
    
    
    Syndic
    
    Accountant
    
    December 31, 2009Fernando Noetinger
    
    
    2008
    
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2009Miguel N. Armando
    
    
    2008
    
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2009Ricardo A. Bertoglio
    
    
    2008
    
    
    Alternate Syndic
    
    Accountant
    
    December 31, 2009
  Ricardo Adolfo Bertoglio
  -185-




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##### Table of Contents



Compensation of Banco Galicias Directors and Officers
      
    
    total compensation, including salaries, variable compensation and other related
concepts for the directors that are also employees and for executive and supervision
functions they perform, and
 
    
    compensation for the independent directors.
   -186-




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##### Table of Contents



Employees
  As of December 31,2008
    
    
    2007
    
    
    2006Grupo Financiero Galicia S.A.
    
    
    9
    
    
    
    10
    
    
    
    8Banco de Galicia y Buenos Aires S.A.
    
    
    5,324
    
    
    
    5,164
    
    
    
    4,676Branches
    
    
    2,888
    
    
    
    2,604
    
    
    
    2,414Head Office
    
    
    2,436
    
    
    
    2,560
    
    
    
    2,262Galicia Uruguay
    
    
    10
    
    
    
    13
    
    
    
    13Regional Credit-Card Companies
    
    
    3,898
    
    
    
    3,769
    
    
    
    3,174Sudamericana Consolidated
    
    
    105
    
    
    
    96
    
    
    
    91Other Subsidiaries
    
    
    62
    
    
    
    51
    
    
    
    46Total
    
    
    9,408
    
    
    
    9,103
    
    
    
    8,008
     -187-




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##### 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 our 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).
  -188-




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##### Table of Contents



(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 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 Argentine law that the compensation of the chief executive officer and all
other executive officers 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, and
it is equally not customary business practice in Argentina, that companies have an audit
committee comprised solely of independent directors. 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 of
Directors 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.
  -189-




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##### Table of Contents



(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 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, a 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 S.A. (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 ADR 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.
   -190-




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##### Table of Contents



Share Ownership
  
 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)
    
    320,454,370 class B shares
    
    
    33.4
    
    
    
    13.5ANSES (2)
    
    253,609,737 class B shares
    
    
    26.4
    
    
    
    10.7EBA Holding Shareholders(3)
    
    113,939,764 class B shares
    
    
    11.9
    
    
    
    4.8Banco Santander (4)
    
    82,741,540 class B shares
    
    
    8.6
    
    
    
    3.5
 (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)
    
    ANSES holding is obtained through information supplied by Caja de Valores and information gathered from the ANSES. Said holding includes
64,204,420 shares in ADS.(3)
    
    No member holds more than 2.0% of the capital stock. Said holding includes 12,876,220 shares in the form of ADS.(4)
    
    Information is based on a Schedule 13 G filed by Banco Santander dated February 16, 2001. However, we have confirmed the amount with
information provided by third party companies. The address for Banco Santander is Plaza de Canalejas 28014, Madrid, Spain, and the country of
organization is the Kingdom of Spain. The holding is in ADRs.  -191-




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##### Table of Contents



Name
    
    Shares
    
    
    % of Shares
    
    
    % of Total VotesThe Bank of New York
    
    320,454,370 class B shares
    
    
    
    25.8
    
    
    
    13.5EBA Holding S.A.
    
    281,221,650 class A shares
    
    
    
    22.7
    
    
    
    59.4ANSES
    
    253,609,737 class B shares
    
    
    
    20.4
    
    
    
    10.7EBA Holding Shareholders
    
    113,939,764 class B shares
    
    
    
    9.2
    
    
    
    4.8Banco Santander
    
    82,741,540 class B shares
    
    
    
    6.7
    
    
    
    3.5
       -192-




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##### Table of Contents



Related Party Transactions
   Outstanding amountEntity
    
    Granted in
    
    Rate
    
    
    Original Amount
    
    
    December 31, 2008
    
    
    April 30, 2009%
    
    
    (in millions of Pesos)Net Investment S.A.
    
    Nov/Dec 2008
    
    
    0.0
    
    
    Ps.
    0.20
    
    
    Ps.
    0.20
    
    
    Ps.
    0.20GV Mandataria de Valores S.A.
    
    Nov/Dec 2008
    
    
    0.0
    
    
    Ps.
    0.57
    
    
    Ps.
    0.57
    
    
    Ps.
    0.57
   -193-




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##### Table of Contents



April 30, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006In millions of Pesos, except as notedAggregate Total Financial Exposure
    
    Ps.
    52.8
    
    
    Ps.
    74.9
    
    
    Ps.
    40.8
    
    
    Ps.
    19.3Number of Recipient Related Parties
    
    
    218
    
    
    
    221
    
    
    
    207
    
    
    
    205Individuals
    
    
    170
    
    
    
    174
    
    
    
    168
    
    
    
    163Companies
    
    
    48
    
    
    
    47
    
    
    
    39
    
    
    
    42Average Total Financial Exposure
    
    Ps.
    0.2
    
    
    Ps.
    0.3
    
    
    Ps.
    0.2
    
    
    Ps.
    0.1Single Largest Exposure
    
    Ps.
    8.8
    
    
    Ps.
    30.5
    
    
    Ps.
    11.6
    
    
    Ps.
    3.6
    -194-




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##### Table of Contents



Item 8. Financial Information
  
 Legal Proceedings
  Theseus S.A. y otra c/ Banco
de Galicia y Buenos Aires S.A. y Grupo Financiero Galicia S.A. s/ Ordinario
  Banco Galicia
  amparo
  -195-




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##### Table of Contents



Regional Credit Card Companies
  
 Dividend Policy and Dividends
 Dividend Policy
    -196-




---



##### Table of Contents



-197-




---



##### Table of Contents



In millions of PesosTo Legal Reserve
    
    
    39.0To Next Fiscal Year
    
    
    160.0
 amparo
   Dividends
     -198-




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##### Table of Contents



Significant Changes
 Grupo Financiero Galicia
     Banco Galicia
 Vencimiemto 2009-7%, Bono Pagaré G+580 Mega (tasa fija)
   -199-




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##### Table of Contents



Item 9. The Offer and Listing
 
 Shares and ADSs
    -200-




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##### Table of Contents



Grupo Financiero Galicia  Class B Shares Buenos Aires Stock Exchange (in Pesos)
 Average Daily VolumeHigh
    
    
    Low
    
    
    (in thousands of Class B shares)Calendar Year2004(1)
    
    
    2.61
    
    
    
    1.42
    
    
    
    5,571.52005
    
    
    2.81
    
    
    
    2.06
    
    
    
    4,784.62006
    
    
    2.86
    
    
    
    1.72
    
    
    
    2,045.32007
    
    
    3.37
    
    
    
    2.23
    
    
    
    1,924.82008
    
    
    2.36
    
    
    
    0.57
    
    
    
    3,549.4Two Most Recent Fiscal Years2007First Quarter
    
    
    3.37
    
    
    
    2.69
    
    
    
    2,762.6Second Quarter
    
    
    3.34
    
    
    
    2.98
    
    
    
    1,622.9Third Quarter
    
    
    3.11
    
    
    
    2.25
    
    
    
    2,000.7Fourth Quarter
    
    
    2.63
    
    
    
    2.23
    
    
    
    1,259.62008First Quarter
    
    
    2.36
    
    
    
    1.94
    
    
    
    1,290.8Second Quarter
    
    
    2.26
    
    
    
    1.57
    
    
    
    1,465.5Third Quarter
    
    
    1.63
    
    
    
    1.12
    
    
    
    1,642.9Fourth Quarter
    
    
    1.56
    
    
    
    0.57
    
    
    
    3,549.42009First Quarter
    
    
    0.88
    
    
    
    0.61
    
    
    
    1,497.9Second Quarter (through May 31, 2009)
    
    
    1.17
    
    
    
    0.70
    
    
    
    3,029.7Most Recent Six MonthsDecember 2008
    
    
    0.86
    
    
    
    0.63
    
    
    
    3,129.7January 2009
    
    
    0.88
    
    
    
    0.69
    
    
    
    1,637.3February 2009
    
    
    0.75
    
    
    
    0.66
    
    
    
    1,159.2March 2009
    
    
    0.70
    
    
    
    0.61
    
    
    
    1,681.0April 2009
    
    
    0.79
    
    
    
    0.70
    
    
    
    2,085.2May 2009
    
    
    1.17
    
    
    
    0.75
    
    
    
    3,974.1
 (1)
    
    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.   -201-




---



##### Table of Contents



Grupo
Financiero Galicia  Preferred Shares Outstanding from May 13, 2004 to May 11, 2005  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 MonthsDecember 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 Financiero Galicia  ADSs  Nasdaq Capital Market (in US$)
 Average Daily VolumeHigh
    
    
    Low
    
    
    (in thousands of ADRs)Calendar Year2004
    
    
    8.85
    
    
    
    4.65
    
    
    
    324.22005
    
    
    9.62
    
    
    
    6.87
    
    
    
    347.32006
    
    
    9.56
    
    
    
    5.61
    
    
    
    190.22007
    
    
    11.12
    
    
    
    6.98
    
    
    
    273.12008
    
    
    7.6
    
    
    
    1.45
    
    
    
    251.6Two Most Recent Fiscal Years2007First Quarter
    
    
    11.12
    
    
    
    8.69
    
    
    
    289.3Second Quarter
    
    
    11.00
    
    
    
    9.59
    
    
    
    239.0Third Quarter
    
    
    10.00
    
    
    
    7.15
    
    
    
    335.7Fourth Quarter
    
    
    8.25
    
    
    
    6.98
    
    
    
    229.42008First Quarter
    
    
    7.60
    
    
    
    6.14
    
    
    
    259.3Second Quarter
    
    
    7.07
    
    
    
    4.92
    
    
    
    235.2Third Quarter
    
    
    5.30
    
    
    
    3.63
    
    
    
    222.2Fourth Quarter
    
    
    5.00
    
    
    
    1.45
    
    
    
    290.12009First Quarter
    
    
    2.42
    
    
    
    1.56
    
    
    
    100.9Second Quarter (through May 31, 2009)
    
    
    3.10
    
    
    
    1.80
    
    
    
    216.9Most Recent Six MonthsDecember 2008
    
    
    2.33
    
    
    
    1.69
    
    
    
    160.8January 2009
    
    
    2.42
    
    
    
    1.77
    
    
    
    135.9February 2009
    
    
    2.12
    
    
    
    1.78
    
    
    
    105.0March 2009
    
    
    1.82
    
    
    
    1.56
    
    
    
    65.4April 2009
    
    
    2.06
    
    
    
    1.80
    
    
    
    171.9May 2009
    
    
    3.10
    
    
    
    1.90
    
    
    
    264.0
   -202-




---



##### 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 Year2004
    
    
    5.10
    
    
    
    3.30
    
    
    
    1.222005
    
    
    4.30
    
    
    
    3.60
    
    
    
    1.962006
    
    
    4.50
    
    
    
    3.04
    
    
    
    1.562007
    
    
    6.46
    
    
    
    4.25
    
    
    
    2.742008
    
    
    4.45
    
    
    
    2.15
    
    
    
    3.30Two Most Recent Fiscal Years2007First Quarter
    
    
    6.46
    
    
    
    4.25
    
    
    
    5.94Second Quarter
    
    
    5.80
    
    
    
    4.99
    
    
    
    2.40Third Quarter
    
    
    5.05
    
    
    
    4.45
    
    
    
    1.43Fourth Quarter
    
    
    4.70
    
    
    
    4.30
    
    
    
    1.102008First Quarter
    
    
    4.45
    
    
    
    4.08
    
    
    
    1.87Second Quarter
    
    
    4.45
    
    
    
    3.65
    
    
    
    4.59Third Quarter
    
    
    3.85
    
    
    
    3.69
    
    
    
    0.88Fourth Quarter
    
    
    3.85
    
    
    
    2.40
    
    
    
    4.192009First Quarter
    
    
    2.38
    
    
    
    2.17
    
    
    
    2.14Second Quarter (through May 31, 2009)
    
    
    2.30
    
    
    
    2.15
    
    
    
    7.40Most Recent Six MonthsDecember 2008
    
    
    2.56
    
    
    
    2.40
    
    
    
    4.19January 2009
    
    
    2.38
    
    
    
    2.30
    
    
    
    2.06February 2009
    
    
    2.30
    
    
    
    2.27
    
    
    
    2.13March 2009
    
    
    2.27
    
    
    
    2.17
    
    
    
    2.23April 2009
    
    
    2.20
    
    
    
    2.17
    
    
    
    15.02May 2009
    
    
    2.30
    
    
    
    2.15
    
    
    
    5.10
  
 Argentine Securities Market
  Sistema Integrado de Negociación Asistida por
Computación
  -203-




---



##### Table of Contents



Market Regulations
      -204-




---



##### Table of Contents



Item 10. Additional Information
 
 Description of Our Bylaws
 General
    
  -205-




---



##### Table of Contents



Outstanding Capital Stock
  As of December 31, 2009Shares
    
    Number of Shares
    
    
    % of Capital Stock
    
    
    % of Voting RightsClass A Shares
    
    
    281,221,650
    
    
    
    22.65
    
    
    
    59.42Class B Shares
    
    
    960,185,367
    
    
    
    77.35
    
    
    
    40.58Total
    
    
    1,241,407,017
    
    
    
    100.00
    
    
    
    100.00
 Registration and Transfer
   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.
  -206-




---



##### Table of Contents



Limited Liability of Shareholders
  Directors
       -207-




---



##### Table of Contents



Appointment of Directors and Syndics by Cumulative Voting
  Compensation of Directors
    Syndics
   -208-




---



##### Table of Contents



Shareholders Meetings
  
    
    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.
        -209-




---



##### Table of Contents



Dividends
      -210-




---



##### Table of Contents



Capital Increases and Reductions
  Preemptive Rights
      -211-




---



##### 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
   -212-




---



##### Table of Contents



Conflicts of Interest
  Redemption or Repurchase
 
  Liquidation
   -213-




---



##### Table of Contents



Other Provisions
  
 Exchange Controls
  
 Taxation
  Argentine Taxes
 Taxation of Dividends
     -214-




---



##### Table of Contents



Taxation of Capital Gains
 
   Procurador del Tesoro
 Transfer Taxes
  Tax on Minimum Notional Income
     -215-




---



##### Table of Contents



Personal Assets Tax
 st
 
  Other Taxes
   -216-




---



##### Table of Contents



Deposit and Withdrawal of Class B Shares in Exchange for ADSs
  United States Taxes
      -217-




---



##### Table of Contents



Each prospective purchaser should consult its own tax advisor with respect to the U.S. Federal,
state, local and foreign tax consequences of acquiring, owning or disposing of class B shares or
ADSs.
 Ownership of ADSs in General
  Taxation of Cash Dividends and Distribution of Stock
    -218-




---



##### Table of Contents



Taxation of Capital Gains
    -219-




---



##### Table of Contents



Passive Foreign Investment Company Considerations
     -220-




---



##### 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. YOU SHOULD CONSULT AN INDEPENDENT TAX
ADVISOR CONCERNING THE TAX CONSEQUENCES OF YOUR PARTICULAR SITUATION.
 
 Material Contracts
 Item 8.
  -221-




---



##### Table of Contents



Documents on Display
 http://www.sec.gov
 
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 
 General
   -222-




---



##### Table of Contents



Interest Rate Risk
     -223-




---



##### Table of Contents



Limit on the Net Financial Income for the First Year
    Net Portfolio
    
    Net Financial Income(1)(In millions of Pesos, except percentages)
    
    As of December 31, 2008
    
    
    As of December 31, 2007Change in Interest Rates in b.p.
    
    Variation
    
    
    % Change in the NFI
    
    
    Variation
    
    
    % Change in the NFI200
    
    
    (48.0
    )
    
    
    (4.59
    )%
    
    
    (57.6
    )
    
    
    (7.55
    )%150
    
    
    (36.0
    )
    
    
    (3.44
    )%
    
    
    (43.2
    )
    
    
    (5.66
    )%100
    
    
    (23.9
    )
    
    
    (2.29
    )%
    
    
    (28.8
    )
    
    
    (3.77
    )%50
    
    
    (12.0
    )
    
    
    (1.15
    )%
    
    
    (14.4
    )
    
    
    (1.89
    )%Static
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50)
    
    
    13.9
    
    
    
    1.33
    %
    
    
    9.8
    
    
    
    1.28
    %(100)
    
    
    23.7
    
    
    
    2.27
    %
    
    
    19.6
    
    
    
    2.57
    %(150)
    
    
    35.4
    
    
    
    3.39
    %
    
    
    26.1
    
    
    
    3.42
    %(200)
    
    
    47.2
    
    
    
    4.52
    %
    
    
    30.0
    
    
    
    3.93
    %
 Net Trading Portfolio
    
    Net Financial Income(1)(In millions of Pesos, except percentages)
    
    As of December 31, 2008
    
    
    As of December 31, 2007Change in Interest Rates in b.p.
    
    Variation
    
    
    % Change in the NFI
    
    
    Variation
    
    
    % Change in the NFI200
    
    
    11.0
    
    
    
    1.05
    %
    
    
    6.7
    
    
    
    0.88
    %150
    
    
    8.3
    
    
    
    0.79
    %
    
    
    5.0
    
    
    
    0.66
    %100
    
    
    5.5
    
    
    
    0.53
    %
    
    
    3.4
    
    
    
    0.45
    %50
    
    
    2.8
    
    
    
    0.27
    %
    
    
    1.7
    
    
    
    0.22
    %Static
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50)
    
    
    (2.7
    )
    
    
    (0.26
    )%
    
    
    (1.6
    )
    
    
    (0.21
    )%(100)
    
    
    (5.5
    )
    
    
    (0.53
    )%
    
    
    (3.3
    )
    
    
    (0.43
    )%(150)
    
    
    (8.2
    )
    
    
    (0.78
    )%
    
    
    (4.9
    )
    
    
    (0.64
    )%(200)
    
    
    (11.0
    )
    
    
    (1.05
    )%
    
    
    (6.6
    )
    
    
    (0.86
    )%
  -224-




---



##### Table of Contents



Net Non Trading Portfolio
    
    Net Financial Income(1)(In millions of Pesos, except percentages)
    
    As of December 31, 2008
    
    
    As of December 31, 2007Change in Interest Rates in b.p.
    
    Variation
    
    
    % Change in the NFI
    
    
    Variation
    
    
    % Change in the NFI200
    
    
    (59.0
    )
    
    
    (5.65
    )%
    
    
    (64.3
    )
    
    
    (8.43
    )%150
    
    
    (44.3
    )
    
    
    (4.24
    )%
    
    
    (48.2
    )
    
    
    (6.32
    )%100
    
    
    (29.4
    )
    
    
    (2.81
    )%
    
    
    (32.2
    )
    
    
    (4.22
    )%50
    
    
    (14.8
    )
    
    
    (1.41
    )%
    
    
    (16.1
    )
    
    
    (2.11
    )%Static
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50)
    
    
    16.6
    
    
    
    1.59
    %
    
    
    11.4
    
    
    
    1.49
    %(100)
    
    
    29.2
    
    
    
    2.79
    %
    
    
    22.9
    
    
    
    3.00
    %(150)
    
    
    43.6
    
    
    
    4.18
    %
    
    
    31.0
    
    
    
    4.06
    %(200)
    
    
    58.2
    
    
    
    5.57
    %
    
    
    36.6
    
    
    
    4.80
    %
 (1)
    
    Net interest of the first year. Net Present Value of Assets and Liabilities
    -225-




---



##### Table of Contents



Net Portfolio
    
    Net Fair Value(In millions of Pesos, except percentages)
    
    As of December 31, 2008
    
    
    As of December 31, 2007Change in Interest Rates in b.p.
    
    Variation
    
    
    % Change in the RPC
    
    
    Variation
    
    
    % Change in the RPC200
    
    
    (4.6
    )
    
    
    (0.18
    )%
    
    
    (47.8
    )
    
    
    (2.02
    )%150
    
    
    (3.6
    )
    
    
    (0.14
    )%
    
    
    (36.2
    )
    
    
    (1.53
    )%100
    
    
    (2.7
    )
    
    
    (0.11
    )%
    
    
    (24.5
    )
    
    
    (1.03
    )%50
    
    
    (1.2
    )
    
    
    (0.05
    )%
    
    
    (12.4
    )
    
    
    (0.52
    )%Static(50)
    
    
    1.3
    
    
    
    0.05
    %
    
    
    12.8
    
    
    
    0.54
    %(100)
    
    
    2.6
    
    
    
    0.10
    %
    
    
    26.1
    
    
    
    1.10
    %(150)
    
    
    4.0
    
    
    
    0.15
    %
    
    
    39.3
    
    
    
    1.66
    %(200)
    
    
    5.3
    
    
    
    0.21
    %
    
    
    53.3
    
    
    
    2.25
    %
 Net Trading Portfolio
    
    Net Fair Value(In millions of Pesos, except percentages)
    
    As of December 31, 2008
    
    
    As of December 31, 2007Change in Interest Rates in b.p.
    
    Variation
    
    
    % Change in the RPC
    
    
    Variation
    
    
    % Change in the RPC200
    
    
    (0.7
    )
    
    
    (0.03
    )%
    
    
    (3.8
    )
    
    
    (0.16
    )%150
    
    
    (0.5
    )
    
    
    (0.02
    )%
    
    
    (2.8
    )
    
    
    (0.12
    )%100
    
    
    (0.3
    )
    
    
    (0.01
    )%
    
    
    (1.9
    )
    
    
    (0.08
    )%50
    
    
    (0.2
    )
    
    
    (0.01
    )%
    
    
    (0.9
    )
    
    
    (0.04
    )%Static(50)
    
    
    0.2
    
    
    
    0.01
    %
    
    
    1.0
    
    
    
    0.04
    %(100)
    
    
    0.4
    
    
    
    0.02
    %
    
    
    1.9
    
    
    
    0.08
    %(150)
    
    
    0.5
    
    
    
    0.02
    %
    
    
    2.9
    
    
    
    0.12
    %(200)
    
    
    0.7
    
    
    
    0.03
    %
    
    
    3.8
    
    
    
    0.16
    %
 Net Non Trading Portfolio
    
    Net Fair Value(In millions of Pesos, except percentages)
    
    As of December 31, 2008
    
    
    As of December 31, 2007Change in Interest Rates in b.p.
    
    Variation
    
    
    % Change in the RPC
    
    
    Variation
    
    
    % Change in the RPC200
    
    
    (3.9
    )
    
    
    (0.15
    )%
    
    
    (44.0
    )
    
    
    (1.86
    )%150
    
    
    (3.1
    )
    
    
    (0.12
    )%
    
    
    (33.4
    )
    
    
    (1.41
    )%100
    
    
    (2.4
    )
    
    
    (0.10
    )%
    
    
    (22.6
    )
    
    
    (0.95
    )%50
    
    
    (1.0
    )
    
    
    (0.04
    )%
    
    
    (11.5
    )
    
    
    (0.49
    )%Static(50)
    
    
    1.1
    
    
    
    0.04
    %
    
    
    11.8
    
    
    
    0.50
    %(100)
    
    
    2.2
    
    
    
    0.09
    %
    
    
    24.2
    
    
    
    1.02
    %(150)
    
    
    3.5
    
    
    
    0.14
    %
    
    
    36.4
    
    
    
    1.54
    %(200)
    
    
    4.6
    
    
    
    0.18
    %
    
    
    49.5
    
    
    
    2.09
    %
  -226-




---



##### Table of Contents



Foreign Exchange Rate Risk
      Value of Foreign Currency Net Position as ofDecember 31, 2008Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(In millions of Pesos, except percentages)40%
    
    
    318.6
    
    
    
    91.0
    
    
    
    40.030%
    
    
    295.9
    
    
    
    68.3
    
    
    
    30.020%
    
    
    273.1
    
    
    
    45.5
    
    
    
    20.010%
    
    
    250.4
    
    
    
    22.8
    
    
    
    10.0Static
    
    
    227.6
    
    
    
    
    
    
    
    (10)%
    
    
    204.8
    
    
    
    (22.8
    )
    
    
    (10.0
    )(20)%
    
    
    182.1
    
    
    
    (45.5
    )
    
    
    (20.0
    )(30)%
    
    
    159.3
    
    
    
    (68.3
    )
    
    
    (30.0
    )(40)%
    
    
    136.6
    
    
    
    (91.0
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales of foreign currency without delivery of the underlying asset, registered in memorandum
accounts. In addition, as of December 31, 2008, the fair value of the Banks foreign currency derivatives amounted to Ps. 43.2 million.  -227-




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##### Table of Contents



Value of Foreign Currency Net Position as ofDecember 31, 2007Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(In millions of Pesos, except percentages)40%
    
    
    453.9
    
    
    
    129.7
    
    
    
    40.030%
    
    
    421.5
    
    
    
    97.3
    
    
    
    30.020%
    
    
    389.0
    
    
    
    64.8
    
    
    
    20.010%
    
    
    356.6
    
    
    
    32.4
    
    
    
    10.0Static
    
    
    324.2
    (2)
    
    
    
    
    
    
    (10)%
    
    
    291.8
    
    
    
    (32.4
    )
    
    
    (10.0
    )(20)%
    
    
    259.4
    
    
    
    (64.8
    )
    
    
    (20.0
    )(30)%
    
    
    226.9
    
    
    
    (97.3
    )
    
    
    (30.0
    )(40)%
    
    
    194.5
    
    
    
    (129.7
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales of foreign currency without delivery of the underlying asset, registered in memorandum accounts.
In addition, as of December 31, 2007, the fair value of the Banks foreign currency derivatives amounted to Ps. 7.7 million. Value of Foreign Currency Net Position as ofDecember 31, 2006Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(In millions of Pesos, except percentages)40%
    
    
    101.5
    
    
    
    29.0
    
    
    
    40.030%
    
    
    94.3
    
    
    
    21.8
    
    
    
    30.120%
    
    
    87.0
    
    
    
    14.5
    
    
    
    20.010%
    
    
    79.8
    
    
    
    7.3
    
    
    
    10.1Static
    
    
    72.5
    (2)
    
    
    
    
    
    
    (10)%
    
    
    65.3
    
    
    
    (7.2
    )
    
    
    (9.9
    )(20)%
    
    
    58.0
    
    
    
    (14.5
    )
    
    
    (20.0
    )(30)%
    
    
    50.8
    
    
    
    (21.7
    )
    
    
    (29.9
    )(40)%
    
    
    43.5
    
    
    
    (29.0
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales of foreign currency without delivery of the underlying asset, registered in memorandum accounts.
In addition, as of December 31, 2006, the fair value of the Banks foreign currency derivatives amounted to Ps. 2.6 million. 
 Currency Mismatches
    -228-




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##### Table of Contents



As of December 31, 2008Assets
    
    
    Liabilities
    
    
    Gap(In millions of Pesos)Financial Assets and Liabilities
    
    
    20,999.7
    
    
    
    21,209.6
    
    
    
    (209.9
    )Pesos  Adjusted by CER
    
    
    2,367.6
    
    
    
    50.3
    
    
    
    2,317.3Pesos  Unadjusted
    
    
    11,531.4
    
    
    
    13,896.4
    
    
    
    (2,365.0
    )Foreign Currency (1)
    
    
    7,100.7
    
    
    
    7,262.9
    
    
    
    (162.2
    )Other Assets and Liabilities
    
    
    3,440.1
    
    
    
    1,275.5
    
    
    
    2,164.6Total Gap
    
    
    24,439.8
    
    
    
    22,485.1
    
    
    
    1,954.7Adjusted for Forward Transactions Recorded in Memo AccountsFinancial Assets and Liabilities
    
    
    20,999.7
    
    
    
    21,209.6
    
    
    
    (209.9
    )Pesos  Adjusted by the CER
    
    
    2,367.6
    
    
    
    50.3
    
    
    
    2,317.3Pesos  Unadjusted, Including Shareholders Equity (2)
    
    
    8,336.7
    
    
    
    11,091.5
    
    
    
    (2,754.8
    )Foreign Currency (1)(2)
    
    
    10,295.4
    
    
    
    10,067.8
    
    
    
    227.6Other Assets and Liabilities
    
    
    3,440.1
    
    
    
    1,275.5
    
    
    
    2,164.6Total Adjusted Gap
    
    
    24,439.8
    
    
    
    22,485.1
    
    
    
    1,954.7
 (1)
    
    In Pesos, at an exchange rate of Ps. 3.4537 per US$ 1.0.(2)
    
    Adjusted for forward sales and purchases of foreign exchange made by the Bank and recorded off-balance sheet. Peso-denominated Assets and Liabilities Adjusted by CER
  Assets and Liabilities Denominated in Foreign Currency
   -229-




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##### Table of Contents



Non-Adjusted Peso-Denominated Assets and Liabilities
  Other Assets and Liabilities
 amparo
 
 Market Risk
  (i)
    
    A 95% degree of confidence.
 (ii)
    
    VaR estimates are made for holding periods of one day and n days, where n is defined
as the number of days necessary to liquidate the position in each security.
 (iii)
    
    In the case of new issuances, the available trading days are taken into consideration,
with a maximum; if there are not enough trading days or if there are no quotations, the
volatility of bonds from domestic issuers with similar risk and characteristics is used.
  -230-




---



##### Table of Contents



Item 12. Description of Securities Other Than Equity Securities
   -231-




---



##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
      -232-




---



##### Table of Contents



Item 16. [Reserved]
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
   -233-




---



##### Table of Contents



Item 16C. Principal Accountants Fees and Services
  2008
    
    
    2007(In thousands of Pesos)Audit Fees
    
    
    6,756
    
    
    
    4,788Audit Related Fees
    
    
    1,428
    
    
    
    1,819Tax Fees
    
    
    685
    
    
    
    280All Other Fees
    
    
    656
    
    
    
    434Total
    
    
    9,525
    
    
    
    7,321
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
   -234-




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##### Table of Contents



Audit Committee Pre-approval
  
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
   -235-




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##### Table of Contents



PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
 Report of the Independent Registered Public Accounting Firm as of and for the fiscal years ended December 31, 2008, 2007 and 2006.Consolidated Balance Sheets as of December 31, 2008 and 2007.Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006.Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006.Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2008, 2007 and 2006.Notes to the Consolidated Financial Statements.
  
 Item 19. Exhibits
 Exhibit
    
    Description1.1
    
    
    Unofficial English language translation of the Bylaws (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.**2.3
    
    
    Indenture, dated as of June 4, 2009, among Grupo Financiero Galicia, The Bank of New York
Mellon, Banco de Valores S.A. and The Bank of New York (Luxembourg) 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
    
    
    Form of Restructured Loan Facility (as evidenced by the Note Purchase Agreement, dated as of
April 27, 2004, among Banco de Galicia y Buenos Aires S.A., Barclays Bank PLC, the holders
party thereto and Deutsche Bank Trust Company Americas).**4.3
    
    
    Form of First Amendment and Waiver to Restructured Loan Facility (as evidenced by the First
Amendment and Waiver to the 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). ****
  -236-




---



##### Table of Contents



Exhibit
    
    Description4.4
    
    
    Form of Second Amendment to Restructured Loan Facility (as evidenced by the Second Amendment
to the Note Purchase Agreement, dated as of August 25, 2006, among Banco de Galicia y Buenos
Aires S.A., the holders party thereto and Deutsche Bank Trust Company
Americas).*****4.5
    
    
    Form of Third Amendment to Restructured Loan Facility (as evidenced by the Third Amendment to
the Note Purchase Agreement, dated as of December 28, 2007, among Banco de Galicia y Buenos
Aires S.A., the holders party thereto and Deutsche Bank Trust Company
Americas).******4.6
    
    
    Loan Agreement, dated as of July 24, 2007, between Grupo Financiero Galicia S.A. and Merrill
Lynch International.******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.11.1
    
    
    Code of Ethics.11.2
    
    
    Code of Corporate Governance Good Practices.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.*****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2006.******
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2007.  -237-




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##### Table of Contents



SIGNATURE
  GRUPO FINANCIERO GALICIA S.A.By:
    
    /s/ Antonio GarcésName:
    
    Antonio GarcésTitle:
    
    Chairman of the Board and Chief Executive Officer
   -238-




---



##### 



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, 2008 and 2007
    
    
    F-4Consolidated Statements of Income for the fiscal years ended December 31, 2008, 2007 and 2006
    
    
    F-7Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2008,
2007 and 2006
    
    
    F-9Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended
December 31, 2008, 2007 and 2006
    
    
    F-11Notes to the Consolidated Financial Statements
    
    
    F-12
   F-1




---



##### Table of Contents



Report of the Independent Registered Public Accounting Firm
      F-2




---



##### Table of Contents



F-3




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Balance Sheets
 As of December 31, 2008 and 2007
  December 31,2008
    
    
    2007ASSETSA. Cash and due from banksCash
    
    
    986,687
    
    
    
    743,185Financial institutions and correspondents
    
    
    2,418,446
    
    
    
    2,216,828Argentine Central Bank
    
    
    2,036,164
    
    
    
    1,648,864Other local financial institutions
    
    
    16,228
    
    
    
    26,425Foreign
    
    
    366,054
    
    
    
    541,539Ps.
    3,405,133
    
    
    Ps.
    2,960,013B. Government and corporate securitiesHoldings of investment account securities
    
    
    548,692
    
    
    
    1,303,437Holdings of trading securities
    
    
    235,614
    
    
    
    38,991Government securities from repo transactions with the Argentine
Central Bank
    
    
    127,532
    
    
    
    Government securities without quotation
    
    
    69,772
    
    
    
    1,872Securities issued by the Argentine Central Bank
    
    
    550,204
    
    
    
    348,757Investments in quoted corporate securities
    
    
    56
    
    
    
    973Ps.
    1,531,870
    
    
    Ps.
    1,694,030C. LoansTo the non-financial public sector
    
    
    1,373,642
    
    
    
    1,265,466To the financial sector
    
    
    148,115
    
    
    
    110,028Interbank loans  (call money loans granted)
    
    
    40,200
    
    
    
    2,906Other loans to domestic financial institutions
    
    
    65,662
    
    
    
    64,895Accrued interest, adjustments and exchange rate differences
receivable
    
    
    42,253
    
    
    
    42,227To the non-financial private sector and residents abroad
    
    
    10,779,630
    
    
    
    10,654,142Overdrafts
    
    
    594,365
    
    
    
    792,148Promissory notes
    
    
    2,116,303
    
    
    
    2,911,170Mortgage loans
    
    
    1,026,754
    
    
    
    945,088Pledge loans
    
    
    80,991
    
    
    
    94,520Personal loans
    
    
    1,217,645
    
    
    
    977,976Credit card loans
    
    
    4,378,366
    
    
    
    3,630,133Other
    
    
    1,217,984
    
    
    
    1,168,684Accrued Interest, adjustments and quotation differences receivable
    
    
    185,762
    
    
    
    177,027Documented interest
    
    
    (38,468
    )
    
    
    (42,462
    )Unallocated collections
    
    
    (72
    )
    
    
    (142
    )Allowances
    
    
    (526,801
    )
    
    
    (428,607
    )Ps.
    11,774,586
    
    
    Ps.
    11,601,029D. Other receivables resulting from financial brokerageArgentine Central Bank
    
    
    627,212
    
    
    
    192,911Amounts receivable for spot and forward sales to be settled
    
    
    4,031
    
    
    
    31,090Securities receivable under spot and forward purchases to be settled
    
    
    1,314,589
    
    
    
    1,517,600Negotiable obligations without quotation
    
    
    4,951
    
    
    
    20,868Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    10,445
    
    
    
    1,087Other
    
    
    2,174,794
    
    
    
    1,852,584Allowances
    
    
    (12,252
    )
    
    
    (19,170
    )Ps.
    4,123,770
    
    
    Ps.
    3,596,970
 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, 2008 and 2007
 December 31,2008
    
    
    2007ASSETS (Continued)E. Assets under financial leasesAssets under financial leases
    
    
    449,936
    
    
    
    359,552Allowances
    
    
    (4,699
    )
    
    
    (3,768
    )Ps.
    445,237
    
    
    Ps.
    355,784F. Equity investmentsIn financial institutions
    
    
    1,712
    
    
    
    3,138Other
    
    
    50,018
    
    
    
    82,009Allowances
    
    
    (3,211
    )
    
    
    (41,357
    )Ps.
    48,519
    
    
    Ps.
    43,790G. Miscellaneous receivablesReceivables for assets sold
    
    
    18,031
    
    
    
    15,980Tax on minimum presumed income  Tax credit
    
    
    284,421
    
    
    
    258,515Other
    
    
    1,623,860
    
    
    
    1,056,970Accrued interest on receivables for assets sold
    
    
    108
    
    
    
    98Other accrued interest and adjustments receivable
    
    
    86
    
    
    
    79Allowances
    
    
    (81,298
    )
    
    
    (85,588
    )Ps.
    1,845,208
    
    
    Ps.
    1,246,054H. Bank premises and equipment
    
    Ps.
    871,269
    
    
    Ps.
    743,132I. Miscellaneous assets
    
    Ps.
    78,623
    
    
    Ps.
    112,575J. Intangible assetsGoodwill
    
    
    37,804
    
    
    
    58,266Organization and development expenses
    
    
    529,175
    
    
    
    390,052Ps.
    566,979
    
    
    Ps.
    448,318K. Unallocated items
    
    
    5,744
    
    
    
    9,161L. Other Assets
    
    
    38,852
    
    
    
    17,882Total Assets
    
    Ps.
    24,735,790
    
    
    Ps.
    22,828,738
 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 Balance Sheets  Continued
As of December 31, 2008 and 2007
 December 31,2008
    
    
    2007LIABILITIES AND SHAREHOLDERS EQUITYM. DepositsNon-financial public sector
    
    Ps.
    1,290,958
    
    
    Ps.
    193,911Financial sector
    
    
    169,302
    
    
    
    167,206Non-financial private sector and residents abroad
    
    
    12,595,874
    
    
    
    12,804,504Current accounts
    
    
    3,002,003
    
    
    
    2,629,925Saving accounts
    
    
    3,843,596
    
    
    
    3,228,954Time deposits
    
    
    5,411,178
    
    
    
    6,543,910Investment accounts
    
    
    206
    
    
    
    199Other
    
    
    261,927
    
    
    
    291,103Accrued interest and quotation differences payable
    
    
    76,964
    
    
    
    110,413Ps.
    14,056,134
    
    
    Ps.
    13,165,621N. Other liabilities resulting from financial brokerageArgentine Central Bank
    
    
    1,682
    
    
    
    698Other
    
    
    1,682
    
    
    
    698Banks and international entities
    
    
    941,483
    
    
    
    717,316Unsubordinated negotiable obligations
    
    
    1,886,138
    
    
    
    2,190,231Amounts payable for spot and forward purchases to be settled
    
    
    1,014,120
    
    
    
    1,273,308Securities to be delivered under spot and forward sales to be settled
    
    
    363,640
    
    
    
    30,734Loans from domestic financial institutions
    
    
    248,550
    
    
    
    213,039-Interbank loans (call money loans received)
    
    
    
    
    
    
    12,501-Other loans from domestic financial institutions
    
    
    245,630
    
    
    
    199,191-Accrued interest payable
    
    
    2,920
    
    
    
    1,347Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    1,270
    
    
    
    Other
    
    
    2,207,308
    
    
    
    1,855,825Accrued interest and quotation differences payable
    
    
    75,261
    
    
    
    81,803Ps.
    6,739,452
    
    
    Ps.
    6,362,954O. Miscellaneous liabilitiesDividends payable
    
    
    16,147
    
    
    
    40Directors and Syndics fees
    
    
    4,946
    
    
    
    4,343Other
    
    
    457,627
    
    
    
    320,200Ps.
    478,720
    
    
    Ps.
    324,583P. Provisions
    
    
    257,333
    
    
    
    170,083Q. Subordinated negotiable obligations
    
    
    986,969
    
    
    
    855,258R. Unallocated items
    
    
    12,627
    
    
    
    6,347S. Other Liabilities
    
    
    112,606
    
    
    
    71,800T. Minority interests
    
    
    246,204
    
    
    
    217,587Total Liabilities
    
    Ps.
    22,890,045
    
    
    Ps.
    21,174,233SHAREHOLDERS EQUITY
    
    
    1,845,745
    
    
    
    1,654,505Total Liabilities and Shareholders Equity
    
    Ps.
    24,735,790
    
    
    Ps.
    22,828,738
 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
 For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007
    
    
    2006A. Financial incomeInterest on cash and due from banks
    
    Ps.
    8,765
    
    
    Ps.
    14,895
    
    
    Ps.
    874Interest on loans granted to the financial sector
    
    
    3,896
    
    
    
    3,345
    
    
    
    2,869Interest on overdrafts
    
    
    182,804
    
    
    
    111,299
    
    
    
    69,670Interest on promissory notes
    
    
    440,490
    
    
    
    294,154
    
    
    
    200,564Interest on mortgage loans
    
    
    126,543
    
    
    
    98,364
    
    
    
    69,967Interest on pledge loans
    
    
    14,998
    
    
    
    12,408
    
    
    
    12,146Interest on credit card loans
    
    
    656,477
    
    
    
    431,790
    
    
    
    281,116Interest on other loans
    
    
    317,501
    
    
    
    202,771
    
    
    
    105,813Interest on other receivables resulting from financial brokerage
    
    
    33,994
    
    
    
    36,231
    
    
    
    171,878Net income from government and corporate securities
    
    
    238,098
    
    
    
    241,303
    
    
    
    235,272Net income from secured loans  Decree No. 1387/01
    
    
    59,851
    
    
    
    79,709
    
    
    
    194,777Consumer price index adjustment (CER)
    
    
    123,948
    
    
    
    205,145
    
    
    
    736,029Exchange rate differences on gold and foreign currency
    
    
    77,898
    
    
    
    87,957
    
    
    
    76,154Other
    
    
    274,088
    
    
    
    178,515
    
    
    
    72,694Ps.
    2,559,351
    
    
    Ps.
    1,997,886
    
    
    Ps.
    2,229,823B. Financial expensesInterest on current account deposits
    
    
    21,641
    
    
    
    16,377
    
    
    
    21,043Interest on savings account deposits
    
    
    3,446
    
    
    
    4,540
    
    
    
    4,105Interest on time deposits
    
    
    757,699
    
    
    
    521,096
    
    
    
    313,036Interest on interbank loans received (call money loans)
    
    
    5,696
    
    
    
    3,918
    
    
    
    3,517Interest on financing from the financial sector
    
    
    774
    
    
    
    1,946
    
    
    
    3,462Interest on other liabilities resulting from financial brokerage
    
    
    297,026
    
    
    
    313,586
    
    
    
    317,459Interest on subordinated obligations
    
    
    101,424
    
    
    
    94,660
    
    
    
    76,480Other interest
    
    
    3,313
    
    
    
    45,848
    
    
    
    186,578Consumer price index adjustment
    
    
    9,249
    
    
    
    66,984
    
    
    
    697,694Contributions made to Deposit Insurance Fund
    
    
    23,555
    
    
    
    20,378
    
    
    
    15,771Other
    
    
    197,196
    
    
    
    157,367
    
    
    
    212,454Ps.
    1,421,019
    
    
    Ps.
    1,246,700
    
    
    Ps.
    1,851,599C. Gross brokerage margin
    
    
    1,138,332
    
    
    
    751,186
    
    
    
    378,224Loan loss provisions
    
    
    395,389
    
    
    
    255,502
    
    
    
    110,869D. Income from servicesIn relation to lending transactions
    
    
    379,752
    
    
    
    334,730
    
    
    
    247,501In relation to borrowing transactions
    
    
    370,181
    
    
    
    293,308
    
    
    
    220,543Other commissions
    
    
    22,415
    
    
    
    18,731
    
    
    
    17,056Other
    
    
    799,800
    
    
    
    523,931
    
    
    
    367,993Ps.
    1,572,148
    
    
    Ps.
    1,170,700
    
    
    Ps.
    853,093E. Expenses for servicesCommissions
    
    
    164,780
    
    
    
    117,708
    
    
    
    80,801Other
    
    
    219,500
    
    
    
    139,896
    
    
    
    100,291Ps.
    384,280
    
    
    Ps.
    257,604
    
    
    Ps.
    181,092
 The accompanying Notes are an integral part of these consolidated financial statements
  F-7




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Statements of Income  Continued
For the fiscal years ended December 31, 2008, 2007 and 2006
 December 31,2008
    
    
    2007
    
    
    2006F. Administrative expensesPersonnel expenses
    
    
    966,213
    
    
    
    670,587
    
    
    
    506,632Directors and syndics fees
    
    
    8,153
    
    
    
    6,415
    
    
    
    5,989Other fees
    
    
    56,938
    
    
    
    42,939
    
    
    
    36,148Advertising and publicity
    
    
    146,496
    
    
    
    113,809
    
    
    
    84,507Taxes
    
    
    103,998
    
    
    
    70,393
    
    
    
    50,469Depreciation of bank premises and equipment
    
    
    61,910
    
    
    
    49,952
    
    
    
    37,095Amortization of organization expenses
    
    
    37,950
    
    
    
    35,640
    
    
    
    34,904Other operating expenses
    
    
    249,219
    
    
    
    190,616
    
    
    
    145,017Other
    
    
    150,201
    
    
    
    105,973
    
    
    
    73,803Ps.
    1,781,078
    
    
    Ps.
    1,286,324
    
    
    Ps.
    974,564Net Income / (Loss) from financial brokerage
    
    Ps.
    149,733
    
    
    Ps.
    122,456
    
    
    Ps.
    (35,208
    )G. Minority interests result
    
    Ps.
    (35,812
    )
    
    Ps.
    (32,119
    )
    
    Ps.
    (19,016
    )H. Miscellaneous incomeNet lncome from equity investments
    
    
    56,764
    
    
    
    1,957
    
    
    
    Default interests
    
    
    4,429
    
    
    
    1,988
    
    
    
    1,062Loans recovered and allowances reversed
    
    
    103,992
    
    
    
    95,969
    
    
    
    142,885Other
    
    
    333,646
    
    
    
    173,581
    
    
    
    151,176Consumer price index adjustment (CER)
    
    
    28
    
    
    
    8
    
    
    
    105Ps.
    498,859
    
    
    Ps.
    273,503
    
    
    Ps.
    295,228I. Miscellaneous lossesNet loss on long-term investments
    
    
    
    
    
    
    
    
    
    
    14,362Default interests and charges in favor of the Argentine Central Bank
    
    
    17
    
    
    
    15
    
    
    
    571Loan loss provisions for miscellaneous receivables and other provisions
    
    
    161,703
    
    
    
    48,151
    
    
    
    62,424Amortization of differences arising from court resolutions
    
    
    39,545
    
    
    
    108,667
    
    
    
    Depreciation and losses from miscellaneous assets
    
    
    1,405
    
    
    
    627
    
    
    
    923Amortization of goodwill
    
    
    20,462
    
    
    
    19,687
    
    
    
    20,478Other
    
    
    138,784
    
    
    
    69,155
    
    
    
    66,922Consumer price index adjustment
    
    
    31
    
    
    
    35
    
    
    
    Ps.
    361,947
    
    
    Ps.
    246,337
    
    
    Ps.
    165,680Net Income before tax
    
    
    250,833
    
    
    
    117,503
    
    
    
    75,324J. Income tax
    
    Ps.
    74,014
    
    
    Ps.
    71,466
    
    
    Ps.
    94,238Net Income / (Loss) for the fiscal year
    
    Ps.
    176,819
    
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )Net Income / (Loss) per common share (basic and assuming full dilution)
    
    
    0.142
    
    
    
    0.037
    
    
    
    (0.015
    )
 The accompanying Notes are an integral part of these consolidated financial statements
  F-8




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007
    
    
    2006Cash Flow from operating activities:Net Income / (Loss) for the year
    
    Ps.
    176,819
    
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )Adjustments to reconcile net income to net cash from
Operating activities:Depreciation of bank premises and equipment and
Miscellaneous assets
    
    
    63,309
    
    
    
    50,570
    
    
    
    37,550Amortization of intangible assets
    
    
    97,957
    
    
    
    163,994
    
    
    
    55,382Increase in allowances for loan and other losses, net of reversals
    
    
    335,658
    
    
    
    269,201
    
    
    
    80,863Equity loss / (gain) of unconsolidated subsidiaries
    
    
    (56,764
    )
    
    
    (1,957
    )
    
    
    14,362Gain on sale of premises and equipment
    
    
    (695
    )
    
    
    (1,472
    )
    
    
    (1,261
    )Consumer price index adjustment (CER/CVS)
    
    
    (113,226
    )
    
    
    485,628
    
    
    
    891,866Unrealized foreign exchange (loss) / gain
    
    
    (229,426
    )
    
    
    37,057
    
    
    
    (5,914
    )Decrease in government securities
    
    
    839,152
    
    
    
    1,589,476
    
    
    
    1,267,505Decrease / (Increase) in other assets
    
    
    (122,938
    )
    
    
    (27,441
    )
    
    
    1,064,407Increase / (Decrease) in other liabilities
    
    
    (101,284
    )
    
    
    (161,327
    )
    
    
    162,287Net cash provided by operating activities
    
    Ps.
    888,562
    
    
    Ps.
    2,449,766
    
    
    Ps.
    3,548,133Cash Flow from investing activities:(Increase) / Decrease in loans, net
    
    
    1,501,309
    
    
    
    (1,410,830
    )
    
    
    894,129Sales of investments in other companies
    
    
    10,421
    
    
    
    
    
    
    
    13,774Increase in equity investments in other companies
    
    
    (5,063
    )
    
    
    (1,698
    )
    
    
    Increase in deposits at the Argentine Central Bank
    
    
    (76,838
    )
    
    
    (45,941
    )
    
    
    (36,169
    )Additions to bank premises and equipment, miscellaneous,
and intangible assets
    
    
    (403,085
    )
    
    
    (287,620
    )
    
    
    (196,313
    )Proceeds from sales of premises and equipment
    
    
    30,337
    
    
    
    30,381
    
    
    
    13,838Net cash (used in) / provided by investing activities
    
    Ps.
    1,057,081
    
    
    Ps.
    (1,715,708
    )
    
    Ps.
    689,259Cash Flow from financing activities:Capital Increase in subsidiaries from minority shareholders
    
    
    
    
    
    
    299
    
    
    
    Cash dividends paid in minority interests
    
    
    (1,404
    )
    
    
    (5,517
    )
    
    
    (5,280
    )Increase / (Decrease) in deposits, net
    
    
    (57,029
    )
    
    
    1,752,527
    
    
    
    1,894,251Borrowings under credit facilities  long-term
    
    
    269,498
    
    
    
    369,668
    
    
    
    418,018Payments on credit facilities  long-term
    
    
    (743,476
    )
    
    
    (1,823,464
    )
    
    
    (687,024
    )Decrease in short-term borrowings, net
    
    
    (156,579
    )
    
    
    (2,527,284
    )
    
    
    (3,856,813
    )Increase / (Decrease) in repurchase agreements
    
    
    (376,645
    )
    
    
    229,886
    
    
    
    934,408Net cash used in financing activities
    
    Ps.
    (1,065,635
    )
    
    Ps.
    (2,003,885
    )
    
    Ps.
    (1,302,440
    )
 The accompanying Notes are an integral part of these consolidated financial statements
  F-9




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Statements of Cash Flows  Continued
For the fiscal years ended December 31, 2008, 2007 and 2006
 December 31,2008
    
    
    2007
    
    
    2006Increase / (Decrease) in cash and cash equivalents, net
    
    Ps.
    880,008
    
    
    Ps.
    (1,269,827
    )
    
    Ps.
    2,934,952Cash and cash equivalents at the beginning of the year
    
    
    3,766,207
    
    
    
    4,988,198
    
    
    
    2,046,836Effect of exchange rate changes on cash and cash equivalents
    
    
    149,168
    
    
    
    47,836
    
    
    
    6,410Cash and cash equivalents at the end of the year
    
    Ps.
    4,795,383
    
    
    Ps.
    3,766,207
    
    
    Ps.
    4,988,198Supplemental disclosures relative to cash flows:Interest paid
    
    Ps.
    1,227,389
    
    
    Ps.
    951,134
    
    
    Ps.
    734,756Income tax paid
    
    Ps.
    64,914
    
    
    Ps.
    32,996
    
    
    Ps.
    20,074Minimum Presumed Income Tax (*)
    
    Ps.
    19,767
    
    
    Ps.
    31,353
    
    
    Ps.
    30,031Non-Cash Investing and financing activities  Trust Interest
    
    Ps.
    159,376
    
    
    Ps.
    98,121
    
    
    Ps.
    99,573
 (*)
    
    The MPIT is calculated based on assets and can be credited against future income
tax. The accompanying Notes are an integral part of these consolidated financial statements
  F-10




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Changes in Shareholders Equity
 For the years ended December 31, 2008, 2007 and 2006
  Inflation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Accumulatedadjustments to
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    deficit) /
    
    
    TotalCapital
    
    
    Paid in
    
    
    Capital Stock and
    
    
    Treasury
    
    
    Profit reserves
    
    
    Retained
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Paid in Capital
    
    
    Stock
    
    
    Legal
    
    
    Other
    
    
    earnings
    
    
    EquityBalance at December 31,
2005
    
    Ps.
    1,241,407
    
    
    
    
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    107,238
    
    
    Ps.
    1,626,776Distribution of retained
earnings by the
shareholders meeting on
April 27,2006Legal Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,855
    
    
    
    
    
    
    
    (34,855
    )
    
    
    Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,383
    
    
    
    (72,383
    )
    
    
    Purchase of treasury stock
    
    
    (1,614
    )
    
    
    
    
    
    
    (362
    )
    
    
    1,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sales of treasury stock
    
    
    1,614
    
    
    
    606
    
    
    
    362
    
    
    
    (1,976
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,914
    )
    
    
    (18,914
    )Balance at December 31,
2006
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    34,855
    
    
    Ps.
    72,383
    
    
    Ps.
    (18,914
    )
    
    Ps.
    1,608,468Absorption approved by
the shareholders meeting
on April 26.2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,914
    )
    
    
    18,914
    
    
    
    Net Income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,037
    
    
    
    46,037Balance at December 31,
2007
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    34,855
    
    
    Ps.
    53,469
    
    
    Ps.
    46,037
    
    
    Ps.
    1,654,505Distribution of retained
earnings by the
shareholders meeting on
April 29,2008Legal Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,302
    
    
    
    
    
    
    
    (2,302
    )
    
    
    Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,735
    
    
    
    (43,735
    )
    
    
    Valuation Differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,421
    
    
    
    
    
    
    
    14,421Net Income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176,819
    
    
    
    176,819Balance at December 31,
2008
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    37,157
    
    
    Ps.
    111,625
    
    
    
    176,819
    
    
    
    1,845,745
 The accompanying Notes are an integral part of these consolidated financial statements
  F-11




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Notes to the Consolidated Financial Statements
 For the fiscal years ended December 31, 2008, 2007 and 2006
  1. Basis of Presentation.
    Issuing Company
    
    December 31, 2008
    
    
    December 31, 2007Grupo Financiero Galicia S.A.Net Investment S.A.
    
    
    99.33
    %
    
    
    99.33
    %Galicia Warrants S.A.
    
    
    99.33
    %
    
    
    99.33
    %Sudamericana Holding S.A.
    
    
    99.33
    %
    
    
    99.33
    %Galval Agente de Valores S.A.
    
    
    100.00
    %
    
    
    100.00
    %GV Mandataria de Valores S.A.
    
    
    100.00
    %
    
    
    Banco de Galicia y Buenos Aires S.A.
    
    
    94.66
    %
    
    
    94.66
    %Banco Galicia Uruguay S.A.
    
    
    94.66
    %
    
    
    94.66
    %Tarjetas Regionales S.A.
    
    
    94.66
    %
    
    
    94.66
    %Galicia Administradora de Fondos S.A.
Sociedad Gerente de Fondos Comunes de Inversión
    
    
    94.66
    %
    
    
    94.66
    %Galicia (Cayman) Ltd.
    
    
    94.66
    %
    
    
    94.66
    %Galicia Pension Fund S.A.
    
    
    94.66
    %
    
    
    94.66
    %Tarjetas del Mar S.A.
    
    
    94.65
    %
    
    
    94.65
    %Galicia Valores S.A. Sociedad de Bolsa
    
    
    94.65
    %
    
    
    94.65
    %Galicia Factoring y Leasing S.A.
    
    
    94.64
    %
    
    
    94.64
    %Tarjeta Naranja S.A.
    
    
    75.73
    %
    
    
    75.73
    %Cobranzas Regionales S.A.
    
    
    73.40
    %
    
    
    73.40
    %Tarjetas Cuyanas S.A.
    
    
    56.80
    %
    
    
    56.80
    %Tarjeta Naranja Dominicana S.A.
    
    
    37.86
    %
    
    
    37.86
    %
    F-12




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 2. Significant Accounting Policies.
      2.1 Presentation of Financial Statements in Constant Argentine Pesos.
    2.2 Foreign Currency.
    2.3 Government and Corporate Securities.
   F-13




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  Valuation of Government Securities under Argentine Banking GAAP.
              F-14




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 National Secured Loans
   2.4 Financial Trust Debt Securities and Certificates of Participation.
  2.5 Interest Income (Expense) Recognition.
    2.6 Allowances for Loan Losses.
   F-15




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 2.7 Provisions for Contingencies.
  2.8 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.
   F-16




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 2.9 Bank Premises and Equipment and Miscellaneous Assets.
     2.10 Intangible Assets.
    2.11 Shareholders Equity.
   F-17




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 2.12 Minimum Presumed Income Tax and Income Tax.
     2.13 Statements of Cash Flows.
 Statement of Cash Flows
    F-18




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 2.14 Use of Estimates.
  3. Restricted Assets.
   December 31,2008
    
    
    2007Peso balances
    
    Ps.
    1,713,396
    
    
    Ps.
    1,573,904Foreign currency balances
    
    
    1,328,983
    
    
    
    868,529
  December 31,2008
    
    
    2007Funds and securities pledged under various arrangements
    
    Ps.
    1,992,080
    
    
    Ps.
    1,218,993Shares on equity investments (*)
    
    
    5,250
    
    
    
    5,250Deposits in the Argentine Central Bank, restricted
under Argentine Central Bank regulations
    
    
    3,055
    
    
    
    1,937Loans pledged and real property granted as
collateral-Banco Galicia Uruguay S.A. (**)
    
    
    65,468
    
    
    
    120,639Loans granted as collateral(***)
    
    
    157,693
    
    
    
    Total
    
    Ps.
    2,223,546
    
    
    Ps.
    1,346,819
 (*)
    
    Shares over which transferability is subject to prior approval of the National or Provincial
authorities, as applicable, under the terms of certain concession contracts signed.(**)
    
    Under a fixed pledged agreement signed on July 24, 2003 and registered with the Registry of
Property  Movable Property  Pledges Division of Montevideo  Uruguay, on August 5, 2003, Galicia
Uruguay S.A.s credit rights against all of its debtors have been pledged in favor of the holders
of transferable time deposit certificates and/or negotiable obligations issued in compliance with
the debt restructuring plan approved.(***)
    
    As of December 31, 2008, the Bank has recorded Ps.266,686 as collateral for credit lines
granted by the IFC, and the related transactions have been allocated to the resources provided by
the IFC. As
collateral for the requested funds, the Bank used secured loans for a face value of US$ 51,000,
equivalent to a cash amount of Ps.157,693, through the Argentine Central Bank, to the Subsecretaría
de la Micro, Pequeña y Mediana Empresa y Desarrollo Provincial destined to the financing of the
Global Credit Program for Small and Medium Companies. As of December 31, 2008, balance of secured
loans was Ps.87,222.  F-19




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
    4. Interest-Bearing Deposits with Other Banks.
 .
 5. Government and Corporate Securities.
  December 31,2008
    
    
    2007Government SecuritiesFor trading purposes:Government Bonds
    
    Ps.
    362,716
    
    
    Ps.
    38,991Other
    
    
    430
    
    
    
    Total trading securities
    
    Ps.
    363,146
    
    
    Ps.
    38,991In investment accountsGovernment Bonds (Boden 2012 Bonds)
    
    
    542,876
    
    
    
    1,303,437Securities issued by the Argentine Central Bank
    
    
    5,816
    
    
    
    Total securities in investment accounts
    
    Ps.
    548,692
    
    
    Ps.
    1,303,437Securities issued by the Argentine Central BankSecurities with quotation
    
    
    29,965
    
    
    
    312,383Securities without quotation
    
    
    520,239
    
    
    
    36,374Total Securities issued by the Argentine Central Bank
    
    Ps.
    550,204
    
    
    Ps.
    348,757Without quotationGovernment Bonds
    
    
    69,772
    
    
    
    1,872Total Without quotation securities
    
    
    69,772
    
    
    
    1,872Total government securities
    
    Ps.
    1,531,814
    
    
    Ps.
    1,693,057Corporate SecuritiesShares
    
    
    
    
    
    
    5Marketable Negotiable obligations
    
    
    56
    
    
    
    Mortgage Bonds
    
    
    
    
    
    
    968Total corporate securities
    
    Ps.
    56
    
    
    Ps.
    973Total government and corporate securities
    
    Ps.
    1,531,870
    
    
    Ps.
    1,694,030
   F-20




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
   6. Loans.
  
 
 
 Overdrafts
 Promissory Notes
 Mortgage loans
 Pledge loans
 Credit card loans
 Personal loans
 Others
   December 31,2008
    
    
    2007Non-financial public sector
    
    Ps.
    1,373,642
    
    
    Ps.
    1,265,466Financial sector (Argentine)
    
    
    148,115
    
    
    
    110,028Non-financial private sector and residents abroad
    
    
    10,779,630
    
    
    
    10,654,142- With preferred guarantees
    
    
    1,332,798
    
    
    
    1,289,818- With other guarantees
    
    
    1,546,237
    
    
    
    1,864,482- Unsecured
    
    
    7,900,595
    
    
    
    7,499,842Subtotal
    
    
    12,301,387
    
    
    
    12,029,636Allowance for loan losses (See Note 7)
    
    
    (526,801
    )
    
    
    (428,607
    )Total
    
    Ps.
    11,774,586
    
    
    Ps.
    11,601,029
  F-21




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007Financial Sector
    
    
    3.95
    %
    
    
    2.25
    %Services
    
    
    18.23
    %
    
    
    19.68
    %Primary Products
    
    
    10.90
    %
    
    
    10.59
    %Consumer
    
    
    43.23
    %
    
    
    36.76
    %Retail Trade
    
    
    4.39
    %
    
    
    6.02
    %Wholesale Trade
    
    
    5.28
    %
    
    
    7.13
    %Construction
    
    
    0.67
    %
    
    
    2.24
    %Manufacturing
    
    
    12.99
    %
    
    
    15.09
    %
 7. Allowance for Loan Losses.
  December 31,2008
    
    
    2007
    
    
    2006Balance at beginning of year
    
    Ps.
    428,607
    
    
    Ps.
    327,042
    
    
    Ps.
    427,911Provision charged to income
    
    
    384,606
    
    
    
    248,415
    
    
    
    105,312Recoveries
    
    
    (6,510
    )
    
    
    (21,556
    )
    
    
    (32,492
    )Foreign exchange effect and other adjustments
    
    
    9,289
    
    
    
    131
    
    
    
    27,113Loans charged off
    
    
    (289,191
    )
    
    
    (125,425
    )
    
    
    (200,802
    )Balance at end of year
    
    Ps.
    526,801
    
    
    Ps.
    428,607
    
    
    Ps.
    327,042
  December 31,2008
    
    
    2007
    
    
    2006Provisions charged to income
    
    Ps.
    384,606
    
    
    Ps.
    248,415
    
    
    Ps.
    105,312Direct charge-offs
    
    
    7,307
    
    
    
    4,334
    
    
    
    3,338Other receivable losses
    
    
    2,545
    
    
    
    1,413
    
    
    
    788Financial leases
    
    
    931
    
    
    
    1,340
    
    
    
    1,431Ps.
    395,389
    
    
    Ps.
    255,502
    
    
    Ps.
    110,869
  8. Other Receivables Resulting from Financial Brokerage.
  December 31,2008
    
    
    2007Preferred guarantees, including deposits with
The Argentine Central Bank
    
    Ps.
    338,189
    
    
    Ps.
    234,939Other guarantees
    
    
    1,588
    
    
    
    76Unsecured
    
    
    3,796,245
    
    
    
    3,381,125Less: Allowance for doubtful accounts
    
    
    (12,252
    )
    
    
    (19,170
    )Ps.
    4,123,770
    
    
    Ps.
    3,596,970
  F-22




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007Mutual funds
    
    Ps.
    39,443
    
    
    Ps.
    59,256Galtrust I
    
    
    633,996
    
    
    
    600,909Other financial trust participation certificates
    
    
    971,064
    
    
    
    828,318Accrued commissions
    
    
    19,015
    
    
    
    15,836Others
    
    
    511,276
    
    
    
    348,265Ps.
    2,174,794
    
    
    Ps.
    1,852,584
 9. Equity Investments.
  December 31,2008
    
    
    2007In Financial Institutions, complementary and authorized activitiesBanelco S.A.
    
    Ps.
    8,453
    
    
    Ps.
    7,852Visa Argentina S.A.
    
    
    2,576
    
    
    
    951Mercado de Valores de Buenos Aires S.A.
    
    
    8,142
    
    
    
    8,141Banco Latinoamericano de Exportaciones S.A.
    
    
    1,712
    
    
    
    1,562Others
    
    
    861
    
    
    
    2,429Total equity investments in Financial Institutions, complementary and authorized activities
    
    Ps.
    21,744
    
    
    Ps.
    20,935In Non-financial InstitutionsAguas Argentinas S.A (*)
    
    Ps.
    
    
    
    Ps.
    23,370Electrigal S.A.
    
    
    5,455
    
    
    
    5,455Aguas
Provinciales de Santa Fe S.A (*)
    
    
    
    
    
    
    10,771A.E.C. S.A.
    
    
    14,244
    
    
    
    10,656Aguas Cordobesas S.A.
    
    
    8,911
    
    
    
    8,911Other
    
    
    1,376
    
    
    
    5,049Total equity investments in non-financial institutions
    
    Ps.
    29,986
    
    
    Ps.
    64,212Allowances
    
    Ps.
    (3,211
    )
    
    Ps.
    (41,357
    )Total Equity investments
    
    Ps.
    48,519
    
    
    Ps.
    43,790
 (*)
    
    In September 2008, the Group sold its equity investments in these companies. (See note 3) 10. Fixed Assets and Intangible Assets.
  December 31,2008
    
    
    2007Land and buildings
    
    Ps.
    890,660
    
    
    Ps.
    782,787Furniture and fittings
    
    
    182,205
    
    
    
    165,470Machinery and equipment
    
    
    305,187
    
    
    
    280,044Vehicles
    
    
    1,243
    
    
    
    1,202Others
    
    
    6,202
    
    
    
    7,052Accumulated depreciation
    
    
    (514,228
    )
    
    
    (493,423
    )Ps.
    871,269
    
    
    Ps.
    743,132
  F-23




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
   December 31,2008
    
    
    2007Goodwill, net of accumulated amortization of Ps.164,790 and Ps.144,328 , respectively
    
    Ps.
    37,804
    
    
    Ps.
    58,266Organization and development expenses, net of accumulated amortization of Ps.163,157
and Ps.170,610 respectively
    
    
    212,301
    
    
    
    113,028Legal actions related to the payment of deposits (amparo claims), net of
accumulated amortization of Ps.469,382 and Ps.429,836 , respectively (see Note 2.10)
    
    
    316,874
    
    
    
    277,024Ps.
    566,979
    
    
    Ps.
    448,318
    December 31,2008
    
    
    2007Banking
    
    
    37,139
    
    
    
    47,932Regional Credit Card companies
    
    
    665
    
    
    
    10,334Ps.
    37,804
    
    
    Ps.
    58,266
 11. Miscellaneous Assets.
  December 31,2008
    
    
    2007Construction in progress
    
    Ps.
    24,857
    
    
    Ps.
    53,331Deposits on fixed asset purchases
    
    
    20,955
    
    
    
    22,285Stationery and supplies
    
    
    9,607
    
    
    
    6,249Real estate held for sale
    
    
    7,326
    
    
    
    7,571Others
    
    
    15,878
    
    
    
    23,139Ps.
    78,623
    
    
    Ps.
    112,575
  F-24




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 12. Allowances and Provisions.
  December 31,2008
    
    
    2007Allowances against asset accounts:Other receivables resulting from financial brokerage, for collection risk (a)
    
    
    12,252
    
    
    
    19,170Assets under financial leases (a)
    
    
    4,699
    
    
    
    3,768Equity investments in other companies (b)
    
    
    3,211
    
    
    
    41,357Miscellaneous receivables, for collection risk (a)
    
    
    81,298
    
    
    
    85,588Reserves for contingencies:For severance payments (c)
    
    
    3,212
    
    
    
    2,477Litigations (d)
    
    
    32,125
    
    
    
    28,694Other contingencies
    
    
    189,936
    
    
    
    114,448Sundry liabilities arising from credit card activities (e)
    
    
    31,849
    
    
    
    24,110Other commitments (f)
    
    
    211
    
    
    
    354Total reserves for contingencies
    
    Ps.
    257,333
    
    
    Ps.
    170,083
 (a)
    
    Based upon an assessment of debtors performance, the economic and financial situation and the
guarantees collateralizing their respective transactions.(b)
    
    Includes the estimated losses due to the excess of the cost plus dividend method over the
equity method in non-majority owned equity investments.(c)
    
    Estimated amounts payable under labor lawsuits filed against the Bank by former employees.(d)
    
    Litigation arising from different types of claims from customers (e.g., claims for thefts from
safe deposit boxes, the cashing of checks that have been fraudulently altered, discrepancies in
deposits and payments services that the Bank renders, etc).(e)
    
    Reserves for rewards to be given under a credit-card reward program, for a guarantee of
credit-cards receivable and for the estimated liability for the insurance of the payment of
credit-cards balance in the event of the death of the credit-card holders.At the date of these consolidated financial statements, the Argentine Revenue Service (AFIP), the
Revenue Board of the Province of Córdoba and the Municipalities of the cities of Mendoza and San
Luis are in the process of conducting audits, with respect to claims made by such agencies,
regarding taxes applicable to Credit Cards issuing companies. The amount claimed for such reason,
adjusted as of December 31, 2008, totals Ps.31,659, approximately.Based on the opinions of their tax advisors, the companies believe that the abovementioned claims
are both legally and technically groundless.However, since the final outcome of these measures cannot be foreseen, provisions have been set up
to cover such contingencies. Therefore, both companies are taking the corresponding administrative
and legal steps in order to solve such issues.(f)
    
    Represents contingent commitments in connection with customers classified in categories other
than the normal categories under Argentine Banking GAAP.At the date of these consolidated financial statements, there are several review and assessment
processes ongoing, at different progress stages, initiated by the provincial and Autonomous City of
Buenos Aires Tax Authorities related to the turnover tax, mainly corresponding to fiscal year
2002, and basically in connection with the Compensatory Bond set forth by the National Government
in order to compensate financial institutions for the losses resulting from the asymmetric
pesification of loans and deposits.The Bank has been expressing its disagreement regarding these adjustments at the corresponding
administrative and/or legal proceedings. These proceedings and their possible effects are
constantly being monitored by the management division. Even though the foregoing has not been
finally resolved yet, the Bank considers it has complied with its tax liabilities in full pursuant
to current regulations, since it is not possible to foresee the final outcome, the Bank has
established provisions deemed suitable according to each processs status.  F-25




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 13.
    
    Other Liabilities Resulting from Financial Brokerage- Banks and International Entities, and
Loans from Domestic Financial Institutions
  December 31,2008
    
    
    2007DescriptionBank and International EntitiesContractual long-term LiabilitiesFloating Rate Bank Loans 2010
    
    Ps.
    5,507
    
    
    Ps.
    8,318Floating Rate Bank Loans 2014
    
    
    86,078
    
    
    
    78,266Floating Rate Bank Loans 2019
    
    
    6,239
    
    
    
    5,276Internacional Finance Corp. (I.F.C.)
    
    
    267,067
    
    
    
    113,444Loan Merrill Lynch
    
    
    214,086
    
    
    
    251,920Other lines from foreign banks
    
    
    7,943
    
    
    
    2,096Total long-term liabilities
    
    Ps.
    586,920
    
    
    Ps.
    459,320Contractual short-term liabilities:Other lines from foreign banks
    
    
    354,563
    
    
    
    257,996Total short-term liabilities
    
    Ps.
    354,563
    
    
    Ps.
    257,996Total Banks and International Entities
    
    Ps.
    941,483
    
    
    Ps.
    717,316Domestic and Financial InstitutionsContractual long-term liabilities:BICE (Banco de Inversión y Comercio Exterior)
    
    
    5,056
    
    
    
    15,805Other lines from domestic banks
    
    
    199,873
    
    
    
    164,007Total long-term liabilities
    
    Ps.
    204,929
    
    
    Ps.
    179,812Contractual short-term liabilities:Other lines from credit from domestic banks
    
    
    43,621
    
    
    
    33,227Total short-term liabilities
    
    Ps.
    43,621
    
    
    Ps.
    33,227Total Domestic and Financial Institutions
    
    Ps.
    248,550
    
    
    Ps.
    213,039TOTAL
    
    Ps.
    1,190,033
    
    
    Ps.
    930,355
     F-26




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  Contractual long-term Liabilities2009
    
    
    301,7452010
    
    
    175,1382011
    
    
    113,6582012
    
    
    82,4402013
    
    
    73,317Thereafter
    
    
    45,551Ps.
    791,849
 14. Other Liabilities Resulting from Financial Brokerage  Negotiable Obligations.
  AnnualInterest
    
    
    December 31,Negotiable Obligations (1)
    
    Maturity
    
    
    Rate
    
    
    2008
    
    
    2007Contractual Long-term liabilities:9% Notes Due 2003(*)
(Semi-annual interest, principal payable at maturity)
    
    
    2003
    
    
    
    9.00
    %
    
    
    5,813
    
    
    
    12,106Banco Galicia  Note 2010 - Libor +350 BP
(Semi-annual interest)
    
    
    2010
    
    
    
    6.65
    %
    
    
    353,755
    
    
    
    536,594Banco Galicia Uruguay S.A. Unsubordinated
(restructured deposits)
(Annual interest, principal payable every year)
    
    Various
    
    
    Various
    
    
    
    54,305
    
    
    
    114,957Banco Galicia  Note 2014
(Semi  annual interest)
    
    
    2014
    
    
    
    7.00
    %
    
    
    933,106
    
    
    
    944,404Banco Galicia  Subordinated Note 2019
(Semi-annual interest, principal payable at maturity)
    
    
    2019
    
    
    
    11.00
    %
    
    
    986,969
    
    
    
    855,258Tarjeta Naranja Class II 
(Interest fixed, semi-annual interest- principal
payable every six months)
    
    
    2008
    
    
    
    17.00
    %
    
    
    
    
    
    
    40,075Tarjeta Naranja Class IV
(Interest fixed, semi-annual interest- principal
payable every six months)
    
    
    2011
    
    
    
    15.50
    %
    
    
    229,821
    
    
    
    307,900Tarjeta Cuyanas S.A. Serie XVIII
(Interest fixed, semi-annual interest- principal
payable every six months)
    
    
    2012
    
    
    
    12.00
    %
    
    
    139,128
    
    
    
    197,855Tarjeta Naranja Class VII
(Fixed Interest, principal payable at maturity)
    
    
    2009
    
    
    
    10,50
    %
    
    
    61,355
    
    
    
    Total long-term liabilities
    
    
    
    
    
    
    
    
    
    Ps.
    2,764,252
    
    
    Ps.
    3,009,149Contractual Short-term liabilities:Tarjeta Naranja Class VIII
(Fixed Interest, principal payable at maturity)
    
    
    2009
    
    
    
    11,00
    %
    
    
    69,058
    
    
    
    Tarjetas Cuyanas S. XIX
(Fixed Interest, principal payable at maturity)
    
    
    2009
    
    
    
    14,00
    %
    
    
    39,797
    
    
    
    Tarjeta Naranja Class V
(Fixed Interest, principal payable at maturity)
    
    
    2008
    
    
    
    8.25
    %
    
    
    
    
    
    
    36,340Total short-term liabilities
    
    
    
    
    
    
    
    
    
    
    108,855
    
    
    
    36,340Ps.
    2,873,107
    
    
    Ps.
    3,045,489
 (1)
    
    Only principal, except for Subordinated Obligations which include accrued interest for
Ps.51,765.  F-27




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
    Past due (*)
    
    
    5,8132009
    
    
    442,2742010
    
    
    464,3292011
    
    
    364,2332012
    
    
    231,1422013
    
    
    221,205Thereafter
    
    
    1,035,256Total
    
    Ps.
    2,764,252
 (*)
    
    Corresponds to past due debt not yet restructured. 15. Balances in Foreign Currency.
  December 31,2008
    
    
    2007Assets:Cash and due from banks
    
    Ps.
    1,806,827
    
    
    Ps.
    1,481,130Government and corporate securities
    
    
    672,354
    
    
    
    1,303,518Loans
    
    
    1,998,358
    
    
    
    1,755,230Other receivables resulting from financial brokerage
    
    
    1,630,433
    
    
    
    1,170,778Assets under financial leases
    
    
    23,541
    
    
    
    Equity investments in other companies
    
    
    1,762
    
    
    
    3,186Miscellaneous receivables
    
    
    995,257
    
    
    
    570,780Bank premises and equipment
    
    
    4,990
    
    
    
    10,928Miscellaneous assets
    
    
    297
    
    
    
    41Intangible assets
    
    
    601
    
    
    
    974Unallocated items
    
    
    2,791
    
    
    
    4,166Other assets
    
    
    129
    
    
    
    252Total
    
    Ps.
    7,137,340
    
    
    Ps.
    6,300,983Liabilities:Deposits
    
    Ps.
    2,386,180
    
    
    Ps.
    2,044,743Other liabilities resulting from financial brokerage
    
    
    4,031,939
    
    
    
    4,035,208Miscellaneous liabilities
    
    
    14,746
    
    
    
    16,381Subordinated Negotiable Obligations
    
    
    986,969
    
    
    
    855,258Provisions
    
    
    8,244
    
    
    
    1,182Unallocated items
    
    
    3,519
    
    
    
    1,205Other Liabilities
    
    
    85
    
    
    
    83Total
    
    Ps.
    7,431,682
    
    
    Ps.
    6,954,060
  F-28




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 16. Transactions with Related Parties.
   17. Breakdown of Captions Included in the Income Statement.
 December 31,2008
    
    
    2007
    
    
    2006Financial IncomeInterest on other receivables resulting from financial brokerage:Interest on purchased certificates of deposits
    
    
    6,033
    
    
    
    5,374
    
    
    
    3,667Compensatory Bond
    
    
    
    
    
    
    3,699
    
    
    
    150,737Additional interest on current accounts and special accounts with
the Argentine Central Bank
    
    
    12,241
    
    
    
    19,621
    
    
    
    14,811Advance payment-Leasing
    
    
    12,332
    
    
    
    5,708
    
    
    
    1,512Other
    
    
    3,388
    
    
    
    1,829
    
    
    
    1,151Ps.
    33,994
    
    
    Ps.
    36,231
    
    
    Ps.
    171,878OtherPremiums on forward purchases of Government securities under repos
    
    
    7,013
    
    
    
    2,863
    
    
    
    3,548Interest on pre-export and export financing
    
    
    69,238
    
    
    
    57,447
    
    
    
    34,669Result from other credits by financial brokerage
    
    
    11,076
    
    
    
    71,667
    
    
    
    Leasing
    
    
    80,036
    
    
    
    46,534
    
    
    
    33,268Net position of valuation public sector loans
    
    
    9,157
    
    
    
    
    
    
    
    Net position of forward transactions in pesos
    
    
    95,433
    
    
    
    
    
    
    
    Other
    
    
    2,135
    
    
    
    4
    
    
    
    1,209Ps.
    274,088
    
    
    Ps.
    178,515
    
    
    Ps.
    72,694Financial ExpensesInterest on other liabilities resulting from financial brokerage:Interest on negotiable obligations
    
    
    187,320
    
    
    
    240,569
    
    
    
    225,903Interest on other liabilities resulting from financial brokerage
from other banks and international entities
    
    
    109,706
    
    
    
    73,017
    
    
    
    91,556Ps.
    297,026
    
    
    Ps.
    313,586
    
    
    Ps.
    317,459Other interestInterest on Argentine Central Bank loans
    
    
    
    
    
    
    5,782
    
    
    
    109,459CER adjustment on Argentine Central Bank advances
    
    
    
    
    
    
    34,766
    
    
    
    69,156Other
    
    
    3,313
    
    
    
    5,300
    
    
    
    7,963Ps.
    3,313
    
    
    Ps.
    45,848
    
    
    Ps.
    186,578
  F-29




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 December 31,2008
    
    
    2007
    
    
    2006OtherPremiums on repo transactions
    
    
    84,823
    
    
    
    68,727
    
    
    
    34,586Contributions and taxes on financial income
    
    
    112,373
    
    
    
    66,028
    
    
    
    52,865Net position of valuation public sector loans
    
    
    
    
    
    
    6,440
    
    
    
    122,261Net position of forward transactions in pesos
    
    
    
    
    
    
    16,172
    
    
    
    1,868Other
    
    
    
    
    
    
    
    
    
    
    874Ps.
    197,196
    
    
    Ps.
    157,367
    
    
    Ps.
    212,454Income from servicesOtherCommissions on credit cards
    
    
    652,040
    
    
    
    410,543
    
    
    
    279,598Safety rental
    
    
    18,003
    
    
    
    13,213
    
    
    
    10,007Insurance premiums
    
    
    58,901
    
    
    
    49,032
    
    
    
    39,980Other
    
    
    70,856
    
    
    
    51,143
    
    
    
    38,408Ps.
    799,800
    
    
    Ps.
    523,931
    
    
    Ps.
    367,993Expenses for servicesOtherGross revenue taxes
    
    
    74,339
    
    
    
    52,504
    
    
    
    36,671Linked with credit cards
    
    
    130,813
    
    
    
    77,555
    
    
    
    58,342Other
    
    
    14,348
    
    
    
    9,837
    
    
    
    5,278Ps.
    219,500
    
    
    Ps.
    139,896
    
    
    Ps.
    100,291Administrative expensesOther operating expensesRentals
    
    
    51,292
    
    
    
    39,963
    
    
    
    28,032Electricity and communications
    
    
    72,712
    
    
    
    57,205
    
    
    
    41,104Maintenance and repair expenses
    
    
    43,841
    
    
    
    34,780
    
    
    
    31,979Security Services
    
    
    42,255
    
    
    
    31,752
    
    
    
    23,490Other operating expenses
    
    
    39,119
    
    
    
    26,916
    
    
    
    20,412Ps.
    249,219
    
    
    Ps.
    190,616
    
    
    Ps.
    145,017Miscellaneous incomeOtherInterest on miscellaneous receivables
    
    
    39,382
    
    
    
    19,875
    
    
    
    58,143Premiums and commissions from insurance business
    
    
    276,019
    
    
    
    115,567
    
    
    
    59,984Other
    
    
    18,245
    
    
    
    38,139
    
    
    
    33,049Ps.
    333,646
    
    
    Ps.
    173,581
    
    
    Ps.
    151,176Miscellaneous lossesOtherClaims
    
    
    1,821
    
    
    
    1,191
    
    
    
    1,288Commissions and expenses on insurance business
    
    
    119,045
    
    
    
    52,019
    
    
    
    53,074Other
    
    
    17,918
    
    
    
    15,945
    
    
    
    12,560Ps.
    138,784
    
    
    Ps.
    69,155
    
    
    Ps.
    66,922
 18. Income Taxes.
    F-30




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 19. Shareholders Equity and Restrictions Imposed on the Distribution of Dividends.
        
    
    The positive difference between the book value and the market value of public sector
assets and/or debt instruments issued by the Argentine Central Bank not valued at market
price: Ps.(2,520,934).
    
    The amount of the assets representing losses from lawsuits related to deposits: Ps.
(316,874).
     F-31




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
   20. Minimum Capital.
     Computable Capital as a %Minimum Capital.
    
    
    Computable Capital.
    
    
    of Minimum Capital.December 31, 2008
    
    Ps.
    1,564,542
    
    
    Ps.
    2,552,269
    
    
    
    163,13December 31, 2007
    
    Ps.
    1,302,827
    
    
    Ps.
    2,357,135
    
    
    
    180,92
 21. Earnings per Share.
     F-32




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 22. Contribution to the Deposit Insurance System.
       F-33




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 23. Statements of Income and Balance Sheets.
  December 31,2008
    
    
    2007
    
    
    2006Interest income:Interest and fees on loans (*)
    
    Ps.
    2,099,393
    
    
    Ps.
    1,505,134
    
    
    Ps.
    1,337,273Interest and dividends on investment securities:Tax-exempt
    
    
    76,912
    
    
    
    99,880
    
    
    
    54,380Interest on interest bearing deposits with other banks
    
    
    8,765
    
    
    
    14,895
    
    
    
    874Interest on other receivables from financial brokerage
    
    
    163,420
    
    
    
    158,767
    
    
    
    272,635Government securities and other trading gains (loss),
net
    
    
    71,515
    
    
    
    46,396
    
    
    
    258,098Total interest income
    
    
    2,420,005
    
    
    
    1,825,072
    
    
    
    1,923,260Interest expenseInterest on deposits
    
    
    794,037
    
    
    
    583,873
    
    
    
    440,784Interest on securities sold under agreements to
repurchase
    
    
    84,823
    
    
    
    68,736
    
    
    
    34,586Interest on short-term liabilities from financial
intermediation
    
    
    82,667
    
    
    
    58,926
    
    
    
    60,032Interest on long-term liabilities from financial
intermediation (*)
    
    
    316,141
    
    
    
    359,602
    
    
    
    1,124,644Total interest expense
    
    
    1,277,668
    
    
    
    1,071,137
    
    
    
    1,660,046Net interest income
    
    
    1,142,337
    
    
    
    753,935
    
    
    
    263,214Provision for loan losses, Net of reversals
    
    
    313,188
    
    
    
    172,470
    
    
    
    28,628Net interest income /(expense) after provision for
loan losses
    
    
    829,149
    
    
    
    581,465
    
    
    
    234,586
 (*)
    
    Includes CER/CVS adjustments.  F-34




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 December 31,2008
    
    
    2007
    
    
    2006Non-interest income:Service charges on deposit accounts
    
    Ps.
    201,653
    
    
    Ps.
    160,534
    
    
    Ps.
    125,687Credit-card service charges and fees
    
    
    548,629
    
    
    
    434,358
    
    
    
    316,324Other commissions
    
    
    897,715
    
    
    
    610,984
    
    
    
    435,109Income from equity in other companies
    
    
    56,764
    
    
    
    1,957
    
    
    
    Premiums and commissions on insurance business
    
    
    276,019
    
    
    
    115,567
    
    
    
    59,984Gain on sale of other investment
    
    
    
    
    
    
    
    
    
    
    93,575Other
    
    
    139,949
    
    
    
    121,428
    
    
    
    219,047Total non-interest income
    
    Ps.
    2,120,729
    
    
    Ps.
    1,444,828
    
    
    Ps.
    1,249,726Non-interest expense:Commissions
    
    
    309,808
    
    
    
    204,867
    
    
    
    144,240Salaries and social security charges
    
    
    805,197
    
    
    
    540,643
    
    
    
    415,406Fees and external administrative services
    
    
    161,192
    
    
    
    125,502
    
    
    
    102,799Depreciation of bank premises and equipment
    
    
    61,910
    
    
    
    49,952
    
    
    
    37,095Personnel services
    
    
    90,791
    
    
    
    75,650
    
    
    
    46,622Rentals
    
    
    51,292
    
    
    
    39,963
    
    
    
    28,032Electricity and communications
    
    
    72,712
    
    
    
    57,205
    
    
    
    41,104Advertising and publicity
    
    
    146,496
    
    
    
    113,809
    
    
    
    84,507Taxes
    
    
    324,475
    
    
    
    214,006
    
    
    
    158,352Amortization of organization and development expenses
    
    
    37,950
    
    
    
    35,640
    
    
    
    34,904Loss from equity in other companies
    
    
    
    
    
    
    
    
    
    
    14,362Maintenance and repair expenses
    
    
    43,841
    
    
    
    34,780
    
    
    
    31,979Minority interest
    
    
    35,812
    
    
    
    32,119
    
    
    
    19,016Commissions and expenses on insurance business
    
    
    119,045
    
    
    
    52,019
    
    
    
    53,072Amortization of Amparo claims
    
    
    39,545
    
    
    
    108,667
    
    
    
    Other Provisions and reserves
    
    
    161,703
    
    
    
    48,151
    
    
    
    62,424Other
    
    
    237,276
    
    
    
    175,817
    
    
    
    135,074Total non-interest expense
    
    Ps.
    2,699,045
    
    
    Ps.
    1,908,790
    
    
    Ps.
    1,408,988Income before tax expense
    
    
    250,833
    
    
    
    117,503
    
    
    
    75,324Income tax expense
    
    
    (74,014
    )
    
    
    (71,466
    )
    
    
    (94,238
    )Net (loss) / income
    
    Ps.
    176,819
    
    
    Ps.
    46,037
    
    
    Ps
    (18,914
    )
  F-35




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007Assets:Cash and due from banks
    
    Ps.
    3,440,912
    
    
    Ps.
    3,008,009Interest-bearing deposits in other banks
    
    
    317,278
    
    
    
    159,252Federal funds sold and securities purchased under
resale agreements or similar agreements
    
    
    416,914
    
    
    
    2,906Trading account assets
    
    
    989,565
    
    
    
    476,195Available for sale securities
    
    
    4,325,448
    
    
    
    4,743,676Loans
    
    
    12,951,627
    
    
    
    12,444,276Allowances for loan losses
    
    
    (539,475
    )
    
    
    (437,917
    )Miscellaneous receivables
    
    
    998,331
    
    
    
    768,641Fixed assets
    
    
    871,269
    
    
    
    743,132Intangible Assets
    
    
    566,979
    
    
    
    448,318Other assets
    
    
    1,282,416
    
    
    
    1,043,401Total assets
    
    Ps.
    25,621,264
    
    
    Ps.
    23,399,889Liabilities and Shareholders Equity:Deposits
    
    Ps.
    13,953,478
    
    
    Ps.
    13,070,023Short-term borrowing
    
    
    507,039
    
    
    
    327,563Other liabilities
    
    
    368,278
    
    
    
    744,896Amounts payable for spot and forward purchases to
be settled
    
    
    1,014,120
    
    
    
    1,273,308Other liabilities resulting from financial brokerage
    
    
    3,394,246
    
    
    
    1,969,060Long-term debt
    
    
    3,556,101
    
    
    
    3,648,281Miscellaneous Liabilities
    
    
    478,720
    
    
    
    324,583Contingent liabilities
    
    
    257,333
    
    
    
    170,083Minority interest in Consolidated Subsidiaries
    
    
    246,204
    
    
    
    217,587Common stock
    
    
    1,241,407
    
    
    
    1,241,407Other shareholders equity
    
    
    604,338
    
    
    
    413,098Total liabilities and shareholders equity
    
    Ps.
    25,621,264
    
    
    Ps.
    23,399,889
  December 31, 2008
    
    
    December 31, 2007Unrealized
    
    
    
    
    
    
    
    
    
    
    UnrealizedCarrying value
    
    
    Gains/(Losses)
    
    
    Market value
    
    
    Carrying value
    
    
    Gains/(Losses)
    
    
    Market valueBoden 2012 Bonds -
Compensatory Bond
and Hedge Bond
    
    
    2,350,815
    
    
    
    
    
    
    
    1,253,440
    
    
    
    2,744,256
    
    
    
    (47,694
    )
    
    
    2,437,796GalTrust I
    
    
    633,996
    
    
    
    
    
    
    
    67,881
    
    
    
    600,909
    
    
    
    (97,166
    )
    
    
    295,325Discount Bonds
    
    
    641,804
    
    
    
    
    
    
    
    161,531
    
    
    
    671,492
    
    
    
    34,020
    
    
    
    312,087Other assets
    
    
    698,833
    
    
    
    20,241
    
    
    
    567,174
    
    
    
    727,019
    
    
    
    (32,981
    )
    
    
    672,132TOTAL
    
    Ps.
    4,325,448
    
    
    Ps.
    20,241
    
    
    Ps.
    2,050,026
    
    
    Ps.
    4,743,676
    
    
    Ps
    (143,821
    )
    
    Ps.
    3,717,340
  F-36




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31, 2008Maturing after
    
    
    Maturing afterMaturing within
    
    
    1 year but within
    
    
    5 years but within
    
    
    Maturing afterCarrying Value
    
    
    1 year
    
    
    5 years
    
    
    10 years
    
    
    10 yearsBoden 2012 Bonds  Compensatory Bond and Hedge Bond
    
    Ps.
    2,350,815
    
    
    Ps.
    587,704
    
    
    Ps.
    1,763,111
    
    
    Ps.
    
    
    
    Ps.
    GalTrust I
    
    
    633,996
    
    
    
    
    
    
    
    32,560
    
    
    
    601,436
    
    
    
    Discount Bonds
    
    
    641,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    641,804Participation Certificates
    
    
    461,714
    
    
    
    306,849
    
    
    
    154,865
    
    
    
    
    
    
    
    Debt Securities
    
    
    88,234
    
    
    
    64,912
    
    
    
    6,600
    
    
    
    16,722
    
    
    
    Other assets
    
    
    148,885
    
    
    
    148,885
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    Ps.
    4,325,448
    
    
    Ps.
    1,108,350
    
    
    Ps.
    1,957,136
    
    
    Ps.
    618,158
    
    
    Ps.
    641,804
 24. Operations by Geographical Segment.
  December 31,2008
    
    
    2007
    
    
    2006Total revenues:(*)Republic of Argentina
    
    Ps.
    4,582,947
    
    
    Ps.
    3,376,524
    
    
    Ps.
    3,315,964Republic of Uruguay
    
    
    47,411
    
    
    
    65,565
    
    
    
    82,194Net income (loss), net
of monetary effects
allocable to each
country:Republic of Argentina
    
    
    166,368
    
    
    
    28,214
    
    
    
    (64,399
    )Republic of Uruguay
    
    
    10,451
    
    
    
    17,823
    
    
    
    45,485Total assets:Republic of Argentina
    
    
    24,349,404
    
    
    
    22,335,675
    
    
    
    23,075,194Republic of Uruguay
    
    
    386,386
    
    
    
    493,063
    
    
    
    540,244Fixed assetsRepublic of Argentina
    
    
    866,179
    
    
    
    732,109
    
    
    
    479,184Republic of Uruguay
    
    
    5,090
    
    
    
    11,023
    
    
    
    11,106Miscellaneous assetsRepublic of Argentina
    
    
    78,326
    
    
    
    112,534
    
    
    
    271,067Republic of Uruguay
    
    
    297
    
    
    
    41
    
    
    
    40GoodwillRepublic of Argentina
    
    
    37,804
    
    
    
    58,266
    
    
    
    65,165Other intangible assetsRepublic of Argentina
    
    
    528,115
    
    
    
    389,078
    
    
    
    436,724Republic of Uruguay
    
    
    1,060
    
    
    
    974
    
    
    
    907Geographical segment
assets as a percentage
of total assetsRepublic of Argentina
    
    
    98,44
    %
    
    
    97,84
    %
    
    
    97,71
    %Republic of Uruguay
    
    
    1,56
    %
    
    
    2,16
    %
    
    
    2,29
    %
 (*)
    
    The caption Revenues include financial income, income from services and miscellaneous income.  F-37




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 25. Financial Instruments with Off-Balance Sheet Risk.
     December 31,2008
    
    
    2007Commitments to extend credit
    
    Ps.
    1,003,449
    
    
    Ps.
    827,851Standby letters of credit
    
    
    157,056
    
    
    
    144,215Guarantees granted
    
    
    208,851
    
    
    
    139,692Acceptances
    
    
    69,500
    
    
    
    56,251
     December 31,2008
    
    
    2007Preferred counter-guarantees
    
    Ps.
    34,748
    
    
    Ps.
    24,840Other counter-guarantees
    
    
    43,253
    
    
    
    26,546
  F-38




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007Checks drawn on the Bank
    
    Ps.
    439,809
    
    
    Ps.
    297,143Checks drawn on the other Bank
    
    
    369,531
    
    
    
    360,481Bills and other items for collection
    
    
    1,322,145
    
    
    
    1,640,885
   26. Derivative Financial Instruments.
   Notional
    
    
    Net Book
    
    
    Net BookAverage
    
    
    Amount as
    
    
    Value as of
    
    
    Value as ofWeighted
    
    
    of
    
    
    December 31,
    
    
    December 31,Maturity
    
    
    December 31,
    
    
    2008 Asset /
    
    
    2007 Asset /Type of Contract
    
    Underlying

    
    Term
    
    
    2008
    
    
    (Liability)
    
    
    (Liability) -FUTURES (a)- Purchases
    
    Foreign currency
    
    5 months
    
    
    230,332
    
    
    
    
    
    
    
    1,087
    (*)- Sales
    
    Foreign currency
    
    3 months
    
    
    116,240
    
    
    
    (297
    )(*)
    
    
    FORWARDS  CLIENTS (b)- Sales
    
    Foreign currency
    
    7 months
    
    
    91,624
    
    
    
    (23,556
    )(*)
    
    
    - Purchases
    
    Foreign currency
    
    3 months
    
    
    300
    
    
    
    65
    (*)
    
    
    FORWARD FOREIGN CURRENCY HEDGE CONTRACT (c)- Purchases
    
    Foreign currency
    
    7 months
    
    
    49,000
    
    
    
    15,827
    
    
    
    OPTIONS (d)- Put option written Boden 2012 coupon
    
    National government securities
    
    25 months
    
    
    36,508
    
    
    
    
    
    
    
    - Put option written Boden 2013 coupon
    
    National government securities
    
    38 months
    
    
    108,142
    
    
    
    
    
    
    
    
 (*)
    
    As of December 31, 2008 and 2007, the amounts correspond to sales as well as purchases.(a)
    
    These transactions are made through recognized exchange markets, such as Mercado Abierto
Electrónico (MAE) and Mercado a Término de Rosario (ROFEX).  F-39




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 The general settlement method for these transactions does not require delivery of the traded
underlying asset. Rather, settlement is carried on a daily basis for the difference, if any,
between the closing price of the underlying asset and the closing price or value of the underlying
asset corresponding to the previous day, the difference in price being charged to income.The Group records under Other Receivables from Financial Brokerage and / or Other Liabilities
Resulting from Financial Brokerage, as the case may be, the difference between the agreed foreign
currency exchange rate and such exchange rate at the end of the year according with the future
prices published by the recognized exchange markets mentioned above.These transactions only include futures purchase and sale of U.S. dollars.(b)
    
    These transactions have been conducted directly with customers pursuant to the above-mentioned
conditions. The Group records under Other Receivables from Financial Brokerage and / or Other
Liabilities Resulting from Financial Brokerage, as the case may be, the difference between the
agreed foreign currency exchange rate and such exchange rate at the end of the year according with
the future prices published by Rofex.(c)
    
    On October 14, 2008, the Group entered into a forward foreign currency hedge contract, aimed to
hedge the risk associated with the exchange rate exposure of financial debt designated in U.S.
Dollars.Since the Groups purpose when entering into this contract was to reduce its exposure to US Dollar
fluctuations and denominate its future commitments in Pesos, and the main terms of the contract
(amount and due date) are similar to those of the financial debt, the derivative has been
designated as a cash flow hedge. Changes in the fair value of this derivative have been charged to
shareholders equity, under Valuation difference from hedging derivatives, and shall be recorded
as results when the covered item affects such results.(d)
    
    As established by Decree 1836/02 and Argentine Central Bank regulations, 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 Bonds and Boden 2012 Bonds in exchange for their certificates.The exercise price will be equal to that resulting from converting to pesos the face value of each
coupon in U.S. dollars at a rate of Ps.1.40 per U.S. dollar adjusted by applying the CER, which
arises from comparing the index at February 3, 2002 to that corresponding to the due date of the
coupon. That value shall in no case exceed the principal and interest amounts in pesos resulting
from applying the face value of the coupon in U.S. dollars at the buying exchange rate quoted by
Banco de la Nación Argentina (Banco Nación) on the payment date of that coupon.As of December 31, 2008 and 2007, the options bought and sold were recorded at their exercise price
in memorandum accounts. The premiums collected and/or paid have been accrued on a straight-line
basis over the life of the contract.  F-40




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 27. Disclosure about Fair Value of Financial Instruments.
    2008
    
    
    2007Book Value
    
    
    Fair Value
    
    
    Book Value
    
    
    Fair ValueDerivative activities: (see Note 26)Assets
    
    Ps.
    15,892
    
    
    Ps.
    15,892
    
    
    Ps.
    1,087
    
    
    Ps.
    1,087Liabilities
    
    
    23,853
    
    
    
    67,073
    
    
    
    
    
    
    
    7,697Non derivative activities:Assets:Cash and due from banks (1)
    
    Ps.
    3,405,133
    
    
    Ps.
    3,405,133
    
    
    Ps.
    2,960,013
    
    
    Ps.
    2,960,013Government securities (2)Trading
    
    
    913,350
    
    
    
    913,350
    
    
    
    387,748
    
    
    
    387,739Without quotation
    
    
    69,772
    
    
    
    20,559
    
    
    
    1,872
    
    
    
    1,872Investment
    
    
    548,692
    
    
    
    303,196
    
    
    
    1,303,437
    
    
    
    1,157,954Loans (3)
    
    
    11,774,586
    
    
    
    11,211,857
    
    
    
    11,601,029
    
    
    
    11,486,918Others (4)
    
    
    5,416,276
    
    
    
    3,501,411
    
    
    
    4,269,838
    
    
    
    3,433,156Liabilities:Deposits (5)
    
    Ps.
    14,056,134
    
    
    Ps.
    13,979,359
    
    
    Ps.
    13,165,621
    
    
    Ps.
    13,132,756Other liabilities resulting from financial
Intermediation:Banks and international entities and
Loans from Domestic Financial
Institutions (6) and
Negotiable obligations (7)
    
    
    4,140,741
    
    
    
    2,419,854
    
    
    
    4,054,516
    
    
    
    3,780,254Others (8)
    
    
    3,561,827
    
    
    
    3,502,958
    
    
    
    3,163,696
    
    
    
    3,132,170
  (1)
    
    Cash and due from banks:By definition, cash and due from banks are short-term and do not
possess credit loss risk. The carrying values as of December 31, 2008 and 2007 are a reasonable
estimate of fair value.(2)
    
    Government securities:Government securities held for trading purposes are carried at fair
value. Holdings of investment account securities correspond to the Compensatory Bond and the Hedge
Bond received (Boden 2012 Bonds) related to the compensation to financial institutions, which fair
value corresponds to the Boden 2012 Bonds quoted market value. Under Argentine Banking GAAP,
securities without quotation include Discount Bonds. Such bonds had quoted market values and
therefore the fair value of them where determined using the mentioned quoted market values.  F-41




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 (3)
    
    Loans:The fair values of loans are estimated for groups of similar characteristics, including
type of loan, credit quality incorporating the credit risk factor. For floating- or adjustable-rate
loans, which mature or are repriced within a short period of time, the carrying values are
considered to be a reasonable estimate of fair values. For fixed-rate loans, market prices are not
generally available and the fair values are estimated by and remaining maturity. In discounting the
estimated future cash flows based on the contracted maturity of the loans. The discount rates are
based on the current market rates corresponding to the applicable maturity. Where quoted market
prices or estimated fair values are available, primarily for loans to refinancing countries, loans
held for dispositions or sales and certain other foreign loans, the fair values are based on such
market prices and estimated fair values, including secondary market prices. For nonperforming
loans, the fair values are generally determined on an individual basis by discounting the estimated
future cash flows and may be based on the appraisal value of underlying collateral as appropriate.In order to determine the fair value of Secured Loans, the portfolio was considered at amortized
cost, which is the fair value at the date of exchange (December 2001).(4)
    
    Others:Includes other receivables from financial brokerage and equity investments in other
companies. A majority of the items included under Other Receivables from Financial Brokerage
purchases of government securities held for investment purposes is the quoted market value of the
underlying government securities, mostly Boden 2012 and Discount Bonds. Also included under this
caption are financial trusts certificates of participation, that their fair value is estimated
using valuation techniques to convert the future amounts to a single present amount discounted. The
measurement is based on the value indicated by current market expectation about those future
amounts. The estimated of the cash flows is based on the future cash flows from the securitized
assets, considering the prepayments, historical loan performance, etc. Equity investments in
companies where significant influence is exercised are not within the scope of SFAS No. 107. Equity
investments in other companies are carried at market value less costs to sell.(5)
    
    Deposits:The fair value of deposit liabilities on demand and savings account deposits is
similar to its book value. The fair value of time deposits was calculated by discounting
contractual cash flows using current market rates for instruments with similar maturities.(6)
    
    Banks and international entities and loans from domestic financial institutions:Includes
credit lines borrowed under different credit arrangements from local and foreign banks and
entities. Most of them were restructured as of May 2004. As of December 2008 and December 2007,
when no quoted market prices were available, the estimated fair value has been calculated by
discounting the contractual cash flows of these liabilities at estimated market rates.(7)
    
    Negotiable obligations:As of December 31, 2008 and December 31, 2007, the fair value of the
negotiable obligations was determined based on quoted market prices and when no quoted market
prices were available, the estimated fair value has been calculated by discounting the contractual
cash flows of these liabilities at estimated market rates.(8)
    
    Others:Includes other liabilities resulting from financial brokerage. Their fair value was
estimated at the expected future cash discounted at the estimated rates at year-end.  F-42




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 28. Pending events derived from the systems crisis in late 2001.
 Legal actions requesting protection of Constitutional guarantees.
       F-43




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
     Claims due to foreign exchange differences arising from the repayment of financial assistance
during foreign exchange market holidays in January 2002.
       F-44




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 29. Preferred Liabilities of the former Banco Almafuerte Coop. Ltdo.
      F-45




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 30. Financial Trusts.
 a) Financial trusts with Banco de Galicia y Buenos Aires S.A. as trustee outstanding at
fiscal year-end:
 Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securities heldCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    in own portfolioName
    
    Date
    
    
    date
    
    
    Trustee

    
    Trust assets

    
    transferred
    
    
    12.31.08
    
    
    12.31.07Galtrust I
    
    
    10.13.00
    
    
    
    10.10.15
    
    
    First Trust of New York N.A.
    
    Loans to provincial governments (Bogar)
    
    US$
    490,224
    (*)
    
    Ps.
    633,996
    
    
    Ps.
    600,909Galtrust II
    
    
    12.17.01
    
    
    
    12.10.10
    
    
    First Trust of New York N.A.
    
    Mortgage loans
    
    US$
    61,191
    
    
    
    
    
    
    Ps.
    8,146Galtrust V
    
    
    12.17.01
    
    
    
    01.10.16
    
    
    First Trust of New York N.A.
    
    Mortgage loans
    
    US$
    57,573
    
    
    
    
    
    
    Ps.
    16,854Galicia
    
    
    04.16.02
    
    
    
    05.06.32
    
    
    Bapro mandatos y negocios
    
    Secured loans
    
    Ps.
    108,000
    
    
    Ps.
    73,447
    
    
    Ps.
    65,347Créditos Inmobiliarios Galicia I
    
    
    08.17.05
    
    
    
    03.15.15
    
    
    Deutsche Bank S.A.
    
    Mortgage loans
    
    Ps.
    91,000
    
    
    Ps.
    21,291
    
    
    Ps.
    20,313Créditos Inmobiliarios Galicia II
    
    
    10.12.05
    
    
    
    12.15.25
    
    
    Deutsche Bank S.A.
    
    Mortgage loans
    
    Ps.
    150,000
    
    
    Ps.
    49,892
    
    
    Ps.
    47,493Galicia Prendas Comerciales
    
    
    07.03.06
    
    
    
    02.15.11
    
    
    Deutsche Bank S.A.
    
    Pledge loans
    
    Ps.
    86,623
    
    
    Ps.
    6,593
    
    
    Ps.
    12,780Galicia Personales III
    
    
    05.16.06
    
    
    
    03.15.11
    
    
    Deutsche Bank S.A.
    
    Personal loans
    
    Ps.
    100,000
    
    
    
    
    
    
    Ps.
    15,909Galicia Personales IV
    
    
    01.17.07
    
    
    
    10.15.11
    
    
    Deutsche Bank S.A.
    
    Personal loans
    
    Ps.
    100,000
    
    
    Ps.
    13,737
    
    
    Ps.
    13,824Galicia Personales V
    
    
    04.13.07
    
    
    
    01.15.12
    
    
    Deutsche Bank S.A.
    
    Personal loans
    
    Ps.
    150,000
    
    
    Ps.
    25,168
    
    
    Ps.
    19,939Galicia Personales VI
    
    
    09.28.07
    
    
    
    06.15.12
    
    
    Deutsche Bank S.A.
    
    Personal loans
    
    Ps.
    108,081
    
    
    Ps.
    17,670
    
    
    Ps.
    15,257Galicia Personales
VII
    
    
    02.21.08
    
    
    
    11.15.12
    
    
    Deutsche Bank S.A.
    
    Personal loans
    
    Ps.
    150,000
    
    
    Ps.
    25,010
    
    
    
    Galicia Personales VIII
    
    
    07.04.08
    
    
    
    04.15.13
    
    
    Deutsche Bank S.A.
    
    Personal loans
    
    Ps.
    187,500
    
    
    Ps.
    39,956
    
    
    
    Galicia Leasing I
    
    
    09.22.06
    
    
    
    05.15.11
    
    
    Deutsche Bank S.A.
    
    Assets under financial leases
    
    Ps.
    150,000
    
    
    Ps.
    24,168
    
    
    Ps.
    23,015
 (*)
    
    The remaining US$ 9,776 was transferred in cash.  
 
  F-46




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
      Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securitiesCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    held in own portfolioName
    
    date
    
    
    date
    
    
    Trustee

    
    Trust assets

    
    transferred
    
    
    12.31.08
    
    
    12.31.07Tarjeta Naranja Trust I
    
    
    11.07.05
    
    
    
    05.20.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    94,500
    
    
    
    
    
    
    Ps.
    21,195Tarjeta Naranja Trust III
    
    
    08.15.06
    
    
    
    09.20.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    139,342
    
    
    
    
    
    
    Ps.
    26,844Tarjeta Naranja Trust IV
    
    
    08.14.07
    
    
    
    07.20.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    76,052
    
    
    
    
    
    
    Ps.
    8,694Tarjeta Naranja Trust V
    
    
    10.09.07
    
    
    
    11.20.09
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    115,306
    
    
    Ps.
    21,391
    
    
    Ps.
    17,828Tarjeta Naranja Trust Vl
    
    
    12.11.07
    
    
    
    01.23.10
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    150,003
    
    
    Ps.
    24,983
    
    
    Ps.
    22,436Tarjeta Naranja Trust Vll
    
    
    02.19.08
    
    
    
    07.23.10
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    142,913
    
    
    Ps.
    25,316
    
    
    
    Tarjeta Naranja Trust Vlll
    
    
    08.05.08
    
    
    
    09.20.10
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    138,742
    
    
    Ps.
    46,235
    
    
    
    
   F-47




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
    Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securities heldCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    in own portfolioName
    
    date
    
    
    date
    
    
    Trustee

    
    Trust assets

    
    transferred
    
    
    12.31.08
    
    
    12.31.07Tarjetas Cuyanas Trust IV
    
    
    11.01.06
    
    
    
    11.15.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    68,120
    
    
    
    
    
    
    Ps.
    17,911Tarjetas Cuyanas Trust V
    
    
    02.04.08
    
    
    
    03.15.10
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    61,700
    
    
    Ps.
    14,733
    
    
    
    Tarjetas Cuyanas Trust VI
    
    
    07.07.08
    
    
    
    02.23.10
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    89,000
    
    
    Ps.
    21,023
    
    
    
    
   Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securities heldCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    in own portfolioName
    
    date
    
    
    date
    
    
    Trustee

    
    Trust assets

    
    transferred
    
    
    12.31.08
    
    
    12.31.07Tarjetas del Mar Serie III
    
    
    11.09.07
    
    
    
    07.31.08
    
    
    Banco de Galicia y Buenos Aires S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    14,217
    
    
    
    
    
    
    Ps.
    2,692Tarjetas del Mar Serie IV
    
    
    07.28.08
    
    
    
    05.31.09
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    26,800
    
    
    Ps.
    5,186
    
    
    
    
  e)
    
    Trust Activities
 
    
    Trust contracts for purposes of guaranteeing compliance with obligations:
   F-48




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Balances of
    
    
    Maturity DateDate of Contract
    
    
    Trustor
    
    Trust Funds
    
    
    (1)Ps.12.29.05
    
    
    
    Tecsan  Benito Roggio
    
    
    2
    
    
    
    04.28.1104.10.07
    
    
    
    Sullair
    
    
    2
    
    
    
    12.31.1010.25.07
    
    
    
    Argensun
    
    
    4
    
    
    
    01.31.0902.12.08
    
    
    
    Sinteplast
    
    
    148
    
    
    
    01.28.13Total
    
    
    156
 (1)
    
    These amounts shall be released monthly until settlement date of trustor obligations or
maturity date, whichever occurs first. 
    
    Financial trust contracts:
  Date of Contract
    
    
    Trustor
    
    Balances of Trust Funds
    
    
    Maturity DatePs.
    
    
    US$03.10.05
    
    
    
    Grobo I
    
    
    714
    
    
    
    
    
    
    
    06.30.09
    (3)07.13.05
    
    
    
    Rumbo Norte I
    
    
    4,277
    
    
    
    32
    
    
    
    07.13.11
    (3)10.12.05
    
    
    
    Hydro I
    
    
    24,960
    
    
    
    
    
    
    
    09.05.17
    (2)08.10.06
    
    
    
    Faid 2006/07
    
    
    179
    
    
    
    
    
    
    
    02.28.09
    (3)12.05.06
    
    
    
    Faid 2011
    
    
    49,805
    
    
    
    
    
    
    
    02.28.12
    (3)12.06.06
    
    
    
    Gas I
    
    
    392,050
    
    
    
    
    
    
    
    06.30.11
    (3)03.02.07
    
    
    
    Agro Nitralco
    
    
    2,876
    
    
    
    
    
    
    
    03.31.09
    (3)03.29.07
    
    
    
    Saturno V
    
    
    90
    
    
    
    
    
    
    
    02.28.09
    (3)05.11.07
    
    
    
    Radio Sapienza V
    
    
    12
    
    
    
    
    
    
    
    02.28.09
    (3)06.08.07
    
    
    
    Saturno VI
    
    
    870
    
    
    
    
    
    
    
    06.30.09
    (3)09.05.07
    
    
    
    Saturno VII
    
    
    3,493
    
    
    
    
    
    
    
    09.30.09
    (3)11.22.07
    
    
    
    Radio Sapienza VI
    
    
    5,737
    
    
    
    
    
    
    
    01.12.11
    (3)03.19.08
    
    
    
    Saturno VIII
    
    
    5,931
    
    
    
    
    
    
    
    03.31.09
    (3)06.19.08
    
    
    
    Saturno IX
    
    
    1,120
    
    
    
    
    
    
    
    03.31.09
    (3)05.06.08
    
    
    
    Agro Nitralco II
    
    
    17,426
    
    
    
    
    
    
    
    08.14.09
    (3)Totals
    
    
    509,540
    
    
    
    32
 (2)
    
    These amounts shall be released monthly until redemption of debt securities.(3)
    
    Estimated date, since maturity date shall occur at the time of the distribution of all of trust
assets. 31. Segment Reporting.
    F-49




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
   Banking:
 Regional Credit Cards
 Insurance:
 Other Grupo Businesses:
   F-50




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Regional
    
    
    
    
    
    
    Other Grupo
    
    
    
    
    
    
    ConsolidatedIn Pesos Thousands
    
    Banking
    
    
    Credit Cards
    
    
    Insurance
    
    
    Businesses
    
    
    Adjustments
    
    
    TotalYear ended December 31, 2008Net Financial Income
    
    
    847,282
    
    
    
    296,156
    
    
    
    20,156
    
    
    
    (80
    )
    
    
    (25,182
    )
    
    
    1,138,332Net Income from Services
    
    
    654,952
    
    
    
    571,829
    
    
    
    
    
    
    
    12,897
    
    
    
    (51,810
    )
    
    
    1,187,868Net Operating Revenue
    
    
    1,502,234
    
    
    
    867,985
    
    
    
    20,156
    
    
    
    12,817
    
    
    
    (76,992
    )
    
    
    2,326,200Provisions for Loan Losses
    
    
    214,948
    
    
    
    180,441
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    395,389Administrative Expenses
    
    
    1,166,476
    
    
    
    554,451
    
    
    
    29,963
    
    
    
    13,463
    
    
    
    16,725
    
    
    
    1,781,078Net Operating Income
    
    
    120,810
    
    
    
    133,093
    
    
    
    (9,807
    )
    
    
    (646
    )
    
    
    (93,717
    )
    
    
    149,733Income from Equity InvestmentTarjetas Regionales SA
    
    
    76,436
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,436
    )
    
    
    Sudamericana
    
    
    2,866
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,866
    )
    
    
    Others
    
    
    58,164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,400
    )
    
    
    56,764Other Income (Loss)
    
    
    (63,014
    )
    
    
    45,242
    
    
    
    43,506
    
    
    
    2,104
    
    
    
    52,310
    
    
    
    80,148Minority Interests
    
    
    
    
    
    
    (20,646
    )
    
    
    
    
    
    
    
    
    
    
    (15,166
    )
    
    
    (35,812
    )Pre-tax Income
    
    
    195,262
    
    
    
    157,689
    
    
    
    33,699
    
    
    
    1,458
    
    
    
    (137,275
    )
    
    
    250,833Income tax provision
    
    
    
    
    
    
    81,253
    
    
    
    11,140
    
    
    
    1,328
    
    
    
    (19,707
    )
    
    
    74,014Net Income
    
    
    195,262
    
    
    
    76,436
    
    
    
    22,559
    
    
    
    130
    
    
    
    (117,568
    )
    
    
    176,819Net Income as a % of Grupo
Financiero Galicias Net
Income
    
    
    110.43
    %
    
    
    43.23
    %
    
    
    12.76
    %
    
    
    0.07
    %Average:Loans
    
    
    8,707,477
    
    
    
    2,104,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,812,470Deposits
    
    
    13,199,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,712
    )
    
    
    13,191,288End of Period:Assets
    
    
    24,439,812
    
    
    
    2,763,843
    
    
    
    227,719
    
    
    
    22,552
    
    
    
    (2,718,136
    )
    
    
    24,735,790Equity
    
    
    1,954,666
    
    
    
    453,728
    
    
    
    77,065
    
    
    
    8,641
    
    
    
    (648,355
    )
    
    
    1,845,745
  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, 2008, 2007 and 2006
 Regional
    
    
    
    
    
    
    Other Grupo
    
    
    
    
    
    
    ConsolidatedIn Pesos Thousands
    
    Banking
    
    
    Credit Cards
    
    
    Insurance
    
    
    Businesses
    
    
    Adjustments
    
    
    TotalYear ended December 31, 2007Net Financial Income
    
    
    516,158
    
    
    
    203,187
    
    
    
    16,640
    
    
    
    559
    
    
    
    14,642
    
    
    
    751,186Net Income from Services
    
    
    520,471
    
    
    
    409,019
    
    
    
    
    
    
    
    8,468
    
    
    
    (24,862
    )
    
    
    913,096Net Operating Revenue
    
    
    1,036,629
    
    
    
    612,206
    
    
    
    16,640
    
    
    
    9,027
    
    
    
    (10,220
    )
    
    
    1,664,282Provisions for Loan Losses
    
    
    159,197
    
    
    
    96,305
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255,502Administrative Expenses
    
    
    875,085
    
    
    
    369,476
    
    
    
    16,147
    
    
    
    9,147
    
    
    
    16,469
    
    
    
    1,286,324Net Operating Income
    
    
    2,347
    
    
    
    146,425
    
    
    
    493
    
    
    
    (120
    )
    
    
    (26,689
    )
    
    
    122,456Income from Equity InvestmentTarjetas Regionales SA
    
    
    88,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,154
    )
    
    
    Sudamericana
    
    
    1,910
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,910
    )
    
    
    Others
    
    
    3,476
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    (1,488
    )
    
    
    1,957Other Income (Loss)
    
    
    (65,465
    )
    
    
    41,343
    
    
    
    21,983
    
    
    
    2,198
    
    
    
    25,150
    
    
    
    25,209Minority Interests
    
    
    
    
    
    
    (27,510
    )
    
    
    
    
    
    
    
    
    
    
    (4,609
    )
    
    
    (32,119
    )Pre-tax Income
    
    
    30,422
    
    
    
    160,258
    
    
    
    22,476
    
    
    
    2,047
    
    
    
    (97,700
    )
    
    
    117,503Income tax provision
    
    
    
    
    
    
    72,104
    
    
    
    7,846
    
    
    
    819
    
    
    
    (9,303
    )
    
    
    71,466Net Income
    
    
    30,422
    
    
    
    88,154
    
    
    
    14,630
    
    
    
    1,228
    
    
    
    (88,397
    )
    
    
    46,037Net Income as a % of Grupo
Financiero Galicias Net
Income
    
    
    66.1
    %
    
    
    191.5
    %
    
    
    31.8
    %
    
    
    2.7
    %
    
    
    
    
    
    
    Average:Loans
    
    
    7,140,643
    
    
    
    1,703,145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,843,788Deposits
    
    
    11,857,001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,059
    )
    
    
    11,844,942End of Period:Assets
    
    
    20,682,613
    
    
    
    2,397,126
    
    
    
    155,427
    
    
    
    12,449
    
    
    
    (418,877
    )
    
    
    22,828,738Equity
    
    
    1,759,396
    
    
    
    377,294
    
    
    
    64,506
    
    
    
    9,406
    
    
    
    (556,097
    )
    
    
    1,654,505
  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, 2008, 2007 and 2006
 Regional
    
    
    
    
    
    
    Other Grupo
    
    
    
    
    
    
    ConsolidatedIn Pesos thousand
    
    Galicia Bank
    
    
    Credit Cards
    
    
    Insurance
    
    
    Businesses
    
    
    Adjustments
    
    
    TotalYear ended December 31, 2006Net Financial Income
    
    
    66,044
    
    
    
    157,474
    
    
    
    17,049
    
    
    
    472
    
    
    
    137,185
    
    
    
    378,224Net Income from Services
    
    
    377,346
    
    
    
    289,798
    
    
    
    
    
    
    
    7,870
    
    
    
    (3,013
    )
    
    
    672,001Net Operating Revenue
    
    
    443,390
    
    
    
    447,272
    
    
    
    17,049
    
    
    
    8,342
    
    
    
    134,172
    
    
    
    1,050,225Provisions for Loan Losses
    
    
    57,628
    
    
    
    53,239
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    110,869Administrative Expenses
    
    
    681,438
    
    
    
    263,789
    
    
    
    11,234
    
    
    
    7,340
    
    
    
    10,763
    
    
    
    974,564Net Operating Income
    
    
    (295,676
    )
    
    
    130,244
    
    
    
    5,815
    
    
    
    1,001
    
    
    
    123,408
    
    
    
    (35,208
    )Income from Equity InvestmentTarjetas Regionales SA
    
    
    70,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,897
    )
    
    
    Sudamericana
    
    
    1,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,126
    )
    
    
    Others
    
    
    (14,821
    )
    
    
    
    
    
    
    
    
    
    
    (163
    )
    
    
    622
    
    
    
    (14,362
    )Other Income (Loss)
    
    
    112,263
    
    
    
    20,666
    
    
    
    6,910
    
    
    
    954
    
    
    
    3,117
    
    
    
    143,910Minority Interests
    
    
    
    
    
    
    (24,124
    )
    
    
    (3
    )
    
    
    
    
    
    
    5,111
    
    
    
    (19,016
    )Pre-tax Income
    
    
    (126,211
    )
    
    
    126,786
    
    
    
    12,722
    
    
    
    1,792
    
    
    
    60,235
    
    
    
    75,324Income tax provision
    
    
    
    
    
    
    55,889
    
    
    
    3,697
    
    
    
    864
    
    
    
    33,788
    
    
    
    94,238Net Income
    
    
    (126,211
    )
    
    
    70,897
    
    
    
    9,025
    
    
    
    928
    
    
    
    26,447
    
    
    
    (18,914
    )Net Income as a % of Grupo
Financiero Galicias Net
Income
    
    
    667.3
    %
    
    
    (374.8
    %)
    
    
    (47.7
    %)
    
    
    (4,9
    %)
    
    
    
    
    
    
    Averages:Loans
    
    
    5,332,256
    
    
    
    1,149,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,481,513Deposits
    
    
    9,505,994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,528
    )
    
    
    9,502,466End of Period:Assets
    
    
    22,105,651
    
    
    
    1,820,887
    
    
    
    121,908
    
    
    
    12,000
    
    
    
    (426,271
    )
    
    
    23,634,175Equity
    
    
    1,263,008
    
    
    
    289,141
    
    
    
    48,061
    
    
    
    8,980
    
    
    
    (722
    )
    
    
    1,608,468
  F-53




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 32. Situation in the financial and capital Markets.
    33.
    Differences between the Argentine Central Banks regulations and Argentine GAAP in the
Autonomous City of Buenos Aires.
  Investment securities
   Secured loans
     F-54




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  Accounting disclosure of effects generated by court decisions on deposits
  Conversion of financial statements
     Allowance for loan losses  Non-financial public sector
  Discount Bonds and GDP-Linked Negotiable Securities
  Accounting for income tax according to the deferred tax method
    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, 2008, 2007 and 2006
 34. Subsequent events.
    35.
    Summary of Significant Differences between Argentine Central Bank Rules and United States
Accounting Principles.
  a. Income tax
    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, 2008, 2007 and 2006
  December 31, 2008SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    138,917
    
    
    
    16,973
    
    
    
    155,890Allowance for loan losses  public sector
    
    
    12,101
    
    
    
    
    
    
    
    12,101Amortization of Intangible assets
    
    
    70,654
    
    
    
    
    
    
    
    70,654Compensation related to the payment of deposits
    
    
    
    
    
    
    110,906
    
    
    
    110,906Impairment of fixed assets and foreclosed assets
    
    
    
    
    
    
    20,575
    
    
    
    20,575Provision for contingencies
    
    
    87,065
    
    
    
    
    
    
    
    87,065Debt restructuring
    
    
    
    
    
    
    59,984
    
    
    
    59,984Others
    
    
    54,768
    
    
    
    46,175
    
    
    
    100,943Loss carry forward
    
    
    799,138
    
    
    
    
    
    
    
    799,138Total gross deferred tax assets
    
    Ps.
    1,162,643
    
    
    Ps.
    254,613
    
    
    Ps.
    1,417,256Deferred tax liabilities:Compensatory and Hedge bond, Provincial public debt and Discount
Bond
    
    Ps.
    563,288
    
    
    Ps.
    (548,711
    )
    
    Ps.
    14,577Others
    
    
    128,307
    
    
    
    
    
    
    
    128,307Total gross deferred tax liabilities
    
    Ps.
    691,595
    
    
    Ps.
    (548,711
    )
    
    Ps.
    142,884Net deferred income tax asset before valuation allowance
    
    Ps.
    471,048
    
    
    Ps.
    803,324
    
    
    Ps.
    1,274,372Valuation allowance
    
    
    (799,138
    )
    
    
    
    
    
    
    (799,138
    )Net deferred income tax (liabilities) / assets
    
    Ps.
    (328,090
    )
    
    Ps.
    803,324
    
    
    Ps.
    475,234
 December 31, 2007SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    91,306
    
    
    
    (2,189
    )
    
    
    89,117Allowance for loan losses  public sector
    
    
    15,306
    
    
    
    
    
    
    
    15,306Amortization of Intangible assets
    
    
    85,564
    
    
    
    
    
    
    
    85,564Compensation related to the payment of deposits
    
    
    
    
    
    
    96,958
    
    
    
    96,958Impairment of fixed assets and foreclosed assets
    
    
    
    
    
    
    21,063
    
    
    
    21,063Provision for contingencies
    
    
    55,358
    
    
    
    
    
    
    
    55,358Debt restructuring
    
    
    
    
    
    
    70,396
    
    
    
    70,396Others
    
    
    37,296
    
    
    
    28,465
    
    
    
    65,761Loss carry forward
    
    
    553,796
    
    
    
    
    
    
    
    553,796Total gross deferred tax assets
    
    Ps.
    838,626
    
    
    Ps.
    214,693
    
    
    Ps.
    1,053,319Deferred tax liabilities:Provincial public debt / Discount Bond
    
    Ps.
    232,862
    
    
    Ps.
    (218,570
    )
    
    Ps.
    14,292Others
    
    
    134,933
    
    
    
    
    
    
    
    134,933Total gross deferred tax liabilities
    
    Ps.
    367,795
    
    
    Ps.
    (218,570
    )
    
    Ps.
    149,225Net deferred income tax asset before valuation allowance
    
    Ps.
    470,831
    
    
    Ps.
    433,263
    
    
    Ps.
    904,094Valuation allowance
    
    
    (553,796
    )
    
    
    
    
    
    
    (553,796
    )Net deferred income tax (liabilities) / assets
    
    Ps.
    (82,965
    )
    
    Ps.
    433,263
    
    
    Ps.
    350,298
  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, 2008, 2007 and 2006
  December 31,2008
    
    
    2007
    
    
    2006Statutory 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.
    (427,665
    )
    
    Ps.
    239,896
    
    
    Ps.
    1,136,729Tax exempt income
    
    
    92,791
    
    
    
    (162,249
    )
    
    
    (752,120
    )Valuation allowance
    
    
    283,952
    
    
    
    14,875
    
    
    
    (661,725
    )Actual tax provision under U.S. GAAP
    
    Ps.
    (50,922
    )
    
    Ps.
    92,522
    
    
    Ps.
    (277,116
    )
      Jurisdiction
    
    Tax yearArgentina
    
    
    2004 - 2008Uruguay
    
    
    2004 - 2008
 b. Commissions on loans
   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, 2008, 2007 and 2006
 c. Intangible assets
 Goodwill
     Software costs
  d. Loan loss reserves
  (i) Loan charge offs and recoveries
   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, 2008, 2007 and 2006
 (ii) Loans  Non-financial national public sector
    (iii) Loans / Bonds  Non-financial provincial public sector
      F-60




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
    (iv) Loans to the non-financial private sector and residents abroad
    December 31,2008
    
    
    2007
    
    
    2006Total impaired loans
    
    Ps.
    286,489
    
    
    Ps.
    399,528
    
    
    Ps.
    460,615Average impaired loans during the year
    
    
    179,969
    
    
    
    398,419
    
    
    
    586,410Total impaired loans with no allowance under U.S. GAAP
    
    
    10,603
    
    
    
    7,132
    
    
    
    10,262Cash payments received for interest on impaired loans,
Recognized as income
    
    
    831
    
    
    
    473
    
    
    
    342Allowance for impaired loans under SFAS 114
    
    
    134,527
    
    
    
    246,293
    
    
    
    291,882
   F-61




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  e. Government securities and other investments
 (i) Compensatory and Hedge bonds received and Hedge Bonds to be received in connection with
the compensation for foreign currency position and compensatory bonds received and to be
received in connection with the compensation for asymmetric pesification.
         F-62




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
    (ii) External Notes / Discount Bonds and GDP-Linked Negotiable Securities
 ,
        F-63




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 (iii) Other investments
     F-64




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 f. Items in process of collection
   g. Compensation related to the payment of deposits
     h. Transfers of financial assets
 Financial trust Galtrust I
   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, 2008, 2007 and 2006
    December 31,
    
    
    December 31,
    
    
    December 31,Discount real rate for:
    
    2008
    
    
    2007
    
    
    2006Galtrust I Participation Certificates
    
    
    40
    %
    
    
    9
    %
    
    
    5
    %
     Financial Trust Secured Loans
    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, 2008, 2007 and 2006
 BG Financial Trust
  Financial Trust Tarjetas del Mar Serie IV
  Other transfers of financial assets consolidated into the Groups financial statements in
accordance with U.S. GAAP
   
    
    determine whether the entity meets the criteria to qualify as a VIE and;
    
    determine whether the Group is the primary beneficiary of the VIE.
  
    
    the design of the entity, including the nature of its risks and the purpose for which
the entity was created, to determine the variability that the entity was designed to create
and distribute to its interest holders;
    
    the nature of the involvement with the entity;
    
    whether control of the entity may be achieved through arrangements that do not involve
voting equity;
    
    whether there is sufficient equity investment at risk to finance the activities of the
entity and;
    
    whether parties other than the equity holders have the obligation to absorb expected
losses or the right to received residual returns.
  
    
    whether the variable interest absorbs the majority of the VIEs expected losses;
    
    whether the variable interest receives the majority of the VIEs expected returns
and;
    
    whether the Group has the ability to make decisions that significantly affect the
VIEs results and activities.
  F-67




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
   December 31,2008Cash and due from banks
    
    Ps.
    33,372Loans (net of allowances)
    
    
    939,955Other assets
    
    
    21,157Total Assets
    
    Ps.
    994,484Debt Securities
    
    Ps.
    721,993Certificates of Participation
    
    
    247,651Other liabilities
    
    
    24,840Total Liabilities
    
    Ps.
    994,484
  Other transfers of financial assets accounted for as sales under U.S. GAAP
     F-68




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
    
    
    The continuing involvement in these trusts is related to the acting as servicer of the
Group securitized assets and the retained interest hold by the Group through certificates
of participation;
    
    There were no restrictions on assets reported by an entity in its statement of financial
position related to a transferred financial asset.
 i. Acceptances
    F-69




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 j. Impairment of real estate properties and foreclosed assets
 Impairment of Long-lived Assets
      F-70




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 k. Equity investments in other companies
    l. Guarantees
 Financial guarantee  Exchange of deposits with the financial system II  Written Options.
     F-71




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Other Financial Guarantees
   2008Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    Amount -Payments (*)
    
    
    Recourse
    
    
    LiabilityFinancial guarantees
    
    
    72,008
    
    
    
    5,362
    
    
    
    292Ps.
    72,008
    
    
    Ps.
    5,362
    
    
    Ps.
    292
 2007Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    Amount -Payments (*)
    
    
    Recourse
    
    
    LiabilityFinancial guarantees
    
    
    47,667
    
    
    
    2,133
    
    
    
    88Ps.
    47,667
    
    
    Ps.
    2,133
    
    
    Ps.
    88
 (*)
    
    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.   m. Minority Interest
   F-72




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 n. Foreign Debt Restructuring
        o. Repurchase Agreements and Reverse Repurchase Agreements (Repos and Reverse Repos)
     F-73




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 p. Fair Value Measurements Disclosures
   Fair Value Hierarchy
   
    
    Level 1  inputs to the valuation methodology are quoted prices
(unadjusted) for identical assets or liabilities in active markets.
    
    Level 2  inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the asset or liability.Level 2  inputs include the following:
 a)
    
    Quoted prices for similar assets or liabilities in active markets;b)
    
    Quoted prices for identical or similar assets or liabilities in non-active markets;c)
    
    Pricing models whose inputs are observable for substantially the full term of the asset
or liability; andd)
    
    Pricing models whose inputs are derived principally from or corroborated by
observable market data through correlation or other means.
 
    
    Level 3  inputs to the valuation methodology are unobservable and
significant to the fair value measurement.
  Determination of Fair Value
   F-74




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
   Assets
 a) Government securities and other investments
  b) Securities receivable under repurchase agreements
  c) Transfers of financial assets
  d) Forward transactions
   F-75




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Liabilities
 e) Forward and futures transactions
    F-76




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Items measured at fair value on a recurring basis
  Internal
    
    
    Internalmodels with
    
    
    models withQuoted
    
    
    significant
    
    
    significantmarket prices
    
    
    observable
    
    
    unobservableTotal
    
    
    in active
    
    
    market
    
    
    marketcarrying
    
    
    markets
    
    
    parameters
    
    
    parametersBalances as of December 31, 2008
    
    value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)ASSETSa) Government securities and other investmentsTrading Securities
    
    Ps.
    363,146
    
    
    Ps.
    363,146
    
    
    Ps.
    
    
    
    Ps.
    Compensatory and Hedge Bond Received
    
    
    280,410
    
    
    
    280,410
    
    
    
    
    
    
    
    Discount Bonds & GDP Linked Negotiable Sec.
    
    
    51,871
    
    
    
    51,871
    
    
    
    
    
    
    
    Securities issued by the Argentine Central Bank
    
    
    550,204
    
    
    
    550,204
    
    
    
    
    
    
    
    Equity Securities
    
    
    56
    
    
    
    56
    
    
    
    
    
    
    
    Other Investments
    
    
    301,486
    
    
    
    
    
    
    
    
    
    
    
    301,486b) Securities receivable under repurchase
agreementsCompensatory and Hedge Bond Received
    
    
    973,030
    
    
    
    973,030
    
    
    
    
    
    
    
    Discount Bonds
    
    
    144,631
    
    
    
    144,631
    
    
    
    
    
    
    
    c) Transfers of financial assetsDebt Securities and Certificates of Participation
    
    
    58,177
    
    
    
    
    
    
    
    
    
    
    
    58,177Certificate of Participation Galtrust I
    
    
    67,881
    
    
    
    
    
    
    
    
    
    
    
    67,881d) Derivatives instruments
    
    
    15,892
    
    
    
    
    
    
    
    15,892
    
    
    
    TOTAL ASSETS AT FAIR VALUE
    
    
    2,806,784
    
    
    
    2,363,348
    
    
    
    15,892
    
    
    
    427,544LIABILITIESe) Derivatives instruments
    
    
    (67,073
    )
    
    
    (297
    )
    
    
    (66,776
    )
    
    
    TOTAL LIABILITIES AT FAIR VALUE
    
    
    (67,073
    )
    
    
    (297
    )
    
    
    (66,776
    )
    
    
    
 Changes in level 3 fair value measurements
  Total Fair ValueBalances as of December 31, 2008
    
    MeasurementsAvailable for sale securities
    
    Ps.Fair value, December 31, 2007
    
    
    737,649Total gains or losses (realized/unrealized)
    
    
    (247,634
    )Included in earnings
    
    
    (259,762
    )Included in other comprehensive income
    
    
    12,128Purchases, issuances and settlements
    
    
    (62,471
    )Transfers in to/ out of level 3
    
    
    Fair value, December 31, 2008
    
    
    427,544
  F-77




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  Total Fair ValueBalances as of December 31, 2008
    
    MeasurementsAvailable for sale securities
    
    Ps.Classification of gains and losses (realized/unrealized)
included in earnings for 2008:Financial Income
    
    
    (259,762
    )Total
    
    
    (259,762
    )
  q. New authoritative pronouncements
    F-78




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Disclosures about Derivative Instruments and Hedging
Activitiesan Amendment of FASB Statement No. 133,
   The Hierarchy of Generally Accepted Accounting
Principles,
   F-79




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  
    
    intends to sell the security;
    
    is more likely than not to be required to sell the security before recovering its cost; or
    
    does not expect to recover the securitys entire amortized cost basis (even if the
entity does not intend to sell)  that is, a credit loss.
  
    
    the estimated amount relating to the credit loss, and
    
    all other changes in fair value.
      F-80




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  
    
    Eliminates the scope exception for qualifying special-purpose entities
    
    Eliminates the quantitative model for determining which party should consolidate and
replaces it with a qualitative model focusing on decision-making for an entitys significant
economic activities
    
    Requires a company to continually reassess whether it should consolidate an entity
subject to FIN 46(R)
    
    Requires an assessment of whether an entity is subject to the standard due to a
troubled debt restructuring
    
    Requires extensive new disclosures
   F-81




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Consolidated net income
 December 31,2008
    
    
    2007
    
    
    2006Net income (loss) as stated
    
    Ps.
    176,819
    
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )Loan origination fees and costs (Note 35 b.)
    
    
    10,300
    
    
    
    (38,629
    )
    
    
    (9,855
    )Intangible assets:Goodwill amortization and impairment (Note 35 c.)
    
    
    (77,605
    )
    
    
    19,687
    
    
    
    19,838Other intangible assets (Note 35 c.)
    
    
    (24,593
    )
    
    
    3,965
    
    
    
    (14,888
    )Compensation related to the payment of deposits (Note 35 g.)
    
    
    (39,850
    )
    
    
    90,197
    
    
    
    (19,444
    )Equity investments in other companies  Impairment (Note 35 k.)
    
    
    (3,882
    )
    
    
    (8,381
    )
    
    
    45,442Loss on exchange of National Public Debt (Note 35 d.(ii))
    
    
    48,228
    
    
    
    196,743
    
    
    
    591,227Provincial Public Debt (Note 35 d.(iii))
    
    
    
    
    
    
    198,099
    
    
    
    1,790,197Loan impairment  Private sector (Note 35 d.(iv))
    
    
    (54,748
    )
    
    
    52,056
    
    
    
    (49,393
    )Transfers of financial assets (Note 35 h.)
    
    
    (376,975
    )
    
    
    8,814
    
    
    
    (22,607
    )Government Securities and other investments:Compensatory Bond received and Hedge Bond (Note 35 e.(i))
    
    
    (838,609
    )
    
    
    63,973
    
    
    
    751,648GDP  Linked Negotiable Securities (Note 35 e.(ii))
    
    
    (31,479
    )
    
    
    (23,683
    )
    
    
    54,940Impairment of other available for sale securities
(Note 35 e.(ii) (iii))
    
    
    (197,564
    )
    
    
    36,151
    
    
    
    21,096Real estate properties asset amortization (Note 35 j.)
    
    
    1,395
    
    
    
    1,395
    
    
    
    1,395Recognition for the fair value of obligations assumed under
Financial guarantees issued (Note 35 l.)
    
    
    (35,727
    )
    
    
    (5,773
    )
    
    
    11,047Troubled Debt restructuring (Note 35 n.)
    
    
    29,749
    
    
    
    86,558
    
    
    
    28,039Deferred Income tax (Note 35 a.)
    
    
    124,936
    
    
    
    (21,056
    )
    
    
    371,354Minimum Presumed Income Tax (Note 35 a.)
    
    
    (25,906
    )
    
    
    (39,631
    )
    
    
    (47,895
    )Minority interest (Note 35 m.)
    
    
    144,533
    
    
    
    (73,627
    )
    
    
    21,686Net income (loss) in accordance with U.S. GAAP
    
    
    (1,170,978
    )
    
    
    592,895
    
    
    
    3,524,913Average number of shares outstanding (in thousands) (Note 21)
    
    
    1,241,407
    
    
    
    1,241,407
    
    
    
    1,240,932Basic net income (loss) per share in accordance with U.S. GAAP
(Note 21)
    
    
    (0.943
    )
    
    
    0.478
    
    
    
    2.841Diluted net income (loss) per share in accordance with U.S.
GAAP (Note 21)
    
    
    (0.943
    )
    
    
    0.478
    
    
    
    2.841
  F-82




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Consolidated shareholders equity
 December 31,2008
    
    
    2007Shareholders equity as stated
    
    Ps.
    1,845,745
    
    
    Ps.
    1,654,505Loan origination fees and costs (Note 35 b.)
    
    
    (40,236
    )
    
    
    (50,536
    )Intangible assets:Goodwill amortization and impairment (Note 35 c.)
    
    
    13,749
    
    
    
    91,354Other intangible assets (Note 35 c.)
    
    
    (46,806
    )
    
    
    (22,213
    )Compensation related to the payment of deposits (Note 35 g)
    
    
    (316,874
    )
    
    
    (277,024
    )Equity investments in other companies  Impairment (Note 35 k.)
    
    
    (26,817
    )
    
    
    (22,935
    )Loans -non Financial Public Sector  Secured loans (Note 35 d.(ii))
    
    
    (32,495
    )
    
    
    (80,723
    )Loan impairment  Private sector (Note 35 d.(iv))
    
    
    (48,495
    )
    
    
    6,253Government securities and other investments:Compensatory and Hedge Bond received (Note 35 e.(i))
    
    
    (1,097,375
    )
    
    
    (306,460
    )Discount Bonds (Note 35 e.(ii))
    
    
    (480,273
    )
    
    
    (359,405
    )GDP  Linked Negotiable Securities (Note 35 e.(ii))
    
    
    9,901
    
    
    
    41,380Other Investments (Note 35 e (iii))
    
    
    (110,716
    )
    
    
    (43,307
    )Financial assets transferred (Note 35 h.)
    
    
    (587,058
    )
    
    
    (317,164
    )Minority interest (Note 35 m.)
    
    
    246,204
    
    
    
    101,671Impairment of real estate properties and foreclosed assets
(Note 35 j.)
    
    
    (67,155
    )
    
    
    (67,155
    )Real Estate properties amortization (Note 35 j.)
    
    
    8,370
    
    
    
    6,975Minimum Presumed Income Tax (Note 35 a.)
    
    
    (284,421
    )
    
    
    (258,515
    )Deferred Income tax (Note 35 a.)
    
    
    475,234
    
    
    
    350,298Recognition for the fair value of obligations assumed under
financial guarantees issued (Note 35 l.)
    
    
    (43,512
    )
    
    
    (7,785
    )Foreign debt restructuring (Note 35 n.)
    
    
    (171,383
    )
    
    
    (201,132
    )Consolidated shareholders equity (deficit) in accordance with
U.S. GAAP
    
    Ps.
    (754,413
    )
    
    Ps.
    238,082
  F-83




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  Grupo Galicia
 Adjustments to
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCapital
    
    
    Paid
    
    
    Shareholders
    
    
    Profit Reserves
    
    
    Comprehensive
    
    
    Retained
    
    
    ShareholdersStock
    
    
    in Capital
    
    
    Equity
    
    
    Legal
    
    
    Other
    
    
    Income (loss)
    
    
    Earnings
    
    
    EquityBalance 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
    )Distribution of retained earnings by
the shareholders meeting on April
27,2006Legal Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,855
    
    
    
    
    
    
    
    
    
    
    
    (34,855
    )
    
    
    Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,383
    
    
    
    
    
    
    
    (72,383
    )
    
    
    Unrealized
gain of available-for-sale securities, net of tax and minority
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,251,449
    )
    
    
    
    
    
    
    (1,251,449
    )Sale of Treasury Stock
    
    
    
    
    
    
    606
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,524,913
    
    
    
    3,524,913Balance at December 31, 2006
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    294,254
    
    
    Ps.
    34,855
    
    
    Ps.
    72,383
    
    
    Ps.
    356,801
    
    
    Ps.
    (1,854,497
    )
    
    Ps.
    145,809Distribution of retained earnings:Absorption approved by the
shareholders meeting on April 26,2007Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,914
    )
    
    
    
    
    
    
    18,914
    
    
    
    Unrealized
gain of available-for-sale securities, net of tax and minority
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500,622
    )
    
    
    
    
    
    
    (500,622
    )Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    592,895
    
    
    
    592,895Balance at December 31, 2007
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    294,254
    
    
    Ps.
    34,855
    
    
    Ps.
    53,469
    
    
    Ps.
    (143,821
    )
    
    Ps.
    (1,242,688
    )
    
    Ps.
    238,082Distribution of retained earnings:Absorption approved by the
shareholders meeting on April 29,2008Legal Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,302
    
    
    
    
    
    
    
    
    
    
    
    (2,302
    )
    
    
    Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,735
    
    
    
    
    
    
    
    (43,735
    )
    
    
    Valuation Differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,421
    
    
    
    
    
    
    
    
    
    
    
    14,421Unrealized
gain of available-for-sale securities, net of tax and minority
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164,062
    
    
    
    
    
    
    
    164,062Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,170,978
    )
    
    
    (1,170,978
    )Balance at December 31, 2008
    
    Ps.
    1,241,407
    
    
    
    606
    
    
    
    294,254
    
    
    
    37,157
    
    
    
    111,625
    
    
    
    20,241
    
    
    
    (2,459,703
    )
    
    
    (754,413
    )
 Comprehensive income
   F-84




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
  December 31,2008
    
    
    2007
    
    
    2006Income StatementFinancial Income
    
    Ps.
    1,201,697
    
    
    Ps.
    2,433,198
    
    
    Ps.
    5,456,352Financial Expenditures
    
    
    1,391,270
    
    
    
    1,160,142
    
    
    
    1,863,588Net Financial Income
    
    
    (189,573
    )
    
    
    1,273,056
    
    
    
    3,592,764Provision for Loan Losses
    
    
    450,137
    
    
    
    203,446
    
    
    
    160,262Income from Services
    
    
    1,538,380
    
    
    
    1,153,619
    
    
    
    837,340Expenditures from Services
    
    
    383,654
    
    
    
    257,242
    
    
    
    180,408Administrative Expenses
    
    
    1,799,579
    
    
    
    1,258,089
    
    
    
    982,843Net Income / (Loss) from Financial Brokerage
    
    
    (1,284,563
    )
    
    
    707,898
    
    
    
    3,106,591Minority Interests
    
    
    108,721
    
    
    
    (105,746
    )
    
    
    2,670Miscellaneous Income
    
    
    494,977
    
    
    
    271,546
    
    
    
    326,308Miscellaneous Losses
    
    
    (541,035
    )
    
    
    188,281
    
    
    
    187,772Net Income / (Loss) before Income tax
    
    
    (1,221,900
    )
    
    
    685,417
    
    
    
    3,247,797Income Tax
    
    
    (50,922
    )
    
    
    92,522
    
    
    
    (277,116
    )Net income (loss) under U.S. GAAP
    
    
    (1,170,978
    )
    
    
    592,895
    
    
    
    3,524,913Other comprehensive income (loss):Unrealized gains (losses) on securities
    
    
    164,062
    
    
    
    (500,622
    )
    
    
    (1,251,449
    )Other comprehensive income (loss)
    
    
    164,062
    
    
    
    (500,622
    )
    
    
    (1,251,449
    )Comprehensive income (Loss)
    
    Ps.
    (1,006,916
    )
    
    Ps.
    92,273
    
    
    Ps.
    2,273,464
  December 31,2008
    
    
    2007
    
    
    2006Boden 2012 Bonds  Compensatory Bond
    
    
    
    
    
    
    (47,694
    )
    
    
    89,441Bogar Bonds
    
    
    
    
    
    
    
    
    
    
    168,908GalTrust I
    
    
    
    
    
    
    (97,166
    )
    
    
    (7,443
    )Discount Bonds
    
    
    
    
    
    
    34,020
    
    
    
    125,251Other
    
    
    20,241
    
    
    
    (32,981
    )
    
    
    (19,356
    )Accumulated other comprehensive
income/
(loss)
    
    Ps.
    20,241
    
    
    Ps.
    (143,821
    )
    
    Ps.
    356,801
   F-85




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Concentration of risk  Total exposure to the public sector  Argentine government and provinces
  December 31, 2008
    
    
    December 31, 2007Argentine
    
    
    
    
    
    
    ArgentineBanking
    
    
    
    
    
    
    BankingGAAP
    
    
    U.S. GAAP
    
    
    GAAP
    
    
    U.S. GAAPArgentine national
government loans
    
    Ps.
    1,481,563
    
    
    Ps.
    1,449,068
    
    
    Ps.
    1,372,854
    
    
    Ps.
    1,306,743Other Argentine
public-sector receivables
    
    
    297,467
    
    
    
    186,751
    
    
    
    272,966
    
    
    
    215,047Galtrust I
(securitization of
Provincial Loans)
    
    
    630,002
    
    
    
    63,887
    
    
    
    597,123
    
    
    
    291,539Compensatory bond received
    
    
    2,350,815
    
    
    
    1,253,440
    
    
    
    2,744,256
    
    
    
    2,437,796Other (1)
    
    
    1,294,448
    
    
    
    824,076
    
    
    
    1,133,572
    
    
    
    815,547Total
    
    Ps.
    6,054,295
    
    
    Ps.
    3,777,222
    
    
    Ps.
    6,120,771
    
    
    Ps.
    5,066,672
 (1)
    
    Includes bonds and other national government bonds. Risks and Uncertainties
 Government Securities
       F-86




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Allowance for loan losses
  U.S. GAAP estimates
  36. Parent only Financial Statements.
   F-87




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Balance sheet (Parent Company only)
 December 31,2008
    
    
    2007ASSETSA. Cash and due from BanksCash
    
    Ps.
    10
    
    
    Ps.
    11Financial institutions and correspondents
    
    
    207
    
    
    
    10,689Ps.
    217
    
    
    Ps.
    10,700B. Government and corporate securitiesHoldings of trading securities
    
    
    191
    
    
    
    Ps.
    191
    
    
    Ps.
    C. LoansTo the financial sector
    
    
    47,264
    
    
    
    43,511Ps.
    47,264
    
    
    Ps.
    43,511D. Other receivables resulting from financial brokerageNegotiable obligations without quotation
    
    
    711
    
    
    
    2,591Balances from forward transactions without delivery of
underlying asset to be settled
    
    
    15,827
    
    
    
    Other
receivables not included in the debtor classification Regulations
    
    
    147
    
    
    
    3,212Other receivables included in the debtor classification
Regulations
    
    
    26,850
    
    
    
    12,465Accrued
interest receivable included in the debtor Classification regulations
    
    
    161
    
    
    
    47Ps.
    43,696
    
    
    Ps.
    18,315F. Equity investmentsIn financial institutions
    
    
    1,898,232
    
    
    
    1,700,152Other
    
    
    63,899
    
    
    
    56,336Ps.
    1,962,131
    
    
    Ps.
    1,756,488G. Miscellaneous receivablesTax on minimum presumed income  Tax credit
    
    
    869
    
    
    
    Other
    
    
    6,178
    
    
    
    76,848Ps.
    7,047
    
    
    Ps.
    76,848H. Bank premises and equipment
    
    
    3,044
    
    
    
    3,134J. Intangible assetsGoodwill
    
    
    10,976
    
    
    
    12,255Organization and development expenses
    
    
    33
    
    
    
    18Ps.
    11,009
    
    
    Ps.
    12,273Total Assets
    
    Ps.
    2,074,599
    
    
    Ps.
    1,921,269
 December 31,2008
    
    
    2007LIABILITIES AND SHAREHOLDERS EQUITYN. Other liabilities resulting from financial brokerage
Banks and international entities
    
    Ps.
    214,086
    
    
    Ps.
    251,920Accrued interest and quotation differences payable
    
    
    6,250
    
    
    
    8,569220,336
    
    
    
    260,489O. Miscellaneous liabilitiesDirectors and Syndics fees
    
    Ps.
    60
    
    
    Ps.
    132Other
    
    
    8,458
    
    
    
    6,1438,518
    
    
    
    6,275Total Liabilities
    
    Ps.
    228,854
    
    
    Ps.
    266,764SHAREHOLDERS EQUITY
    
    Ps.
    1,845,745
    
    
    Ps.
    1,654,505Total Liabilities and Shareholders Equity
    
    Ps.
    2,074,599
    
    
    Ps.
    1,921,269
  F-88




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Statement of Income (Parent Company only)
 December 31,2008
    
    
    2007
    
    
    2006A. Financial incomeInterest on loans granted to the financial sector
    
    
    97
    
    
    
    694
    
    
    
    54Interest on other loans
    
    
    
    
    
    
    670
    
    
    
    Interest on other receivables resulting from financial brokerage
    
    
    314
    
    
    
    388
    
    
    
    665Net income from government and corporate securities
    
    
    126
    
    
    
    5,817
    
    
    
    114,641Other
    
    
    
    
    
    
    897
    
    
    
    3,100Ps.
    537
    
    
    Ps.
    8,466
    
    
    Ps.
    118,460B. Financial expensesInterest on other liabilities resulting from financial brokerage
    
    Ps.
    17,062
    
    
    Ps.
    8,565
    
    
    Ps.
    Exchange rate differences on gold and foreign currency
    
    
    11,258
    
    
    
    
    
    
    
    Other
    
    
    280
    
    
    
    302
    
    
    
    53Ps.
    28,600
    
    
    Ps.
    8,867
    
    
    Ps.
    53C. Gross brokerage margin
    
    
    (28,063
    )
    
    
    (401
    )
    
    
    118,407F. Administrative expensesPersonnel expenses
    
    
    3,492
    
    
    
    2,953
    
    
    
    2,149Directors and syndics fees
    
    
    1,013
    
    
    
    933
    
    
    
    702Other fees
    
    
    3,182
    
    
    
    3,522
    
    
    
    2,033Taxes
    
    
    1,208
    
    
    
    2,150
    
    
    
    704Other operating expenses
    
    
    521
    
    
    
    529
    
    
    
    613Other
    
    
    5,080
    
    
    
    4,665
    
    
    
    4,265Ps.
    14,496
    
    
    Ps.
    14,752
    
    
    Ps.
    10,466Net Income / (Loss) from financial brokerage
    
    Ps.
    (42,559
    )
    
    Ps.
    (15,153
    )
    
    Ps.
    107,941H. Miscellaneous incomeNet income on long-term investments
    
    
    219,688
    
    
    
    65,840
    
    
    
    Loans recovered and allowances reversed
    
    
    
    
    
    
    
    
    
    
    640Other
    
    
    1,557
    
    
    
    609
    
    
    
    1,111Ps.
    221,245
    
    
    Ps.
    66,449
    
    
    Ps.
    1,751I. Miscellaneous lossesNet loss on long-term investments (1)
    
    
    
    
    
    
    
    
    
    
    81,238Other
    
    
    3,952
    
    
    
    2,111
    
    
    
    1,723Ps.
    3,952
    
    
    Ps.
    2,111
    
    
    Ps.
    82,961Net Income / (Loss) before tax
    
    
    174,734
    
    
    
    49,185
    
    
    
    26,731J. Income tax
    
    Ps.
    (2,085
    )
    
    Ps.
    3,148
    
    
    Ps.
    45,645Net income / (Loss) for the fiscal year
    
    Ps.
    176,819
    
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )
 (1)
    
    Includes the foreign currency position compensation.  F-89




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##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2008, 2007 and 2006
 Statement of cash flows (Parent Company only)
 December 31,2008
    
    
    2007
    
    
    2006CHANGES IN CASHCash at the beginning of the period
    
    Ps.
    26,407
    
    
    Ps.
    15,727
    
    
    Ps.
    9,573Increase / (decrease) in cash
    
    
    1,155
    
    
    
    10,680
    
    
    
    6,154Cash at end of period
    
    
    27,562
    
    
    
    26,407
    
    
    
    15,727Cash provided by (used in) operating activitiesLess:
    
    
    (15,349
    )
    
    
    (25,404
    )
    
    
    (31,884
    )Operating expenses paidPlus:Other operating income received
    
    
    5,294
    
    
    
    20,694
    
    
    
    22,347Cash provided by (used in) operating activities
    
    Ps.
    (10,055
    )
    
    Ps.
    (4,710
    )
    
    Ps.
    (9,537
    )Other sources of cashLoan received
    
    
    
    
    
    
    250,960
    
    
    
    Dividends
    
    
    12,163
    
    
    
    9,450
    
    
    
    613Increase in short-term investment
    
    
    1,676
    
    
    
    5,062
    
    
    
    14,581Collection of deposit as per Decree 616/2005
    
    
    72,360
    
    
    
    
    
    
    
    Other sources of cash
    
    
    1,806
    
    
    
    718
    
    
    
    546Other sources of cash
    
    Ps.
    88,005
    
    
    Ps.
    266,190
    
    
    Ps.
    15,740Other uses of cashPayment of loans received
    
    
    (76,760
    )
    
    
    
    
    
    
    Increase in fixed assets
    
    
    (24
    )
    
    
    (213
    )
    
    
    (42
    )Increase in long-term investments
    
    
    (11
    )
    
    
    (175,299
    )
    
    
    (7
    )Deposit as per Decree 616/2005
    
    
    
    
    
    
    (75,288
    )
    
    
    Total other uses of cash
    
    Ps.
    (76,795
    )
    
    Ps.
    (250,800
    )
    
    Ps.
    (49
    )Increase / (decrease) in cash
    
    Ps.
    1,155
    
    
    Ps.
    10,680
    
    
    Ps.
    6,154
   F-90




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    Description1.1
    
    
    Unofficial English language translation of the Bylaws (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.**2.3
    
    
    Indenture, dated as of June 4, 2009, among Grupo Financiero Galicia, The Bank of New York Mellon, Banco de
Valores S.A. and The Bank of New York (Luxembourg) 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
    
    
    Form of Restructured Loan Facility (as evidenced by the Note Purchase Agreement, dated as of April 27, 2004,
among Banco de Galicia y Buenos Aires S.A., Barclays Bank PLC, the holders party thereto and Deutsche Bank Trust
Company Americas).**4.3
    
    
    Form of First Amendment and Waiver to Restructured Loan Facility (as evidenced by the First Amendment and Waiver
to the 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). ****4.4
    
    
    Form of Second Amendment to Restructured Loan Facility (as evidenced by the Second Amendment to the Note
Purchase Agreement, dated as of August 25, 2006, among Banco de Galicia y Buenos Aires S.A., the holders party
thereto and Deutsche Bank Trust Company Americas).*****4.5
    
    
    Form of Third Amendment to Restructured Loan Facility (as evidenced by the Third Amendment to the Note Purchase
Agreement, dated as of December 28, 2007, among Banco de Galicia y Buenos Aires S.A., the holders party thereto
and Deutsche Bank Trust Company Americas).******4.6
    
    

Loan
Agreement, dated as of July 24, 2007, between Grupo Financiero
Galicia S.A. and Merrill Lynch International.******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.11.1
    
    
    Code of Ethics.11.2
    
    
    Code of Corporate Governance Good Practices.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.*****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2006.******
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2007.